As filed with the Securities and Exchange Commission on February 17, 1994
Registration No. 33-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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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)
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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: /_/
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
<S> <C> <C> <C>
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Title of each class of Amount to be Maximum value of securities to Amount of Registration
securities to be registered registered be received in the exchange (1) Fee
- ---------------------------------------------------------------------------------------------------------
11-1/2% Series B
Senior Secured
Notes Due 2000(2) $27,000,000 $27,000,000 $9,310.34
- ---------------------------------------------------------------------------------------------------------
Guarantee(3) (4) (4)
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<FN>
(1) Calculated pursuant to Rule 457(f) under the Securities Act of 1933, based
upon the book value, as of February 16, 1994, of the securities to be
received by the registrant in the exchange
(2) Issued by Trump's Castle Funding, Inc.
(3) Issued by Trump's Castle Associates.
(4) Pursuant to Rule 457(n), no registration fee is payable with respect to the
Guarantee.
</FN>
</TABLE>
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.
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<PAGE>
<TABLE>
<CAPTION>
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
----------------------- ---------------------
<S> <C>
1. Forepart of the Registration Statement and
Outside 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 Company 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
<PAGE>
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
</TABLE>
<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
_______________, 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."
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:
o Potential limitation on claims in a future bankruptcy
o The risks in the payment of principal and interest on the Senior Notes
o The recent bankruptcy of the Partnership and Funding, and their recent
operating performance
o The high level of competition in the casino gaming industry
o The security for and ranking of the Senior Notes
o The 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
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 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
<PAGE>
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 "THE EXCHANGE OFFER --Termination of Certain
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
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
<PAGE>
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, 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.
As of December 31, 1993, the Partnership has 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).
<PAGE>
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.
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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.
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THE NEW JERSEY CASINO CONTROL COMMISSION HAS NOT PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS UNLAWFUL.
-------------------
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 ___________, 1994.
The date of this Prospectus is ___________, 1994.
<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.
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<PAGE>
TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY ........................................................ 7
Trump's Castle ....................................................... 7
The Registrants ...................................................... 9
Risk Factors ......................................................... 10
The Exchange Offer ................................................... 11
Comparison of Series A Notes and Series B Notes ...................... 14
Other Debt Facilities ................................................ 14
SUMMARY FINANCIAL INFORMATION ............................................. 16
Summary Historical Financial Information ............................. 16
OWNERSHIP STRUCTURE OF THE PARTNERSHIP
AND RELATED ENTITIES ................................................. 19
RISK FACTORS .............................................................. 20
Potential limitation on claims in a future Bankruptcy ................ 20
Loss of Certain Rights in Connection with the Exchange
Offer .............................................................. 20
High Leverage and Fixed Charges ...................................... 20
Risk in Refinancing and Repayment of Indebtedness .................... 22
Recent Losses and the Partnership's 1992 Bankruptcy
Resulting from its Inability to Meet its
Debt Service Requirements .......................................... 23
Competition and Industry Rate of Growth .............................. 24
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 ...................................................... 27
The Restrictions Imposed by Certain Debt Instruments on the
Partnership's Ability to Respond to Changing Business and
Economic Conditions ................................................ 29
Certain Consequences of a Public Offering
of Casino Interests ................................................ 30
Risks Inherent in an International Marketing Strategy ................ 32
The Conflicting Interests of Certain Officers and
Directors of the Partnership and its Affiliates .................... 32
Control and Involvement of Trump ..................................... 33
Reliance on Key Personnel ............................................ 37
Strict Regulation of the Partnership by the CCC ...................... 37
Potential Disqualification of Holders of the Senior
Notes by the CCC ................................................... 38
The Effect of Currency Transaction Reporting
Requirements on the Partnership's Business ......................... 38
Trading Markets; Potential Volatility of Market Prices ............... 38
FUNDING ................................................................... 40
THE PARTNERSHIP ........................................................... 40
THE EXCHANGE OFFER ........................................................ 41
Background of the Exchange Offer ..................................... 41
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<PAGE>
Terms of the Exchange Offer .......................................... 41
Termination of Certain Rights ........................................ 42
Procedure for Tendering Series A Notes ............................... 43
Acceptance and Delivery of Series B Notes ............................ 45
Period for Tendering Series A Notes .................................. 46
Withdrawal Rights .................................................... 47
Conditions of the Exchange Offer ..................................... 48
Depositary and Information Agent ..................................... 49
Fees and Expenses .................................................... 49
Appraisal Rights ..................................................... 50
Miscellaneous ........................................................ 50
CAPITALIZATION OF REGISTRANTS ............................................. 51
SELECTED FINANCIAL INFORMATION ............................................ 52
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS ............................................ 54
General .............................................................. 54
Results of Operations for the Years Ended
September 30, 1993 and 1992 ........................................ 54
Results of Operations for the Years Ended
September 30, 1992 and 1991 ........................................ 56
Results of Operations for the Years Ended
December 31, 1991 and 1990 ......................................... 57
Inflation ............................................................ 58
Liquidity and Capital Resources ...................................... 59
BUSINESS .................................................................. 62
The Recapitalization ................................................. 63
The Restructuring .................................................... 63
Casino Hotel Facilities and Operations ............................... 66
Marketing Strategy ................................................... 67
Atlantic City Market ................................................. 71
Properties ........................................................... 72
Employees and Labor Relations ........................................ 73
Seasonality .......................................................... 73
Competition .......................................................... 74
Legal Proceedings .................................................... 74
REGULATORY MATTERS ........................................................ 78
Casino Control Commission ............................................ 78
Operating Licenses ................................................... 78
Casino Licensee ...................................................... 78
Control Persons ...................................................... 80
Financial Sources .................................................... 80
Institutional Investors .............................................. 80
Ownership and Transfer of Securities ................................. 82
Interim Casino Authorization ......................................... 83
Approved Hotel Facilities ............................................ 84
License Fees ......................................................... 84
Gross Revenue Tax .................................................... 85
Investment Alternative Tax Obligations ............................... 85
Minimum Casino Parking Charges ....................................... 85
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<PAGE>
Conservatorship ...................................................... 86
Employees ............................................................ 86
Gaming Credit ........................................................ 87
Control Procedures ................................................... 87
Other Laws and Regulations ........................................... 87
MANAGEMENT ................................................................ 89
Directors and Executive Officer ...................................... 89
Compensation ......................................................... 93
Employment Agreements ................................................ 95
Compensation of Directors ............................................ 96
Compensation Committee Interlocks
and Insider Participation .......................................... 96
CERTAIN TRANSACTIONS ...................................................... 98
Other Trump Casinos .................................................. 98
Other Transactions With Affiliates ................................... 99
Services Agreement ................................................... 100
DESCRIPTION OF THE SENIOR NOTES ........................................... 101
General .............................................................. 101
Guarantee ............................................................ 102
Security ............................................................. 102
Ranking .............................................................. 103
Non-Recourse ......................................................... 103
Sinking Fund ......................................................... 104
Mandatory Redemption ................................................. 105
Certain Covenants .................................................... 105
Merger and Sale of Assets, etc ....................................... 114
Events of Default .................................................... 116
Defeasance or Covenant Defeasance of
Satisfaction and Discharge ......................................... 120
Modifications and Amendments ......................................... 122
Gaming Laws .......................................................... 123
The Purchase Agreement ............................................... 123
The Senior Note Mortgage and the Senior
Guarantee Mortgage ................................................. 124
The Senior Note Trustee .............................................. 126
Usury Law ............................................................ 127
Registration Rights .................................................. 127
Intercreditor Agreement .............................................. 128
Certain Definitions .................................................. 128
THE MIDLANTIC TERM LOAN ................................................... 143
Midlantic Term Loan .................................................. 143
Intercreditor Agreement .............................................. 145
Put Agreement ........................................................ 145
DESCRIPTION OF THE MORTGAGE NOTES ......................................... 147
General .............................................................. 147
Guarantee ............................................................ 147
Security ............................................................. 148
Ranking .............................................................. 148
Non-Recourse ......................................................... 148
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<PAGE>
Mandatory Redemption ................................................. 148
Optional Redemption .................................................. 149
Events of Default .................................................... 149
Certain Covenants .................................................... 150
DESCRIPTION OF THE PIK NOTES .............................................. 151
General .............................................................. 151
Guarantee ............................................................ 151
Security ............................................................. 151
Ranking .............................................................. 152
Non-Recourse ......................................................... 152
Mandatory Redemption ................................................. 152
Optional Redemption .................................................. 152
Events of Default .................................................... 153
Certain Covenants .................................................... 153
DESCRIPTION OF THE AMENDED AND RESTATED PARTNERSHIP
AGREEMENT ............................................................ 154
General .............................................................. 154
Management of the Partnership ........................................ 154
Indemnification ...................................................... 157
Casino Control Commission Regulation ................................. 158
DESCRIPTION OF THE SERVICES AGREEMENT ..................................... 160
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS ................................. 164
EXPERTS ................................................................... 165
LEGAL MATTERS ............................................................. 165
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<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"). With its 70,000 square foot casino, first-class guest rooms
and other luxury amenities, Trump's Castle has been awarded a "Four Star" Mobil
Travel Guide rating in each of the last three years. Management believes that
the "Four Star" rating reflects the high quality amenities and services that
Trump's Castle provides to its casino patrons and hotel guests.
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.
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,
- 7 -
<PAGE>
all of which are designed to provide the gaming patron with a more comfortable
gaming experience. Presently, Trump's Castle is undertaking a 3,000 square foot
expansion to accommodate the addition of simulcast race-track wagering and Keno
games. 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.
For the year ended December 31, 1993 gross operating profit at Trump's
Castle increased by approximately $9.5 million to $47 million based on $305
million of gross revenue from $37.5 million based on $289 million of gross
revenue in 1992. The significant improvement in operating margins is largely due
to marketing efforts focused on more profitable business segments. The EBITDA of
Trump's Castle for 1993 was $45.2 million, representing an increase of $10.9
million or 31.8%, from EBITDA in 1992. See "BUSINESS --Marketing Strategy."
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<PAGE>
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
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
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<PAGE>
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:
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
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<PAGE>
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
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."
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<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, and (v) the
consent of the Casino Control Commission (the
"CCC"). 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"
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<PAGE>
and "--Comparison of Series A Notes and Series B
Notes."
Expiration Date............ 11:00 a.m. Minneapolis-St. Paul time, on ________
__, 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."
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.
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.
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<PAGE>
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."
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
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<PAGE>
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 any payment default on 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."
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<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, 1992
and for the nine months ended September 30, 1992 and 1993. The financial
information of the Partnership and Funding as of December 31, 1988, 1989, 1990,
1991 and 1992 and for the years then ended set forth below has been derived from
the audited consolidated financial statements of the Partnership and Funding.
The financial information as of September 30, 1992 and 1993 and for each of the
nine months ended September 30, 1992 and 1993 for the Partnership and Funding
has been derived from the unaudited consolidated financial statements of the
Partnership and Funding included elsewhere in this Prospectus. 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>
<CAPTION>
Nine Months Ended
Year Ended December 31, September 30,
------------------------------------------------------- -------------------
1988 1989 1990 1991 1992 1992 1993
------ ------ ------ ------ ------ ------ ------
(dollars in thousands, except gaming data)
<S> <C> <C> <C> <C> <C> <C> <C>
Statements of Operations Data:
Net revenues........................... $278,229 $294,731 $268,832 $220,086 $268,650 $204,821 $207,749
Depreciation and amortization.......... 19,973 17,564 20,658 21,414 19,802 15,218 12,866
Income (loss) from operations.......... 36,042 34,424 1,249 (2,360) 8,027 7,155 21,999
Net interest expense................... (39,506) (41,588) (47,866) (47,839) (44,861) (33,928) (34,781)
Loss before extraordinary gain......... (3,118) (6,678) (43,481) (50,199) (36,834) (26,773) (12,782)
Balance Sheet Data (at end of period):
Total assets........................... 396,890 439,775 408,276 391,303 379,641 380,071 376,638
Total long-term debt, net of current
maturities........................... 323,703 335,144 --(a) --(a) 279,445 277,115 296,924
Preferred partnership interest......... N/A N/A N/A N/A 15,000 15,000 15,000
Total capital (deficit)................ 28,205 30,274 (13,207) (63,406) 60,799 71,032 47,507
Financial Ratios and Other Data:
EBITDA (b)............................. 57,007 53,052 22,020 23,690 34,330 29,657 35,684
Capital expenditures................... 60,419 50,129 12,614 5,117 8,574 6,296 10,217
Ratio of earnings to fixed
charges (c).......................... --(d) --(d) --(d) --(d) --(d) --(d) --(d)
Ratio of EBITDA to net interest
expense.............................. 1.44 1.28 .46 .50 .77 .87 1.03
Gaming Data (dollars in millions):(e)
Table Games:
Total Atlantic City table drop (f)..... $ 7,657 $ 7,664 $ 7,903 $ 7,219 $ 7,055 $ 5,416 $ 5,200
Atlantic City table drop growth........ 6.8% 0.1% 3.1% -8.7% -2.3% -2.2% -4.0%
Atlantic City table hold
percentage (g)....................... 16.2% 16.0% 15.5% 15.8% 15.6% 15.7% 15.7%
Trump's Castle table drop (f).......... $ 761 $ 746 $ 665 $ 441 $ 504 $ 389 $ 371
Trump's Castle table hold
percentage (g)....................... 15.4% 15.8% 14.8% 15.3% 15.4% 15.3% 14.4%
Trump's Castle table games
market share (h)..................... 9.4% 9.6% 8.0% 5.9% 7.1% 7.0% 6.6%
Trump's Castle table games
fair share (i)....................... 8.6% 8.7% 8.0% 7.6% 7.6% 7.5% 7.8%
Trump's Castle table games
efficiency (j)....................... 109.3% 110.3% 100.0% 77.6% 93.4% 93.3% 84.6%
Slots:
Total Atlantic City slot revenue....... $ 1,494 $ 1,577 $ 1,724 $ 1,851 $ 2,114 $ 1,628 $ 1,709
Atlantic City slot revenue
growth............................... 12.6% 5.6% 9.3% 7.4% 14.2% 14.5% 5.0%
Trump's Castle slot revenue (k)........ $ 129 $ 147 $ 136 $ 129 $ 163 $ 123 $ 132
Trump's Castle slot market
share(i)............................. 8.7% 9.3% 7.9% 7.0% 7.7% 7.6% 7.7%
Trump's Castle slot fair share (l)..... 8.8% 9.0% 8.0% 7.6% 7.7% 7.7% 8.1%
Trump's Castle slot
efficiency (j)....................... 98.9% 103.3% 98.8% 92.1% 100.0% 98.7% 95.1%
</TABLE>
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<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, 1988, 1989, 1990, 1991 and
1992 by $3,957, $9,894, $43,481, $50,199 and $36,834, respectively and for
the nine months ended September 30, 1992 and 1993 by $26,773 and $12,782,
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.
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<PAGE>
OWNERSHIP STRUCTURE OF THE PARTNERSHIP
AND RELATED ENTITIES
{DIAGRAM OF STRUCTURE}
- 19 -
<PAGE>
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
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<PAGE>
Partnership Note, the Partnership Note and the Subordinated Partnership Note
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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<PAGE>
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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<PAGE>
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 $43.5 million, $50.2 million and $36.8
million (before an extraordinary gain of $128.2 million) for the years ended
December 31, 1990, 1991 and 1992, respectively, and a net loss of $12.8 million
for the nine months ended September 30, 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
addition, on a pro forma basis, the Partnership's earnings before income taxes
and fixed charges would have been insufficient to cover its fixed charges for
the year ended December 31, 1992 and for the nine months ended September 30,
1993. See "UNAUDITED PRO FORMA 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
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<PAGE>
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 for the first nine months of 1993 are
attributable, in part, to the success of its new business strategy. See
"BUSINESS -- Marketing Strategy." Continued 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
Trump's Castle competes primarily with other casinos located in Atlantic
City, New Jersey, and also would compete with any 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, casinos located in
Connecticut, Nevada, New Orleans, Mississippi, 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.
Competition in the Atlantic City casino hotel market is intense. 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, although the Partnership is not aware of any
present plans by third parties to develop such sites.
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. Gaming revenues are expected to
increase by 2.6% for 1993, compared to 1992.
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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
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%. In 1992, however, the Atlantic City
casino industry experienced an increase of 6.9% in gaming revenues per square
foot from 1991. Gaming revenues per square foot are expected to increase by .5%
for 1993, compared to 1992. See "BUSINESS -- Atlantic City Market."
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.
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
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
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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. See "BUSINESS -- Legal Proceedings -- Indian Gaming Regulatory
Act Suit."
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
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. 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,
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particularly if casino gaming were permitted in jurisdictions near or in New
Jersey or other states in the Northeast. Currently, casino gaming, other than
Native American gaming, is not allowed in other areas of New Jersey or in New
York or 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 and Keno. 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
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
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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 will also be 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.
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."
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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
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
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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."
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
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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
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
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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
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. There may also be difficulties
presented in collecting from such players.
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 Trump Taj Mahal Associates, 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
addition, in connection with a prepayment of the mortgage bonds issued by a TTMA
affiliate, Trump could increase his beneficial ownership of TTMA to up to 80%.
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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 which was entered into between the Partnership and TC/GP upon
consummation of the Recapitalization 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
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.
See "CERTAIN TRANSACTIONS."
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.
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
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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."
Although he has no obligation to contribute funds to the Partnership,
management 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. 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 restructuring, 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
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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
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. 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 with a non-affiliated third party
holding an equity interest in the property. 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 or do not become
effective, Trump's interest in such property could be subject to foreclosure
(which could occur at any time) resulting in defaults under various 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
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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
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 the restructuring agreements referred to above
become effective and no events which terminate the "forbearance agreements"
described above occur, the aggregate amount of remaining personal indebtedness
to financial institutions will be approximately $235 million or if the New York
hotel restructuring agreements referred to above do not become effective, $340
million (plus accrued interest). No assurance can be given that such
restructuring agreements will become effective 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 Partnership that he is actively pursuing all
reasonable means of providing for the repayment or rescheduling of such
indebtedness.
There can be no assurance that Trump will be successful in repaying or
rescheduling his indebtedness or that his assets will appreciate sufficiently to
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provide a source of repayment for such 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 on the 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."
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."
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<PAGE>
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 CCC will determine the qualification of specific security holders,
including Institutional Investors subsequent to consummation of the Exchange
Offer. There can be no assurance that the CCC will grant the requested waivers.
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
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 indefinitely suspended, 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
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<PAGE>
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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<PAGE>
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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<PAGE>
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, 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.
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 the 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" shall mean 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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<PAGE>
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 were ___ registered holders
of the Series A Notes. Solely for reasons of administration (and for no other
purpose), Funding has fixed the close of business on ____________, 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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<PAGE>
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.
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
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
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<PAGE>
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
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
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<PAGE>
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, the Information Agent 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
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
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<PAGE>
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
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
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<PAGE>
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
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
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<PAGE>
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;
(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
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<PAGE>
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 and Information Agent
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.
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.
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<PAGE>
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.
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CAPITALIZATION OF REGISTRANTS
The following table sets forth the capitalization of the Partnership and
Funding as of September 30, 1993, which is prior to the consummation of the
Recapitalization, and 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
September 30, 1993 December 31, 1993
Debt: (unaudited) (unaudited)
(dollars in (dollars in
thousands) thousands)
---------- ----------
9-1/2% Mortgage Bonds due
1998, net .............................. $ 251,924(a) $ -
11-3/4% Mortgage Notes due 2003 .......... - 202,552(b)
Increasing Rate Subordinated
Pay-in-Kind Notes due 2005 ............. - 42,242(c)
Midlantic Term Loan ...................... 38,000 38,000
Midlantic Grid Note ...................... 7,000 -
11-1/2% Senior Notes ..................... - 27,000
---------- ----------
Total Debt ...................... 296,924 309,794
Total Capital ............................ 47,507 31,678
---------- ----------
Total Capitalization ............ $ 344,431 $ 341,472
========== ==========
- ---------
(a) Net of unamortized discount of $83,986 as of September 30, 1993.
(b) Net of unamortized discounts of $39,589, based on 96% exchange, as of
December 31, 1993.
(c) Net of unamortized discounts of $8,256, based on 96% exchange, as of
December 31, 1993.
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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, 1992 and
for the nine months ended September 30, 1992 and 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. The financial
information as of September 30, 1992 and 1993, and for each of the nine months
then ended, has been derived from the unaudited consolidated financial
statements of the Partnership and Funding, which in the opinion of management
reflect all adjustments necessary to present fairly the financial position and
results of operation for those periods. Interim results are not necessarily
indicative of full year performance. 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."
- 52 -
<PAGE>
HISTORICAL FINANCIAL INFORMATION
OF TRUMP'S CASTLE ASSOCIATES AND
TRUMP'S CASTLE FUNDING, INC.
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended December 31, September 30,
----------------------------------------------------- ---------------------
1988 1989 1990 1991 1992 1992 1993
-------- -------- --------- -------- -------- -------- --------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues:
Gaming ........................... $248,022 $264,358 $233,597 $194,760 $242,008 $184,409 $186,773
Other ............................ 63,202 74,150 68,626 53,208 57,298 44,328 45,468
-------- -------- --------- -------- -------- -------- --------
Gross revenues ................... 311,224 338,508 302,223 247,968 299,306 228,737 232,241
Promotional allowances ........... 32,995 43,777 33,391 27,882 30,656 23,916 24,492
-------- -------- --------- -------- -------- -------- --------
Net revenues ..................... 278,229 294,731 268,832 220,086 268,650 204,821 207,749
Cost and Expenses:
Gaming ........................... 120,604 131,224 159,585 119,719 149,376 111,928 111,945
Other ............................ 53,424 59,936 39,004 30,477 32,523 24,098 23,199
General and Administrative ....... 48,186 51,583 48,336 46,337 52,939 40,439 37,740
Depreciation and amortization .... 19,973 17,564 20,658 21,414 19,802 15,218 12,866
Restructuring costs .............. - - - 4,499 5,983 5,983 -
-------- -------- --------- -------- -------- -------- --------
Income (loss) from operations .... 36,042 34,424 1,249 (2,360) 8,027 7,155 21,999
-------- -------- --------- -------- -------- -------- --------
Net interest expense ................ (39,506) (41,588) (47,866) (47,839) (44,861) (33,928) (34,781)
Extraordinary gain (a) .............. - - - - 128,187 128,187 -
Net income (loss) ................... (3,118) (6,678) (43,481) (50,199) 91,353 101,414 (12,782)
Balance Sheet Data (at end of period):
Cash and cash equivalents ........... $ 19,715 $ 14,600 $ 8,046 $ 14,972 $ 23,610 $ 19,555 $ 21,250
Property and equipment-net .......... 340,373 373,780 366,540 351,177 340,383 342,690 337,734
Total assets ........................ 396,890 439,775 408,276 391,303 379,641 380,071 376,638
Total long-term debt (b) ............ 323,703 335,144 - - 279,445 277,115 296,924
Preferred partnership interest (c) .. - - - - 15,000 15,000 15,000
Total capital (deficit) (c) ......... 28,205 30,274 (13,207) (63,406) 60,799 71,032 47,507
<FN>
- -----------
(a) The extraordinary gain of $128,187 for the nine months ended September 30,
1992 and the year ended December 31, 1992 reflects a $96,896 accounting
adjustment to carry the Bonds at fair market value based on current rates
of interest at the date of issuance, an $18,000 forgiveness of bank
borrowings, $22,805 representing discharge of accrued interest and net of
the write-off of $9,514 of unamortized Bond issuance costs.
(b) Long-term debt of $337,649 and $340,553 as of December 31, 1990 and 1991
had been classified as a current liability.
(c) Represents the Trump Priority Interest that was issued in exchange for the
cancellation of certain indebtedness. The amount is also included in total
capital as of December 31, 1992 and September 30, 1992 and 1993.
</FN>
</TABLE>
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<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 Nine Month Periods Ended
September 30, 1993 and 1992
Net revenues for the nine month periods ended September 30, 1993 and 1992
totaled approximately $207.7 million and $204.8 million respectively,
representing a $2.9 million (1.4%) increase. Gaming revenues were approximately
$186.8 million for the nine months ended September 30, 1993 and $184.4 million
for the comparable period in 1992, representing a $2.4 million (1.3%) increase.
Management believes the $2.4 million (1.3%) increase in gaming revenues is
attributable primarily to a continuing emphasis on customer service and a
repositioning by the Partnership to expand profitable market segments.
Gaming revenue is comprised of table game win and slot machine win. For the
nine months ended September 30, 1993 and 1992 slot win approximated $132.1
million and $125.0 million respectively. Dollars wagered on slot machines
totaled approximately $1,410.4 million and $1,276.3 million for the nine months
ended September 30, 1993 and 1992, respectively, with a win percentage of 9.4%
in 1993 and 9.8% in 1992, respectively. The lower slot win percentage of 9.4%
was largely intentional and designed by the Partnership in order to remain
competitive and stimulate patron play. Slot machine wagerings increased 10.5%
and slot machine revenue increased 5.7% for the nine months ended September 30,
1993 over the comparable period in 1992. For the nine months ended September 30,
1993 and 1992, table game win approximated $54.7 million and $59.4 million
respectively. During these periods, dollars wagered on table games totaled
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<PAGE>
approximately $370.8 million with a win percentage of 14.4% in 1993 and $389.1
million with a win percentage of 15.3% in 1992.
Nongaming revenues increased approximately $1.1 million from $44.3 million
for the nine months ended September 30, 1992, to $45.5 million for the
comparable period in 1993. This improvement was attributable primarily to an
increase in rooms revenue of $1.6 million (11.8%) partially offset by a decline
in food and beverage revenues of $0.8 million (-3.1%). Room occupancy was 89.0%
and 86.8% and the average rate was approximately $82 and $79 for the nine months
ended September 30, 1993 and 1992, respectively. Other revenues increased $0.3
million (4.4%) for the nine month period ended September 30, 1993 over the
comparable period in 1992, due primarily to a shift in marketing emphasis toward
patrons with an above average spending profile. Offsetting the improvement in
nongaming revenues during these periods was an increase in promotional
allowances of $0.6 million related to the increase in gaming revenues.
Promotional allowances as a percentage of gaming revenues increased to 13.1% for
the nine months ended September 30, 1993 from 13.0% for the comparable period in
1992.
Gaming expenses remained virtually unchanged for the nine month period
ended September 30, 1993 over the comparable period in 1992. During these
periods, other operating expenses including Rooms, Food & Beverage and General &
Administrative decreased $2.2 million (-3.6%). These decreases were related to
previously established cost containment policies.
For the nine month period ended September 30, 1993 depreciation and
amortization decreased $2.4 million (-15.5%) 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.
Restructuring costs were not incurred for the first nine months of 1993
compared to costs of $6.0 million for the same period in 1992 due to the
Company's Restructuring which was completed on May 29, 1992.
Income from operations improved $13.5 million (or $7.5 million excluding
restructuring costs) as a result of increased revenues, previously implemented
cost containment measures and a continued emphasis on customer service for the
nine month period ended September 30, 1993 as compared to the same period in
1992.
The Partnership experienced a net loss of $12.8 million for the nine months
ended September 30, 1993 and a profit of $101.4 million, primarily as a result
of the Restructuring during the comparable period in 1992.
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<PAGE>
Results of Operations for the Years Ended December 31, 1992 and 1991
Net revenues (gross revenues, less promotional expenses) for the twelve
months 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 twelve months ended December 31, 1992 and 1991, table game win
(i.e., revenues from table games) approximated $77.7 million and $67.6 million
and slot win (i.e., revenues from slot machines) 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 $7.6 million, net of allowances for
doubtful gaming receivables of approximately $2.7 million.
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
low level gaming patrons to upscale patrons with higher gaming budgets.
Offsetting the nongaming revenue increase was an increase in promotional
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<PAGE>
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 expenses increased for the twelve month period 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 twelve
months 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 financial restructuring, of $128.2
million offset by litigation expense of $1.4 million.
Results of Operations for the Years Ended December 31, 1991
and 1990
Net revenues for the twelve month periods ended December 31, 1991 and 1990
totalled approximately $220.1 million and $268.8 million, respectively. Gaming
revenues were approximately $194.8 million and $233.6 million in 1991 and 1990,
respectively. Management believes the decline in gaming revenues was
attributable to a continuing competitive market in Atlantic City and a
repositioning by the Partnership to eliminate unprofitable market segments.
For the twelve months ended December 31, 1991 and 1990, table game win
approximated $67.6 and $98.3 million and slot win approximated $127.2 million
and $135.3 million, respectively. During these periods, dollars wagered on table
games totalled approximately $441.2 million with a win percentage of 15.3% in
1991 and $665.2 million with a win percentage of 14.8% in 1990. Dollars wagered
on slot machines totalled approximately $1,278.9 million and $1,268.3 million in
1991 and 1990 with a win percentage in 1991 of 9.9% and in 1990 of 10.7%. The
lower slot win percentage in 1991 was designed to remain competitive and
stimulate patron play. Slot machine wagerings increased 0.8% for the twelve
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<PAGE>
months ended December 31, 1991 over the comparable period in 1990 while slot
machine revenue decreased 6.0%.
Nongaming revenues declined approximately $15.4 million from $68.6 million
in 1990 to $53.2 million in 1991. This decline was attributable primarily to
rooms (24.1%) and food and beverage (21.9%). Room occupancy was 85.3% and 84.5%
and the average rate was approximately $77 and $102 for the twelve months ended
December 31, 1991 and 1990, respectively. The average rate reduction occurred
primarily from repricing casino room promotional allowances to competitive
levels in the Atlantic City market. Food and beverage revenues declined as the
marketing emphasis was shifted from attracting large numbers of low level gaming
patrons to upscale patrons with higher gaming budgets. Offsetting the nongaming
revenue decline was a decrease in promotional allowances of $5.5 million.
Promotional allowances as a percentage of gaming revenues remained constant at
14.3% from 1990 to 1991.
Gaming expenses declined for the twelve month period ended December 31,
1991 by $39.7 million (25.0%) and all other operating expenses including rooms,
food & beverage, general & administrative and other declined $9.8 million
(9.1%). These reductions reflect the results of several 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 increased $0.8 million (3.7%) due primarily
to a reconfiguration of the casino floor and the purchase of new slot machines.
Income from operations declined $3.6 million primarily as a result of
incurring $4.5 million of professional fees related to the debt restructuring
for the twelve month period ended December 31, 1991. Excluding these
nonrecurring restructuring costs, income from operations would have increased
$0.9 million from $1.2 million for the twelve months ended December 31, 1990 to
$2.1 million for the twelve months ended December 31, 1991.
The Partnership incurred a net loss of $50.2 million for the twelve months
ended December 31, 1991 and $43.5 million for the comparable period in 1990.
Inflation
There was no significant impact on the Partnership's operations as a result
of inflation during 1992, 1991, and 1990.
- 58 -
<PAGE>
Liquidity and Capital Resources
Cash flow from operating activities is the Partnership's principal source
of liquidity to meet debt service obligations, capital expenditure programs and
operating liquidity. For the nine months ended September 30, 1993, the
Partnership's net cash flow provided by operating activities before cash debt
service obligations was $36.1 million, cash debt service was $25.5 million,
resulting in net cash provided by operating activities of $10.6 million. For the
nine months ended September 30, 1992, the Partnership's net cash flow provided
by operating activities before cash debt service obligations was $18.4 million,
cash debt service was $7.2 million, resulting in net cash provided by operating
activities of $11.2 million. Cash and cash equivalents of $21.2 million at
September 30, 1993 reflects a reduction of $2.4 million from $23.6 million at
December 31, 1992. For the year ended December 31, 1992, net cash provided by
operating activities before cash debt service obligations was $27.6 million,
cash debt service was $8.2 million, resulting in net cash provided by operating
activities of $19.4 million which resulted in an overall increase of $8.6
million in cash and cash equivalents from December 31, 1991. For the year ended
December 31, 1991, net cash provided by operating activities before cash debt
service obligations was $20.4 million, cash debt service was $7.9 million,
resulting in net cash provided by operating activities of $12.5 million, which
resulted in an increase of $7.0 million in cash and cash equivalents from
December 31, 1990. The increase of $6.9 million in net cash provided by
operating activities in 1992 reflects primarily improved operating performance.
Net cash provided by (used in) operating activities for the years ended 1992,
1991 and 1990 was $19.4 million, $12.5 million and ($6.5) million, respectively.
The lower cash debt service in 1991 and 1992 reflects the Partnership's
liquidity problems at such time, as a result of which it failed to make certain
cash interest payments. See "BUSINESS -- The Restructuring".
Upon consummation of the Recapitalization, 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 operations in the foreseeable future and that no additional external
financing beyond that included in the Recapitalization is anticipated.
The effect of the Recapitalization on the Partnership's capital structure
has been to increase the Partnership's weighted average cost of debt capital
from approximately 9.43% to approximately 11.74%.
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<PAGE>
Pre-Recapitalization Weighted Average Cost of Debt Capital
Principal
Amount Rate
------------- ----
Midlantic Term Loan................... $ 38,000,000 9.00%
Bonds................................. 335,910,000 9.50%
Midlantic Grid Note................... 7,000,000 8.50%
-----
Weighted Average Cost of
Debt Capital........................ 9.43%
Post-Recapitalization Weighted Average Cost of Debt Capital
Principal
Amount Rate
------------- ----
Midlantic Term Loan................... $ 38,000,000 9.00%
Senior Notes.......................... 27,000,000 11.50%
Mortgage Notes........................ 242,141,000 11.75%
PIK Notes............................. 50,499,000 13.875%
------
Weighted Average Cost of
Debt Capital........................ 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 $358 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
would require approximately $31.4 million in 1994 and $36.1 million in 1995, in
operating cash flow to meet its debt service obligation, as opposed to $33.6
million in 1994 and $38.1 million in 1995 in the absence of the
Recapitalization. If necessary, the Partnership may seek to obtain a Working
Capital Facility to fund any shortfall in cash available to meet debt service
obligations.
Capital expenditures of $10.2 million for the nine months ended September
30, 1993 increased approximately $3.9 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.
Anticipated capital expenditures for 1994 will approximate $8 million and
include the renovation of 250 hotel rooms, the purchase of new slot machines and
related equipment and a 3,000 foot expansion to the casino floor to accommodate
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<PAGE>
the addition of simulcast race-track wagering and Keno games. The expansion will
also increase casino access and casino visibility for hotel patrons. Capital
expenditures for 1992, 1991 and 1990 were $8.6 million, $5.1 million and $12.6
million, respectively. Management believes that the anticipated future level of
capital expenditures will 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 the Senior Notes and the Partnership's other
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."
- 61 -
<PAGE>
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.
- 62 -
<PAGE>
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
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, 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) 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 to (i) fund the redemption of the Bonds not exchanged in the
Recapitalization's Exchange Offer, (ii) repay in full all principal and accrued
interest outstanding under the Midlantic Grid Note, (iii) fund any amounts
judicially awarded in respect of statutory appraisal rights arising out of the
Merger (subject to certain limitations) and (iv) 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.
- 63 -
<PAGE>
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
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
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<PAGE>
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.
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
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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."
Casino Hotel Facilities and Operations
Trump's Castle Casino offers 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 on a 14.7 acre parcel of land with 726 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 will be renovated by
April of 1994. The facility also offers nine restaurants, a 460 seat cabaret
theatre, 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 theatre and
additional recreational amenities.
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 a 3,000 square foot expansion
accommodate the addition of simulcast race track wagering and Keno games. 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.
Trumps's Castle operates a Marina which includes docks containing 600 slips
and a 35,000 square foot two-story building. The building contains a 240 seat
gourmet restaurant, a 60 seat restaurant and lounge, retail space and State
offices. The Marina building is connected to Trump's Castle by an elevated
pedestrian walkway. Trump's Castle also has a nine-story garage providing
on-site parking for approximately 3,000 vehicles; and a helipad which is located
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atop the parking garage making Trump's Castle the only Atlantic City casino with
access by land, sea and air.
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 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
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.
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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 segregated
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
devoted more of its casino floor space to slot machines and has replaced 900 of
its slot machines with newer machines. In the next 6 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
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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-Margret, 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.
Player Development, Casino Hosts and Slot Ambassadors
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
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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
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,
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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 9.6%, 2.6%, 5.2%, 1.3%, 7.5% and
2.6% during 1988, 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
approximately 12 miles from Atlantic City) to handle large airline carriers and
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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
The casino hotel area of 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.
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
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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
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. The Partnership believes that its
relationships with its employees are satisfactory.
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
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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 and also would compete with any 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, casinos located in
Nevada, Connecticut, New Orleans, Mississippi, 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. To the extent that legalized gaming becomes
more prevalent in New Jersey or other nearby jurisdictions, competition would
intensify. See "RISK FACTORS -- Competition and Industry Rate of Growth" and
"BUSINESS -- Legal Proceedings."
Legal Proceedings
The Partnership, its partners, certain members of the former Executive
Committee, Funding, and certain of their employees are involved in various legal
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. If
adversely decided, these legal proceedings could have a material adverse effect
on the Partnership's results of operations and financial condition.
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
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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 in the Memorandum of Understanding. 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 Old Bonds 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 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.
Indian Gaming Regulatory Act Suit. On April 30, 1993, Trump, the
Partnership and the partnerships that own the Other Trump Casinos (collectively,
the "plaintiffs") filed a suit in the United States District Court for the
District of New Jersey against the Secretary of the Interior and the Chairman of
the National Indian Gaming Commission in their official capacities seeking a
permanent injunction against the enforcement of certain provisions of IGRA
insofar as they require a state to enter into tribal-state gambling compacts
with Native American tribes authorizing the creation and operation of gambling
enterprises on any tribal lands within a state, even if it is contrary to the
state's wishes. The plaintiffs are also seeking a declaration that IGRA is
unconstitutional insofar as it interferes with state sovereignty in violation of
the Tenth Amendment of the U.S. Constitution.
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In the proceeding, the plaintiffs contend that Native American gaming is
free from any meaningful control or regulation either by the states or the
federal government. Thus, the ability of duly state licensed gaming enterprises,
such as those owned and operated by plaintiffs, to compete fairly and
effectively in lawful markets and to generate substantial employment and state
tax revenues is being undermined. The plaintiffs state that IGRA, by creating
what is essentially an untaxed, unregulated gaming industry which will compete
directly with plaintiffs, who are heavily taxed and highly regulated, has caused
plaintiffs substantial economic injury and threatens further such injury.
IGRA mandates that the states enter into compacts authorizing the creation
and operation of gaming enterprises with any group deemed to constitute a
recognized Native American tribe. The plaintiffs contend that the states are,
therefore, compelled, by means of IGRA, to effectuate a federal program for
which the United States is assuming no financial regulatory or enforcement
responsibilities. The plaintiffs argue that this is a violation of the Tenth
Amendment.
If the gaming activities called for under existing compacts in Connecticut
and New York are permitted, the plaintiffs state that they would also adversely
affect the economic interests of plaintiffs, and such adverse effects could be
material. In New Jersey, a group 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 negotiate a gaming
compact with the State of New Jersey under IGRA. On December 3, 1993, however,
the U.S. Department of the Interior proposed that such Federal recognition of
the Ramapough Indians be denied.
The IGRA litigation is in the preliminary stages. The Government filed a
motion to dismiss, which was denied on January 10, 1994. The Partnership is
unable to predict the ultimate outcome of the litigation. See "RISK FACTORS --
Competition and Industry Rate of Growth" and "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."
Other Litigation. Various legal proceedings are now pending against the
Partnership. The Partnership considers all such proceedings to be ordinary
litigation incident to the character of its business. 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.
At this juncture in the actions described above, the prospects of a
favorable outcome with respect to the Partnership and Funding cannot be
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assessed. The Partnership and Funding intend to vigorously contest the
allegations made against them. If adversely decided, the proceedings could have
a material adverse effect on the combined financial condition and results of
operations of the Partnership and Funding.
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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 Donald
J. Trump 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. On
December 15, 1993, the CCC approved the Recapitalization and the Exchange Offer.
See "Casino License."
Casino Licensee
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
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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 "REGULATORY MATTERS
- --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
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.
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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
"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
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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
reviewed 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
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
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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" below) and has executed a trust agreement pursuant to such
an application.
Each Institutional Investor seeking a waiver of qualification must execute
a certification as described above.
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. Each of
Funding and the Partnership is 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 prior to 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, 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
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experience; and (4) interim operation will best serve the interests of the
public.
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 currently has a sufficient
number of sleeping units so that it will not be required to add any additional
such units in connection with its 3,000 square foot expansion to accomodate the
addition of simulcast race track wagering and Keno games.
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.
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Gross Revenue Tax
Each casino licensee is also required to pay an annual tax of 8% on its
gross casino revenues. For the years ended December 31, 1992 and 1993, the
Partnership's gross revenue tax was approximately $19 million and $19.7 million,
respectively, and its 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 the 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 shall 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 shall determine the
amount each casino licensee shall 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
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licensee, $1.50 will 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
and (ii) the funding of 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 register 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.
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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.
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 close 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 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 United States Department of the Treasury
has recently adopted regulations requiring additional disclosures of
transactions in excess of $3,000, which regulations are scheduled to become
effective on March 1, 1994. 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.
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As the result of an audit conducted by the United States Department of the
Treasury, Office of Financial Enforcement, 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 $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 -- Conflicts of Interest."
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 Thomas P. Venier 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
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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
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 the sole 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; member of the executive committee of
TTMA from April 1991 to October 1991; and 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 member of the board of directors of the managing general
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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
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 Theatre
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
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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
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 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.
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<PAGE>
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 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. See "BUSINESS -- The
Restructuring." 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
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, 1992, 1991 and 1990 to the Chief Executive Officer and
each of the four most highly compensated executive officers of the Partnership
whose cash compensation, including bonuses and deferred compensation, exceeded
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$100,000 for the year ended December 31, 1992. Executive Officers of Funding do
not receive any additional compensation for serving in such capacity.
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.
<TABLE>
<CAPTION>
Name and Other All Other
Principal Position Year Salary Bonus Compensation (1) Compensation (2)
- ------------------ ---- ------ ----- ---------------- ----------------
<S> <C> <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
Nicholas Niglio, 1993 $ 45,192 $100,000 -- --
Executive Vice 1992 -- -- -- --
President 1991 -- -- -- --
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
Robert M. Pickus, 1993 $148,553 $ 21,300 -- $3,774
Senior Vice President-- 1992 144,875 12,500 -- 3,117
General Counsel 1991 134,310 -- -- 2,678
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 -- --
- ---------------
<FN>
(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.
</FN>
</TABLE>
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<PAGE>
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.
The Partnership has an employment agreement with Nicholas Niglio, who
serves as Executive Vice President. The agreement, which expires on December 31,
1996 provides for an annual salary of $250,000, which is subject to review, and
an annual bonus of $100,000. In addition, upon the commencement of his
employment with the Partnership, Mr. Niglio received $100,000 as compensation
for the loss of stock rights from his previous employer.
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<PAGE>
The Partnership has an employment agreement with Robert E. Schaffhauser,
who serves as Senior Vice President of Finance. The agreement, which expires on
January 4, 1995, provides for an annual salary of $180,000 and a discretionary
bonus.
Pursuant to an employment agreement dated November 2, 1992, Patrick R.
Dennehy serves as Executive Vice President of Operations of the Partnership. The
agreement, which expires on June 1, 1996, provides for an annual salary of
$200,000, which is subject to review and a signing bonus of $50,000.
Pursuant to an employment agreement dated January 31, 1992, as amended on
March 19, 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
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.
The Partnership has an employment agreement dated December 20, 1993, with
Patricia M. Wild, who serves as Senior Vice President and General Counsel. The
agreement provides, for an annual salary of $115,000 and a discretionary bonus.
As of December 13, 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
twelve (12) months.
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 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.
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<PAGE>
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
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.
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<PAGE>
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 Notes, 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
Donald J. Trump and his Affiliates as of December 31, 1992. For a more detailed
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<PAGE>
description of the Partnership's transactions with Donald J. Trump and his
Affiliates, see "-- Other Transactions with Affiliates" below.
Amount Due and Outstanding
to the Partnership
as of December 31, 1993
--------------------------
Trump Plaza Associates................................ $338,000
Trump Taj Mahal Associates............................ 112,000
The Trump Organization................................ 225,000
Total Due from Affiliates
as of December 31, 1992.......................... $675,000
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. ("Plaza Hotel"), the partnership which operates The Plaza Hotel
in New York City, and The Trump Organization. TPA, Plaza Hotel, 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 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.
During 1991, the Partnership incurred expenses of approximately $0.9
million in corporate salaries, $1.3 million in fleet maintenance/limousine
services and $0.7 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.
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<PAGE>
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.
Winton Associates, Inc. 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 to assist it in representing Putnam, and
paid Prudential one-half of the fees described above and to reimburse 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 intends
to pay a $1.5 million cash bonus to Trump upon approval thereof by the CCC.
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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<PAGE>
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."
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<PAGE>
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
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 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 will be 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 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
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<PAGE>
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."
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.
In addition, 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
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<PAGE>
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
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)
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<PAGE>
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
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
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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
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
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(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
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
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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 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
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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 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;
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(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
"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
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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
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.
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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)
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
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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)
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
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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
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
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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.
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
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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";
(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)
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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
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
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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
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)
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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
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
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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
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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)
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)
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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
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
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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
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":
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(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
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
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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
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
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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)
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.
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
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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 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
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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
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.
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"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).
"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
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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.
"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.
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"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.
"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
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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.
"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
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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.
"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
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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.
"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
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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;
(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
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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.
"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
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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
(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
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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.
"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.
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"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.
"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.
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"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.
"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.
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"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)
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making open market purchases of such securities, (v) restrict the ability of the
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.
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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
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.
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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
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
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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:
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.
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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).
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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
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.
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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 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
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"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."
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).
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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
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
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"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
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
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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, among
others, 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.
(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.
- 156 -
<PAGE>
(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.
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,
- 157 -
<PAGE>
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
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
- 158 -
<PAGE>
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.
- 159 -
<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,
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,
- 160 -
<PAGE>
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).
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.
- 161 -
<PAGE>
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
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
- 162 -
<PAGE>
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.
- 163 -
<PAGE>
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
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.
- 164 -
<PAGE>
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.
- 165 -
<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 Street
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>
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
Report of Independent Public Accountants on the Financial Statements of
Trump's Castle Associates and subsidiary.............................................................. F- 1
Consolidated Balance Sheets of Trump's Castle Associates and subsidiary as of
December 31, 1991 and 1992............................................................................ F- 2
Consolidated Statements of Operations of Trump's Castle Associates and subsidiary
for the years ended December 31, 1990, 1991 and 1992.................................................. F- 3
Consolidated Statements of Capital (Deficit) of Trump's Castle Associates and subsidiary
for the years ended December 31, 1990, 1991 and 1992.................................................. F- 4
Consolidated Statements of Cash Flows for Trump's Castle Associates and subsidiary
for the years ended December 31, 1990, 1991 and 1992.................................................. F- 5
Notes to consolidated financial statements of Trump's Castle Associates and subsidiary................... F- 7
Consolidated Balance Sheets of Trump's Castle Associates and subsidiary as of
December 31, 1992 and September 30, 1993 (unaudited).................................................. F-14
Consolidated Statements of Operations of Trump's Castle Associates and subsidiary
for the three and nine months ended September 30, 1992 and 1993 (unaudited)........................... F-15
Consolidated Statements of Changes in Capital of Trump's Castle Associates and subsidiary
for the nine months ended September 30, 1993 (unaudited).............................................. F-16
Consolidated Statements of Cash Flows for Trump's Castle Associates and subsidiary
for the nine months ended September 30, 1992 and 1993 (unaudited)..................................... F-17
Notes to consolidated financial statements of Trump's Castle Associates and subsidiary................... F-18
</TABLE>
<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,
1991 and 1992, and the related consolidated statements of operations, capital
(deficit) and cash flows for each of the three years in the period ended
December 31, 1992. These consolidated financial statements 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 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, 1991 and 1992, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1992, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN & CO.
Roseland, New Jersey
February 12, 1993
F-1
<PAGE>
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 31, 1991 and 1992
ASSETS
<TABLE>
<CAPTION>
1991 1992
---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents (Note 3)................................ $ 14,972,000 $23,610,000
Trade receivable, less allowance for doubtful accounts of
$3,104,000 and $2,721,000, respectively........................ 6,009,000 4,841,000
Accounts receivable, other........................................ 1,224,000 1,980,000
Due from affiliates, net (Note 6)................................. 563,000 742,000
Inventories (Note 3).............................................. 1,851,000 2,160,000
Prepaid expenses and other current assets......................... 3,749,000 2,929,000
------------ ------------
Total current assets........................................... 28,368,000 36,262,000
------------ ------------
PROPERTY AND EQUIPMENT (Notes 3, 4, and 5):
Land and land improvements........................................ 58,279,000 62,117,000
Buildings and building improvements............................... 320,370,000 321,345,000
Furniture, fixtures and equipment................................. 94,440,000 97,194,000
Construction in progress.......................................... 1,394,000 2,401,000
------------ ------------
474,483,000 483,057,000
Less--Accumulated depreciation.................................... 123,306,000 142,674,000
------------ ------------
351,177,000 340,383,000
------------ ------------
OTHER ASSETS (Note 2):
Deferred bond issuance costs, less accumulated amortization
of $3,815,000 and $0, respectively............................. 9,586,000 --
Other Assets...................................................... 2,172,000 2,996,000
------------ ------------
Total other assets 11,758,000 2,996,000
------------ ------------
Total assets................................................... $391,303,000 $379,641,000
============ ============
LIABILITIES AND CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Short-term borrowings (Notes 2 and 5)............................. $ 13,000,000 $ --
Bank Borrowings (Note 5).......................................... 50,000,000 --
Current maturities of First Mortgage Bonds (Note 4)............... 290,553,000 --
Due to partners (Note 6).......................................... 32,513,000 --
Trade accounts payable............................................ 5,611,000 4,484,000
Accrued payroll................................................... 6,769,000 7,598,000
Accrued interest payable (Note 2)................................. 39,001,000 11,713,000
Other............................................................. 17,262,000 15,602,000
------------ ------------
Total current liabilities...................................... 454,709,000 39,397,000
FIRST MORTGAGE BONDS, due 1998 (Note 4).............................. -- 234,445,000
OTHER LONG-TERM DEBT (Note 5)........................................ -- 45,000,000
------------ ------------
Total liabilities.............................................. 454,709,000 318,842,000
------------ ------------
COMMITMENTS AND CONTINGENCIES (Note 7)
CAPITAL (DEFICIT) (Notes 2 and 6):
Partners' Capital................................................. 40,070,000 73,395,000
Partners' (Deficit)............................................... (103,476,000) (12,596,000)
------------ ------------
Total capital (deficit)........................................ (63,406,000) 60,799,000
------------ ------------
Total liabilities and capital.................................. $391,303,000 $379,641,000
============ ============
</TABLE>
The accompanying notes to consolidated financial statements are an
integral part of these consolidated balance sheets.
Trump's Castle Associates and Subsidiary
F-2
<PAGE>
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1990, 1991 and 1992
<TABLE>
<CAPTION>
1990 1991 1992
---- ---- ----
<S> <C> <C> <C>
Revenues:
Gaming (Note 3)...................................... $233,597,000 $194,760,000 $242,008,000
Rooms................................................ 21,863,000 16,599,000 17,785,000
Food and beverage.................................... 36,241,000 28,307,000 31,361,000
Other................................................ 10,522,000 8,302,000 8,152,000
------------ ------------ ------------
Gross Revenues.................................... 302,223,000 247,968,000 299,306,000
Less-Promotional allowances (Note 3)................. 33,391,000 27,882,000 30,656,000
------------ ------------ ------------
Net Revenues...................................... 268,832,000 220,086,000 268,650,000
------------ ------------ ------------
Costs and Expenses (Notes 2,6, and 7):
Gaming............................................... 159,585,000 119,719,000 149,376,000
Rooms................................................ 3,154,000 3,253,000 3,306,000
Food and beverage.................................... 15,818,000 13,236,000 16,502,000
General and administrative........................... 48,336,000 46,337,000 52,939,000
Depreciation and amortization........................ 20,658,000 21,414,000 19,802,000
Other................................................ 20,032,000 13,988,000 12,715,000
Debt restructuring costs............................. -- 4,499,000 5,983,000
------------ ------------ ------------
267,583,000 222,446,000 260,623,000
------------ ------------ ------------
Income (loss) from operations..................... 1,249,000 (2,360,000) 8,027,000
Interest Income......................................... 893,000 505,000 499,000
Interest Expense........................................ (48,759,000) (48,344,000) (45,360,000)
Gain on Sinking Fund Payment............................ 3,136,000 -- --
------------ ------------ ------------
Loss before extraordinary gain.................... (43,481,000) (50,199,000) (36,834,000)
Extraordinary Gain on Plan
of Reorganization(Note 2)............................ -- -- 128,187,000
------------ ------------ ------------
Net Income (Loss)................................. ($43,481,000) ($50,199,000) $ 91,353,000
============ ============ ============
</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 CAPITAL (DEFICIT)
For the Years Ended December 31, 1990, 1991 and 1992
<TABLE>
<CAPTION>
Partners' Partners'
Capital Deficit Total
--------- --------- -----
<S> <C> <C> <C>
Balance at December 31, 1989............................ $40,070,000 ($9,796,000) $30,274,000
Net loss.......................................... -- (43,481,000) (43,481,000)
----------- ----------- -----------
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 (Notes 2 and 6).................... 33,325,000 -- 33,325,000
Net income........................................ -- 91,353,000 91,353,000
Partnership Distribution (Note 6)....................... -- (473,000) (473,000)
----------- ----------- -----------
Balance at December 31, 1992...................... $73,395,000 ($12,596,000) $60,799,000
=========== =========== ===========
</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, 1990, 1991 and 1992
<TABLE>
<CAPTION>
1990 1991 1992
---- ---- ----
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income (loss).................................... ($43,481,000) ($50,199,000) $ 91,353,000
Adjustments to reconcile net income (loss)
to net cash flows provided by (used in)
operating activities--
Noncash charges--
Extraordinary gain............................. -- -- (128,187,000)
Depreciation and amortization.................. 20,658,000 21,414,000 19,802,000
Accretion of bond discount..................... 2,505,000 2,904,000 6,617,000
Provision for losses on receivables............ 6,267,000 3,387,000 2,290,000
Amortization of CRDA tax credits............... 4,041,000 1,959,000 1,335,000
Valuation allowance of CRDA contributions...... 113,000 137,000 518,000
----------- ----------- -----------
(9,897,000) (20,398,000) (6,272,000)
Increase (decrease) in receivables, net........ (4,000,000) 3,303,000 (2,057,000)
Increase (decrease) in inventories............. 718,000 922,000 (309,000)
Decrease (increase) in other current assets.... (1,818,000) (1,596,000) 302,000
Decrease (increase) in other assets............ 2,221,000 (99,000) 8,689,000
Increase in current liabilities................ 6,268,000 30,322,000 19,028,000
----------- ----------- -----------
Net cash flows provided by (used in)
operating activities................ ($6,508,000) $12,454,000 $ 19,381,000
----------- ----------- -----------
</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
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1990, 1991 and 1992
<TABLE>
<CAPTION>
1990 1991 1992
---- ---- ----
<S> <C> <C> <C>
Cash Flows Used By Investing Activities:
Purchases of property and equipment, net............. ($12,614,000) ($5,117,000) ($8,574,000)
Purchase of CRDA investments......................... (296,000) (411,000) (1,696,000)
Purchase and sinking fund payment
of First Mortgage Bonds, net of
gain of $3,136,000................................ (13,025,000) -- --
----------- ----------- -----------
Net cash flows used in investing activities.... (25,935,000) (5,528,000) (10,270,000)
----------- ----------- -----------
Cash Flows From Financing Activities:
Additional borrowings................................ 27,889,000 -- --
Repayment of borrowings.............................. (2,000,000) -- --
Distributions to TC/GP, INC.......................... -- -- (473,000)
----------- ----------- -----------
Net cash flows provided by (used in)
financing activities........................... 25,889,000 -- (473,000)
----------- ----------- -----------
Net increase (decrease)
in cash and cash equivalents................... (6,554,000) 6,926,000 8,638,000
Cash and cash equivalents
at beginning of year................................... 14,600,000 8,046,000 14,972,000
----------- ----------- -----------
Cash and cash equivalents
at end of year......................................... $ 8,046,000 $14,972,000 $23,610,000
=========== =========== ===========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
F-6
<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.
The current partners and their respective ownership interests are Donald J.
Trump, 49.995%, the Managing General Partner, Trump's Castle Hotel and Casino,
Inc. ("TCHC"), .01% and TC/GP, Inc. ("TC/GP"), 49.995%.
The Company was incorporated on May 28, 1985 solely to serve as a
financing company to raise funds through the issuance of its 13-3/4% First
Mortgage Bonds, Series A-1, due 1997 (the "Series A-1 Bonds"), and 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"), the proceeds of which were loaned to the
Partnership. In return for such proceeds, the Partnership issued a promissory
note (the "Old Partnership Note") to the Company in a principal amount equal to
the aggregate principal amount of the Old Bonds and with similar payment terms.
In addition, the Partnership directly guaranteed the payment of the principal
of, premium, if any, and interest on the Old Bonds (the "Old Guaranty"). On May
29, 1992, the Old Partnership Note and Old Guaranty were discharged, the
Partnership issued a new promissory note (the "Partnership Note") and a new
guaranty (the "Guaranty") and the Old Bonds were exchanged for the Company's
9.50% Mortgage Bonds, due 1998 (the "New Bonds") and shares of common stock of
TC/GP (the "Common Stock") as more fully described in Note 2.
Since the Company has no business operations, its ability to repay the
principal and interest on the New Bonds is completely dependent upon the
operations of the Partnership.
Donald J. Trump beneficially owns 50% of the Partnership and the Company
and has pledged his total ownership interest as collateral under various
personal debt agreements.
(2) PLAN OF REORGANIZATION:
On March 9, 1992, the Company, the Partnership, 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 Old Bonds were exchanged for the New Bonds and the Common Stock (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
resulted in approximately 50% of the beneficial ownership interest in the
Partnership being transferred to the holders of the Old Bonds.
In accordance with AICPA Statement of Position 90-7, "Financial Reporting
by Entities in Reorganization Under the Bankruptcy Code," the New Bonds have
been 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 the New Bonds was determined based on the trading price of the New 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 the New Bonds
of approximately $96,896,000. This gain will be offset by increased interest
costs over the period of the New 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 holds 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 provides
F-7
<PAGE>
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
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 has
the right to appoint four of the seven members of the Board. The remaining
members of the Board are appointed by TC/GP through the holders of its Common
Stock. Upon the occurrence of certain events, as defined, TC/GP has the right to
appoint four members of the Board and Donald J. Trump has the right to appoint
three.
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).
(3) ACCOUNTING POLICIES:
Principles of Consolidation
The consolidated financial statements include the accounts of Trump's
Castle Associates and its wholly-owned subsidiary. All significant intercompany
balances and transactions have been eliminated.
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. Cost of
complimentaries allocated from rooms, food and beverage departments to the
casino department during the years ended December 31, 1990, 1991 and 1992 are as
follows:
1990 1991 1992
----------- ----------- -----------
Rooms..................... $ 4,958,000 $ 4,304,000 $ 5,390,000
Food and Beverage ........ 17,179,000 13,694,000 17,351,000
Other..................... 3,396,000 1,360,000 1,954,000
----------- ----------- -----------
$25,533,000 $19,358,000 $24,695,000
=========== =========== ===========
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 New Jersey Casino Control Act (the "Casino Control Act") and the
regulations promulgated thereunder, the Company and the Partnership 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 for financial report purposes.
F-8
<PAGE>
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
As of December 31, 1992, the Partnership had New Jersey State net
operating losses of approximately $352,000 for financial reporting purposes and
$134, 799,000 for income tax purposes available to offset taxable income through
1998.
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.
Fair value of financial instruments
The carrying amount of the following financial instruments of the Company
and the Partnership 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 Amended
Term Loan and Amended Grid Note based on the recently renegotiated terms.
The estimated fair values of other financial instruments are as follows:
December 31, 1992
-----------------------------------
Carrying Amount Fair Value
--------------- ------------
9.5% Mortgage Bonds............ $234,445,000 $233,945,000
The fair values of the Mortgage Bonds are based on quoted market prices
obtained by the Partnership from its investment advisor.
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:
1990 1991 1992
---- ---- ----
Cash paid during the year for interest
(net of amounts capitalized).......... $42,847,000 $7,902,000 $8,172,000
=========== ========== ==========
In addition, during 1993, the Partnership received a non cash capital
contribution of $33,325,000, representing discharge of related party
indebtedness (Note 2).
Reclassifications
Certain reclassifications were made to the 1990 and 1991 financial
statements to present them on a basis consistent with the 1992 presentation.
(4) MORTGAGE BONDS:
Upon consummation of the Plan on May 29, 1992, each $1,000 principal
amount of the Company'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 the Company's 9.50% New Bonds, together with one share of the Common
Stock of TC/GP and certain other payments. The New Bonds and Common Stock trade
together as a unit (the "Unit") and may not be transferred separately, except
upon the occurrence of certain events.
F-9
<PAGE>
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The New Bonds mature on August 15, 1998 and bear 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 is required to pay interest
in cash to the holders of New 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") is payable to holders of New Bonds in cash
to the extent that Excess Available Cash, as defined, of the Partnership is
available for such purpose and in additional Units to the extent that Excess
Available Cash is less than the Additional Amount, as defined. On August 15,
1992, interest was paid to the holders of New Bonds at the rate of 9.5% from the
Effective Date to August 15, 1992, as follows: The Mandatory Cash Amount of
5.00% was paid in cash and the other 4.5% of the 9.5% due was paid in additional
Units.
As of December 31, 1992, the outstanding principal amount of New Bonds was
$326,056,000. As discussed in Note 2, the carrying amount of these Bonds as
reflected in the accompanying balance sheet has been reduced to reflect the debt
at its net present value as of the date of issuance, adjusted for accretion
through December 31, 1992.
The New Bonds are secured by an assignment of a promissory note of the
Partnership to the Company (the "Partnership Note") in an amount and with
payment terms necessary to service the New Bonds. The Partnership Note is
secured by a mortgage on Trump's Castle and substantially all of the other
assets of the Partnership (the "Mortgage"). The New Bonds are guaranteed as to
payment of principal and interest on a nonrecourse basis by the Partnership and
are secured by a mortgage on the Partnership's real property.
The New Bonds are subject to redemption at any time, in whole, but not in
part, at specified prices. Upon the redemption of the New Bonds, the Common
Stock will cease to trade as a Unit with the New Bonds, and will trade
separately.
(5) BANK BORROWINGS:
In February 1998, 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 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 New
Bonds.
F-10
<PAGE>
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The Amended Grid Note (the "Amended Grid Note") bears interest at 8.5% per
annum for the first three years and will be adjusted to a market rate if the
maturity thereof is extended in accordance with its terms. The outstanding
principal amount of the Amended Grid Note has been reduced to $7,000,000 and the
Amended Grid Note has been converted into a demand note, although Midlantic has
agreed not to demand payment for a period of three years from the Effective Date
so long as no Event of Default has occurred thereunder.
(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 will initially be $15,000,000 and the Partnership
will be required to pay a priority return thereon semi-annually at a rate per
annum of up to 9.50%. The priority return on capital will be paid currently out
of certain cash in excess of the First Tier Sweep Amount, as defined, or under
certain circumstances, the Third Tier Sweep Amount, as defined. To the extent
not paid in full, the Trump Priority Interest will be entitled to a priority
distribution upon dissolution of the Partnership. For the year ended December
31, 1992, no amounts were payable as priority return on capital.
Trump Management Fee
On the Effective Date, the Partnership entered into a services agreement
with Trump's Castle Management Corp. ("TCMC"), a corporation wholly owned by
Donald J. Trump (the "Management Agreement"). The Management Agreement provides
that the day-to-day operation of Trump's Castle and all ancillary properties and
businesses of the Partnership will be under the exclusive management and
supervision of TCM.
Pursuant to the Management Agreement, the Partnership is 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, will receive an incentive fee equal to 10% of the
excess EBITDA over $45,000,000 for such fiscal year. During the year ended
December 31, 1992, the Partnership incurred expenses of $888,000 of fees under
this Agreement.
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. The
remaining $2,500,000 of gaming chip liability is included in the $4,100,000 of
unredeemed chip liability as of December 31, 1992, and has been reflected as
other liabilities in the accompanying consolidated balance sheet.
Due from Affiliates
Amounts due from affiliates were $563,000 and $742,000 as of December 31,
1991 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, Plaza Hotel, TO and TTMA are affiliates of Donald J.
Trump. These transactions include certain shared payroll costs, fleet
maintenance and limousine service as well as complimentary services offered to
customers, for which the Partnership makes initial payments and is then
reimbursed by the affiliates.
F-11
<PAGE>
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
During 1990, the Partnership incurred expenses of approximately $989,000
in corporated salaries, $1,758,000 in fleet maintenance/limousine services,
$4,489,000 related to the usage of the yacht and $1,930,000 of other
transactions on behalf of these related entities. In addition, the Partnership
received payments totaling $7,612,000 for services rendered and had $2,172,000
of deductions for similar cost 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.
During 1992, the Partnership incurred expenses of approximately $1,240,000
in corporate salaries and $512,000 of other transactions on behalf of these
related entities. In addition, the Partnership received payments totaling
$1,372,000 for services rendered and had $197,000 of deductions for similar
costs incurred by these related entities on behalf of the Partnership.
Partnership Distribution
Under the terms of Partnership Agreement, the Partnership is required to
pay all costs incurred by TC/GP. During the period from May 29, 1992 through
December 31, 1992, the Partnership paid $473,000 of expenses of behalf of TC/GP,
which has been reflected as a partnership distribution.
(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 anytime. 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 16, 1993
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
Commitments on these agreements at December 31, 1992 were approximately
$5,927,000.
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 or the results of operations 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 Casino Control Act), in an amount equivalent to 1.25%
of its gross casino revenues (as defined in the Casino Control Act) or pay an
alternative tax of 2.5% of its gross casino revenues. Investment tax credits may
F-12
<PAGE>
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
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 has donated
$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.
The Partnership has charged $1,959,000 to operations in 1991 and
$1,355,000 in 1992 which represents amortization of a portion of the tax credits
discussed above. In addition, for the years ended December 31, 1990, 1991, 1992,
the Partnership charged to operations $113,000, $137,000 and $656,000
respectively, to give effect to the below market interest rates associated with
purchased CRDA bonds. As of December 31, 1992, approximately $121,000 of future
tax credits and deposits are included in the accompanying consolidated balance
sheets.
(8) EMPLOYEE BENEFITS PLANS:
The Company 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 $594,000, $343,000 and $764,000 for matching
contributions for the years ended December 31, 1990, 1991 and 1992,
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, 1990, 1991 and 1992 were $303,000, $308,000 and $397,000,
respectively.
The Partnership provides no other material post employment benefits.
(9) FINANCIAL INFORMATION:
Financial information relating to the Company as of and for the years
ended December 31, 1991 and 1992 is as follows:
1991 1992
---- ----
Total Assets (including Mortgage Note
Receivable of $290,553,000 in 1991
and $326,056,000 in 1992)............ $329,120,000 $337,771,000
Total Liabilities and Capital
(including Mortgage Bonds payable
of $290,553,000 in 1991 and
$234,445,000 in 1992)................ $329,120,000 $337,771,000
Interest Income......................... $ 39,721,000 $ 34,866,000
Interest Expense........................ $ 39,721,000 $ 34,866,000
Net Income.............................. $ -- $ --
F-13
<PAGE>
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(in thousands)
ASSETS
December September 30, 1993
1992 (unaudited)
-------- -----------------
CURRENT ASSETS:
Cash and temporary investments.................. $ 23,610 $ 21,250
Receivables, net................................ 6,821 6,249
Due from affiliates, net........................ 742 1,033
Inventories..................................... 2,160 1,842
Other current assets............................ 2,929 3,986
-------- --------
Total current assets................... 36,262 34,360
PROPERTY AND EQUIPMENT, NET..................... 340,383 337,734
OTHER ASSETS.................................... 2,996 4,544
-------- --------
Total assets........................... $379,641 $376,638
======== ========
LIABILITIES AND CAPITAL
CURRENT LIABILITIES:
Accounts payable and accrued expenses........... $ 27,684 $ 28,160
Accrued interest payable........................ 11,713 4,047
-------- --------
Total current liabilites............... 39,397 32,207
MORTGAGE BONDS,due 1998 net of unamortized
discount of $91,612 and $83,986 (Note 2)..... 234,445 251,924
BANK BORROWINGS................................. 45,000 45,000
-------- --------
Total liabilities ..................... 318,842 329,131
CAPITAL......................................... 60,799 47,507
-------- --------
Total liabilities and capital.......... $379,641 $376,638
======== ========
The accompanying notes to consolidated financial statements are an
integral part of these consolidated balance sheets.
F-14
<PAGE>
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30 Ended September 30
--------------------- --------------------
1992 1993 1992 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Gaming................................... $ 71,062 $ 70,061 $184,409 $186,773
Rooms.................................... 5,578 6,694 13,654 15,268
Food and beverage........................ 9,221 8,693 24,302 23,548
Other.................................... 2,699 2,709 6,372 6,652
--------- --------- --------- ---------
Gross Revenues........................ 88,560 88,157 228,737 232,241
Less--Promotional allowances............. 9,345 9,796 23,916 24,492
--------- --------- --------- ---------
Net Revenues.......................... 79,215 78,361 204,821 207,749
--------- --------- --------- ---------
Cost and Expenses:
Gaming................................... 41,798 39,051 111,928 111,945
Rooms.................................... 826 876 2,336 2,578
Food and beverage........................ 4,834 4,261 12,416 12,624
General and administrative............... 16,982 16,278 49,785 45,737
Depreciation and amortization............ 4,557 3,450 15,218 12,866
Debt restructuring costs................. -- -- 5,983 --
--------- --------- --------- ---------
68,997 63,916 197,666 185,750
--------- --------- --------- ---------
Income from operations................ 10,218 14,445 7,155 21,999
Interest Income............................. 159 151 311 485
Interest Expense............................ (11,028) (12,732) (34,239) (35,266)
Extraordinary Gain.......................... -- -- 128,187 --
--------- --------- --------- ---------
Net Income (Loss)........................ $(651) $1,864 $101,414 ($ 12,782)
========= ========= ========= =========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
F-15
<PAGE>
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CAPITAL
For the Nine Months Ended September 30, 1993
(unaudited)
(in thousands)
Partners' Partners'
Capital Deficit Total
--------- --------- -----
Balance at December 31, 1992......... $73,395 ($12,596) $60,799
Net loss............................. -- (12,782) (12,782)
Partnership Distribution............. -- (510) (510)
------- ------- -------
Balance at September 30, 1993........ $73,395 ($25,888) $47,507
======= ======= =======
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
F-16
<PAGE>
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30
--------------------------
1992 1993
---- ----
<S> <C> <C>
Cash Flows From Operating Activities:
Net income (loss)......................................................... $101,414 ($12,782)
Adjustments to reconcile net profit (loss) to net cash
flows provided by (used in) operating activities
Noncash charges--
Depreciation and amortization.......................................... 15,218 12,866
Accretion of bond discount............................................. 4,287 7,625
Provision for losses on receivables.................................... 1,927 670
Valuation adjustment of CRDA investments............................... 1,301 819
Extraordinary gain..................................................... (128,187) --
--------- --------
(4,040) 9,198
(Increase) in receivables, net......................................... (1,948) (389)
Decrease (increase) in inventories..................................... (386) 318
Increase in other current assets....................................... (1,576) (1,154)
(Increase) decrease in other assets.................................... 7,644 (33)
Increase in current liabilities........................................ 11,555 2,664
--------- --------
Net cash flows provided by operating activities..................... $ 11,249 $ 10,604
--------- --------
Cash Flows Used In Investing Activities:
Purchases of property and equipment, net............................... ($6,296) ($10,217)
Purchase of CRDA investments........................................... (69) (2,237)
--------- --------
Net cash flows used in investing activities......................... (6,365) (12,454)
Cash Flows Used In Financing Activities:
Distributions to TC/GP, INC............................................ (301) (510)
--------- --------
Net increase (decrease) in cash and cash equivalents............... 4,583 (2,360)
Cash and cash equivalents at beginning of period............................. 14,972 23,610
--------- --------
Cash and cash equivalents at September 30.................................... $ 19,555 $21,250
========= ========
Supplemental information:
Cash paid for interest.................................................... $ 7,146 $25,488
========= ========
</TABLE>
The accompanying notes to consolidated financial statements are an
F-17
<PAGE>
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(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.
The current partners and their respective ownership interests are Donald J.
Trump, 49.995%, the Managing General Partner, Trump's Castle Hotel and Casino,
Inc. ("TCHC"), .01% and TC/GP, Inc. ("TC/GP), 49.995%.
The Company was incorporated on May 28, 1985, solely to serve as a
financing company to raise funds through the issuance of its 13-3/4% First
Mortgage Bonds, Series A-1, due 1997 (the "Series A-1 Bonds") and 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"), the proceeds of which were loaned to the
Partnership. In return for such proceeds, the Partnership issued a promissory
note (the "Old Partnership Note") to the Company in a principal amount equal to
the aggregate principal amount of the Old Bonds and with similar payment terms.
In addition, the Partnership directly guaranteed the payment of the principal
of, premium, if any, and interest on the Old Bonds (the "Old Guaranty"). On the
Effective Date, the Old Partnership Note and Old Guaranty were discharged, the
Partnership issued a new promissory note (the "Partnership Note") and a new
guaranty (the "Guaranty") and the Old Bonds were exchanged for the Company's
9.50% Mortgage Bonds, due 1998 (the "New Bonds") and shares of common stock of
TC/GP (the "Common Stock") as more fully described in Note 2.
Since the Company has no business operations, its ability to repay the
principal and interest on the New Bonds is completely dependent upon the
operations of the Partnership.
Donald J. Trump beneficially owns 50% of the Partnership and the Company
and has pledged his total ownership interest as collateral under various
personal debt agreements.
The accompanying consolidated financial statements have been prepared by
the Company and the Partnership without audit. In the opinion of the Company and
the Partnership, all adjustments consisting of only normal recurring
adjustments, necessary to present fairly the financial position, results of
operations and changes in cash flows for all periods presented have been made.
The accompanying consolidated financial statements have been prepared by
the Company and the Partnership pursuant to the rules and regulations of the
Securities and Exchange Commission ("SEC"). Accordingly, certain information and
note disclosures normally included in financial statements prepared in
conformity with generally accepted accounting principles have been condensed or
omitted. These financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's and the
Partnership's Annual Report on Form 10-K for the year ended December 31, 1992.
(2) MORTGAGE BONDS:
Upon consummation of the Plan on May 29, 1992, each $1,000 principal
amount of the Company'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 the Company's 9.50% New Bonds, together with one share of the Common
Stock of TC/GP and certain other payments. The New Bonds and Common Stock trade
together as a unit (the "Unit") and may not be transferred separately, except
upon the occurrence of certain events. The New Bonds bear 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 is required to pay interest
in cash to the holders of New Bonds outstanding on the immediately preceding
August 1 or February 1 at varying rates per annum (the "Mandatory Cash Amounts")
as follows:
F-18
<PAGE>
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(unaudited)
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 all subsequent
Interest Payment Dates............... 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") is payable to holders of New Bonds in cash
to the extent that Excess Available Cash, as defined, of the Partnership is
available for such purpose and in additional Units to the extent that Excess
Available Cash is less than the Additional Amount. On August 15, 1993, the
Mandatory Cash Amount of 7.00% per annum was paid in cash and the other 2.50% of
9.50% due was paid in additional Units.
The New Bonds are secured by an assignment to First Bank National
Association, the trustee under the indenture pursuant to which the New Bonds
were issued (the "Indenture"), of a promissory note of the Partnership to the
Company (the "Partnership Note") in an amount and with payment terms necessary
to service the New Bonds. The Partnership Note is secured by a mortgage on
Trump's Castle and substantially all of the other assets of the Partnership (the
"Mortgage"). The New Bonds are guaranteed as to payment of principal and
interest on a nonrecourse basis by the Partnership and are secured by a mortgage
on the Partnership's real property.
The New Bonds are subject to redemption at any time, in whole, but not in
part, at specified prices. Upon the redemption of the New Bonds, the Common
Stock will cease to trade as a Unit with the New Bonds, and will trade
separately.
(3) CASINO LICENSE RENEWAL:
The Partnership holds a casino license issued by the New Jersey Casino
Control Commission (the "CCC"). On the basis of an agreement to manage the
operation of Trump's Castle between the Partnership and Trump's Castle
Management Corp. ("TCM"), a corporation wholly owned by Donald J. Trump, TCM
also holds a casino license issued by the CCC. TC/GP, the Company, TCHC and
Donald J. Trump are required to be qualified by the CCC with respect to these
casino licenses.
On April 19, 1993, subject to certain continuing reporting and compliance
conditions, the CCC approved Donald J. Trump as a natural person qualifier and
TC/GP, the Company and TCHC as entity qualifiers with respect to these casino
licenses. The CCC renewed the casino license of the Partnership through May 31,
1995 and renewed the casino license of TCM through May 31, 1994. The casino
license held by the Partnership is renewable for periods of up to two years. The
casino license held by TCM is renewable for a period of up to one year for the
next renewal period and thereafter for periods of up to two years.
Casino licenses are non-transferable, revocable and dependent upon the
financial stability of the licensee. Due to the uncertainty of any renewal
application, there can be no assurance that the casino licenses of the
Partnership and TCM will be renewed. Upon suspension for more than 120 days,
revocation or the failure or refusal to renew same for any reason, the Casino
Control Act provides that the CCC may appoint a conservator to, under its direct
supervision, operate and, subject to all valid liens and encumbrances, dispose
of the casino hotel facilities.
F-19
<PAGE>
<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
II-1
<PAGE>
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 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
II-2
<PAGE>
any proceeding and any liabilities asserted against him by reason of his having
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.
5.1(11) -Opinion of Willkie Farr & Gallagher.
5.2(11) -Opinion of Ribis Graham & Curtin.
8(11) -Opinion of Willkie Farr & Gallagher regarding tax matters.
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 -Employment Agreement, dated January 3, 1994, between Robert E.
Schaffhauser and the Partnership.
10.32 -Employment Agreement dated December 20, 1993 between Patricia M.
Wild and the Partnership.
10.33 -Amendment of Employment Agreement, dated December 30, 1993,
between Thomas Venier and the Partnership.
10.34 -Amended and Restated Credit Agreement, dated as of December 28,
1993, among Midlantic, the Partnership and Funding.
10.35 -Amendment No. 1 to Amended and Restated Indenture of Mortgage,
between the Partnership, as Mortgagor and Midlantic, as
Mortgagee.
10.36 -Amended and Restated Indenture of Mortgage, between the
Partnership, as Mortgagor and Midlantic, as Mortgagee, dated as
of May 29, 1992.
II-7
<PAGE>
10.37 -Amendment No. 1 to Amended and Restated Assignment of Leases and
Rents, between the Partnership, as assignor, and Midlantic, as
assignee.
10.38 -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 -Amendment No. 1 to Amended and Restated Assignment of Operating
Assets, between the Partnership, as assignor and Midlantic, as
assignee.
10.40 -Amended and Restated Assignment of Operating Assets, between the
Partnership, as assignor, and Midlantic, as assignee, dated as of
May 29, 1992.
10.41 -Intercreditor Agreement, by and among Midlantic, the Senior Note
Trustee, the Mortgage Note Trustee, the PIK Note Trustee, Funding
and the Partnership.
24.1 -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 -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.
II-8
<PAGE>
(3) Incorporated herein by reference to the Exhibit to Funding's Annual Report
on Form 10-K for the year ended December 31, 1991.
(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) To be filed by amendment.
(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.
II-9
<PAGE>
B. Financial Statements Schedules
Report of Independent Public Accountants
II -Amounts Receivable (Payable) From (To) Related Parties, Underwriters,
Promoters, and Employees other than Related Parties
V -Property and Equipment
VI -Accumulated Depreciation and Amortization of Property and Equipment
VIII -Valuation and Qualifying Accounts
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 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 17th day of February, 1994.
TRUMP'S CASTLE FUNDING, INC.
By: /s/ Donald J. Trump
---------------------------
By: Donald J. Trump
Title: President
TRUMP'S CASTLE ASSOCIATES
By: /s/ 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
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: /s/ Donald J. Trump Chairman of the Board, February 17, 1994
- ------------------------------ President, Chief Executive
Donald J. Trump Officer (Principal Executive
Officer), Treasurer (Principal
Financial Officer) and sole
Director of the Registrant.
By: /s/ Robert E. Schaffhauser Assistant Treasurer of the February 17, 1994
- ------------------------------ Registrant (Principal
Robert E. Schaffhauser Accounting Officer)
TRUMP'S CASTLE ASSOCIATES
By: /s/ Donald J. Trump Chairman, Board of Partner February 17, 1994
- ------------------------------ Representatives
Donald J. Trump
By: /s/ Nicholas L. Ribis Member, Board of Partner February 17, 1994
- ------------------------------ Representatives and
Nicholas L. Ribis Chief Executive Officer
By: /s/ Roger P. Wagner Member, Board of Partner February 17, 1994
- ------------------------------ Representatives and
Roger P. Wagner President
By: /s/ Ernest E. East Member, Board of Partner February 17, 1994
- ------------------------------ Representatives
Ernest E. East
II-14
<PAGE>
By: /s/ Asher O. Pacholder Member, Board of Partner February 17, 1994
- ------------------------------ Representatives
Asher O. Pacholder
By: /s/ Wallace B. Askins Member, Board of Partner February 17, 1994
- ------------------------------ Representatives
Wallace B. Askins
By: /s/ Thomas F. Leahy Member, Board of Partner February 17, 1994
- ------------------------------ Representatives
Thomas F. Leahy
By: /s/ Robert E. Schaffhauser Chief Financial and February 17, 1994
- ------------------------------ Accounting Officer
Robert E. Schaffhauser
II-15
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Nicholas L. Ribis and Ernest E. East, and each of
them, with full power to act without the other, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments to this Registration Statement, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary fully to all intents and purposes as
he might or could do in person thereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
Signature Title Date
- --------- ----- ----
TRUMP'S CASTLE FUNDING, INC.
/s/ Donald J. Trump Chairman of the Board, February 17, 1994
- ------------------------------ President, Chief Executive
Donald J. Trump Officer (Principal Executive
Officer), Treasurer (Principal
Financial Officer) and sole
Director of the Registrant.
/s/ Robert E. Schaffhauser Assistant Treasurer of February 17, 1994
- ------------------------------ the Registrant (Principal
Robert E. Schaffhauser Accounting Officer).
II-16
<PAGE>
TRUMP'S CASTLE ASSOCIATES
By: /s/ Donald J. Trump Chairman, Board of February 17, 1994
- ------------------------------ Partner Representatives
Donald J. Trump
By: /s/ Nicholas L. Ribis Member, Board of Partner February 17, 1994
- ------------------------------ Representatives and
Nicholas L. Ribis Chief Executive Officer
By: /s/ Roger P. Wagner Member, Board of Partner February 17, 1994
- ------------------------------ Representatives and
Roger P. Wagner President
By: /s/ Ernest E. East Member, Board of Partner February 17, 1994
- ------------------------------ Representatives
Ernest E. East
By: /s/ Asher O. Pacholder Member, Board of Partner February 17, 1994
- ------------------------------ Representatives
Asher O. Pacholder
By: /s/ Wallace B. Askins Member, Board of Partner February 17, 1994
- ------------------------------ Representatives
Wallace B. Askins
By: /s/ Thomas F. Leahy Member, Board of Partner February 17, 1994
- ------------------------------ Representatives
Thomas F. Leahy
By: /s/ Robert E. Schaffhauser Chief Financial and February 17, 1994
- ------------------------------ Accounting Officer
Robert E. Schaffhauser
II-17
<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 12, 1993. 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 12, 1993
S-1
<PAGE>
SCHEDULE II
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
SCHEDULE II-AMOUNTS RECEIVABLE (PAYABLE) FROM (TO) RELATED PARTIES,
UNDERWRITERS, PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES
FOR THE YEARS ENDED DECEMBER 31, 1990, 1991 AND 1992
<TABLE>
<CAPTION>
=======================================================================================
BALANCE AT BALANCE
BEGINNING AT
NAME OF DEBTOR OF PERIOD ADDITIONS DEDUCTIONS END OF PERIOD
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Year Ended December 31, 1990:
The Trump Organization ....... $1,596,000 $4,458,000 ($6,050,000) $ 3,000
Trump Plaza Associates ....... (3,000) 1,473,000 (989,000) 481,000
New York Plaza Hotel ......... 84,000 440,000 (436,000) 89,000
Trump Taj Mahal Associates
Limited Partnership ........ 8,000 2,795,000 (2,265,000) 538,000
---------- ---------- ----------- ----------
$1,684,000 $9,166,000 ($9,739,000) $1,111,000
========== ========== =========== ==========
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
========== ========== =========== ==========
Year Ended December 31, 1992:
The Trump Organization ....... $ 120,000 $ 154,000 ($74,000) $ 200,000
Trump Plaza Associates ....... 349,000 1,041,000 (1,054,000) 336,000
New York Plaza Hotel ......... 24,000 27,000 (51,000) -
Trump Taj Mahal Associates
Partnership ................ 70,000 999,000 (863,000) 206,000
---------- ---------- ----------- ----------
$ 563,000 $2,221,000 ($2,042,000) $ 742,000
========== ========== =========== ==========
All of the above amounts are noninterest bearing and are due on demand.
=======================================================================================
</TABLE>
S-2
<PAGE>
SCHEDULE V
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
SCHEDULE V-PROPERTY AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1990, 1991 AND 1992
<TABLE>
<CAPTION>
=========================================================================================================
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, 1990:
Land and land improvements .... $ 47,770,000 $ 160,000 $ - $ 9,890,000 $ 67,766,000
Buildings and building
improvements ................ 290,816,000 1,535,000 - 27,441,000 319,792,000
Furniture, Fixtures and
equipment ................... 81,236,000 3,079,000 (501,000) 7,580,000 91,394,000
Construction in progress ...... 37,663,000 8,149,000 - (44,911,000) 901,000
------------ ----------- ---------- ----------- ------------
$457,485,000 $12,869,000 ($501,000) $ - $469,853,000
============ =========== ========== =========== ============
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
============ =========== ========== =========== ============
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
============ =========== ========== =========== ============
(A) Represents the reclassification of completed projects to in-service classification.
=========================================================================================================
</TABLE>
S-3
<PAGE>
SCHEDULE VI
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
SCHEDULE VI-ACCUMULATED DEPRECIATION AND AMORTIZATION
OF PROPERTY AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1990, 1991 AND 1992
<TABLE>
<CAPTION>
==========================================================================================
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, 1990:
Land improvements ............ $ 777,000 $ 186,000 $ - $ 963,000
Buildings and building
improvements ............... 28,074,000 7,866,000 - 35,940,000
Furniture, fixtures and
equipment .................. 54,854,000 11,803,000 (247,000) 66,410,000
------------ ----------- ----------- ------------
$ 83,705,000 $19,855,000 ($247,000) $103,313,000
============ =========== =========== ============
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
============ =========== =========== ============
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
============ =========== =========== ============
==========================================================================================
</TABLE>
S-4
<PAGE>
SCHEDULE VIII
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
SCHEDULE VIII-VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1990, 1991 AND 1992
<TABLE>
<CAPTION>
==============================================================================================
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 .... $2,629,000 $6,267,000 ($3,712,000)(A) $5,184,000
========== ========== ========== ==========
Valuation allowance for interest
differential on CRDA bonds ....... $3,672,000 $ 113,000 ($3,111,000)(B) $ 674,000
========== ========== ========== ==========
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
========== ========== ========== ==========
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
========== ========== ========== ==========
(A) Write-off of uncollectible accounts.
(B) Write-off of allowance applicable to contribution of CRDA deposits.
==============================================================================================
</TABLE>
S-5
<PAGE>
SCHEDULE IX
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
SCHEDULE IX-SHORT-TERM BORROWINGS
FOR THE YEARS ENDED DECEMBER 31, 1990, 1991 AND 1992
<TABLE>
<CAPTION>
======================================================================================
CATEGORY WEIGHTED MAXIMUM AVERAGE WEIGHTED
OF INTEREST AMOUNT AMOUNT AVERAGE
AGGREGATE BALANCE AT RATE AT OUTSTANDING OUTSTANDING INTEREST RATE
SHORT-TERM END END OF DURING THE DURING THE DURING THE
BORROWINGS OF PERIOD PERIOD PERIOD PERIOD(A) PERIOD(B)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1990:
Line of credit ... $13,000,000 11.0% $15,000,000 $13,167,000 10.2%
Term loan ........ 50,000,000 11.0 50,000,000 50,000,000 11.2
----------- ---- ----------- ----------- ----
$63,000,000 11.0% $65,000,000 $83,167,000 11.0%
=========== ==== =========== =========== ====
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%
=========== ==== =========== =========== ====
1992:
Line of credit ... $ - - $ - $ - -
Term loan ........ - - - - -
----------- ---- ----------- ----------- ----
$ - - $ - $ - -
=========== ==== =========== =========== ====
(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.
======================================================================================
</TABLE>
S-6
<PAGE>
SCHEDULE X
TRUMP'S CASTLE ASSOCIATES AND SUBSIDIARY
SCHEDULE X-SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1990, 1991 AND 1992
================================================================================
CHARGED TO COSTS AND EXPENSES
--------------------------------------------
ITEMS 1990 1991 1992
- --------------------------------------------------------------------------------
Maintenance and repairs ...... $ 2,746,000 $ 2,120,000 $ 2,691,000
=========== =========== ===========
Taxes, other than payrolland
income taxes:
Gaming taxes ............... $18,368,000 $15,480,000 $19,070,000
=========== =========== ===========
Real estate taxes ............ $ 7,743,000 $ 7,975,000 $ 6,808,000
=========== =========== ===========
Advertising costs ............ $ 7,229,000 $ 4,736,000 $ 6,101,000
=========== =========== ===========
================================================================================
S-7
January 3, 1994
Robert E. Schaffhauser
55 Broadway
Somers Point, NJ 08244
Dear Mr. Schaffhauser:
This letter will serve to confirm our understanding and agreement
pursuant to which Trump's Castle Associates ("TCA") has agreed to
employ you, and you have agreed to be employed by TCA for the
Term defined and set forth in Paragraph 2, unless terminated
earlier by TCA pursuant to Paragraph 12 hereof:
1. You shall be employed by TCA in the capacity of Senior Vice
President Finance to perform such duties as are commonly
attendant upon such office and such further duties as may be
specified, from time to time, by TCA.
2. Your employment with TCA shall commence on January 4, 1994
and continue for a period of One (1) year thereafter.
3. a. During the term of this Agreement, you shall be paid an
annual base salary at the rate of One Hundred Eighty
Thousand ($180,000) Dollars, payable periodically in
accordance with TCA's regular payroll practices.
b. You shall be entitled to participate in TCA's executive
bonus program in such form and at such levels as TCA, in its
sole and absolute discretion, may hereafter elect to provide
similarly situated executives. You may also be entitled to
receive a discretionary bonus in TCA's sole and absolute
discretion.
4. You shall be afforded coverage under TCA's employee
insurance programs in such form and at such levels as TCA,
in its sole and absolute discretion, may hereafter elect to
provide for similarly situated executives.
5. a. You shall be entitled to participate in TCA's executive
benefit programs in such form and at such levels as TCA, in
its sole and absolute discretion, may hereafter elect to
provide similarly situated executives.
6. a. You shall be entitled to participate in TCA's executive
benefit programs in such form and at such levels as TCA, in
its sole and absolute discretion, may hereafter elect to
provide similarly situated executives.
(1)
<PAGE>
b. You shall, in addition to monetary compensation,
receive a car allowance of Seven Hundred Fifty ($750)
Dollars per month.
7. You agree that so long as TCA continues to pay your salary
as provided herein, you shall not accept employment, either
as an employee, consultant or independent contractor, for or
on behalf of any other casino hotel located in Atlantic
City, New Jersey. You acknowledge and agree that this
restrictive covenant is reasonable as to duration, terms and
geographical area and that the same is necessary to protect
the legitimate interests of TCA, imposes no undue hardship
on you and is not injurious to the public.
8. You hereby agree that throughout the term of this Agreement
you shall devote your full time, attention and efforts to
TCA's business and shall not, directly or indirectly, work
for, consult with or otherwise engage in any other
activities of a business nature for any other person or
entity, without TCA's prior written consent. You will
promptly communicate to TCA, in writing when requested, all
marketing strategies, technical designs and concepts, and
other ideas pertaining to TCA's business which are conceived
or developed by you, alone or with others, at any time
(during or after business hours) while you are employed by
TCA. You acknowledge that all of those ideas will be TCA's
exclusive property. You agree to sign any documents which
TCA deems necessary to confirm its ownership of those ideas,
and you agree to otherwise cooperate with TCA in order to
allow TCA to take full advantage of those ideas.
9. You acknowledge that you have access to information which is
proprietary and confidential to TCA. This information
includes, but is not limited to, (1) the identity of
customers and prospects, (2) names, addresses and telephone
numbers of individual contacts, (3) pricing policies,
marketing strategies, product strategies and methods of
operation, and (4) expansion plans, management policies and
other business strategies and policies. You acknowledge and
understand that this information must be maintained in
strict confidence in order for TCA to protect its business
and its competitive position in the marketplace.
Accordingly, both during and after termination your
employment, you agree that you will not disclose any of this
information for any purpose or remove materials containing
this information from TCA's premises. Upon termination of
your employment, you will immediately return to TCA all
correspondence files, business card files, customer and
prospect lists, price books, technical data, notes and other
materials which contain any of this information, and you
will not retain copies of those materials.
(2)
<PAGE>
10. You represent to TCA that there are no restrictions or
agreements to which you are a party which would be violated
by our execution of this Agreement and your employment
hereunder.
11. You hereby agree to comply with all of the rules,
regulations, policies and/or procedures adopted by TCA
during the term of this Agreement, as well as all applicable
state, federal and local laws, regulations and ordinances.
12. You hereby represent that you presently hold the New Jersey
Casino Control Commission license required in connection
with your employment hereunder and will take appropriate
steps to renew said license in a timely manner.
13. You hereby understand and acknowledge that TCA may terminate
this Agreement in the event your Casino Control Commission
license is terminated and/or suspended or revoked by the
Commission or if you shall commit an act constituting
"Cause", which is defined to mean the following: a breach
by you of any of the provisions of this Agreement or any
employee conduct rules; an act of dishonesty; the deliberate
and intentional refusal by you to perform your duties
hereunder; alcohol or drug addiction; your disability, which
is defined to be any condition prohibiting you from
performing your duties hereunder for a period in excess of
thirty (30) days; or your death. In the event of a
termination pursuant to this paragraph, TCA shall pay to you
your salary earned to the date of termination and shall have
no further liability or obligation to you under this
Agreement.
14. TCA shall indemnify, defend and hold you harmless, including
the payment of reasonable attorney fees, if TCA does not
directly provide your defense, from and against any and all
claims made by anyone, including, but not limited to, a
corporate entity, company, other employee, agent, patron or
member of the general public with respect to any claim which
asserts as a basis, any acts, omissions or other
circumstances involving the performance of your employment
duties hereunder unless such claim is based upon your gross
negligence or any willful and/or wanton act.
15. You represent that you are a citizen of the United States or
that you possess the proper visa and/or work permits
necessary to perform your functions hereunder.
16. You acknowledge that it would be extremely difficult to
measure the damages that might result from any breach by you
of your promises in Sections 7, 8 and 9 of this Agreement
and that a breach may cause irreparable injury to TCA which
(3)
<PAGE>
could not be compensated by money damages. Accordingly, TCA
will be entitled to enforce this Agreement by obtaining a
court order prohibiting you (and any others involved) from
breaching this Agreement. If a court decides that any part
of this agreement is too broad, the court may limit that
part and enforce it as limited.
17. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey and in
any lawsuit involving this Agreement, you consent to the
jurisdiction and venue of any state or federal court located
in New Jersey. This Agreement represents the entire
agreement between the parties and may not be modified or
amended without the written agreement of both parties. This
Agreement supersedes all other agreements between the
parties.
If the foregoing correctly sets forth our understanding, kindly
sign and return to me the duplicated copy of this letter enclosed
herewith.
Very truly yours,
TRUMP'S CASTLE ASSOCIATES
Agreed & Consented to:
By: ROGER P. WAGNER ROBERT E. SCHAFFHAUSER
---------------------- ------------------------
Roger P. Wagner Robert E. Schaffhauser
President/Chief Operating
Officer
January 4, 1994
-------------------------
Date
(4)
<PAGE>
December 20, 1993
Patricia M. Wild
617 Stratford Drive
Moorestown, NJ 08057
Dear Ms. Wild:
This letter will serve to confirm our understanding and
agreement pursuant to which Trump's Castle Associates
("TCA)" has agreed to employ you, and you have agreed to be
employed by TCA for the Term defined and set forth in
Paragraph 2:
1. You shall be employed by TCA in the capacity of Senior
Vice President/General Counsel reporting to the
President/Chief Operating Officer, to perform such
duties as are commonly attendant upon such office and
such other duties as may be specified, from time to
time, by TCA.
2. Your employment with TCA shall commenced on
December 6, 1993 and continue for a period of one (1)
year thereafter. Commencing on December 13, 1993 and
on the last day of each week thereafter, the Term
shall be automatically extended for one (1) week so
that at all time the Term during the duration of this
Agreement shall be an unexpired period of twelve (12)
months. (The last day of the Term as from time to
time extended is hereinafter referred to as the
"Expiration Date".) TCA may elect to terminate the
automatic extension of the Term set forth herein by
giving you thirty (30) days prior written notice of
such election. Upon the giving of such notice, your
employment under this Agreement shall terminate on the
Expiration Date (as last extended). In the event of
such notice, TCA may, in its sole discretion, offer to
either continue your employment through the Expiration
Date, pay you the full amount of your salary through
the Expiration Date, or continue your employment for a
period of time less than the Expiration Date with the
payment of the remainder of your salary through the
Expiration Date.
<PAGE>
Page 2
Patricia M. Wild
December 20, 1993
3. a. During the term of this Agreement, you shall be
paid an annual base salary at the rate of One Hundred
Fifteen Thousand ($115,000) Dollars, payable
periodically in accordance with TCA's regular payroll
practices.
b. You shall be entitled to participate in TCA's
executive bonus program in such form and at such
levels as TCA, in its sole and absolute discretion,
may hereafter elect to provide similarly situated
executives. You may also be entitled to receive a
discretionary bonus in TCA's sole and absolute
discretion.
c. As of May 9, 1994, you shall be entitled to three
(3) weeks vacation. Thereafter, you will earn
vacation in accordance with TCA's regular policy
therefor, using May 8, 1989, your first date of
employment at Trump Plaza Hotel and Casino, as your
vacation eligibility date.
4. On the first anniversary of your employment with TCA
and on all subsequent anniversary dates, your annual
salary will be reviewed in accordance with TCA's
regular policies therefor. Any increase of your
annual salary shall be in TCA's sole and absolute
discretion.
5. You shall be afforded coverage under TCA's employee
insurance programs in such form and at such levels as
TCA, in its sole and absolute discretion, may
hereafter elect to provide for similarly situated
executives.
6. a. You shall be entitled to participate in TCA's
executive benefit programs in such form and at such
levels as TCA, in its sole and absolute discretion,
may hereafter elect to provide similarly situated
executives.
b. You shall, in addition to monetary compensation,
receive a car allowance of Seven Hundred Fifty ($750)
Dollars per month.
7. You hereby agree that throughout the term of this
Agreement you shall devote your full time, attention
<PAGE>
Page 3
Patricia M. Wild
December 20, 1993
and efforts to TCA's business and shall not, directly
or indirectly, work for, consult with or otherwise
engage in any other activities of a business nature
for any other person or entity, without TCA's prior
written consent. Notwithstanding this Paragraph, you
may engage in court-ordered pro bono publico legal
representation, so long as such representation does
not conflict with your representation of TCA.
8. You acknowledge that you have access to information
which is proprietary and confidential to TCA. This
information includes, but is not limited to, (1) the
identity of customers and prospects, (2) names,
addresses and telephone numbers of individual
contacts, (3) pricing policies, marketing strategies,
product strategies and methods of operation, and (4)
expansion plans, management policies and other
business strategies and policies. You acknowledge and
understand that this information must be maintained in
strict confidence in order for TCA to protect its
business and its competitive position in the
marketplace. Accordingly, both during and after
termination your employment, you agree that you will
not disclose any of this information for any purpose
or remove materials containing this information from
TCA's premises.
9. You represent to TCA that there are no restrictions or
agreements to which you are a party which would be
violated by our execution of this Agreement and your
employment hereunder.
10. You hereby agree to comply with all of the rules,
regulations, policies and/or procedures adopted by TCA
during the term of this Agreement, as well as all
applicable state, federal and local laws, regulations
and ordinances.
11. You hereby represent that you presently hold the New
Jersey Casino Control Commission license required in
connection with your employment hereunder and will
take appropriate steps to renew said license in a
timely manner.
12. You hereby understand and acknowledge that TCA may
terminate this Agreement in the event your Casino
<PAGE>
Page 4
Patricia M. Wild
December 20, 1993
Control Commission license is terminated and/or
suspended or revoked by the Commission or if you shall
commit an act constituting "Cause", which is defined
to mean the following: a breach by you of any of the
provisions of this Agreement or any employee conduct
rules; an act of dishonesty; the deliberate and
intentional refusal by you to perform your duties
hereunder; illegal drug use or addiction; your
disability, which is defined to be any condition
prohibiting you from performing your duties hereunder
for a period in excess of thirty (30) days; or your
death. In the event of a termination pursuant to this
paragraph, TCA shall pay to you your salary earned to
the date of termination and shall have no further
liability or obligation to you under this Agreement.
13. TCA shall indemnify, defend and hold you harmless,
including the payment of reasonable attorney fees, if
TCA does not directly provide your defense, from and
against any and all claims made by anyone, including,
but not limited to, a corporate entity, company, other
employee, agent, patron or member of the general
public with respect to any claim which asserts as a
basis, any acts, omissions or other circumstances
involving the performance of your employment duties
hereunder unless such claim is based upon your gross
negligence or any willful and/or wanton act.
14. You represent that you are a citizen of the United
States or that you possess the proper visa and/or work
permits necessary to perform your functions hereunder.
15. You acknowledge that it would be extremely difficult
to measure the damages that might result from any
breach by you of your promises in Sections 7 and 8 of
this Agreement and that a breach may cause irreparable
injury to TCA which could not be compensated by money
damages. Accordingly, TCA will be entitled to enforce
this Agreement by obtaining a court order prohibiting
you (and any others involved) from breaching this
Agreement. If a court decides that any part of this
Agreement is too broad, the court may limit that part
and enforce it as limited.
16. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey
<PAGE>
Page 5
Patricia M. Wild
December 20, 1993
and in any lawsuit involving this Agreement, you
consent to the jurisdiction and venue of any state or
federal court located in New Jersey. This Agreement
represents the entire agreement between the parties
and may not be modified or amended without the written
agreement of both parties. This Agreement supersedes
all other agreements between the parties.
If the foregoing correctly sets forth our understanding,
kindly sign and return to me the duplicated copy of this
letter enclosed herewith.
Very truly yours,
TRUMP'S CASTLE ASSOCIATES
Agreed & Consented to:
By: ROGER P. WAGNER PATRICIA M. WILD
--------------- ---------------------------
Roger P. Wagner Patricia M. Wild
President/Chief Operating Officer ---------------------------
12/22/93
Date
(5)
December 30, 1993
Mr. Thomas P. Venier
11 West Rosedale Avenue
Northfield, NJ 08225
Re: January 31, 1992 Employment Agreement
Dear Mr. Venier:
This will confirm our agreement to amend your employment contract
dated January 31, 1992 (the "Agreement"), as amended by letter
dated March 19, 1993 (the "First Amendment"), as follows:
1. Paragraph 1 of the Agreement is amended to reflect that your
title (pending approval of the title by the Casino Control
Commission) shall be Senior Vice President, Strategic
Planning and Project Development, reporting to the President
and Chief Operating Officer of Trump's Castle Associates.
2. Notwithstanding any provision in the Agreement or in the
First Amendment to the contrary, you may terminate the
Agreement by giving thirty (30) days written notice to
Trump's Castle Associates of your intent to terminate. Upon
receipt of such termination notice from you, Trump's Castle
will pay you an amount equal to six (6) months of your then
current salary, if and only if you represent to Trump's
Castle Associates that you do not intend to seek or accept
employment with any other Atlantic City casino/hotel for a
period of six (6) months following such termination.
All other terms of the Agreement, as amended by the First
Amendment, shall remain in full force and effect. If the terms
of this letter amendment are acceptable to you, kindly sign the
enclosed copy of this Letter and return to my office.
Very truly yours,
/s/ ROGER P. WAGNER
Roger P. Wagner
President
Chief Operating Officer
RPW:vn
I hereby accept and agree to the foregoing.
/s/ THOMAS P. VENIER Date: 12/31/93
- ---------------------- ----------
Thomas P. Venier
(1)
=================================================================
TRUMP'S CASTLE ASSOCIATES
TRUMP'S CASTLE FUNDING, INC.
_______________________
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of
December 28, 1993
_______________________
MIDLANTIC NATIONAL BANK
_______________________
=================================================================
<PAGE>
TABLE OF CONTENTS
AMENDED AND RESTATED CREDIT AGREEMENT. . . . . . . . . . . . . .
PRELIMINARY STATEMENT. . . . . . . . . . . . . . . . . . . . . .
ARTICLE I.
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 1.01 Definitions . . . . . . . . . . . . . . . . . . .
Section 1.02 Notices . . . . . . . . . . . . . . . . . . . . .
Section 1.03 Form and Contents of Documents
Delivered to the Bank . . . . . . . . . . . . . .
Section 1.04 Compliance Certificates and
Opinions. . . . . . . . . . . . . . . . . . . . .
Section 1.05 Effect of Recitals, Headings and
Table of Contents . . . . . . . . . . . . . . . .
Section 1.06 Successors and Assigns. . . . . . . . . . . . . .
Section 1.07 Separability Clause . . . . . . . . . . . . . . .
Section 1.08 Benefits of Credit Agreement. . . . . . . . . . .
Section 1.09 Governing Law . . . . . . . . . . . . . . . . . .
Section 1.10 Casino Control Act. . . . . . . . . . . . . . . .
Section 1.11 Miscellaneous . . . . . . . . . . . . . . . . . .
Section 1.12 General Application of Remedies Provisions. . . .
ARTICLE II.
AMOUNT AND TERMS OF LOAN
Section 2.01 Restructured Loan . . . . . . . . . . . . . . . .
Section 2.02 The Note. . . . . . . . . . . . . . . . . . . . .
Section 2.03 Extension of Loan . . . . . . . . . . . . . . . .
Section 2.04 Calculation of Interest . . . . . . . . . . . . .
Section 2.05 Payments. . . . . . . . . . . . . . . . . . . . .
Section 2.06 Optional Prepayments; Mandatory Prepayments . . .
Section 2.07 Limitation on Liability . . . . . . . . . . . . .
ARTICLE III.
CONDITIONS PRECEDENT
Section 3.01 Conditions Precedent. . . . . . . . . . . . . . .
Section 3.02 Conditions to Extension of Loan . . . . . . . . .
(i)
<PAGE>
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
Section 4.01 Organization, Standing,
Qualification and Power . . . . . . . . . . . . .
Section 4.02 Authorization of Agreement and
Other Lending Documents . . . . . . . . . . . . .
Section 4.03 No Conflict . . . . . . . . . . . . . . . . . . .
Section 4.04 Permits . . . . . . . . . . . . . . . . . . . . .
Section 4.05 Security Interest . . . . . . . . . . . . . . . .
Section 4.06 Disclosure. . . . . . . . . . . . . . . . . . . .
Section 4.07 Financial Statements. . . . . . . . . . . . . . .
Section 4.08 Litigation. . . . . . . . . . . . . . . . . . . .
Section 4.09 Environmental Matters . . . . . . . . . . . . . .
Section 4.10 Personal Property . . . . . . . . . . . . . . . .
Section 4.11 Insurance . . . . . . . . . . . . . . . . . . . .
Section 4.12 Regulation. . . . . . . . . . . . . . . . . . . .
Section 4.13 Investment Company Act. . . . . . . . . . . . . .
Section 4.14 Indenture Documents . . . . . . . . . . . . . . .
ARTICLE V.
SATISFACTION AND DISCHARGE
Section 5.01 Payment of Indebtedness; Satis-
faction and Discharge of Credit
Agreement . . . . . . . . . . . . . . . . . . . .
ARTICLE VI.
SECURITY
Section 6.01 Mortgage Documents. . . . . . . . . . . . . . . .
Section 6.02 Recording, etc. . . . . . . . . . . . . . . . . .
Section 6.03 Custody of the Mortgage Documents . . . . . . . .
ARTICLE VII.
REMEDIES
Section 7.01 Events of Default . . . . . . . . . . . . . . . .
Section 7.02 Acceleration of Maturity;
Enforcement of Mortgage Documents . . . . . . . .
Section 7.03 Covenant to Pay the Bank Amounts
Due on the Note and Right of Bank
to Judgment . . . . . . . . . . . . . . . . . . .
(ii)
<PAGE>
Section 7.04 Application of Money Collected. . . . . . . . . .
Section 7.05 Suits to Protect Trust Estate and
Enforce Covenants . . . . . . . . . . . . . . . .
Section 7.06 Restoration of Rights and Remedies. . . . . . . .
Section 7.07 Rights and Remedies Cumulative. . . . . . . . . .
Section 7.08 Delay or Omission Not Waiver. . . . . . . . . . .
Section 7.09 Undertaking for Costs . . . . . . . . . . . . . .
ARTICLE VIII.
REIMBURSEMENT AND INDEMNIFICATION OF THE BANK
Section 8.01 Reimbursement and Indemnity . . . . . . . . . . .
ARTICLE IX.
REPORTING OBLIGATIONS OF THE BORROWER
Section 9.01 Financial Statements. . . . . . . . . . . . . . .
Section 9.02 Certificates, Other Information . . . . . . . . .
Section 9.03 Notices . . . . . . . . . . . . . . . . . . . . .
ARTICLE X.
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 10.01 Consolidation, Merger, Conveyance
or Transfer . . . . . . . . . . . . . . . . . . .
Section 10.02 Successor Entity Substituted. . . . . . . . . . .
Section 10.03 Successor Management of
Casino-Hotel. . . . . . . . . . . . . . . . . . .
Section 10.04 Limitation on Lease of Trust Estate
as Entirety . . . . . . . . . . . . . . . . . . .
Section 10.05 Limitation on Sales of Trust
Estate. . . . . . . . . . . . . . . . . . . . . .
ARTICLE XI.
COVENANTS
Section 11.01 Payment of Principal and Interest . . . . . . . .
Section 11.02 Limitations on Liens. . . . . . . . . . . . . . .
Section 11.03 Restriction of Activities . . . . . . . . . . . .
Section 11.04 Certain Restricted Payments . . . . . . . . . . .
(iii)
<PAGE>
Section 11.05 Payment of Taxes and Other Claims . . . . . . . .
Section 11.06 Compliance Certificates . . . . . . . . . . . . .
Section 11.07 Maintenance of Existence:
Compliance with Laws. . . . . . . . . . . . . . .
Section 11.08 To Keep Books: Inspection by Bank . . . . . . . .
Section 11.09 Waiver of Stay, Extension or Usury
Laws. . . . . . . . . . . . . . . . . . . . . . .
Section 11.10 Transactions with Affiliates. . . . . . . . . . .
Section 11.11 Continuation of Lending Documents . . . . . . . .
ARTICLE XII.
GUARANTY
Section 12.01 Guaranty. . . . . . . . . . . . . . . . . . . . .
Section 12.02 Execution and Delivery of Guaranty. . . . . . . .
Exhibit A - Amendment No. 1 to the Term Note
Exhibit B - Amendment No. 1 to the Mortgage
Exhibit C - Amendment No. 1 to the Assignment of Leases and Rents
Exhibit D - Amendment No. 1 to the Assignment of Operating Assets
Exhibit E - Amendment No. 1 to the Put Agreement
Exhibit F - Intercreditor Agreement
Exhibit G - Consent and Agreement
Exhibit H - Officer's Certificate
Exhibit I - Intentionally Omitted
Exhibit J - Opinion - Ribis Graham & Curtin
Exhibit K - Opinion - Hannoch Weisman
Exhibit L - Opinion - Lowenstein Sandler
(iv)
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT
AMENDED AND RESTATED CREDIT AGREEMENT dated as of December
28, 1993 among TRUMP'S CASTLE ASSOCIATES, a New Jersey general
partnership which is the successor in interest to Trump's Castle
Associates Limited Partnership, a New Jersey limited partnership
(hereinafter called the "Borrower"), TRUMP'S CASTLE FUNDING,
INC., a New Jersey corporation (hereinafter called the
"Company"), and MIDLANTIC NATIONAL BANK, a national banking
association (together with its successors and assigns,
hereinafter called the "Bank").
PRELIMINARY STATEMENT
The terms used in this Preliminary Statement which are not
otherwise defined herein have their meanings set forth in Article
One.
WHEREAS, the Borrower, the Company and the Bank entered into
a Credit Agreement dated February 16, 1988 (the "1988 Credit
Agreement") pursuant to which the Bank made a construction loan
to the Borrower in the principal amount of up to $50,000,000,
which construction loan was subsequently converted pursuant to
the 1988 Credit Agreement into a term loan in the principal
amount of $50,000,000 (the "Original Term Loan"), evidenced by a
Term Note dated August 15, 1990 (the "Original Term Note");
WHEREAS, as a result of financial difficulties, the
Borrower, the Company and others requested the Bank to
restructure the terms and conditions of the Original Term Loan,
among other things, to reduce the principal amount thereof from
$50,000,000 to $38,000,000, to modify the interest rate and to
defer the repayment of principal;
WHEREAS, a joint plan of reorganization of the Borrower, the
Company and Castle providing for such restructuring of the
Original Term Loan (the "Plan") was confirmed by entry of the
order of the bankruptcy court pursuant to Section 1129 of the
United States Bankruptcy Code;
WHEREAS, as of May 29, 1992 (the "Original Amendment Date"),
the parties amended and restated the 1988 Credit Agreement to
reflect the terms of the Plan, to make certain other changes and,
solely for the convenience of the parties hereto, to amend and
restate in its entirety the 1988 Credit Agreement, which Amended
and Restated Credit Agreement dated as of May 29, 1992 is herein
referred to as the "1992 Credit Agreement";
WHEREAS, the Borrower and the Company have offered to
exchange (the "Exchange Offer") all of the 9-1/2% First Mortgage
Bonds due 1998 issued by the Company (the "Existing Bonds") for
(1)
<PAGE>
the Mortgage Notes, the PIK Notes and cash, all pursuant to the
Recapitalization (as defined in the Registration Statement);
WHEREAS, the Borrower, the Company and others have requested
that the Bank consent to the Recapitalization and make certain
changes to the 1992 Credit Agreement and the other Lending
Documents to conform to the new ownership and debt structure of
the Borrower, the Company and TC/GP resulting from the
Recapitalization;
WHEREAS, the Bank has agreed to consent to the
Recapitalization and to make such other changes, but only on the
terms and conditions provided herein and the other Lending
Documents contemplated hereby, including, without limitation, the
condition, among others, that the Bank continue to receive a
first priority lien and security interest in and upon the Trust
Estate as collateral security for the Loan, senior (and not pari
passu or subordinate) to the liens and security interests in and
upon the Trust Estate granted or to be granted in favor of the
Senior Note Trustee and the Mortgage Note Trustee; and
WHEREAS, solely for the convenience of the parties, the
parties hereby amend and restate the 1992 Credit Agreement in its
entirety.
NOW, THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt and suffi-
ciency of which are hereby acknowledged, the parties hereto agree
as follows:
ARTICLE I.
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION.
Section 1.01 Definitions.
For all purposes of this Credit Agreement, except as
otherwise expressly provided or unless the context otherwise
requires:
(a) the terms defined in this Article One have the
meanings assigned to them in this Article One and include
the plural as well as the singular;
(b) all accounting terms not otherwise defined herein
have the meanings assigned to them, and all computations
herein provided for shall be made, in accordance with
generally accepted accounting principles consistently
applied;
(2)
<PAGE>
(c) the words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Credit Agreement
as a whole and not to any particular Article, Section or
other subdivision;
(d) reference herein to any article or section of this
Credit Agreement or of any other document referred to herein
refers to the entirety of such article or section, including
without limitation all subsections or other subdivisions
thereof;
(e) reference herein to any agreement or document,
including without limitation this Credit Agreement, the
Mortgage, the Indentures, the Partnership Agreement and the
Intercreditor Agreement, refers, unless specific reference
is made to that agreement or document as in effect on the
Effective Date or on the date hereof (or an essentially
similar term is used), to such agreement or document as in
effect from time to time; and
(f) reference to documents as from time to time
amended, supplemented or modified shall include,
without limitation, restatements of such documents.
"Accountant" means a Person engaged in the practice of
accounting who (except as otherwise expressly provided in this
Credit Agreement) may be employed by or affiliated with the
Borrower or the Company.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person and,
with respect to any specified natural Person, any other Person
having a relationship by blood, marriage or adoption not more
remote than first cousin with such specified Person. For
purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and
the terms "controlling" and "controlled" have meanings correla-
tive to the foregoing.
"Borrower" means the Person named as the "Borrower" in the
first paragraph of this Credit Agreement until a successor entity
shall have become such with the prior written consent of the Bank
pursuant to the applicable provisions of this Credit Agreement,
and thereafter "Borrower" shall mean such successor entity
exclusively.
"Borrower Mortgage" means a mortgage or similar instrument
granted by the Borrower encumbering any substantial portion (or
(3)
<PAGE>
greater portion) of the Borrower's property to secure the
obligations of the Borrower and/or the Company under any
Indenture Documents (including, without limitation, mortgages
securing any Indenture Guarantee) or Refinancing Debt and
includes, without limitation, each such mortgage granted to the
Senior Note Trustee and the Mortgage Note Trustee.
"Borrower Order" means a written order signed with a
Borrower Signature and delivered to the Bank.
"Borrower Signature" means the signature of the Managing
Partner or, if the Managing Partner is a corporation, the signa-
ture of the duly authorized officer thereof.
"Business Day" means a day other than Saturday, Sunday or
other day on which commercial banks in the State of New Jersey
are authorized or required by law to close.
"Casino" means that portion of the Casino-Hotel used for
gaming and related activities.
"Casino-Hotel" means the casino and hotel complex currently
known as the "Trump Castle Casino Resort by the Bay" and
ancillary structures, marina and other facilities used or to be
used in connection with the operation thereof, together with all
furniture, fixtures and equipment at any time contained therein,
in each case owned by or leased to the Borrower and covered by
the lien of the Mortgage Documents.
"Castle" means Trumps' Castle Hotel & Casino, Inc., a New
Jersey corporation.
"CCC Required Redemption Event" means a disqualification of
a holder of Notes by the Gaming Authorities and failure to
dispose of the Notes within 30 days, thereby requiring redemption
at the lower of the outstanding principal amount thereof and fair
market value, together with accrued and unpaid interest through
the redemption date.
"Change of Control Event" means an event constituting a
Change of Control as such term is defined in each of the
Indentures as of the date hereof.
"Combination Transaction" has the meaning stated in Section
10.01 hereof.
"Commission" means the Securities and Exchange Commission,
as from time to time constituted, created under the Securities
Exchange Act of 1934, or if any time after the execution of this
Credit Agreement such Commission is not existing and performing
(4)
<PAGE>
the duties theretofore assigned to it under such Act, then the
Governmental Authority performing such duties at such time.
"Company" means the Person named as the "Company" in the
first paragraph of this Credit Agreement until a successor entity
shall have become such with the prior written consent of the Bank
pursuant to the applicable provisions of this Credit Agreement,
and thereafter, except to the extent otherwise contemplated by
Section 10.02 hereof, the "Company" shall mean such successor
entity exclusively.
"Company Signature" means the signature of a duly authorized
officer of the Company.
"Condemnation/Casualty Event" means any Total Taking or
Casualty, as such term is defined in the Mortgage Note Indenture
as in effect on the date hereof.
"Consent and Agreement" means the Consent and Agreement
dated as of the date hereof executed and delivered by the Bank,
the Trustees, the Borrower and the Company, a copy of which is
attached hereto as Exhibit G, as the same may from time to time
be amended, supplemented or otherwise modified.
"Credit Agreement" means this Amended and Restated Credit
Agreement, as the same may from time to time be amended,
supplemented or otherwise modified by one or more written
agreements or other written instruments (including written
amendments) entered into pursuant to the applicable provisions
hereof.
"Default" means the occurrence and continuance of an Event
of Default or an event which, after notice or lapse of time or
both, would become an Event of Default.
"Effective Date" means the date on which each of the condi-
tions set forth in Section 3.01 hereof shall have been satisfied
or waived.
"Equity Offering Event" means a sale or other transfer of
any direct or indirect equity interest upon the occurrence of
which the Borrower and/or the Company is required by the
provisions of the PIK Note Indenture to use 35% of the proceeds
thereof (and no more) to redeem the PIK Notes.
"Event of Default" has the meaning stated in Section 7.01
hereof. An Event of Default shall "exist" if an Event of Default
shall have occurred and be continuing.
"Excepted Property" has the meaning stated in Section 1.01
of the Mortgage.
(5)
<PAGE>
"Existing Bonds" has the meaning stated in the Preliminary
Statement.
"Existing Encumbrances" has the meaning stated in Section
1.01 of the Mortgage.
"Extended Stated Maturity Date" means May 28, 2000.
"Extension Date" has the meaning stated in Section 2.03(a)
hereof.
"Extension Option" has the meaning stated in Section 2.03(a)
hereof.
"F,F&E Financing Agreement" has the meaning stated in
Section 1.01 of the Mortgage.
"First Mortgage Debt" means Indebtedness of the Borrower
under this Credit Agreement, the Note and other Lending Docu-
ments.
"Gaming Authorities" means the New Jersey Casino Control
Commission and the New Jersey Division of Gaming Enforcement
(including any successors to either of them), and any Govern-
mental Authority which regulates gaming in any jurisdiction in
which the Borrower, the Company or any of their Affiliates
conducts gaming activities and has jurisdiction over such Person.
"General Partner" means a general partner of the Borrower.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof and any entity exer-
cising executive, legislative, judicial, regulatory or adminis-
trative functions of or pertaining to government, including,
without limitation, the Gaming Authorities, and any corporation
or other entity owned or controlled (through stock or capital
ownership or otherwise) by any of the foregoing.
"Grid Note" means the Grid Note (including the Rider
thereto) dated the Original Amendment Date issued by the Borrower
in the original principal amount of $7,000,000, payable to the
order of the Bank, the principal of which, and all interest
accrued thereon, is being paid in full to the Bank on the date
hereof.
"Guaranty" means the Guaranty contained in Article Twelve
hereof.
"Hotel" means that portion of the Casino-Hotel not included
within the Casino.
(6)
<PAGE>
"Indebtedness" means, as applied to any Person, any
indebtedness in respect of borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such
Person or only to a portion thereof), or evidenced by bonds,
notes, debentures or similar instruments or letters of credit, or
representing the balance deferred and unpaid of the purchase
price of any property, if and to the extent such indebtedness
would appear as a liability upon a balance sheet of such Person
prepared in accordance with generally accepted accounting
principles, and shall also include any capitalized lease
obligations of such Person.
"Indenture" or "Indentures" means all of the Senior Note
Indenture, the Mortgage Note Indenture and the PIK Note
Indenture, unless specific reference is made to one or more, but
less than all, of the Indentures.
"Indenture Documents" means the Senior Indenture Note
Documents, the Mortgage Note Indenture Documents and the PIK Note
Indenture Documents.
"Indenture Indebtedness" means the principal, interest
and/or premiums payable under the Indentures and/or the Indenture
Notes.
"Indenture Guaranty" means all guaranties executed by the
Borrower in favor of any Trustee or the Company respecting any
obligations under any of the Senior Note Indenture Documents, the
Mortgage Note Indenture Documents and/or the PIK Note Indenture
Documents.
"Indenture Noteholder" means the holder of any Indenture
Notes.
"Indenture Notes" or "Notes" mean the Senior Notes, the
Mortgage Notes and the PIK Notes unless specific reference is
made to one or more, but less than all, of the Notes.
"Independent" when used with respect to any specified Person
means such a Person who (a) is in fact independent, (b) does not
have any direct financial interest or any material indirect
financial interest in the Borrower or the Company or in any other
obligor upon the Note or in any Affiliate of the Borrower or the
Company or of such other obligor and (c) is not connected with
the Borrower or the Company or such other obligor as an officer,
employee, promoter, underwriter, trustee, partner, director or
person performing similar functions. Whenever it is herein
provided that any Independent Person's opinion or certificate
shall be furnished to the Bank, such Person shall be appointed by
a Borrower Order, and such opinion or certificate shall state
that the signer has read this definition and that the signer is
(7)
<PAGE>
Independent within the meaning thereof. A Person who is
performing or who has performed services as an independent
contractor to any specified Person shall not be considered not
Independent merely by reason of the fact that such Person is
performing or has performed such services. For purposes of this
Credit Agreement, an "Independent Accountant" shall mean a
nationally recognized accounting firm which is Independent.
"Initial Stated Maturity Date" means May 28, 1995.
"Intercreditor Agreement" means the Intercreditor Agreement
dated as of the date hereof executed and delivered by the Bank
and the Trustees, a copy of which is attached hereto as Exhibit
F, as the same may from time to time be amended, supplemented or
otherwise modified.
"Interest Payment Date" means the date on which an install-
ment of interest on the Note is due and payable.
"Legal Requirements" has the meaning stated in Section 1.01
of the Mortgage.
"Lending Documents" means this Credit Agreement, the Note,
the Mortgage Documents, the Guaranty, the Put Agreement, the
Intercreditor Agreement and any other instruments, documents and
agreements, to which either the Borrower or the Company is a
party, executed or delivered pursuant to or in connection with
any of the foregoing or with the 1992 Credit Agreement, as the
same may from time to time be amended, supplemented or otherwise
modified.
"Lien" means, with respect to any Person:
(a) any encumbrance, mortgage, pledge, lien, charge or
other security interest of any kind upon any property or
other assets of such Person, whether now owned or hereafter
acquired, or upon the income or profits therefrom;
(b) the acquisition of any property or other assets
upon conditional sale or subject to a purchase money or
other title retention agreement, device or arrangement
(including a capitalized lease); and
(c) the assignment or pledge for security of any
accounts, general intangibles or chattel paper owned by such
Person, with or without recourse, or the sale of any of the
foregoing with recourse.
"Loan" means all indebtedness, obligations and other
liabilities of the Borrower to the Bank and its successors and
assigns under this Credit Agreement, the Note, the Mortgage and
(8)
<PAGE>
the other Lending Documents, whether direct or indirect, absolute
or contingent, secured or unsecured, due or to become due, now
existing or hereafter arising, including, without limitation, all
interest, fees, charges, costs and expenses (including, without
limitation, reasonable attorneys' fees and disbursements) for
which the Borrower or the Company is now or hereafter becomes
liable to pay to the Bank pursuant to any of such Lending
Documents.
"Managing Partner" means the Person currently named as the
managing general partner of the Borrower pursuant to the Partner-
ship Agreement until another Person shall have become such
pursuant to the applicable provisions of the Partnership Agree-
ment or otherwise, and thereafter, "Managing Partner" means such
Person exclusively.
"Mandatory Redemption Events" means the events upon the
occurrence of which the Company is obligated to effect a
Redemption of any of the Indenture Notes (including events as to
which the Company is obligated to offer to any Indenture
Noteholder the right to require the Company to effect a
Redemption of such Indenture Noteholder's Notes), and any similar
obligation of the Borrower.
"Maturity" when used with respect to the Note means the date
on which the principal (or any portion thereof) of the Note
becomes due and payable as therein or herein provided, whether at
the Initial Stated Maturity Date, the Extended Stated Maturity
Date or by declaration of acceleration or prepayment or
otherwise.
"Maximum Extension Rate of Interest" means either (i) if the
Bank elects, in connection with the exercise by the Borrower of
the Extension Option pursuant to Section 2.03 hereof, to charge a
fluctuating rate of interest during the extended term of the
Loan, a per annum rate not greater than 3% above the Prime Rate
as from time to time during such extension in effect, but not at
any time a rate per annum less than 9%, or (ii) if the Bank so
elects to charge a fixed rate of interest during the extended
term of the Loan, a per annum rate not less than 9% or, subject
to the 9% minimum rate, greater than that rate which is 3% above
the Prime Rate as in effect on the Extension Date.
"Mortgage" means the Amended and Restated Indenture of
Mortgage dated as of the Original Amendment Date between the
Bank, as mortgagee, and the Borrower, as mortgagor, securing the
Note, as amended by Amendment No. 1 thereto dated as of the date
hereof, a copy of which is attached hereto as Exhibit B, as the
same may from time to time be amended, supplemented or otherwise
modified.
(9)
<PAGE>
"Mortgage Documents" means the Mortgage, the amended and
restated assignments dated as of the Original Amendment Date from
the Borrower to the Bank, as amended by Amendment No. 1 thereto
dated as of the date hereof, copies of which are attached hereto
as Exhibits C and D, and any other security documents to which
either the Borrower or the Company is a party, executed or
delivered pursuant to or in connection with the Mortgage and/or
such assignments, as the same may from time to time be amended,
supplemented or otherwise modified.
"Mortgage Note Indenture" means the Mortgage Note Indenture
dated as of the date hereof by and among the Company, as Issuer,
the Borrower, as Guarantor, and First Bank National Association,
as Trustee, as the same may, subject to the provisions of
Sections 11.03(c), (d) and (e) hereof, from time to time be
amended, supplemented or otherwise modified, including by one or
more indentures or other instruments supplemental thereto.
"Mortgage Note Indenture Documents" means the Mortgage Note
Indenture, the Mortgage Notes, the Assignment Agreement (as
defined in the Mortgage Note Indenture), the mortgage executed by
the Borrower in favor of the Company and assigned to the Mortgage
Note Trustee in connection with the Mortgage Note Indenture, the
Partnership Note (as defined in the Mortgage Note Indenture), the
Indenture Guaranty executed by the Borrower in favor of the
Mortgage Note Trustee and secured by the Borrower Mortgage
executed by the Borrower in favor of the Mortgage Note Trustee,
the Intercreditor Agreement and any other instruments, documents
and agreements executed or delivered pursuant to or in connection
with any of the foregoing, as the same may, subject to the
provisions of Sections 11.03(c),(d) and (e) hereof, from time to
time be amended, supplemented or otherwise modified.
"Mortgage Note Trustee" means the Person named as the
"Mortgage Note Trustee" in the Mortgage Note Indenture until a
successor Mortgage Note Trustee shall have become such pursuant
to the applicable provisions of the Mortgage Note Indenture, and
thereafter "Mortgage Note Trustee" shall mean such successor
Mortgage Note Trustee. References to the "Mortgage Note Trustee"
shall also be construed as provided in Section 11.03(d) hereof.
"Mortgage Notes" mean the promissory notes executed and
delivered pursuant to the Mortgage Note Indenture, as the same
may, subject to the provisions of Sections 11.03(c), (d) and (e)
hereof, from time to time be amended, supplemented or otherwise
modified, including by one or more amendments or other
instruments supplemental thereto.
"1988 Credit Agreement" has the meaning stated in the
Preliminary Statement.
(10)
<PAGE>
"1992 Credit Agreement" has the meaning stated in the
Preliminary Statement.
"Note" means the Term Note dated as of August 15, 1990, as
amended and restated as of the Original Amendment Date, made by
the Borrower in the aggregate principal amount of $38,000,000,
payable to the order of the Bank, as amended by Amendment No. 1
thereto dated as of the date hereof, a copy of which is attached
hereto as Exhibit A, as the same may from time to time be
amended, supplemented, renewed, extended or otherwise modified
with the prior written consent of the Bank, provided that if the
term of the Loan has been extended pursuant to Section 2.03
hereof, thereafter "Note" shall mean the replacement note made by
the Borrower to the order of the Bank pursuant to the provisions
thereof or the Note, as amended pursuant to the provisions of
Section 2.03 hereof, as the Bank may elect pursuant thereto.
"Officer" of the Borrower or the Company means any Person
authorized to execute a Borrower Signature or Company Signature,
as the case may be.
"Officers' Certificate" delivered by the Borrower or the
Company means a certificate signed with a Borrower Signature or
Company Signature, as the case may be, and delivered to the Bank.
Whenever this Credit Agreement requires that an Officers' Certi-
ficate be signed also by an Accountant or other expert, such
Accountant or other expert may (except as otherwise expressly
provided in this Credit Agreement) be in the employ of the
Borrower or the Company.
"Open Market Borrower Note Purchases" means the purchase,
redemption or other acquisition of any of the Senior Notes, the
Mortgage Notes or the PIK Notes, with up to 50% of the Borrower's
Excess Available Cash (as defined in the Mortgage Note Indenture
as in effect on the date hereof) as permitted by each of the
Indentures, provided that, at the time of any such transaction
and after giving effect thereto, (i) no Event of Default, and no
material Default hereunder or under any other Lending Document as
to which the Bank shall have given notice to the Borrower shall
have occurred and be continuing and (ii) such purchase shall then
be permitted under the provisions of each of the Indentures, as
the same is in effect on the date hereof.
"Opinion of Counsel" means a written opinion of Independent
legal counsel.
"Original Amendment Date" has the meaning stated in the
Preliminary Statement.
"Original Indenture Security Documents" means all of the
documents which secure the obligations under the Existing Bonds,
(11)
<PAGE>
including, without limitation, the mortgage granted by the
Borrower to the Company and assigned to the Trustee, dated June
27, 1985 and amended by Amendment No. 1 dated as of May 29, 1992.
"Original Term Note" has the meaning stated in the Prelim-
inary Statement.
"Owned Land" has the meaning stated in Section 1.01 of the
Mortgage.
"Partnership Agreement" means the Amended and Restated
Partnership Agreement dated as of the date hereof, by and among
Trump, Castle and TC/GP, as general partners, as the same may
from time to time be amended, supplemented or otherwise modified.
"Permits" has the meaning stated in Section 1.01 of the
Mortgage.
"Permitted Borrower Distributions" means, with respect to
any period, the excess of (a) the sum of all cash receipts of the
Borrower derived from any source for such period (irrespective of
whether such receipts constitute revenues from operations, the
proceeds of indebtedness, reductions in reserve or contributions
of the partners), over (b) cash disbursements connected with the
ownership and operation of the Casino-Hotel for such period,
including, without limitation, all debt service (including annual
payments of principal and interest in respect of the promissory
notes issued by the Borrower with respect to each of the Inden-
tures, management fees, Capital Expenditures (as defined in the
Existing Partnership Agreement), fees paid to individuals for
serving as Noteholder Representatives, reasonable legal and
accounting fees, all costs relating to public reporting require-
ments, payments in respect of directors and officers insurance
and indemnification payments to or on behalf of any of the
Noteholder Representatives), and such reserves as required to be
maintained pursuant to the terms of any of the Borrower's
obligations, the requirements of any Governmental Authority or
are otherwise established by the Board of Partner Representatives
as reasonably necessary to meet contingencies or future
obligations.
"Permitted PIK Note Cash Interest Payments" means, for any
fiscal year of the Borrower, the difference between (a)
$31,920,000 and (b) interest payable in such fiscal year on the
Senior Notes and the Mortgage Notes and, with respect to the
fiscal years during which the same is payable, the Permitted
Senior Note Principal Payments.
"Permitted Senior Encumbrances" has the meaning stated in
Section 11.02 hereof.
(12)
<PAGE>
"Person" means any individual, corporation, partnership,
joint venture, association, joint stock company, trust, unincor-
porated organization or any other entity or government or any
agency or political subdivisions thereof.
"PIK Note Indenture" means the PIK Note Indenture dated as
of the date hereof by and among the Company, as Issuer, the
Borrower, as Guarantor, and First Bank National Association, as
Trustee, as such Indenture may, subject to the provisions of
Sections 11.03(e), (d) and (e) hereof, from time to time be
amended, supplemented or otherwise modified, including by one or
more indentures or other instruments supplemental thereto.
"PIK Note Indenture Documents" means the PIK Note Indenture,
the PIK Notes, the Pledge Agreement (as defined in the PIK Note
Indenture), the Subordinated Partnership Note (as defined in the
PIK Note Indenture), the Indenture Guaranty executed by the
Borrower in favor of the PIK Note Trustee, the Intercreditor
Agreement and any other instruments, documents and agreements
executed or delivered pursuant to or in connection with any of
the foregoing, as the same may, subject to the provisions of
Sections 11.03(c), (d) and (e) hereof, from time to time be
amended, supplemented or otherwise modified.
"PIK Note Trustee" means the Person named as the "PIK Note
Trustee" in the PIK Note Indenture until a successor PIK Note
Trustee shall have become such pursuant to the applicable
provisions of the PIK Note Indenture, and thereafter "PIK Note
Trustee" shall mean such successor PIK Note Trustee. References
to the "PIK Note Trustee" shall also be construed as provided in
Section 11.03(d) hereof.
"PIK Notes" mean the promissory notes executed and
delivered pursuant to the PIK Note Indenture, as the same may,
subject to the provisions of Sections 11.03(c),(d) and (e)
hereof, from time to time be amended, supplemented or otherwise
modified, including by one or more amendments or other
instruments supplemental thereto.
"Plan" has the meaning stated in the Preliminary Statement.
"Premises" has the meaning stated in Granting Clause Second
of the Mortgage.
"Prime Rate" means the interest rate announced from time to
time by the Bank as its "prime rate" or "prime lending rate."
This rate of interest is determined from time to time by the Bank
as a means of pricing some loans to its customers and is neither
tied to any external rate of interest or index nor does it
necessarily reflect the lowest rate of interest actually charged
(13)
<PAGE>
by the Bank to any particular class or category of customers of
the Bank.
"Principal Payment Date" means a date on which a payment of
principal with respect to the Loan becomes due and payable
pursuant to the Note.
"Put Agreement" means the Put Agreement dated as of
February 16, 1988, as amended and restated as of the Original
Amendment Date, executed and delivered by Trump in favor of the
Bank, as amended by Amendment No. 1 to the Put Agreement dated as
of the date hereof, a copy of which is attached hereto as Exhibit
E, as the same may from time to time be amended, supplemented or
otherwise modified with the prior written consent of the Bank.
"Redemption" shall mean any action pursuant to which an
Indenture Note is no longer outstanding or effectively out-
standing, including, without limitation, any one or more of the
following: a redemption, exchange, refunding, repayment,
refinancing, defeasance, repurchase, retirement or other
replacement or other substitution or other similar action,
provided that an exchange effected pursuant to the Registration
Rights Agreement (as defined in the Registration Statement),
whereby the Senior Notes are exchanged for new promissory notes
upon substantially identical terms, shall not constitute a
"Redemption" as defined herein.
"Refinancing Debt" has the meaning stated in Section
11.03(d) hereof.
"Refinancing Debt Documents" means any credit agreement,
indenture, mortgage, assignment of leases and rents and any and
all other instruments, documents and agreements executed or
delivered pursuant to or in connection with Refinancing Debt, as
the same may, subject to the provisions of Sections 11.03(c), (d)
and (e), from time to time be amended, supplemented or otherwise
modified.
"Registration Statement" means the Registration Statement on
Form S-4, Registration No. 33-51411, of the Borrower and the
Company as declared effective by the Commission on December 10,
1993, together with all amendments thereto on or before the date
hereof, pursuant to which, among other things, the Indenture
Notes have been registered under the Securities Act of 1933.
"Required Redemption Event" means a CCC Required Redemption
Event, a Condemnation/Casualty Event and/or a Change in Control
Event.
"Restricted Payment" means, as applied to the Borrower or
the Company, (a) any dividend or other distribution of assets,
(14)
<PAGE>
properties, cash, rights, obligations or securities paid or made
by the Borrower or the Company on or in respect of any class of
such Person's capital stock, partnership interest or other equity
interest, as the case may be, (b) any redemption, purchase,
retirement or other acquisition of any shares of such Person's
capital stock, partnership interest or other equity interest, as
the case may be, (c) any advances or loans to any Affiliate of
the Borrower or the Company by the Borrower or the Company, (d)
any capital contribution to, or other debt or equity investment
in, an Affiliate, (e) any principal payment on or redemption,
purchase, defeasance, retirement or other acquisition prior to
any scheduled principal payment or maturity of any Indenture
Indebtedness or any cash interest payments with respect thereto,
(f) any payment by or on behalf of the Borrower or the Company of
any compensation (whether direct or indirect, as salary, bonus,
management fees, reimbursement of expenses or otherwise) to an
Affiliate of either the Borrower or the Company (for this
purpose, Affiliate of the Borrower or the Company shall not
include employees thereof (other than Trump) actively involved in
the operation of the Casino-Hotel), and (g) any payment to any
Trustee made by the Borrower or the Company to fund a Blocked
Payment (as that term is defined in the Intercreditor Agreement),
which under the terms of the Consent and Agreement, dated the
date hereof, of the Borrower and the Company appended to the
Intercreditor Agreement, the Borrower has agreed to pay directly
to the Bank for application to the Loan; provided however, that
so long as no Event of Default has occurred and is continuing,
the term "Restricted Payment" shall not include (i) any payment
of principal, or interest or other amount required or, subject to
the provisions of Sections 11.03 and 11.04 hereof, permitted to
be made in respect of the Indenture Notes as in effect on the
date hereof (including any such payment made by the Borrower
pursuant to any Indenture Guaranty or any other such payment made
by the Borrower or the Company to the Trustees of their respec-
tive obligations under any of the Indenture Documents to the
extent not inconsistent with the Intercreditor Agreement) or in
respect of any Refinancing Debt incurred in accordance with the
provisions of Section 11.03(d) hereof to the extent permitted to
be made pursuant to the terms of this Credit Agreement and the
other Lending Documents and the Refinancing Debt Documents; (ii)
any Open Market Borrower Note Purchases; (iii) any Redemption of
all, but not less than all of the Indenture Notes, effected at
the respective applicable minimum redemption prices contained in
each of the Senior Note Indenture, the Mortgage Note Indenture
and the PIK Note Indenture (as applicable) as in effect on the
date hereof, provided that same complies with the provisions of
Section 11.03(d) hereof; (iv) any redemption of any class of
capital stock or partnership interest of any such Person (other
than Trump or any Affiliate thereof), if such Person receives an
Opinion of Counsel (a copy of which is delivered to the Bank)
that the failure to redeem such capital stock or partnership
(15)
<PAGE>
interest would subject such Person to an adverse action or
failure to act by a Gaming Authority and, in the opinion of the
Board of Directors or Managing Partner of such Person, such
adverse action or failure to act would be likely to have a
material adverse effect with respect to such Person; (v) loans to
employees of such Person actively involved in the operation of
the Casino-Hotel not exceeding $10,000 per employee or $250,000
in the aggregate at any one time outstanding, or the engagement
of such Person in credit transactions in the operation of the
Casino-Hotel, if such loans or credit transactions are in the
ordinary course of business; (vi) payments or distributions made
by the Borrower or the Company during any period permitted by the
Indentures in an amount not in excess of the Permitted Borrower
Distributions with respect to such period; (vii) any payments of
the fees and expenses of any Noteholder Representatives to the
extent required to be paid pursuant to the Partnership Agreement
as in effect on the date hereof; (viii) any indemnification
payment to or on behalf of any Noteholder Representatives
required to be made pursuant to Section 15.11 of the Partnership
Agreement as in effect on the date hereof; and (ix) the
distribution by the Partnership of the stock of TC/GP and,
subject to Section 4.14(a)(iii)(B) hereof, the issuance of PIK
Notes in connection with the Merger (as defined in the
Registration Statement). Without limiting the generality of the
foregoing, the term "Restricted Payments" shall include payments
or distributions made in respect of the Trump Priority Capital as
provided for in the Partnership Agreement as in effect on the
date hereof or general distributions to the General Partners in
respect of the general partners' interest as provided for in the
Partnership Agreement as in effect on the date hereof, except
those payments or distributions made by the Borrower or the
Company during any period in an amount not in excess of the
Permitted Borrower Distributions with respect to such period.
For purposes of this definition, "capital stock", "Partnership
interest" or "other equity interest" shall include warrants,
rights and options to acquire shares of capital stock, partner-
ship interests or other equity interest, as the case may be.
"Senior Note Indenture" means the Senior Note Indenture
dated as of the date hereof by and among the Company, as Issuer,
the Borrower, as Guarantor, and First Bank National Association,
as Trustee, as the same may, subject to the provisions of
Sections 11.03(c), (d) and (e) hereof, from time to time be
amended, supplemented or otherwise modified, including by one or
more indentures or other instruments supplemental thereto.
"Senior Note Indenture Documents" means the Senior Note
Indenture, the Senior Notes, the Assignment Agreement (as defined
in the Senior Note Indenture), the mortgage executed by the
Borrower in favor of the Company and assigned to the Senior Note
Trustee in connection with the Senior Note Indenture, the
Partnership Note (as defined in the Senior Note Indenture), the
Indenture Guaranty executed by the Borrower in favor of the
Senior Note Trustee and secured by the Borrower Mortgage executed
(16)
<PAGE>
by the Borrower in favor of the Senior Note Trustee, the
Intercreditor Agreement and any other instruments, documents and
agreements executed or delivered pursuant to or in connection
with any of the foregoing, as the same may, subject to the
provisions of Section 11.03(c), (d) and (e) hereof, from time to
time be amended, supplemented or otherwise modified.
"Senior Note Trustee" means the Person named as the "Senior
Note Trustee" in the Senior Note Indenture until a successor
Senior Note Trustee shall have become such pursuant to the
applicable provisions of the Senior Note Indenture, and
thereafter "Senior Note Trustee" shall mean such successor Senior
Note Trustee. References to the "Senior Note Trustee" shall also
be construed as provided in Section 11.03(d) hereof.
"Senior Notes" mean the promissory notes executed and
delivered pursuant to the Senior Note Indenture, as the same may,
subject to the provisions of Sections 11.03(c), (d) and (e)
hereof, from time to time be amended, supplemented or otherwise
modified, including by one or more amendments or other
instruments supplemental thereto.
"Services Agreement" means the Services Agreement dated as
of the date hereof between the Borrower and TC/GP, as the same
may, subject to the provisions of Section 11.03(b) hereof, from
time to time be amended, supplemented or otherwise modified.
"Stated Maturity" when used with respect to the Note means
the Initial Stated Maturity Date or, if the term of the Loan is
extended in accordance with Section 2.03(b) hereof, the Extended
Stated Maturity Date.
"Successor" has the meaning stated in Section 2.07 hereof.
"Tangible Personal Property" has the meaning stated in
Granting Clause Fourth of the Mortgage.
"TC/GP" means TC/GP Corporation, a Delaware corporation to
be wholly-owned by Trump as of the date the Merger (as defined in
the Registration Statement) is consummated.
"Trump" means Donald J. Trump.
"Trustees" or "Trustee" means all of the Senior Note
Trustee, the Mortgage Note Trustee and the PIK Note Trustee
unless specific reference is made to one or more, but less than
all, of the Trustees.
"Trust Estate" has the meaning stated in the habendum to the
Granting Clauses of the Mortgage.
(17)
<PAGE>
Section 1.02 Notices.
(a) Any request, demand, authorization, direction, notice
(including, without limitation, a notice of default), consent,
waiver or other document provided or permitted by this Credit
Agreement to be made upon, given or furnished to, or filed with,
the Borrower, the Company or the Bank shall be deemed given when
either (i) delivered by hand or by Federal Express or similar
overnight courier or (ii) three Business Days after sending by
registered or certified mail, postage prepaid, in either case,
addressed as follows:
To the Borrower:
Trump's Castle Associates
Trump's Castle Casino Resort by the Bay
Brigantine Boulevard at Huron Avenue
Atlantic City, New Jersey 08401
Attn: General Counsel
To the Company:
Trump's Castle Funding, Inc.
Trump's Castle Casino Resort by the Bay
Brigantine Boulevard at Huron Avenue
Atlantic City, New Jersey 08401
Attn: General Counsel
To the Bank:
Midlantic National Bank
Supervised Loan Department - 7th Floor
499 Thornall Street
Edison, New Jersey 08837
Attn: Ben Berzin, Jr., Senior Vice President
with, in each case, a copy sent by the same method to:
Donald J. Trump
c/o The Trump Organization
725 Fifth Avenue
New York, New York 10022
The Trump Organization
725 Fifth Avenue
New York, New York 10022
Attn: Nicholas L. Ribis, Esq.
(18)
<PAGE>
Sills Cummis Zuckerman Radin
Tischman Epstein & Gross, P.A.
One Riverfront Plaza
Newark, New Jersey 07102
Attn: Ira A. Rosenberg, Esq.
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Attn: Thomas M. Cerabino, Esq.
Ropes & Gray
One International Place
Boston, Massachusetts 02110-2624
Attn: Robert L. Nutt, Esq.
(b) By notice to the Borrower, the Company and/or the Bank,
given as provided above, any party may designate additional or
substitute addresses for such notices, which, notwithstanding
Subsection (a) of this Section 1.02, shall be deemed given when
received.
Section 1.03 Form and Contents of Documents Delivered to the
Bank.
Whenever several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not
necessary that all such matters be certified by, or covered by
the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and
one or more other such Persons may certify or give an opinion as
to other matters in one or several documents.
Any certificate or opinion of an Officer of the Borrower or
the Company may be based, insofar as it relates to legal matters,
upon a certificate or opinion of, or representations by, counsel,
unless such Officer knows that the certificate or opinion or
representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any Opinion of
Counsel may be based, insofar as it relates to factual matters,
upon a certificate or opinion of, or representations by, an
Officer or Officers of the Borrower or the Company stating that
the information with respect to such factual matters is in the
possession of the Borrower or the Company, unless such counsel
knows that the certificate or opinion or representations with
respect to such matters are erroneous. If appropriate to the
matter being opined upon, any Opinion of Counsel may be subject
to rights of creditors and the availability of equitable
remedies.
(19)
<PAGE>
Whenever any Person is required to make, give or execute two
or more applications, requests, consents, certificates, state-
ments, opinions or other instruments under this Credit Agreement,
they may, but need not, be consolidated and form one instrument.
Whenever in this Credit Agreement, in connection with any
application or certificate or report to the Bank, it is provided
that the Borrower or the Company shall deliver any document as a
condition of the granting of such application, or as evidence of
the Borrower's or the Company's compliance with any term hereof,
it is intended that the truth and accuracy, at the time of the
granting of such application or at the effective date of such
certificate or report (as the case may be), of the facts and
opinions stated in such documents shall in such case be condi-
tions precedent to the right of the Borrower or the Company to
have such application granted or to the sufficiency of such
certificate or report.
Section 1.04 Compliance Certificates and Opinions.
Upon any application or request by the Borrower or the
Company to the Bank to take any action under any provision of
this Credit Agreement, the Borrower or the Company shall furnish
to the Bank an Officers' Certificate stating that all conditions
precedent, if any, provided for in this Credit Agreement relating
to the proposed action have been complied with and an Opinion of
Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which
the furnishing of such documents is specifically required by any
provision of this Credit Agreement relating to such particular
application or request, no additional certificate or opinion need
be furnished.
Every certificate or opinion with respect to compliance with
a condition or covenant provided for in this Credit Agreement
shall include:
(a) a statement that each individual signing such
certificate or opinion has read such condition or covenant
and the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of
the examination or investigation upon which the statements
or opinions contained in such certificate or opinion are
based;
(c) a statement that, in the opinion of each such
individual, he has made such examination or investigation as
is necessary to enable him to express an informed opinion as
(20)
<PAGE>
to whether or not such condition or covenant has been
complied with; and
(d) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been
complied with.
Section 1.05 Effect of Recitals, Headings and Table of
Contents.
All Recitals set forth in the Preliminary Statement above
are incorporated herein and are made an integral part of this
Credit Agreement. The Article and Section headings herein and in
the Table of Contents are for convenience only and shall not
affect the construction hereof.
Section 1.06 Successors and Assigns.
All covenants and agreements in this Credit Agreement by the
Borrower or the Company shall, subject to Section 10.02, bind its
successors and assigns, whether so expressed or not. The
Borrower and the Company each acknowledges that the Bank may at
any time sell, assign, transfer or grant participation or
subparticipations in the Loan to other financial institutions
and/or Persons other than Trump or an Affiliate of Trump
(individually, a "Transferee") and in that connection may distri-
bute information concerning the Borrower and the Company and
their respective Affiliates to such Transferee or Person who may
become a Transferee; provided that any such sale, assignment,
transfer or grant of any participation or subparticipation of any
Loan or portion thereof shall be subject to the approval of the
relevant Gaming Authorities to the extent necessary. The
Borrower and the Company each agrees that each Transferee is a
third-party beneficiary of this Credit Agreement, the Note and
the other Lending Documents and may exercise all rights with
respect to the portion of the Loan held by it as fully as if such
Transferee were the direct holder thereof, subject to the
applicable provisions of the Lending Documents.
Section 1.07 Separability Clause.
In case any provision in this Credit Agreement, the Note or
any other Lending Document shall be invalid, illegal or
unenforceable in any respect (a) such provisions shall be
enforced to the maximum extent permitted by applicable law, it
being intended that all provisions are fully enforceable; and (b)
the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
(21)
<PAGE>
Section 1.08 Benefits of Credit Agreement.
Except as expressly provided in Section 1.06 hereof, nothing
in this Credit Agreement, the Note or any other Lending Document,
express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, any benefit or any
legal or equitable right, remedy or claim under this Credit
Agreement, the Note or any other Lending Document.
Section 1.09 Governing Law.
This Credit Agreement shall be deemed to be a contract under
the laws of the State of New Jersey and shall be construed in
accordance with and governed by the laws of the State of New
Jersey (without giving effect to principles of conflicts of
laws).
Section 1.10 Casino Control Act.
Each of the provisions of this Credit Agreement is subject
to and shall be enforced in compliance with the provisions of the
New Jersey Casino Control Act.
Section 1.11 Miscellaneous.
(a) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original,
but all of which when taken together shall constitute but one and
the same agreement.
(b) Amendments and Waivers. Neither this Credit Agreement
nor any other Lending Document, nor any terms hereof or thereof,
may be amended, waived, discharged or terminated unless such
amendment, waiver, discharge or termination is in writing signed
by the Bank and any other party or parties thereto. Any such
waiver and any such amendment, supplement or modification shall
be binding upon the Borrower, the Company, the Bank and all
future holders of all or any part of the Note. In the case of
any waiver, the Borrower, the Company and the Bank shall be
restored to their former positions and rights hereunder and under
the Lending Documents to the extent set forth in such waiver, and
any Default or Event of Default expressly waived shall be deemed
to be cured and not continuing; but no such waiver shall extend
to any subsequent or other Default or Event of Default, or impair
any right consequent thereon.
(c) No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Bank, any right,
remedy, power or privilege hereunder or under any other Lending
Document shall operate as a waiver thereof; nor shall a single or
partial exercise of any right, remedy, power or privilege
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hereunder or under any other Lending Document preclude any other
or further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, power and
privileges herein provided and provided in the other Lending
Documents are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
(d) CONSENT TO JURISDICTION. EACH OF THE BORROWER AND THE
COMPANY HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(i) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS CREDIT AGREEMENT OR
ANY OF THE OTHER LENDING DOCUMENTS OR FOR RECOGNITION AND
ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-
EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF
NEW JERSEY, THE COURTS OF THE UNITED STATES OF AMERICA FOR
THE DISTRICT OF NEW JERSEY AND APPELLATE COURTS FROM ANY
THEREOF;
(ii) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY
BE BROUGHT IN SUCH COURTS, AND WAIVES ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR
PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES
NOT TO PLEAD OR CLAIM THE SAME;
(iii) AGREES THAT SERVICE OF PROCESS IN ANY SUCH
ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY
THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY
SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO THE
BORROWER OR THE COMPANY, AS THE CASE MAY BE, AT ITS ADDRESS
SET FORTH IN SECTION 1.02 HEREOF OR AT SUCH OTHER ADDRESS OF
WHICH THE BANK SHALL HAVE BEEN NOTIFIED PURSUANT THERETO;
AND
(iv) AGREES THAT NOTHING HEREIN SHALL (A) AFFECT THE
RIGHT OF THE BANK TO EFFECT SERVICE OF PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR (B) LIMIT THE RIGHT OF THE BANK
TO SUE IN ANY OTHER JURISDICTION.
(e) Further Assurances. At any time and from time to time,
upon the Bank's request and at the expense of the Borrower and/or
the Company, the Borrower and the Company shall promptly and duly
execute and deliver or cause to be executed and delivered any and
all instruments and documents and take any and all further
actions as the Bank may deem necessary or advisable to effect the
purposes and carry out the intent of the Lending Documents and to
perfect, confirm, enforce and/or continue the rights and remedies
of the Bank thereunder and as provided by law.
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(f) Interpretation. The parties acknowledge and agree that
(i) each party and its counsel have reviewed and negotiated the
terms and provisions of this Credit Agreement and the other
Lending Documents and have contributed to the preparation and
revision thereof, (ii) the normal rules of construction, to the
effect that any ambiguities are resolved against the drafting
party, shall not be applied in the interpretation of this Credit
Agreement and the other Lending Documents and (iii) the terms and
provisions of this Credit Agreement and the other Lending
Documents shall be construed fairly as to all parties hereto and
thereto and not in favor of or against any party, regardless of
which party was generally responsible for the preparation of this
Credit Agreement and the other Lending Documents.
(g) Entire Agreement. This Credit Agreement and the other
Lending Documents, and the instruments and documents executed and
delivered in connection herewith and therewith, constitute the
entire understanding between and parties with respect to the
transactions contemplated hereby, and supersede and replace all
other agreements, understandings, representations and statements
with respect to the transactions contemplated thereby.
Section 1.12 General Application of Remedies Provisions.
(a) The remedies of the Bank upon any default by the
Borrower or the Company in the fulfillment of any of their
obligations hereunder shall be limited in each instance by the
provisions of Section 2.07 hereof, whether or not the provisions
providing for such remedies explicitly refer to such Section.
(b) In each instance, the giving of any notice and the
expiration of any grace period provided for in Section 7.01
hereof shall be a condition to a Default becoming an Event of
Default (and to the assertion of any rights granted to the Bank
upon an Event of Default), except that (i) there is no notice or
grace period required in respect of certain Defaults, (ii) upon
the occurrence of any Default specified in Section 2.3 of the
Intercreditor Agreement, the Bank may take the actions therein
provided and (iii) upon the occurrence of any Default, the Bank
may take the actions provided for in Section 7.05 hereof.
(c) For the purposes of this Credit Agreement, it is
understood that a Lien or an event which does not materially
diminish the value of the Bank's interest in the Trust Estate
shall not be deemed an "impairment of security," as that phrase
is used in this Credit Agreement, provided that the failure of
the Borrower to pay ad valorem real estate taxes with respect to
all or any part of the Trust Estate (or to provide collateral
security to the Bank for the payment thereof) as required by
Section 11.05 hereof shall be deemed to constitute an "impairment
of security" as used herein and as used in the Mortgage.
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ARTICLE II.
AMOUNT AND TERMS OF LOAN
Section 2.01 Restructured Loan.
Upon the Effective Date, the 1992 Credit Agreement shall be
amended and replaced by this Credit Agreement, a new
Intercreditor Agreement shall be entered into by the parties
thereto and, to the extent provided herein, certain other Lending
Documents (as defined in the 1992 Credit Agreement) shall be
amended and/or amended and restated in their entireties and
replaced by such other amended and restated Lending Documents,
respectively. As a result of the foregoing, upon the Effective
Date the rights, obligations and liabilities of the Borrower and
the Company under the 1992 Credit Agreement shall be modified,
superseded and governed by, and the Borrower shall repay the Loan
in the principal amount of $38,000,000 in accordance with, the
terms and conditions of this Credit Agreement and the other
Lending Documents. THE BORROWER AND THE COMPANY EACH HEREBY
ACKNOWLEDGES AND AGREES THAT (a) THE LOAN IS PAYABLE BY SUCH
PERSON PURSUANT TO THE LENDING DOCUMENTS WITHOUT DEDUCTION,
SETOFF, DEFENSE OR COUNTERCLAIM FOR ANY REASON WHATSOEVER, AND
(b) NEITHER THE BORROWER NOR THE COMPANY, NOR ANY OF THEIR
RESPECTIVE AFFILIATES, HAS ANY CLAIMS AGAINST THE BANK OR ANY OF
ITS AFFILIATES, OR ANY OF ITS DIRECTORS, OFFICERS, EMPLOYEES OR
AGENTS, ARISING OUT OF OR IN CONNECTION WITH THE LENDING DOCU-
MENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREBY, AND HEREBY
EXPRESSLY WAIVES AND RELEASES ANY AND ALL SUCH CLAIMS.
Section 2.02 The Note.
The Loan is evidenced by the Note, which is payable to the
order of the Bank and represents the obligation of the Borrower
to pay to the order of the Bank the aggregate outstanding prin-
cipal amount of the Loan, with interest thereon as prescribed in
this Section 2.02. The Note is (a) dated as of the Original
Amendment Date, (b) in the principal amount of $38,000,000, (c)
stated to mature on the Stated Maturity Date, on which date the
entire outstanding principal amount of the Note shall be due and
payable in full, and (d) bearing interest for the period from the
Original Amendment Date until paid in full on the principal
amount thereof from time to time outstanding at the rate provided
therein, provided, that, if all or a portion of the principal
amount of the Loan shall not be paid when due after the expira-
tion of any applicable grace period contained herein or in the
Note (whether at the Stated Maturity Date, by acceleration or
otherwise), any such overdue payment shall, without limiting the
rights of the Bank under Section 7 hereof, thereafter bear
interest at a rate three percent (3%) per annum in excess of the
interest rate otherwise payable in respect of the Loan from the
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date of nonpayment (both before and after judgment), until paid
in full (and, to the extent any provision in the Note, the
Mortgage or any other Lending Document is inconsistent with this
proviso, such provisions are hereby deemed amended to be consis-
tent with this proviso). Interest accrued on the Note shall
continue to be payable monthly in arrears on the last Business
Day of each calendar month, and on the Stated Maturity Date and
payment (including prepayment) in full thereof.
Section 2.03 Extension of Loan.
(a) Subject to the satisfaction on the Extension Date of
the conditions precedent set forth in Section 3.02 hereof, the
Borrower shall have the option to extend the term of the Loan on
the Extension Date to the Extended Stated Maturity Date (the
"Extension Option"), with such extension having effect for all
purposes of this Credit Agreement from and after the Initial
Stated Maturity Date. The "Extension Date" shall be the Initial
Stated Maturity Date unless any Event of Default with respect to
which the forbearance provisions of Section 3.1 of the Inter-
creditor Agreement apply shall have occurred within the 90-day
period immediately preceding the Initial Stated Maturity Date and
shall be continuing on the Initial Stated Maturity Date, in which
event the "Extension Date" shall be that date, not later than the
90th day immediately succeeding the Initial Stated Maturity Date,
upon which all such Events of Default are cured in accordance
with Section 3.1 of the Intercreditor Agreement (if cured), and
if not so cured, the Extension Option shall cease to have any
force and effect. The Borrower may elect to exercise the
Extension Option by furnishing to the Bank at any time not more
than 120 days nor less than 30 days immediately preceding the
Initial Stated Maturity Date a notice of its intention so to
extend. If any Event of Default with respect to which the
forbearance provisions of Section 3.1 of the Intercreditor
Agreement apply occurs after the Borrower has furnished such
notice, the Borrower shall (i) promptly by notice to the Bank
reconfirm its intention to extend the term of the Loan and (ii)
use its best efforts diligently to cure such Event of Default.
On the Extension Date, and as a condition to extension, in
addition to the conditions precedent set forth in Section 3.02
hereof, the Borrower shall pay to the Bank all accrued interest
and principal required to be paid on the Loan through the Exten-
sion Date.
(b) The Loan as so extended shall be evidenced by a
replacement Note, which shall be payable to the order of the Bank
and shall represent the obligation of the Borrower to pay the
Bank the aggregate outstanding principal amount of the Loan, with
interest thereon as prescribed in this Section 2.03. The
replacement Note shall (i) be dated as of the Effective Date,
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(ii) be in the principal amount of $38,000,000, less any
prepayments of principal made prior to the Extension Date, (iii)
be stated to mature in 59 consecutive equal monthly installments
of principal, each in the amount of $158,333, payable on the last
Business Day of each calendar month, commencing on the first such
date to occur after the Initial Stated Maturity Date, and the
entire outstanding principal amount of the replacement Note shall
be due and payable in full on the Extended Stated Maturity Date,
and (iv) bear interest for the period from the date thereof until
paid in full on the principal amount thereof from time to time
outstanding at a rate per annum equal to such percentage in
excess of the Prime Rate as the Bank may determine is reasonable
for a secured term loan of this nature based upon market
conditions then existing (but such rate shall be subject to (A)
the limitations set forth in the definition of the Maximum
Extension Rate of Interest and (B) the Bank's right to establish
a fixed rate of interest as provided in the definition of the
Maximum Extension Rate of Interest); provided, that if all or a
portion of the principal amount of the Loan shall not be paid
when due after the expiration of any applicable grace period
contained herein or in such replacement Note (whether at the
Extended Stated Maturity Date, by acceleration or otherwise), any
such overdue payment shall, without limiting the rights of the
Bank under Section 7 hereof, thereafter bear interest at a rate
three percent (3%) per annum in excess of the interest rate
otherwise payable in respect of the Loan, from the date of
nonpayment (both before and after judgment), until paid in full.
Interest accrued on the Note shall be payable monthly in arrears
on the last Business Day of each calendar month, commencing on
the first such date to occur after the Extension Date, and on the
Extended Stated Maturity Date and on the payment (including
prepayment) in full of the Note. Notwithstanding the foregoing,
the Bank may at its option elect to have an amendment made to the
Note to reflect the terms set forth above, rather than require
the delivery of a replacement Note.
(c) In the event that the Extension Date occurs after the
Initial Stated Maturity Date, then during the period from the
Initial Stated Maturity Date to the Extension Date, the Borrower
shall make payments of interest and principal on the Note as if
the Extension Option had been exercised as of the Initial Stated
Maturity Date.
(d) If the term of the Loan is not extended as provided in
this Section 2.03, the Loan shall be due and payable in full as
of the Initial Stated Maturity Date.
Section 2.04 Calculation of Interest.
Interest payable hereunder and under the Note shall be
calculated on the basis of a 360-day year, but charged for the
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actual number of days elapsed. Any change in the interest rate
on the Note resulting from a change in the Prime Rate shall
become effective (without notice to the Borrower) as of the
opening of business on the day on which such change in the Prime
Rate becomes effective. The Bank shall notify the Borrower of
the effective date and the amount of each such change in the
Prime Rate, provided that the failure or delay in giving any such
notice shall not affect any of the obligations of the Borrower of
the Company hereunder.
Section 2.05 Payments.
All payments (including prepayments) by the Borrower on
account of principal, interest and fees payable hereunder shall
be made without setoff or counterclaim to the Bank, at its
offices specified in Section 1.02 hereof, in lawful money of the
United States of America and in immediately available funds. If
any payment hereunder or on the Note becomes due and payable on a
day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day and, with respect to
payment of interest, interest on principal shall be payable at
the then applicable rate during such extension.
Section 2.06 Optional Prepayments; Mandatory Prepayments.
(a) The Borrower may, at its option, at any time and from
time to time prepay the Note (including any replacement Note) in
whole or in part without premium or penalty, upon at least three
(3) Business Days' notice to the Bank, specifying the date and
amount of prepayment. Such notice shall be irrevocable and the
payment amount specified in such notice shall be due and payable
on the date specified, together with interest accrued on the
amount prepaid to and including such date of prepayment. Each
such optional prepayment of the Loan shall be applied to the
installments of principal of the Loan in the inverse order of
maturity. Amounts prepaid on account of the Loan may not be
reborrowed. Any optional partial prepayments of the Loan shall
be in the principal amount of $1,000,000 or such greater amount
(in multiples of $1,000,000) as may be specified by the Borrower.
(b) The Borrower shall prepay the Note (including any
replacement Note) and all other obligations of the Borrower
and/or the Company payable to the Bank hereunder and under the
other Lending Documents, upon the occurrence of any Change of
Control Event or any Condemnation/Casualty Event, as provided in
this Section 2.06. The Note and all such other obligations of
the Borrower and/or the Company shall be paid (i) in full, upon
the occurrence of any Change of Control Event, and (ii) to the
extent of any proceeds received by the Borrower and/or the
Company at any time and from time to time as a result thereof,
upon the occurrence of any Condemnation/Casualty Event. Such
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prepayment shall be made within two Business Days of the
occurrence of a Change of Control Event or the receipt of any
proceeds by the Borrower and/or the Company as a result of any
Condemnation/Casualty Event. Any such mandatory prepayment of
the Loan shall be applied first to pay all accrued but unpaid
interest on the Loan, then to the outstanding principal amount
thereof and the balance, if any, shall be applied to pay all such
other obligations of the Borrower and/or the Company in respect
of the Loan. Each such mandatory prepayment of the principal of
the Loan shall be applied to the installments of principal in the
inverse order of maturity. Amounts so prepaid on account of the
Loan may not be reborrowed.
Section 2.07 Limitation on Liability.
Notwithstanding anything herein or in any other agreement,
document, certificate, instrument, statement or omission referred
to below to the contrary, the Borrower and the Company are liable
hereunder only to the extent of the present and future assets of
the Borrower and of the Company and, except as provided in this
Section 2.07 and as provided in the Put Agreement, no other
person or entity, including, but not limited to, any partner,
partner representative, officer, committee or committee member of
the Borrower or any partner therein or of any partnership
affiliate (as defined in Rule 405 under the Securities Act of
1933, as amended) of the Borrower, or any incorporator, officer,
director or shareholder of the Company, of any corporate partner
of the Borrower or of any corporate affiliate of the Borrower, or
any affiliate or controlling person or entity of any of the
foregoing, or any successor, personal representative, heir or
assign (each, a "Successor") 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 herein or therein) under, in connection with, arising
out of or relating to this Credit Agreement, the other Lending
Documents 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, (i) the Bank shall preserve any
personal claims it may have for fraud, liabilities under the
Securities Act of 1933, as amended, and other liabilities that
cannot be waived under applicable federal and state laws against
such Persons in connection with the transactions contemplated
hereby, provided, however, that such conduct shall not in and of
itself constitute an Event of Default under the Credit Agreement,
the Note, the Mortgage or any other Lending Document, (ii) Trump
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shall be liable to the Bank to perform his obligations under the
Put Agreement, (iii) each of the General Partners of the Borrower
shall be liable to the Borrower to repay to the Borrower an
amount equal to any Restricted Payment actually received by that
General Partner in contravention of Section 11.04 hereof, (iv)
Trump and each Affiliate of Trump (but not in any event any
Partner Representative (as defined in the Partnership Agreement)
other than Trump or any Affiliate thereof) shall be liable to
repay to the Borrower any Restricted Payment actually received by
Trump or such Affiliate of Trump, as the case may be, in
contravention of Section 11.04, (v) with respect to a Combination
Transaction, any Successor shall have liability hereunder and
under any other Lending Document to the fullest extent the
Borrower and the Company have, taking into consideration the
provisions of the second sentence of Section 10.02 hereof, (vi)
any Person who receives directly or indirectly any assignment or
other transfer in whole or in part of the Trust Estate in
contravention of the provisions of this Credit Agreement or any
of the other Lending Documents shall be liable hereunder and
under the other Lending Documents to the extent of the assets
received and (vii) the foregoing is not intended to and shall not
apply to (A) the Intercreditor Agreement (but shall apply to the
Consent and Agreement executed by the Borrower and the Company
relating thereto), (B) the obligations and agreements of the
Trustees set forth in the Consent and Agreement or (C) any
Opinions of Counsel, title insurance policies, pro-forma policies
and/or commitments, title recording letters, title reinsurance
policies, pro-forma policies and/or commitments, real estate
surveys and/or insurance policies delivered to or entered into
for the benefit of the Bank pursuant to this Credit Agreement or
any of the other Lending Documents, or in connection with the
transactions contemplated hereby or thereby or by the 1992 Credit
Agreement, and to the extent certain items referred to in this
clause "C" are not included in similar provisions in the
Mortgage, Assignment of Leases and Rents, Assignment of Operating
Assets, the Note and any other Lending Document, they are hereby
deemed so included. Any agreement, document, certificate, state-
ment or other instrument to be executed simultaneously with, in
connection with, arising out of or relating to this Credit Agree-
ment or any other Lending Document, or any other agreement,
document, certificate, statement or instrument referred to above,
or any agreement, document, certificate, statement or instrument
contemplated hereby (other than the Put Agreement), shall contain
language mutatis mutandi to this Section 2.07 and, if such
language is omitted, shall be deemed to contain such language.
The foregoing shall not apply to, or otherwise impair or reduce,
the liability of Trump under, or in connection with any documents
executed by Trump in connection with, the Grid Note (the "Grid
Note Documents") or any other Person bound by any of the Grid
Note Documents, including the Guarantee executed by Trump in
connection with the Grid Note to the extent any portion of the
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payment thereof must be paid or returned by the Bank to the
Borrower or any other Person for any reason whatsoever.
ARTICLE III.
CONDITIONS PRECEDENT
Section 3.01 Conditions Precedent.
The obligation of the Bank to enter into this Agreement and
certain other Lending Documents as of the date hereof is subject
to the fulfillment on the Effective Date of the following
conditions precedent, all to the reasonable satisfaction of the
Bank and its counsel:
(a) Note. The Bank shall have received Amendment No. 1 to
the Note conforming to the requirements hereof, duly executed by
the Borrower and the Company.
(b) Amendments to Lending Documents. The Bank shall have
received the amendments to the Lending Documents attached as
Exhibits B through E hereto, each of which shall be duly executed
and delivered by the parties thereto, in form and substance
satisfactory to the Bank and its counsel and in full force and
effect.
(c) Payment of Principal and Interest Under the Grid Note.
The Bank shall have received payment on or before the Effective
Date of $7,000,000 in respect of the payment of the principal of
the Grid Note, together with all accrued but unpaid interest
thereon through and including the date of such payment, by wire
transfer of immediately available funds.
(d) Fee. The Bank shall have received payment on or before
the Effective Date of a fee in the amount of $380,000, by wire
transfer of immediately available funds.
(e) Legal Opinions of Counsel to the Borrower and other
Legal Opinions. The Bank shall have received (i) a favorable
opinion of Ribis, Graham & Curtin, New Jersey counsel to the
Borrower, the Company and Trump, dated as of the date hereof, in
substantially the form of Exhibit J hereto, (ii) a favorable
opinion of Hannoch Weisman, New Jersey regulatory counsel to the
Borrower, the Company and Trump, dated as of the date hereof, in
substantially the form of Exhibit K hereto; and (iii) a favorable
opinion of Lowenstein Sandler, counsel to the Trustees, dated as
of the date hereof, in substantially the form of Exhibit L
hereto.
(31)
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(f) Receipt of Consideration for the Senior Notes;
Defeasance of the Existing Bonds; Cancellation of Original
Indenture Security Documents. The Company shall have received
all of the consideration contemplated to be received by it with
respect to the issuance of the Senior Notes, the Existing Bonds
shall all have been defeased and the mortgage granted by the
Borrower to the Company and assigned to First National Bank
Association, as trustee, to secure the Existing Bonds and all of
the other Original Indenture Security Documents shall be
terminated.
(g) Delivery of Consent and Agreement. The Trustees, the
Borrower and the Company shall have duly executed and delivered
to the Bank the Consent and Agreement, which shall be in form and
substance satisfactory to the Bank and counsel and in full force
and effect.
(h) Partnership and Corporate Proceedings. The Bank shall
have received the resolutions of the Board of Partner Representa-
tives of the Borrower and the Board of Directors of the Company
authorizing the execution, delivery and performance of each of
the Lending Documents to which each of them is a party, and
authorizing the loan arrangements and the Guaranty provided for
herein, certified by the Managing Partner of the Borrower and the
secretary or assistant secretary of the Company, respectively.
(i) Incumbency Certificates. The Bank shall have received
a certificate of a General Partner of the Borrower and the
secretary or assistant secretary of the Company, dated as of the
date hereof, as to the incumbency and signature of the Managing
Partner and Officer or Officers signing each of the Lending
Documents to which the Borrower or the Company is a party and any
other certificate or other document to be delivered pursuant
thereto, together with evidence of the incumbency of such General
Partner and such Officer.
(j) Partnership and Corporate Documents. The Bank shall
have received (i) a copy of the Partnership Agreement of the
Borrower (as amended and/or restated through the date hereof),
certified by the Managing Partner of the Borrower, (ii) a copy of
the Certificate of Incorporation of the Company (as amended
through the date hereof), recently certified by the Secretary of
State of New Jersey, (iii) a copy of the By-laws of the Company
(as amended through the date hereof), certified by the secretary
or assistant secretary of the Company, and (iv) recent
certificates from the Secretary of State (or other appropriate
authority of such jurisdiction), evidencing the good standing of
the Company in the State of New Jersey and in each other state or
jurisdiction in which it is currently qualified to do business.
(32)
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(k) Consents, Licenses, Approvals, etc. The Bank shall
have received copies of all consents, licenses and approvals, if
any, required in connection with the execution, delivery and
performance by the Borrower and the Company of, and the validity
and enforceability of, this Credit Agreement, the Note, the
Mortgage and the other Lending Documents, and such consents,
licenses and approvals shall not be subject to any qualifications
or conditions and shall be in full force and effect.
(l) Intercreditor Agreement. The Bank shall have received
the Intercreditor Agreement, duly executed and delivered by the
Trustees, in form and substance satisfactory to the Bank and its
counsel and in full force and effect.
(m) Filings, Registrations and Recordings. All additional
documents, if any, (including, without limitation, Uniform
Commercial Code financing statements) required to be filed,
registered or recorded in order to continue, in favor of the
Bank, a legal, valid and enforceable first priority (except for
Permitted Senior Encumbrances) perfected mortgage lien upon and
security interest in the Trust Estate as provided in the Mortgage
Documents, senior (and not pari passu or subordinate) to the
mortgage liens upon and security interests in the Trust Estate
granted or to be granted to any of the Trustees pursuant to the
Indenture Documents, shall have been properly filed, registered
or recorded in each office in each jurisdiction in which such
filings, registrations and recordings are required or advisable.
The Bank shall have received acknowledgement copies of all such
filings, registrations and recordings (or, in lieu thereof, the
Bank shall have received other evidence satisfactory to the Bank
that all such filings, registrations, and recordings shall have
been or will be made); and the Bank shall have received evidence
that all necessary filing, registration and recording fees and
all taxes or other expenses related to such filings,
registrations and recordings have been paid in full.
(n) Evidence of Insurance. The Bank shall have received
evidence, reasonably satisfactory to the Bank, that the Borrower
has obtained and maintained policies of insurance as required by
the Mortgage Documents, accompanied by evidence of the payment of
the premiums therefor with endorsements naming the Bank and the
Trustees, as their interests may appear, as loss payees but with
instructions that all proceeds required under Section 5.11 of the
Mortgage to be paid to the Bank be paid to the Bank.
(o) Title Insurance Policies. The Bank shall have
received, in respect of the Mortgage, mortgagee's title insurance
policies or marked-up unconditional binders for such insurance
policies, dated as of the date hereof, from title insurance
companies acceptable to the Bank. Such policies shall (i) be in
amounts satisfactory to the Bank (both as to primary insurance
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and reinsurance), (ii) insure that the Mortgage insured thereby
continues to be a valid first priority (except for Permitted
Senior Encumbrances) mortgage lien upon and security interest in
the Trust Estate, free and clear of all defects and encumbrances
(except for Permitted Senior Encumbrances), senior (and not pari
passu or subordinate) to the mortgage lien upon and security
interest in the Trust Estate granted or to be granted to any
Trustee pursuant to the Indenture Documents, (iii) name the Bank
as the insured thereunder, (iv) be in the form of ALTA Loan
Policy-1970 (amended 10/17/70 and 1/17/84), and (v) be in the
form of the Lawyers Title Insurance Policy delivered to the Bank
on the Original Amendment Date and shall contain such
endorsements and affirmative coverage as the Bank may, in order
to give effect to the requirements specified in clauses (ii)
through (iv) hereof, reasonably request, including, without
limitation, that the proceeds of such policies shall be payable
to the Bank notwithstanding any misrepresentation, omission,
inaccuracy or default in any application or other document or
other written communication delivered in connection with such
policies by, on behalf of or to the Borrower, the Company or the
Trustees or in connection with obtaining any certificate, consent
or agreement from the Trustees (including, without limitation,
any documents delivered to the Trustees in connection with the
grant to the Bank of a first priority (except for Permitted
Senior Encumbrances) lien upon and security interest in the Trust
Estate, whether or not required to obtain any Trustee's consent
or agreement). The Bank shall also have received evidence that
all premiums in respect of such policies have been paid.
(p) Title Recording Letter. The Bank shall have received a
letter from a title insurance company in form and substance and
from an issuer reasonably satisfactory to it, to the effect that
such title insurance company has received documents, in
recordable form, to discharge of record each of the Original
Indenture Security Documents and that such title insurance
company undertakes to promptly and properly record all such
documents of discharge.
(q) Lien Searches. The Bank shall have received the
results of (i) receipt searches of the Uniform Commercial Code
filings which may have been filed with respect to personal
property of the Borrower or the Company in the state filing
offices and real estate records in each of the jurisdictions in
which the Borrower or the Company owns or leases personal
property, and (ii) such tax lien, judgment and other searches as
the Bank may reasonably request; and such searches shall have
been conducted by Persons satisfactory to the Bank and the
results thereof shall be reasonably satisfactory to the Bank in
confirming the first priority security interest and Liens
(subject to Permitted Senior Encumbrances) granted to the Bank
hereunder and under the Mortgage Documents.
(34)
<PAGE>
(r) Taxes. The Bank shall have received evidence,
reasonably satisfactory to the Bank, that all past and current
(if due and payable) taxes and assessments applicable to the
Premises and all buildings, structures and improvements thereon
or payable by the Borrower have been paid in full.
(s) Officers' Certificate. The Bank shall have received an
Officers' Certificate, dated as of the date hereof, in the form
of Exhibit H hereto, executed by the Managing Partner of the
Borrower and a duly authorized officer of the Company, certifying
that the conditions precedent set forth in this Section 3.01 have
been satisfied.
(t) Delivery of Partnership Agreement and Indenture
Documents. The Bank shall have received complete and correct
copies, authenticated by the Managing Partner of the Borrower and
a duly authorized officer of the Company, of the Indentures and
each of the other Indenture Documents (including all exhibits,
schedules and disclosure letters referred to therein or delivered
pursuant thereto, if any) and all amendments thereto, waivers
relating thereto delivered on the date hereof and of the
Partnership Agreement as in effect on the date hereof. Neither
the Indenture Documents nor the Partnership Agreement, all as
delivered on the date hereof, shall contain provisions which
differ in any material respect from the forms of the Indenture
Documents and of the Partnership Agreement included as Exhibits
to the Registration Statement or from the description thereof
contained in the Registration Statement.
(u) No Legal Restraints. There shall be no (i) litigation,
investigation or proceeding of or before any Governmental
Authority pending or threatened which calls into question the
legality, validity or enforceability of this Credit Agreement,
the Note, the Mortgage or any of the other Lending Documents or
any of the transactions contemplated hereby or thereby, or (ii)
injunction, writ, preliminary restraining order or any order of
any nature issued by any Governmental Authority directing that
the transactions provided for in this Credit Agreement, the Note
or any of the other Lending Documents not be consummated as
herein or therein provided.
(v) Issuance of the Indenture Notes. The transactions
contemplated by the Indenture Documents shall have been
consummated substantially on the terms provided in the
Registration Statement, including, without limitation, the
issuance of the Indenture Notes and the cancellation of the
Existing Bonds on the terms provided in the Registration
Statement, including, without limitation, that at least 90% of
the Existing Bonds shall have been tendered for exchange pursuant
to the Exchange Offer.
(35)
<PAGE>
(w) Representations and Warranties. The representations
and warranties made by the Borrower and the Company set forth in
Article Four hereof shall be true and correct in all material
respects on and as of the Effective Date.
(x) No Default or Event of Default. No Default or Event of
Default shall have occurred and be continuing on the Effective
Date; and no default shall have occurred and be continuing on the
date hereof in the payment, as and when due, of all amounts
payable in respect of the Loan and all other Indebtedness of the
Borrower and/or the Company to the Bank in accordance with the
terms thereof.
(y) Payment of Expenses. The Borrower and/or the Company
shall have paid or reimbursed the Bank (including payment to the
Bank's counsel) for all costs and expenses incurred in connection
with the preparation, negotiation, execution and delivery of this
Credit Agreement and the other Lending Documents and the
consummation of the transactions contemplated hereby and thereby
(including, without limitation, attorneys' fees and expenses,
closing costs and all other related costs and expenses).
(z) Additional Matters. All partnership and corporate
proceedings and other legal matters incident to the transactions
contemplated by this Credit Agreement shall be reasonably satis-
factory to the Bank and its counsel, and the Bank shall have
received copies of all documents referred to herein which the
Bank may have reasonably requested in connection therewith.
Section 3.02 Conditions to Extension of Loan.
The obligation of the Bank to extend the term of the Loan
pursuant to Section 2.03 hereof is subject to fulfillment on the
Extension Date of the following conditions precedent, all to the
reasonable satisfaction of the Bank and its counsel:
(a) Note. The Bank shall have received a replacement note
(or, if the Bank elects, an amendment to the Note) duly executed
by the Borrower, evidencing the extension of the term of the Loan
and not the payment or satisfaction of the Indebtedness evidenced
by the Note. Such replacement note shall be substantially in the
form of the Note, with changes to reflect the extension of the
term, the adjustment of the interest rate and the amortization of
principal, all as provided for in Section 2.03(b) hereof or, if
the Bank elects to amend the Note, such amendment shall be in
form and substance satisfactory to the Bank. If the Bank elects
to amend the Note rather than require a replacement Note, the
remaining provisions of this Section 3.02 shall apply in all
respects to such amendment of the Note, or the Note, as so
amended, as applicable, rather than the replacement Note.
(36)
<PAGE>
(b) Legal Opinions. The Bank shall have received the
favorable opinions, dated as of the Extension Date, of the
counsel referred to in Section 3.01(e) (or other Independent
counsel reasonably satisfactory to the Bank) addressing the
matters addressed in paragraphs 1, 2, 3, 4, 5, 6 and 7 of Exhibit
J hereto and paragraph 1 of Exhibit K hereto (in each case, with
appropriate changes to reflect changes not in contravention of
this Credit Agreement or any of the other Lending Documents).
(c) Officers' Certificate. The Bank shall have received an
Officers' Certificate, dated as of the Extension Date, certifying
that the conditions precedent set forth in this Section 3.02 have
been satisfied, executed by an Officer of the Borrower.
(d) Consent and Agreement. The Bank shall have received
the Consent and Agreement duly executed and delivered by the
Borrower, the Company and the Trustees, substantially in the
recordable form of Exhibit G hereto, under the terms of which the
Borrower, the Company and the Trustees acknowledge and agree that
the lien upon and security interest in the Trust Estate granted
to the Bank pursuant to the Mortgage Documents continues to rank
senior (and not pari passu or subordinate) to the lien upon and
security interest in the Trust Estate granted to any of the
Trustees pursuant to the Indenture Documents.
(e) Title Insurance. The Bank shall have received an
appropriate endorsement from the title insurance companies
referred to in Section 3.01(o) hereof, providing that the
Mortgage continues to constitute a valid first priority (except
for all Permitted Senior Encumbrances) lien upon and security
interest in the Trust Estate, senior (and not pari passu or
subordinate) to the lien upon and security interest in the Trust
Estate granted to any of the Trustees pursuant to the Indenture
Documents, as security for the obligations of the Borrower under
this Credit Agreement, the Note, the Mortgage and the other
Lending Documents.
(f) Representations and Warranties. The following
representations and warranties shall be true and correct on and
as of the Extension Date, after giving effect to the extension of
the term of the Loan:
(i) the Borrower is a validly existing corpora-
tion or general or limited partnership under the laws of the
jurisdiction of its organization;
(ii) the Borrower has all requisite corporate or
partnership power and authority to own, lease and operate
the Casino Hotel;
(37)
<PAGE>
(iii) the Borrower has all requisite corporate or
partnership power and authority to execute the replacement
Note or, if the Bank so elects, the amendment of the Note
and to perform its obligations under the Credit Agreement,
the replacement Note or, if the Bank so elects, the Note, as
amended as contemplated hereby, the Mortgage Documents and
the other Lending Documents;
(iv) the Borrower has taken all necessary
corporate or partnership action to issue the replacement
Note, and to perform its obligations under the Credit Agree-
ment, the replacement Note or, if the Bank so elects, the
amendment of the Note, the Mortgage and the other Lending
Documents, each of which constitutes the valid and binding
obligations of the Borrower, enforceable in accordance with
the respective terms thereof; and
(v) the execution and delivery of the replacement
Note or, if the Bank so elects, the amendment of the Note
and the performance thereof, the Mortgage and the other
Lending Documents will not conflict with other documents or
law or require the consent of Governmental Authorities, all
substantially as stated in Section 4.03 hereof.
(g) No Event of Default. No Event of Default shall have
occurred and be continuing on the Extension Date.
(h) Payment of Expenses. The Borrower and/or the Company
shall have paid or reimbursed the Bank (including payment to the
Bank's counsel) for any reasonable costs and expenses incurred in
connection with the extension of the term of the Loan, including
the preparation of the replacement Note or, if the Bank so
elects, the amendment of the Note and any necessary amendments to
any of the other Lending Documents (including, without
limitation, reasonable attorneys' fees and expenses, closing
costs (including payment of the premiums for the title insurance
endorsements) and all other related costs and expenses).
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
The following representations and warranties are true and
correct on and as of the Effective Date:
Section 4.01 Organization, Standing, Qualification and Power.
(a) The Borrower is duly organized and validly existing as
a general partnership under the laws of the State of New Jersey.
As of the date hereof, its general partners are Trump, Castle and
TC/GP. Each of the Company and Castle has been duly organized
(38)
<PAGE>
and is validly existing as a corporation in good standing under
the laws of the State of New Jersey and TC/GP has been duly
organized and is validly existing as a corporation in good
standing under the laws of the State of Delaware. Trump is the
Managing Partner of the Borrower under the Partnership Agreement.
(b) The Borrower has all requisite partnership power and
authority to own, lease and operate the Casino-Hotel.
(c) As of the date hereof, the only shareholders of Castle
are Trump and TC/GP (and after the Merger (as defined in the
Registration Statement) the only shareholder of Castle will be
Trump), subject, however to the exercise of the Litigation
Warrants (as defined in the Mortgage Note Indenture), and the
only shareholder of the Company is the Borrower.
(d) Each of the Borrower and the Company has all requisite
partnership and corporate power and authority to execute this
Credit Agreement, the Note, the Mortgage and the other Lending
Documents to which each of them is a party, and to carry out the
transactions contemplated hereby and thereby.
Section 4.02 Authorization of Agreement and Other Lending
Documents.
Each of the Borrower and the Company has taken all actions
necessary to authorize it to enter into and perform its obliga-
tions under this Credit Agreement, the Note, the Mortgage Docu-
ments and the other Lending Documents to which it is a party.
This Credit Agreement, the Note, the Mortgage Documents and the
other Lending Documents to which each of the Borrower or the
Company is a party and all amendments thereto contemplated hereby
have been duly and validly executed and delivered by the Borrower
or the Company, as the case may be, and constitute valid and
binding obligations of the Borrower and the Company, enforceable
in accordance with their respective terms.
Section 4.03 No Conflict.
The execution, delivery and performance of this Credit
Agreement, the Note and the other Lending Documents and the
consummation of the transactions contemplated hereby and thereby,
including the changes to the Loan and the execution, issuance and
delivery of all amendments to the Lending Documents contemplated
hereby, do not and will not (a) conflict with or result in a
breach of any of the terms and provisions of, or constitute a
default (or an event which with notice or lapse of time, or both,
would constitute a default) or require consent under, or result
in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Borrower, the Company or
Castle, except as permitted by the Lending Documents, the terms
(39)
<PAGE>
of any agreement (including, without limitation, the Indentures,
the Indenture Notes or any other Indenture Document), instrument,
franchise, license or permit to which the Borrower, the Company
or Castle is a party or by which any of such Persons or their
respective property or assets may be bound, other than liens
created by the Lending Documents and the Indenture Documents, or
(b) violate or conflict with any provision of the Partnership
Agreement of the Borrower or the certificate of incorporation or
by-laws of the Company or Castle or any statute, rule or
regulation of any Governmental Authority having jurisdiction over
the Borrower, the Company or Castle or any of their respective
properties or assets, or any applicable judgment, decree or order
known to any of them. No material consent, approval, authoriza-
tion, order, registration, filing, qualification, license or
permit of or with any Governmental Authority having jurisdiction
over the Borrower, the Company or Castle or any of their
respective properties or assets is required for the execution,
delivery and performance of this Credit Agreement, the Note, the
Mortgage Documents or any of the other Lending Documents and the
consummation of the transactions contemplated hereby and thereby,
including the changed loan arrangements provided for herein and
the execution, issuance and delivery of all amendments to the
Lending Documents contemplated hereby, except any recording,
registration or filing of the Mortgage Documents or any financing
statements in respect thereof (which have been accomplished or
provided for as contemplated by Section 6.02 hereof).
Section 4.04 Permits.
Each of the Borrower, the Company and Castle (a) is in
possession of, and the Borrower is operating the Casino-Hotel in
compliance with all material provisions of all material Permits
necessary for the operation of the Casino-Hotel in accordance
with all Legal Requirements, all of which are, so far as is known
to any of them, valid and in full force and effect, and (b) owns
or otherwise holds all material rights necessary for the opera-
tion of the Casino-Hotel in accordance with all Legal Require-
ments. Neither the Borrower nor the Company has as of the
Effective Date received written notice that any Gaming Authority
has commenced proceedings to suspend, revoke or not renew any
such Permits.
Section 4.05 Security Interest.
The Mortgage and any financing statements or similar instru-
ments required with respect thereto have created and constitute a
valid, binding, enforceable and perfected first priority real
property lien upon and security interest in the Trust Estate in
favor of the Bank, senior (and not pari passu or subordinate) to
the liens upon and security interests in the Trust Estate created
by the Indenture Documents in favor of any of the Trustees, as
(40)
<PAGE>
security for the obligations of the Borrower arising under this
Credit Agreement, the Note and the other Lending Documents,
subject only, as to first priority, to the Permitted Senior
Encumbrances, it being understood that certain of the assets of
the Borrower referred to in Schedules 2 and 3 of the Mortgage as
in effect on May 29, 1992 may have been disposed of by the
Borrower in accordance with any applicable terms of the Lending
Documents.
Section 4.06 Disclosure.
Neither this Credit Agreement nor any other of the Lending
Documents contains any untrue statement of a material fact or
omits or will omit to state any material fact necessary to make
the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading. Except
as set forth in the Registration Statement, there is no fact
known to the Borrower or the Company that materially and
adversely affects, or insofar as the Borrower or the Company can
reasonably foresee, could materially and adversely affect, either
(i) the ability of the Borrower or the Company to perform its
respective obligations under this Credit Agreement, the Note or
any of the other Lending Documents or the Indentures, the
Indenture Notes or any of the other Indenture Documents to which
any of them is a party or (ii) the business, operations, property
or condition (financial or otherwise) of the Borrower or the
Company.
Section 4.07 Financial Statements.
The audited and the unaudited financial statements of the
Borrower and the Company contained in the Registration Statement
present fairly the financial condition of the Borrower and the
Company as at the respective statement dates, and the results of
their operations for the respective periods then ended. All such
financial statements, including related schedules and notes
thereto, have been prepared in accordance with generally accepted
accounting principles applied on a basis consistently maintained
through the period involved, except that the unaudited financial
statements have not been prepared in accordance with generally
accepted accounting principles as to footnote disclosure and are
subject to year-end adjustments.
Section 4.08 Litigation.
Except as disclosed in the Registration Statement, there is
no action, proceeding or investigation pending (other than normal
overseeing reviews of the Gaming Authorities) or, to the best
knowledge of the Borrower and the Company, threatened, against
the Borrower, the Company or the Trust Estate which involves any
material risk of any final order, judgment or liability which,
(41)
<PAGE>
after giving effect to any applicable insurance, will result in
any material adverse change in the business, properties,
operations, condition (financial or other) or results of the
Borrower or the Company or which seeks to enjoin the consummation
of or questions the validity of any of the transactions
contemplated by this Agreement. Neither the Borrower nor the
Company has received any notices, suits, orders, decrees or
judgments relating to zoning, building, use and occupancy, fire,
health, sanitation, air pollution, ecological, environmental or
other violations of any Legal Requirements against or with
respect to the Trust Estate, which violations remain outstanding
and could materially adversely affect the value of the Trust
Estate.
Section 4.09 Environmental Matters.
To the best of the Borrower's and the Company's knowledge:
(a) none of the real property owned and/or occupied by the
Borrower and located in the State of New Jersey, including, but
not limited to, the Owned Land, has ever been used by previous
owners and/or operators to refine, produce, store, handle,
transfer, process or transport hazardous Substances," as such
term is defined in N.J.S.A. 58:10-23.11b(k), and the Borrower
does not intend to use in the future, such real property,
including, but not limited to, the Owned Land, for the principal
or primary purposes of refining, producing, storing, handling,
transferring, processing or transporting such "Hazardous
Substances";
(b) no lien has been attached to any revenues or any real
or personal property owned by the Borrower and located in the
State of New Jersey, including, but not limited to, the Owned
Land, as a result of the expending of money by or from the New
Jersey Spill Compensation Fund to pay for "Damages," as such term
is defined in N.J.S.A. 58:10-23.11b(d), arising from the inten-
tional or unintentional action or omission of the Borrower or any
previous owner and/or operator of such real property; and
(c) none of the real property owned and/or occupied by the
Borrower and located in the State of New Jersey, including, but
not limited to, the Owned Land, has ever been used by previous
owners and/or operators to generate, manufacture, refine,
transport, treat, store, handle or dispose of "Hazardous
Substances" or "Hazardous Wastes," as such terms are defined in
N.J.A.C. 7:1-3.3, and the Borrower does not intend to use any of
its real property, including, but not limited to, the Owned Land,
for such purposes.
(42)
<PAGE>
Section 4.10 Personal Property.
The Borrower owns good and marketable title to, or has valid
and subsisting leasehold interests in the Tangible Personal
Property, subject only to the Permitted Encumbrances; provided,
however, that the foregoing is subject to the terms of Section
5.06 of the Mortgage.
Section 4.11 Insurance.
The Borrower maintains all insurance policies required by
the Lending Documents and the Indenture Documents, and such
policies are in full force and effect.
Section 4.12 Regulation.
Neither the Borrower nor the Company is engaged nor will
either of them engage, principally or as one of its important
activities, in the business of extending credit for the purpose
of "purchasing" or "carrying" any "margin stock" within the
respective meanings of each of the quoted terms under Regulation
U of the Board of Governors of the Federal Reserve System as now
and from time to time hereafter in effect. No part of the
proceeds of the Loan has been used for (i) any purpose which
violates, or which is inconsistent with, the provisions of
Regulation U of such Board of Governors or (ii) "purchasing" or
"carrying" "margin stock," as so defined.
Section 4.13 Investment Company Act.
Neither the Borrower nor the Company is an "investment
company" registered or required to be registered under the
Investment Company Act of 1940, as amended, or is controlled by
such a company.
Section 4.14 Indenture Documents.
(a) With respect to the Indenture Documents, the Borrower
represents and warrants to the Bank that the following
constitutes a correct description of the terms and conditions of
the Indenture Documents as to interest, principal amount,
maturity date, required principal amortization, mandatory
redemption, optional redemption and open market purchases (it
being acknowledged that certain of these terms are subject to the
provisions of Sections 2.06 and 11.03 hereof):
(i) As to the Senior Notes:
(43)
<PAGE>
(A) Interest - The interest rate is 11-1/2%, subject to
reduction to 11-1/4% per annum and an increase of 1/2
of 1% as provided in the Registration Rights Agreement.
(B) Principal Amount - The principal amount of the
Senior Notes shall not exceed $27,000,000.
(C) Maturity Date - The maturity date of the Senior
Notes is November 15, 2000.
(D) Scheduled Principal Amortization - The scheduled
principal amortization of the Senior Notes is 15% of
the original principal amount on each of November 15,
1998 and November 15, 1999 ("Permitted Senior Note
Principal Payment").
(E) Mandatory Redemption Events - The only Mandatory
Redemption Events are (i) a CCC Required Redemption
Event, (ii) a Condemnation/Casualty Event and (iii) a
Change of Control Event.
(F) Optional Redemption - Redemptions are permitted at
the option of the Company (it being acknowledged that
the Company's right to exercise such option is subject
to Section 11.03 hereof).
(ii) As to the Mortgage Notes:
(A) Interest - The interest rate is 11-3/4%, subject to
reduction to 11-1/2% per annum.
(B) Principal Amount - The principal amount of the
Mortgage Notes shall not be more than $243,000,000.
(C) Maturity Date - The maturity date of the Mortgage
Notes is November 15, 2003.
(D) Scheduled Principal Amortization - There is no
scheduled principal amortization of the Mortgage Notes.
(E) Mandatory Redemption Events - The only Mandatory
Redemption Events are (i) a CCC Required Redemption
Event, (ii) a Condemnation/Casualty Event and (iii) a
Change of Control Event.
(F) Optional Redemption - Redemptions are permitted at
the option of the Company (it being acknowledged that
the Company's right to exercise such option is subject
to Section 11.03 hereof). Redemptions may not be
effected at the option of the Company at any time prior
to December 31, 1998.
(44)
<PAGE>
(iii) As to the PIK Notes:
(A) Interest - The interest rate is 7% per annum
through September 30, 1994, and thereafter 13-7/8% per
annum.
(B) Principal Amount - The maximum principal amount of
the PIK Notes is $186,500,000, and as of the date of
the Merger shall not exceed $52,066,127.
(C) Maturity Date - The maturity date of the PIK Notes
is November 15, 2005.
(D) Scheduled Principal Amortization - There is no
scheduled principal amortization of the PIK Notes.
(E) Mandatory Redemption Events - The only Mandatory
Redemption Events are (i) a CCC Required Redemption
Event, (ii) a Condemnation/Casualty Event, (iii) a
Change of Control Event and (iv) an Equity Offering
Event (upon the occurrence of which not more than 35%
of the proceeds thereof are required to be used to
effect a Redemption of the PIK Notes, without premium,
penalty or discount).
(F) Optional Redemption - Redemptions are permitted at
the option of the Company (it being acknowledged that
the Company's right to exercise such option is subject
to Section 11.03 hereof).
(b) The Borrower represents and warrants that payments of
any kind required or permitted to be made to TC/GP (or any other
Affiliate of Trump) under the Services Agreement (expected to
become effective on December 30) are substantially similar to and
in an amount not greater than the payments required to be made
under the Management Agreement dated May 29, 1992 between the
Borrower and Trump's Castle Management Corp. ("TCM"). The
Management Agreement between Borrower and TCM is expected to be
terminated on December 30 (and will be terminated when the
Services Agreement becomes effective), and the payments required
thereunder do not duplicate in whole or in part any payments
required or permitted under the Services Agreement. The
provisions contained herein relating to the Services Agreement
shall apply to the Management Agreement until the Services
Agreement becomes effective.
(45)
<PAGE>
ARTICLE V.
SATISFACTION AND DISCHARGE
Section 5.01 Payment of Indebtedness; Satisfaction and
Discharge of Credit Agreement.
Whenever the following conditions exist, namely:
(a) the outstanding principal amount of the Note has been
indefeasibly paid by the Borrower; and
(b) the Borrower or the Company has indefeasibly paid or
caused to be indefeasibly paid all other sums payable hereunder
and under the Note by the Borrower and the Company, including the
fees and expenses of the Bank and its counsel; then this Credit
Agreement and the lien, rights and interests created hereby or
pursuant hereto shall cease, determine and become null and void
and the Bank shall, at the expense of the Borrower, execute and
deliver a termination statement and such instruments of
satisfaction and discharge as may be necessary and pay, assign,
transfer and deliver to the Borrower or upon Borrower Order all
cash, securities and other personal property then held by the
Bank as collateral security hereunder.
ARTICLE VI.
SECURITY
Section 6.01 Mortgage Documents.
In order to secure the due and punctual payment of the
principal of and interest on the Note, when and as the same shall
be due and payable, whether at Maturity or on any Interest
Payment Date, by acceleration or otherwise, and performance of
all other obligations of the Borrower and the Company to the Bank
under this Credit Agreement (including the Guaranty) and the
other Lending Documents to which the Borrower or the Company is a
party, according to the terms hereunder, the Borrower has granted
to the Bank a legal, valid and enforceable first priority
(except, as to first priority, for Permitted Senior Encumbrances)
lien upon and security interest in the Trust Estate pursuant to
the Mortgage Documents, senior (and not pari passu or
subordinate) to the liens upon and security interests in the
Trust Estate granted to any of the Trustees pursuant to the
Indenture Documents. The Borrower has the full right, power and
authority to grant, bargain, sell, release, convey, hypothecate,
assign, mortgage, pledge, transfer and confirm the property
constituting the Trust Estate, in the manner and form done, or
intended to be done, in the Mortgage and the other Mortgage
Documents, free and clear of all liens, pledges, charges and
(46)
<PAGE>
encumbrances which are senior to the Lien of the Mortgage except
for the Permitted Senior Encumbrances, and (a) will forever
warrant and defend the title to the same against the claims of
all persons whatsoever in accordance with the terms of the
Mortgage and the other Mortgage Documents, (b) will execute,
acknowledge and deliver to the Bank such further assignments,
transfers, assurances or other instruments as the Bank may
reasonably require or request, and (c) will do or cause to be
done all such acts and things as may be reasonably necessary or
proper, to assure and confirm to the Bank its interest in the
Trust Estate, so as to render the same available for the security
and benefit of this Credit Agreement and of the Note secured
hereby, according to the intent and purposes herein expressed.
The Mortgage Documents create and vest in the Bank the direct and
valid first lien, except (as to first priority) for the Permitted
Senior Encumbrances, on the property constituting the Trust
Estate which they purport to create. To the extent that any
security interest in the Trust Estate is deemed to be granted and
to be governed by the Uniform Commercial Code, the Mortgage and
the other Mortgage Documents are deemed to be and are security
agreements.
Section 6.02 Recording, etc.
The Borrower has caused and will cause, at its own expense,
the Mortgage Documents, this Credit Agreement and all amendments
or supplements thereto, to be registered, recorded and filed
and/or re-recorded, refiled and renewed in such manner and in
such place or places, if any, as may be required by law in order
fully to preserve and protect the lien of the Mortgage Documents
on all parts of the Trust Estate and to effectuate and preserve
the security and all rights of the Bank. The Borrower will
provide to the Bank:
(a) promptly after the execution and delivery of this
Credit Agreement or any amendment or supplement hereto or any
instrument of further assurance, an Opinion or Opinions of
Independent Counsel in form and substance satisfactory to the
Bank either (i) stating that, in the opinion of such counsel,
this Credit Agreement, the Mortgage and the Mortgage Documents
(including the Consent and Agreement) and all other instruments
of further assurance or amendment have been properly recorded,
registered, filed and indexed to the extent necessary to make
effective the liens intended to be created by the Mortgage
Documents (including stating that no other documents need to be
so recorded, registered or filed to make effective such liens),
and reciting the details of such action or referring to prior
Opinions of Counsel in which such details are given, and stating
that the Mortgage Documents identified in such opinion as being
the subject of such recording, registering and filing are the
only recordings, registering and filing necessary to give notice
(47)
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thereof and that no rerecordings, re-registering or re-filings
are necessary to maintain such notice, and further stating that
all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and
protect the rights of the Bank hereunder and under the Mortgage
Documents, or (ii) stating that, in the opinion of such counsel,
no such action is necessary to make such liens effective; and
(b) By January 30, 1994 and within 60 days after November
30 in each year beginning with the year 1994, an Opinion or
Opinions of Counsel, dated as of such date, either (i) stating
that, in the opinion of such counsel, such action has been taken
with respect to the recording, registering, filing, re-recording,
re-registering and re-filing of all supplemental agreements,
financing statements, continuation statements or other
instruments of further assurance as is necessary to maintain the
liens of the Mortgage Documents and reciting the details of such
action or referring to prior Opinions of Counsel in which such
details are given, and stating that all financing statements and
continuation statements have been executed and filed that are
necessary fully to preserve and protect the rights of the Bank
hereunder and under the Mortgage Documents, or (ii) stating that,
in the opinion of such counsel, no such action is necessary to
maintain such liens.
Section 6.03 Custody of the Mortgage Documents.
The Bank shall hold in its possession the Mortgage
Documents, except as they from time to time may be required for
actions, suits or proceedings relating to the Mortgage Documents
or for the purpose of enforcing or realizing upon any right or
value thereby represented. The Bank may, from time to time, in
its sole discretion, for the purpose of convenient location of
the Mortgage Documents, appoint one or more agents to hold
physical custody, for the account of the Bank, of the Mortgage
Documents.
ARTICLE VII.
REMEDIES
Section 7.01 Events of Default.
"Event of Default," whenever used herein, means only one or
more of the following events (whatever the reason for such event
and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any other
Governmental Authority):
(48)
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(a) default in the payment of any interest upon the Note
when such interest becomes due and payable and continuance of
such default for a period of five days, subject to such notice
requirements as are set forth in Section 3.01 of the
Intercreditor Agreement; or
(b) default in the payment of the principal of the Note at
its Stated Maturity; or
(c) default in the payment of the principal of the Note
when due other than at its Stated Maturity (whether on any
Principal Payment Date, by acceleration or otherwise) and
continuance of such default for a period of 10 days after such
due date, subject to such notice requirements as are set forth in
Section 3.1 of the Intercreditor Agreement; or
(d) default in the performance, or breach of any covenant
of the Borrower or the Company set forth in Section 7.03, Section
8.01, Section 10.05, Section 11.03(b), Section 11.03(c), Section
11.03(d), Section 11.03(e) or Section 11.04 of the Credit
Agreement as in effect on the date hereof, or Section 3.07,
Section 5.08(a), Section 5.11 or the payment of proceeds
provisions of Section 5.20 of the Mortgage as in effect on the
date hereof, and the continuance of such default or breach for a
period of 60 days after there has been given to the Borrower and
to the Trustees and Trump a written notice from the Bank
specifying such default or breach and requiring it to be remedied
and stating that such notice is a "Notice of Default hereunder";
or
(e) an admission in writing by the Borrower or the Company
of its inability to pay its debts generally as they become due or
the entry of a decree or order by a court having jurisdiction in
the premises for relief in respect of the Borrower or the Company
under the federal bankruptcy laws or any other applicable federal
or state law, or appointing a custodian, receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of or
for the Borrower or the Company or any substantial part of any of
their property, or ordering the winding up or liquidation of any
of their affairs, and the continuance of any such decree or order
unstayed and in effect for a period of 60 consecutive days; or
(f) the commencement by the Borrower or the Company of a
voluntary case under the federal bankruptcy laws or any other
applicable federal or state law, or the consent or acquiescence
by any of them to the filing of any such petition or to the
appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator (or other similar
official) of the Borrower or the Company or any substantial part
of any of their property, or the making by any of them of an
assignment for the benefit of creditors; or
(49)
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(g) the revocation, suspension or loss of any Permit which
results in the cessation of the food and beverage service,
lodging or wagering operations of the Casino-Hotel for a period
of more than 90 consecutive days; or
(h) either (a) the Indebtedness evidenced by any of the
Indenture Documents (including, without limitation, any Indenture
Notes or any Indenture Guaranty) or any Refinancing Debt has been
accelerated, or (b) any Trustee or the holder of any Refinancing
Debt shall have commenced an action to foreclose any Lien of any
mortgage, assignment of leases and rents, assignment of operating
assets or other security documents granted by the Borrower to
secure any one or more of the obligations of the Borrower or the
Company under any of the Indenture Documents or any of the
Refinancing Debt Documents; or
(i) default in the performance, or breach, of any covenant
of the Borrower or the Company set forth in Section 10.01 or
10.04 of the Credit Agreement as in effect on the date hereof; or
(j) either
(i) the existence of any Lien which constitutes a Lien
against the Trust Estate that has priority at law over the
Lien of the Mortgage and which is not a Permitted Senior
Encumbrance, or
(ii) the commencement of an action or proceeding to
foreclose or enforce any Liens against property included in
the Trust Estate by any holder or holders thereof unless and
so long as (x) such action is being contested by the
Borrower, (y) the fair market value of the property subject
to such Liens is less than $7,500,000 and (z) the claims of
such holders do not in the aggregate exceed the sum of
$7,500,000,
and the continued existence of such Liens, or the continuance of
such action or proceeding, for a period of 60 days after there
shall have been given to the Borrower and to the Trustees and
Trump a written notice from the Bank specifying such Liens,
action or proceeding and requiring it to be eliminated and
stating that such notice is a "Notice of Default" hereunder; or
(k) in any action in which the Bank is a party, the entry
of a final judgment, decree or order by a court of competent
jurisdiction holding this Credit Agreement, the Note, the
Mortgage or any other Lending Document to be invalid or
unenforceable in any material respect, or the Borrower, the
Company, TC/GP or any Trustee, or any other Person acting on
behalf of any of the foregoing, shall assert, in any pleading
filed in such a court, that this Credit Agreement, the Note, the
(50)
<PAGE>
Mortgage or any other Lending Document is invalid or unenforce-
able in any material respect, provided that any such claim by the
Borrower or the Company, or any other Person acting on its
behalf, of the invalidity or unenforceability of any of the
Lending Documents shall be an Event of Default hereunder only in
the case that the Bank provides notice of same to the Trustees
and such claim is not completely withdrawn in writing within 10
Business Days of delivery of such notice to the Trustees; or
(l) any Mortgage Document shall never have been effective,
or shall cease to be effective, to grant to the Bank (or the Bank
shall otherwise not have obtained or ceased to have) a first
priority lien (subject, as to first priority, to Permitted Senior
Encumbrances), upon and security interest in the Trust Estate,
including that such Lien shall be senior (and not pari passu or
subordinate) to the Liens upon and security interests in the
Trust Estate granted to any of the Trustees pursuant to the
Indenture Documents, as collateral security for the Indebtedness
under this Credit Agreement, the Note and the other Lending
Documents, and the continuance of such circumstance for a period
of 30 days after there shall have been given to the Borrower a
written notice specifying such defect and requiring it to be
remedied and stating that such notice is a "Notice of Default"
hereunder; or the Borrower, the Company, TC/GP or any Trustee, or
any other Person acting on behalf of any of the foregoing, shall
so assert in writing or make any such claim in any litigation,
investigation or proceeding, provided that any such claim by the
Borrower or the Company, or any other Person acting on its
behalf, shall be an Event of Default hereunder only in the case
that the Bank provides notice of same to the Trustees and such
claim is not completely withdrawn in writing within 10 Business
Days of delivery of such notice to the Trustees; or
(m) default in the performance, or breach, of the covenants
of the Borrower or the Company set forth in Section 11.05 or
11.07 of this Credit Agreement as in effect on the date hereof or
in Section 5.06 (but only the last sentence thereof), Section
5.08(c) or 5.08(d) of the Mortgage as in effect on the date
hereof, if such default or breach constitutes an impairment of
security (as defined in Section 1.12(c) hereof) (it being
acknowledged by the Borrower and the Company that the failure of
the Borrower to pay ad valorem real estate taxes with respect to
all or any part of the Trust Estate (or to provide collateral
security to the Bank for the payment thereof) as required by
Section 11.05 hereof shall be deemed to constitute an "impairment
of security"), and the continuance of such circumstance for a
period of 60 days after there shall have been given to the
Borrower a written notice specifying such default and requiring
it to be remedied and stating that such notice is a "Notice of
Default" hereunder; or
(51)
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(n) the Borrower shall cease to own all of the issued and
outstanding capital stock of the Company; or
(o) any of the representations and warranties contained in
Section 4.14 hereof shall be incorrect in any respect.
Section 7.02 Acceleration of Maturity; Enforcement of Mortgage
Documents.
If an Event of Default (other than an Event of Default
specified in Section 7.01(e) or (f)) occurs and is continuing,
then and in every such case, subject to the forbearance
provisions of Section 3.1 of the Intercreditor Agreement (which
are acknowledged not to be applicable to certain Events of
Default), the Bank may declare the outstanding principal amount
of the Note to be due and payable immediately, by a notice in
writing to the Borrower, and upon any such declaration such
outstanding principal amount shall become immediately due and
payable. If an Event of Default specified in Section 7.01(e) or
(f) occurs, the principal amount of the Note shall ipso facto
become and be due and payable immediately, without any
declaration or other act on the part of the Bank.
If the principal amount of the Note shall have been so
accelerated, the Bank in its discretion may proceed to enforce
its rights under the Mortgage Documents.
Section 7.03 Covenant to Pay the Bank Amounts Due on the Note
and Right of Bank to Judgment.
The Borrower covenants that, if:
(a) default is made in the payment of any interest on the
Note when such interest becomes due and payable, and such default
continues for a period of five days; or
(b) default is made in the payment of the principal of the
Note at its Stated Maturity, or
(c) default is made in the payment of the principal of the
Note when due other than at its Stated Maturity (whether on any
Principal Payment Date, by acceleration or otherwise) and if such
default continues for a period of 10 days after such due date;
then, upon demand of the Bank, the Borrower will pay to the Bank
the whole amount then due and payable on the Note for principal
and interest, with interest at the respective rate or rates
prescribed therefor in the Note on overdue principal and, in
addition thereto, such further amount as shall be sufficient to
cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of
(52)
<PAGE>
the Bank, its agents and counsel. If the Borrower fails to pay
such amounts forthwith upon such demand, the Bank shall be
entitled to sue for and recover judgment against the Borrower
(subject to the limitations on liability set forth in Section
2.07) and any other obligor on the Note (subject to an equivalent
limitation on liability with respect to such obligor) for the
whole amount so due and unpaid. Subject to the provisions of
Section 7.05 hereof, the Bank shall be entitled to institute such
suit either before, after or during the pendency of any
proceedings for the enforcement of this Credit Agreement or of
any of the other Lending Documents.
In the case of a foreclosure of the Mortgage and a sale of
the Trust Estate and application of the proceeds as provided in
Section 7.04, the Bank shall be entitled to enforce payment of,
and to receive, all amounts then remaining due and unpaid upon
the Note, and shall be entitled to recover judgment for any
portion of the same remaining unpaid, with interest as aforesaid,
subject to the provisions of Section 2.07. No recovery of any
such judgment upon any property of the Borrower shall affect or
impair the security provided by this Credit Agreement, the lien
of the Mortgage upon the Trust Estate or any rights, powers or
remedies of the Bank, except that upon recovery by, and
indefeasible payment in full to, the Bank of all amounts payable
by the Borrower hereunder, under the Note and the other Lending
Documents, the lien, rights and interests of the Bank created
hereby or pursuant thereto shall cease and be discharged as
provided in Section 5.01 hereof.
Section 7.04 Application of Money Collected.
Any money collected by the Bank pursuant to this Article
Seven or pursuant to Section 5.11 or 5.20 of the Mortgage which
is not required to be paid to the Mortgagor thereunder shall be
applied in the following order, at the date or dates fixed by the
Bank and, in case of the distribution of such money on account of
principal, upon presentation of the Note and the notation thereon
of the payment if only partially paid and upon surrender thereof
if fully paid:
(a) First: To the payment of all amounts due the Bank under
Sections 7.03 and 8.01;
(b) Second: To the payment of the whole amount then due
upon the Note, for principal and interest, in respect of which or
for the benefit of which such money has been collected, with
interest (to the extent that such interest has been collected by
the Bank or a sum sufficient therefor has been so collected and
payment thereof is legally enforceable at the respective rate or
rates prescribed therefor in the Note) on overdue principal;
(53)
<PAGE>
(c) Third: To the payment of the remainder, if any, to the
Trustees in accordance with Section 2.2 of the Intercreditor
Agreement; and
(d) Fourth: to the payment of the remainder, if any, to the
Borrower or to whomsoever may be lawfully entitled to receive the
same or as a court of competent jurisdiction may direct.
Section 7.05 Suits to Protect Trust Estate and Enforce
Covenants.
The Bank covenants and agrees, for the benefit of the
Borrower, each Trustee, TC/GP and the Indenture Noteholders that
the Bank may accelerate the principal amount of the Note only
upon the occurrence and continuance of an Event of Default which
is not then subject to the forbearance provisions of Section 3.1
of the Intercreditor Agreement. Without limiting the generality
of the foregoing, the Bank so covenants and agrees that only upon
the occurrence of an Event of Default specifically set forth in
Section 7.01 hereof shall the Bank be entitled to accelerate and
enforce its rights under any of the Lending Documents pursuant to
the provisions of Section 7.02. However, whether or not a default
or breach constitutes an Event of Default under Section 7.01, the
Bank shall have the power to protect and enforce the Bank's
rights against the Borrower or the Company by suit in equity,
action at law or other appropriate proceeding, either for actual
damages or specific performance of any covenant in this Credit
Agreement or in the Note or the other Lending Documents or in aid
of the exercise of any power granted herein or therein.
Section 7.06 Restoration of Rights and Remedies.
If the Bank has instituted any proceeding to enforce any
right or remedy under this Credit Agreement or any of the other
Lending Documents and such proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the
Bank, then and in every such case the Borrower and the Bank
shall, subject to any determination in such proceeding, be
restored to their former positions hereunder, and thereafter all
rights and remedies of the Bank shall continue as though no such
proceeding had been instituted.
Section 7.07 Rights and Remedies Cumulative.
No right or remedy herein conferred upon or reserved to the
Bank is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law,
be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity
or otherwise. The assertion or employment of any right or remedy
(54)
<PAGE>
hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 7.08 Delay or Omission Not Waiver.
No delay or omission of the Bank to exercise any right or
remedy accruing upon an Event of Default shall impair any such
right or remedy or constitute a waiver of any such Event of
Default or an acquiescence therein. Every right and remedy given
by this Article Seven or by law to the Bank may be exercised from
time to time, and as often as may be deemed expedient, by the
Bank.
Section 7.09 Undertaking for Costs.
All parties to this Credit Agreement agree that any court
may in its discretion require, in any suit for the enforcement of
any right or remedy under this Credit Agreement or any of the
other Lending Documents, or in any suit against the Bank for any
action taken or omitted by it as lender, the filing by any party
litigant in such suit of an undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable
costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good
faith of the claims or defenses made by such party litigant; but
the provisions of this Section 7.09 shall not apply to any suit
instituted by the Bank for the enforcement of the payment of the
principal of or interest on the Note when due (whether at its
Stated Maturity, on any Principal Payment Date, by acceleration
or otherwise) or the relevant Interest Payment Date.
ARTICLE VIII.
REIMBURSEMENT AND INDEMNIFICATION OF THE BANK
Section 8.01 Reimbursement and Indemnity.
The Borrower agrees (and to the extent the Borrower does not
do so, the Company agrees):
(a) to pay or reimburse the Bank upon its request for all
reasonable costs, expenses, disbursements and advances incurred
or made by the Bank in connection with the development,
preparation and execution of, and any amendment, supplement or
modification of or waiver of any of the provisions of, this
Credit Agreement, the Mortgage Documents and any of the other
Lending Documents, and the consummation of the transactions
contemplated hereby and thereby, including without limitation the
reasonable fees, expenses and disbursements of its agents
(including without limitation any Appraiser engaged by the Bank)
and counsel, except any such expense, disbursement or advance as
(55)
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may be attributable to the Bank's gross negligence or bad faith
as finally determined by a court of competent jurisdiction; and
(b) to pay or reimburse the Bank upon its request for all
reasonable costs, expenses, disbursements and advances incurred
or made by the Bank in connection with, and to pay, indemnify and
hold the Bank harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever arising out of or in connection with, the
restructuring of the Loan as provided in the 1992 Credit
Agreement and the changes provided herein, the taking of the lien
upon and security interest in the Trust Estate pursuant to the
Mortgage Documents, or the exercise, enforcement or preservation
of any rights or remedies under this Credit Agreement, the
Mortgage Documents and any of the other Lending Documents
(including, without limitation, the reasonable fees, expenses and
disbursements of its agents and counsel).
As security for the performance of the obligations of the
Borrower and the Company under this Section 8.01, the Bank shall
be secured under this Credit Agreement, the Mortgage Documents
and the other Lending Documents by the Lien upon the Trust Estate
granted under the Lending Documents, and for the payment of such
expenses, reimbursements and indemnity the Bank shall have the
right to use and apply any moneys held by it pursuant hereto.
The agreements and obligations of the Borrower and the
Company contained in this Section 8.01 shall survive the
repayment of the Note and all other amounts payable hereunder.
ARTICLE IX.
REPORTING OBLIGATIONS OF THE BORROWER
Section 9.01 Financial Statements.
The Borrower will furnish to the Bank:
(a) as soon as available, but in any event within 90 days
after the end of each fiscal year of the Borrower and the
Company, respectively, a copy of the audited balance sheets of
the Borrower and the Company, as the case may be, as at the end
of such fiscal year and the related statements of income and
retained earnings and changes in financial position of the
Borrower and the Company, as the case may be, for such fiscal
year, setting forth in each case in comparative form the
corresponding figures for the previous year, all in reasonable
detail, and, so long as the Borrower or the Company has issued
any securities then subject to the periodic reporting
requirements of the Securities Exchange Act of 1934, as amended,
(56)
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or is required by Gaming Authorities to have audited financial
statements, certified by Arthur Andersen & Co. or another firm of
Independent Accountants of nationally recognized standing; and
(b) as soon as available, but in any event not later than
30 days after the end of each of the first three fiscal quarters
of each fiscal year of the Borrower and the Company, respective-
ly, a copy of the unaudited consolidated balance sheet of the
Borrower and the Company, as the case may be, as at the end of
each such quarter and the related unaudited statements of income
and retained earnings and changes in financial position of the
Borrower and the Company, as the case may be, for such quarter
and the portion of the fiscal year of the Borrower and the
Company, as the case may be, through the end of such quarter,
setting forth in each case in comparative form the figures for
the previous year, such financial statements to be certified by
the chief financial officer of the Borrower (or of any General
Partner of the Borrower) and the Company, as the case may be.
All such financial statements shall be prepared in
reasonable detail and in accordance with generally accepted
accounting principles except, in the case of interim financial
statements, for the absence of footnotes and for year-end
adjustments) applied consistently throughout the periods
reflected therein (except as concurred in by the firm of
Independent Accountants reporting on such financial statements or
chief financial officer of the Borrower and the Company, as the
case may be, and disclosed therein).
Section 9.02 Certificates, Other Information.
The Borrower will furnish to the Bank:
(a) concurrently with the delivery of the financial
statements referred to in Section 9.01(a) hereof, a letter from
the firm of Independent Accountants reporting on such financial
statements stating that, in seeking the examination necessary to
express their opinion on such financial statements, except as
disclosed in such letter, nothing has come to their attention to
lead them to believe that an Event of Default hereunder existed
at the close of the fiscal year, it being understood that the
review of such accountants cannot be relied upon to give them
knowledge of an Event of Default except as it relates to
accounting and auditing matters;
(b) concurrently with the delivery of the financial
statements referred to in Sections 9.01(a) and (b) hereof, a
certificate of the chief financial officer of the Borrower (or of
a General Partner of the Borrower) and the Company (i) stating
that, to the best of such officer's knowledge, except as
disclosed in such certificate, (i) each of the Borrower and the
(57)
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Company during such period has observed and performed in all
material respects all its covenants and other agreements
contained in this Credit Agreement and the other Lending
Documents to be observed or performed by the Borrower and the
Company, (ii) that such officer has obtained no knowledge of any
Default or Event of Default, and (iii) stating that all such
financial statements have been prepared in accordance with
generally accepted accounting principles (except, in the case of
interim financial statements, for footnotes and year-end
adjustments, as aforesaid) applied consistently throughout the
period reflected therein (except as disclosed therein);
(c) promptly upon receipt thereof, copies of all final
reports submitted to the Borrower or the Company by a firm of
Independent Accountants in connection with each annual, interim
or special audit of the books of the Borrower or the Company made
by such firm of Independent Accountants, including, without
limitation, any final comment letter submitted by such firm of
Independent Accountants to management in connection with its
annual audit;
(d) promptly upon their becoming available, copies of all
financial statements, reports and notices sent or made available
generally by the Borrower or the Company to any Gaming Authority,
its security holders or the holders of beneficial interests, of
all regular and periodic reports and all final registration
statements and final prospectuses, if any, filed by the Borrower
or the Company with any securities exchange or with the
Commission, the Gaming Authorities or any other Governmental
Authority;
(e) concurrently with the delivery to any of the Trustees
by the Borrower or the Company, or promptly after receipt thereof
from any of the Trustees by the Borrower or the Company, copies
of any and all notices, requests, demands or other written
communications given or received by the Borrower or the Company
under or in connection with the Indenture or any of the other
Indenture Documents; and
(f) promptly such additional financial and other
information as the Bank may from time to time reasonably request.
Section 9.03 Notices.
The Borrower will promptly give notice to the Bank:
(a) of the occurrence of any Default or Event of
Default;
(b) of any (i) event of default under the Indenture or any
other Indenture Document, or (ii) litigation, investigation or
(58)
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proceeding which may exist at any time between the Borrower or
the Company and any Governmental Authority, which in any such
case would, after giving effect to any applicable insurance, if
adversely determined, have a material adverse effect on the
business, operations, property or condition (financial or
otherwise) or results of operations of the Borrower, the Company
or Trump; and
(c) of any litigation or proceeding affecting the Borrower
or the Company (i) in which the amount claimed is $5,000,000 or
more and not covered by insurance, (ii) in which injunctive or
similar relief is sought which, if obtained, would have a
material adverse effect on the business, operations, property or
condition (financial or otherwise) or results of operations of
the Borrower or the Company, or (iii) which questions the
validity or enforceability of this Credit Agreement or any of the
other Lending Documents or the Indenture or any of the other
Indenture Documents.
Each notice pursuant to this Section 9.03 shall be
accompanied by a statement of the chief executive officer or the
chief financial officer of the Borrower (or a General Partner
thereof) or the Company, as the case may be, setting forth
details of the occurrence referred to therein and stating what
action the Borrower or the Company as the case may be, proposes
to take with respect thereto.
ARTICLE X.
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 10.01 Consolidation, Merger, Conveyance or Transfer.
Neither the Borrower nor the Company shall consolidate,
combine or merge with or into any other Person or permit any
other Person to consolidate, combine or merge with or into the
Borrower or the Company, as the case may be; neither the Borrower
with respect to the Trust Estate nor the Company with respect to
all or substantially all of its assets shall convey or transfer
its interest in the Trust Estate or such assets, as the case may
be, substantially as an entirety to any other Person or permit
any other Person to convey or transfer all or substantially all
of its assets, subject to liabilities other than de minimis
liabilities, to the Borrower or the Company, as the case may be
(each such transaction is referred to herein as a "Combination
Transaction"); provided, however, that the Borrower and/or the
Company may engage in a Combination Transaction with the prior
written consent of the Bank, which consent may be given or
withheld by the Bank in its sole discretion.
(59)
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Section 10.02 Successor Entity Substituted.
Upon the consummation of any Combination Transaction
effected in compliance with Section 10.01, the successor entity
formed by such consolidation or into which the Borrower or the
Company is combined or to which such conveyance or transfer is
made shall succeed to, and be substituted for, and may exercise
every right and power of, the Borrower or the Company, whichever
the case may be, under this Credit Agreement with the same effect
as if such successor entity had been named as the Borrower or the
Company herein. Any such successor entity which shall so assume
all of the obligations of the Borrower and the Company under this
Credit Agreement, the Note, the Mortgage and the other Lending
Documents shall be entitled to the limitation of liability set
forth in Section 2.07 hereof. Nothing herein or in the Mortgage
(including Section 4.02 thereof) shall be construed as releasing
the Person named as the "Borrower" or the "Company", as the case
may be, in the first paragraph of this Credit Agreement.
Section 10.03 Successor Management of Casino-Hotel.
Neither the Borrower nor the Company shall request the
consent of the Bank to engage in any Combination Transaction
unless, immediately following such Combination Transaction, (a)
the Borrower (or any successor entity) shall be eligible for and
shall meet all relevant Legal Requirements, including holding all
material Permits, required for the normal operation of the
business of owning and operating the Casino-Hotel, and (b) the
Borrower (or any successor entity) shall be controlled by a
Person that is, or shall retain to manage the Casino-Hotel one or
more Persons that are, experienced in the operation and
management of casino-hotels.
Section 10.04 Limitation on Lease of Trust Estate as Entirety.
The Borrower shall not lease the Trust Estate substantially
as an entirety to any Person, nor shall the Borrower lease either
the Casino-Hotel or the Casino or the Hotel substantially as an
entirety to any Person; provided that the Borrower may lease the
Trust Estate substantially as an entirety to an Affiliate of the
Borrower, so long as (a) the Borrower confirms in writing that
such lease is covered by the Assignment of Leases and Rents
attached hereto as Exhibit C; (b) such lease provides for net
rent to the Borrower after payment of all expenses in connection
with the Casino-Hotel, including capital expenditures at least
equal to the debt service on the Indebtedness under the
Indentures and any Refinancing Debt; (c) such lease is not
assignable by the lessee except to an Affiliate of the Borrower;
(d) such lease is expressly subject and subordinate to the
Mortgage and may be terminated by the Bank upon foreclosure of
the Mortgage; (e) the Gaming Authorities have given or waived all
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necessary consents and approvals to such lease; (f) the Bank is
provided a copy of such lease and any amendments thereto; (g)
such lease complies with the provisions of Section 5.13(d)(4) of
the Mortgage; and (h) the Bank is provided with an Opinion of
Counsel and an Officers' Certificate to the effect that the
Borrower has complied with the provisions of this Credit
Agreement regarding such lease and that all Permits required in
connection with such lease have been obtained.
Section 10.05 Limitation on Sales of Trust Estate.
Except as permitted by this Credit Agreement and the
Mortgage, neither the Borrower nor the Company shall sell,
assign, lease, hypothecate, pledge, mortgage or otherwise
transfer, whether singly or in a series of transactions all or
any material part of the Trust Estate or the assets of the
Company, or any interest therein.
ARTICLE XI.
COVENANTS
Section 11.01 Payment of Principal and Interest.
The Borrower will duly and punctually pay the principal of
and interest on the Note in accordance with the terms of this
Credit Agreement and the Note.
Section 11.02 Limitations on Liens.
Neither the Borrower nor the Company will create, incur,
suffer or permit to be created or incurred or to exist any Lien
on the Trust Estate senior to the Liens on the Trust Estate
created pursuant to the Mortgage Documents, except the following
senior Liens which are permitted by this Section 11.02 and are
herein referred to as "Permitted Senior Encumbrances":
(a) Existing Encumbrances consisting of all encumbrances
which were senior to the Lien of the Mortgage when such mortgage
was executed and delivered on February 16, 1988 (the "1988
Mortgage"), and Liens subsequently created which were permitted
under the Lending Documents to be senior to the Lien of the 1988
Mortgage;
(b) Liens to secure taxes, assessments and other
governmental charges, which continue only as long as payment
thereof shall not be required by Section 11.05;
(c) deposits or pledges (other than Liens on real property
or improvements) made (i) in connection with, or to secure
payment of, workers' compensation, unemployment insurance, old
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age pensions or other social security, (ii) in connection with
casualty insurance maintained in accordance with Section 5.11 of
the Mortgage, (iii) to secure the performance of bids, tenders,
contracts (other than contracts relating to borrowed money) or
leases, (iv) to secure statutory obligations or surety or appeal
bonds, (v) to secure indemnity, performance or other similar
bonds in the ordinary course of business or (vi) in connection
with contests to the extent that payment thereof shall not at
that time be required by Section 11.05;
(d) Liens of carriers and warehousemen, and similar Liens,
in each case which, either individually or collectively, do not
constitute an impairment of security under Section 1.11(c);
(e) encumbrances in the nature of (i) zoning restrictions,
(ii) easements and rights of way which do not, in the reasonable
judgment of the Borrower, materially interfere with the operation
of the Casino-Hotel, (iii) restrictions of record on the use of
the real property on the Original Amendment Date which do not
materially impair the use of the Casino-Hotel and (iv) landlords'
and lessors' Liens which, either individually or collectively, do
not constitute an impairment of security under Section 1.11(c);
(f) Liens on rented premises, which in each case do not
materially diminish the value of the leasehold interest of the
Borrower in the encumbered property or impair the use thereof in
the business of the Borrower or the Company;
(g) notices of intention filed by mechanics, materialmen or
laborers under the mechanics' lien statute which, either
individually or collectively, do not constitute an impairment of
security;
(h) setoff rights of any depository institution with which
the Borrower or the Company maintains deposit accounts;
(i) Liens in respect of F,F&E Financing Agreements and the
renewal or extension of any such Liens; provided, however, that
each such Lien shall attach solely to the particular item of
property acquired pursuant to the applicable F,F&E Financing
Agreement; and
(j) purchase money security interests (including mortgages,
conditional sales, capitalized leases and any other title
retention or deferred purchase devices) not arising under F,F&E
Financing Agreements, and the renewal or extension of any such
Liens; provided, however, that each such Lien shall attach solely
to the particular item of property so acquired, and the principal
amount of Indebtedness secured thereby shall not exceed the cost
of such item of property.
(62)
<PAGE>
Section 11.03 Restriction of Activities.
(a) The Company shall not conduct any business whatsoever,
other than to collect principal and interest (and any interest on
overdue principal and interest) under the Indenture Notes or any
Refinancing Debt, to preserve and enforce its rights under any
documents in which the Borrower is a mortgagor or other obligor,
to do or cause to be done all things necessary or appropriate to
protect the Trust Estate and to preserve its rights therein, and
otherwise to comply with its obligations under this Credit
Agreement and the other Lending Documents and the Indentures and
the other Indenture Documents to which it is a party.
(b) Neither the Borrower nor the Company shall (i) enter
into any management or services agreement relating to the
Casino-Hotel with Trump or any of his Affiliates other than the
Services Agreement or (ii) amend the Services Agreement in any
manner which increases the amount of fees payable thereunder or
materially reduces the obligations of Trump or TC/GP (or their
respective designees) thereunder.
(c) Without the prior written consent of the Bank, neither
the Borrower nor the Company will enter into any amendment,
supplement or other modification of any of the Indenture Notes or
of any of the other Indenture Documents, as the same are in
effect on the date hereof, which directly or indirectly (i)
changes the scheduled maturity date of such Indebtedness to a
date earlier than as set forth in Section 4.14 hereof, (ii)
increases the stated rate of interest on the Indenture Notes to a
rate of interest which is at any time greater than as set forth
in Section 4.14 hereof, (iii) amends the provisions of any
Indenture as in effect on the date hereof, so as to require or
permit the Borrower or the Company to effect a Redemption of all
of the Notes at any time or under any circumstances other than as
set forth in the Indentures on the date hereof, (iv) amends the
provisions of any Indenture as in effect on the date hereof, so
as to provide for the open market purchases by the Borrower or
the Company of any of the Indenture Notes in any amounts greater
or at times earlier than that provided in the Indentures as of
the date hereof or (v) adds to any Indenture any provision for a
sinking fund, mandatory prepayment or other amortization of the
principal amount of any of the Indenture Notes.
(d) Without the prior written consent of the Bank, neither
the Borrower nor the Company will directly or indirectly incur
any Indebtedness to fund the Redemption of all or any part of any
of the Indenture Notes ("Refinancing Debt", which term shall be
construed to mean any Indebtedness which refinances or otherwise
replaces any other Refinancing Debt), including, without
limitation, by reason of a complete Redemption of any kind,
unless (i) the principal amount of such Indebtedness shall not at
(63)
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any time directly or indirectly exceed the aggregate principal
amount of the Senior Notes, the Mortgage Notes and the PIK Notes;
(ii) the aggregate of the payments of interest and principal
required to be paid by the Borrower and/or the Company in respect
of such Refinancing Debt shall not directly or indirectly in any
year exceed the aggregate amount of the interest (and, in each of
1998 and 1999, the Permitted Senior Note Principal Payments)
which the Company is obligated under the terms of the Indentures
as in effect on the date hereof to pay in respect of the Senior
Notes, the Mortgage Notes and the PIK Notes in such year, (A)
without giving effect to the required payment of principal on the
maturity date of the Senior Notes in the year 2000, (B) without
giving effect to any provision of any of the Indentures which may
require a prepayment or acceleration of principal (including,
without limitation, a Condemnation/Casualty Event, a Change in
Control Event or an Equity Offering Event), (C) excluding all the
interest on the PIK Notes (except Permitted PIK Note Cash
Interest Payments), and (D) excluding, in the case of any such
refinancing transaction in 1998 or thereafter, the principal
payable under the Senior Notes in 1998 and 1999 except to the
extent that principal is actually paid in such years; (iii) the
maturity date of the Refinancing Debt shall not be earlier than
2003, provided that up to $40,000,000 of such Refinancing Debt
may mature at any time after November 15, 2000 and a principal
payment of an amount equal to each Permitted Senior Note
Principal Payment may be made in each of 1998 and 1999; and (iv)
such Refinancing Debt does not directly or indirectly permit
Redemptions and/or open market purchase of any Refinancing Debt,
in whole or in part, in amounts greater than or at times earlier
than as permitted in this Credit Agreement or as set forth in
each of the Indentures, as the same is in effect on the date
hereof. Upon the consummation of any such refinancing
transaction, and as a condition to the effectiveness thereof, (A)
the holder of any Refinancing Debt (or the trustee(s), agent(s)
or other similar representative(s) of the holder or holders of
Refinancing Debt) and the Bank shall enter into an intercreditor
agreement under the terms of which each of the Bank and such
holder(s) (or representative(s)) shall have rights and
obligations with respect to the Note and the Refinancing Debt
similar in all material respects to the rights and obligations of
the Bank and the Senior Note Trustee, the Mortgage Note Trustee
and/or the PIK Note Trustee (as applicable) under the
Intercreditor Agreement as then in effect, and thereafter all
references in the Lending Documents to such "Trustee" shall be
construed as references to such holder(s) (or representative(s)),
(B) the Borrower, the Company and such holder(s) (or
representatives(s)) shall have executed and delivered to the Bank
a consent and agreement substantially in the form of the Consent
and Agreement, which thereafter shall be recorded in office of
the Clerk of Atlantic County, and (C) the Borrower, the Company
and the Bank shall have entered into amendments to this Credit
(64)
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Agreement and the other Lending Documents reasonably satisfactory
to the Bank with respect to or relating to the Refinancing Debt.
(e) Neither the Company nor the Borrower shall directly or
indirectly (i) effect any Redemption of the Notes or make any
payments of principal of any of the Indenture Notes, other than
(A) a Redemption in whole of all of the Indenture Notes (i.e.,
all of the Senior Notes, the Mortgage Notes and the PIK Notes
taken as a whole), subject to compliance with the provisions of
Section 11.03(d) hereof, (B) a Redemption which constitutes a
Required Redemption Event, provided that the provisions of
Section 2.06 hereof are complied with, (C) a Permitted Senior
Note Principal Payment or (D) a Redemption of the PIK Notes upon
the occurrence of an Equity Offering Event, pursuant to which 35%
(and no more) of the proceeds thereof are used to redeem the PIK
Notes (provided that the proceeds thereof used to redeem the PIK
Notes arises solely from a sale of equity, and not, by way of
example only, from the incurrence by either the Borrower or the
Company of additional Indebtedness or contingent obligations
(including guaranties) or from internally generated funds); (ii)
make any payments to a sinking fund or take any similar action;
(iii) make any interest payment on the PIK Notes in cash until
the Loan is indefeasibly paid in full, except for Permitted PIK
Note Cash Interest Payments; or (iv) make open market purchases
of any of the Indenture Notes (including, without limitation,
open market purchase made pursuant to a tender offer), except for
Open Market Borrower Note Purchases.
Section 11.04 Certain Restricted Payments.
Neither the Borrower nor the Company shall make any
Restricted Payment; provided, however, that, so long as no Event
of Default has occurred and is continuing hereunder (whether or
not such Event of Default is an Event of Default with respect to
which the forbearance provisions of Section of 3.1 of the
Intercreditor Agreement apply), the Borrower and the Company may
at any time make any of the following Restricted Payments:
(i) Permitted Borrower Distributions;
(ii) payments made to Trump, TC/GP or any other
Affiliate of Trump under the Services Agreement and in
accordance with Section 11.03(b) hereof;
(iii) distributions in respect of General Partners'
taxes made in all substantive respects in a manner
substantially similar to the provisions contained in Section
5.6.1 of the Borrower's partnership agreement as in effect
on the Original Amendment Date (for purposes of this Section
11.04, "Existing Partnership Agreement"), notwithstanding
that such partnership agreement shall have been amended and
(65)
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restated in its entirety on or immediately prior to the date
hereof;
provided, however, that so long as no Event of Default described
in Section 7.01(a), (b) or (c) hereof has occurred and is
continuing, and except as provided in the last sentence of
Section 2.3 of the Intercreditor Agreement, the Borrower and the
Company may make any payment to fund a Blocked Payment (as that
term is defined in the Intercreditor Agreement).
Section 11.05 Payment of Taxes and Other Claims.
The Borrower and the Company will each pay or discharge or
cause to be paid or discharged, before the same shall become
delinquent, (a) all taxes, assessments and governmental charges
levied or imposed upon the Borrower or the Company or upon the
income, sales, profits, property or activities of the Borrower or
the Company which may create a lien on the Trust Estate senior to
the Lien of the Mortgage, and (b) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a
Lien upon the property of the Borrower or the Company senior to
the Lien of the Mortgage, provided that (subject to the further
provisions herein) neither the Borrower nor the Company shall be
required to pay or discharge or cause to be paid or discharged
any such tax, assessment, charge or claim so long as the amount,
applicability or validity is being contested in good faith by
appropriate proceedings and so long as such proceedings suspend
the collection thereof through commencement of foreclosure upon
the Trust Estate, and provided further that to the extent that
any ad valorem real estate taxes are or are claimed to be
delinquent for in excess of three months, the Borrower will
promptly deposit in an interest-bearing account with the Bank an
amount equal to the disputed real estate taxes (and annually
thereafter, interest claimed thereon) or will provide the Bank
with additional collateral security reasonably satisfactory to
the Bank for the payment thereof.
Section 11.06 Compliance Certificates.
The Borrower will deliver to the Bank, within 120 days after
the end of each fiscal year of the Borrower, an Officers'
Certificate stating that:
(i) a review of the activities of the Borrower
and the Company during such year and of performance under
this Credit Agreement, the Mortgage, the Note and the other
Lending Documents has been made under his supervision, and
(ii) to the best of each signer's knowledge, based
on such review, the Borrower and the Company have fulfilled
all their material obligations under this Credit Agreement,
(66)
<PAGE>
the Note, the Mortgage and the other Lending Documents
throughout such year, or if a Default has occurred and is
continuing hereunder, specifying each such Default known to
him and the nature and status thereof.
Section 11.07 Maintenance of Existence: Compliance with Laws.
Subject to Article Ten, the Borrower will do or cause to be
done all things necessary to preserve and keep in full force and
effect its existence as a partnership, and the Company will do or
cause to be done all things necessary to preserve and keep in
full force and effect its existence in good standing as a
corporation. Without limiting the generality of the foregoing,
the Borrower and the Company will each comply in all material
respects with the New Jersey Casino Control Act.
Section 11.08 To Keep Books: Inspection by Bank.
The Borrower and the Company will each keep proper books of
record and account, in which full and correct entries shall be
made of all dealings or transactions of or in relation to the
Note and the properties, business and affairs of the Borrower and
the Company in accordance with generally accepted accounting
principles consistently applied. Said books shall be maintained
in an office located either in Atlantic City, New Jersey, in the
Borough of Manhattan, City of New York, State of New York, or in
another city within the United States of America identified to
the Bank in a notice furnished to the Bank by the Borrower. The
Borrower and the Company will, upon the written request of the
Bank, and at the expense of the Borrower and the Company, permit
the Bank or its representatives on any Business Day to inspect
the Casino-Hotel and the books of account, records, reports and
other papers of the Borrower and the Company, and to make copies
and extracts therefrom, and will afford and procure a reasonable
opportunity to make any such inspection (provided that any such
inspection shall not unreasonably interfere with the business
operations of the Borrower and the Company), and the Borrower and
the Company will furnish to the Bank any and all information as
the Bank may reasonably request with respect to the performance
by the Borrower and the Company of their covenants and agreements
in this Credit Agreement or the Mortgage.
Neither the Borrower nor the Company shall without prior
notice to the Bank, change the fiscal year of the Borrower or the
Company from December 31.
Section 11.09 Waiver of Stay, Extension or Usury Laws.
Each of the Borrower and the Company covenants (to the
extent that it may lawfully do so) that it will not at any time
insist upon, or plead, or in any manner whatsoever claim or take
(67)
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the benefit or advantage of, any usury, stay or extension law or
any other law which would prohibit or forgive the Borrower or the
Company, as the case may be, from paying all or any portion of
the interest on the Note as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may
otherwise affect the covenants or the performance of this Credit
Agreement or the Mortgage; and the Borrower or the Company, as
the case may be, (to the extent that it may lawfully do so),
hereby expressly waives all benefit or advantage of any such law,
and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Bank, but will
suffer and permit the execution of every such power as though no
such law had been enacted.
Section 11.10 Transactions with Affiliates.
Subject to and without limiting the other provisions of this
Credit Agreement or the Mortgage, neither the Borrower nor the
Company shall engage in any transactions with the Borrower's
partners or the Company's shareholder or any of their other
Affiliates or any Affiliates of the Borrower's partners or the
Company's shareholders, except on terms comparable to those
generally available on an arm's-length basis in similar
transactions with third parties, provided, however, that such
arm's-length standard shall not apply to the provision of the
Services Agreement, the Partnership Agreement and the Indenture
Documents as each thereof is in effect on the date hereof.
Section 11.11. Continuation of Lending Documents.
The parties acknowledge and agree that an Intercreditor
Agreement has been executed simultaneously with the execution and
delivery of this Credit Agreement, which Intercreditor Agreement
supersedes and replaces the Intercreditor Agreement dated as of
May 29, 1992, executed and delivered by the parties thereto
pursuant to the 1992 Credit Agreement. All of the other Lending
Documents executed and delivered pursuant to or in connection
with the 1992 Credit Agreement (including, without limitation,
the Note, the Mortgage, the Assignment of Leases and Rents and
the Assignment of Operating Assets) shall remain in full force
and effect, except as specifically amended or modified pursuant
to or in connection with this Credit Agreement.
(68)
<PAGE>
ARTICLE XII.
GUARANTY
Section 12.01 Guaranty.
The Company hereby guarantees (such guaranty to be referred
to herein as the "Guaranty") to the Bank and its successors and
assigns, irrespective of the validity and enforceability of this
Credit Agreement, the Note or the obligations of the Borrower
hereunder or thereunder, that: (a) the principal of and interest
on the Note will be promptly paid in the amounts and at the time
when due, whether at the Maturity or Interest Payment Date, by
acceleration or otherwise, and interest on the overdue principal,
if any, of the Note and all other obligations of the Borrower to
the Bank hereunder or thereunder will be promptly paid in full or
performed, all in accordance with the terms hereof and thereof;
and (b) in case of any extension of time of payment or renewal of
the Note or any of such other obligations, that same will be
promptly paid in full when due or performed in accordance with
the terms of the extension or renewal, whether at its Maturity,
by acceleration or otherwise. Failing payment when due of any
amount so guaranteed for whatever reason, the Company will be
obligated to pay the same immediately. This Guaranty is a
guaranty of payment, and is not limited to collectability. The
Company hereby agrees that its obligations hereunder shall be
unconditional, subject to the provisions of Section 2.07,
irrespective of the validity, regularity or enforceability of the
Note or this Credit Agreement, the absence of any action to
enforce the same, any waiver or consent by the Bank with respect
to any provisions hereof or thereof, any releases of collateral,
any delays in obtaining or realizing upon or failures to obtain
or realize upon collateral, the recovery of any judgment against
the Borrower, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or
equitable discharge or defense of a guarantor. The Company hereby
waives diligence, presentment, demand of payment, filing of
claims with a court in the event of insolvency or bankruptcy of
the Borrower, any right to require a proceeding first against the
Borrower, protest, notice, all demands whatsoever and any other
defense of a guarantor or surety and covenants that this Guaranty
will not be discharged except by complete performance of the
obligations contained in the Note and this Credit Agreement. If
the Bank is required by any court or otherwise to return to
either the Borrower or the Company, or any custodian, trustee,
liquidator or other similar official acting in relation to either
the Borrower or the Company, any amount paid by either the
Borrower or the Company to the Bank, this Guaranty, to the extent
theretofore discharged, shall be reinstated in full force and
effect, subject to the provisions of Section 2.07. The Company
agrees that it shall not be entitled to any right of subrogation
(69)
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in relation to the Borrower in respect of any obligations
guaranteed hereby. The Company further agrees that, as between
the Company, on the one hand, and the Bank, on the other hand (a)
the maturity of the obligations guaranteed hereby may be
accelerated, subject to the provisions of Section 2.07, as
provided in Section 7.02 for the purposes of this Guaranty,
notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the obligations
guaranteed hereby, and (b) in the event of any declaration of
acceleration of such obligations as provided in Section 7.02,
such obligations (whether or not due and payable) shall forthwith
become due and payable by the Company for the purpose of this
Guaranty.
Section 12.02 Execution and Delivery of Guaranty.
To evidence its Guaranty set forth in Section 12.01, the
Company hereby agrees that a notation of such Guaranty may be
endorsed on the Note, that if so endorsed the Note shall provide
for a limitation on liability as set forth in Section 2.07 and
that this Credit Agreement shall be executed on behalf of the
Company by an Officer of the Company.
The Company hereby agrees that its Guaranty set forth in
Section 12.01 shall remain in full force and effect,
notwithstanding any failure to endorse on the Note a notation of
such Guaranty, subject to the provisions of Section 2.07.
This Credit Agreement may be executed in any number of
counterparts, each of which as executed shall be deemed to be an
original, but all such counterparts shall constitute one and the
same instrument.
(70)
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Credit Agreement to be duly executed and attested, all as of the
day and year first above written.
ATTEST: TRUMP'S CASTLE ASSOCIATES
By:____________________________ By:___________________________
Donald J. Trump
Managing Partner
ATTEST: TRUMP'S CASTLE FUNDING, INC.
By:________________________ By:_________________________
Donald J. Trump
President
MIDLANTIC NATIONAL BANK
By:
----------------------------
Ben Berzin, Jr.
Senior Vice President
(71)
<PAGE>
CONSENT
Solely for the purposes of consenting to the Amendment
and Restatement of the 1992 Credit Agreement, TC/GP
Inc. has signed below. TC/GP Inc. is not otherwise a
party hereto and has no rights hereunder.
TC/GP INC.
By:
----------------------------
Title:
General Partner
(72)
<PAGE>
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on this ____ day of December, 1993,
before me, the subscriber, a Notary Public of the state of New
York, personally appeared, Donald J. Trump, the Managing Partner
of TRUMP'S CASTLE ASSOCIATES, a New Jersey general partnership,
who, I am satisfied, is the person who has signed the within
instrument as the Managing Partner of said general partnership,
and he acknowledged that he signed, sealed and delivered the same
as such Managing Partner, that the within instrument is the
voluntary act and deed of said general partnership made by virtue
of its Board of Partnership Representatives, and that he received
a true copy of the within instrument on behalf of said general
partnership.
-----------------------------------
Notary Public of the State of
New York
{Seal}
(73)
<PAGE>
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on this ____ day of December, 1993,
before me the subscriber, a Notary Public of the State of New
York, personally appeared, Donald J. Trump, the President of
TRUMP'S CASTLE FUNDING, INC., a New Jersey corporation, who, I am
satisfied, is the person who executed the within instrument as
the President of said corporation, and he acknowledged that he
signed, sealed with the proper corporate seal and delivered the
same as such officer, that the within instrument is the voluntary
act and deed of said corporation made by virtue of authority of
its board of directors, and that he received a true copy of the
within instrument on behalf of said corporation.
----------------------------------
Notary Public of the State of
New York
{Seal}
(74)
<PAGE>
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on this 27th day of December, 1993,
before me the subscriber, a Notary Public of the State of New
York, personally appeared BEN BERZIN JR., a Senior Vice President
of MIDLANTIC NATIONAL BANK, a national banking association, who,
I am satisfied, is the person who executed the within instrument,
as Senior Vice President of said association, and he acknowledged
that he signed, sealed with the proper corporate seal and
delivered the same as such officer, that the within instrument is
the voluntary act and deed of said association made by virtue of
authority of its board of directors, and that he received a true
copy of the within instrument on behalf of said association.
---------------------------------
Notary Public of the State of
New York
{Seal}
(75)
<PAGE>
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on this 28th day of December, 1993,
before me the subscriber, a Notary Public of the State of New
York, personally appeared, Donald J. Trump, the President of
TC/GP a New Jersey corporation, who, I am satisfied, is the
person who executed the within instrument as the President of
said corporation, and he acknowledged that he signed, sealed with
the proper corporate seal and delivered the same as such officer,
that the within instrument is the voluntary act and deed of said
corporation made by virtue of authority of its board of
directors, and that he received a true copy of the within
instrument on behalf of said corporation.
___________________________________
Notary Public of the State of
New York
{Seal}
(76)
=================================================================
____________________________________________
AMENDMENT NO. 1 TO
AMENDED AND RESTATED
INDENTURE OF MORTGAGE
Dated as of December 28, 1993
____________________________________________
TRUMP'S CASTLE ASSOCIATES,
a New Jersey general partnership,
as Mortgagor
and
MIDLANTIC NATIONAL BANK,
as Mortgagee
================================================================
Prepared by: _______________________________
Ira A. Rosenberg, Esq.
Sills Cummis Zuckerman Radin
Tischman Epstein & Gross, P.A.
One Riverfront Plaza
Newark, New Jersey 07102
(201) 643-7000
<PAGE>
AMENDMENT NO. 1 TO AMENDED AND RESTATED
INDENTURE OF MORTGAGE
------------------------
AMENDMENT NO. 1 (the "Amendment") to AMENDED AND RESTATED
INDENTURE OF MORTGAGE, dated as of December 28, 1993, between
TRUMP'S CASTLE ASSOCIATES, a New Jersey general partnership which
is the successor to Trump's Castle Associates Limited
Partnership, a New Jersey limited partnership (the "Mortgagor"),
and MIDLANTIC NATIONAL BANK, a national banking association (the
"Mortgagee"). Capitalized terms used and not defined herein
shall have the meanings ascribed to such terms in the Original
Mortgage (herein defined).
WITNESSETH:
----------
WHEREAS, the Mortgagor delivered to the Mortgagee an Amended
and Restated Mortgage, dated as of May 29, 1992 (the "Original
Mortgage"), recorded in Mortgage Book 4777, commencing at page
200, to secure certain obligations including, without limitation,
obligations under the 1992 Credit Agreement (as hereinafter
defined) and the Note (as hereinafter defined).
WHEREAS, as of May 29, 1992, among other things, (i) the
Mortgagor, Trump's Castle Funding, Inc. ("Funding") and the
Mortgagee entered into a Credit Agreement (the "1992 Credit
Agreement"), and (ii) the Mortgagor issued to the Mortgagee an
Amended and Restated Term Note in the principal amount of
$38,000,000, bearing interest and being payable as set forth
therein (the "1992 Note");
WHEREAS, the Mortgagee and the Mortgagor have agreed to
amend and restate the 1992 Credit Agreement (the 1992 Credit
Agreement, as so amended and restated as of the date hereof and
as the same may hereafter from time to time be amended,
supplemented, restated or otherwise modified in writing, the
"Credit Agreement") and the Mortgagor has agreed to execute an
Amendment No. 1 to the 1992 Note (the 1992 Note, as so amended by
Amendment No. 1 thereto dated as of the date hereof and as the
same may hereafter from time to time be amended, supplemented,
restated or otherwise modified in writing, including any
replacement Note issued pursuant to Section 2.03 of the Credit
Agreement, the "Note"), but only upon the condition, among
others, that the Mortgagor confirm, acknowledge and agree in
writing that the Original Mortgage, as amended by this Amendment
No. 1, continues to constitute collateral security for the
obligations of the Mortgagor under the Credit Agreement and the
Note, with the priority and upon the other terms as set forth
therein; and
(1)
<PAGE>
WHEREAS, the Mortgagor has agreed to execute and deliver to
Mortgagee this Amendment No. 1 to the Original Mortgage.
NOW THEREFORE, in consideration of the foregoing and $10.00
in hand paid by the Mortgagee to the Mortgagor and for other good
and valuable consideration, the receipt and sufficiency whereof
is hereby acknowledged, Mortgagor hereby agrees with the
Mortgagee as follows:
1. General. Mortgagor hereby confirms to and agrees with
Mortgagee that the Original Mortgage secures all of the
obligations under the Credit Agreement and all of the obligations
under the Note. Anything to the contrary contained herein or in
the Original Mortgage notwithstanding, Mortgagor further confirms
to and agrees with the Mortgagee that, without limiting the
generality of the preceding sentence, except as referred to in
the recitals on pages 1 and 2 of the Original Mortgage, (a) the
term "Credit Agreement" as defined in the Original Mortgage means
the Amended and Restated Credit Agreement dated of even date
herewith among the Mortgagor (as Borrower), Funding (as
Guarantor) and the Mortgagee (as Lender), as it may from time to
time be amended, supplemented, restated or otherwise modified in
writing; (b) the term "Note" as defined in the Original Mortgage
means the Note (as defined in the Original Mortgage), as amended
by Amendment No. 1 thereto dated as of even date herewith and as
may from time to time be amended, supplemented, restated or
otherwise modified (including any extension) in writing, and
shall include any replacement Note issued pursuant to Section
2.03 of the Credit Agreement; (c) the term "Mortgage" as defined
in the Original Mortgage means the Amended and Restated Mortgage
dated as of May 29, 1992, as amended by this Amendment No. 1 and
as it may from time to time be amended, supplemented, restated or
otherwise modified in writing; and (d) reference in the Original
Mortgage and in this Amendment No. 1 to the phrase "as from time
to time amended, supplemented or modified" and similar phrases
was intended to and does include, therein and herein,
restatements of the documents with respect to which such
reference was or is hereby made.
2. Amendment of Granting Clauses and Other Clauses. The
Granting Clauses of the Original Mortgage are hereby amended as
follows:
(a) Amendment of Paragraph Preceding Granting Clause
First. The words "mortgaged, pledged" are hereby added to the
fourth to last line of the paragraph immediately preceding
Granting Clause First, between the words "alienated" and
"released" and the following words are hereby added to the end of
such paragraph "and does hereby grant to Mortgagee and its
successors a security interest in and to all of Mortgagor's
right, title and interest in, to and under all of the following
(2)
<PAGE>
described property (including the proceeds thereof)," (it being
confirmed by Mortgagee that, to the extent required by applicable
Legal Requirements, a security interest in and to all such
property was granted in the Original Mortgage).
(b) Amendment of Granting Clause Third. The words
"Mortgagor as" are hereby added to the first line of Granting
Clause Third between the words "of" and "lessor". The words "and
during the continuance of" are hereby added to the seventh line
of Granting Clause Third between the words "of" and "an".
Mortgagor confirms that the rents, income, revenues and other
items referred to in Granting Clause Third include, without
limitation, fees and charges.
(c) Amendment of Granting Clause Fourth. Mortgagor
hereby confirms that the grant in Granting Clause Fourth was
intended to and hereby agrees that such grant does include (i)
all of Mortgagor's title and interest in and to such assets, and
(ii) all assets of Mortgagor, whether now owned and/or hereafter
acquired by Mortgagor. Granting Clause Fourth (g)(vi) is hereby
amended to read as follows after the word "shows" on the third
line thereof:
"in any showroom, convention space, exhibition hall or
sports and entertainment arena of the Casino Hotel or
in any other improvements now or hereafter located on
any of the Premises."
Granting Clause Fourth (h) is hereby amended to add after
the word "development" on the third line thereof the words
"design, construction and/or improvement of the Casino Hotel, or
for any other development"
(d) Confirmations re: Granting Clause Fifth:
Mortgagor confirms and hereby agrees that Clause "(b)" of
Granting Clause Fifth includes, without limitation, to the extent
not included in any other Granting Clause of the Mortgage (but
excluding all Excepted Property) each of the following: all
pedestrian bridges, entrance-ways, parking lots, plazas, curb-
cuts, walkways, driveways and landscaping and such fixtures as
constitute real property, now or hereby erected or placed on the
Premises or on any other land or any interest therein hereafter
acquired by Mortgagor, lighting equipment, electronic billboards,
ice machines, printing presses, mirrors, bars, furnaces, coal and
oil burning apparatus, wall cabinets, machinery, generators,
partitions, steam and hot water boilers, lighting and power
plants, pipes, plumbing, radiators, sinks, bathtubs, water
closets, gas and electrical fixtures, blinds, dishwashers,
freezers, and vacuum cleaning systems; other fire prevention or
extinguishing apparatus and material; bookings for any other
improvements now or hereafter located on any of the Premises; all
(3)
<PAGE>
leases, whether with respect to the real property, personal
property or both real and personal property of Mortgagor; trade
names; service marks; any and all goodwill associated with the
Casino or Hotel or any of the other assets contained in the Trust
Estate, including any improvements now or hereafter located in
any of the Premises; any employment contracts with officers and
other employees of the Mortgagor; all software licensing
agreements as are required to operate computer software system on
any other improvements now or hereafter located on any of the
Premises; all contracts, purchase orders, requisitions, and
agreements relating to any other improvements now or hereafter
located on any of the Premises; lighting fixtures; other
materials respecting lighting; poker tables, other gaming tables;
kitchen utensils; all upholstery material, carpets and rugs,
beds, bureaus, chandeliers, chairs, chests, desks, bookcases,
tables, curtains, hangings, pictures, divans, couches, ornaments,
bars, bar fixtures, safes, stoves, ranges, refrigerators, radios,
televisions, clocks, electrical equipment, lamps, mirrors,
heating and lighting fixtures and equipment, ice machines, air
conditioning machines, fire prevention and extinguishing
apparatus, laundry machines, and all similar and related articles
used in bedrooms, sitting rooms, bathrooms, boudoirs, halls,
closets, kitchens, dining rooms, offices, lobbies, basements and
cellars in the Casino Hotel and in any other improvements now or
hereafter located on any of the Premises; and any customer lists
utilized by Mortgagor including lists of transient guests and
restaurant and bar patrons and "high roller" lists.
It is acknowledged by Mortgagee, as to Granting Clause
Fifth, the fifth paragraph on page 8 of the Original Mortgage,
and as to the sixth full paragraph on page 8 of the Original
Mortgage in the next to last line, that any property which
hereafter becomes Excepted Property in accordance with the terms
of this Mortgage shall after such time no longer be part of the
Trust Estate and subject to the lien of this Mortgage.
3. Amendment of Section 1.01(b). The word "not" is hereby
added to the first line of Section 1.01(b) between the words
"terms" and "otherwise".
4. Amendment of Specified Definitions in Section 1.01.
The following additional changes are made to Section 1.01 of the
Original Mortgage:
(a) The term "Appraised Value" is hereby amended in
its entirety to read as follows: "'Appraised Value' means the
fair market value of the Casino Hotel, and of all other property
now or hereafter owned or leased by Mortgagor and subject to the
lien of this Mortgage, as determined by an Independent Appraiser
on the basis of an appraisal in conformity with the criteria set
forth at 12 C.F.R. 564.4 or such similar published policy or
(4)
<PAGE>
regulation as from time to time governs real estate related
transactions by institutions regulated by the Office of Thrift
Supervision; provided, that the value of the Casino Hotel and
such other property shall not include the value of (i) any
furniture, fixtures and equipment therein to the extent of the
Outstanding Amount of any indebtedness secured by any F,F&E
Financing Agreement with respect thereto and (ii) any Excepted
Property."
(b) As to the term "Casino Hotel", the word "all" is
added to the second line between the words "and" and "furniture".
(c) The term "Credit Agreement" has the meaning set
forth above.
(d) As to the term "Default", the words "and
continuance" in the first line of such definition are hereby
deleted.
(e) As to the term "Event of Default", the following
words in the second sentence thereof "and be continuing" are
hereby deleted.
(f) As to the term "Independent", the word "Mortgagor"
shall replace the word "Mortgagee" on the eleventh line thereof.
(g) The term "Insurance Trustee" is hereby amended in
its entirety to read as follows: "`Insurance Trustee' means the
Mortgagee or, if the Mortgagee so elects, (i) any bank, trust
company or insurance company with a net worth in excess of
$100,000,000 designated by the Mortgagee or (ii) the Mortgagor."
(h) The term "Intercreditor Agreement" is hereby
amended in its entirety to read as follows: "`Intercreditor
Agreement' means the Intercreditor Agreement dated as of the date
of Amendment No. 1 to the Mortgage between the Mortgagee and each
Trustee, as from time to time amended, supplemented, restated or
otherwise modified in writing."
(i) The term "Mortgage Debt" is hereby amended in its
entirety to read as follows: "'Mortgage Debt' means at any point
in time, the Indebtedness of the Mortgagor under the Credit
Agreement, the Note and the other Lending Documents and the
Indebtedness of the Mortgagor and the Company under the
Indentures and the other Indenture Documents and under any
Replacement Debt Documents."
(j) The term "Management Agreement" is hereby deleted.
(k) The term "Opinion of Counsel" is hereby amended in
its entirety to read as follows: "Opinion of Counsel means a
written opinion of Independent Legal Counsel."
(5)
<PAGE>
(l) The term "Original Policy" is hereby amended in
its entirety to read as follows: "`Original Policy' means the
ALTA Loan Policies of Title Insurance issued by: First American
Title Insurance Company, Chicago Title Insurance Company and
Commonwealth Land Title Insurance Company, dated as of the date
of Amendment No. 1 to the Mortgage."
(m) The term "Services Agreement" has the meaning
stated in Section 1.01 of the Credit Agreement.
(n) The term "Trustee" is hereby amended to add "or
Trustees" after the word "Trustee."
(o) See Section 1 hereof for other changes to Section
1.01 of the Mortgage.
5. Other Amendments to Article I.
(a) Section 1.02(a) is hereby amended (i) to
substitute Thomas M. Cerabino, Esq. for Theodore LaPier with
respect to the delivery of notices to Willkie Farr & Gallagher
and (ii) to delete the requirement that any notices (or copies of
any notices) be delivered to TC/GP.
(b) The following paragraph is hereby added to the end
of Section 1.03.
"This will confirm that every application, certificate,
report, affidavit, opinion, consent, statement or other
instrument required to be delivered to Mortgagee under this
Mortgage or under any other Mortgage Document shall be in
writing and shall be prepared and delivered without cost and
expense to Mortgagee."
(c) Section 1.07 of the Original Mortgage is hereby
amended to add the following to the end of Section 1.07: "and if
any such provision is invalid, illegal or unenforceable only as
to certain Person(s) or circumstance(s) the application of such
provisions to other Person(s) or circumstance(s) shall not be
affected thereby and each such provision shall in any event be
enforced to the greatest extent permitted by law."
(d) The last sentence in Section 1.10 of the Original
Mortgage is hereby amended to (i) to add a comma after the word
"under" and before the second "with" on the second and third
lines, respectively of such sentence and to add to the end of
such sentence the words "to the extent any portion of the payment
thereof must be paid or returned by the Mortgagee to the
Mortgagor or any other Person for any reason whatsoever".
(6)
<PAGE>
(e) Section 1.12(a)(vi) is hereby amended to add the
following sentence:
"Mortgagee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see
fit, and, if Mortgagee shall determine to make any such
further inquiry or investigation, it shall be entitled
(subject to the express limitations with respect thereto
contained in this Mortgage, if any and except to the extent,
if any, in Section 11.08 of the Credit Agreement) to examine
the books, records and premises of Mortgagor, personally or
by agent or attorney, and Mortgagee may, in its sole
discretion, discontinue such inquiry or information at any
time."
(f) Section 1.12(a) is hereby amended by adding
thereto a new Subsection (ix) to read as follows:
"Mortgagee shall not be personally liable, in case of entry
by it upon the Trust Estate, for debts contracted or
liabilities or damages incurred in the management or
operation of the Trust Estate."
(g) Mortgagor confirms that, with respect to the
application of Section 1.15(b) and otherwise, neither any grace
period nor notice is required with respect to certain Defaults
and Events of Defaults.
(h) Mortgagor confirms it has granted (and to the
extent, if any, it has not, does hereby grant) a security
interest in the Trust Estate to the Mortgagee to the extent that
the grant of any security interests or other lien in any portion
of the Trust Estate is governed by the Uniform Commercial Code as
in effect under the laws of the State of New Jersey or any other
State.
6. Amendment of Article II of the Original Mortgage.
Article II of the Original Mortgage is hereby amended as follows:
(a) Amendment of Section 2.01. Section 2.01 of the
Original Mortgage is hereby amended to include, on the fourth
line of Section 2.01, the words "and the Credit Agreement"
between the words "Mortgage," and "to".
(b) Amendment of Section 2.02. Section 2.02 is hereby
amended as follows: (i) the following words shall be added to the
end of the last sentence of Section 2.02: "provided that
Mortgagee shall have no liability thereunder and all costs and
expenses (including, without limitation, reasonable attorneys
fees and disbursements) shall be paid by Mortgagor"; and (ii)
Section 2.02(d) is hereby amended to add to the end of such
subsection the following:
(7)
<PAGE>
"including, without limitation, that each Trustee has
confirmed in writing to Mortgagee that it has released from
the lien of its mortgage and any other security instrument
any lien or other encumbrance it has with respect to the
properties desired to be conveyed by Mortgagor."
(c) Amendment of Section 2.03. Section 2.03 is hereby
amended as follows: (i) on the second line of Section 2.03(a)
after the word "contrary", the words "subject to the provisions
of Section 2.03(e)" shall be added; and (ii) a new Section
2.03(e) shall be added to read in its entirety as follows:
"Notwithstanding anything to the contrary contained in this
Section 2.03 or otherwise, the Mortgagor shall not have the
right to perform any of the acts provided for in this
Section 2.03 unless each Trustee confirms in writing to the
Mortgagee that any portion of the Trust Estate to be
conveyed free from the lien of the Mortgage will
simultaneously become free from the lien of each Indenture
Mortgage and any other security instrument granted to each
Trustee".
(d) Amendment of Section 2.04. Section 2.04 is hereby
amended as follows: (i) the words "Except as provided in the
last sentence of this Section 2.04" are hereby added to the
beginning of the first sentence of Section 2.04; and (ii) the
following sentence is hereby added to the end of Section 2.04:
"Notwithstanding the foregoing, to the extent and prior to the
time any Trustee receives a security interest or other lien of
any kind in or to any of the property described in this Section
2.04, Mortgagee shall receive a lien and security interest in all
such property with a greater priority than that directly or
indirectly granted to any Trustee".
7. Amendment of Article III. Article III of the Original
Mortgage is hereby amended as follows:
(a) Section 3.07 is hereby amended to put a period
after "Trust Estate" on the last line and to immediately
thereafter start a new sentence with the words "The provisions of
this Section 3.07 are".
(b) Section 3.08 is hereby amended to replace on the
6th line thereof the word "hereof" with the word "thereof".
(c) Section 3.09 is hereby amended to replace the word
"hereunder" on the eighteenth line of Section 3.09 with the words
"under Section 3.09".
(8)
<PAGE>
(d) Section 3.10(b) is hereby amended to delete the
words "being advised by counsel" in the ninth line of Section
3.10(b).
(e) Section 3.11 is amended to delete the words
"pursuant to this Article III" in the second line of Section
3.11.
8. Amendments to Article Five. Article Five is hereby
amended as follows:
(a) Amendment of Section 5.07. Section 5.07 is hereby
amended as follows: (i) to add the words "or any interest
therein" in the first line of the first paragraph of Section 5.07
after the word "mixed" and before the word "other"; (ii) the
following paragraph shall be added to Section 5.07 as the next to
last paragraph thereof.
"Mortgagor shall use reasonable efforts to insure that all
Operating Assets (other than Excepted Property) or any
interest therein hereafter acquired by Mortgagor shall be
assignable to Mortgagee, and to the extent such assignment
to Mortgagee requires the consent of any governmental
authority or any other Person, Mortgagor shall use
reasonable efforts to obtain such consent or a waiver
thereof and Mortgagor shall not effectively assign same to
any Trustee unless Mortgagor also assigns same to
Mortgagee."
(b) Amendment of Section 5.08. Section 5.08 is hereby
amended as follows: (i) Section 5.08(b) is hereby amended to add
the words "first class" between the words "other" and "casino-
hotel" in the eighth line thereof; (ii) Section 5.08(c) is hereby
amended to add the words "first class" between the words "other"
and "casino-hotel" in the fourth line thereof; (iii) Section
5.08(d) is hereby amended to add the words "or any part thereof"
between the words "Estate" and "then" on the 11th line of Section
5.08(d) and delete the words "part hereof" on such line and by
adding the words "and comply with all obligations of the
Mortgagor under, and keep in full force and effect, all easements
which in any respect inure to the benefit of, or otherwise
affect, the Trust Estate or any part thereof, if a failure to
comply with the same would impair Mortgagee's security hereunder"
at the end of Clause (iii) of Section 5.08(d); (iv) a new Section
5.08(f) is hereby amended to read as follows:
"Notwithstanding anything to the contrary contained in this
Section 5.08 or in Section 5.09, to the extent any
provisions contained herein are inconsistent with the
provisions of Section 11.05 of the Credit Agreement with
respect to the Mortgagor's obligations to promptly pay real
(9)
<PAGE>
estate taxes, the provisions of such Section 11.05 shall
control."
A new Section 5.08(g) is hereby added to Section 5.08, to
read in its entirety as follows:
In the event of the passage after the date of this
Mortgage of any law of the State of New Jersey, or any
other governmental entity, changing in any way the laws
now in force for the taxation of mortgages, or debts
secured thereby, for federal, state or local purposes,
or the manner of the operation of any such taxes, so as
to affect the interest of Mortgagee, pay the full
amount of such new or additional taxes.
(c) Amendment of Section 5.09. Section 5.09 is hereby
amended to add a last sentence as follows: "Notwithstanding
anything to the contrary, to the extent that the provisions of
Sections 11.05 and/or 1.12(c) of the Credit Agreement respecting
the payment of real estate taxes conflict with the provisions of
this Section 5.09 and/or Section 1.15(c) of this Mortgage, the
provisions of Sections 1.12(c) and/or 11.05 of the Credit
Agreement shall control."
(d) Amendment of Section 5.11. Section 5.11 is hereby
amended as follows: (i) for the purposes of this Section 5.11,
the word building or buildings shall be deemed to include,
without limitation, all structures and all other improvements on
the Premises; (ii) Sections 5.11(a)(iv) and (v) are hereby each
amended in its entirety to read as follows:
(iv) business interruption insurance covering not
less than 6 months of loss, provided that, at any time
that Mortgagor is renewing any policy for such
insurance or taking out any new or replacement policy
for such insurance covering a period of less than 12
months, Mortgagor shall deliver to Mortgagee an
Officers' Certificate certifying that the period of
coverage to be maintained by Mortgagor under such
policy is the maximum that can be maintained at rates
determined by Mortgagor to be reasonable for such
coverage;
(v) to the extent available, flood insurance in
an amount not less than the Insurance Amount, or, if
such insurance cannot be obtained in an amount not less
than the Insurance Amount, such lesser amount as may
then be so obtainable but in no event less than
$100,000,000; and
(10)
<PAGE>
(iii) a new Section 5.11(i) is hereby added to Section 5.11 to
read in its entirety as follows:
(i) Mortgagor shall maintain at all times during
the performance of Alterations, in addition to any
insurance required to be maintained under Section 5.11
hereby, appropriate workers' compensation insurance
covering all persons employed for such Alterations to
the extent required by applicable law, and
comprehensive general liability insurance expressly
covering the additional hazards due to such
Alterations. Each such policy of insurance shall
comply with the provisions of this Section 5.11, and
Mortgagor shall comply with Subsections (b), (c), (e),
(f), (g) and (h) of Section 5.11 in connection with all
such insurance.
Notwithstanding anything to the contrary in this Mortgage,
whether or not payment of proceeds or other payment(s) in respect
of any insurance policy is required to be made by Mortgagor to
Mortgagee pursuant to Section 5.11 or any payment is required to
be made by Mortgagor to Mortgagee pursuant to Section 5.20, any
and all such payments shall be paid to Mortgagee (to be applied
pursuant to the terms of this Mortgage and the Intercreditor
Agreement) until all obligations under the Credit Agreement, this
Mortgage and Note are paid in full prior to the payment of any
such amount to any Trustee. To the extent that from time to time
either any Trustee is named as a loss payee on any other
insurance policy or on any insurance policy with greater coverage
than is provided herein, or any insurance is otherwise designated
for any Trustee, then the Mortgagor agrees to cause the Mortgagee
to be named as a loss payee on each such additional or other
policy.
(e) Amendment of Section 5.17. Section 5.17 is hereby
amended as follows: (i) the word covenants is deemed to include
the terms, provisions, or conditions contained in this Mortgage;
and (ii) Mortgagor agrees that (A) all payments by Mortgagee
pursuant to Section 5.17 shall be immediately due and payable by
Mortgagor to Mortgagee and shall be secured by the lien of this
Mortgage; and (B) no such advance or payment by Mortgagee shall
relieve Mortgagor from any default hereunder or impair any right
or remedy of Mortgagee.
(f) Amendment of Section 5.20. Section 5.20 is hereby
amended to include the words "or if applicable Legal Requirements
do not permit the Restoration of the Casino Hotel for use as a
hotel and casino complex" between the words "Restoration" and
"then" on the next to last line of Section 5.20(a). Section
5.20(a) is hereby also amended to change the percentage
requirement in Section 5.20(a) in the twenty-fourth line thereof
(11)
<PAGE>
from 66 2/3% to 80% and to change the amount in the fourth line
thereof from $5,000,000 to $10,000,000.
(g) A new Section 5.21 is hereby added to the Original
Mortgage, and shall read in its entirety as follows:
Section 5.21. Environmental.
Without limiting the generality of any other provision of
this Mortgage, Mortgagor covenants, represents and warrants to
Mortgagee as follows:
(a) Mortgagor shall comply with any and all federal,
state and local environmental legislation, rules, and regulations
in effect as of the date of this Mortgage and subsequent thereto,
including, without limitation, the Spill Compensation and Control
Act (N.J.S.A. 58:10-23. 11 et seq.) (the "Spill Act"); the
Industrial Site Recovery Act (N.J.S.A. 13:1K-6 et seq.) ("ISRA");
the Solid Waste Management Act (N.J.S.A. 13:1E-1 et seq.); the
Resource, Conservation and Recovery Act (42 U.S.C. Section 6901
et seq.) ("RCRA"); the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. Section 9601 et seq.)
("CERCLA") and such other environmental legislation, rules and
regulations, as are in or may come into effect and apply to (i)
Mortgagor and/or Mortgagee with respect to the Premises or (ii)
the transactions contemplated hereby, and as to any occupants or
users of the Trust Estate, whether as lessees, tenants, licensees
or otherwise, Mortgagor shall use its best efforts to cause same
to comply with said legislation, rules and regulations.
Mortgagor agrees to pay all costs required in connection with
compliance with the foregoing legislation, rules and regulations.
(b) Mortgagor has not used in the past, nor shall
Mortgagor use in the future, the Premises for the purpose of
refining, producing, storing, handling, transferring, processing
or transporting "Hazardous Substances", as such term is defined
in ISRA, the Spill Act, CERCLA or the regulations relating
thereto, except that Mortgagor and its subsidiaries have used,
and Mortgagor may continue in the future to use, substances in
the operation and maintenance of the Premises, including, without
limitation, heating oil, gasoline and cleaning chemicals which
could be considered as "Hazardous Substances" under the preceding
definition.
(c) To the best of Mortgagor's knowledge, after due
inquiry and investigation, none of the real property owned,
leased and/or occupied by Mortgagor and located in the State of
New Jersey, including, without limitation, the Premises, has been
or is now being used as a "Major Facility" as such term is
defined in N.J.S.A. 58:10-23.11b(l). Mortgagor will not use the
Premises in the future as a "Major Facility".
(12)
<PAGE>
(d) To the best of Mortgagor's knowledge, after due
inquiry and investigation, no lien has been attached to any
revenues or any real or personal property owned by Mortgagor or
the Premises, as a result of the Chief Executive of the New
Jersey Spill Compensation Fund expending monies from said fund to
pay for "Cleanup Costs", as such term is defined in N.J.S.A.
58:10-23.11b(d), arising from an intentional or unintentional
action or omission of Mortgagor or any previous owner and/or
operator of such real property.
(e) There is no asbestos or asbestos containing
material on the Premises. To the best of Mortgagor's knowledge,
there are no underground storage tanks located at the Premises,
other than those tanks previously disclosed to Mortgagee and
which are maintained in accordance with all material Legal
Requirements. Mortgagor has not installed or placed, or permitted
to be installed or placed, any underground storage tanks at or on
the Premises, other than those tanks previously disclosed to
Mortgagee and which are maintained in accordance with all
material Legal Requirements. Underground storage tanks shall have
the definition as set forth in N.J.S.A. 58:10A-22(p).
(f) Mortgagor has not received a summons, citation,
directive, letter, other written communication, or, to the best
of its knowledge, any oral communication, from the New Jersey
Department of Environmental Protection and Energy or from any
other Person concerning any intentional or unintentional action
or omission on Mortgagor's part resulting in the releasing,
spilling, leaking, pumping, pouring, emitting, emptying or
dumping of "Hazardous Substances", as such term is defined in
N.J.S.A. 58:10-23.11b(k), into the waters or onto the lands of
the State of New Jersey, or into the waters outside the
jurisdiction of the State of New Jersey, in either case resulting
in damage to the lands, waters, fish, shellfish, wildlife, biota,
air and other resources owned, managed, held in trust or
otherwise controlled by the State of New Jersey.
(g) In connection with any purchase of the Premises or
any business or assets located thereon or any "closing,
terminating or transferring operations" of any "industrial
establishment", as that term is defined in ISRA, occurring on or
after December 31, 1983, Mortgagor required that the owner and or
operator of the industrial establishment comply with the
provisions of ECRA and the owner and or operator did comply
therewith.
(h) Upon the occurrence of an Event (as hereinafter
defined), Mortgagee shall have the right to have its consultants
perform a comprehensive environmental audit of the Premises. Such
audit shall be conducted by an environmental consultant chosen by
Mortgagee and may include a visual survey, a record review, an
(13)
<PAGE>
area reconnaissance assessing the presence of hazardous or toxic
waste or substances, PCBs or storage tanks at the Premises, an
asbestos survey of the Premises, which may include random
sampling of the improvements and air quality testing, and such
further site assessments as Mortgagee may reasonably require due
to the results obtained from the foregoing. Mortgagor grants
Mortgagee, its agents, consultants and contractors the right to
enter the Premises for the purposes of performing such studies
and the cost of such studies shall be due and payable by
Mortgagor to Mortgagee upon demand and shall be secured by the
lien of this Mortgage. Mortgagee shall direct the environmental
consultant to use its best efforts not to hinder Mortgagor's or
any tenant's operations when conducting such audit, sampling or
inspections. For purposes of this paragraph, the term "Event"
shall mean (i) the occurrence of any Event of Default, (ii) the
issuance of any summons, citation, directive or similar written
notice from the New Jersey Department of Environmental Protection
and Energy or from any other local, state or federal governmental
authority or from any other person, firm or corporation
concerning any alleged material violation of any and all federal,
state and local environmental legislation, rules and regulations
in effect as of the date of this Mortgage and subsequent thereto
or (iii) the initiation of any legal action, suits or other legal
or administrative proceedings relating to or in connection with
any alleged violation of any and all federal, state and local
environmental legislation, rules and regulations in effect as of
the date of this Mortgage and subsequent thereto.
(i) If a lien shall be filed against the Premises by
the New Jersey Department of Environmental Protection and Energy,
pursuant to and in accordance with the provisions of N.J.S.A.
58:10-23.11(f), as a result of the Chief Executive of the New
Jersey Spill Compensation Fund having expended monies from said
fund to pay for "Damages", as such term is defined in N.J.S.A.
58:10-23.11g, and/or "Cleanup and Removal-Costs", as such term is
defined in N.J.S.A. 58:10-23(b), arising from an intentional or
unintentional action or omission of Mortgagor resulting in the
releasing, spilling, pumping, pouring, emitting, emptying or
dumping of "Hazardous Substances", as such term is defined in
N.J.S.A. 58:10-23.ll(b)k into waters of the State of New Jersey
or onto lands from which it might flow or drain into said waters,
then, unless there is a good faith basis for contesting such lien
and Mortgagor is so contesting such lien in accordance with both
Section 5.09 hereof and has taken all other actions relating
thereto as required by any other provisions of this Mortgage or
the Credit Agreement, Mortgagor shall, within 30 days from the
date that Mortgagor is given notice that the lien has been placed
against the Premises or within such shorter period of time if the
State of New Jersey has commenced steps to cause the Premises to
be sold pursuant to the lien, either (i) pay the claim and remove
the lien from the Premises, or (ii) furnish (A) a bond
(14)
<PAGE>
satisfactory to a title company selected by Mortgagee (the "Title
Insurer") in the amount of the claim out of which the lien
arises, (B) to the Mortgagee, a cash deposit (which may be
disbursed by the Mortgagee in its sole discretion) in the amount
of the claim out of which the lien arises, or (C) other security
reasonably satisfactory to Mortgagee in an amount sufficient to
discharge the claim out of which the lien arises.
(j) Mortgagor shall use its best efforts to cause
compliance by all lessees with all applicable Legal Requirements
relating to environmental protection.
(k) Mortgagor shall promptly provide Mortgagee with
copies of all notices received by or prepared by Mortgagor in
connection with ISRA, CERCLA, the Spill Act, RCRA or any other
environmental law, rule or regulation relating to the Premises.
For purposes of this paragraph, the term "notice" shall mean any
summons, citation, directive, order, claim, pleading, letter,
application, filing, report, findings, declarations or other
materials pertinent to compliance of the Trust Estate and
Mortgagor with such environmental laws, rules or regulations.
(l) If this Mortgage is foreclosed, Mortgagor shall
deliver the Premises in compliance with all applicable federal,
state and local environmental laws, ordinances, rules and
regulations, including, without limitation, ISRA.
(m) Without limiting the generality of Section 5.22,
Mortgagor agrees to defend, indemnify and save Mortgagee harmless
from and against any loss or liability, cost or expense
(including, without limitation, reasonable attorneys' fees,
consultants' fees, disbursements and court costs) arising out of,
or incurred in connection with, Mortgagor's misrepresentation, or
failure promptly (but in no event to exceed the time period
permitted by law) to comply with and perform its obligations,
under this Section 5.21. The provisions of this subsection (m)
shall survive any transfer of the Premises, including a transfer
after a foreclosure of this Mortgage.
(h) A new Section 5.22 is hereby added to the Original
Mortgage, and shall read in its entirety as follows:
Section 5.22. Indemnification.
Mortgagor shall protect, indemnify, hold harmless and defend
Mortgagee and its directors, officers, partners, shareholders,
agents, servants and employees from and against any and all
liabilities, obligations, claims, damages, penalties, causes of
action, costs and expenses (including, without limitation,
reasonable attorneys' fees, disbursements and court costs),
imposed upon or incurred by or asserted against Mortgagee by
(15)
reason of (a) any injury to or death of Persons or loss of or
damage to property occurring on or about the Premises or any part
thereof or the adjoining sidewalks, curbs, vaults and vault
spaces, if any, streets, alleys or ways, (b) any use, nonuse or
condition of the Premises or any part thereof or the adjoining
sidewalks, curbs, vaults and vault spaces, if any, streets,
alleys or ways, (c) any failure on the part of Mortgagor to
perform or comply with any of the terms of this Mortgage, (d)
performance of any labor or services or the furnishing of any
materials or other property in respect of the Premises or any
part thereof made or suffered to be made by or on behalf of
Mortgagor, (e) any negligence or tortious act on the part of
Mortgagor or any of its agents, contractors, lessees, licensees
or invitees, or (f) any work in connection with the Premises;
provided, that no amounts shall be payable to Mortgagee under
this Section 5.22 in respect of liabilities, obligations, claims,
damages, penalties, causes of action, costs or expenses imposed
upon or incurred by or asserted against Mortgagee to the extent
the same result from any negligence or tortious act on the part
of Mortgagee or any of its agents, contractors, lessees,
licensees or invitees. All amounts payable to Mortgagee under
this Section 5.22 shall be payable on demand; provided, that with
respect to consequential damages (other than attorneys' fees,
disbursements and court costs imposed upon or incurred by
Mortgagee in connection therewith, which shall in all events be
payable on demand), no such amounts shall be payable until, and
to the extent that, (i) there has been entered the final
determination of a court of competent jurisdiction awarding such
consequential damages to the party or parties seeking such
damages or (ii) an agreement of settlement with respect thereto
(which shall have been previously approved by Mortgagor, such
consent not to be unreasonably withheld) shall have been executed
by Mortgagee and such party or parties. Any such amounts which
are not paid within 5 days after demand therefor by Mortgagee
shall bear interest at the rate set forth in the Note from the
date of such demand and all such amounts and interest thereon
shall be secured by the lien of this Mortgage. In case any
action, suit or proceeding is brought against Mortgagee by reason
of any such occurrence, Mortgagor, upon request of Mortgagee,
shall, at Mortgagor's expense, resist and defend such action,
suit or proceeding or cause the same to be resisted or defended
by counsel designated by Mortgagor and approved by Mortgagee,
which approval shall not be unreasonably withheld; provided, that
Willkie, Farr & Gallagher is hereby approved by Mortgagee.
(h) A new Section 5.23 is hereby added to the Original
Mortgage and shall read in its entirety as follows.
(16)
<PAGE>
Section 5.23. Facility Leases.
(a) Mortgagor shall do or cause to be done all things
necessary to preserve and keep unimpaired the rights of
Mortgagor, as lessee under all Facility Leases (herein defined),
and, to prevent any termination, surrender, cancellation,
forfeiture or impairment of any thereof. "Facility Leases" shall
mean (i) the Marina Lease and (ii) any other leases which are
Facility Leases from time to time under the Indenture of Mortgage
and Security Agreement between Mortgagor and Trump's Castle
Funding, Inc. as the Mortgagee, as assigned to First Bank
National Association, in its capacity as Mortgage Note Trustee
under a Mortgage Note Indenture of even date herewith, as same is
from time to time amended, as each such Facility Lease is from
time to time amended, supplemented, restated or otherwise
modified which for all purposes of this Mortgage includes
extensions and/or renewals. Mortgagor shall at all times fully
perform and comply with all agreements, covenants, terms and
conditions imposed upon or assumed by it as lessee under each of
the Facility Leases (including, without limitation, the covenant
to pay rent and all taxes, assessments and other charges
mentioned therein) prior to the expiration of any notice and/or
cure period provided in each such Facility Lease. Upon receipt
by Mortgagee from a Lessor of any written notice of default by
the lessee thereunder, Mortgagee may rely thereon and take any
action Mortgagee deems necessary in its sole discretion to
prevent or to cure any default by Mortgagor in the performance of
or compliance with any of the agreements, covenants, terms or
conditions imposed upon or assumed by Mortgagor as lessee under
such Facility Lease, even though the existence of such default or
the nature thereof be questioned or denied by Mortgagor or by any
party on behalf of Mortgagor. Without limiting the generality of
Section 3.09, Mortgagor hereby expressly grants to Mortgagee, and
agrees that Mortgagee shall have, the absolute and immediate
right to enter in and upon the Premises or any part thereof to
such extent and as often as Mortgagee, in its sole discretion,
deems necessary or desirable for the purpose permitted by the
immediately preceding sentence, subject only to applicable Legal
Requirements. Without limiting Mortgagor's obligations or
Mortgagee's rights set forth above or limiting Mortgagee's other
remedies under this Mortgage, Mortgagee may pay and expend such
sums of money as Mortgagee in its sole discretion deems necessary
for any such purpose, and Mortgagor hereby agrees to pay to
Mortgagee immediately and without demand, all such sums referred
to above, so paid and expended by Mortgagee, together with
interest thereon from the date of each such payment at the
highest rate of interest set forth in the Note. All sums so paid
and expended by Mortgagee, and the interest thereon, shall be
added to and be secured by the lien of this Mortgage.
(b) Mortgagor further covenants and agrees as follows:
(17)
<PAGE>
(i) Mortgagor shall not surrender, terminate or
cancel any Facility Lease, and shall not without the
consent of Mortgagee modify, change, supplement, alter
or amend any Facility Lease either orally or in writing
if an impairment of the security granted under this
Mortgage would result therefrom. As further security
for the repayment of the indebtedness secured hereby
and for the performance of the covenants herein and in
each Facility Lease contained Mortgagor hereby assigns
to Mortgagee all of Mortgagor's rights, privileges and
prerogatives as lessee under each Facility Lease to
terminate, cancel, modify, change, supplement, alter or
amend such Facility Lease and any such termination,
cancellation, modification, change, supplement,
alteration or amendment of a Facility Lease without the
prior consent thereto by Mortgagee shall be void and of
no force and effect. Unless (1) an Event of Default
has occurred and is continuing and (2) either (A) there
has been an acceleration of maturity of the Note
pursuant to Section 3.02 or (B) Mortgagee exercises its
rights under Section 3.09, Mortgagee shall have no
right to terminate, cancel, modify, change, supplement,
alter or amend any Facility Lease.
(ii) No release or forbearance of any of Mortgagor's
obligations under any Facility Lease, pursuant to such
Facility Lease or otherwise, shall release Mortgagor from
any of Mortgagor's other obligations under this Mortgage.
(iii) Unless Mortgagee shall otherwise expressly
consent in writing, the fee title to the premises leased
pursuant to the Facilities Leases ("Leased Facilities") and
Mortgagor's leasehold estates therein shall not merge and
shall always remain separate and distinct, notwithstanding
the union of said estates either in the Lessor or in the
lessee, or in a third party by purchase or otherwise.
(iv) Mortgagor shall promptly notify Mortgagee in
writing of any request made by Mortgagor, as lessee under
any Facility Lease, or any of the Lessors, for arbitration
proceedings under any Facility Lease and of the institution
of any arbitration proceedings, as well as all proceedings
thereunder. Mortgagor shall promptly deliver to Mortgagee a
copy of the determination of the arbitrators in each such
arbitration proceedings. Mortgagee shall have the right to
participate in such arbitration proceedings in association
with Mortgagor or on its own behalf as an interested party.
(v) Mortgagor shall not consent to the subordination
of any Facility Lease to any mortgage, deed of trust or
(18)
<PAGE>
other lien on the fee interest of the lessor under any
Facility Lease ("Lessor").
(vi) If Mortgagor acquires fee simple title or any
other estate, title or interest in any Leased Facility,
Mortgagor shall promptly notify Mortgagee of such
acquisition and, on request by Mortgagee, shall cause to be
executed and recorded all such other and further assurances
or other instruments in writing as may in the opinion of
Mortgagee be required or desirable to carry out the intent
and meaning of clauses (b) and (c) of Granting Clause Fifth.
(vii) Within 5 days after Mortgagor's receipt of any
notice of any motion, application or effort to reject any
Facility Lease by any Lessor or any trustee arising from or
in connection with any case, proceeding or other action
commenced or pending by or against any Lessor under the
Federal Bankruptcy Code or any comparable provision
contained in any present or future federal, state, local,
foreign or other statute, law, rule or regulation
("Comparable Provision"), Mortgagor shall give notice
thereof to Mortgagee. Mortgagor hereby (A) assigns to
Mortgagee any and all of Mortgagor's rights as lessee under
Section 365(h) of the Code or any Comparable Provision and
(B) covenants that it shall not elect to treat any Facility
Lease as terminated pursuant to Section 365(h) of the Code
or any Comparable Provision without the prior consent of
Mortgagee and (C) agrees that any such election by Mortgagor
without such consent shall be null and void.
(viii) Without limiting the generality of the
foregoing, to the extent permitted by applicable law,
Mortgagor hereby unconditionally assigns, transfers and sets
over to Mortgagee all of Mortgagor's claims and rights to
the payment of damages arising from any rejection by Lessor
of any Facility Lease under the Code or any Comparable
Provision. Mortgagee shall have the right to proceed in its
own name or in the name of Mortgagor in respect of any
claim, suit, action or proceeding relating to the rejection
of any Facility Lease, including, without limitation, the
right to file and prosecute, in cooperation with Mortgagor,
any proofs of claim, complaints, motions, applications,
notices and other documents, in any case in respect of
Lessor under the Code or any Comparable Provision. This
assignment constitutes a present, irrevocable and
unconditional assignment of the foregoing claims, rights and
remedies, and shall continue in effect until all of the
indebtedness and obligations secured by this Mortgage shall
have been satisfied and discharged in full. Any amounts
received by Mortgagee in damages arising out of the
rejection of any Facility Lease as aforesaid shall be
(19)
<PAGE>
applied first to all reasonable costs and expenses of
Mortgagee (including, without limitation, reasonable
attorneys' fees, disbursements and court costs) incurred in
connection with the exercise of any of its rights or
remedies under this Section 5.23, and thereafter as provided
in Section 3.03.
(ix) If there shall be filed by or against Mortgagor a
petition under the Code or any Comparable Provision and
Mortgagor, as lessee under any Facility Lease, shall
determine to reject such Facility Lease, Mortgagor shall
give Mortgagee not less than 10 days' prior notice of the
date on which Mortgagor shall apply to the Bankruptcy Court
or other judicial body with appropriate jurisdiction for
authority to reject such Facility Lease. Mortgagee shall
have the right, but not the obligation, to serve upon
Mortgagor within such 10-day period a notice stating that
(a) Mortgagee demands that Mortgagor assume and assign such
Facility Lease to Mortgagee pursuant to Section 365 of the
Code or any Comparable Provision and (b) Mortgagee covenants
to cure or provide adequate assurance of future performance
under such Facility Lease. If Mortgagee serves upon
Mortgagor the notice described in the preceding sentence,
Mortgagor shall not seek to reject such Facility Lease and
shall comply with the demand provided for in clause (a) of
the preceding sentence within 30 days after the notice shall
have been given subject to the performance by Mortgagee of
the covenant provided for in clause (b) of the preceding
sentence. The foregoing provisions of this Section 5.23(ix)
shall not apply to the extent not permitted by applicable
law. Effective upon the entry of an order for relief in
respect of Mortgagor under Chapter 7 of the Code or any
Comparable Provision, Mortgagor hereby assigns and transfers
to Mortgagee a non-exclusive right to apply to the
Bankruptcy Court or other judicial body with appropriate
jurisdiction for any order extending the period during which
such Facility Lease may be rejected or assumed.
(x) Mortgagor shall promptly give to Mortgagee copies
of (A) all notices of default and (B) any other
communications or notices with respect to events that relate
to the possible impairment of the security of this Mortgage,
which Mortgagor shall give or receive under any Facility
Lease and shall promptly notify Mortgagee of any default
under any Facility Lease on the part of the Lessor or
Mortgagor.
(xi) Mortgagor shall enforce with due diligence all of
the obligations of the Lessor under each Facility Lease, to
the end that Mortgagor may enjoy all of the rights and
privileges granted to it under the Facility Leases.
(20)
<PAGE>
(xii) Mortgagor shall notify Mortgagee within 5 days
after the transfer of a fee interest in any Leased Facility
or any portion thereof to or from an Affiliate.
(xiii) No Affiliate of Mortgagor shall at any time
hereafter acquire fee title to the leased land or any
portion thereof unless simultaneously with such acquisition
such Affiliate and Mortgagor execute and exchange (and
deliver to the Mortgagee an executed counterpart of) an
instrument in form and substance satisfactory to Mortgagee
providing that so long as such Affiliate owns such fee title
(A) such Affiliate shall not terminate the applicable
Facility Lease for any reason whatsoever (including, without
limitation, due to the default of Mortgagor under such
Facility Lease) and (B) such Affiliate shall not accept,
and, if tendered by Mortgagor shall promptly return to
Mortgagor, any payment of rent or other charges payable
under such Facility Lease in excess of the amount required
to pay the debt service and other sums payable under any
mortgage affecting such Affiliate's fee interest in the
applicable Leased Facility (and such Affiliate shall use
such funds only to pay its debt service obligations and
other sums payable under such mortgage) at any time that an
Event of Default, or a Default of the type described in
Sections 7.1(a), (b) and (f) of the Credit Agreement, shall
have occurred and be continuing under this Mortgage or the
Credit Agreement.
(c) Subject to the provisions of Subsection 5.23(b)(iii),
if both the lessor's and lessee's estates under any Facility
Lease or any portion thereof shall at any time become vested in
one owner, this Mortgage and the lien created hereby shall
nevertheless not be destroyed or terminated by application of the
doctrine of merger and, in such event, Mortgagee shall continue
to have all of the rights and privileges of a first leasehold
mortgagee.
(d) Mortgagor hereby acknowledges that if any Facility
Lease shall be terminated prior to the natural expiration of its
term due to default by the lessee thereunder, and if pursuant to
such Facility Lease, Mortgagee or its designee shall acquire from
the Lessor a new lease of the Leased Facility or any portion
thereof, Mortgagor shall have no right, title or interest in or
to such lease or the leasehold estate created thereby, or the
options therein contained.
(e) Each Facility Lease hereafter entered into or assumed
by Mortgagor as lessee or sublessee shall contain provisions (i)
permitting the assignment of the same to Mortgagee and permitting
assignment without the lessor's consent if this Mortgage is
foreclosed; and (ii) providing protection to Mortgagee, as
(21)
<PAGE>
leasehold mortgagee, in form reasonably satisfactory to
Mortgagee.
9. Other Matters. Other changes to the Original Mortgage
and other matters are as follows:
(a) The title of the Original Mortgage, "Indenture of
Mortgage", shall hereafter be "Indenture of Mortgage and Security
Agreement" including in the cover page and page one of the
Original Mortgage.
(b) This will confirm that the word "lease" includes
any license agreement, concession agreement or other occupancy
agreement.
(c) Mortgagor hereby confirms to and agrees with the
Mortgagee as follows:
(i) The liens granted to Mortgagee pursuant to
the Mortgage, as amended hereby, and in the Assignment of Leases
and Rents, as amended by Amendment No. 1 thereto of even date
herewith, and the Assignment of Operating Assets, as amended by
Amendment No. 1 thereto of even date herewith, are senior (and
not pari passu or subordinate) in all respects to the mortgages
and other liens and security interests granted to Trump's Castle
Funding, Inc. and/or each Trustee against, in and to the Trust
Estate (including any part thereof).
(ii) The grant of the mortgage lien and security
interest to Mortgagee in the Original Mortgage included a
mortgage lien and security interest in Mortgagor's right, title
and interest in and to the following property (other than
Excepted Property): accounts, accounts receivable, and other
income and proceeds (including without limitation, all rents,
fees, charges, accounts, issues, profits, revenues and payments
for or from (a) the use or occupancy of the rooms and other
public facilities in the Hotel and (b) the operation of the
Casino).
(iii) The definition of "Marina Lease" includes,
without limitation, extensions.
(iv) The term "Maturity" is intended to and does
include, without limitation, scheduled principal payments.
(v) The term "Permits" is intended to and does
include authorizations.
(vi) All notices pursuant to Section 1.02 must be
given in writing.
(22)
<PAGE>
(vii) The word "document", when used in the
Mortgage, includes, without limitation, approvals, appraisals,
notes, securities and other instruments.
(viii) Whenever the words "including", "includes"
or similar words are used in this Mortgage, the same shall mean
"including without limitation", "includes without limitation",
etc., notwithstanding that in some instances this use is
specified and in other instances it is not.
(ix) When used in Section 3.07 and elsewhere,
expenses are intended to and does include disbursements,
including court costs.
(x) The word "will" is not intended to be and is
not any less binding in any manner upon Mortgagor as the word
"shall".
(xi) The word "all" in the Granting Clauses of
this Mortgage was intended to and does include each of the
properties, rights, privileges, interests and other assets of
Mortgagor therein described (other than Excepted Property).
(d) Anything contained in this Amendment No. 1 to the
contrary notwithstanding, nothing contained herein is intended to
or shall or does lessen or impair in any respect the
establishment of or priority of the liens and security interests
granted pursuant to the Original Mortgage.
(e) Mortgagor acknowledges it has received a true copy
of this Amendment No. 1.
(f) The June 30 date in the first line of Section
5.07(b) of the Original Mortgage is amended to be November 30.
10. Limited Amendment. The Original Mortgage remains
unamended (except to the extent expressly set forth above) and in
full force and effect.
(23)
<PAGE>
IN WITNESS WHEREOF, the Mortgagor has caused this Amendment
No. 1 to the Amended and Restated Indenture of Mortgage to be
duly executed and witnessed, all as of the day and year first
above written.
WITNESS: TRUMP'S CASTLE ASSOCIATES
__________________________ By:_____________________________
Donald J. Trump
Its Managing Partner
(24)
<PAGE>
IN WITNESS WHEREOF, Mortgagee has accepted and approved this
Amendment No. 1 to the Amended and Restated Indenture of Mortgage
and caused this instrument to be duly executed and witnessed, all
as of the date and year first above written.
WITNESS: MIDLANTIC NATIONAL BANK
_______________________ By:_____________________________
Ben Berzin, Jr.
Senior Vice President
(25)
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on this ____ day of December, 1993,
before me, the subscriber, a Notary Public of the state of New
York, personally appeared, Donald J. Trump, the Managing Partner
of TRUMP'S CASTLE ASSOCIATES, a New Jersey general partnership,
who, I am satisfied, is the person who has signed the within
instrument as the Managing Partner of said general partnership,
and he acknowledged that he signed, sealed and delivered the same
as such Managing Partner, that the within instrument is the
voluntary act and deed of said general partnership made by virtue
of its Board of Partnership Representatives, and that he received
a true copy of the within instrument on behalf of said general
partnership.
_______________________________
Notary Public of the State of
New York {Seal}
(26)
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on this ____ day of December, 1993,
before me the subscriber, a Notary Public of the State of New
Jersey, personally appeared Ben Berzin, Jr., the Senior Vice
President of MIDLANTIC NATIONAL BANK, a national banking
association, who I am satisfied is the person who executed the
within instrument, as Senior Vice President of said association,
and he acknowledged that he signed, sealed with the proper
corporate seal and delivered the same as such officer, that the
within instrument is the voluntary act and deed of such
association made by virtue of authority of its board of
directors, and that he received a true copy of the within
instrument on behalf of such association.
________________________________________
Notary Public of the State of New Jersey
{Seal}
(27)
--------------------------------------
AMENDED AND RESTATED INDENTURE OF MORTGAGE
Dated as of May 29, 1992
-------------------------------------
TRUMP'S CASTLE ASSOCIATES
a New Jersey general partnership,
as the Mortgagor,
and
MIDLANTIC NATIONAL BANK,
as the Mortgagee
=======================================================================
Prepared by: _________________________
Ira A. Rosenberg, Esq.
Sills Cummis Zuckerman Radin
Tischman Epstein & Gross, P.A.
One Riverfront Plaza
Newark, New Jersey 07102
(201) 643-7000
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 1.01. Definitions. . . . . . . . . . . . . . . . 9
Section 1.02. Notices, etc., to Mortgagee and
Mortgagor. . . . . . . . . . . . . . . . . 16
Section 1.04. Compliance Certificates and Opinions.. . . 18
Section 1.05. Effect of Recitals, Headings and Table of
Contents.
Section 1.06. Successors and Assigns; Amendments.. . . . 19
Section 1.07. Separability Clause. . . . . . . . . . . . 19
Section 1.08. Benefits of Mortgage.. . . . . . . . . . . 19
Section 1.09. Governing Law. . . . . . . . . . . . . . . 20
Section 1.10. Limitation on Liability. . . . . . . . . . 20
Section 1.11. Provisions Required by Credit Agreement. . 21
Section 1.12. Rights of Mortgagee. . . . . . . . . . . . 21
Section 1.13. Mortgage Subject to the Provisions of the
Act. . . . . . . . . . . . . . . . . . . . 22
Section 1.14. Discharge of Lien. . . . . . . . . . . . . 22
Section 1.15. General Application. . . . . . . . . . . . 22
Section 1.16. Mortgage as Security Agreement and
Financing Statement; Application.. . . . . 23
ARTICLE TWO
RELEASE; OTHER EXCEPTED PROPERTY
Section 2.01. Possession by Mortgagor; Dispositions
Without Release. . . . . . . . . . . . . . 23
Section 2.02. Obsolete Property; Tangible Personal
Property Lease Modifications;
Conveyances. . . . . . . . . . . . . . . . 23
Section 2.03. Released Land. . . . . . . . . . . . . . . 25
Section 2.04. Other Excepted Property. . . . . . . . . . 27
ARTICLE THREE
REMEDIES
Section 3.01. Events of Default. . . . . . . . . . . . . 28
Section 3.02. Acceleration of Maturity; Rescission and
Annulment.
Section 3.03. Application of Moneys Received by
Mortgagee. . . . . . . . . . . . . . . . . 28
Section 3.04. Restoration of Rights and Remedies.. . . . 29
(i)
<PAGE>
Section 3.05. Rights and Remedies Cumulative.. . . . . . 29
Section 3.06. Delay or omission Not Waiver.. . . . . . . 29
Section 3.07. Undertaking for Costs. . . . . . . . . . . 29
Section 3.08. Waiver of Appraisement and Other Laws. . . 30
Section 3.09. Entry. . . . . . . . . . . . . . . . . . . 30
Section 3.10. Power of Sale; Suits for Enforcement.. . . 31
Section 3.11. Incidents of Sale. . . . . . . . . . . . . 31
Section 3.12. Receiver.. . . . . . . . . . . . . . . . . 32
Section 3.13. {RESERVED} . . . . . . . . . . . . . . . . 32
Section 3.14. {RESERVED} . . . . . . . . . . . . . . . . 33
ARTICLE FOUR
CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
Section 4.01. Consolidation, Merger, Conveyance or
Transfer only on Certain Terms.. . . . . . 33
Section 4.02. Successor Entity Substituted.. . . . . . . 33
ARTICLE FIVE
COVENANTS AND REPRESENTATIONS
Section 5.01. Payment of Principal and Interest. . . . . 33
Section 5.02. {RESERVED} . . . . . . . . . . . . . . . . 33
Section 5.03. {RESERVED} . . . . . . . . . . . . . . . . 33
Section 5.04. {RESERVED} . . . . . . . . . . . . . . . . 33
Section 5.05. Actions and Proceedings. . . . . . . . . . 33
Section 5.06. Warranty of Title. . . . . . . . . . . . . 34
Section 5.07. After-Acquired Property; Further
Assurances; Recording. . . . . . . . . . . 35
Section 5.08. Payment of Taxes and Certain Claims;
Maintenance of Properties; Compliance
with Legal Requirements and Insurance
Requirements.
Section 5.09. Permitted Contests.. . . . . . . . . . . . 38
Section 5.10. {RESERVED} . . . . . . . . . . . . . . . . 39
Section 5.11. To Insure. . . . . . . . . . . . . . . . . 39
Section 5.12. Limitations on Building Demolition,
Alterations, Improvements and New
Construction.. . . . . . . . . . . . . . . 46
Section 5.13. Leases.. . . . . . . . . . . . . . . . . . 48
Section 5.14. Compliance Certificates. . . . . . . . . . 50
Section 5.15. {RESERVED} . . . . . . . . . . . . . . . . 50
Section 5.16. {RESERVED} . . . . . . . . . . . . . . . . 50
Section 5.17. Advances by Mortgagee. . . . . . . . . . . 50
Section 5.18. {RESERVED} . . . . . . . . . . . . . . . . 51
Section 5.19. {RESERVED} . . . . . . . . . . . . . . . . 51
Section 5.20. Eminent Domain.. . . . . . . . . . . . . . 51
(ii)
<PAGE>
AMENDED AND RESTATED INDENTURE OF MORTGAGE
AMENDED AND RESTATED INDENTURE OF MORTGAGE, dated as of
May 29, 1992 between TRUMP'S CASTLE ASSOCIATES, a New Jersey
general partnership which is the successor to Trump's Castle
Associates Limited Partnership, a New Jersey limited partnership
(the "Mortgagor"), and MIDLANTIC NATIONAL BANK, a national banking
association (the "Mortgagee").
WITNESSETH:
WHEREAS, the Mortgagor, the Mortgagee and Trump's Castle
Funding, Inc. ("Funding") entered into a Credit Agreement dated
February 16, 1988 (the "1988 Credit Agreement") pursuant to which
Mortgagee made a construction loan to the Borrower in the
principal amount of up to $50,000,000, which construction loan was
subsequently converted pursuant to the 1988 Credit Agreement into
a term loan in the principal amount of $50,000,000, evidenced by a
term Note dated August 15, 1990 (the "Original Term Note"); and
WHEREAS, the Mortgagor and the Mortgagee entered into an
Indenture of Mortgage dated as of February 16, 1988, filed for
recordation in Atlantic County, New Jersey on February 16, 1988
and recorded in Mortgage Book 3840 commencing at page 98 (the
"1988 Mortgage"; and the 1988 Mortgage, as amended and restated
hereby and as the same may from time to time hereinafter be
amended, supplemented or otherwise modified is hereinafter
referred to as the "Mortgage"); and
WHEREAS, the 1988 Mortgage secured, among other obligations,
(i) the payment of the principal amount of the Original Term Note
and all renewals, extensions, and modifications thereof, (ii) the
payment of interest (including interest on all overdue principal)
due under the provisions of the Original Term Note, (iii) the
payment by the Mortgagor to the Mortgagee of all sums expended or
advanced by the Mortgagee pursuant to any term or provision of the
1988 Mortgage, (iv) the performance of each covenant, term,
condition and agreement of the Mortgagor in the 1988 Mortgage, the
Original Term Note or the 1988 Credit Agreement contained, (v) all
costs and expenses, including reasonable counsel fees and expenses
which may arise in respect of the 1988 Credit Agreement, the
Original Term Note and the 1988 Mortgage or in respect of the
obligations secured by any thereof and (vi) the performance and
observance of all of the provisions contained in the 1988
Mortgage; and
(1)
<PAGE>
WHEREAS, as security, in addition to the Mortgage, for the
payment and performance of the obligations described above, the
Mortgagor also entered into, among other security instruments,
(i) a certain Assignment of Operating Assets dated as of
February 16, 1988, filed for recordation in Atlantic County, New
Jersey on February 18, 1988 in Mortgage Book 3840 commencing at
page 175, (ii) a certain Assignment of Leases and Rents dated as
of February 16, 1988, filed for recordation in Atlantic County,
New Jersey on February 18, 1988 in Mortgage Book 4630 commencing
at page 293, and (iii) various financing statements executed by
the Mortgagor, as debtor (such security instruments, each as in
effect on the date hereof, being hereinafter referred to
collectively as the "Other 1988 Security Documents"); and
WHEREAS, a joint plan of reorganization of the Mortgagor,
Funding and certain affiliates thereof (the ("Plan") has been
confirmed by entry of the final order of the United States
Bankruptcy Court for the District of New Jersey under its Case
Nos. 92-11191, 92-11192 and 92-11193 pursuant to Section 1129 of
the United States Bankruptcy Code; and
WHEREAS, in connection with the Plan, (i) the Mortgagor and
the Mortgagee have entered into the Credit Agreement (as
hereinafter defined), which Credit Agreement amends and restates
the 1988 Credit Agreement, (ii) the Mortgagor has issued to the
Mortgagee an Amended and Restated Term Note of even date herewith
in the principal amount of $38,000,000, bearing interest and being
payable as therein set forth (as the same may from time to time be
amended, supplemented, or otherwise modified, including by way of
substitution pursuant to Section 2.03 of the Credit Agreement, the
"Note") which Note amends, restates and renews the Original Term
Note and has been executed and delivered by the Mortgagor and
Funding in substitution therefor, but not in payment, satisfaction
or cancellation of the indebtedness outstanding thereunder, and
(iii) the Mortgagor and the Mortgagee have entered into and have
agreed to have recorded in the appropriate public records of
Atlantic County, New Jersey this Amended and Restated Indenture of
Mortgage in order, among other things, to reflect their intention
that the liens, security interests and assignments evidenced by
the 1988 Mortgage and the Other 1988 Security Documents continue,
as amended and restated hereby and by various other documents
being executed contemporaneously herewith, as valid and subsisting
first priority liens, security interests and assignments against,
in and to the Trust Estate (as hereinafter defined), senior (and
not pari passu or subordinate) to the liens, security interests
and assignments granted and made to the Trustee (and its
predecessor trustee) pursuant to the Indenture Documents (as
hereinafter defined) against, in and to the Trust Estate;
(2)
<PAGE>
NOW THEREFORE, in consideration of the foregoing and $10.00
in hand paid by the Mortgagee to the Mortgagor and for other good
and valuable consideration, the receipt and sufficiency whereof is
hereby acknowledged, and in order to secure (i) the payment of the
principal amount of the Note in lawful money of the United States
to be paid in accordance with the provisions thereof (including
all renewals, extensions, and modifications of the Note) all of
which are hereby made an integral part hereof as though set forth
at length herein, (ii) payment of interest (including interest on
all overdue principal) becoming due under the provisions of the
Note, (iii) payment by the Mortgagor to the Mortgagee of all sums
expended or advanced by the Mortgagee pursuant to any term or
provision of this Mortgage, (iv) performance of each covenant,
term, condition and agreement of the Mortgagor herein, in the Note
or in the Credit Agreement contained, (v) all costs and expenses,
including reasonable counsel fees and expenses as provided in
Section 3.07, which may arise in respect of the Credit Agreement,
the Note and this Mortgage or of the obligations secured hereby,
and (vi) performance and observance of all of the provisions
herein contained, the Mortgagor has executed and delivered this
Amended and Restated Indenture of Mortgage, thereby amending and
restating the 1988 Mortgage to read in its entirety as hereinafter
set forth and to become the Mortgage represented hereby, and has
bargained, sold, alienated, released, conveyed and confirmed unto
the Mortgagee and its successors hereunder and assigns forever,
all of its right, title and interest in, to and under any of the
following described property:
GRANTING CLAUSES
GRANTING CLAUSE FIRST
All the property, rights, title, interest, privileges and
franchises particularly described in annexed Schedule 1 (the
"Owned Land"), which Schedule is hereby made a part of, and deemed
to be described in, this Granting Clause as fully as if set forth
in this Granting Clause at length.
GRANTING CLAUSE SECOND
All the rents, issues, profits, revenues and other income and
proceeds of the property subjected or required to be subjected to
the lien of this Mortgage, including, without limitation, the
property described in Granting Clauses First and Fifth (said
property is hereinafter collectively referred to as the
"Premises"), and all the estate, right, title and interest of
every nature whatsoever of the Mortgagor in and to the same and
every part thereof.
(3)
<PAGE>
GRANTING CLAUSE THIRD
All of the rights of lessor under the Leases in effect
on the date of execution of this Mortgage or hereinafter entered
into by the Mortgagor, if any, including extensions, renewals or
amendments of all of the same, and the immediate and continuing
right as security in accordance with an Amended and Restated
Assignment of Leases and Rents of even date herewith between the
Mortgagor and the Mortgagee, and, after the occurrence of an Event
of Default, to make claim for, collect, receive and receipt for
(and to apply the same as provided herein) any and all rents,
income, revenues, issues, profits, security and other sums of
money payable or receivable thereunder or pursuant thereto, and
all proceeds thereof, whether payable as rent, insurance proceeds,
condemnation awards, security or otherwise and whether payable
prior to or subsequent to the maturity date of the Note, to
receive and give notices and consents thereunder, to bring actions
and proceedings thereunder or for the enforcement thereof, to make
waivers and agreements, to take such action upon the happening of
a default under any Lease, including the commencement, conduct and
consummation of any proceedings at law or in equity as shall be
permitted by any provision of any Lease, and to do any and all
things which the Mortgagor or any lessor is or may become entitled
to do under the Leases; provided, that the assignment made by this
Granting Clause Third shall not impair or diminish any obligation
of the Mortgagor under the Leases, nor shall any such obligation
be imposed upon the Mortgagee.
GRANTING CLAUSE FOURTH
Without limiting the generality of the provisions of Granting
Clause Second, the Mortgagor's rights, privileges and franchises
in and to the following, to the extent of the Mortgagor's interest
therein and thereto and to the extent assignable (collectively,
"Operating Assets"):
(a) bookings for the use of guest rooms, banquet facilities
and meeting rooms at the Casino-Hotel;
(b) all contracts respecting utility services for, and the
maintenance, operations or equipping of the Premises, including
guaranties and warranties relating thereto;
(c) the Roadway Improvement Contracts;
(d) the Permits;
(4)
<PAGE>
(e) all contract rights, leases, concessions, trademarks,
logos, copyrights, warranties and other items of intangible
personal property relating to the ownership or operation of the
Casino-Hotel, including, without limitation, (1) any rights
against Hilton under the Mortgagor's contracts with Hilton
pertaining to the Casino-Hotel, (2) telephone and other
communication numbers, (3) all software licensing agreements as
are required to operate computer software systems at the
Casino-Hotel and books and records relating to the software
programs and (4) lessee's interest under leases of Tangible
Personal Property;
(f) all agreements entered into by or on behalf of the
Mortgagor or by Hilton, as the Mortgagor's predecessor in interest
in the Casino-Hotel, which have been assigned to the Mortgagor,
for the design and construction, and for the equipping and
furnishing, of the Casino-Hotel, including architect's agreements,
engineering agreements, construction contracts, consulting
agreements and agreements or purchase orders for all items of
Tangible Personal Property and payment and performance bonds in
favor of the Mortgagor in connection with the Trust Estate (and
all warranties and guaranties thereunder and warranties and
guaranties of any subcontractor and bond issued in connection with
the Trust Estate (and all warranties and guaranties thereunder and
warranties and guaranties of any subcontractor and bond issued in
connection with the work to be performed by any subcontractor);
(g) the following personal property (the "Tangible
Personal Property") now or hereafter acquired by the Mortgagor:
(i) all furniture, furnishings, equipment, machinery,
apparatus, appliances, fixtures and fittings and other
articles of tangible personal property which are, or are to
be located on, or used in connection with the operation of,
the Casino-Hotel;
(ii) all slot machines, electronic gaming devices, crap
tables, blackjack tables, roulette tables, baccarat tables
and big six wheels, located or to be located in the
Casino-Hotel, and all furnishings and equipment to be used in
connection with the operation thereof;
(iii) all cards, dice, gaming chips and plaques,
tokens, chip racks, dealing shoes, dice cups, dice sticks,
layouts, paddles, roulette balls and other consumable
supplies and items to be used in connection with the gaming
operations of the Casino-Hotel;
(iv) all china, glassware, linens, silverware and
uniforms, whether in use or held in reserve storage for
future use, in connection with the operation of the
(5)
<PAGE>
Casino-Hotel, which are on hand or on order whether stored
on-site or off-site;
(v) all consumables and operating supplies of every
kind and nature for use in all of the operating departments
of the Casino-Hotel, including, without limitation,
accounting supplies, guest supplies, forms, printing,
stationery, food and beverage stock, bar supplies, laundry
supplies and brochures to existing purchase orders;
(vi) all sets and scenery, costumes, props and other
items of tangible personal property on hand or on order for
use in the production of shows in the showroom of the
Casino-Hotel; and
(vii) all cars, limousines, vans, buses, trucks and
other vehicles owned or leased by the Mortgagor for use in
Casino-Hotel operations;
(h) all drawings, designs, plans and specifications prepared
by the architects, interior designers, landscape designers and any
other consultants for the development of the Premises, as amended
from time to time;
(i) any administrative and judicial proceedings
initiated by Hilton or the Mortgagor, or in which Hilton or the
Mortgager has intervened, concerning the Casino-Hotel and
agreements, if any, which are the subject matter of such
proceedings;
(j) any licenses held by the Mortgagor for the use of the
production "City Lites"; and
(k) the license agreements dated as of June 17, 1985 between
Hilton and the Mortgagor, described in Schedule 3.
Provided, that the assignment made by this Granting Clause
Fourth shall not impair or diminish any obligation of the
Mortgager with respect to the Operating Assets, nor shall any such
obligation be imposed on the Mortgagee.
GRANTING CLAUSE FIFTH
(a) All of the Mortgagor's right, title and interest in and
to all buildings and improvements of every kind and description
now or hereafter erected or placed on the Owned Land or on any
other land hereafter acquired by the Mortgagor and all fixtures
and articles of personal property now or hereafter attached to or
contained in and used in connection with such buildings and
improvements, including, but limited to, all apparatus, furniture,
furnishings, machinery, motors, elevators, fittings, radiators,
(6)
<PAGE>
cooking ranges, ice boxes, mechanical refrigerators, awnings,
shades, screens, office equipment and other furnishings, and all
plumbing, heating, lighting, cooking, laundry, ventilating,
incinerating, air-conditioning and sprinkler equipment and
fixtures and appurtenances thereto; and all renewals or
replacements thereof or articles in substitution therefor, whether
or not the same are or shall be attached to the Owned Land, any
other land hereafter acquired by Mortgagor and any such buildings
and improvements thereon in any manner, and to the extent the
grant of a security interest in any portion of the Trust Estate is
governed by the Uniform Commercial Code, this Mortgage is hereby
deemed to be and is as well a security agreement under said Code
for the purpose of creating hereby a security interest in all of
the Mortgagor's right, title and interest in and to said property,
securing the said obligations, for the benefit of the Mortgagee;
(b) All other property, real, personal or mixed (other than
Excepted Property), of every kind and description and wheresoever
situate, now owned or which may be hereafter acquired by the
Mortgagor, it being the intention hereof that all property,
rights, privileges and franchises now owned by the Mortgagor or
acquired by the Mortgagor after the date hereof (other than
Excepted Property) shall be as fully embraced within and subjected
to the lien hereof as if such property were specifically described
herein; and
(c) All of Mortgagor's right, title and interest in and to
the Leasehold Property and the Pedestrian Bridge Easement (as
defined below).
* * *
TOGETHER with all of the Mortgagor's right, title and
interest in and to all mineral and water rights and any title or
reversion, in and to the beds of the ways, streets, avenues and
alleys adjoining the Premises to the center line thereof and in
and to all strips, gaps and gores adjoining the premises on all
sides thereof; and
TOGETHER with all of the Mortgagor's right, title and
interest to and singular the tenements, hereditaments, easements,
appurtenances, passages, waters, water courses, riparian rights,
other rights, liberties and privileges thereof or in any way now
or hereafter appertaining to the Premises, including any other
claim at law or in equity as well as any after-acquired title,
franchise or license and the reversion and reversions and
remainder and remainders thereof; and
(7)
<PAGE>
TOGETHER with all awards and other compensation heretofore or
hereafter to be made to the present and all subsequent owners of
the Trust Estate for any taking by eminent domain, either
permanent or temporary, of all or any part of the said Trust
Estate or any easement or appurtenances thereof, including
severance and consequential damage and change in grade of streets,
all in accordance with and subject to the provisions of
Section 5.20; and
TOGETHER with all proceeds of any unearned premiums on any
insurance policies described in Section 5.11, and the right to
receive and apply the proceeds of any insurance, judgments or
settlements made in lieu thereof, for damage to the Trust Estate
or otherwise, all in accordance with and subject to the provisions
of Section 5.11; and
TOGETHER with all proceeds of every kind and nature, and all
products of every kind and nature, of any of the foregoing
property, rights, title, interests, privileges, franchises and
other assets described in Granting Clauses First through Fifth or
in any of the other clauses thereafter.
The foregoing shall include, whether or not specifically
identified in one or more instances, all such property, rights,
title, interests, privileges, franchises and other assets now
owned and/or hereafter existing.
EXCLUDING, with respect to all of the hereinabove granted
property, rights, title, interest, privileges and franchises, the
Excepted Property.
TO HAVE AND TO HOLD all said Premises, property, rights,
privileges, franchises and assets of every kind and description,
real, personal or mixed, hereby and hereafter granted, bargained,
sold, alienated, assigned, transferred, hypothecated, pledged,
released, conveyed, mortgaged or confirmed as aforesaid, or
intended, agreed or covenanted so to be, together with all the
appurtenances thereto appertaining (said Premises, leases,
Operating Assets, properties, rights, privileges, franchises and
assets, being herein collectively called the "Trust Estate") unto
the Mortgagee and its successors and assigns forever.
SUBJECT, HOWEVER, on the date hereof, to Existing
Encumbrances and, after the date hereof, to Permitted Senior
Encumbrances.
UPON CONDITION that, until the happening of an Event of
Default which has not been cured as provided in Section 3.1 of the
Intercreditor Agreement and subject to provisions of Article Two,
the Mortgagor shall be permitted to possess and use the Trust
Estate, and to receive and use the rents, issues, profits,
revenues and other income of the Trust Estate.
(8)
<PAGE>
AND IT IS HEREBY COVENANTED AND DECLARED that the Trust
Estate is to be held and applied by the Mortgagee, subject to the
further covenants, conditions and trusts hereinafter set forth,
and the Mortgagor does hereby covenant and agree to and with the
Mortgagee, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 1.01. Definitions.
For all purposes of this Mortgage, except as otherwise
expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article One have the meanings
assigned to them in this Article One and include the plural as
well as the singular;
(b) all accounting terms otherwise defined herein have the
meaning assigned to them, and all computations herein provided for
shall be made in accordance with generally accepted accounting
principles consistently applied; and
(c) the words "herein", "hereof" and "hereunder" and other
words of similar import refer to this Mortgage as a whole and not
to any particular Article, Section or other subdivision.
"Accountant" has the meaning stated in Section 1.01 of the
Credit Agreement.
"Affiliate" has the meaning stated in Section 1.01 of the
Credit Agreement.
"Alterations" has the meaning stated in Section 5.12.
"Appraised Value" means the average of the respective fair
market values of the Casino-Hotel determined separately by two
Independent Appraisers on the basis of the valuation methodology
that such Appraisers shall deem appropriate, provided that such
Appraisers shall take into account, without limitation, the
capitalized cash flow of the Borrower and the replacement cost
(net of depreciation taken) of the Casino-Hotel in determining
Appraised Value, and further provided that the value of the
Casino-Hotel shall not include the value of any furniture,
fixtures and equipment therein to the extent of the Indebtedness
secured by any F,F&E Financing Agreements with respect thereto nor
of any Excepted Property.
(9)
<PAGE>
"Appraiser" means an MAI appraiser (i.e., a member in good
standing of the American Institute of Real Estate Appraisers) who
is (i) of recognized standing among appraisers of properties
similar to the Casino-Hotel and (ii) experienced in the appraisals
of properties of a similar size and scope to that of the
Casino-Hotel, selected by the Mortgagor.
"Architect" means an Independent Person licensed as an
architect in the State of New Jersey selected by the Mortgagor.
"Business Day" has the meaning stated in Section 1.01 of the
Credit Agreement.
"Casino" means that portion of the Casino-Hotel used for
gaming and related activities.
"Casino-Hotel" means the casino and hotel complex and
ancillary structures and facilities located on the Premises and
furniture, fixtures and equipment at any time contained therein.
"Casualty" means any act or occurrence, of any kind or nature
which results in damage, loss or destruction to any building or
improvements on the Premises and/or Tangible Personal Property.
"Certificate of Appraised Value" means the certificate of two
Independent Appraisers stating the Appraised Value.
"Combination Transaction" has the meaning stated in
Section 10.01 of the Credit Agreement.
"Credit Agreement" means that certain Amended and Restated
Credit Agreement of even date herewith among the Mortgagor, as
borrower, Funding, as guarantor, and the Mortgagee, as lender, as
it may from time to time be amended, supplemented or otherwise
modified from time to time by one or more agreements or other
instruments supplemental thereto entered into pursuant to the
applicable provisions thereof.
"Default" means the occurrence and continuance of an
Event of Default or an event which, after notice or lapse of time
or both, would become an Event of Default.
"Event of Default" has the meaning stated in Section 7.01 of
the Credit Agreement. An Event of Default shall "exist" if an
Event of Default shall have occurred and be continuing.
"Excepted Property" means:
(1) the personal property owned by lessees under
Leases and the personal property of any guests staying
in the Hotel; and
(10)
<PAGE>
(2) any property deemed to be Excepted Property pursuant to
the provisions of Section 2.04 hereof.
"Existing Encumbrances" means the matters set forth in
Schedule 4.
"F,F&E Financing Agreement" means a written agreement
creating a purchase money lien upon any Tangible Personal Property
and other items constituting Operating Assets, such as computer
software, which are financed, purchased or leased by the
Mortgagor; provided that, the principal amount of the indebtedness
secured by such lien shall not exceed 75% of the cost to the
Mortgagor of such property at the time of acquisition.
"First Mortgage Debt" means the Indebtedness of the Mortgagor
under the Credit Agreement, Note and the other Lending Documents,
which Indebtedness is secured by a first priority lien on the
Trust Estate.
"Funding" has the meaning stated in the Recitals.
"General Partner" means a general partner of the
Mortgagor.
"Hilton" means Hilton Hotels Corporation.
"Hotel" means that portion of the Casino-Hotel
not included within the Casino.
"Impositions" has the meaning stated in Section 5.08.
"Indebtedness" has the meaning stated in Section 1.01 of the
Credit Agreement.
"Indenture Documents" has the meaning stated in Section 1.01
of the Credit Agreement.
"Independent" when used with respect to any specified Person
means such a Person who (a) is in fact independent, (b) does not
have any direct financial interest or any material indirect
financial interest in the Mortgagor or in any other obligor upon
the Note or in any Affiliate of the Mortgagor or of such other
obligor and (c) is not connected with the Mortgagor or such other
obligor or any Affiliate of the Mortgagor or such other obligor as
an officer, employee, promoter, underwriter, trustee, partner,
director or person performing similar functions. Whenever it is
herein provided that an independent Person's opinion or
certificate shall be furnished by the Mortgagee, such Person shall
be appointed by a Mortgagor Order, and such opinion or certificate
shall state that signer has read this definition and that the
signer is Independent within the meaning thereof. A Person who is
performing or who has performed services as an independent
(11)
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contractor to any specified Person shall not be considered not
Independent merely by reason of the fact that such Person is
performing or has performed such services.
"Insurance Amount" has the meaning stated in
Section 5.11(a)(1).
"Insurance Requirements" means all terms of any insurance
policy covering or applicable to the Trust Estate or any part
thereof, all requirements of the issuer of any such policy, and
all orders, rules, regulations and other requirements of the
National Board of Fire Underwriters (or any other body exercising
similar functions) applicable to or affecting the Trust Estate or
any part thereof or any use or condition of the Trust Estate or
any part thereof.
"Insurance Trustee" means the Mortgagee or, if the Mortgagee
so elects, any bank, trust company or insurance company with net
worth in excess of $100,000,000, designated by the Mortgagee.
"Insurer" means either the insurers currently providing
coverages, which carriers are admitted in New Jersey, or, upon
renewal of the coverages in force on the date hereof, an insurance
company or companies authorized to issue insurance in the State of
New Jersey selected by the Mortgagor and reasonably satisfactory
to each of the Mortgagee and the Trustee.
"Intercreditor Agreement" means the Intercreditor Agreement
dated as of the date hereof between the Mortgagee and the Trustee,
as from time to time in effect.
"Lease" means each lease of any spaces in any building or
buildings, an interest in which building or buildings constitutes
a part of the Trust Estate, including every agreement relating
thereto or entered into in connection therewith and every guaranty
of the performance and observance of the covenants, conditions and
agreements to be performed by the lessee under any lease.
"Leasehold Property" means all rights now or hereafter vested
in Mortgagor as a tenant under any lease or other arrangement for
occupancy of real property, including but not limited to
Mortgagor's leasehold estate in and to the Marina (as such
capitalized term is defined in the Marina Lease) and all other
interests and privileges granted to Mortgagor pursuant to the
Marina Lease.
"Legal Requirements" means all laws, statutes, codes, acts,
ordinances, orders, judgments, decrees, injunctions, rules,
regulations, permits, licenses, authorizations, directions and
requirements (including, without limitation, the New Jersey
Environment Cleanup Responsibility Act and the New Jersey Spill
Compensation and Control Act of 1976) of all governments,
(12)
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departments, commissions, boards, courts, authorities, agencies,
officials and officers, of governments, federal, state and
municipal (including, without limitation, the New Jersey
Department of Environmental Protection, the Atlantic City Bureau
of Investigations, Division of Gaming Enforcement of the State of
New Jersey and the Casino Control Commission of the State of New
Jersey), foreseen or unforeseen, ordinary or extraordinary, which
now is or at any time hereafter becomes applicable to the Trust
Estate or any part thereof, or any of the adjoining sidewalks, or
the use of the Casino-Hotel as a gaming or gambling facility or
any other use or condition of the Trust Estate or any part
thereof.
"Lending Documents" has the meaning stated in Section 1.01 of
the Credit Agreement.
"Management Agreement" has the meaning stated in Section 1.01
of the Credit Agreement.
"Managing Partner" has the meaning stated in Section 1.01 of
the Credit Agreement.
"Marina Lease" means the lease agreement made September 1,
1990 between the State of New Jersey, as landlord, and Mortgagor,
as tenant, respecting property known as the Senator Frank S.
Farley State Marina, Atlantic City, New Jersey, being designated
as a portion of Block B-4, Lot 11 on the tax map of the City of
Atlantic City, Atlantic County, New Jersey, as more particularly
described on Schedule A appended hereto and made a part hereof,
together with all amendments, restatements and renewals of said
lease agreement.
"Maturity" when used with respect to the Note means the date
on which the principal (or any portion thereof) of the Note
becomes due and payable as therein or herein provided, whether at
the Stated Maturity or by declaration of acceleration or
prepayment or otherwise.
"Mortgage" has the meaning stated in the Recitals.
"Mortgage Debt" has the meaning stated in Section 1.01 of the
Credit Agreement.
"Mortgage Documents" has the meaning stated in Section 1.01
of the Credit Agreement.
"Mortgagee" means the Person named as the "Mortgagee" in the
first paragraph of this instrument.
(13)
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"Mortgagor" means the Person named as the "Mortgagor" in the
first paragraph of this instrument until a successor entity shall
have become such pursuant to the applicable provisions of this
Mortgage, and thereafter, except to the extent otherwise
contemplated by Section 4.02, "Mortgagor" shall mean such
successor entity exclusively.
"Mortgagor Consent," "Mortgagor Order" and "Mortgagor
Request" mean, respectively, a written consent, order or request
signed with a Partnership Signature and delivered to the
Mortgagee.
"Note" has the meaning stated in the Recitals, and shall
include any replacement Note issued pursuant to Section 2.03 of
the Credit Agreement.
"Notices" has the meaning stated in Section 1.02.
"Officer" means any Person authorized to execute a
Partnership Signature.
"Officers' Certificate" means a certificate signed with a
Partnership Signature and delivered to the Mortgagee. Whenever
this Mortgage requires that an Officers' Certificate be signed
also by an Architect or an Accountant or other expert, such
Architect, Accountant or other expert may (except as otherwise
expressly provided in this Mortgage) be in the employ of the
Mortgagor.
"1988 Credit Agreement" has the meaning stated in the
Recitals.
"1988 Mortgage" has the meaning stated in the Recitals.
"Operating Assets" has the meaning stated in Granting
Clause Fourth.
"Opinion of Counsel" means a written opinion of counsel
who may (except as otherwise expressly provided in this Mortgage)
be an employee of the Mortgagor or of an Affiliate of the Mort-
gagor.
"Other 1988 Security Documents" has the meaning stated in the
Recitals.
"Original Policy" means the ALTA Loan Policies of Title
issued by Lawyers Title Insurance Company, Commonwealth Land Title
Insurance Company, Title Insurance Company of Minnesota, Security
and Title Guaranty Company and First American Title Insurance
Company pursuant to Title Commitment #NJLT 10171 redated the
date hereof.
(14)
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"Owned Land" has the meaning stated in Granting Clause First.
"Partnership Signature" means the signature of the Managing
Partner or, if the Managing Partner is a corporation, the
signature of a duly authorized officer thereof.
"Pedestrian Bridge Easement" means the easement and all other
rights granted to Mortgagor pursuant to Ordinance No. 2 of 1988 of
the City of Atlantic City, including any future expansion of such
rights, a legal description of which easement is appended hereto
as Schedule B and made a part hereof.
"Permits" means all licenses, franchises, statements of
compliance, certificates of operation, certificates of occupancy
and permits required for the lawful ownership, occupancy,
operation and use of all or a material portion of the Premises
whether held by Mortgagor or any other Person (which may be
temporary or permanent) (including, without limitation, those
required for the use of the Casino-Hotel as a licensed casino
facility), in accordance with all applicable Legal Requirements.
"Permitted Senior Encumbrances" has the meaning stated in
Section 11.02 of the Credit Agreement.
"Person" means any individual, corporation,
partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or any other entity or
government or any agency or political subdivision thereof.
"Plan" has the meaning stated in the Recitals.
"Premises" has the meaning set forth in Granting Clause
Second.
"Principal Payment Date" has the meaning stated in Section
1.01 of the Credit Agreement.
"Purchase Agreement" means the Purchase and Sale Agreement
dated April 27, 1985 between Hilton and Trump's Castle Hotel &
Casino, Inc. (formerly Atlantic City Palace, Inc.), as amended to
the date hereof (subsequently assigned to the Mortgagor).
"Put Agreement" has the meaning stated in Section 1.01 of the
Credit Agreement.
"Qualified Leasehold Interest" has the meaning stated in
Section 2.03(c).
(15)
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"Released Land" has the meaning stated in Section 2.03.
"Restoration" has the meaning set forth in Section 5.11.
"Roadway Improvement Contracts" means the agreements
and other matters identified in Schedule 2.
"Settlement Costs" has the meaning set forth in Section 5.20.
"Stated Maturity" has the meaning stated in Section 1.01 of
the Credit Agreement.
"Taking" means the acquisition or condemnation by eminent
domain of the whole or any part of the Premises, by a competent
authority, for any public or quasi-public use or purpose.
"Tangible Personal Property" has the meaning set forth in
Granting Clause Fourth.
"Trustee" has the meaning stated in Section 1.01 of the
Credit Agreement.
"Trust Estate" has the meaning set forth in the habendum to
the Granting Clauses.
Section 1.02. Notices, etc., to Mortgagee and Mortgagor.
(a) Any request, demand, authorization, direction, notice
(including, without limitation, a notice of default), consent,
waiver or other document provided or permitted by this Mortgage to
be made upon, given or furnished to, or filed with, the Mortgagor
or the Mortgagee (collectively, "Notices") shall be deemed given
when either (i) delivered by hand or by Federal Express or similar
overnight courier or (ii) three Business Days after sending by
registered mail, postage prepaid, addressed as follows:
To the Mortgagor:
Trump's Castle Associates
Trump Castle Casino Resort by the Bay
Brigantine Boulevard at Huron Avenue
Atlantic City, New Jersey 08401
Attn: General Counsel
To the Mortgagee:
Midlantic National Bank
Supervised Loan Department - 7th Floor
499 Thornall Street
Edison, New Jersey 08837
Attn: Ben Berzin, Jr., Senior Vice President
and
(16)
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TC/GP Corporation
c/o Trump's Castle Associates
Trump Castle Casino Resort by the Bay
Brigantine Boulevard at Huron Avenue
Atlantic City, New Jersey 08401
Attn: Treasurer
with, in each case, a copy to:
Donald J. Trump
c/o The Trump Organization
725 Fifth Avenue
New York, New York 10022
The Trump Organization
725 Fifth Avenue
New York, New York 10022
Attn: Nicholas L. Ribis, Esq.
Sills Cummis Zuckerman Radin Tischman
Epstein & Gross, P.A.
One Riverfront Plaza
Newark, New Jersey 07102
Attn: Ira A. Rosenberg, Esq.
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Attn: Theodore LaPier, Esq.
Ropes & Gray
One International Place
Boston, Massachusetts 02110-2624
Attn: Robert L. Nutt, Esq.
(b) By notice to the Mortgagor or the Mortgagee, the other
party may designate additional or substitute addresses for notices
which, notwithstanding Subsection (a) above, shall be deemed given
when received.
Section 1.03. Form and Contents of Documents Delivered to
Mortgagee.
Whenever several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not
necessary that all such matters be certified by, or covered by the
opinion of, only one such Person, or that they be so certified or
covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other
such Persons as to such matters in one or several documents.
(17)
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Any certificate or opinion of an officer of the Mortgagor may
be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless
such officer knows that the certificate or opinion or
representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any Opinion of
Counsel may be based, insofar as it relates to factual matters,
upon a certificate or opinion of, or representations by, an
officer or officers of the Mortgagor stating that the information
with respect to such factual matter is in the possession of the
Mortgagor, unless such counsel knows that the certificate or
opinion or representations with respect to such matters are
erroneous. If appropriate to the matter being opined upon, any
Opinion of Counsel may be subject to rights of creditors and the
availability of equitable remedies.
Whenever any Person is required to make, give or execute two
or more applications, requests, consents, certificates,
statements, opinions or other instruments under this Mortgage,
they may, but need not, be consolidated and form one instrument.
Whenever in this Mortgage, in connection with any application
or certificate or report to the Mortgagee, it is provided that the
Mortgagor shall deliver any document as a condition of the
granting of such application, or as evidence of the Mortgagor's
compliance with any term hereof, it is intended that the truth and
accuracy, at the time of the granting of such application or at
the effective date of such certificate or report (as the case may
be), of the facts and opinions stated in such document shall in
such case be conditions precedent to the right of the Mortgagor to
have such application granted or to the sufficiency of such
certificate or report.
Section 1.04. Compliance Certificates and Opinions.
Upon any application or request by the Mortgagor to the
Mortgagee to take any action under any provision of this
Mortgage, the Mortgagor shall furnish to the Mortgagee an
Officers' Certificate stating that all conditions precedent, if
any, provided for in this Mortgage relating to the proposed action
have been complied with and an Opinion of Counsel stating that in
the opinion of such counsel all such conditions precedent, if any,
have been complied with, except that in the case of any such
application or request as to which the furnishing of such
documents is specifically required by any provision of this
Mortgage relating to such particular application or request, no
additional certificate or opinion need be furnished. Every
certificate or opinion with respect to compliance with a condition
or covenant provided for in this Mortgage shall include:
(a) a statement that each individual signing such
certificate or opinion has read such condition or covenant and the
definitions herein relating thereto;
(18)
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(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such
individual, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to
whether or not such condition or covenant has been complied with;
and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.05. Effect of Recitals, Headings and Table of Contents.
All Recitals set forth above are incorporated herein and are
made an integral part of this Mortgage. The Article and Section
headings herein and in the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 1.06. Successors and Assigns; Amendments.
(a) Subject to the provisions of Section 4.02 hereof and
Article 10 of the Credit Agreement, this Mortgage shall be binding
upon and inure to the benefit of the Mortgagor and the Mortgagee
and of the respective successors and assigns of the Mortgagor and
the Mortgagee to the same effect as if each such successor or
assign were in each case named as a party to this Mortgage.
(b) This Mortgage may not be modified, amended, discharged,
released nor any of its provisions waived except by agreement in
writing executed by the Mortgagor and the Mortgagee and in
accordance with the provisions of this Mortgage and the Credit
Agreement.
Section 1.07. Separability Clause.
In case any provisions in this Mortgage, the Credit Agreement
or the Note shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.
Section 1.08. Benefits of Mortgage.
Without limiting the generality of Section 1.12, nothing in
this Mortgage, in the Credit Agreement or in the Note, express or
implied, shall give to any Person, other than the parties hereto
and their successors and assigns, any benefit or any legal or
equitable right, remedy or claim under this Mortgage, the Credit
Agreement or the Note.
Section 1.09. Governing Law.
(19)
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This Mortgage shall be deemed to be a contract under the laws
of the State of New Jersey and shall be construed in accordance
with and governed by the laws of the State of New Jersey.
Section 1.10. Limitation on Liability.
Notwithstanding anything herein or in any other agreement,
document, certificate, instrument, statement or omission referred
to below to the contrary, the Mortgagor is liable hereunder only
to the extent of the assets of the Mortgagor and, except as
provided in Section 2.07 of the Credit Agreement as in effect on
the date hereof, no other person or entity, including, but not
limited to, any partner, partner representative, officer,
committee, or committee member of the Mortgagor or any partner
therein or of any partnership affiliate (as defined in Rule 405
under the Securities Act of 1933, as amended) of the Mortgagor, or
any incorporator, officer, director, or shareholder of any
corporate partner of the Mortgagor or of any corporate affiliate
of the Mortgagor, or any affiliate or controlling person or entity
of any of the foregoing, or any agent, employee, or 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 herein or
therein) under, in connection with, arising out of or relating to
the Credit Agreement, this Mortgage or the other Lending
Documents, 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.
Any agreement, document, certificate, statement or other
instrument to be executed simultaneously with, in connection with,
arising out of or relating to this Mortgage or any other Mortgage
Document, or any other agreement, document, certificate, statement
or instrument contemplated hereby (other than the Put Agreement),
shall contain language mutatis mutandi to this Section 1.10 and,
if such language is omitted, shall be deemed to contain such
language. The foregoing shall not apply to, or otherwise impair
or reduce, the liability of Donald J. Trump under or in connection
with any documents executed by Donald J. Trump in connection with
the Grid Note (the "Grid Note Documents") or any other person
bound by any of the Grid Note Documents, including the Guarantee
executed by Donald J. Trump in connection with the Grid Note.
Section 1.11. Provisions Required by Credit Agreement.
Whenever the provisions of this Mortgage and the provisions
of the Credit Agreement shall be inconsistent, the provisions of
the Credit Agreement shall govern.
(20)
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Section 1.12. Rights of Mortgagee.
(a) So long as the Mortgagee is the mortgagee hereunder:
(i) the Mortgagee may rely and shall be protected in
acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, coupon
or other paper or document believed by it to be genuine and
to have been signed or presented by the proper party or
parties;
(ii) any request or direction of the Mortgagor mentioned
herein shall be sufficiently evidenced by a Mortgagor Request
or Mortgagor Order;
(iii) whenever in the administration of this Mortgage
the Mortgagee shall deem it desirable that a matter be proved
or established prior to taking, suffering or omitting any
action hereunder, the Mortgagee (unless other evidence be
herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officers' Certificate;
(iv) the Mortgagee may consult with counsel and the
written advice of such counsel or any Opinion of Counsel
shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by the
Mortgagee hereunder in good faith and in reliance thereon;
(v) the Mortgagee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture or other paper or document;
(vi) the Mortgagee may execute any of the rights or
powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys, and the
Mortgagee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed
with due care by it hereunder;
(vii) the Mortgagor shall pay or cause the Mortgagee to
be paid all amounts provided in Sections 7.03 and 8.01 of the
Credit Agreement; and
(viii) no provision of this Mortgage shall require the
Mortgagee either to (i) expend or risk its own funds or
otherwise incur any financial liability in the performance of
its obligations hereunder, or (ii) exercise any of its rights
or remedies hereunder.
(21)
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(b) The provisions of this Section 1.12 shall also apply to
all other Lending Documents.
Section 1.13. Mortgage Subject to the Provisions of the Act.
Each provision of this Mortgage is subject to and shall
be enforced in compliance with the provisions of the New Jersey
Casino Control Act, as amended.
Section 1.14. Discharge of Lien.
If the Mortgagor shall pay or cause to be paid, or there
shall otherwise be paid, to the Mortgagee all amounts required to
be paid by the Mortgagor pursuant to this Mortgage, the Credit
Agreement and the Note and the conditions precedent for the Credit
Agreement to cease, determine and become null and void in
accordance with Section 5.01 of the Credit Agreement shall have
occurred, the Mortgagee shall promptly cancel and discharge the
Mortgage Documents, including, without limitation, this Mortgage,
and any financing statements filed in connection herewith, and
execute and deliver to the Mortgagor all such instruments as may
be necessary, required or appropriate to evidence such discharge
and satisfaction of said lien or liens, subject to the Consent
attached as an Exhibit to the Intercreditor Agreement.
Section 1.15. General Application.
(a) The remedies of the Mortgagee upon any default by the
Mortgagor in the fulfillment of any of its obligations hereunder
shall be limited in each instance by the provisions of
Section 1.10, whether or not the provisions providing for such
remedies explicitly refer to such Section.
(b) The assertion of any rights upon any Default shall be
subject in each instance to the giving of any notice and the
expiration of any grace period provided for in Section 7.01 of the
Credit Agreement as a condition to such Default becoming an Event
of Default.
(c) For the purpose of this Mortgage, it is understood that
a Lien or an event which does not materially diminish the value of
the Mortgagee's interest in the Trust Estate shall not be deemed
an "impairment of security," as that phrase is used in this
Mortgage.
Section 1.16. Mortgage as Security Agreement and Financing
Statement; Application.
(a) This Mortgage constitutes a security agreement between
the Mortgagor, as debtor, and the Mortgagee, as secured party, for
all purposes of the Uniform Commercial Code as in effect under the
laws of the State of New Jersey. This Mortgage shall be effective
(22)
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as a financing statement pursuant to N.J.S.A. 12A:9-402(6),
whereby the Mortgagor grants to the Mortgagee a continuing
perfected security interest in fixtures.
(b) This Mortgage is subject to "modification" within the
meaning of N.J.S.A. 46:9-8.1 et. seq., and shall have the benefit
of the lien priority provisions thereof. Such modification may
include, without limitation, a change in the interest rate,
maturity date or other terms and conditions of this Mortgage and
of the Note or other obligations secured hereby.
ARTICLE TWO
RELEASE; OTHER EXCEPTED PROPERTY
Section 2.01. Possession by Mortgagor; Dispositions Without
Release.
So long as there shall have been no acceleration of the Note
under Section 3.02, the Mortgagor shall be suffered and permitted,
with power freely and without let or hindrance on the part of the
Mortgagee, subject to the provisions of this Mortgage, to possess,
use, manage, operate and enjoy the Trust Estate or any part
thereof and to collect, receive, use, invest and dispose of the
rents, issues, tolls, profits, revenues and other income from the
Trust Estate or any part thereof, to use, consume and dispose of
any consumables, goods, wares and merchandise in the ordinary
course of business of operating the Casino-Hotel and to adjust and
settle all matters relating to choses in action, leases and
contracts.
Section 2.02. Obsolete Property; Tangible Personal Property Lease
Modifications; Conveyances.
The Mortgagor shall have the right, at any time and from time
to time, unless an Event of Default shall have occurred and be
continuing, without any release from or consent by Mortgagee:
(a) To sell or dispose of, free from the lien of this
Mortgage, any Tangible Personal Property which, in the Mortgagor's
opinion, may have become obsolete or unfit for use, is no longer
useful, profitable or necessary in the conduct of its businesses
or the operation of the Trust Estate, unless, in the case of
material fixtures only, the same have been replaced by other
Tangible Personal Property or fixtures of substantially comparable
utility in the conduct of its business or the operation of the
Trust Estate and no purchaser of any such property shall be bound
to inquire into any question affecting its right to sell or
otherwise dispose of the same free from the lien of this Mortgage;
(23)
<PAGE>
(b) To replace or add to any material portion of the
Tangible Personal Property, provided, such replacement or addition
become subject to the lien of this Mortgage.
(c) To alter, repair or change the location or position of
any material portion of the Tangible Personal Property; provided,
however, that no change shall be made in such portion of the
Tangible Personal Property or in the location thereof which would
in any respect impair the lien of this Mortgage upon such
property;
(d) (i) To convey fee title to portions of the Owned Land to
governmental authorities, public utilities or others as required
by the terms of the Roadway Improvement Contracts, or (ii) to
grant interests in the Owned Land in the nature of rights-of-way
or easements or other rights or privileges in the nature of
easements and/or suffer or permit the acquisition thereof to or by
governmental authorities, public utilities or others if required
by the terms of the Roadway Improvement Contracts or otherwise,
provided (1) that none of the same will materially reduce or
impair (A) the value or usefulness of the Trust Estate or (B) the
normal operation of the Casino-Hotel, (2) the Mortgagor has
delivered to the Mortgagee an Officers' Certificate, dated not
earlier than 10 days prior to the date of such conveyance,
certifying that (A) no Event of Default has occurred and is
continuing, and (B) the conditions set forth in this Subsection
(d) for such conveyance have been fulfilled, and (3) the Mortgagor
has delivered to the Mortgagee (A) a duplicate original of the
instrument, if any, pursuant to which such grant or conveyance is
to be made, (B) in the case of a conveyance of fee title, an
Opinion of Counsel that such grant or conveyance complies with the
provisions of this Subsection (d), and (C) such other instruments,
certificates and opinions as the Mortgagee may reasonably request;
or
(e) To renew, extend, surrender, terminate, modify or amend
any leases of Tangible Personal Property, when in the Mortgagor's
opinion, it is prudent to do so.
The Mortgagor shall retain any net cash proceeds received
from the sale or disposition of any Tangible Personal Property
under Subsection (a) of this Section 2.02, in the business of
operating the Casino-Hotel as a part of the Trust Estate in
accordance with the provisions of Section 5.08(c).
The Mortgagee shall be under no responsibility or duty with
respect to the exercise of the rights of the Mortgagor under this
Section 2.02 or the application of the proceeds of any sale or
disposition of any Tangible Personal Property.
The Mortgagee shall, from time to time, promptly execute any
written instrument in form satisfactory to it to confirm the
propriety of any action taken by the Mortgagor under this
(24)
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Section 2.02, upon receipt by the Mortgagee of a Mortgagor Request
requesting the same, together with an Officers' Certificate
stating that the action so to be confirmed was duly taken in
conformity with this Section 2.02 and that the execution of such
written instrument is appropriate to confirm the propriety of such
action under this Section 2.02.
Section 2.03. Released Land.
(a) Notwithstanding anything in Granting Clauses First and
Fifth to the contrary, the Mortgagor shall have the right, at any
time and from time to time, unless an Event of Default shall have
occurred and be continuing, to convey all or part of the portion
of the Owned Land described as the Parking Facilities Parcel on
Schedule 1 (the land to be so conveyed is hereinafter referred to
as the "Released Land"), free from the lien of the Mortgage,
provided that the Mortgagor furnishes the Mortgagee with the
following:
(i) an Officers' Certificate requesting the release of
such property from the Trust Estate and stating that the
Mortgagor is not required to hold the Released Land in order
to maintain all Permits and in order to comply with the
provisions of all material contracts to which the Mortgagor
is a party or by which the Mortgagor is bound and either (A)
the Mortgagor has made adequate provision to maintain any
then-applicable Permits and to comply with such contractual
requirements by: (1) owning and using the balance of the
Trust Estate; (2) acquiring fee title to any real property
that would enable Mortgagor to maintain all Permits and
satisfy such contractual requirements; or (3) acquiring a
Qualified Leasehold Interest in real property that would
enable the Mortgagor to maintain such Permits and satisfy
such contractual requirements; or (B) neither the
requirements of such Permits nor such contracts require the
Mortgagor to own the Released Land or use or operate any land
in the manner in which the Released Land is intended to be
used (i.e., an employee parking lot); or (C) such
requirements have been waived and (y) that such conveyance
will not materially interfere with the normal operation of
the Casino-Hotel; and
(ii) an Opinion of Counsel to the effect that the
Mortgagor is not required to own and use the Released Land in
order to maintain in good standing all Permits or by the
provisions of any material contract known to counsel and to
which the Mortgagor is a party or by which it is bound to own
and use the Released Land.
(b) Notwithstanding anything in Section 2.03(a) or Granting
Clause Fifth to the contrary, if the Mortgagor acquires a
Qualified Leasehold Interest, then the Mortgagor shall have the
right, at any time, to assign or terminate such lease, unless an
(25)
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Event of Default has occurred and is continuing, provided that the
Mortgagor provides the Mortgagee with the following:
(i) an Officers' Certificate requesting the release of
such Qualified Leasehold Interest from the Trust Estate and
stating that Mortgagor is not required to hold the Qualified
Leasehold Interest in order to maintain all Permits and in
order to comply with the provisions or all material contracts
to which the Mortgagor is a party or by which the Mortgagor
is bound and either (A) the Mortgagor has made adequate
provision to maintain any then applicable Permits and to
comply with such contractual requirements by: (1) acquiring
fee title to any real property that would enable Mortgagor to
maintain all Permits and satisfy such contractual
requirements; or (2) acquiring a Qualified Leasehold Interest
in real property that would enable the Mortgagor to maintain
such Permits and satisfy such contractual requirements; (B)
neither the requirements of such Permits nor such contracts
require the Mortgagor to hold the Qualified Leasehold
Interest or use or operate any land in the manner in which
the Qualified Leasehold Interest is intended to be used
(i.e., an employee parking lot); or (C) such requirements
have been waived; and
(ii) an Opinion of Counsel to the effect that the
Mortgagor is not required to hold the Qualified Leasehold
Interest in order to maintain in good standing all Permits or
by the provisions of any material contract known to counsel
and to which the Mortgagor is a party or by which it is bound
to hold the Qualified Leasehold Interest to be released.
(c) A lease will be deemed a "Qualified Leasehold Interest"
if:
(i) the term of such lease (including any renewal
periods, if the renewal right is unilateral on the part of
the Mortgagor) expires after the latest Stated Maturity of
the Note;
(ii) either (A) such lease is superior to all mortgages,
ground and underlying leases encumbering the real property
that is covered by the lease or (B) the holders of all such
mortgages and leases execute and deliver to the Mortgagor,
for the benefit of the lessee under such lease and its
successors and assigns, a non-disturbance agreement on terms
reasonably satisfactory to the Mortgagee and the Trustee;
(iii) such lease contains such provisions as are
typically contained in a lease secured by a leasehold
mortgage with respect to the rights of a leasehold mortgagee
thereunder;
(26)
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(iv) such lease cannot be terminated or surrendered
voluntarily by the Mortgagor except in accordance with the
provisions of Section 2.03(b);
(v) either (A) such lease is an arms-length transaction
with a Person other than an Affiliate of the Mortgagor or (B)
the Mortgagor delivers to the Mortgagee a certificate from
the Appraiser stating that the rent under such lease is not
greater than the fair market rent and that the other terms of
such lease are fair and reasonable in the commercial leasing
market for such type of property and for the intended use of
such property;
(vi) the Mortgagor delivers to the Mortgagee an
assignment to the Mortgagee of the lessee's interest in the
lease creating the Qualified Leasehold Interest; and
(vii) the Mortgagor delivers to the Mortgagee an
Officers' Certificate and an Opinion of Counsel confirming
the satisfaction of the condition set forth in clause (i)
hereof and the due authorization, execution and delivery, and
enforceability against the Mortgagor of the assignment
referred to in clause (vi) above.
(d) The Mortgagor shall retain any net cash proceeds
received from the sale or disposition of all or any portion of the
Released Land in accordance with the provisions of Section
5.08(c).
Section 2.04. Other Excepted Property.
Notwithstanding any provision contained in this Mortgage or
the Credit Agreement to the contrary, including, without
limitation, the provisions of Granting Clauses Fourth and Fifth
and of Articles Two and Five hereof, if the Mortgagor acquires
Tangible Personal Property and other items constituting operating
assets, such as computer software subject to any F,F&E Financing
Agreement, or becomes the lessee under a lease for any of the same
and if the document evidencing such F,F&E Financing Agreement
prohibits secondary liens or the provisions of any such lease
prohibits any assignment thereof by the lessee, and if any such
prohibition is standard and customary with respect to similar
transactions of the lender or lessor, as the case may be, then the
property so purchased or the lessee's interest in the lease, as
the case may be, shall be deemed to be Excepted Property. If any
such F,F&E Financing Agreement permits secondary liens, then the
Mortgagee agrees to execute and deliver to the Mortgagor, at the
Mortgagor's expense, such documents as the holder of such F,F&E
Financing Agreement may reasonably request to evidence the
subordination of the lien of the Mortgage and the Mortgage
Documents to the lien of such F,F&E Financing Agreement.
(27)
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ARTICLE THREE
REMEDIES
Section 3.01. Events of Default.
"Event of Default," whenever used herein means an Event of
Default as defined in Section 7.01 of the Credit Agreement. The
exercise of any rights or remedies by the Mortgagee hereunder is
subject to the forbearance provisions of Section 3.1 of the
Intercreditor Agreement.
Section 3.02. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default
specified in Section 7.01(e) or (f) of the Credit Agreement)
occurs and is continuing, then, and in every such case, unless
such Event of Default is subject to the forbearance provisions of
Section 3.1 of the Intercreditor Agreement, the Mortgagee may
declare the principal amount of the Note to be due and payable
immediately, by a notice in writing to the Mortgagor, and upon any
such declaration such principal shall become immediately due and
payable. If an Event of Default specified in Section 7.01(e) or
(f) of the Credit Agreement which is not subject to the
forbearance provisions of Section 3.1 of the Intercreditor
Agreement occurs, the principal amount of the Note shall ipso
facto become and be due and payable immediately without any
declaration or other act on the part of the Mortgagee. If an
Event of Default specified in Section 7.01(e) or (f) of the Credit
Agreement which is subject to the forbearance provisions of
Section 3.1 of the Intercreditor Agreement occurs and is
continuing at the time such forbearance provisions cease to apply,
then the principal amount of the Note shall ipso facto become due
and payable immediately without any declaration or other act on
the part of the Mortgagee.
Section 3.03. Application of Moneys Received by Mortgagee.
Any moneys received by the Mortgagee pursuant to the
provisions of this Article Three (including moneys received by
the Mortgagee after any action or act by the Mortgagee under
(28)
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Section 3.10) shall be applied by the Mortgagee in accordance with
the provisions of Section 7.04 of the Credit Agreement and the
applicable provisions of the Intercreditor Agreement.
Section 3.04. Restoration of Rights and Remedies.
If the Mortgagee has instituted any proceeding to enforce any
right or remedy under this Mortgage and such proceeding has been
discontinued or abandoned for any reason or has been determined
adversely to the Mortgagee, then and in every such case the
Mortgagor and the Mortgagee shall, subject to any determination in
such proceeding, be restored to their former positions hereunder,
and thereafter all rights and remedies of the Mortgagee shall
continue as though no such proceeding had been instituted.
Section 3.05. Rights and Remedies Cumulative.
No right or remedy herein conferred upon or reserved to the
Mortgagee is intended to be exclusive of any other right or
remedy, and every right and remedy shall, subject to the
provisions of Section 1.10, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 3.06. Delay or omission Not Waiver.
No delay or omission of the Mortgagee to exercise any right
or remedy accruing upon an Event of Default shall impair any such
right or remedy or constitute a waiver of any such Event of
Default or an acquiescence therein. Every right and remedy given
by this Article Three or by law to the Mortgagee may be exercised,
subject to the provisions of Section 1.10, from time to time, and
as often as may be deemed expedient, by the Mortgagee.
Section 3.07. Undertaking for Costs.
If any action or proceeding shall be commenced (including,
without limitation, an action to foreclose this Mortgage or to
collect the indebtedness secured hereby) to which action or
proceeding the Mortgagee is made or becomes a party, or in which
it becomes necessary in the opinion of the Mortgagee to defend or
uphold the lien of this Mortgage, the Mortgagor shall pay to
Mortgagee all expenses, including reasonable attorneys' fees and
expenses, incurred by the Mortgagee, in connection therewith,
together with interest at the rate then payable on the Note, from
the date of payment less the net amount received by the Mortgagee
under any title insurance policy, and, until paid, all such
expenses, together with interest as aforesaid, shall be a lien on
the Trust Estate, subject to the provisions of Section 1.10.
(29)
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Section 3.08. Waiver of Appraisement and Other Laws.
To the full extent that it may lawfully so agree, the
Mortgagor will not at any time insist upon, plead, claim or take
the benefit or advantage of, any appraisement, valuation, stay,
extension or redemption law now or hereafter in force, in order to
prevent or hinder the enforcement of this Mortgage or the absolute
sale of the Trust Estate, or any part hereof, or the possession
thereof by any purchaser at any sale under this Article Three; and
the Mortgagor, for itself and all who may claim under it, so far
as it or they now or hereafter may lawfully do so, hereby waives
the benefit of all such laws. The Mortgagor, for itself and all
who may claim under it, waives, to the extent that it may lawfully
do so, all right to have the property in the Trust Estate
marshalled upon any foreclosure hereof, and agrees that any court
having jurisdiction to foreclose this Mortgage may order the sale
of the Trust Estate as an entirety.
If any law in this Section 3.08 referred to and now in force,
of which the Mortgagor or its successor or successors might take
advantage despite this Section 3.08, shall hereafter be repealed
or cease to be in force, such law shall not thereafter be deemed
to constitute any part of the contract herein contained or to
preclude the application of this Section 3.08.
Section 3.09. Entry.
The Mortgagor agrees that, upon the occurrence of an Event of
Default (but subject to the forbearance provisions of Section 3.1
of the Intercreditor Agreement), the Mortgagor, upon demand of the
Mortgagee during the continuance thereof, shall forthwith
surrender to the Mortgagee the actual possession of, and it shall
be lawful for the Mortgagee by such officer or agents as it may
appoint to enter and take possession of, the Trust Estate (and the
books and papers of the Mortgagor), and to hold, operate and
manage the Trust Estate (including the making of all needful
repairs, and such alterations, additions and improvements as the
Mortgagee shall deem wise) and to receive the rents, issues,
tolls, profits, revenues and other income thereof, and, after
deducting the costs and expenses of entering, taking possession,
holding, operating and managing the Trust Estate, as well as
payments for taxes, insurance and other proper charges upon the
Trust Estate and reasonable compensation to itself, its agents and
counsel, to apply the same as provided in Section 3.03, provided
that the Mortgagee's rights hereunder shall be subject to the
provisions of the New Jersey Casino Control Act. Whenever all
that is then due upon the Note and under any of the terms of this
Mortgage and the Credit Agreement shall have been paid and all
defaults hereunder and thereunder shall have been made good, the
Mortgagee shall surrender possession to the Mortgagor.
(30)
<PAGE>
Section 3.10. Power of Sale; Suits for Enforcement.
In case an Event of Default shall occur and be continuing,
the Mortgagee, with or without entry, in its discretion may,
subject to the forbearance provisions of Section 3.1 of the
Intercreditor Agreement:
(a) sell, subject to any mandatory requirements of
applicable law, the Trust Estate as an entirety, or in such
parcels, as the Mortgagee may determine, to the highest bidder at
public auction at such place and at such time (which sale may be
adjourned by the Mortgagee from time to time in its discretion by
announcement at the time and place fixed for such sale, without
further notice) and upon such terms as the Mortgagee may fix and
briefly specify in a notice of sale to be published as required by
law; or
(b) subject to the provisions of Section 1.10, proceed to
protect and enforce its rights under this Mortgage by sale
pursuant to judicial proceedings or by a suit, action or
proceeding in equity or at law or otherwise, whether for the
specific performance of any covenant or agreement contained in
this Mortgage or in aid of the execution of any power granted in
this Mortgage or for the foreclosure of this Mortgage or for the
enforcement of any other legal, equitable or other remedy, as the
Mortgagee, being advised by counsel, shall deem most effectual to
protect and enforce any of the rights of the Mortgagee; the
failure to join tenants shall not be asserted as a defense to any
foreclosure or proceeding to enforce the rights of the Mortgagee.
Section 3.11. Incidents of Sale.
Upon any sale of any of the Trust Estate effected by the
Mortgagee pursuant to this Article Three, whether made under the
power of sale hereby given or pursuant to judicial proceedings, to
the extent permitted by law:
(a) the principal of and accrued interest on the Note if not
previously due, shall at once become and be immediately due and
payable;
(b) subject to the receipt of any required prior approvals
of the New Jersey Casino Control Commission, the Mortgagee may bid
for and purchase the property offered for sale, and upon
compliance with the terms of sale may hold, retain and possess and
dispose of such property, without further accountability, and may,
in paying the purchase money therefor, deliver the Note or claims
for interest thereon in lieu of cash to the amount which shall,
upon distribution of the net proceeds of such sale, be payable
thereon, and the Note, in case the amounts so payable thereon
shall be less than the amount due thereon, shall be returned to
the Mortgagee or other holder or holders thereof after being
appropriately stamped to show partial payment;
(31)
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(c) the Mortgagee may make and deliver to the purchaser or
purchasers a good and sufficient deed, bill of sale and instrument
of assignment and transfer of the property sold;
(d) the Mortgagee is hereby irrevocably appointed the true
and lawful attorney of the Mortgagor, in its name and stead, to
make all necessary deeds, bills of sale and instruments of
assignment and transfer of the property thus sold; and for that
purpose it may execute all necessary deeds, bills of sale and
instruments of assignment and transfer, and may substitute one or
more persons, firms or corporations with like power, the Mortgagor
hereby ratifying and confirming all that its said attorney or such
substitute or substitutes shall lawfully do by virtue hereof; but
if so requested by the Mortgagee or by any purchaser, the
Mortgagor shall ratify and confirm any such sale or transfer by
executing and delivering to the Mortgagee or to such purchaser or
purchasers all proper deeds, bills of sale, instruments of
assignment and transfer and releases as may be designated in any
such request;
(e) all right, title, interest, claim and demand whatsoever,
either at law or in equity or otherwise, of the Mortgagor of, in
and to the property so sold shall be divested and such sale shall
be a perpetual bar both at law and in equity against the
Mortgagor, its successors and assigns, and against any and all
Persons claiming or who may claim the property sold or any part
thereof from, through or under the Mortgagor, its successors and
assigns; and
(f) the receipt of the Mortgagee or of the officer making
such sale shall be a sufficient discharge to the purchaser or
purchasers at such sale for his or their purchase money and such
purchaser or purchasers and his or their assigns or personal
representatives shall not, after paying such purchase money and
receiving such receipt, be obliged to see to the application of
such purchase money, or be in anywise answerable for any loss,
misapplication or non-application thereof.
Section 3.12. Receiver.
Upon the occurrence of an Event of Default and commencement
(subject to the forbearance provisions of Section 3.1 of the
Intercreditor Agreement) of judicial proceedings by the Mortgagee
to enforce any right under this Mortgage, the Mortgagee shall be
entitled, as against the Mortgagor, without notice or demand and
without regard to the adequacy of the security for the Note or the
solvency of the Mortgagor, to the appointment of a receiver of the
Trust Estate, and of the rents, issues, profits, revenues and
other income thereof.
Section 3.13. {RESERVED}
Section 3.14. {RESERVED}
(32)
<PAGE>
ARTICLE FOUR
CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
Section 4.01. Consolidation, Merger, Conveyance or Transfer only
on Certain Terms.
The Mortgagor shall comply with all provisions applicable to
the Mortgagor in Article Ten of the Credit Agreement.
Section 4.02. Successor Entity Substituted.
Upon any consolidation or combination or any conveyance or
transfer of the Trust Estate or any portion thereof in accordance
with Article Ten of the Credit Agreement, the successor entity
formed by such consolidation or into which the Mortgagor is
combined or to which such conveyance or transfer is made shall
succeed to, and be substituted for, and may exercise every right
and power of, the Mortgagor under this Mortgage with the same
effect as if such successor entity had been named as the Mortgagor
herein.
ARTICLE FIVE
COVENANTS AND REPRESENTATIONS
The Mortgagor covenants with the Mortgagee as follows:
Section 5.01. Payment of Principal and Interest.
The Mortgagor will duly and punctually pay the principal of
and interest on the Note in accordance with the terms of the Note,
the Credit Agreement and this Mortgage.
Section 5.02. {RESERVED}
Section 5.03. {RESERVED}
Section 5.04. {RESERVED}
Section 5.05. Actions and Proceedings.
The Mortgagee covenants and agrees, for the benefit of the
Mortgagor, the Trustee, TC/GP (as that term is defined in the
Credit Agreement) and the Holders (as that term is defined in the
Indenture Documents) that the Mortgagee may accelerate the Note
only upon the occurrence and continuation of an Event of Default
which is not then subject to the forbearance provisions of Section
3.1 of the Intercreditor Agreement. However, whether or not a
default or breach constitutes an Event of Default, the Mortgagee
shall have the power to protect and enforce the Mortgagee's rights
(33)
<PAGE>
against the Mortgagor by suit in equity, action at law or other
appropriate proceeding, either for specific performance of any
covenant of the Mortgagor contain in this Mortgage or in aid of
the exercise of any power granted herein.
Section 5.06. Warranty of Title.
The Mortgagor represents and warrants that as of the date
hereof:
(a) it is duly authorized under the laws of the State of New
Jersey and all other applicable laws to execute and deliver the
Mortgage Documents, and all partnership action on its part
necessary for the valid execution and delivery of the Mortgage
Documents has been duly and effectively taken;
(b) it is the lawful owner and is lawfully seized and
possessed of the Owned Land and all buildings and improvements
thereon, free and clear of all liens, charges or encumbrances,
other than the Mortgage Documents and the Existing Encumbrances;
(c) it has good title to, or valid and subsisting leasehold
interests in, the Operating Assets, subject to no lien,
encumbrance or charge, other than Permitted Senior Encumbrances,
which is senior to the lien of this Mortgage; and
(d) the Mortgagor has good and lawful right and authority to
execute this Mortgage and to grant, bargain, sell, alienate,
convey, assign, transfer, hypothecate, pledge, mortgage and
confirm the Trust Estate as provided herein (including, without
limitation, with respect to the Operating Assets, without the
consent of any third party, other than governmental authorities,
but any applicable or necessary consent or approval of any such
governmental authority has been given or waived at or prior to the
execution and delivery of this Mortgage), and this Mortgage
constitutes a valid first mortgage lien and deed of trust and
first priority security interest in the Trust Estate, subject only
to Permitted Senior Encumbrances.
In making the representations in this Section 5.06, the
Mortgagor is relying on certain representations made to it by
Hilton in the Purchase Agreement, and the Mortgagor shall not be
deemed to be in breach of any such representation to the extent
that such breach results from a breach of an equivalent
representation made by Hilton so long as the Mortgagor is then
proceeding and thereafter continues to proceed to enforce with
reasonable diligence all appropriate remedies against Hilton
arising as a result of such a breach by Hilton. In addition, the
Mortgagor shall not be deemed to be in breach of any such
representation to the extent that the facts giving rise to such
breach are insured against under the Original Policy so long as
the Mortgagor is then proceeding and thereafter continues to
(34)
<PAGE>
proceed to enforce with reasonable diligence its rights under such
Original Policy.
The Mortgagor hereby does and will forever warrant and defend
the (a) title to the Trust Estate and (b) the first priority of
the lien of the Mortgage Documents thereon, subject to Permitted
Senior Encumbrances, against the claims and demands of all persons
whomsoever, at the Mortgagor's sole cost and expense.
Section 5.07. After-Acquired Property; Further Assurances;
Recording.
All property, real, personal or mixed (other than Excepted
Property), of every kind and description and wheresoever situated,
which may be hereafter acquired by the Mortgagor shall immediately
upon the acquisition thereof by the Mortgagor, and without any
further mortgage, conveyance or assignment, become subject to the
lien of this Mortgage as fully as though now owned by the
Mortgagor and covered by the Granting clauses. Nevertheless, the
Mortgagor will do, execute, acknowledge and deliver all and every
such further acts, conveyances, mortgages, financing statements
and assurances as the Mortgagee shall require for accomplishing
the express purposes of this Mortgage.
The Mortgagor will, as provided in Section 5.13, from time to
time subject to the lien of this Mortgage its right, title and
interest under all Leases.
The Mortgagor will cause this instrument and all other
instruments of further assurance, including all financing
statements and continuation statements covering security interests
in personal property, to be promptly recorded, registered and
filed, and at all times to be kept recorded, registered and filed,
and will execute and file such financing statements and cause to
be issued and filed such continuation statements, all in such
manner and in such places as may be required by law or as
requested by the Mortgagee to fully preserve and protect the
rights of the Mortgagee as a secured party under the Uniform
Commercial Code to all property comprising the Trust Estate (to
the extent a grant of a security interest therein is governed by
the Uniform Commercial Code) and to perfect, preserve and protect
the lien of this Mortgage as a valid direct first mortgage lien of
record and a valid first priority security interest on the Trust
Estate.
The Mortgagor will pay all filing or recording fees and all
expenses incident to the execution and delivery of this Mortgage,
any financing statement or continuation statement with respect to
the personal property constituting part of the Trust Estate and
any instrument of further assurance, and all federal, state,
county and municipal stamp taxes and other taxes, duties, imposts,
assessments and charges arising out of or in connection with the
execution and delivery of the Note, the Credit Agreement, this
(35)
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Mortgage, any financing statement or continuation statement with
respect to the personal property constituting part of the Trust
Estate or any instrument of further assurance.
The Mortgagor will furnish to the Mortgagee:
(a) Promptly after the execution and delivery of this
instrument or other instrument of further assurance, an Opinion of
Counsel stating that, in the opinion of such Counsel, this
instrument and other instruments of further assurance have been
properly recorded, registered, indexed and filed to the extent
necessary to make effective the lien intended to be created by
this Mortgage, and reciting the details of such action or
referring to prior opinions of Counsel in which such details are
given, and stating that all financing statements and continuation
statements have been executed, indexed and filed that are
necessary fully to preserve and protect the rights of the
Mortgagee hereunder, or stating that, in the opinion of such
Counsel, no such action is necessary to make such lien effective;
and
(b) Within 60 days after June 30 in each year beginning with
the year 1992, an Opinion of Counsel, dated as of such date,
stating that, in the opinion of such Counsel, (i) such action has
been taken with respect to the recording, registering, filing,
re-recording, re-registering and re-filing of this instrument and
of all financing statements, continuation statements or other
instruments of further assurance as is necessary to maintain the
first priority lien of this Mortgage (including the first priority
lien on any property, other than Excepted Property, acquired by
the Mortgagor after the execution and delivery of this instrument
and owned by the Mortgagor at the end of the preceding calendar
year) and reciting the details of such action or referring to
prior Opinions of Counsel in which such details are given, and
(ii) either (A) the Mortgagor has all Permits necessary for the
continuing operation of the Casino-Hotel and that all financing
statements and continuation statements have been executed and
filed that are necessary fully to preserve and protect the rights
of the Mortgagee hereunder, or (B) the Mortgagor has all Permits
necessary for the continuing operations of the Casino-Hotel and
that, in the opinion of such counsel, no such action is necessary
to maintain such lien.
Section 5.08. Payment of Taxes and Certain Claims; Maintenance of
Properties; Compliance with Legal Requirements and
Insurance Requirements.
The Mortgagor will:
(a) subject to the provisions of Section 5.09 relating to
contests, pay or cause to be paid promptly (or when installments
of the same shall become due and payable, if, by law or by
agreement or arrangement with the applicable governmental agency
(36)
<PAGE>
or authority, the same may be paid in installments) all taxes
(including, without limitation, real estate taxes, personal or
other property taxes and all sales, value added, use and similar
taxes), assessments (including, without limitation, all
assessments for public improvements or benefits, whether or not
commenced or completed prior to the date hereof and whether or not
to be completed prior to the satisfaction of this Mortgage),
water, sewer or other rents, rates and charges, excises, levies,
license fees, permit fees, inspection fees and other authorization
fees and other charges, in each case whether general or special,
ordinary or extraordinary, or foreseen or unforeseen, of every
character (including all interest, additions to tax and penalties
thereon), that may be assessed, levied, confirmed or imposed on or
in respect of or be a lien upon (1) the Trust Estate or any part
thereof or any rent therefrom or any estate, right or interest
therein, or (2) any acquisition, occupancy, use, leasing or
possession of or activity conducted on the real property or any
part thereof included in the Trust Estate or any gross receipts
thereof or of the rent therefrom, which is senior to the lien of
this Mortgage (all of the foregoing being referred to collectively
as "Impositions"). Notwithstanding the foregoing or any other
provisions of the Credit Agreement, this Mortgage or any of the
other Lending Documents, the Mortgagor shall not be required to
pay any income, profits or revenue tax upon the income of the
Mortgagee, nor any franchise, excise, corporate, estate,
inheritance, succession, capital levy or transfer tax of the
Mortgagee, nor any interest, additions to tax or penalties in
respect thereof, unless such tax is imposed, levied or assessed in
substitution for any Imposition that the Mortgagor is required to
pay pursuant to this Section 5.08. The Mortgagor will deliver to
the Mortgagee official receipts or other proof evidencing payments
of any Impositions in accordance with the requirements of this
Section 5.08. The Mortgagor shall not be entitled to any credit
for taxes or assessments paid against the Note;
(b) except for such property which the Mortgagor may dispose
of or replace pursuant to Section 2.02, maintain and keep all its
properties used or useful in the conduct of its business,
including, without limitation, the Casino-Hotel and all Tangible
Personal Property, in good repair, working order and condition,
except for reasonable wear and use, and make or cause to be made
all such needful and proper repairs, renewals and replacements
thereto consistent with the standards of other casino-hotels in
Atlantic City, New Jersey;
(c) occupy and continuously operate the Casino-Hotel and
keep the Casino-Hotel supplied with Tangible Personal Property,
all in a manner consistent with the standards of other
casino-hotels in Atlantic City, New Jersey.
(d) subject to the provisions of Section 5.09 relating to
contests, the Mortgagor at its sole expense will timely (1) comply
with all Legal Requirements and Insurance Requirements, whether or
(37)
<PAGE>
not compliance therewith shall require structural changes in the
buildings and improvements included in the Trust Estate or
interfere with the use and enjoyment of the Trust Estate or any
part thereof, (2) procure, maintain and comply with all Permits
and other authorizations required for (i) the Casino as a gaming
and gambling facility, (ii) the on-premises consumption of
alcoholic beverages at the Casino-Hotel and (iii) any other use of
the Trust Estate part hereof then being made, and for the prior
erection, installation, operation and maintenance of the
improvements or any part thereof, and (3) comply with any
instruments of record at the time in force affecting the Trust
Estate or any part thereof, if the failure to comply with the same
would materially impair the Mortgagee's security hereunder.
Without limiting the generality of the foregoing, the Mortgagor
represents and warrants that at the time of the execution of this
Mortgage, the Mortgagor is in compliance with the requirements of
clauses (1), (2) and (3) to the extent necessary to continue
operation of the Casino-Hotel;
(e) promptly perform all of the terms, covenants and
conditions to be performed by Mortgagor or Hilton under the
Roadway Improvement Contracts, to the extent necessary to maintain
all Permits and comply with all Legal Requirements, subject to the
right to contest such terms, covenants and conditions in
accordance with the provisions set forth in Section 5.09 with
respect to such Contracts.
Section 5.09. Permitted Contests.
The Mortgagor may, at its sole expense, contest (after prior
written notice to the Mortgagee) by appropriate legal proceedings
conducted in good faith and with due diligence, the amount or
validity or application, in whole or in part, of any Imposition or
lien therefor or any Legal Requirement or Insurance Requirement or
the application of any instrument of record affecting the Trust
Estate or any part thereof or any claims of mechanics,
materialmen, suppliers or vendors or lien therefor, and may
withhold payment of the same pending such proceedings if permitted
by law, or make payment under protest or defer compliance with any
such Legal Requirement, any such Insurance Requirement or the
terms of any such instrument, and the same shall not be a Default
hereunder; provided that (a) in the case of any Impositions or
lien therefor or any claims of mechanics, materialmen, suppliers
or vendors or lien therefor which is senior to the lien of this
Mortgage, such proceedings shall suspend the collection thereof,
through commencement of foreclosure upon the Trust Estate, (b) in
case of ad valorem real property taxes, no tax sale certificate
pertaining to delinquent taxes has been sold by the taxing
authority, (c) in the case of a Legal Requirement, the Mortgagee
shall not be in any danger of any civil or any criminal liability,
and the failure of the Mortgagor to comply with such Legal
Requirement shall not affect the continuance in good standing of
any Permit or result in the suspension, termination, non-renewal
(38)
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or material adverse modification of any Permit, and (d) in the
case of an Insurance Requirement, the failure of the Mortgagor to
comply therewith shall not affect the validity of any insurance
required to be maintained by the Mortgagor hereunder.
Section 5.10. {RESERVED}
Section 5.11. To Insure.
(a) The Mortgagor will, at its expense, maintain with
Insurers:
(1) insurance with respect to the Mortgagor's
insurable properties constituting a part of the Trust
Estate (including without limitation valuable papers
coverage) against loss or damage by fire, lightning and
other risks from time to time included under "all-risk"
policies and against loss or damage by sprinkler
leakage, water damage, collapse, malicious mischief and
explosion in respect of any steam and pressure boilers
and similar apparatus located on such insurable
properties, in amounts at all times sufficient to
prevent the Mortgagor from becoming a coinsurer within
the terms of the applicable policies, but in any event
such insurance shall be maintained in such insurable
amounts not less than the greater of the following
(hereinafter referred to as the "Insurance Amount"): (i)
100% of the then full insurable value of such insurable
properties, the term "full insurable value" to mean the
actual cash value (excluding the costs of foundation,
footing, excavation, paving, landscaping and other
similar, noninsurable improvements) determined from time
to time (but not less frequently than once in any 36
calendar months), by an Architect, contractor, appraiser
or an Insurer or (ii) the then outstanding Amount of any
Mortgage Debt, including the Note;
(2) public liability, including personal injury
and property damage and comprehensive general liability
insurance against any and all claims arising out of or
connected with the possession, use, leasing, operation
or condition of such insurable properties in such
amounts as, in the Mortgagor's judgment, are prudent,
considering the cost and availability of such insurance,
for personal injury and property damage with respect to
any one occurrence, which may be written under a blanket
or umbrella policy;
(3) appropriate workers' compensation insurance
with respect to any work (to the extent the risks to be
covered thereby are not already covered by other
policies of insurance maintained by the Mortgagor) on or
about such insurable properties;
(39)
<PAGE>
(4) to the extent available business interruption
insurance covering not less than six months of loss,
which may be written under blanket policies;
(5) flood insurance in an amount not less than the
Insurance Amount; and
(6) such other insurance with respect to such
insurable properties against loss or damage of the kinds
from time to time customarily insured against by persons
owning or using casino-hotels of comparable size in the
marina area of Atlantic City, New Jersey.
Notwithstanding the foregoing, the Mortgagor shall be
permitted to maintain a deductible with respect to the insurance
policies described in clauses (1), (2), (4), (5) and (6) in an
amount not to exceed the customary deductible (if any) with
respect to such types of insurance maintained by casino-hotels of
a similar size and value in Atlantic City, New Jersey (but in no
event more than $1,000,000 for all occurrences during any period
of twelve consecutive months) (with respect to business
interruption insurance, such deductible shall be applied against
the aggregate amount payable in respect to each Casualty).
(b) Each policy of insurance maintained by the Mortgagor
pursuant to Subsection (a) of this Section 5.11 shall, (1) except
in the case of workers' compensation insurance, name as insured
the Mortgagee, as such, and the Mortgagor, (2) provide that all
insurance proceeds for losses, except in the case of public
liability insurance and workers' compensation insurance or as
otherwise provided in Subsections (d), (e) and (f) of this Section
5.11, be payable solely to the Mortgagee and the Trustee, as their
interests may appear, (3) include effective waivers (whether under
the terms of any such policy or otherwise) by the insurer of all
claims for insurance premiums against all loss payees and named
insureds (other than the Mortgagor) and all rights of subrogation
against any named insured, (4) except in the case of public
liability and workers' compensation insurance, provide that any
losses shall be payable notwithstanding (i) any act, failure to
act, negligence of, or violation or breach of warranties,
declarations or conditions contained in such policy by the
Mortgagor or the Mortgagee or any other named insured or loss
payee, (ii) the occupation or use of the insurable properties for
purposes more hazardous than permitted by the terms of the policy,
(iii) any foreclosure or other proceeding or notice of sale
relating to the insurable properties or (iv) any change in the
title to or ownership or possession of the insurable properties,
(5) contain a non-assessable, non-contributory mortgagee clause in
favor of the Mortgagee, and (6) provide that if all or any part of
such policy is cancelled, terminated or expires, or if there shall
be any reduction in amount or material change in coverage
thereunder, then, not less than 30 days prior to such
cancellation, termination, expiration, reduction or change the
(40)
<PAGE>
insurer will forthwith give written notice thereof to each named
insured and Mortgagee and that no cancellation, termination,
expiration, reduction in amount or material change in coverage
thereof shall be effective until at least 30 days after receipt by
each named insured and Mortgagee of written notice thereof.
(c) The Mortgagor has delivered or will deliver to the
Mortgagee, (1) duplicate originals of all insurance policies that
the Mortgagor is required to maintain pursuant to this
Section 5.11 and (2) within 30 days after each reduction in
insurance required to be maintained by the Mortgagor hereunder, an
Officers' Certificate setting forth the particulars as to all such
insurance policies and certifying that the same comply with the
requirements of this Section 5.11, that all premiums or
installments thereat then due thereon have been paid and that the
same are in full force and effect. The Mortgagee shall not be
responsible for effecting or renewing any insurance or for the
responsibility or solvency of the insurers.
(d) The Mortgagor shall give written notice to the Mortgagee
immediately upon obtaining knowledge of any Casualty which results
in damage, loss or destruction in an amount in excess of
$5,000,000 to any buildings or improvements on the Premises and/or
any Tangible Personal Property or action or proceedings with
respect thereto. Within 30 days after any Casualty which results
in any damage, loss or destruction in an amount in excess of
$5,000,000 to any buildings or improvements on the Premises and/or
Tangible Personal Property, the Mortgagor shall deliver to the
Mortgagee a certificate of an Architect stating (i) whether, in
such Architect's opinion, applicable Legal Requirements permit the
Restoration of said buildings and improvements for the same uses
and to the same size and quality in all material respects, as
existed immediately prior to the Casualty (and if said certificate
states that Legal Requirements do not permit such Restoration,
said certificate shall describe the manner closest approximating
such criteria to which the buildings and improvements could be so
restored and shall be accompanied by a Certificate of Appraised
Value dated not more than 10 days prior to delivery setting forth
the Appraised Value immediately prior to the Casualty and the
estimated Appraised Value immediately after the Restoration),
(ii) the estimated cost, in such Artchitect's (or such Architect's
estimator's opinion) of effecting such Restoration, and (iii) the
estimated period of time, in such Architect's opinion, required to
effect such Restoration. If the amount of insurance proceeds
available to the Mortgagor, directly or through the Insurance
Trustee, to fund such Restoration are less than the cost of
Restoration so estimated by the Architect, the Mortgagor shall
provide to the Mortgagee, as a further condition to Restoration,
evidence reasonably satisfactory to the Mortgagee of the
Mortgagor's ability to fund such excess cost of Restoration within
such estimated time to effect such Restoration. If the Mortgagor
is required to deliver such Certificates of Appraised Value and if
based on such Certificates of Appraised Value immediately after
(41)
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Restoration, the aggregate outstanding principal amount of
Mortgage Debt immediately after such Restoration shall exceed the
greater of (i) 66-2/3% of the Appraised Value immediately after
such Restoration or (ii) the quotient of the aggregate outstanding
principal amount of Mortgage Debt immediately prior to such
Casualty divided by the Appraised Value immediately prior to the
Casualty multiplied by the Appraised Value immediately after such
Restoration, then the proceeds of any insurance shall not be
applied to Restoration as set forth in Subsections (e), (h) and
(i) below, but shall instead be paid and delivered to the
Mortgagee to the extent of the then outstanding principal amount
of the Note and any other interest or other sums due hereunder or
under the Credit Agreement, the Note or any of the other Lending
Documents, to be applied to the satisfaction of the Mortgage to
the extent proceeds are available for such purpose and, provided
that no additional sums are due to the Mortgagee under the Credit
Agreement, the Note or any of the other Lending Documents, the
balance of any net insurance proceeds shall be paid to the Trustee
for distribution pursuant to the Indenture.
(e) Subject to the provisions of subsection (d) above, in
case a Casualty occurs, the following shall apply:
(1) if the cost of Restoration (as hereinafter
defined) does not exceed the sum of $5,000,000, the net
insurance proceeds shall be paid by the Mortgagee to the
Mortgagor;
(2) if the cost of Restoration is $5,000,000 or
more, the net insurance proceeds shall be paid by the
Mortgagee to the Insurance Trustee;
(3) the Mortgagor shall commence with reasonable
promptness under the circumstances and thereafter with
due diligence proceed to perform and complete in a good
and workmanlike manner the restoration, repair,
replacement or rebuilding of the damage or destruction
resulting from the Casualty (all of which restoration,
repair, replacement or rebuilding are referred to as the
"Restoration") in accordance with the plans and
specifications submitted to the Insurance Trustee, in
conformance with all Legal Requirements and in
accordance with the further provisions of this
Subsection (e), regardless of the extent of any such
Casualty and whether or not net insurance proceeds, if
any, shall be available or, if available, shall be
sufficient, for the purpose of the Restoration;
provided, however, that if the Mortgagor does not
receive any net insurance proceeds within 30 days after
any Casualty because the adjustment of the loss has not
yet occurred, then the obligation of the Mortgagor to
commence such Restoration shall be deferred until such
proceeds are made available to the Mortgagor; provided,
(42)
<PAGE>
further, that (i) the Mortgagor diligently and
continuously adjusts such loss with the Insurer,
(ii) the Mortgagor delivers to the Mortgagee an Officers'
Certificate within such 30-day period requesting the
extension of such period, estimating the date on which such
proceeds will be available and describing the
Mortgagor's efforts to adjust such loss and (iii)
the Mortgagor delivers to the Mortgagee additional Officers'
Certificates every 30 days thereafter updating the
information contained in the certificate described in
Clause (ii). All Restoration work shall be performed in
accordance with the applicable provisions of
Section 5.12 and in conformance with all Legal
Requirements and Insurance Requirements and, prior to
commencing any Restoration, the Mortgagor shall obtain
all Permits necessary in connection therewith, and shall
obtain, and keep in full force and effect until the
completion of such Restoration, such additional
insurance as the Insurance Trustee may require.
The plans and specifications for the Restoration shall be
accompanied by a certificate of the Mortgagor and an
Opinion of Counsel to the effect that upon the
completion of the Restoration pursuant to the plans and
specifications, the Premises and all buildings
and improvements thereon will comply with all Legal
Requirements and Insurance Requirements.
Notwithstanding anything in this Section 5.11 to the
contrary, if said Casualty is in an amount less than
$5,000,000, the Mortgagor shall not be required to
perform and complete such Restoration (unless the
performance and completion of the Restoration is
necessary in order for the Mortgagor to be in compliance
with any term, provision or condition of the Lending
Documents (other than this Section 5.11(e)).
(4) Any insurance proceeds which the Mortgagor
receives shall be held by the Mortgagor in trust for the
benefit of the Mortgagee and the Trustee and the purpose
of paying the cost of the Restoration, except as
otherwise provided herein.
(5) Any net insurance proceeds that the Insurance
Trustee holds pursuant to this Subsection (e) shall be
deposited in an interest-bearing investment reasonably
designated by the Mortgagor (and the interest thereon
shall be added to such proceeds) and shall be paid by
the Insurance Trustee to reimburse the Mortgagor for, or
to make payment for, the Restoration, after the
Insurance Trustee deducts therefrom the amount of any
reasonable costs and expenses incurred in connection
with the performance of its obligations under this
Section 5.11. The Insurance Trustee shall make such
payments not more frequently than once every 30 days
(43)
<PAGE>
upon the written request of the Mortgagor, by paying to
the Mortgagor or the Persons named in the certificate
described in Clause (6) of this Subsection (e) the
respective amounts stated in such certificate from time
to time as the Restoration progresses, provided the
Mortgagor has complied with the requirements of this
Subsection (e). The Mortgagor's written request shall
be accompanied by (i) the certificate described in
Clause (6) of this Subsection (e) and (ii) a title
company or official search, or other evidence reasonably
acceptable to the Insurance Trustee, showing that there
has not been filed with respect to the Premises any
vendor's, contractor's, mechanic's, laborer's or
materialman's statutory or similar lien which has not
been discharged of record (or bonded against or secured
by other security) or any other encumbrance (other than
encumbrances which, with the giving of notice or the
passage of time, or both, would not constitute an Event
of Default).
(6) The certificate required by Clause (5) of this
Subsection (e) shall (A) be an Officers' Certificate,
countersigned by the Architect in charge of the
Restoration with respect to the matters described in
Subclauses (i) and (v) below, (B) be dated not more than
10 days prior to such request and (C) set forth that:
(i) all of the Restoration work theretofore
performed is in substantial compliance with the
plans and specifications theretofore submitted to
the Insurance Trustee and in compliance with all
Legal Requirements and Insurance Requirements;
(ii) the sum then requested either has been
paid by the Mortgagor or is justly due to
contractors, subcontractors, materialmen,
engineers, architects or other Persons who have
rendered services or furnished or contracted to
deliver materials for the Restoration therein
specified, and the names and addresses of such
persons, a brief description of such services and
materials and the several amounts so paid or due to
each of said Persons in respect thereof;
(iii) no part of the amount requested has
been or is the basis in any previous or then
pending request for the withdrawal of net insurance
proceeds, and that the sum then requested does not
exceed the value of the services and materials
described in the certificate;
(iv) except for the amount, if any, stated
pursuant to Subclause (ii) of this Clause (6) in
(44)
<PAGE>
such certificate to be due for services or
materials, and except for amounts in dispute and/or
customary retainages, there is no outstanding
indebtedness known to the Person signing such
certificate, after due inquiry, which is then due
for labor, wages, materials, supplies or services
in connection with such Restoration; and
(v) the remaining cost, as estimated by the
Persons signing such certificate, of the
Restoration in order to complete the same does not
exceed the net insurance proceeds remaining in the
hands of the Insurance Trustee after payment of the
sum requested in such certificate or if such
estimated cost does exceed such insurance proceeds
such certificate shall state the amount of any such
deficiency. If the certificate states that such
deficiency will exist, the Mortgagor shall deliver
the amount of such deficiency in cash or cash
equivalent to the Insurance Trustee simultaneously
with the delivery of such certificate, which amount
shall be deemed insurance proceeds for purposes of
this Section 5.11(e).
(7) If net insurance proceeds shall be
insufficient to pay the entire cost of the Restoration,
then, after completion of the Restoration, the Mortgagor
shall pay the deficiency. If all or any part of the net
insurance proceeds are not used for the Restoration in
accordance with this Subsection (e) (because such
proceeds exceed the amount required to complete the
Restoration), then upon completion of the Restoration in
accordance with this Subsection (e), such amount not so
used shall be paid to the Mortgagor.
(f) Provided that no Event of Default has occurred and is
continuing, all net business interruption insurance proceeds shall
be paid to the Mortgagor, to be segregated from the other funds of
Mortgagor and held in trust by the Mortgagor for the following
purposes and in the following order of priority: (i) for debt
service for the estimated period of Restoration (for purposes of
this Section 5.11(f), interest and principal payments due on any
payment date under the Note will be deemed to accrue in equal
daily installments beginning the day after the immediately
preceding payment date and ending on such payment date); and (ii)
for the payment of Impositions and for any other expense incurred
in connection with the operation or business of the Casino-Hotel.
(g) The Mortgagor shall not take out separate insurance,
concurrent in form or contributing in the event of loss with that
required to be maintained pursuant to this Section 5.11, unless
the Mortgagee is included therein as a mortgagee, with loss
payable to the Mortgagee and the Insurance Trustee pursuant to
(45)
<PAGE>
Section 5.11(b) hereof. The Mortgagor shall immediately notify
the Mortgagee whenever any such separate insurance is taken out
and shall promptly deliver to the Mortgagee a duplicate original
of the policy of such insurance, a copy thereof certified by the
insurer or a certificate thereof.
(h) Insurance claims by reason of damage or destruction to
any portion of the Trust Estate may be adjusted by the Mortgagor,
but the Mortgagee shall have the right (but not the obligation) to
join the Mortgagor in adjusting, and approving the adjustment of,
any such loss except in the event of a loss where the amount of
insurance reasonably anticipated to be received with respect to
such loss is less than $5,000,000, and the Mortgagor shall assist
the Mortgagee in any such adjustment at the request of the
Mortgagee. If the Mortgagee at its election as aforesaid joins
the Mortgagor in any adjustment process, then the Mortgagee's
approval of the adjustment shall not be unreasonably withheld.
(i) Subject only to the forbearance provisions of Section
3.1 of the Intercreditor Agreement, if an Event of Default shall
have occurred and be continuing, the Mortgagee may, at its option,
(A) refrain from paying to the Mortgagor or the Insurance Trustee
any net insurance proceeds or (B) instruct the Insurance Trustee
to pay to the Mortgagee and the Trustee, as their interests may
appear, any insurance proceeds then held by the Insurance Trustee,
as the case may be.
(j) The Mortgagee shall be entitled to participate with the
Mortgagor in any adjustment, settlement or other resolution with
insurers of any amount in excess of $5,000,000 claimed by the
Mortgagor against those insurers.
Section 5.12. Limitations on Building Demolition, Alterations,
Improvements and New Construction.
The Mortgagor will not authorize, permit or make any
demolition, alteration or improvement of any building included in
the Trust Estate or any new construction on any part of the Trust
Estate, except in conformity with and subject to the limitations
hereinafter in this Section 5.12 set forth.
Unless an Event of Default shall have occurred and be
continuing, the Mortgagor shall have the right at all times to
make or permit such alterations, improvements or new construction,
structural or otherwise (herein sometimes called collectively
"alterations"), of or on the Trust Estate, to be made in all cases
subject to the following conditions:
(a) no alteration shall be undertaken or carried out except
in conformity with all Legal Requirements and Insurance
Requirements;
(46)
<PAGE>
(b) if the estimated cost of any alteration, together with
other alterations that constitute a single construction plan or
project (whether or not accomplished in several stages or
procedures), exceeds $5,000,000, the building or buildings as so
improved or altered, upon completion of the work, shall be of a
value not less than the value of such building or buildings
immediately prior to the making of such alteration;
(c) any alteration which is structural in nature or involves
an estimated cost of more than $5,000,000 shall be conducted under
the supervision of an Architect, and no such alteration shall be
undertaken until 10 days after there shall have been filed with
the Mortgagee detailed plans and specifications and cost estimates
thereof, prepared and approved in writing by such Architect
stating that such plans and specifications conform to all
applicable provisions of this Section 5.12;
(d) no alteration involving an estimated cost of more than
$5,000,000 shall be undertaken until the Mortgagor has furnished
to the Mortgagee, at the Mortgagor's sole cost and expense, a
surety bond or bonds, covering performance, and labor and material
payments with respect to the work to be so performed, naming the
Mortgagee as obligee, issued by a responsible surety company,
authorized to do business in the State of New Jersey, in a form
generally and customarily used by such surety in an amount equal
to the estimated cost of construction of the work covered by the
plans and specifications therefor, guaranteed and conditioned upon
the performance and completion of such construction, substantially
in conformity with the said plans and specifications and within a
reasonable time, subject to delays by fire, strikes, lock-out,
acts of God, inability to obtain labor or materials, governmental
restrictions, enemy action, civil commotion or unavoidable
casualty or other similar causes beyond the control of the
Mortgagor, free and clear of all liens, claims and liabilities for
the cost of such alterations. In the event such surety bond or
bonds shall be unobtainable, the Mortgagor shall deliver to the
Mortgagee security by cash, letter of credit or other guarantee,
affording substantially the same protection as would such bond or
bonds;
(e) all work done in connection with any alterations shall
be done promptly and in a good and workmanlike manner. The work
in connection with any alteration shall be prosecuted with
reasonable dispatch, delays due to fire, strikes, lockouts, acts
of God, inability to obtain labor or materials, governmental
restrictions, enemy action, civil commotion or unavoidable
Casualty or similar causes beyond the control of the Mortgagor
excepted;
(f) if the estimated cost of alterations exceeds $5,000,000,
the Mortgagor shall have delivered to the Mortgagee (A) prior to
the commencement of such alterations, additions or improvements
copies of all Permits required for the commencement of such work,
(47)
<PAGE>
together with a certificate of the Architect or an Opinion of
Counsel to the effect that all Permits required for the
commencement of such alterations have been obtained; and (B)
within a reasonable period of time after the completion of the
alterations, copies of all Permits required in connection with the
completion thereof, together with either an opinion of Counsel or
a certificate of the Architect that all such Permits have been so
obtained by the Mortgagor and that the Mortgagor has complied with
all the requirements of this Section 5.12;
(g) no alterations of any kind shall be made to any building
which shall change the use or reduce the size or quality of the
building in any material respect; and
(h) no alterations costing in excess of $5,000,000, together
with other alterations that constitute a single construction plan
or project (whether or not accomplished in several stages or
procedures), shall be made to any building if such alterations are
not expected to be completed at least 120 days prior to the Stated
Maturity of the Note (except if such alterations are required in
order to comply with Legal Requirements).
Section 5.13. Leases.
The Mortgagor shall not:
(a) subject to the provisions of Section 5.13(d) and Article
Ten of the Credit Agreement, enter into any Lease, or renew,
modify, extend terminate or amend any Lease, except in the
ordinary course of business of operating the Casino-Hotel;
(b) receive or collect, or permit the receipt or collection
of, any rental payments under any Lease more than one year in
advance of the respective periods in respect of which they are to
accrue, except that, in connection with the execution and delivery
of any Lease or of any amendment to any Lease, rental payments
thereunder may be collected and received in advance in an amount,
not in excess of three months' rent and/or a security deposit may
be required thereunder in an amount not exceeding one year's rent;
(c) collaterally assign, transfer or hypothecate (other than
to the Mortgagee hereunder or to any holders of Mortgage Debt;
provided, however, that in the case of any such Mortgage Debt
(other than the Indebtedness under the Credit Agreement, the Note
and the other Lending Documents), such collateral assignment shall
be subordinate to the assignment of rental payments hereunder) any
rental payment under any Lease whether then due or to accrue in
the future, the interest of the Mortgagor as landlord under any
Lease or the rents, issues of profits or the Trust Estate;
(d) after the date hereof, enter into any Lease or renew any
Lease, unless such Lease contains terms to the effect as follows:
(48)
<PAGE>
(1) the Lease and the rights of the tenants
thereunder shall be subject and subordinate to the
rights of the Mortgagee under this Mortgage;
(2) the Lease may be assigned by the landlord
thereunder to the Mortgagee,
(3) the rights and remedies of the tenant in
respect of any obligations of the landlord thereunder
shall be nonrecourse as to any assets of the landlord
other than its equity in the building in which the lease
Premises are located or the proceeds thereof, and
(4) the tenant's obligation to pay rent and any
additional rent shall not be subject to any deduction,
counterclaim or setoff whatsoever; or
(e) modify any Lease with respect to the matters described
in Clauses (1) through (4) of paragraph (d).
If the Mortgagor enters into a Lease (other than with any
Affiliate of the Mortgagor) for a term of more than three years,
the Mortgagee shall deliver a non-disturbance and attornment
agreement substantially in the form of Exhibit A hereto, following
receipt of a certificate of a leasing broker who is not an
Affiliate of the Mortgagor or the broker involved in such
transaction experienced with respect to leases of commercial space
in the Atlantic City area stating that the rent under the Lease is
not less than fair market rent and that the other terms of the
Lease are fair and reasonable in the commercial leasing market.
The Mortgagor shall, upon demand, reimburse the Mortgagee for any
costs and expenses (including reasonable attorneys' fees) incurred
by the Mortgagee in connection with the preparation, review and
delivery of such non-disturbance and attornment agreements.
Promptly after the execution and delivery hereof, the
Mortgagor will cause the lessee under each Lease now in effect and
promptly after each Lease is executed or becomes effective after
the date of the execution and delivery hereof, the Mortgagor will
cause the lessee under each such Lease, to be duly notified in
writing (unless the substance and effect of such notice shall be
contained in such Lease) of the subjection of the owner's
interest, as lessor, in and to such Lease to the lien of this
Mortgage and of the name and address of the Mortgagee. Each such
notice shall state that the lease of such lessee is a Lease as
herein defined. If a new Mortgagee is at any time appointed
hereunder or the address of the Mortgagee shall at any time be
changed, the Mortgagor will cause each lessee under each Lease to
be promptly notified in writing of the name and address of such
new Mortgagee or the new address of the Mortgagee. The Mortgagor
will use reasonable efforts (but shall not be obligated to incur
any expenditure other than de minimis amounts) to obtain from each
lessee under each Lease to whom any notice is sent pursuant to
(49)
<PAGE>
this paragraph an acknowledgment of receipt of such notice, and
the Mortgagor will promptly deliver to the Mortgagee, upon
request, a copy of each such acknowledgment of receipt which it is
able to obtain. The Mortgagee shall not be responsible for
securing or causing the Mortgagor to secure any such
acknowledgment.
The provisions of this Section 5.13 shall not apply to a
lease of substantially all of the Trust Estate if such lease is in
accordance with Section 10.04 of the Credit Agreement as in effect
on the date hereof.
Section 5.14. Compliance Certificates.
The Mortgagor will deliver to the Mortgagee, within 120 days
after the end of each fiscal year of the Mortgagor, an Officers'
Certificate stating that:
(a) a review of the activities of the Mortgagor during such
year and/or performance under this Mortgage has been made under
his supervision, and
(b) to the best of each signer's knowledge, based on such
review, the Mortgagor has fulfilled all its obligations under this
Mortgage throughout such year, or, if there has been a default in
the fulfillment of any such obligation, specifying each such
default known to him and the nature and status thereof.
Promptly after the Mortgagor may reasonably be deemed to have
knowledge of a default hereunder, the Mortgagor will deliver to
the Mortgagee a written notice specifying the nature and period of
existence thereof and the action the Mortgagor is taking and
promises to take with respect thereto.
Section 5.15. {RESERVED}
Section 5.16. {RESERVED}
Section 5.17. Advances by Mortgagee.
If the Mortgagor shall fail to perform any of its covenants
in this Mortgage and such failure shall continue for 10 days
following notice thereof given by the Mortgagee (or at any time,
without notice, in case of emergency), the Mortgagee may (but is
not obligated to), at any time and from time to time, take any
action or make advances, to effect performance of any such
covenant on behalf of the Mortgagor; and all moneys so used or
advanced by the Mortgagee and all reasonable costs and expenses
incurred by Mortgagee in connection therewith, together with
interest on all of the same at the rate of interest set forth in
the Note, shall be repaid by the Mortgagor upon demand and such
advances shall be secured under this Mortgage prior to the Note.
(50)
<PAGE>
Section 5.18. RESERVED
Section 5.19. RESERVED
Section 5.20. Eminent Domain.
(a) The Mortgagor shall give written notice to the Mortgagee
immediately upon obtaining knowledge of any Taking affecting the
Trust Estate. If the Taking is estimated to result in an award of
more than $5,000,000 or the Taking would interfere with or
adversely affect the operation of the Casino-Hotel in accordance
with Legal Requirements, then within 30 days after any such
Taking, the Mortgagor shall deliver to the Mortgagee a certificate
of an Architect stating whether, in such Architect's opinion,
applicable Legal Requirements permit the Restoration of any
buildings and improvements for the same uses and the same size and
quality in all material respects as existed immediately prior to
the Taking (and if said certificate states that Legal Requirements
do not permit such Restoration, said certificate shall describe
the manner closest approximating such criteria to which the
buildings and improvements could be so restored and shall be
accompanied by a Certificate of Appraised Value dated not more
than 10 days prior to delivery setting forth the Appraised Value
immediately prior to the Taking and the estimated Appraised Value
immediately after the permitted Restoration). If the Mortgagor is
required to deliver such Certificates of Appraised Value and if
based on such Certificates at Appraised Value immediately after
Restoration, the aggregate outstanding principal amount of
Mortgage Debt immediately after such Restoration shall exceed the
greater of (i) 66-2/3% of the Appraised Value immediately after
such Restoration or (ii) the quotient of the outstanding principal
amount of the Mortgage Debt immediately prior to such Taking
divided by the Appraised Value immediately prior to the Taking
multiplied by the Appraised Value immediately after such
Restoration, then the Taking shall be deemed a Taking of "the
whole or substantially all of the Premises."
(b) If at any time there shall occur a Taking of less than
the whole or substantially all of the Premises and the award or
awards resulting therefrom (after there shall have been first
deducted the fees and expenses incurred in connection with the
termination, settlement and collection of such award or awards,
including, but not limited to, reasonable counsel fees and
expenses, hereinafter referred to as "Settlement Costs") (i) shall
not exceed the sum of $10,000,000, the entire amount of such award
shall be paid to the Mortgagor; and (ii) if such award is
$10,000,000 or more, the entire amount of such award shall be paid
to the Insurance Trustee. In either event, such awards shall be
applied to the cost of demolition, repair, Restoration and
replacement of the Trust Estate to as nearly as practicable to its
uses, value and condition immediately prior to the Taking. The
Mortgagor shall promptly commence and with due diligence perform
the Restoration in accordance with Clauses (3), (4) and (7) of
(51)
<PAGE>
Section 5.11(e) (after substituting the words "Taking" for
"Casualty" and "award" for "net insurance proceeds"), at no cost
to the Mortgagee. All claims or suits arising out of any Taking
may be settled by the Mortgagor, except that the Mortgagee shall
have the right (but not the obligation) to participate in such
claim or suit, and to approve settlement thereat, except a claim
or suit where the amount reasonably anticipated to be received by
the Mortgagor is less than $5,000,000. If the Mortgagee at its
election as aforesaid joins such claim or suit, the Mortgagee's
approval of such settlement shall not be unreasonably withheld.
The insurance Trustee shall promptly pay such sums as are received
by it from such Taking from time to time in accordance with the
procedures set forth in Clauses (5) and (6) of Section 5.11(.e)
(after substituting the words "Taking" for "Casualty" and "award"
for "net insurance proceeds").
(c) If at any time there shall occur a Taking of the whole
or substantially all of the Premises, then the award shall not be
applied to Restoration but shall instead be paid and delivered to
the Mortgagee to the extent of the then outstanding principal
amount of the Note and any other interest or other sums due
hereunder or under the Credit Agreement, the Note or any of the
other Lending Documents, to be applied to the satisfaction of this
Mortgage to the extent proceeds are available for such purpose
and, provided that no additional sums are due the Mortgagee under
the Credit Agreement, the balance of any award shall be paid to
the Trustee for distribution pursuant to the Indenture.
(d) Notwithstanding anything contained herein to the
contrary, if an Event of Default shall have occurred and is
continuing, the Mortgagee may, at its option, (A) refrain from
paying to the Mortgagor or the Insurance Trustee any award or (B)
instruct the Insurance Trustee to pay to the Mortgagee and the
Trustee, as their interests may appear, any award then held by the
Insurance Trustee, as the case may be.
This instrument may be executed in any number of
counterparts, each of which as executed shall be deemed to be an
original, but all such counterparts shall constitute one and the
same instrument.
THE MORTGAGOR DECLARES THAT THE MORTGAGOR HAS RECEIVED A TRUE
COPY OF THIS MORTGAGE.
{THIS SPACE LEFT INTENTIONALLY BLANK}
(52)
<PAGE>
IN WITNESS WHEREOF, the Mortgagor has caused this Mortgage to
be duly executed and attested, all as of the day and year first
above written.
WITNESSED: TRUMP'S CASTLE ASSOCIATES
By:_________________________
Donald J. Trump,
______________________________ Its Managing Partner
(53)
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on this 29th day of May, 1992, before
me, the subscriber, a Notary Public of the state of New York,
personally appeared, Donald J. Trump, the Managing Partner of
TRUMP'S CASTLE ASSOCIATES, a New Jersey general partnership, who,
I am satisfied, is the person who has signed the within instrument
as the Managing Partner of said general partnership, and he
acknowledged that he signed, sealed and delivered the same as such
Managing Partner, that the within instrument is the voluntary act
and deed of said general partnership made by virtue of its Board
of Partnership Representatives, and that he received a true copy
of the within instrument on behalf of said general partnership.
______________________________
Notary Public of the State of
New York {Seal}
(54)
=================================================================
____________________________________________
AMENDMENT NO. 1 TO
AMENDED AND RESTATED
ASSIGNMENT OF LEASES AND RENTS
Dated as of December 28, 1993
____________________________________________
TRUMP'S CASTLE ASSOCIATES,
a New Jersey general partnership,
as Assignor
and
MIDLANTIC NATIONAL BANK,
as Assignee
=================================================================
Prepared by: _______________________________
Ira A. Rosenberg, Esq.
Sills Cummis Zuckerman Radin
Tischman Epstein & Gross, P.A.
One Riverfront Plaza
Newark, New Jersey 07102
(201) 643-7000
<PAGE>
AMENDMENT NO. 1 TO AMENDED AND RESTATED
ASSIGNMENT OF LEASES AND RENTS
------------------------------
AMENDMENT NO. 1 (the "Amendment") to AMENDED AND RESTATED
ASSIGNMENT OF LEASES AND RENTS, dated as of December 28, 1993,
between TRUMP'S CASTLE ASSOCIATES, a New Jersey general
partnership which is the successor to Trump's Castle Associates
Limited Partnership, a New Jersey limited partnership (the
"Assignor"), and MIDLANTIC NATIONAL BANK, a national banking
association (the "Assignee"). Capitalized terms used and not
defined herein shall have the meanings ascribed to such terms in
the Original Assignment (as defined below).
WITNESSETH:
----------
WHEREAS, the Assignor delivered to the Assignee an Amended
and Restated Assignment of Leases and Rents, dated as of May 29,
1992 (the "Original Assignment"), and recorded June 2, 1992 in
Mortgage Book 4777, page 278, to secure certain obligations
including, without limitation, obligations under the 1992 Credit
Agreement (as hereinafter defined) and the Note (as hereinafter
defined).
WHEREAS, as of May 29, 1992, among other things, (i) the
Assignor, Trump's Castle Funding, Inc. ("Funding" or the
"Company") and the Assignee entered into an Amended and Restated
Credit Agreement (the "1992 Credit Agreement"), and (ii) the
Assignor issued to the Assignee an Amended and Restated Term Note
in the principal amount of $38,000,000, bearing interest and
being payable as set forth therein (the "1992 Note");
WHEREAS, the Assignee and the Assignor have agreed to amend
and restate the 1992 Credit Agreement (the 1992 Credit Agreement,
as so amended and restated as of the date hereof and as the same
may hereafter from time to time be amended, supplemented,
restated or otherwise modified, the "Credit Agreement") and the
Assignor has agreed to execute an Amendment No. 1 to the 1992
Note (the 1992 Note, as so amended by Amendment No. 1 thereto
dated as of the date hereof and as the same may hereafter from
time to time be amended, supplemented, restated or otherwise
modified, the "Note"), but only upon the condition, among others,
that the Assignor confirm, acknowledge and agree in writing that
the Original Assignment, as amended by this Amendment No. 1,
continues to constitute collateral security for the obligations
of the Assignor under the Credit Agreement and the Note, with the
priority and upon the other terms as set forth therein; and
(1)
<PAGE>
WHEREAS, the Assignor has agreed to execute and deliver this
Amendment to the Assignee.
NOW THEREFORE, in consideration of the foregoing and $10.00
in hand paid by the Assignee to the Assignor and for other good
and valuable consideration, the receipt and sufficiency whereof
is hereby acknowledged, the Assignor confirms and acknowledges to
and agrees with the Assignee as follows:
1. Assignor hereby confirms to and agrees with Assignee
that the Original Assignment secures all of the obligations under
the Credit Agreement and all of the obligations under the Note.
Anything to the contrary contained herein or in the Original
Assignment notwithstanding, Assignor further confirms to and
agrees with the Assignee that, without limiting the generality of
the preceding sentence, except as referred to in the recitals on
pages 1 and 2 of the Original Assignment, (a) the term "Credit
Agreement" as defined in the Original Assignment means the
Amended and Restated Credit Agreement dated of even date herewith
among the Assignor, (as Borrower), Funding (as Guarantor) and the
Assignee (as Lender), as it may from time to time be amended,
supplemented, restated or otherwise modified in writing; (b) the
term "Note" as defined in the Original Assignment means the Note
(as defined in the Original Assignment), as amended by Amendment
No. 1 thereto dated as of even date herewith and as may from time
to time be amended, supplemented, restated or otherwise modified
in writing (which includes the Replacement Note provided for in
Section 2.03 of the Credit Agreement); (c) the term "Mortgage" as
defined in the Original Assignment means the Amended and Restated
Indenture of Mortgage dated as of May 29, 1992, as amended by
Amendment No. 1 thereto dated as of even date herewith and as it
may from time to time be amended, supplemented, restated or
otherwise modified in writing; and (d) reference in the Original
Assignment and in this Amendment No. 1 to the phrase "as from
time to time amended, supplemented or modified" and similar
phrases was intended to and does include, therein and herein,
restatements of the documents with respect to which such
reference was or is hereby made.
2. Clause (iv) of the last sentence starting on page 5 of
the Original Assignment (beginning with the words
"Notwithstanding the foregoing") is replaced by clause (iv) below
and clauses (v) through (vii) are hereby added to such sentence:
(2)
<PAGE>
"(iv) Trump and each Affiliate of Trump (but not in any
event any Partner Representative (as defined in the
Partnership Agreement) other than Trump or any
Affiliate thereof) shall be liable to repay to the
Assignor any Restricted Payment actually received by
Trump or such Affiliate of Trump, as the case may be,
in contravention of Section 11.04 of the Credit
Agreement, (v) with respect to a Combination
Transaction, any Successor shall have liability
hereunder and under any other Lending Document to the
fullest extent the Assignor and the Company have,
taking into consideration the provisions of the second
sentence of Section 10.02 of the Credit Agreement, (vi)
any Person who receives directly or indirectly any
assignment or other transfer in whole or in part of the
Trust Estate in contravention of the provisions of the
Credit Agreement or any of the other Lending Documents
shall be liable hereunder and under the other Lending
Documents to the extent of the assets received and
(vii) the foregoing is not intended to and shall not
apply to (A) the Intercreditor Agreement (but shall
apply to the Consent and Agreement executed by the
Assignor and the Company relating thereto), (B) the
obligations and agreements of the Trustees set forth in
the Consent and Agreement or (C) any Opinions of
Counsel, title insurance policies, pro-forma policies
and/or commitments, title recording letters, title
reinsurance policies, pro-forma policies and/or
commitments, real estate surveys and/or insurance
policies delivered to or entered into for the benefit
of the Assignee pursuant to the Credit Agreement or any
of the other Lending Documents, or in connection with
the transactions contemplated hereby or thereby or by
the 1992 Credit Agreement."
3. This Amendment No. 1 may be executed in counterparts
(each of which shall constitute an original, but all of which
when taken together shall constitute but one Amendment), and it
shall not be necessary that any one counterpart be signed by the
parties so long as each party shall have executed a counterpart.
(3)
<PAGE>
4. The Original Assignment remains unamended (except to
the extent expressly set forth above) and in full force and
effect.
IN WITNESS WHEREOF, the Assignor has caused this Amendment
No. 1 to the Assignment of Leases and Rents to be duly executed
and witnessed, all as of the day and year first above written.
WITNESS: TRUMP'S CASTLE ASSOCIATES
__________________________ By:_____________________________
Donald J. Trump
Its Managing Partner
(4)
<PAGE>
IN WITNESS WHEREOF, Assignee has accepted and approved this
Amendment No. 1 to the Amended and Restated Assignment of Leases
and Rents and caused this instrument to be duly executed and
witnessed, all as of the date and year first above written.
WITNESS: MIDLANTIC NATIONAL BANK
_______________________ By:_____________________________
Ben Berzin, Jr.
Senior Vice President
(5)
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on this ____ day of December, 1993,
before me, the subscriber, a Notary Public of the state of New
York, personally appeared, Donald J. Trump, the Managing Partner
of TRUMP'S CASTLE ASSOCIATES, a New Jersey general partnership,
who, I am satisfied, is the person who has signed the within
instrument as the Managing Partner of said general partnership,
and he acknowledged that he signed, sealed and delivered the same
as such Managing Partner, that the within instrument is the
voluntary act and deed of said general partnership made by virtue
of its Board of Partnership Representatives, and that he received
a true copy of the within instrument on behalf of said general
partnership.
_______________________________
Notary Public of the State of
New York {Seal}
(6)
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on this ____ day of December, 1993,
before me the subscriber, a Notary Public of the State of New
Jersey, personally appeared Ben Berzin, Jr., the Senior Vice
President of MIDLANTIC NATIONAL BANK, a national banking
association, who I am satisfied is the person who executed the
within instrument, as Senior Vice President of said association,
and he acknowledged that he signed, sealed with the proper
corporate seal and delivered the same as such officer, that the
within instrument is the voluntary act and deed of such
association made by virtue of authority of its board of
directors, and that he received a true copy of the within
instrument on behalf of such association.
________________________________________
Notary Public of the State of New York
{Seal}
(7)
=============================================================================
_____________________________
AMENDED AND RESTATED
ASSIGNMENT OF
LEASES AND RENTS
_____________________________
TRUMP'S CASTLE ASSOCIATES,
as Assignor,
To
MIDLANTIC NATIONAL BANK,
as
Assignee
Dated as of May 29, 1992
============================================================================
Prepared by:
__________________________
Ira A. Rosenberg, Esq.
Sills Cummis Zuckerman Radin
Tischman Epstein & Gross, P.A.
One Riverfront Plaza
Newark, New Jersey 07102
(201) 643-7000
<PAGE>
AMENDED AND RESTATED ASSIGNMENT OF LEASES AND RENTS
THIS AMENDED AND RESTATED ASSIGNMENT OF LEASES AND
RENTS ("Assignment") made as of the 29th day of May, 1992, by
TRUMP'S CASTLE ASSOCIATES, a New Jersey general partnership
having an office at Trump's Castle Casino Resort by the Bay,
Brigantine Boulevard at Huron Avenue, Atlantic City, New Jersey
08401 and which is the successor in interest to Trump's Castle
Associates Limited Partnership, a New Jersey limited partnership
("Assignor"), to MIDLANTIC NATIONAL BANK, a national banking
association having an office at Metro Park Plaza, 499 Thornall
Street, Edison, New Jersey 08818 ("Assignee").
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement dated
February 16, 1988 (the "1988 Credit Agreement") among Assignor,
Trump's Castle Funding, Inc. ("Funding") and Assignee, Assignee
made a construction loan to Assignor in the principal amount of
up to $50,000,000, which construction loan subsequently was
converted pursuant to the 1988 Credit Agreement into a term loan
in the principal amount of $50,000,000 (the "Original Term
Loan");
WHEREAS, the proceeds of the Original Term Loan were
made available by Assignee to Assignor for the purpose of
enabling Assignor to construct certain new facilities and reno-
vate certain existing facilities in connection with the casino
hotel (the "Casino-Hotel") now known as Trump's Castle Casino
Resort by the Bay, located at Brigantine Boulevard at Huron
Avenue in Atlantic City, Atlantic County, New Jersey (the real
property on which the Casino-Hotel is located is more
particularly described on Schedule 1 and together with the
Casino-Hotel is collectively called the "Property");
WHEREAS, as security for Assignor's obligations under
the 1988 Credit Agreement and the other lending documents
executed in connection therewith, Assignor executed, among other
things, an Assignment of Leases and Rents dated February 16, 1988
(the "1988 Assignment");
WHEREAS, as a result of financial difficulties,
Assignor, Funding and others have requested Assignee, and
Assignee has agreed, to restructure the terms and conditions of
the Original Term Loan as set forth in the Amended and Restated
Credit Agreement of even date herewith among Assignor, Funding
and Assignee (the "Credit Agreement"), the Amended and Restated
Term Note of even date herewith made by Assignor in favor of
Assignee (the "Note") and the other Lending Documents (as defined
in the Credit Agreement), among other things, to reduce the
(1)
<PAGE>
principal amount of the Original Term Loan from $50,000,000 to
$38,000,000, to modify the interest rate and to defer the
repayment of principal;
WHEREAS, a joint plan of reorganization of Assignor,
Funding and an affiliated entity thereof providing for the
restructuring of the Original Term Loan as provided in the Credit
Agreement, the Note and the other Lending Documents (the "Plan")
has been confirmed by entry of a final order of the United States
Bankruptcy Court for the District of New Jersey under its Case
Nos. 92-11191, 92-1192 and 92-11193, pursuant to Section 1129 of
the United States Bankruptcy Code;
WHEREAS, in connection with the Plan, (i) Assignor,
Funding and Assignee have entered into the Credit Agreement, (ii)
Assignor has issued to Assignee the Note and (iii) Assignor has
executed and delivered in favor of Assignee an Amended and
Restated Indenture of Mortgage of even date herewith (the "Mort-
gage"), pursuant to which Assignor has encumbered, mortgaged and
conveyed to Assignee all of its right, title and interest in and
to the Trust Estate (as defined in the Mortgage), including,
without limitation, all of Assignor's right, title and interest
in and to the Property, as further security for the performance
and observance of Assignor's obligations under the Credit Agree-
ment, the Note and the other Lending Documents (as defined in the
Credit Agreement);
WHEREAS, as additional security for the performance of
Assignor's obligations under the Credit Agreement, the Note and
the other Lending Documents, Assignor has entered into an Amended
and Restated Assignment of Operating Assets of even date
herewith, pursuant to which Assignor has assigned its rights in,
to and under the Operating Assets (as defined in the Mortgage);
WHEREAS, Assignor is the owner, in fee simple absolute,
of the Owned Land (as defined in the Mortgage); and Assignor has
entered into and may hereafter enter into leases, subleases or
occupancy agreements, as lessor or sublessor, as the case may be,
concerning or affecting the use or occupancy of its interests or
estates in and to the Property or any part thereof; and
WHEREAS, Assignee's willingness to restructure the
Original Term Loan pursuant to the Credit Agreement is subject to
the condition, among others, that Assignor shall have executed
and delivered to Assignee this Assignment, to reflect the terms
of the Plan, to make certain other changes and, solely for the
convenience of Assignor and Assignee, amend and restate in its
entirety the 1988 Assignment.
NOW, THEREFORE, Assignor, for good and valuable
consideration, the receipt and sufficiency of which are hereby
(2)
<PAGE>
acknowledged, does hereby bargain, sell, transfer, assign,
convey, set over and deliver unto Assignee, as additional
security for the payment of the Note and the payment and
performance of all the terms and conditions of the Credit
Agreement and the other Lending Documents and any and all
amendments, modifications, restatements, extensions and renewals
thereof, all leases or occupancy agreements wherein it is lessor
concerning or affecting the use or occupancy of the Property, or
any part thereof, now existing or which may be executed at any
time in the future, and all amendments, modifications,
restatements, extensions and renewals of said leases or occupancy
agreements, and any of them, all of which are collectively called
the "Leases," all rents, rights to receive the payment of money
and other income which may now or hereafter be or become due or
owing under the Leases, and any of them, and any and all payments
derived from or relating to the Leases, including, without
limitation, (a) claims for the recovery of damages done to the
Property, (b) claims for damages resulting from acts of
insolvency or acts of bankruptcy or otherwise, and (c) lump sum
payments for the cancellation of Leases or the waiver of any
obligation or term thereof prior to the expiration date; it being
intended hereby to establish a present and complete transfer unto
Assignee of all of Assignor's right, title, interest and estate
in and to the Leases and all the rents and other income arising
thereunder; provided, however, that Assignor is hereby granted a
license by Assignee to (i) collect all of said rents and other
income herein assigned which may become due during the life of
this Assignment and (ii) subject to the terms and conditions of
the other Lending Documents, enter into, renew, modify, extend,
terminate, amend, collaterally assign, transfer or hypothecate
any or all of the Leases, in accordance with and subject to the
provisions of Section 5.13 of the Mortgage and Sections 10.04 and
10.05 of the Credit Agreement, each until an Event of Default
under the Credit Agreement (an "Event of Default") shall have
occurred. Upon the occurrence and during the continuance of an
Event of Default, Assignor agrees to deposit with Assignee upon
demand such of the Leases as may from time to time be designated
by Assignee.
Assignor hereby appoints Assignee the true and lawful
attorney of Assignor with full power of substitution, and with
power for Assignor and in the name of Assignor and/or in its
name, place and stead, to demand, collect, receipt and give
complete acquittance for any and all rents and other amounts
herein assigned which may be or become due and payable under the
Leases, and at its discretion to file any claim or take any other
action or proceeding and make any settlement of any claims,
either in its own name or in the name of Assignor or otherwise,
which Assignee may deem necessary or desirable in order to
collect and enforce the payment of any and all rents and other
amounts herein assigned. No right shall be exercised by the
(3)
<PAGE>
Assignee under this paragraph until an Event of Default has
occurred. All lessees under the Leases are hereby expressly
authorized and directed, after the occurrence of an Event of
Default, to pay all rents and other sums herein assigned to
Assignee or such nominee as Assignee may designate in writing
delivered to and received by such lessees, who thereafter are
expressly relieved of any and all duty, liability or obligation
to Assignor in respect of all payments so made.
Assignee is hereby vested with full power to use all
measures, legal and equitable, deemed by it necessary or
desirable to enforce this Agreement and to collect the rents and
other sums assigned hereunder. Assignee shall be under no
obligation to enforce any of the rights or claims assigned to it
hereunder, or to perform or carry out any of the obligations of
Assignor under any of the Leases and does not assume any of the
liabilities in connection with or arising or growing out of the
covenants and agreements of Assignor in the Leases. It is
further understood and agreed that this Assignment shall not
operate to place responsibility for the control, care, management
or repair of Assignor's estates or interests in and to the
Property, or parts thereof, upon Assignee, nor shall it operate
to make Assignee liable for the carrying out of any of the terms
and conditions of any of the Leases, or for any waste to
Assignor's estates or interests in and to the Property by any
lessee or sublessee of Assignor under any Leases or by any
occupant of the Property, or by any party whatsoever or for any
dangerous or defective condition of the Property or for any
negligence in the management, upkeep, repair or control of
Assignor's estates or interests in and to the Property,
including, without limitation, for any action or omission
resulting in loss or injury or death to any lessee, licensee,
employee or stranger thereat. No right shall be exercised by the
Assignee under this paragraph until an Event of Default has
occurred.
Assignee hereby agrees to promptly remit to Assignor
any amounts collected hereunder by Assignee which are in excess
of those applied to pay in full the aforesaid liabilities and
indebtedness at the time due (including those due by reason of an
acceleration pursuant to an Event of Default).
Nothing herein contained is intended to or shall limit,
reduce or otherwise impair the rights of Assignee or the
obligations of Assignor set forth in the Mortgage, but rather all
of the terms, provisions and conditions of this Assignment are in
addition to and in supplement of such rights and obligations.
Upon the termination of the Mortgage Documents (as
defined in the Credit Agreement) and the payment in full of the
principal sum, interest and other indebtedness secured thereby,
(4)
<PAGE>
this Assignment shall be and become null and void, and all
estate, right, title and interest of Assignee in and to the
Leases shall revert to Assignor and Assignee shall promptly
cancel and discharge of record this Assignment and any financing
statement filed in connection herewith and execute and deliver to
Assignor all such instruments as may be appropriate to evidence
such discharge and satisfaction of said Assignment; otherwise,
this Assignment shall remain in full force and effect as herein
provided, shall inure to the benefit of Assignee and its succes-
sors and assigns, and any subsequent holder of the Note and shall
be binding upon Assignor, and its successors and assigns, and any
subsequent holder of Assignor's right, title, interest and estate
in and to the Property.
Notwithstanding anything herein or in any other agree-
ment, document, certificate, instrument, statement or omission
referred to below to the contrary, Assignor is liable hereunder
only to the extent of the assets of Assignor and, except as
provided in the Put Agreement (as defined in the Credit Agree-
ment) and in Section 2.07 of the Credit Agreement, no other
person or entity, including, but not limited to, any partner,
partner representative, officer, committee or committee member of
Assignor or any partner therein or of any partnership affiliate
(as defined in Rule 405 under the Securities Act of 1933, as
amended) of Assignor or any incorporator, officer, director or
shareholder of any corporate partner of Assignor or of any
corporate affiliate of Assignor, or any affiliate or controlling
person or entity 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 herein or therein) under, in connection
with, arising out of or relating to this Assignment, 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, (i) as provided in Section 2.07 of the Credit
Agreement, Assignor shall preserve any personal claims it may
have for fraud, liabilities under the Securities Act of 1933, as
amended, and other liabilities that cannot be waived under
applicable federal and state laws against such Persons in
connection with the transactions contemplated hereby and by the
other Lending Documents; provided, however, that such conduct
shall not in and of itself constitute an Event of Default under
the Credit Agreement, the Note, the Mortgage or any other Lending
Document, (ii) Trump shall be liable to Assignee to perform his
(5)
<PAGE>
obligations under the Put Agreement, (iii) each of the general
partners of Assignor shall be liable to Assignor to repay to
Assignor an amount equal to any Restricted Payment (as defined in
the Credit Agreement) actually received by that general partner
in contravention of Section 11.04 of the Credit Agreement, and
(iv) Trump or any affiliate of Trump (but not in any event
including TC/GP, any director thereof, any Bondholder
Representative (as such terms are defined in the Partnership
Agreement) or any Holder (as such term is defined in the
Indenture)) shall be liable to repay to Assignor any Restricted
Payment actually received by Trump or such affiliate of Trump, as
the case may be, in contravention of said Section 11.04. Any
agreement, document, certificate, statement or other instrument
to be executed simultaneously with, in connection with, arising
out of or relating to this Assignment or any other agreement,
document, certificate, statement or instrument referred to above,
or any agreement, document, certificate, statement of instrument
contemplated hereby shall contain language mutatis mutandi to
this paragraph and, if such language is omitted, shall be deemed
to contain such language.
This Assignment shall be governed by and construed
under the internal laws of the State of New Jersey, without
giving effect to the principles of conflicts of laws.
This Assignment is subject to and shall be enforced in
compliance with the provisions of the New Jersey Casino Control
Act.
IN WITNESS WHEREOF, Assignor and Assignee have caused
this Assignment to be duly executed, all as of the date first
above set forth.
ATTEST: ASSIGNOR:
TRUMP'S CASTLE ASSOCIATES
By:/s/ Nicholas Ribis By:/s/ Donald J. Trump
----------------------- ----------------------------
(SEAL) ASSIGNEE:
MIDLANTIC NATIONAL BANK
By:/s/ Ben Berzin
-------------------------
Ben Berzin, Jr.
(6)
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on this 29th day of May, 1992,
before me, the subscriber, a Notary Public of the State of New
York, personally appeared Donald J. Trump, the Managing Partner
of TRUMP'S CASTLE ASSOCIATES, a New Jersey general partnership,
who, I am satisfied, is the person who has signed the within
instrument on behalf of such general partnership, and I having
first made known to him the contents thereof he thereupon
acknowledged that he signed and delivered the said instrument in
his capacity as such Managing Partner aforesaid, and that the
within instrument is the voluntary act of said general
partnership.
/s/ Manuel Rubio
-------------------------------
Notary Public of the State of
New York {Seal}
(7)
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on this 30th day of May, 1994,
before me the subscriber, a Notary Public of the State of New
York, personally appeared Ben Berzin, Jr., the Senior Vice
President of MIDLANTIC NATIONAL BANK, a national banking
association, who I am satisfied is the person who executed the
within instrument, as Senior Vice President of said association,
and he acknowledged that he signed, sealed with the proper
corporate seal and delivered the same as such officer, that the
within instrument is the voluntary act and deed of such
association made by virtue of authority of its board of
directors, and that he received a true copy of the within
instrument on behalf of such association.
/s/ Manuel Rubio
-------------------------------
Notary Public of the State of
New York {Seal}
(8)
=================================================================
____________________________________________
AMENDMENT NO. 1 TO
AMENDED AND RESTATED
ASSIGNMENT OF OPERATING ASSETS
Dated as of December 28, 1993
____________________________________________
TRUMP'S CASTLE ASSOCIATES,
a New Jersey general partnership,
as Assignor
and
MIDLANTIC NATIONAL BANK,
as Assignee
=================================================================
Prepared by: _______________________________
Ira A. Rosenberg, Esq.
Sills Cummis Zuckerman Radin
Tischman Epstein & Gross, P.A.
One Riverfront Plaza
Newark, New Jersey 07102
(201) 643-7000
<PAGE>
AMENDMENT NO. 1 TO AMENDED AND RESTATED
ASSIGNMENT OF OPERATING ASSETS
_______________________________
AMENDMENT NO. 1 (the "Amendment") to AMENDED AND RESTATED
ASSIGNMENT OF OPERATING ASSETS, dated as of December 28, 1993,
between TRUMP'S CASTLE ASSOCIATES, a New Jersey general
partnership which is the successor to Trump's Castle Associates
Limited Partnership, a New Jersey limited partnership (the
"Assignor"), and MIDLANTIC NATIONAL BANK, a national banking
association (the "Assignee"). Capitalized terms used and not
defined herein shall have the meanings ascribed to such terms in
the Original Assignment (as defined below).
WITNESSETH:
__________
WHEREAS, the Assignor delivered to the Assignee an Amended
and Restated Assignment of Operating Assets, dated as of May 29,
1992 (the "Original Assignment"), recorded June 2, 1992 in
Mortgage book 4777, page 295, to secure certain obligations
including, without limitation, obligations under the 1992 Credit
Agreement (as hereinafter defined) and the Note (as hereinafter
defined).
WHEREAS, as of May 29, 1992, among other things, (i) the
Assignor, Trump's Castle Funding, Inc. ("Funding" or the
"Company") and the Assignee entered into an Amended and Restated
Credit Agreement (the "1992 Credit Agreement"), and (ii) the
Assignor issued to the Assignee an Amended and Restated Term Note
in the principal amount of $38,000,000, bearing interest and
being payable as set forth therein (the "1992 Note");
WHEREAS, the Assignee and the Assignor have agreed to amend
and restate the 1992 Credit Agreement (the 1992 Credit Agreement,
as so amended and restated as of the date hereof and as the same
may hereafter from time to time be amended, supplemented,
restated or otherwise modified, the "Credit Agreement") and the
Assignor has agreed to execute an Amendment No. 1 to the 1992
Note (the 1992 Note, as so amended by Amendment No. 1 thereto
dated as of the date hereof and as the same may hereafter from
time to time be amended, supplemented, restated or otherwise
modified, the "Note"), but only upon the condition, among others,
that the Assignor confirm, acknowledge and agree in writing that
the Original Assignment, as amended by this Amendment No. 1,
continues to constitute collateral security for the obligations
of the Assignor under the Credit Agreement and the Note, with the
priority and upon the other terms as set forth therein; and
(1)
<PAGE>
WHEREAS, the Assignor has agreed to execute and deliver this
Amendment to the Assignee.
NOW THEREFORE, in consideration of the foregoing and $10.00
in hand paid by the Assignee to the Assignor and for other good
and valuable consideration, the receipt and sufficiency whereof
is hereby acknowledged, the Assignor confirms and acknowledges to
and agrees with the Assignee as follows:
1. Assignor hereby confirms to and agrees with Assignee
that the Original Assignment secures all of the obligations under
the Credit Agreement and all of the obligations under the Note.
Anything to the contrary contained herein or in the Original
Assignment notwithstanding, Assignor further confirms to and
agrees with the Assignee that, without limiting the generality of
the preceding sentence, except as referred to in the recitals on
pages 1 and 2 of the Original Assignment, (a) the term "Credit
Agreement" as defined in the Original Assignment means the
Amended and Restated Credit Agreement dated of even date herewith
among the Assignor, (as Borrower), Funding (as Guarantor) and the
Assignee (as Lender), as it may from time to time be amended,
supplemented, restated or otherwise modified in writing; (b) the
term "Note" as defined in the Original Assignment means the Note
(as defined in the Original Assignment), as amended by Amendment
No. 1 thereto dated as of even date herewith and as may from time
to time be amended, supplemented, restated or otherwise modified
in writing (which shall include any replacement Note pursuant to
Section 2.03 of the Credit Agreement); (c) the term "Mortgage" as
defined in the Original Assignment means the Amended and Restated
Indenture of Mortgage dated as of May 29, 1992, as amended by
Amendment No. 1 thereto dated as of even date herewith and as may
from time to time be amended, supplemented, restated or otherwise
modified in writing; and (d) reference in the Original Assignment
and in this Amendment No. 1 to the phrase "as from time to time
amended, supplemented or modified" and similar phrases was
intended to and does include, therein and herein, restatements of
the documents with respect to which such reference was or is
hereby made.
2. Clause (iv) of the first full sentence on page 6 of the
Original Assignment (beginning with the words "Notwithstanding
the foregoing") is replaced by clause (iv) below and clauses (v)
through (vii) are hereby added to such sentence:
(2)
<PAGE>
"(iv) Trump and each Affiliate of Trump (but not in any
event any Partner Representative (as defined in the
Partnership Agreement) other than Trump or any
Affiliate thereof) shall be liable to repay to the
Assignor any Restricted Payment actually received by
Trump or such Affiliate of Trump, as the case may be,
in contravention of Section 11.04 of the Credit
Agreement, (v) with respect to a Combination
Transaction, any Successor shall have liability
hereunder and under any other Lending Document to the
fullest extent the Assignor and the Company have,
taking into consideration the provisions of the second
sentence of Section 10.02 of the Credit Agreement, (vi)
any Person who receives directly or indirectly any
assignment or other transfer in whole or in part of the
Trust Estate in contravention of the provisions of the
Credit Agreement or any of the other Lending Documents
shall be liable hereunder and under the other Lending
Documents to the extent of the assets received and
(vii) the foregoing is not intended to and shall not
apply to (A) the Intercreditor Agreement (but shall
apply to the Consent and Agreement executed by the
Assignor and the Company relating thereto), (B) the
obligations and agreements of the Trustees set forth in
the Consent and Agreement or (C) any Opinions of
Counsel, title insurance policies, pro-forma policies
and/or commitments, title recording letters, title
reinsurance policies, pro-forma policies and/or
commitments, real estate surveys and/or insurance
policies delivered to or entered into for the benefit
of the Assignee pursuant to the Credit Agreement or any
of the other Lending Documents, or in connection with
the transactions contemplated hereby or thereby or by
the 1992 Credit Agreement."
3. This Amendment No. 1 may be executed in counterparts
(each of which shall constitute an original, but all of which
when taken together shall constitute but one Amendment), and it
shall not be necessary that any one counterpart be signed by the
parties so long as each party shall have executed a counterpart.
(3)
<PAGE>
4. The Original Assignment remains unamended (except to
the extent expressly set forth above) and in full force and
effect.
IN WITNESS WHEREOF, the Assignor has caused this Amendment
No. 1 to the Assignment of Operating Assets to be duly executed
and witnessed, all as of the day and year first above written.
WITNESS: TRUMP'S CASTLE ASSOCIATES
__________________________ By:_____________________________
Donald J. Trump
Its Managing Partner
(4)
<PAGE>
IN WITNESS WHEREOF, Assignee has accepted and approved this
Amendment No. 1 to the Amended and Restated Assignment of
Operating Assets and caused this instrument to be duly executed
and witnessed, all as of the date and year first above written.
WITNESS: MIDLANTIC NATIONAL BANK
_______________________ By:_____________________________
Ben Berzin, Jr.
Senior Vice President
(5)
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED that on this ____ day of December, 1993,
before me, the subscriber, a Notary Public of the state of New
York, personally appeared, Donald J. Trump, the Managing Partner
of TRUMP'S CASTLE ASSOCIATES, a New Jersey general partnership,
who, I am satisfied, is the person who has signed the within
instrument as the Managing Partner of said general partnership,
and he acknowledged that he signed, sealed and delivered the same
as such Managing Partner, that the within instrument is the
voluntary act and deed of said general partnership made by virtue
of its Board of Partnership Representatives, and that he received
a true copy of the within instrument on behalf of said general
partnership.
_______________________________
Notary Public of the State of
New York {Seal}
(6)
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on this ____ day of December, 1993,
before me the subscriber, a Notary Public of the State of New
Jersey, personally appeared Ben Berzin, Jr., the Senior Vice
President of MIDLANTIC NATIONAL BANK, a national banking
association, who I am satisfied is the person who executed the
within instrument, as Senior Vice President of said association,
and he acknowledged that he signed, sealed with the proper
corporate seal and delivered the same as such officer, that the
within instrument is the voluntary act and deed of such
association made by virtue of authority of its board of
directors, and that he received a true copy of the within
instrument on behalf of such association.
________________________________________
Notary Public of the State of New York
{Seal}
(7)
- -----------------------------------------------------------------
_____________________________
AMENDED AND RESTATED
ASSIGNMENT OF
OPERATING ASSETS
_____________________________
TRUMP'S CASTLE ASSOCIATES,
as Assignor,
To
MIDLANTIC NATIONAL BANK,
as
Assignee
Dated as of May 29, 1992
- -----------------------------------------------------------------
Prepared by:
__________________________
Ira A. Rosenberg, Esq.
Sills Cummis Zuckerman Radin
Tischman Epstein & Gross, P.A.
One Riverfront Plaza
Newark, New Jersey 07102
(201) 643-7000
<PAGE>
AMENDED AND RESTATED ASSIGNMENT OF OPERATING ASSETS
THIS AMENDED AND RESTATED ASSIGNMENT OF OPERATING
ASSETS ("Assignment") made as of the 29th day of May, 1992, by
TRUMP'S CASTLE ASSOCIATES, a New Jersey general partnership
having an office at Trump's Castle Casino Resort by the Bay,
Brigantine Boulevard at Huron Avenue, Atlantic City, New Jersey
and which is the successor in interest to Trump's Castle
Associates Limited Partnership, a New Jersey limited partnership
("Assignor"), to MIDLANTIC NATIONAL BANK, a national banking
association having an office at Metro Park Plaza, 499 Thornall
Street, Edison, New Jersey 08818 ("Assignee").
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement dated
February 16, 1988 (the "1988 Credit Agreement") among Assignor,
Trump's Castle Funding, Inc. ("Funding") and Assignee, Assignee
made a construction loan to Assignor in the principal amount of
up to $50,000,000, which construction loan subsequently was
converted pursuant to the 1988 Credit Agreement into a term loan
in the principal amount of $50,000,000 (the "Original Term
Loan");
WHEREAS, the proceeds of the Original Term Loan were
made available by Assignee to Assignor for the purpose of
enabling Assignor to construct certain new facilities and reno-
vate certain existing facilities in connection with the casino
hotel (the "Casino-Hotel") now known as Trump's Castle Casino
Resort by the Bay, located at Brigantine Boulevard at Huron
Avenue in Atlantic City, Atlantic County, New Jersey (the real
property on which the Casino-Hotel is located is more
particularly described on Schedule 1 and together with the
Casino-Hotel is collectively called the "Property");
WHEREAS, as security for Assignor's obligations
under the 1988 Credit Agreement and the other lending documents
executed in connection therewith, Assignor executed, among other
things, an Assignment of Operating Assets dated February 16, 1988
(the "1988 Assignment");
WHEREAS, as a result of financial difficulties,
Assignor, Funding and others have requested Assignee, and
Assignee has agreed, to restructure the terms and conditions of
the Original Term Loan as set forth in the Amended and Restated
Credit Agreement of even date herewith among Assignor, Funding
and Assignee (the "Credit Agreement"), the Amended and Restated
(1)
<PAGE>
Term Note of even date herewith made by Assignor in favor of
Assignee (the "Note") and the other Lending Documents (as defined
in the Credit Agreement), among other things, to reduce the
principal amount of the Original Term Loan from $50,000,000 to
$38,000,000, to modify the interest rate and to defer the
repayment of principal;
WHEREAS, a joint plan of reorganization of Assignor,
Funding and an affiliated entity thereof providing for the
restructuring of the Original Term Loan as provided in the Credit
Agreement, the Note and the other Lending Documents (the "Plan")
has been confirmed by entry of a final order of the United States
Bankruptcy Court for the District of New Jersey under its Case
Nos. 92-11191, 92-1192 and 92-11193, pursuant to Section 1129 of
the United States Bankruptcy Code;
WHEREAS, in connection with the Plan, (i) Assignor,
Funding and Assignee have entered into the Credit Agreement, (ii)
Assignor has issued to Assignee the Note and (iii) Assignor has
executed and delivered in favor of Assignee an Amended and
Restated Indenture of Mortgage of even date herewith (the "Mort-
gage"), pursuant to which Assignor has encumbered, mortgaged and
conveyed to Assignee all of its right, title and interest in and
to the Trust Estate (as defined in the Mortgage), including,
without limitation, all of Assignor's right, title and interest
in and to the Property, as further security for the performance
and observance of Assignor's obligations under the Credit Agree-
ment, the Note and the other Lending Documents;
WHEREAS, as additional security for the performance
of Assignor's obligations under the Credit Agreement, the Note
and the other Lending Documents, Assignor has entered into an
Amended and Restated Assignment of Leases and Rents of even date
herewith, pursuant to which Assignor has assigned its rights in,
to and under certain leases and rents;
WHEREAS, Assignor is the owner, in fee simple
absolute, of the Owned Land (as defined in the Mortgage); and
Assignor has and may hereafter own, hold or lease Operating
Assets (as defined in the Mortgage) concerning or affecting the
use or occupancy of its interests or estates in and to the
Property or any part thereof; and
WHEREAS, Assignee's willingness to restructure the
Original Term Loan pursuant to the Credit Agreement is subject to
the condition, among others, that Assignor shall have executed
and delivered to Assignee this Assignment, to reflect the terms
of the Plan, to make certain other changes and, solely for the
convenience of Assignor and Assignee, amend and restate in its
entirety the 1988 Assignment.
(2)
<PAGE>
NOW, THEREFORE, Assignor, for good and valuable con-
sideration, the receipt and sufficiency of which are hereby
acknowledged, does hereby bargain, sell, transfer, assign, con-
vey, set over and deliver unto Assignee, as additional security
for the payment of the Note and the payment and performance of
all the terms and conditions of the Credit Agreement and the
other Lending Documents and any and all amendments,
modifications, restatements, extensions and renewals thereof, all
of Assignor's right, title and interest in and to the Operating
Assets, now existing or hereafter acquired (including, without
limitation, all bookings, accounts, rights to receive the payment
of money, contracts, permits, leases, licenses and agreements
constituting a part of the Operating Assets (collectively,
"Operating Agreements"), all Operating Agreements now existing or
which may be executed at any time in the future, and all
amendments, modifications, restatements, extensions and renewals
of the Operating Agreements, and any of them, and all rents and
other income which may now or hereafter be or become receivable
or rights to receive the payment of money under the Operating
Agreements, and any of them); it being intended hereby to
establish a present and complete transfer unto Assignee of all of
Assignor's right, title, interest and estate in and to the
Operating Assets and all the Income (as hereinafter defined)
arising thereunder; provided, however, that Assignor is hereby
granted a license by Assignee, so long as there shall have been
no acceleration of maturity of the Note pursuant to Section 7.01
of the Credit Agreement which has not been rescinded or an
exercise by the Mortgagee of its rights under Section 3.10 of the
Mortgage (either being hereinafter referred to as an
"Acceleration Event"), to (a) possess, use, manage, operate,
enjoy and, subject to and in accordance with the terms of the
Mortgage, dispose of the Operating Assets or any part thereof and
to collect, receive, use, invest and dispose of the rents,
issues, tolls, profits, revenues and other income therefrom
(collectively, "Income"), (b) use, consume and dispose of any
consumables, goods, wares and merchandise in the ordinary course
of business of operating the Casino-Hotel or any other
improvements now or hereafter located on any of the Property and
(c) adjust and settle all matters relating to choses in action,
leases and contracts. Upon the occurrence of the Acceleration
Event, Assignor agrees to deposit with Assignee upon demand such
of the Operating Agreements as may from time to time be
designated by Assignee.
Assignor hereby appoints Assignee the true and
lawful attorney of Assignor with full power of substitution, and
with power for Assignor and in the name of Assignor and/or in its
name, place and stead, to (a) possess, use, manage and enjoy the
Operating Assets or any part thereof, including, without
limitation, to collect, receive, use, invest, dispose of and give
complete acquittance for any and all Income herein assigned which
(3)
<PAGE>
may be or become due and payable under the Operating Agreements,
(b) use, consume and dispose of any consumable goods, wares and
merchandise, (c) adjust and settle all matters relating to choses
in action, leases and contracts, and (d) at its discretion, file
any claim or take any other action or proceeding and make any
settlement of any claims, either in its own name or in the name
of Assignor or otherwise, which Assignee may deem necessary or
desirable in order to collect and enforce the rights herein
assigned. No rights shall be exercised by the Assignee under
this paragraph until an Acceleration Event has occurred. All
parties to the Operating Agreements are hereby expressly
authorized and directed, after the occurrence of an Acceleration
Event, to pay all amounts payable to Assignor thereunder to
Assignee or such nominees as Assignee may designate in writing
delivered to and received by such parties, who thereafter are
expressly relieved of any and all duty, liability or obligation
to Assignor in respect of all payments so made.
Assignee is hereby vested with full power to use all
measures, legal and equitable, deemed by it necessary or proper
to enforce this Assignment, including, without limitation, to
collect all Income and to exercise all other rights provided for
hereunder. Assignee shall be under no obligation to enforce any
of the rights or claims assigned to it hereunder, or to perform
or carry out any of the obligations of Assignor under any of the
Operating Agreements, and Assignee does not assume any of the
liabilities in connection with or arising or growing out of the
covenants and agreements of Assignor in the Operating Agreements.
It is further understood and agreed that this Assignment shall
not operate to place responsibility for the control, care,
management or repair of Assignor's estates or interests in and to
the Operating Assets, or parts thereof, upon Assignee, nor shall
it operate to make Assignee liable for the carrying out of any of
the terms and conditions of any of the Operating Agreements, or
for any negligence in the management, upkeep, repair or control
of Assignor's estates or interests in and to the Operating
Assets, including, without limitation, for action or omissions
resulting in loss or injury or death to any lessee, licensee,
employee or stranger thereat. No such rights shall be exercised
by the Assignee under this paragraph until an Acceleration Event
has occurred.
For purposes of this Assignment, the term "Operating
Assets" shall exclude any items constituting Excepted Property,
as defined in Section 1.01 of the Mortgage.
Assignee hereby agrees to promptly remit to Assignor
any amounts collected hereunder by Assignee which are in excess
of those applied to pay in full the aforesaid liabilities and
indebtedness at the time due (including those due by reason of
any Acceleration Event).
(4)
<PAGE>
IT IS AGREED that, to the extent the grant of a
security interest in the Operating Assets is governed by the
provisions of the Uniform Commercial Code, this Assignment is and
is hereby agreed to be a "Security Agreement" under said Code,
and Assignor hereby grants and conveys to Assignee a security
interest in the Operating Assets and all proceeds and products
thereof. Assignor shall at any time and from time to time
execute and deliver such additional security agreements,
financing statements and continuation statements, and shall take
all such actions, as Assignee may deem necessary or desirable to
perfect Assignee's interest under this Assignment as a secured
party under the Uniform Commercial Code.
IT IS FURTHER AGREED that the rights and benefits
created hereunder supplement and are not in substitution for the
liens created by the Mortgage with respect to the Operating
Assets and that nothing contained herein shall limit or affect
the rights of Assignee under the Mortgage.
Upon the termination of the Mortgage Documents (as
defined in the Credit Agreement) and the payment in full of the
principal sum, interest and other indebtedness secured thereby,
this Assignment shall be and become null and void, and all
estate, right, title and interest of Assignee in and to the
Operating Assets shall revert to Assignor and Assignee shall
promptly cancel and discharge of record this Assignment and any
financing statement filed in connection herewith and execute and
deliver to Assignor all such instruments as may be appropriate to
evidence such discharge and satisfaction of said Assignment;
otherwise, this Assignment shall remain in full force and effect
as herein provided, shall inure to the benefit of Assignee and
its successors and assigns, and any subsequent holder of the Note
and shall be binding upon Assignor, and its successors and
assigns, and any subsequent holder of Assignor's right, title,
interest and estate in and to the Property.
Notwithstanding anything herein or in any other
agreement, document, certificate, instrument, statement or
omission referred to below to the contrary, Assignor is liable
hereunder only to the extent of the assets of Assignor and,
except as provided in the Put Agreement (as defined in the Credit
Agreement) or in Section 2.07 of the Credit Agreement, no other
person or entity, including, but not limited to, any partner,
partner representative, officer, committee or committee member of
Assignor or any partner therein or of any partnership affiliate
(as defined in Rule 405 under the Securities Act of 1933, as
amended) of Assignor, or any incorporator, officer, director or
shareholder of any corporate partner of Assignor or of any
corporate affiliate of Assignor, or any affiliate or controlling
person or entity of any of the foregoing, or any successor,
personal representative, heir or assign of any of the foregoing,
(5)
<PAGE>
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 under-
taking contained herein or therein) under, in connection with,
arising out of or relating to this Assignment, 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, certi-
ficate, instrument or statement. Notwithstanding the foregoing,
(i) as provided in Section 2.07 of the Credit Agreement, Assignor
shall preserve any personal claims it may have for fraud,
liabilities under the Securities Act of 1933, as amended, and
other liabilities that cannot be waived under applicable federal
and state laws against such Persons in connection with the
transactions contemplated hereby and by the other Lending
Documents; provided, however, that such conduct shall not in and
of itself constitute an Event of Default under the Credit
Agreement, the Note, the Mortgage or any other Lending Document,
(ii) Trump shall be liable to Assignee to perform his obligations
under the Put Agreement, (iii) each of the general partners of
Assignor shall be liable to Assignor to repay to Assignor an
amount equal to any Restricted Payment (as defined in the Credit
Agreement) actually received by that general partner in
contravention of said Section 11.04 of the Credit Agreement, and
(iv) Trump or any affiliate of Trump (but not in any event
including TC/GP, any director thereof, any Bondholder
Representative (as such terms are defined in the Partnership
Agreement) or any Holder (as such term is defined in the
Indenture)) shall be liable to repay to Assignor any Restricted
Payment actually received by Trump or such affiliate of Trump, as
the case may be, in contravention of Section 11.04. Any
agreement, document, certificate, statement or other instrument
to be executed simultaneously with, in connection with, arising
out of or relating to this Assignment or any other agreement,
document, certificate, statement or instrument referred to above,
or any agreement, document, certificate, statement or instrument
contemplated hereby, shall contain language mutatis mutandi to
this paragraph and, if such language is omitted, shall be deemed
to contain such language.
This Assignment shall be governed by and construed
under the internal laws of the State of New Jersey, without
giving effect to the principles of conflicts of laws.
This Assignment is subject to and shall be enforced
in compliance with the provisions of the New Jersey Casino
Control Act.
(6)
<PAGE>
IN WITNESS WHEREOF, Assignor and Assignee have
caused this Assignment to be duly executed, all as of the date
first above set forth.
ATTEST: ASSIGNOR:
TRUMP'S CASTLE ASSOCIATES
By:/s/ Nicholas Ribis By:/s/ Donald J. Trump
------------------- --------------------
(SEAL) ASSIGNEE:
MIDLANTIC NATIONAL BANK
By:/s/ Ben Berzin
----------------
Ben Berzin, Jr.
(7)
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on this 29th day of May,
1992, before me, the subscriber, a Notary Public of the State of
New York, personally appeared DONALD J. TRUMP, the Managing
Partner of TRUMP'S CASTLE ASSOCIATES, a New Jersey general
partnership, who, I am satisfied, is the person who has signed
the within instrument on behalf of such general partnership, and
I having first made known to him the contents thereof he
thereupon acknowledged that he signed and delivered the said
instrument to his capacity as such Managing Partner aforesaid,
and that the within instrument is the voluntary act and deed of
said general partnership.
/s/ Manuel Rubio
------------------------------
Notary Public of the State of
New York {Seal}
(8)
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on this ___th day of May,
1992, before me, the subscriber, a Notary Public of the State of
New York, personally appeared Ben Berzin, Jr., the Senior Vice
President of MIDLANTIC NATIONAL BANK, a national banking asso-
ciation, who I am satisfied is the person who executed the within
instrument, as Senior Vice President of said association, and he
acknowledged that he signed, sealed with the proper corporate
seal and delivered the same as such officer, that the within
instrument is the voluntary act and deed of such association made
by virtue of authority of its board of directors, and that he
received a true copy of the within instrument on behalf of such
association.
/s/ Manuel Rubio
------------------------------
Notary Public of the State of
New York {Seal}
(9)
<PAGE>
INTERCREDITOR AGREEMENT
-----------------------
INTERCREDITOR AGREEMENT, dated as of December 28, 1993, by
and between MIDLANTIC NATIONAL BANK, a national banking
association ("Midlantic" or the "Bank"), FIRST BANK NATIONAL
ASSOCIATION as Trustee (the "Senior Note Trustee") under a
certain Senior Note Indenture dated as of the date hereof (as the
same may from time to time be amended, supplemented or otherwise
modified, the "Senior Note Indenture") among TRUMP'S CASTLE
FUNDING, INC., as Issuer (the "Company"), TRUMP'S CASTLE
ASSOCIATES, as Guarantor (the "Borrower"), and the Senior Note
Trustee; FIRST BANK NATIONAL ASSOCIATION, as Trustee (the
"Mortgage Note Trustee") under a certain Mortgage Note Indenture
dated as of the date hereof (as the same may from time to time be
amended, supplemented or otherwise modified, the "Mortgage Note
Indenture") among the Company as Issuer, the Borrower as
Guarantor, and the Mortgage Note Trustee; and FIRST BANK NATIONAL
ASSOCIATION, as Trustee (the "PIK Note Trustee") under a certain
PIK Note Indenture dated as of the date hereof (as the same may
from time to time be amended, supplemented or otherwise modified,
the "PIK Note Indenture") among the Company, as Issuer, the
Borrower as Guarantor, and the PIK Note Trustee.
WITNESSETH:
WHEREAS, pursuant to the Credit Agreement dated February 16,
1988 (the "1988 Credit Agreement") among the Borrower, the
Company and the Bank, the Bank made a construction loan to the
Borrower in the principal amount of up to $50,000,000, which
construction loan was subsequently converted pursuant to the 1988
Credit Agreement into a term loan in the principal amount of
$50,000,000 (the "Original Term Loan");
WHEREAS, as a result of financial difficulties, the
Borrower, the Company and others requested the Bank to
restructure the terms and conditions of the Original Term Loan,
among other things, to reduce the principal amount thereof from
$50,000,000 to $38,000,000, to modify the interest rate and to
defer the repayment of principal;
WHEREAS, a joint plan of reorganization of the Borrower, the
Company and Castle providing for such restructuring of the
Original Term Loan (the "Plan") was confirmed by entry of the
order of the bankruptcy court pursuant to Section 1129 of the
United States Bankruptcy Code;
WHEREAS, as of May 29, 1992 (the "Original Amendment Date"),
the parties amended and restated the 1988 Credit Agreement to
reflect the terms of the Plan, to make certain other changes and,
solely for the convenience of the parties hereto, to amend and
restate in its entirety the 1988 Credit Agreement, which Amended
(1)
<PAGE>
and Restated Credit Agreement dated as of May 29, 1992 is herein
referred to as the "1992 Credit Agreement";
WHEREAS, pursuant to the 1992 Credit Agreement and the other
Lending Documents, including, without limitation, the
Intercreditor Agreement and the Consent and Agreement, each dated
May 29, 1992, among the Borrower, the Bank and First Bank
National Association (the "Original Trustee"), the Bank received
a first priority lien and security interest in and upon the Trust
Estate, senior (and not pari passu or subordinate) to the liens
and security interests in and upon the Trust Estate granted or to
be granted to the Original Trustee, as collateral security for
the Original Term Loan;
WHEREAS, the Borrower and the Company have offered to
exchange all of the Existing Bonds for the Mortgage Notes, the
PIK Notes and cash, all pursuant to the Recapitalization (as
defined in the Registration Statement);
WHEREAS, the Borrower, the Company and others have requested
that the Bank consent to the Recapitalization and make certain
changes to the 1992 Credit Agreement and the other Lending
Documents to conform to the new ownership and debt structure of
the Borrower, the Company and TC/GP resulting from the
Recapitalization;
WHEREAS, the Bank has agreed to consent to the
Recapitalization and to make such other changes, but only upon
the condition, among others, that the Trustees enter into this
Agreement, to confirm, acknowledge and agree that the Bank
continues to have a first priority lien and security interest in
and upon the Trust Estate as collateral security for the Loan,
senior (and not pari passu or subordinate) to the liens and
security interests in and upon the Trust Estate granted or to be
granted in favor of any of the Trustees; and
WHEREAS, Midlantic and the Trustees desire to set forth
herein their relative rights and obligations with respect to the
Midlantic Term Loan Obligations and related matters.
NOW THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
SECTION 1. Definitions.
1.1. As used in this Agreement and unless otherwise
expressly indicated, all capitalized words and terms not defined
herein shall have the respective meanings and be construed herein
(2)
<PAGE>
as such words or terms are defined or construed in the Credit
Agreement.
1.2. For the purposes of this Agreement, the following
terms shall have the following meanings:
"Credit Agreement" means the Amended and Restated
Credit Agreement by and among Midlantic, the Borrower and
the Company, dated as of the date hereof, as the same may
from time to time be amended, supplemented or otherwise
modified.
"Indenture Guarantees" means all guaranties now
existing or hereafter arising executed by the Borrower in
favor of any Trustee, as the same may from time to time be
amended, supplemented or otherwise modified.
"Indenture Mortgages" means any and all mortgages now
existing or hereafter arising granted by the Borrower and/or
the Company which secures, in whole or in part, directly or
indirectly, through assignment or otherwise, the Indenture
Obligations, including, without limitation, any mortgage
granted by the Borrower (i) to the Company and assigned to a
Trustee and (ii) to a Trustee to secure any Indenture
Guarantee.
"Indenture Obligations" means all indebtedness,
obligations and other liabilities of the Borrower and/or the
Company to any one or more Trustees and any and all other
Persons pursuant to or arising from the Indentures, the
Indenture Notes, the Indenture Mortgages, the Indenture
Guarantees and the other Indenture Documents, whether direct
or indirect, absolute or contingent, secured or unsecured,
due or to become due, now existing or hereafter arising,
including, without limitation, all interest, fees, charges,
costs and expenses (including, without limitation,
reasonable attorneys' fees and disbursements), for which the
Borrower, the Company or any other Person is now or
hereafter becomes liable to pay to the Trustee(s) or any
other Persons pursuant to any of such Indenture Documents.
"Indentures" means the Senior Note Indenture, the
Mortgage Note Indenture and the PIK Note Indenture.
"Midlantic Term Loan Obligations" or "Midlantic
Obligations" means all indebtedness, obligations and other
liabilities of the Borrower and/or the Company to Midlantic
and its successors and assigns pursuant to or arising from
the Credit Agreement, the Note, the Mortgage and the other
Lending Documents, whether direct or indirect, absolute or
contingent, secured or unsecured, due or to become due, now
(3)
<PAGE>
existing or hereafter arising, including, without
limitation, all interest, fees, charges, costs and expenses
(including, without limitation, reasonable attorneys' fees
and disbursements) for which the Borrower or the Company is
now or hereafter becomes liable to pay to Midlantic pursuant
to any of such Lending Documents.
"Trustee" or "Trustees" shall mean each of the Senior
Note Trustee, the Mortgage Note Trustee and the PIK Note
Trustee and each of their permitted successors and assigns,
unless the context requires reference to one or more but
less than all of such Trustees.
1.3. The words "hereof", "herein" and "hereunder" and words
of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement, and section, subsection, schedule and exhibit
references are to this Agreement unless otherwise specified. The
terms defined in this Section and elsewhere include the plural as
well as the singular.
SECTION 2. Midlantic Lien Priority.
2.1. Lien Priority. Each Trustee hereby agrees that any
and all security interests, mortgages, assignments of leases,
assignments of operating assets, other assignments, pledges and
other liens, charges or encumbrances (including, without
limitation, the Indenture Mortgages and the Indenture Guarantees)
now existing or hereafter created or arising in its favor in
respect of any of the Indenture Obligations are expressly
subordinate, inferior and junior in priority, operation and
effect to any and all security interests, mortgages, assignments
of leases, assignments of operating assets, other assignments,
pledges and other liens, charges or encumbrances now existing or
hereafter created or arising in favor of Midlantic in respect of
the Midlantic Term Loan Obligations, notwithstanding anything to
the contrary contained in any agreement or filing to which the
Borrower, the Company or any Trustee may now or hereafter be a
party, and irrespective of the time, order or method of
attachment or perfection of any security interests granted
thereby or the time or order of execution, filing or recording of
any mortgages, financing statements or other security interests,
assignments, pledges and other liens, charges or encumbrances.
Any assets (including, without limitation, any real
property(ies)) of the Borrower now or from time to time hereafter
given, granted, assigned, mortgaged, pledged or otherwise
encumbered to secure either the Midlantic Term Loan Obligations
or any portion of the Indenture Obligations (collectively,
together with any and all proceeds or products thereof, the
"Shared Collateral") shall be subject to the priority established
by this Section 2.1., provided that (i) the Senior Partnership
(4)
<PAGE>
Note, the Partnership Note and the Subordinated Partnership
Note (as such terms are defined in the Senior Note Indenture, the
Mortgage Note Indenture and the PIK Note Indenture, respectively)
shall not constitute "Shared Collateral" and (ii) the proceeds of
any title insurance policies and/or reinsurance policies with
respect to the Trust Estate shall constitute "Shared Collateral"
only to the extent that the Bank and any Trustee both shall have
the right to receipt thereof upon the occurrence of any facts or
circumstances giving rise to any claim made under such title
insurance and/or reinsurance policies.
2.2. Proceeds of Shared Collateral. In the event that
Midlantic or any one or more Trustees exercises its respective
rights with respect to the Shared Collateral under the Lending
Documents or the Indenture Documents, as the case may be, each of
Midlantic and each Trustee shall apply the proceeds from any sale
or sales or other disposition(s) of Shared Collateral (i) first,
to the payment of the costs and expenses of such sales or other
disposition(s), including the reasonable compensation of agents
and reasonable fees and expenses of counsel, (ii) second, any
surplus then remaining to the payment in full of the Midlantic
Term Loan Obligations, (iii) third, any surplus then remaining to
the payment of the Indenture Obligations in accordance with the
Indenture Documents, and (iv) fourth, subject to the rights of
the holder of any then existing Lien of which Midlantic or any
Trustee has actual notice, any surplus then remaining to the
Borrower or as a court of competent jurisdiction may otherwise
direct. Subject to the rights of the Borrower to apply insurance
proceeds or eminent domain awards to effect Restorations of the
Premises, as those terms are defined in and set forth in the
Mortgage, such proceeds and awards are acknowledged to be Shared
Collateral and subject to this Section 2.2.
2.3. Payment Blockage. If at any time an Event of Default
described in Section 7.01(a), (b) or (c) of the Credit Agreement
(including an Event of Default arising from the failure of the
Borrower to pay the entire amount of the Midlantic Term Loan
Obligations which shall have been accelerated by Midlantic in
accordance with the Credit Agreement) (each, a "Payment Event of
Default") occurs and is continuing, and Midlantic shall have
given written notice thereof to the Trustees, then no Trustee
shall be entitled to receive, and no Trustee shall make to the
holders of the Indenture Notes any payments of interest on or the
principal of any of the Indenture Notes, or to effect any
Redemption of any of the Indenture Notes or to make open market
purchases of any of the Indenture Notes (any such payments of
interest and/or principal and any payments to effect any Redemp-
tion or make open market purchases being hereinafter referred to
as a "Blocked Payment"). If, notwithstanding the foregoing, any
payment constituting a Blocked Payment is received by any Trustee
after the occurrence and during the continuance of a Payment
(5)
<PAGE>
Event of Default, such payment or distribution received by any
such Trustee shall be held in trust by such Trustee for the
benefit of Midlantic until such time as (i) such Trustee receives
written notice from Midlantic that the Payment Event of Default
has been remedied or cured, including any cure effected pursuant
to Section 3.1 hereof, in which event such Trustee shall be
entitled hereunder to distribute the amount of such Blocked
Payment to the holders of the Indenture Notes in accordance with
the applicable Indenture, (ii) such Trustee receives written
notice from Midlantic of the occurrence of an Event of Default
described in Section 7.01(e) or (f) of the Credit Agreement (each
a "Bankruptcy Event of Default"), in which event such payment
shall be paid to Midlantic or as a court of competent
jurisdiction may direct in a final and non-appealable order and
to the extent paid to or for the benefit of Midlantic shall be
deemed for purposes of this Agreement to be proceeds of Shared
Collateral, or (iii) such Trustee receives written notice from
Midlantic that Midlantic has accelerated the stated maturity of
the Midlantic Term Loan Obligations and/or is exercising any
other rights or remedies under the Lending Documents with respect
to any Payment Event of Default, in which event such payment
shall be paid over to Midlantic and shall be deemed for purposes
of this Agreement to be proceeds of Shared Collateral. For the
purposes of this Section 2.03, each Trustee shall conclusively
presume that a Payment Event of Default has occurred simulta-
neously (i) with the occurrence of an Event of Default described
in Section 7.01(h) of the Credit Agreement, whether or not
Midlantic has given formal notice of same to the Borrower or to
any Trustee; and (ii) upon an Event of Default under Section
7.01(c) so long as Midlantic has given notice of same to the
Trustees, whether or not the ten day grace period provided for
therein has passed, unless as to (i) and (ii) contrary written
notice is given to it by Midlantic.
SECTION 3. Forbearance by Midlantic.
3.1. Midlantic Term Loan Obligations. Except as provided
in this Section 3.1, upon the occurrence of any Event of Default
(as defined in the Credit Agreement) Midlantic agrees to give the
Borrower and each Trustee at least 90 days' prior written notice
of the acceleration by Midlantic of the stated maturity of the
Midlantic Term Loan Obligations, or the commencement of the
exercise by Midlantic of any other remedies against the Borrower
or with respect to any collateral security given by the Borrower
to Midlantic with respect thereto, in connection with such Event
of Default. Such notice of acceleration and/or the exercise of
other remedies by Midlantic shall be effective to accelerate the
Midlantic Term Loan Obligations and/or to commence the exercise
by Midlantic of other remedies with respect to such Event of
Default, on the 90th day following the receipt of such notice by
the Borrower and each Trustee, unless the Borrower or other
(6)
<PAGE>
Persons acting on its behalf shall cure such Event of Default (by
payment in cash and/or other remedy) and all other adverse
consequences of such Event of Default prior to the expiration of
such 90-day period. Notwithstanding anything to the contrary
contained herein, Midlantic shall have an obligation to give such
notice and provide such 90-day cure period to the Borrower and
the Trustees only once with respect to any particular type of
Event of Default. Thereafter, subject to the notice requirements
and cure periods, if any, provided in the Lending Documents, the
Bank may proceed to exercise its rights and remedies without
regard to this Section 3.1, except that, as long as this
Agreement shall remain in effect, the Bank shall provide the
Trustees with notice of a payment default prior to the
commencement of the running of the grace periods provided in
Section 7.01(a) and Section 7.01(c) of the Credit Agreement.
For purposes of this Agreement, the types of Events of
Default with respect to which Midlantic shall have an obligation
to forbear pursuant to this Section 3.1 in its exercise of
remedies for 90 days after receipt by the Borrower and the
Trustees of notice (each of which type of Event of Default may be
cured once, but only once, by the Borrower or Persons acting on
its behalf, and then only during such 90-day period), are as
follows:
(a) a Payment Event of Default arising out of the
Borrower's failure to make a payment of interest or of
principal on the date the same is due (subject to applicable
cure periods, if any), under the Note (as distinguished from
a Payment Event of Default arising from the acceleration of
the Stated Maturity of the Midlantic Term Loan Obligations
as a consequence of any other Event of Default);
(b) a Bankruptcy Event of Default which has not
resulted in the entry of an order for relief by a bankruptcy
court under the federal bankruptcy laws;
(c) an Event of Default under Section 7.01(d), Section
7.01(i) or Section 7.01(m) of the Credit Agreement (it being
understood that breaches of separate covenants shall be
deemed to be separate types of Events of Default, except
that (i) Events of Default with respect to substantially
similar covenants referred to therein and (ii) a series of
related Events of Default shall (in either such case) be
deemed to be a single type of Event of Default for purposes
hereof);
(d) an Event of Default under Section 7.01(j) of the
Credit Agreement;
(7)
<PAGE>
(e) an Event of Default under Section 7.01(1) of the
Credit Agreement; or
(f) an Event of Default under Section 7.01(n) of the
Credit Agreement.
The Events of Default described in Section 7.01(e) or
Section 7.01(f) (bankruptcy or insolvency) which has resulted in
the entry of an order for relief by a bankruptcy court under the
federal bankruptcy laws, Section 7.01(g) (revocation of license),
Section 7.01(h) (acceleration by Trustee), Section 7.01(k)
(judicial determination of invalidity of Lending Documents) and
in Section 7.01(o) (certain specific misrepresentations and
breaches of warranties) shall not be Events of Default with
respect to which Midlantic's forbearance obligations (or notice
obligations) provided for in this Section 3.1 shall apply.
An Event of Default of a single type shall be deemed to be
"cured" if, at the end of such 90-day period, all Events of
Default of that type have been cured. Nothing in this Agreement
shall alter or change in any manner the Borrower's rights under
the Lending Documents to cure (i) Defaults which have not yet
ripened into Events of Default and (ii) Events of Default with
respect to which Midlantic has elected not to accelerate (or take
any other remedial action or exercise any other right in respect
of) the Midlantic Term Loan Obligations.
The fact that there are three Trustees shall not change the
provision in the second paragraph of this Section 3.1 to the
effect that a cure may be effected once, but only once as
provided therein for each Event of Default described in
subparagraphs (A) through (F) of that paragraph.
3.2. Exercise of Remedies. Nothing in this Agreement shall
prevent at any time any Trustee from exercising or refraining in
its sole discretion from the exercise of any rights or remedies
available to it under this Agreement or the Indenture Documents,
provided that (i) all remedies exercised by any Trustee in
respect of any Shared Collateral shall be exercised in accordance
with Section 2 hereof (including, without limitation, that
proceeds of Shared Collateral shall be distributed as provided in
Section 2.2 hereof) and (ii) there is compliance with Section 2.3
hereof.
SECTION 4. Representations and Warranties.
4.1. By Each Trustee. Each Trustee hereby represents and
warrants to Midlantic that:
(8)
<PAGE>
(a) Corporate Existence. The Trustee is a national
banking association duly organized, validly existing and in
good standing under the laws of the United States.
(b) Power and Authority. The Trustee has full power,
authority and legal right to execute, deliver and perform
this Agreement. The execution and delivery of this
Agreement by the Trustee and the performance or observance
of each of the obligations of the Trustee hereunder have
been duly authorized by all necessary action on the part of
the Trustee.
(c) Enforceable Obligations. This Agreement has been
duly executed and delivered by the Trustee and constitutes a
legal, valid and binding obligation of the Trustee,
enforceable against it in accordance with its terms.
(d) Consents, Approvals, Authorizations, etc. No
consent, approval, order or authorization of or
registration, declaration or filing with any Governmental
Authority or any other Person is required in connection with
the valid execution and delivery by the Trustee of this
Agreement or the carrying out or performance by the Trustee
of any of the transactions required or contemplated hereby.
(e) No Legal Bar. The execution and delivery of this
Agreement by the Trustee, and the performance by the Trustee
of its obligations hereunder, will not violate any Legal
Requirements affecting the Trustee.
(f) No Transfer or Subordination. The Trustee has not
(i) sold, assigned or otherwise transferred, in whole or in
part, any of the Indenture Obligations, any interest therein
or any collateral security or guaranty therefor to any other
Person or (ii) made, given or permitted any currently
effective subordination or postponement in respect of the
Indenture Obligations or any Shared Collateral, except to
Midlantic as provided herein.
4.2. By Midlantic. Midlantic hereby represents and
warrants to each Trustee that:
(a) Corporate Existence. Midlantic is a national
banking association duly organized, validly existing and in
good standing under the laws of the United States.
(b) Power and Authority. Midlantic has full power,
authority and legal right to execute, deliver and perform
this Agreement. The execution and delivery of this
Agreement by Midlantic and the performance or observance of
each of the obligations of Midlantic hereunder have been
(9)
<PAGE>
duly authorized by an officer of Midlantic to which the
Board of Directors of Midlantic has duly delegated the
authority to enter into this Agreement, and Midlantic has
delivered to the Trustees evidence reasonably satisfactory
to it of such authorization.
(c) Enforceable Obligations. This Agreement has been
duly executed and delivered by Midlantic and constitutes a
legal, valid and binding obligation of Midlantic,
enforceable against it in accordance with its terms.
(d) Consents, Approvals, Authorizations, etc. No
consent, approval, order or authorization or registration,
declaration or filing with any Governmental Authority or any
other Person is required in connection with the valid
execution and delivery by Midlantic of this Agreement or the
carrying out of performance by Midlantic of any of the
transactions required or contemplated hereby.
(e) No Legal Bar. The execution and delivery of this
Agreement by Midlantic, and the performance by Midlantic of
its obligations hereunder, will not violate any Legal
Requirements affecting Midlantic.
(f) No Transfer or Subordination. Midlantic has not
(i) sold, assigned or otherwise transferred, in whole or in
part, any of the Midlantic Term Loan Obligations, any
interest therein or any collateral security or guaranty
therefor to any other Person or (ii) made, given or
permitted any currently effective subordination or
postponement in respect of the Midlantic Obligations or any
Shared Collateral.
Section 5. Negative Covenants of the Trustees.
5.1. Until the Midlantic Term Loan Obligations are
indefeasibly paid in full, each Trustee agrees not to, directly
or indirectly:
(a) take, demand or receive from the Borrower or the
Company, by set-off, Redemption, purchase or in any other
manner, any payment in respect of the Indenture Obligations,
contrary to or in violation of the terms of this Agreement;
(b) enter into any amendment or modification of, or
supplement to, any Indenture or any other Indenture Document
which would contravene the provisions of Section 11.03(c),
(d) or (e) of the Credit Agreement as in effect on the
Effective Date;
(10)
<PAGE>
(c) accept any payment or distribution made by or on
behalf of the Borrower or the Company that the Borrower or
the Company is prohibited from making under the Credit
Agreement or any of the other Lending Documents; or
(d) accept any payment or distribution made by or on
behalf of the Borrower or the Company that the Borrower or
the Company is prohibited from making under any of the
Indenture Documents; or
(e) accelerate the indebtedness under its Indenture
without giving Midlantic at least two prior business days
notice of such acceleration.
SECTION 6. Waivers, etc.
6.1. Each of the parties hereto consents to and agrees with
the other parties that, without the necessity of any reservation
of rights against any other party and without notice to or
further assent by any other party, subject to the provisions of
Sections 2.1, 2.2 and 5.1 hereof, (a) any demand for payment of
any Midlantic Term Loan Obligation or Indenture Obligation may be
rescinded in whole or in part, and any Midlantic Term Loan
Obligations or Indenture Obligation may be continued, and the
Midlantic Term Loan Obligations and the Indenture Obligations, or
the liability of the Borrower or any other Person upon or for any
part thereof, or any collateral security or guaranty therefor or
right of offset with respect thereto, or any obligation or
liability of the Borrower or any other Person thereunder or with
respect thereto may, from time to time, in whole or in part, be
renewed, extended, modified, accelerated, compromised, waived,
surrendered or released (it being acknowledged that the foregoing
is subject, in the case of any Shared Collateral, to the
provisions of Section 2 hereof), and (b) the Lending Documents
and the Indenture Documents, and any other documents, instruments
or agreements evidencing or governing the terms of any of the
Midlantic Term Loan Obligations or the Indenture Obligations or
any collateral security documents or guaranties or documents in
connection therewith, may be amended, modified, supplemented or
terminated, in whole or in part, as the parties thereto may deem
advisable from time to time, except as otherwise expressly set
forth therein, and any collateral security at any time held by
Midlantic or any Trustee from the payment of any of the Midlantic
Term Loan Obligations or any Indenture Obligations, respectively,
may be sold, exchanged, waived, surrendered or released, in each
case all without notice to or further assent by any other party
hereto, each of which will remain bound under this Agreement, and
all without impairing, releasing or affecting the lien priority
or other provisions herein, notwithstanding any such renewal,
extension, modification, acceleration, compromise, amendment,
supplement, termination, sale, exchange, waiver, surrender or
(11)
<PAGE>
release, subject in each case to the provisions hereof. The
Trustees and Midlantic hereby waive any and all notice of the
creation, renewal, extension or accrual of any of the Midlantic
Term Loan Obligations or the Indenture Obligations, as the case
may be, and notice of or proof of reliance by Midlantic or the
Trustees, as the case may be, upon this Agreement, and the
Midlantic Term Loan Obligations, or the Indenture Obligations, as
the case may be, and each of them shall conclusively be deemed to
have been created, contracted or incurred in reliance upon this
Agreement, and all dealings between the Borrower and Midlantic or
the Trustees, as the case may be, shall be deemed to have been
consummated in reliance upon this Agreement. Each Trustee hereby
acknowledges and agrees that Midlantic has relied upon the lien
priority and other provisions hereof in entering into the Credit
Agreement, the Note and the other Lending Documents and all such
other documents, instruments and agreements relating to the
Midlantic Term Loan Obligations. Each Trustee hereby waives
notice of or proof of reliance on this Agreement. Midlantic
hereby acknowledges and agrees that each Trustee has relied upon
the provisions hereof in entering into the Indentures and all
other documents, instruments and agreements relating to the
Indenture Obligations. Midlantic hereby waives notice of or
proof of reliance on this Agreement.
6.2. Each Trustee hereby acknowledges and confirms to
Midlantic that:
(a) Midlantic has not made any representations or
warranties as to any matter which may affect or in any way
relate to the financial condition, relationships or
transactions of the Borrower or any other Person, including,
without limitation, the business, assets, liabilities, type
or value of any security therefor, financial condition,
management or control of the Borrower or any other Person;
and
(b) Except as expressly provided herein, Midlantic is
not obligated to notify any Trustee or any other Person of
any change in the business, assets, liabilities, type or
value of any security therefor, financial condition,
management or control of the Borrower or of any other
Person. None of such changes shall release or otherwise
impair any of the rights of Midlantic as against the
Borrower and the Trustees (hereunder or under the Credit
Agreement, the Note and the other Lending Documents, or any
other document, instrument or agreement relating to any of
the Midlantic Term Loan Obligations); and
(c) The failure by Midlantic to obtain, perfect or
realize upon any security for any of the Midlantic Term Loan
Obligations or the indebtedness, obligations or liabilities
(12)
<PAGE>
of any other Person, shall not release or otherwise impair
any of the obligations of the Trustees hereunder.
SECTION 7. Term and Termination.
This Agreement shall constitute from and after the Effective
Date a continuing agreement and shall remain in effect until the
Midlantic Term Loan Obligations are indefeasibly paid and
performed in full or, if earlier, until the Indenture Notes are
indefeasibly paid in full without contravention of Section 2.2 or
Section 5.1 hereof and the Indenture Mortgages and Other
Indenture Security Documents are discharged of record. For
purposes hereof, "Other Indenture Security Documents" shall mean
any other document evidencing any mortgage, security interest or
any other lien or encumbrance in favor of any Trustee which are a
matter of public record. This Agreement, including without
limitation, the lien priority and other provisions hereof shall
remain in effect, notwithstanding any proceeding instituted by or
against the Borrower and/or the Company seeking to adjudicate it
a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief or
composition of the Borrower and/or the Company or its respective
debts under any law relating to bankruptcy, insolvency or
reorganization or relief or protection of debtors, or seeking the
entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for the Borrower or
any substantial part of its property or assets. First National
Bank Association, in its capacity as Trustee under the Amended
and Restated Indenture dated as of May 29, 1992 relating to the
Existing Bonds, as same may have been amended or otherwise
modified, hereby represents and warrants to Midlantic that all of
the Indenture Documents (as defined in the 1992 Credit Agreement)
which secured any obligation respecting or relating to the
Existing Bonds (including, without limitation, a mortgage,
assignment of leases, assignment of operating assets and UCC-1
financing statements) have been terminated and cancelled and
documents sufficient to discharge of record each such Indenture
Document (the "Discharge Documents") have been irrevocably given
to a title company, and such title company has agreed with it and
Midlantic to properly and promptly record each Discharge
Document.
SECTION 8. Remedies and Cooperation.
8.1. Each party hereby acknowledges that the other parties
shall have no adequate remedy at law if a party violates any of
the terms of provisions hereof. In such event, each other party
shall have the right, in addition to any and all other rights and
remedies as may be available under applicable law, to obtain in
any court of competent jurisdiction injunctive relief to restrain
any such party from any breach or threatened breach of this
(13)
<PAGE>
Agreement or otherwise to specifically enforce any of the terms
or provisions hereof.
8.2. The Bank agrees (without prejudice to any rights or
remedies the Bank may be entitled to exercise) that it will not
interfere with any lawful effort initiated by any Trustee to
avoid or cure any Event of Default under the Midlantic Term Loan
Obligations within the applicable cure period provided for in
Section 3.1 hereof, or any circumstance that may give rise to
such an Event of Default within the applicable cure period
provided in the Lending Documents, and on inquiry initiated by
the Trustee (whether by telephone or in writing), the Bank shall
confer with such Trustee and provide it with such unprivileged
information pertaining to the Lending Documents, the status
thereof, and such other matters relating to the Borrower within
the knowledge of the Bank as such Trustee may from time to time
reasonably request.
SECTION 9. Concerning the Trustees.
9.1. Each Trustee (or separate trustee appointed with such
authority pursuant to each Indenture as in effect on the date
hereof (the "Successor Provisions")) undertakes to perform such
duties and only such duties as are specifically set forth in this
Intercreditor Agreement as assigned to such Trustee (or such
co-trustee or separate trustee, as the case may be). No implied
covenants or obligations shall be read into this Intercreditor
Agreement against any Trustee (or such co-trustee or separate
trustee, as the case may be) or Midlantic.
9.2. In the absence of bad faith on its part, each Trustee
(and such co-trustee or separate trustee) may conclusively rely,
as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions
furnished to such Trustee (or such co-trustee or separate
trustee, as the case may be) and conforming to the requirements
of this Intercreditor Agreement; but in the case of any such
certificates or opinions which by any provision hereof are
specifically required to be furnished to any Trustee (or such
co-trustee or separate trustee, as the case may be), such Trustee
(or such co-trustee or separate trustee, as the case may be)
shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Intercreditor
Agreement.
9.3. Each Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, coupon or other paper
or document believed by it to be genuine and to have been signed
or presented by the proper party or parties.
(14)
<PAGE>
9.4. Whenever in the administration of this Intercreditor
Agreement any Trustee shall deem it desirable that a matter be
proved or established prior to taking, suffering or omitting any
action hereunder, such Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its
part, rely upon an Officers' Certificate.
9.5. Each Trustee may consult with counsel, and the written
advice of such counsel or any opinion of counsel shall be full
and complete authorization and protection in respect of any
action taken, suffered or omitted by such Trustee hereunder in
good faith and in reliance thereon.
9.6. No Trustee shall be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture or other paper or
document.
9.7. No provision of this Intercreditor Agreement or any
other Lending Document (including the provisions of Section 2.07
of the Credit Agreement, Section 1.10 of the Mortgage or any
similar provisions incorporated herein by reference,
notwithstanding the terms of such provisions) shall be construed
to relieve any Trustee (or any co-trustee or separate trustee
appointed pursuant to said successor provisions) from liability
for its own negligent action, its own negligent failure to act,
or its own willful misconduct, except that no Trustee (or such
co-trustee or separate trustee, as the case may be) shall be
liable for any error of judgment made in good faith by a
responsible officer, unless it shall be proved that such Trustee
(or such co-trustee or separate trustee, as the case may be) was
negligent in ascertaining the pertinent facts.
9.8. No provision of this Intercreditor Agreement shall
require any Trustee (or such co-trustee or separate trustee, as
the case may be) to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that,
under the terms of the applicable Indenture or otherwise,
repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it.
9.9. Each Trustee may execute any of its rights or powers
hereunder or perform any of its duties hereunder either directly
or by or through agents or attorneys, and such Trustee shall not
be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder.
(15)
<PAGE>
SECTION 10. Miscellaneous.
10.1. No failure to exercise, and no delay in exercising,
on the part of any party hereto from time to time of any right,
power or privilege under this Agreement or any document securing
and/or evidencing the Midlantic Term Loan Obligations or the
Indenture Obligations shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or
privilege under this Agreement or any other such document
preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. The rights and remedies
provided in this Agreement and in any agreement relating to any
of the Midlantic Term Loan Obligations or the Indenture
Obligations and all other agreements, instruments and documents
referred to in any of the foregoing are cumulative and shall not
be exclusive of any rights or remedies provided by law.
10.2. Each party hereto agrees to execute and deliver such
further documents and to do such other acts and things as any
other party may reasonably request in order fully to effect the
purposes of this Agreement.
10.3. Any request, demand, authorization, direction, notice
(including, without limitation, a notice of default), consent,
waiver or other document provided or permitted by this Agreement
to be made upon, given or furnished to, or filed with Midlantic,
any Trustee or the Borrower shall be deemed given when either (i)
delivered by hand or by Federal Express or other similar
overnight courier or (ii) three Business Days after sending by
registered or certified mail, postage prepaid; in either case
addressed as follows:
To the Trustees (one such notice shall constitute sufficient
notice to the each of the three Trustees hereunder, unless the
same Person is not the Trustee under each Indenture)):
First Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55010
Attention: Corporate Trust Department
To Midlantic:
Midlantic National Bank
Supervised Loan Department, 7th Floor
499 Thornall Street
Edison, New Jersey 08837
Attention: Ben Berzin, Jr., Senior Vice President
(16)
<PAGE>
To the Borrower:
Trump's Castle Associates
Trump Castle Casino Resort by the Bay
Brigantine Boulevard at Huron Avenue
Atlantic City, New Jersey 08401
Attention: Chief Executive Officer
TC/GP Corporation
Trump Castle Casino Resort by the Bay
Brigantine Boulevard at Huron Avenue
Atlantic City, New Jersey 08401
Attention: Treasurer
with, in each case, a copy sent by the same method to:
The Trump Organization
725 Fifth Avenue
New York, New York 10022
Attention: Nicholas L. Ribis, Esq.
Sills Cummis Zuckerman Radin Tischman
Epstein & Gross, P.A.
One Riverfront Plaza
Newark, New Jersey 07102
Attention: Ira A. Rosenberg, Esq.
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York, 10022
Attention: Thomas M. Cerabino, Esq.
Ropes & Gray
One International Place
Boston, Massachusetts, 02110-2624
Attention: Robert L. Nutt, Esq.
By notice given as provided above, each Trustee, Midlantic or the
Borrower may designate additional or substitute addresses for
such notices, which, notwithstanding the provisions of clause
(ii) of this Section 9.3, shall be deemed given when received.
If any Trustee commences foreclosure or other proceedings
for sale of any Shared Collateral pursuant to any Indenture
Mortgage or any Other Indenture Security Document, or the Bank
commences foreclosure or other proceedings for sale of any Shared
Collateral pursuant to the Mortgage or other security instrument
securing the Midlantic Term Loan Obligations, then the
foreclosing party agrees to give the other copies of notices at
the same time and by substantially the same method the
(17)
<PAGE>
foreclosing party provides any such notice to the Borrower or the
Company.
10.4. No amendment or waiver of any provision of this
Agreement nor consent to any departure by any party herefrom,
shall in any event be effective unless the same shall be in
writing and signed by such party, and then such waiver or consent
shall be effective only in the specific instance and for the
specific purpose for which given.
10.5. This Agreement may be executed by the parties hereto
in any number of separate counterparts all of which taken
together shall constitute one and the same instrument.
10.6. This Agreement, and the rights and obligations of the
parties hereunder, shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New
Jersey (without giving effect to principles of choice of law).
Each Trustee hereby submits itself for the sole purpose of this
Agreement and any controversy arising hereunder to the
nonexclusive jurisdiction of the federal and state courts located
in the State of NeW Jersey, and waives any objection (on the
grounds of lack of jurisdiction or forum non conveniens, or
otherwise) to jurisdiction over it by any federal or state court
in the State of New Jersey.
10.7. This Agreement is solely for the benefit of the
parties hereto and, for the limited purpose of the provisions of
Sections 3.1 and 3.2 hereof, the Borrower and its General
Partners and their respective successors and assigns, and no
other Person shall have any right, benefit, priority or interest
under, or because of the existence of, this Agreement.
10.8. The agreements of the Trustees hereunder are made
solely in its capacity as Trustee under each of the Indentures,
and shall bind, and inure to the benefit of, the holders of the
Notes.
10.9. Any successor Trustee under any Indenture shall be
deemed to be and shall be bound by this Agreement.
(18)
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and
duly authorized officers as of the day and year first above
written.
MIDLANTIC NATIONAL BANK
By: _______________________________
Name: _____________________________
Title: ____________________________
FIRST BANK NATIONAL ASSOCIATION, as
Senior Note Trustee under the
Senior Note Indenture
By: _______________________________
Name: _____________________________
Title: ____________________________
FIRST BANK NATIONAL ASSOCIATION, as
Mortgage Note Trustee under the
Mortgage Note Indenture
By: _______________________________
Name: _____________________________
Title: ____________________________
FIRST BANK NATIONAL ASSOCIATION, as
PIK Note Trustee under the PIK Note
Indenture
By: _______________________________
Name: _____________________________
Title: ____________________________
FIRST BANK NATIONAL ASSOCIATION, as
Trustee under the May 29, 1992
Indenture (for the purposes of
Section 7)
By: _______________________________
Name: _____________________________
Title: ____________________________
(19)
<PAGE>
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on this 27th day of December, 1993,
before me the subscriber, a Notary Public of the State of New
York, personally appeared __________________________ a
_____________________ of MIDLANTIC NATIONAL BANK, a national
banking association, who, I am satisfied, is the person who
executed the within instrument, as ______________________ said
association, and he acknowledged that he signed, sealed with the
proper corporate seal and delivered the same as such officer,
that the within instrument is the voluntary act and deed of said
association made by virtue of authority of its board of
directors, and that he received a true copy of the within
instrument on behalf of said association.
_________________________________
Notary Public of the State of
New York
{Seal}
(20)
<PAGE>
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on this 27th day of December, 1993,
before me the subscriber, a Notary Public of the State of New
York, personally appeared __________________________ a
_____________________ of FIRST BANK NATIONAL ASSOCIATION, a
national banking association, the Trustee under a certain Senior
Note Indenture pursuant to which Trump's Castle Funding, Inc. is
issuing Senior Notes, who, I am satisfied, is the person who
executed the within instrument, as ______________________ said
association, and he acknowledged that he signed, sealed with the
proper corporate seal and delivered the same as such officer,
that the within instrument is the voluntary act and deed of said
association made by virtue of authority of its board of
directors, and that he received a true copy of the within
instrument on behalf of said association.
_________________________________
Notary Public of the State of
New York
{Seal}
(21)
<PAGE>
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on this 28th day of December, 1993,
before me the subscriber, a Notary Public of the State of New
York, personally appeared ___________________ a
_____________________ of FIRST BANK NATIONAL ASSOCIATION, a
national banking association, the Trustee under a certain
Mortgage Notes Indenture pursuant to which Trump's Castle
Funding, Inc. is issuing Mortgage Notes, who, I am satisfied, is
the person who executed the within instrument, as
______________________ said association, and he acknowledged that
he signed, sealed with the proper corporate seal and delivered
the same as such officer, that the within instrument is the
voluntary act and deed of said association made by virtue of
authority of its board of directors, and that he received a true
copy of the within instrument on behalf of said association.
_________________________________
Notary Public of the State of
New York
{Seal}
(22)
<PAGE>
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on this 28th day of December, 1993,
before me the subscriber, a Notary Public of the State of New
York, personally appeared __________________________ a
_____________________ of FIRST BANK NATIONAL ASSOCIATION, a
national banking association, the Trustee under a certain PIK
Note Indenture pursuant to which Trump's Castle Funding, Inc. is
issuing PIK Notes, who, I am satisfied, is the person who
executed the within instrument, as ______________________ said
association, and he acknowledged that he signed, sealed with the
proper corporate seal and delivered the same as such officer,
that the within instrument is the voluntary act and deed of said
association made by virtue of authority of its board of
directors, and that he received a true copy of the within
instrument on behalf of said association.
_________________________________
Notary Public of the State of
New York
{Seal}
(23)
<PAGE>
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on this 28th day of December, 1993,
before me the subscriber, a Notary Public of the State of New
York, personally appeared __________________________ a
_____________________ of FIRST BANK NATIONAL ASSOCIATION, a
national banking association, as Trustee under a certain existing
indenture, who, I am satisfied, is the person who executed the
within instrument, as ______________________ said association,
and he acknowledged that he signed, sealed with the proper
corporate seal and delivered the same as such officer, that the
within instrument is the voluntary act and deed of said
association made by virtue of authority of its board of
directors, and that he received a true copy of the within
instrument on behalf of said association.
_________________________________
Notary Public of the State of
New York
{Seal}
(24)
EXHIBIT 24.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of
our reports dated February 12, 1993 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
February 16, 1994
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Nicholas L. Ribis and Ernest E. East, and each of
them, with full power to act without the other, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments to this Registration Statement, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary fully to all intents and purposes as
he might or could do in person thereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
Signature Title Date
- --------- ----- ----
TRUMP'S CASTLE FUNDING, INC.
/s/ Donald J. Trump Chairman of the Board, February 17, 1994
- ------------------------------ President, Chief Executive
Donald J. Trump Officer (Principal Executive
Officer), Treasurer (Principal
Financial Officer) and sole
Director of the Registrant.
/s/ Robert E. Schaffhauser Assistant Treasurer of February 17, 1994
- ------------------------------ the Registrant (Principal
Robert E. Schaffhauser Accounting Officer).
<PAGE>
TRUMP'S CASTLE ASSOCIATES
By: /s/ Donald J. Trump Chairman, Board of February 17, 1994
- ------------------------------ Partner Representatives
Donald J. Trump
By: /s/ Nicholas L. Ribis Member, Board of Partner February 17, 1994
- ------------------------------ Representatives and
Nicholas L. Ribis Chief Executive Officer
By: /s/ Roger P. Wagner Member, Board of Partner February 17, 1994
- ------------------------------ Representatives and
Roger P. Wagner President
By: /s/ Ernest E. East Member, Board of Partner February 17, 1994
- ------------------------------ Representatives
Ernest E. East
By: /s/ Asher O. Pacholder Member, Board of Partner February 17, 1994
- ------------------------------ Representatives
Asher O. Pacholder
By: /s/ Wallace B. Askins Member, Board of Partner February 17, 1994
- ------------------------------ Representatives
Wallace B. Askins
By: /s/ Thomas F. Leahy Member, Board of Partner February 17, 1994
- ------------------------------ Representatives
Thomas F. Leahy
By: /s/ Robert E. Schaffhauser Chief Financial and February 17, 1994
- ------------------------------ Accounting Officer
Robert E. Schaffhauser
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM T-1
Statement of Eligibility and Qualification Under the
Trust Indenture Act of 1939 of a Corporation
Designated to Act as Trustee
FIRST BANK NATIONAL ASSOCIATION
(Exact name of Trustee as specified in its charter)
United States 41-0256895
(State of Incorporation) (I.R.S. Employer
Identification No.)
First Trust Center
180 East Fifth Street
St. Paul, Minnesota 55101
(Address of Principal Executive Offices) (Zip Code)
Trump's Castle Funding, Inc.
Trump's Castle Associates
(Exact name of registrant as specified in its charter)
New Jersey 11-2739203
New Jersey 22-2608426
(State of Incorporation) (I.R.S. Employer
Identification No.)
Brigantine Boulevard and Huron Avenue
Atlantic City, New Jersey 08401
(Address of Principal Executive Offices) (Zip Code)
11-1/2% Senior Notes due 2000
(Title of the Indenture Securities)
<PAGE>
GENERAL
1. General InformationFurnish the following information as to the Trustee.
(a) Name and address of each examining or supervising authority to which
it is subject.
Comptroller of the Currency
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes
2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS If the obligor or any
underwriter for the obligor is an affiliate of the Trustee, describe each
such affiliation.
None
See Note following Item 16.
Items 3-15 are not applicable because to the best of the Trustee's
knowledge the obligor is not in default under any Indenture for which the
Trustee acts as Trustee.
16. LIST OF EXHIBITS List below all exhibits filed as a part of this statement
of eligibility and qualification. Each of the exhibits listed below is
incorporated by reference from a previous registration.
1. Copy of Articles of Association.
2. Copy of Certificate of Authority to Commence Business.
3. Authorization of the Trustee to exercise corporate trust powers
(included in Exhibits 1 and 2; no separate instrument).
4. Copy of existing By-Laws.
5. Copy of each Indenture referred to in Item 4. N/A.
6. The consents of the Trustee required by Section 321(b) of the act.
7. Copy of the latest report of condition of the Trustee published
pursuant to law or the requirements of its supervising or examining
authority.
<PAGE>
NOTE
The answers to this statement insofar as such answers relate to what
persons have been underwriters for any securities of the obligors within three
years prior to the date of filing this statement, or what persons are owners of
10% or more of the voting securities of the obligors, or affiliates, are based
upon information furnished to the Trustee by the obligors. While the Trustee has
no reason to doubt the accuracy of any such information, it cannot accept any
responsibility therefor.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, First Bank National Association, an Association organized and existing
under the laws of the United States, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, and its seal to be hereunto affixed and attested, all
in the City of Saint Paul and State of Minnesota on the 14th day of February,
1994.
FIRST BANK NATIONAL ASSOCIATION
[SEAL]
/s/ Frank P. Leslie III
-------------------------------
Frank P. Leslie III
Assistant Vice President
/s/Scott Strodthoff
- ------------------------------
Scott Strodthoff
Assistant Secretary
<PAGE>
EXHIBIT 6
CONSENT
In accordance with Section 321(b) of the Trust Indenture Act of 1939, the
undersigned, FIRST BANK NATIONAL ASSOCIATION hereby consents that reports of
examination of the undersigned by Federal, State, Territorial or District
authorities may be furnished by such authorities to the Securities and Exchange
Commission upon its request therefor.
Dated: February 14, 1994
FIRST BANK NATIONAL ASSOCIATION
/s/ Frank P. Leslie III
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Frank P. Leslie III
Assistant Vice President
