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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended: September 30, 1996
Commission File No. 1-9029
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TRUMP'S CASTLE FUNDING, INC.
(Exact Name of Registrant as Specified in its Charter)
NEW JERSEY 11-2739203
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
One Castle Boulevard
Atlantic City, New Jersey 08401
(609) 441-6060
(Address, Including Zip Code and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
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TRUMP'S CASTLE ASSOCIATES, L.P.
(Exact Name of Registrant as Specified in its Charter)
NEW JERSEY 22-2608426
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
One Castle Boulevard
Atlantic City, New Jersey 08401
(609) 441-6060
(Address, Including Zip Code and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
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Indicate by check mark whether the Registrants (1) have filed all Reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) have been subject to such
filing requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark whether the Registrants have filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes |X| No |_|
Trump's Castle Funding, Inc. meets the conditions set forth in General
Instructions H(1)(a) and (b) of From 10-Q and is therefore filing this form with
the reduced disclosure format.
As of November 14, 1996, there were 200 shares of Trump's Castle Funding,
Inc.'s common stock outstanding.
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<PAGE>
TRUMP'S CASTLE ASSOCIATES, L.P. AND SUBSIDIARY
-------------
INDEX TO FORM 10-Q
Page No.
--------
PART I -- FINANCIAL INFORMATION
ITEM 1 -- Financial Statements
Consolidated Balance Sheets of Trump's Castle Associates, L.P.
and Subsidiary as of September 30, 1996 (unaudited) and
December 31, 1995 ............................................. 1
Consolidated Statements of Operations of Trump's Castle
Associates, L.P. and Subsidiary for the Three Months and
Nine Months Ended September 30, 1996 and 1995 (unaudited) ..... 2
Consolidated Statement of Partners' Capital/Deficit of Trump's
Castle Associates, L.P. and Subsidiary for the Nine Months
Ended September 30, 1996 (unaudited) .......................... 3
Consolidated Statements of Cash Flows of Trump's Castle
Associates, L.P. and Subsidiary for the Nine Months Ended
September 30, 1996 and 1995 (unaudited) ....................... 4
Notes to Consolidated Financial Statements of Trump's Castle
Associates, L.P. and Subsidiary (unaudited) ................... 5-7
ITEM 2 -- Management's Discussion and Analysis of Financial
Condition and Results of Operations ...................... 8-11
PART II -- OTHER INFORMATION
ITEM 1 -- Legal Proceedings ........................................ 12
ITEM 2 -- Changes in Securities .................................... 12
ITEM 3 -- Defaults Upon Senior Securities .......................... 12
ITEM 4 -- Submission of Matters to Vote of Security Holders ........ 12
ITEM 5 -- Other Information ........................................ 12
ITEM 6 -- Exhibits and Reports on Form 8-K ......................... 13
SIGNATURES
Signature -- Trump's Castle Funding, Inc. ........................ 14
Signature -- Trump's Castle Associates, L.P. ..................... 15
i
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
TRUMP'S CASTLE ASSOCIATES, L.P. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(in thousands)
ASSETS
September 30, December 31,
1996 1995
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents ....................... $ 21,049 $ 21,038
Receivables, net ................................ 8,191 10,259
Due from affiliates ............................. -- 1,146
Inventories ..................................... 1,357 1,567
Other current assets ............................ 2,522 4,961
--------- --------
Total Current Assets ........................ 33,119 38,971
--------- --------
PROPERTY AND EQUIPMENT ............................ 317,015 322,115
--------- --------
OTHER ASSETS ...................................... 10,810 9,495
--------- --------
Total Assets ................................ $ 360,944 $370,581
========= ========
LIABILITIES AND PARTNERS' CAPITAL/DEFICIT
CURRENT LIABILITIES:
Current maturities--other borrowings ............ $ 3,799 $ 2,903
Accounts payable and accrued expense ............ 27,890 31,108
Due to affiliates ............................... 604 --
Accrued interest payable ........................ 11,910 4,391
--------- --------
Total Current Liabilities ................... 44,203 38,402
MORTGAGE NOTES .................................... 208,409 206,569
(Net of unamortized discount of $ 33,732 and
$ 35,572, respectively)
PIK NOTES ......................................... 58,576 54,110
(Net of unamortized discount of $ 7,575 and
$ 7,750, respectively)
OTHER BORROWINGS .................................. 62,865 62,336
OTHER LONG TERM LIABILITIES ....................... 5,947 3,351
--------- --------
Total Liabilities ........................... 380,000 364,768
--------- --------
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL/DEFICIT ......................... (19,056) 5,813
--------- --------
Total Liabilities and Capital ............... $ 360,944 $370,581
========= ========
The accompanying notes to consolidated financial statements are an
integral part of these consolidated statements.
1
<PAGE>
TRUMP'S CASTLE ASSOCIATES, L.P. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(unaudited)
(in thousands)
Three Months Nine Months
Ended Ended
September 30, September 30,
------------------- ---------------------
1996 1995 1996 1995
-------- -------- --------- ---------
REVENUES:
Gaming ......................... $ 67,103 $ 81,050 $ 194,276 $ 205,561
Rooms .......................... 5,624 6,281 14,629 15,475
Food and beverage .............. 9,474 9,431 25,064 22,411
Other .......................... 3,019 3,219 6,936 7,053
-------- -------- --------- ---------
Gross Revenues ................ 85,220 99,981 240,905 250,500
Less-Promotional allowance ....... 11,278 10,823 30,221 25,186
-------- -------- --------- ---------
Net Revenues ................... 73,942 89,158 210,684 225,314
-------- -------- --------- ---------
COSTS AND EXPENSES:
Gaming ......................... 43,340 46,204 124,319 119,881
Rooms .......................... 426 657 1,181 1,984
Food and beverage .............. 3,389 3,527 8,174 9,500
General and administrative ..... 19,269 19,518 57,409 55,054
Depreciation and amortization .. 4,102 3,704 11,779 10,817
-------- -------- --------- ---------
Total costs and expense ........ 70,526 73,610 202,862 197,236
-------- -------- --------- ---------
Income From Operation .......... 3,416 15,548 7,822 28,078
INTEREST INCOME .................. 208 82 466 306
OTHER INCOME ..................... 3,000 -- 3,000 --
INTEREST EXPENSE ................. (12,561) (11,640) (36,157) (34,229)
-------- -------- --------- ---------
Net Income (Loss) .............. $ (5,937) $ 3,990 $ (24,869) $ (5,845)
======== ======== ========= =========
The accompanying notes to consolidated financial statements are an
integral part of these consolidated statements.
2
<PAGE>
TRUMP'S CASTLE ASSOCIATES, L.P. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL/DEFICIT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(unaudited)
(in thousands)
Partners' Partners'
Capital Deficit Total
------- -------- --------
Balance at December 31, 1995 ........... $73,395 $(67,582) $ 5,813
Net Loss ............................... -- (24,869) (24,869)
------- -------- --------
Balance at September 30, 1996 .......... $73,395 $(92,451) $(19,056)
======= ======== ========
The accompanying notes to consolidated financial statements are an
integral part of these consolidated statements.
3
<PAGE>
TRUMP'S CASTLE ASSOCIATES, L.P. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(unaudited)
(in thousands)
Nine Months
Ended September 30,
--------------------
1996 1995
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ................................................ $(24,869) $ (5,845)
Adjustments to reconcile net loss to net cash flows
provided by operating activities --
Noncash charges --
Depreciation and amortization ........................ 11,779 10,817
Accretion of bond discount ........................... 2,015 1,750
Provisions for losses on receivables ................. 1,321 905
Valuation allowance-- CRDA investments ............... 997 1,179
-------- --------
(8,757) 8,806
Decrease (increase) in receivables ................... 1,893 (689)
Decrease in inventories .............................. 210 348
Decrease(increase) in other current assets ........... 2,139 (3,567)
Decrease(increase) in other assets ................... 215 (209)
Increase in current liabilities ...................... 4,735 6,350
Increase in other liabilities ........................ 6,520 5,716
-------- --------
Net cash flows provided by operating activities .... 6,955 16,755
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net ................. (4,125) (4,647)
Purchase of CRDA investments ............................ (2,104) (2,048)
-------- --------
Net cash flows used in investing activities ........ (6,229) (6,695)
-------- --------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
Proceeds from issuance of debt .......................... 1,738 --
Payments of other borrowings ............................ (2,453) (794)
-------- --------
Net cash flows (used in) provided by investing
activities ....................................... (715) (794)
-------- --------
Net increase in cash and cash equivalents .......... 11 9,266
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ......... 21,038 19,122
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ............... $ 21,049 $ 28,388
======== ========
SUPPLEMENTAL INFORMATION:
Cash paid for interest .................................. $ 19,595 $ 18,767
======== ========
SUPPLEMENTAL DISCLOSURE OF INVESTING AND FINANCING
ACTIVITIES:
Capital Lease Obligations .............................. $ 2,017 $ --
======== ========
The accompanying notes to consolidated financial statements are an
integral part of these consolidated statements.
4
<PAGE>
TRUMP'S CASTLE ASSOCIATES, L.P. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(1) Organization and Operations
The accompanying consolidated financial statements include those of Trump's
Castle Associates, L.P., currently a New Jersey limited partnership (the
"Partnership"), and its wholly owned subsidiary, Trump's Castle Funding, Inc., a
New Jersey corporation ("Funding").
The Partnership owns and operates Trump's Castle Casino Resort ("Trump's
Castle"), a luxury casino hotel located in the marina district of Atlantic City,
New Jersey.
The accompanying consolidated financial statements have been prepared by
the Partnership without audit. In the opinion of the Partnership, all
adjustments, consisting of only normal recurring adjustments necessary to
present fairly the financial position, results of operations and cash flows for
the periods presented have been made. All significant intercompany balances and
transactions have been eliminated in the consolidated financial statements.
The accompanying consolidated financial statements have been prepared by
the Partnership pursuant to the rules and regulations of the Securities and
Exchange Commission (the "SEC"). Accordingly, certain information and note
disclosures normally included in the financial statements prepared in conformity
with generally accepted accounting principles have been omitted.
These financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the annual
report on Form 10-K for the year ended December 31, 1995 filed with the SEC by
the Partnership and Funding. Certain reclassifications have been made to conform
prior year financial information with the current year presentation.
The casino industry in Atlantic City is seasonal in nature; accordingly,
the results of operations for the period ending September 30, 1996 are not
necessarily indicative of the operating results for a full year.
(2) PIK Notes
On June 23, 1995, the Partnership entered into an Option Agreement (the
"Option Agreement") with Hamilton Partners, L.P. ("Hamilton") which granted the
Partnership an option (the "Option") to acquire the Increasing Rate Subordinated
Pay-in-Kind Notes due 2005 of Funding (the "PIK Notes") owned by Hamilton. The
Option was granted to the Partnership in consideration of $1.9 million of
aggregate payments to Hamilton. The Option was exercisable at a price equal to
60% of the aggregate principal amount of the PIK Notes delivered by Hamilton,
with accrued but unpaid interest, plus 100% of the PIK Notes issued to Hamilton
as interest subsequent to June 23, 1995. Pursuant to the terms of the Option
Agreement, upon the occurrence of certain events within 18 months of the time
the Option is exercised, the Partnership is required to make an additional
payment to Hamilton of up to 40% of the principal amount of the PIK Notes. On
May 21, 1996, the Partnership assigned the Option to Trump Hotels & Casino
Resorts Holdings, L.P. ("THCR Holdings"), a Delaware limited partnership and a
subsidiary of Trump Hotels & Casino Resorts, Inc. ("THCR"), which, on that same
date, exercised the Option and acquired approximately 90% of the PIK Notes for
approximately $38.7 million (the "Purchase Price"), in exchange for which THCR
Holdings received an aggregate of approximately $59.3 million of PIK Notes.
Concurrently with the exercise of the Option, THCR Holdings entered into an
agreement with the Partnership and Donald J. Trump ("Trump"), which granted THCR
Holdings a six-month exclusive right to negotiate with Trump and the Partnership
with respect to the acquisition of the Partnership (the "Acquisition") (see Note
3). If an agreement with respect to the Acquisition did not occur within six
months, the Partnership had the right to repurchase from THCR Holdings, for a
period of 90 days (the "Castle Repurchase Date"), the acquired PIK Notes for an
amount in cash equal to the Purchase Price plus 16% interest thereon (the
"Repurchase Price"). In the event that the Partnership did not repurchase the
acquired PIK Notes, Trump had the right to purchase from THCR Holdings, for a
period of 90 days following the Castle Repurchase Date, the acquired PIK Notes
for an amount in cash equal to the Repurchase Price calculated to the date of
such purchase.
On May 15, 1996, the semi-annual interest payment of $4,292,000 was paid by
issuance of additional PIK Notes.
5
<PAGE>
TRUMP'S CASTLE ASSOCIATES, L.P. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(unaudited)
(3) Acquisition of the Partnership
On October 7, 1996, THCR Holdings acquired from Trump all of the
outstanding equity of the Partnership.
Pursuant to the terms of the Agreement, dated as of June 24, 1996, as
amended (the "Agreement"), by and among THCR, THCR Holdings, Trump Casinos II,
Inc., formerly known as TC/GP, Inc. ("TCI-II"), Trump's Castle Hotel & Casino,
Inc. ("TCHI") and Trump, the aggregate consideration payable for all of the
outstanding equity interests of the Partnership (assuming, as of the date of the
Agreement, a value of $30 per share for THCR's Common Stock, par value $.01 per
share (the "THCR Common Stock")), was $176.9 million, payable in limited
partnership interests in THCR Holdings (exchangeable into shares of THCR Common
Stock) and cash as set forth below. The consideration represented, as of the
date of the Agreement, (A) $525.0 million (the agreed-upon value for the
business and operations of the Partnership) minus (B) $314.0 million (the sum of
all the aggregate principal amounts of (i) the Partnership's capital lease
obligations and indebtedness under the loan with PNC Bank, N.A. (successor to
Midlantic Bank, N.A.) (the "Term Loan"), (ii) the PIK Notes not held by THCR
Holdings, (iii) 111 @ 2% Senior Secured Notes due 2000 of Funding (the "Senior
Notes") and (iv) 113 @ 4% Mortgage Notes due 2003 of Funding (the "Mortgage
Notes") outstanding as of the date of the Agreement) minus (C) $40.8 million
(the aggregate principal amount of all PIK Notes held by THCR Holdings estimated
(on the date of the Agreement) to be outstanding as of the closing date of the
Acquisition (the "Closing Date") less the aggregate discount at which Trump
could have repurchased the PIK Notes held by THCR Holdings) plus (D) $6.7
million (the estimated (as of the date of the Agreement) excess cash over the
operating needs of the Partnership on the Closing Date).
As contemplated in the Agreement, on October 7, 1996, the Closing Date, the
following transactions were effected:
(i) Trump contributed to THCR Holdings his 61.5% equity interest in
the Partnership, in consideration of which he received a 9.52854% limited
partnership interest in THCR Holdings, exchangeable into 3,626,450 shares
of THCR Common Stock (valuing each such share at $30.00 (the "THCR Stock
Contribution Value"));
(ii) TCI-II contributed to THCR Holdings its 37.5% equity interest in
the Partnership, in consideration of which it received a 5.81009% limited
partnership interest in THCR Holdings, exchangeable into 2,211,250 shares
of THCR Common Stock (valuing each such share at the THCR Stock
Contribution Value); and
(iii) THCR-TCHI Merger Corp., a Delaware corporation and a wholly
owned subsidiary of THCR Holdings ("Merger Sub"), merged (the "TCHI
Merger") with and into TCHI (holder of a 1% equity interest in the
Partnership) whereupon (x) each share of common stock of TCHI, par value
$.01 per share (the "TCHI Common Stock"), outstanding immediately prior to
the TCHI Merger was converted into the right to receive $.8845 in cash (the
"TCHI Consideration") and each share of common stock of Merger Sub was
converted into the right to receive one share of common stock of the
surviving corporation of the TCHI Merger and (y) each holder of the
outstanding warrants (the "Castle Warrants") issued under the Warrant
Agreement, dated as of December 30, 1993, between TCHI and First Bank
National Association, as warrant agent, became entitled to receive, for
each former share of TCHI Common Stock for which each Castle Warrant was
exercisable, an amount in cash equal to the TCHI Consideration.
In the aggregate, Trump received (i) a limited partnership interest in THCR
Holdings convertible into 5,837,700 shares of THCR Common Stock and (ii)
$884,550 in cash. On October 7, 1996, the closing sale price of the THCR Common
Stock on the New York Stock Exchange was $22.625 per share.
In connection with the Acquisition, the Partnership was converted to a
limited partnership with THCR Holdings as a 99% limited partner and TCHI, as the
surviving corporation of the TCHI Merger, as a 1% general partner. The business
and operations of the Partnership are managed by its sole general partner, TCHI.
TCHI's Board of Directors includes, as of October 7, 1996, the three members
appointed by the holders of the Mortgage Notes and the PIK Notes, as well as
four other members appointed by THCR Holdings.
The Partnership and TCHI have been designated unrestricted subsidiaries
under the indenture governing the 151 @ 2% Senior Secured Notes due 2005 (the
"THCR Senior Notes") of THCR Holdings and Trump Hotels & Casino
6
<PAGE>
TRUMP'S CASTLE ASSOCIATES, L.P. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(unaudited)
Resorts Funding, Inc. (the "THCR Senior Note Indenture"). All of THCR Holding's
direct and indirect equity interests in the Partnership were pledged to the
trustee under the THCR Senior Note Indenture for the benefit of the holders of
the THCR Senior Notes.
(4) Financial Information of Funding
Financial information relating to Funding is as follows (in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------ ------------
<S> <C> <C>
Total Assets (including Mortgage Notes Receivable of
$242,141, net of unamortized discount of $33,732 and
$35,572 at September 30, 1996 and December 31, 1995, PIK
Notes Receivable of $66,151, net of unamortized discount
of $7,575 at September 30, 1996 and $61,860, net
unamortized discount of $7,750 at December 31, 1995, and
Senior Notes Receivable of $27,000 at September 30, 1996
and December 31, 1995) ....................................... $293,985 $287,679
======== ========
Total Liabilities and Capital (including Mortgage Notes
Payable of $242,141, net of unamortized discount of $33,732
and $35,572 at September 30, 1996 and December 31, 1995, PIK
Notes Payable of $66,151, net of unamortized discount of
$7,575 at September 30, 1996, and $61,860, net of unamortized
discount of $7,750 at December 31, 1995, and Senior Notes
Payable of $27,000 at September 30, 1996 and December 31, 1995) $293,985 $287,679
======== ========
</TABLE>
Nine Months
Ended September 30,
1996 1995
-------- --------
Interest Income .......................... $ 32,242 $ 31,148
Interest Expense ......................... 32,242 31,148
-------- --------
Net Income ............................... $ -- $ --
======== ========
(5) License Revenue
On September 27, 1996, the Partnership entered into a Thermal Energy
Service Agreement with Atlantic Jersey Thermal Systems, Inc. ("Atlantic
Thermal") pursuant to which Atlantic Thermal was granted an exclusive license
for a period of 20 years to use, operate and maintain certain steam and chilled
water production facilities at Trump's Castle (the "Thermal Agreement"). In
consideration of the license, Atlantic Thermal paid the Partnership $3,000,000,
which amount has been included in other non-operating income during the three
month and nine month periods ended September 30, 1996.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULT OF OPERATIONS.
Capital Resources and Liquidity
Cash flow from operating activities is the Partnership's principal source
of liquidity. For the nine months ended September 30, 1996, the Partnership's
net cash flow provided by operating activities before cash debt service
obligations was $28.9 million and cash debt service was $21.9 million, resulting
in net cash provided by operating activities of approximately $7.0 million.
In addition to cash needs to fund the day-to-day operations of Trump's
Castle, the Partnership's principal uses of cash are capital expenditures and
debt service.
Total capital expenditures for 1996 are anticipated to be approximately
$7.0 million and principally consist of (i) the purchase of slot machines, (ii)
renovations to guest rooms and the hotel tower and (iii) the construction of two
new player clubs. Management believes that these levels of capital expenditures
are sufficient to maintain the attractiveness of Trump's Castle and the
aesthetics of its hotel rooms and other public areas. Capital expenditures of
$6.6 million (including $2.5 million of capital leases) were incurred during the
nine months ended September 30, 1996 primarily for the previously mentioned
projects.
The Partnership's debt consists primarily of (i) the Term Loan, (ii) the
Senior Notes, (iii) the Mortgage Notes and (iv) the PIK Notes.
The Term Loan bears interest at the prime rate plus 3%, currently 11-1/4%,
and requires amortized monthly principal payments of approximately $158,000. The
Term Loan matures on May 28, 2000.
The Senior Notes have an outstanding principal amount of $27 million, and
bear interest at the rate of 11-1/2% per annum (which may be reduced to 11-1/4%
upon the occurrence of certain events). The Senior Notes mature on November 15,
2000 and are subject to a sinking fund which requires the retirement of 15% of
the Senior Notes on each of November 15, 1998 and 1999.
The Mortgage Notes have an outstanding principal amount of approximately
$242 million, bear interest at the rate of 11-3/4% per annum (which may be
reduced to 11-1/2% upon the occurrence of certain events) and mature on November
15, 2003.
The PIK Notes have an outstanding principal amount of approximately $66.2
million and mature on November 15, 2005. Interest is currently payable
semi-annually at the rate of 13-7/8%. On or prior to November 15, 2003, interest
on the PIK Notes may be paid in cash or through the issuance of additional PIK
Notes. During the second quarter, interest on the PIK Notes was paid through the
issuance of additional notes aggregating $4.3 million, and the Partnership
anticipates that additional interest due in 1996 of approximately $4.6 million
will be paid through the issuance of additional PIK Notes.
On June 23, 1995, the Partnership entered into the Option Agreement with
Hamilton which granted the Partnership the Option to acquire the PIK Notes owned
by Hamilton. The Option was granted to the Partnership in consideration of $1.9
million of aggregate payments to Hamilton. The Option was exercisable at a price
equal to 60% of the aggregate principal amount of the PIK Notes delivered by
Hamilton, with accrued but unpaid interest, plus 100% of the PIK Notes issued to
Hamilton as interest subsequent to June 23, 1995. Pursuant to the terms of the
Option Agreement, upon the occurrence of certain events within 18 months of the
time the Option is exercised, the Partnership is required to make an additional
payment to Hamilton of up to 40% of the principal amount of the PIK Notes. On
May 21, 1996, the Partnership assigned the Option to THCR Holdings which, on
that same date, exercised the Option and acquired approximately 90% of the PIK
Notes for the Purchase Price, in exchange for which THCR Holdings received an
aggregate of approximately $59.3 million of PIK Notes. Concurrently with the
exercise of the Option, THCR Holdings entered into an agreement with the
Partnership and Trump which granted THCR Holdings a six-month exclusive right to
negotiate with Trump and the Partnership with the respect to the Acquisition. If
an agreement with respect to the Acquisition did not occur within six months,
the Partnership had the right to repurchase from THCR Holdings, for a period of
90 days, the acquired PIK Notes for the Repurchase Price. In the event that the
Partnership did not repurchase the acquired PIK Notes, Trump had the right to
purchase from THCR Holdings, for a
8
<PAGE>
period of 90 days following the Castle Repurchase Date, the acquired PIK Notes
for an amount in cash equal to the Repurchase Price calculated to the date of
such purchase.
The Partnership's total cash debt service requirement was approximately
$21.9 million during the nine months ended September 30, 1996 and the
Partnership anticipates that approximately $17.9 million will be required for
the remainder of 1996 to meet its debt service obligations. As a result of the
Acquisition and the Partnership's designation as an unrestricted subsidiary
under the THCR Senior Note Indenture, the Partnership has the ability to receive
advances, subject to the limitations and restrictions set forth in the THCR
Senior Note Indenture, to the Partnership for working capital, debt service and
other purposes. It is contemplated that THCR Holdings may fund up to $5 million
to the Partnership for such purposes. In addition, the Partnership has the
ability to obtain a working capital facility of up to $10 million, although
there can be no assurance that such financing will be available on terms
acceptable to the Partnership.
The ability of Funding and the Partnership to pay their indebtedness when
due will depend on their ability to either generate cash from operations
sufficient for such purposes or to refinance such indebtedness on or before the
date on which it becomes due. The Partnership does not currently anticipate
being able to generate sufficient cash flow from operations to repay a
substantial portion of the principal amounts of the Mortgage Notes and the PIK
Notes. Thus, the repayment of the principal amount of this indebtedness will
likely depend primarily upon the ability of Funding and the Partnership to
refinance this debt when due. The future operating performance of the
Partnership and the ability to refinance this debt will be subject to the then
prevailing economic conditions, industry conditions and numerous other
financial, business, and other factors, many of which are beyond the control of
Funding or the Partnership. There can be no assurance that the future operating
performance of the Partnership will be sufficient to meet these repayment
obligations or that the general state of the economy, the status of the capital
markets generally or the receptiveness of the capital markets to the gaming
industry will be conducive to refinancing this debt or other attempts to raise
capital.
Important Factors Relating to Forward Looking Statements
In connection with certain forward-looking statements contained in this
Quarterly Report on Form 10-Q and those that may be made in the future by or on
behalf of the Partnership and Funding, the Partnership and Funding note that
there are various factors that could cause actual results to differ materially
from those set forth in any such forward-looking statements. The forward-looking
statements contained in this Quarterly Report were prepared by management and
are qualified by, and subject to, significant business, economic, competitive,
regulatory and other uncertainties and contingencies, all of which are difficult
or impossible to predict and many of which are beyond the control of the
Partnership and Funding. Accordingly, there can be no assurance that the
forward-looking statements contained in this Quarterly Report will be realized
or that actual results will not be significantly higher or lower. The statements
have not been audited by, examined by, compiled by or subjected to agreed-upon
procedures by independent accountants, and no third-party has independently
verified or reviewed such statements. Readers of this Quarterly Report should
consider these facts in evaluating the information contained herein. In
addition, the business and operations of the Partnership and Funding are subject
to substantial risks which increase the uncertainty inherent in the
forward-looking statements contained in this Quarterly Report. The inclusion of
the forward-looking statements contained in this Quarterly Report should not be
regarded as a representation by the Partnership and Funding or any other person
that the forward-looking statements contained in this Quarterly Report will be
achieved. In light of the foregoing, readers of this Quarterly Report are
cautioned not to place undue reliance on the forward-looking statements
contained herein.
Results of Operations: Operating Revenues and Expenses
The financial information presented below reflects the financial condition
and results of operations of the Partnership. Funding is a wholly-owned
subsidiary of the Partnership and conducts no business other than collecting
amounts due under certain intercompany notes from the Partnership for the
purpose of paying principal of, premium, if any, and interest on its
indebtedness, which Funding issued as a nominee for the Partnership.
9
<PAGE>
Comparison of Results of Operations for the Three-Month Periods Ended
September 30, 1996 and 1995. The Partnership's net revenues (gross revenues less
promotional allowances) for the three months ended September 30, 1996 and 1995
were approximately $73.9 million and $89.2 million, respectively. The $15.3
million or 17.2% decrease is primarily the result of the decreased win
percentage as described below.
Gaming revenues provide the majority of the Partnership's revenues and
primarily consist of slot machine and table games win.
Slot win was approximately $49.2 million and $56.6 million (a decrease of
approximately $7.4 million or 13.1%) for the three months ended September 30,
1996 and 1995, respectively. The total dollar amount wagered by customers on
slot machines decreased by approximately $65.6 million or 9.8% to $601.2 million
for the three months ended September 30, 1996. This decrease in slot volume was
the primary reason for the decline in slot win. Additionally the slot win
percentage decreased to 8.2% for the three months ended September 30, 1996, from
8.5% for the three months ended September 30, 1995.
Table game win was approximately $17.9 million and $24.5 million (a
decrease of $6.6 million or 26.9%) for the three months ended September 30, 1996
and 1995, respectively. The total dollar amount wagered by customers on table
games decreased by approximately $2.5 million or 1.7% to $140.8 million for the
three months ended September 30, 1996 from $143.3 million for the three months
ended 1995. The decrease in table game win was primarily caused by a decrease in
the table game win percentage (table game win as a percentage of dollars wagered
on table games) to12.3% for the three months ended September 30, 1996 from 16.5%
for the three months ended September 30, 1995. The table game win percentage is
outside the control of the Partnership, and although it is fairly constant over
the long-term, it can vary significantly from period to period, due in part to
the play of certain premium patrons who tend to wager substantial dollar amounts
on table games.
For the three months ended September 30, 1996 and 1995, credit extended to
the table games customers was approximately 32.6% and 31.4% of overall table
play, respectively. This relatively high level of credit play continues a trend
which started in the last fiscal year and is the result of an increased level of
play by individuals who wager relatively large sums. These premium patrons tend
to use a higher percentage of credit when they wager.
Nongaming revenues, in the aggregate, decreased by approximately $800,000
or 4.2% to $18.1 million for the three months ended September 30, 1996 from
$18.9 million for the three months ended September 30, 1995, primarily as a
result of a decrease in rooms revenue activity. Although occupancy rates
remained constant when compared with the same period in 1995, average
complimentary revenues per room declined. This average rate was decreased by
management with the intention of stimulating casino gaming volume.
Promotional allowances increased by approximately $500,000 or 4.6% to $11.3
million for the three months ended September 30, 1996 from $10.8 million for the
three months ended September 30, 1995, primarily as a result of an increase in
complimentary food and beverage activity. During the current year two player
clubs were opened which provide private dining for premium gaming patrons.
Gaming costs and expenses decreased by approximately $2.9 million or 6.2%
to $43.0 million for the three months ended September 30, 1996 from $46.2
million for the three months ended September 30, 1995. This decrease is
primarily the result of lower promotional coupon costs as well as decreases in
gaming revenue taxes and payroll costs.
Other non-operating income of $3.0 million for the three months ended
September 30, 1996 represents the non-refundable licensing fee resulting from
the Thermal Agreement (see Note 5 to the Consolidated Financial Statements).
Interest expense increased approximately $1.0 million or 8.6% to $12.6
million for the three months ended September 30, 1996 from $11.6 million
primarily due to an increase in the outstanding principal related to the PIK
Notes.
Comparison of Results of Operations for the Nine-Month Periods Ended
September 30, 1996 and 1995. The Partnership's net revenues (gross revenues less
promotional allowances) for the nine months ended September 30, 1996 and 1995
were approximately $210.7 million and $225.3 million, respectively.
Slot win was approximately $144.1 million and $147.0 million (a decrease of
approximately $2.9 million or 2.0%) for the nine months ended September 30, 1996
and 1995, respectively. The total dollar amount wagered by
10
<PAGE>
customers on slot machines increased by approximately $48.1 million or 2.8% to
$1,737.2 million for the nine months ended September 30, 1996. This slot volume
increase is the result of marketing programs and special events implemented by
management to stimulate slot play. This increase in slot volume was offset by a
decrease in the slot win percentage (slot win as a percentage of dollars wagered
on slot machines) to 8.3% for the nine months ended September 30, 1996 from 8.7%
for the nine months ended September 30, 1995. This slot win percentage decrease
was primarily due to an increased volume of customer play on higher denomination
slot machines, which traditionally have a lower slot win percentage.
Table game win was approximately $50.2 million and $58.6 million (a
decrease of $8.4 million or 14.3%) for the nine months ended September 30, 1996
and 1995, respectively. The total dollar amount wagered by customers on table
games increased by approximately $29.6 million or 8.3% to $384.4 million for the
nine months ended September 30, 1996 from $354.8 for the nine months ended
September 30, 1995. This increase, again, is the result of marketing programs
and special events implemented by management as well as an increased emphasis on
providing superior customer service. These increases were offset by a decrease
in the table game win percentage (table game win as a percentage of dollar
wagered on table games) to 12.6% for the nine months ended September 30, 1996
from 15.9% for the nine months ended September 30, 1995. The table game win
percentage is outside the control of the Partnership, and although it is fairly
constant over the long-term, it can vary significantly from period to period,
due in part to the play of certain premium patrons who tend to wager substantial
dollar amounts on table games.
For the nine months ended September 30, 1996 and 1995, credit extended to
the table games customers was approximately 31.6% and 29.0% of overall table
play, respectively. This relatively high level of credit play continues a trend
which started in the last fiscal year and is the result of an increased level of
play by individuals who wager relatively large sums. These premium patrons tend
to use a higher percentage of credit when they wager.
Nongaming revenues, in the aggregate, increased by approximately $1.7
million or 3.8% to $46.6 million for the nine months ended September 30, 1996
from $44.9 million for the nine months ended September 30, 1995, primarily as
the result of food and beverage revenue (an approximate $2.7 million increase).
During the current year, marketing programs designed to increase gaming revenues
caused an increase in complimentary rooms and food and beverage revenues (an
approximate $5.2 million increase) as compared to the prior year.
Promotional allowances increased by approximately $5.0 million or 19.8 % to
$30.2 million for the nine months ended September 30, 1996 from $25.2 million
for the nine months ended September 30, 1995. As discussed above, marketing
programs designed to increase gaming revenues caused an increase in
complimentary rooms and food and beverage activity as compared to the prior
year.
Gaming costs and expenses increased by approximately $4.4 million or 3.7%
to $124.3 million for the nine months ended September 30, 1996 from $119.9
million for the nine months ended September 30, 1995. This increase is primarily
the result of an increase in promotional coupon costs as well as increased
direct marketing and advertising costs associated with the new marketing
programs and special events introduced to stimulate gaming revenues.
Room and food and beverage costs and expenses for the nine months ended
September 30, 1996 and 1995 decreased approximately $2.1 million or 18.5%. This
decrease is primarily due to the increased level of complimentary food, beverage
and hotel services provided to patrons. The costs of such complimentaries have
been included in gaming costs and expenses.
For the nine months ended September 30, 1996, general and administrative
costs increased approximately $2.3 million or 4.2% primarily due to higher
facilities costs, advertising costs and other administrative costs.
Other non-operating income of $3.0 million for the nine months ended
September 30, 1996 represents the non-refundable licensing fee resulting from
the Thermal Agreement (see Note 5 to the Consolidated Financial Statements).
Interest expense increased approximately $2.0 million or 5.8% to $36.2
million for the nine months ended September 30, 1996 from $34.2 million,
primarily resulting from an increase in the outstanding principal related to the
PIK Notes.
11
<PAGE>
PART II -- OTHER INFORMATION
ITEM 1 -- LEGAL PROCEEDINGS
The Partnership, its partners, its affiliates, Funding and certain of their
employees have been involved in various legal proceedings. In general, 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.
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 and not material to its business or financial
condition. 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 its
financial condition or results of operations of the Partnership.
On August 14, 1996, certain stockholders of THCR filed two derivative
actions in the Court of Chancery in Delaware (Civil Action Nos. 15148 and 15160)
against each of the members of the Board of Directors of THCR, THCR, THCR
Holdings, the Partnership and TCI-II. The plaintiffs claim that the directors of
THCR breached their fiduciary duties in connection with the Acquisition and seek
an injunction, damages and an accounting.
On October 16, 1996, a stockholder of THCR filed a derivative action in the
United States District Court, Southern District of New York (96 Civ. 7820)
against each member of the Board of Directors of THCR, THCR, THCR Holdings, the
Partnership, Trump Casinos, Inc., TCI-II, TCHI and Salomon Brothers Inc
("Salomon") . The plaintiff claims that the defendants breached their fiduciary
duties and engaged in ultra vires acts in connection with the Acquisition and
that Salomon was negligent in the issuance of its fairness opinion with respect
to the Acquisition. The plaintiff also alleges violations of the federal
securities laws for alleged omissions and misrepresentations in THCR's proxies,
and that Trump, TCI-II and TCHI breached that Agreement by supplying THCR with
untrue information for inclusion in the proxy statement delivered to THCR's
stockholders in connection with the Acquisition. The plaintiff seeks removal of
the directors of THCR, an injunction, rescission and damages.
The Partnership and the other defendants in the foregoing actions believe
that the suits are without merit and intend to contest vigorously the
allegations against them.
ITEM 2 -- CHANGES IN SECURITIES
None.
ITEM 3 -- DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 -- SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
None.
ITEM 5 -- OTHER INFORMATION
On October 23, 1996, Trump Casino Services, L.L.C. ("Trump Services"), a
New Jersey limited liability company and a subsidiary of Trump Atlantic City
Associates, Trump Plaza Associates, Trump Taj Mahal Associates
12
<PAGE>
and the Partnership entered into an Amended and Restated Services Agreement (the
"Services Agreement"), pursuant to which Trump Services, in order to generate
efficiencies and realize synergies through consolidation of operations, will
provide certain management, financial and other functions necessary and
incidental to the operations of each of the Trump Plaza Hotel and Casino, the
Trump Taj Mahal Casino Resort and Trump's Castle. Trump Services will receive no
compensation for providing the services, other than payments to fund the costs
and expenses incurred in connection therewith.
Reference is made to the Services Agreement, attached as an Exhibit hereto
and incorporated herein by reference.
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
Exhibit No. Description of Exhibit
----------- ----------------------
3.7.2 Amendment to the Second Amended and Restated Partnership
Agreement of Trump's Castle Associates, dated as of
October 7, 1996.
3.7.3 Third Amended and Restated Partnership Agreement of Trump's
Castle Associates, L. P., dated as of October 7, 1996.
10.46 Thermal Energy Service Agreement, dated as of September 27,
1996, by and between Atlantic Jersey Thermal Systems, Inc.
and Trump's Castle Associates.
10.47 Amended and Restated Services Agreement, dated as of October
23, 1996, by and among Trump Plaza Associates, Trump Taj
Mahal Associates, Trump's Castle Associates, L.P. and Trump
Casino Services, L.L.C.
27.1 Financial Data Schedule of Trump's Castle Funding, Inc.
27.2 Financial Data Schedule of Trump's Castle Associates, L.P.
b. Current Reports on Form 8-K:
The Registrants did not file any Current Reports on Form 8-K during the
period beginning July 1, 1996 and ending September 30, 1996.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRUMP'S CASTLE FUNDING, INC.
(Registrant)
Date: November 14, 1996
By: /s/ DONALD J. TRUMP
-----------------------------------
Donald J. Trump
President and Treasurer
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRUMP'S CASTLE ASSOCIATES, L.P.
(Registrant)
Date: November 14, 1996
By: /s/ JOHN P. BURKE
-----------------------------------
John P. Burke
Treasurer
15
AMENDMENT
TO
SECOND AMENDED AND RESTATED
PARTNERSHIP AGREEMENT
OF
TRUMP'S CASTLE ASSOCIATES
Amendment to the Second Amended and Restated Partnership Agreement, made
this 7th day of October 1996, by and among DONALD J. TRUMP ("Trump"), an
individual having an address at 725 Fifth Avenue, New York, New York 10022,
TC/GP, INC., a Delaware Corporation ("TC/GP"), and TRUMP'S CASTLE HOTEL &
CASINO, INC., a New Jersey Corporation ("TCHI").
W I T N E S S E T H:
WHEREAS, TCHI and Trump, as general partners and Trump as limited partner,
formed a partnership (the "Partnership") by entering into an Agreement of
Limited Partnership under the laws of the State of New Jersey on May 24, 1985,
and amended such agreement on December 14, 1988, August 8, 1990, February 7,
1992 and February 10, 1992 and further amended and restated such agreement as
set forth in an Amended and Restated Partnership Agreement dated May 29, 1992
and a Second Amended and Restated Partnership Agreement dated December 30, 1993
(said Second Amended and Restated Partnership Agreement as in effect on the date
hereof is referred to herein as the "Partnership Agreement"); and
WHEREAS, Trump, TCHI and TC/GP desire to amend the Agreement to convert the
Partnership from a general partnership to a limited partnership under the laws
of the State of New Jersey effective on the date hereof and to continue the
Partnership as a limited partnership under the New Jersey Uniform Limited
Partnership Law; and
WHEREAS, in conjunction with the conversion of the Partnership to a limited
partnership, Trump, TCHI and TC/GP desire to add the designation "L.P." to the
name of the Partnership.
NOW THEREFORE, it is agreed that:
1. Effective on or after the date hereof, paragraph 1.1 of the Partnership
Agreement is hereby amended in its entirety to read as follows:
"1.1 Name. The name of the Partnership shall be, and the business of the
Partnership shall be conducted under the name of, "Trump's
<PAGE>
Castle Associates, L.P.". All contracts of the Partnership shall be made,
all instruments and documents executed, and all acts of the Partnership
done, in the name of the Partnership; and all properties of the Partnership
shall be acquired, held and disposed of in the name of the Partnership or
in a designated nominee."
2. The following definitions are added to Article 2 of the Partnership
Agreement:
"General Partners" shall mean Trump, TC/GP and TCHI, their duly admitted
successors and assigns as general partners hereof, and any other Person who is a
general partner of the Partnership at the time of reference thereto.
"Limited Partners" shall mean Trump and TC/GP, their permitted successors
or assigns as limited partners hereof, and any Person who is a limited partner
of the Partnership at the time of reference thereto.
3. The definition of "Partner" under Article 2 of the Partnership Agreement
is hereby amended in its entirety to read as follows:
"Partners" shall mean the General Partners and the Limited Partners, their
duly admitted successors or assigns or any Person who is a partner of the
Partnership at the time of reference thereto.
4. Effective on and after the date hereof, Paragraph 4.5 of the Partnership
Agreement is hereby amended in its entirety to read as follows:
"As at any date, each Partner's "Partnership Percentage" shall mean such
Partner's cumulative General Partner and Limited Partner percentage interest in
the Profits and Losses of the Partnership determined in accordance with this
Section 4.5. As at the date of this Agreement the Partnership Percentage of each
Partner is as follows:
Limited General
Partnership Partnership Partnership
Partner Interest Interest Percentage
------- ----------- ----------- -----------
Trump 60.5% 1.0% 61.5%
TC/GP 36.5% 1.0% 37.5%
TCHI -- 1.0% 1.0%
-2-
<PAGE>
5. Effective on and after the date hereof, Paragraph 6.2 of the Partnership
Agreement is amended in its entirety to read as follows:
6.2. Partners. The day-to-day control of the business, operations and
activities of the Partnership shall be vested in and conducted by the General
Partners which shall be responsible for supervising the activities of the
Partnership's officers, employees and agents. Except as otherwise provided
expressly in this Agreement, and subject to the provisions of Section 6.1 and
Article 7, the General Partners shall have full authority in the name and on
behalf of the Partnership to do all things deemed necessary or desirable by them
in the conduct of the business of the Partnership, including, without
limitation, the right to enter into and perform contracts of all kinds, to bring
and defend actions at law or in equity, to buy, own, manage, sell, lease or
otherwise acquire or dispose of Partnership assets, to pay all expenses incurred
by or on behalf of the Partnership, and to cause the Partnership to enter into
partnerships, joint ventures and similar arrangements; provided, however, that
no action that would, if the Partnership were a corporation incorporated under
the laws of the State of New Jersey, require the authorization of the board of
directors of such corporation, shall be deemed authorized or be undertaken by
the General Partners without the prior approval of the Board of Partner
Representatives in accordance with Article 7 hereof. The General Partners may
delegate matters within the authority of the General Partners hereunder to a
General Partner who shall be the managing partner or to a third party, acting as
agent for the Partners, pursuant to a management or similar agreement.
6. Effective on and after the date hereof, Paragraph 13.1 of the
Partnership Agreement is amended in its entirety to read as follows:
13.1 Termination. The Partners hereby waive their right of partition and
agree not to do anything that would terminate the Partnership prior to the
expiration of its term without the prior written consent of the other Partners.
No Partner may voluntarily withdraw from the Partnership without the prior
written consent of all other Partners. Upon the withdrawal, death, retirement or
insanity of the General Partner, or any other event of dissolution under the New
Jersey Uniform Limited Partnership Law, the business of the Partnership shall be
wound-up and terminated unless all remaining Partners, within 90 days
thereafter, agree in writing that the Partnership shall be reconstituted and its
business continued.
7. On and after the date hereof, each reference in the Partnership
Agreement to "this Partnership Agreement", "hereof", "hereunder" or words of
like import referring to the Agreement shall mean and be a reference to the
Partnership Agreement as
-3-
<PAGE>
amended by this Amendment. The Partnership Agreement, as amended by this
Amendment, shall continue in full force and effect and is hereby in all respects
ratified and confirmed.
8. From time to time upon request and without further consideration, each
of the parties hereto shall, and shall cause its subsidiaries and affiliates to,
execute, deliver and acknowledge all such further instruments, including a
Certificate of Limited Partnership, and do such further acts as any other party
hereto may reasonably require to evidence or implement the conversion of the
Partnership to a Limited Partnership pursuant to this Amendment.
9. This Amendment shall be governed by, and construed in accordance with,
the laws of the State of New Jersey.
10. Notwithstanding anything to the contrary contained in this Amendment,
this Amendment will be deemed to include all provisions required by the New
Jersey Casino Control Act and the regulations promulgated thereunder ("Casino
Control Act") and to the extent that anything contained in this Amendment is
inconsistent with the Casino Control Act, the provisions of the Casino Control
Act shall govern and all provisions of the Casino Control Act, to the extent
required by law to be included in this Amendment, are incorporated herein by
reference as if fully restated in this Amendment.
IN WITNESS WHEREOF, this Amendment has been executed as of the 7th day of
October 1996.
/s/ DONALD J. TRUMP
--------------------------------------
Donald J. Trump
TC/GP, INC.
By: /s/ DONALD J. TRUMP
--------------------------------------
Donald J. Trump, President
TRUMP'S CASTLE HOTEL & CASINO, INC.
By: NICHOLAS L. RIBIS
--------------------------------------
Nicholas L. Ribis
Vice President
-4-
==================================================================
TRUMP'S CASTLE ASSOCIATES, L.P.
a New Jersey limited partnership
Third Amended and Restated Partnership Agreement
October 7, 1996
=================================================================
<PAGE>
TRUMP'S CASTLE ASSOCIATES, L.P.
a New Jersey limited partnership
THIRD AMENDED AND RESTATED PARTNERSHIP AGREEMENT
THIS THIRD AMENDED AND RESTATED PARTNERSHIP AGREEMENT is entered into by
and among Donald J. Trump ("Trump"), an individual whose principal residence is
725 Fifth Avenue, New York, New York 10022, Trump Casinos II, Inc. (formerly
known as TC/GP, Inc.), a Delaware corporation ("TC/GP"), as Withdrawing Limited
Partners, Trump's Castle Hotel & Casino, Inc., a New Jersey corporation
("TCHI"), as general partner, and Trump Hotels & Casino Resorts Holdings, L.P.,
a Delaware limited partnership ("THCR Holdings"), as limited partner. Each of
TCHI and THCR Holdings is referred to herein as a "Partner" and collectively
they are the "Partners."
PRELIMINARY STATEMENT
Terms defined in this Preliminary Statement which are not defined
herein have the respective meanings set forth in Article 2 of this Agreement.
WHEREAS, TCHI and Trump, as general partners, and Donald J. Trump as
limited partner, formed a partnership (the "Partnership") by entering into an
Agreement of Limited Partnership under the laws of the State of New Jersey on
May 24, 1985, and amended such agreement on December 14, 1988, August 8, 1990,
February 7, 1992 and February 10, 1992, and further amended and restated such
agreement as set forth in an Amended and Restated Partnership Agreement dated
May 29, 1992 (said Amended and Restated Partnership Agreement, as in effect on
the date hereof, is referred to herein as the "Prior Agreement"); and
WHEREAS, in connection with the consummation of an exchange offer and
recapitalization of certain outstanding indebtedness of the Partnership, Trump,
TCHI and TC/GP amended and restated in its entirety the Prior Agreement in a
Second Amended and Restated Partnership Agreement dated as of December 30, 1993,
which set forth their respective rights and obligations in connection with the
Partnership; and
WHEREAS, in connection with the acquisition of all of the equity
interests in the Partnership by THCR Holdings (the "Acquisition"), Trump, TCHI
and TC/GP amended the Second Amended and Restated Partnership Agreement dated as
of December 30, 1993 in an Amendment dated October 7, 1996, whereby Trump, TCHI
and TC/GP converted the Partnership to a limited partnership governed by the New
Jersey Uniform Limited Partnership Law and set forth the respective limited and
general partnership interests of each Partner (the Second Amended and Restated
Partnership Agreement as amended and in effect on the date hereof is referred to
herein as the "Current Agreement"); and
<PAGE>
WHEREAS, Trump, TCHI and TC/GP desire to amend the Current Agreement to
convert each of Trump's and TC/GP's remaining one (1%) percent general
partnership interests in the Partnership into one (1%) percent limited
partnership interests (the "Conversion") such that upon the consummation of the
Conversion, Trump has a 61.5% limited partnership interest in the Partnership
and TC/GP has a 37.5% limited partnership interest in the Partnership; and
WHEREAS, simultaneously with the Conversion, Trump and TC/GP have
contributed their respective 61.5% or 37.5% limited partnership interest in the
Partnership to THCR Holdings; and
WHEREAS, Trump, TC/GP and TCHI desire to substitute THCR Holdings as a
limited partner of the Partnership in lieu of Trump and TC/GP to the full extent
of the interest so assigned;
NOW, THEREFORE, Trump, TCHI, TC/GP and THCR Holdings agree that the
Current Agreement, as amended by the Second Amendment, is hereby amended and
restated in its entirety and that the Partnership is hereby continued as a
limited partnership on the terms and conditions set forth herein, and further
agree as follows:
ARTICLE 1
Certain Matters
2.1 Name. The name of the Partnership shall be, and the business of the
Partnership shall be conducted under the name of, "Trump's Castle Associates,
L.P.". All contracts of the Partnership shall be made, all instruments and
documents executed, and all acts of the Partnership done, in the name of the
Partnership; and all properties of the Partnership shall be acquired, held and
disposed of in the name of the Partnership or in a designated nominee.
2.2 Term. The Partnership shall continue in existence until December
31, 2041 or until the earlier termination of the Partnership in accordance with
the provisions of Article 13.
ARTICLE 2
Definitions
The following definitions shall for all purposes, unless otherwise
clearly indicated to the contrary, apply to the terms used in this Agreement:
"Acquisition" has the meaning set forth in the preamble to this
Agreement.
"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,
<PAGE>
and, with respect to any specified natural Person, any other Person having a
relationship with such specified Person by blood, marriage or adoption not more
remote than first cousin. For purposes of this definition: "control" when used
with respect to any specified Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agreement" means this Partnership Agreement, as in effect from time to
time.
"Alternate Noteholder Representative" has the meaning stated in Section
7.2 of this Agreement.
"Appraisal" shall mean the appraisal of the Castle dated August 31,
1993 prepared by Appraisal Group International.
"Bank Pledge Agreements" shall mean the pledge agreements listed on
Schedule 1 hereto in favor of certain creditors of Donald J. Trump.
"Board of Partner Representatives" has the meaning stated in Section
6.1.
"Capital Account" has the meaning stated in Section 4.1.
"Capital Expenditure" means, with respect to any Person, amounts which
should in accordance with generally accepted accounting principles be added to
the fixed assets account on the balance sheet of such Person in respect of (i)
the acquisition, construction, improvement, replacement or betterment of assets
or leaseholds and (ii) to the extent related to and not included in clause (i)
above, expenditures on, account of materials, contract labor and direct labor
(excluding expenditures properly chargeable to repairs and maintenance), all
determined in accordance with generally accepted accounting principles
consistently applied.
"Capitalized Lease" means, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee which, in
conformity with generally accepted accounting principles consistently applied,
is or should be accounted for as a capitalized lease on the balance sheet of
such Person.
"Capitalized Lease Obligations" means, with respect to any Person, the
amount of the liability reflecting the aggregate discounted amount of future
payments under all Capitalized Leases by such Person as lessee, calculated in
conformity with generally accepted accounting principles consistently applied.
"Casino Control Act" means the New Jersey Casino Control Act and the
regulations promulgated thereunder, each as in effect from time to time.
"Castle" has the meaning stated in Article 3.
"Certificate of Interest" has the meaning stated in Section 15.15.
"Certificate Transfer Ledger" has the meaning stated in Section 15.15.
3
<PAGE>
"Code" means the Internal Revenue Code of 1986, as in effect from time
to time.
"CRDA Bonds" has the meaning stated in Section 1.01 of the Indenture.
"Debt" means, with respect 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 (excluding
trade credit, so long as such trade credit is not characterized as a long-term
liability under generally accepted accounting principles), 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
consistently applied, and shall also include any Capitalized Lease Obligations
of such Person.
"EBITDA" means, with respect to any period, an amount equal to the sum
of (i) the net income (or loss) of the Partnership for such period determined in
accordance with generally accepted accounting principles, consistently applied,
excluding any extraordinary, unusual or non-recurring gains or losses, plus (ii)
all amounts deducted in computing such net income (or loss) in respect of
interest (including the imputed interest portions of rentals under Capitalized
Leases), depreciation, amortization and taxes based upon or measured by income,
plus (iii) other non-cash charges arising from market value adjustments and
adjustments pertaining to contributions of deposits in each case in respect of
CRDA Bonds.
"General Partner" shall mean TCHI, its successors and assigns.
"Guarantee" means:
(i) any guarantee by a Person of the payment or performance of,
or any contingent obligation by a Person in respect of, any
Debt or other obligations of any obligor other than such
Person;
(ii) any other arrangement whereby credit is extended to one
obligor on the basis of any promise or undertaking of
another Person (including any "comfort letter" written by
such other Person to a creditor or prospective creditor) to
(a) pay the Debt or other obligations of such obligor, (b)
purchase an obligation owed by such obligor, (c) purchase or
lease assets under circumstances designed to enable such
obligor to discharge certain specific obligations or (d)
maintain the capital, working capital, solvency or general
financial condition of such obligor, in each case whether or
not such arrangement is disclosed in the balance sheet of
such other Person or referred to in a note thereto;
(iii) any liability of a Person as a general partner of a
partnership in respect of Debt or other obligations of such
partnership (other than non-recourse Debt or other
non-recourse obligations);
(iv) any liability of a Person as a joint venturer of a joint
venture in respect of Debt or other obligations of such
joint venture (other than non-recourse Debt or other
non-recourse obligations); and
(v) reimbursement obligations with respect to outstanding
letters of credit, surety bonds and other financial
guarantees; provided,
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however, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary
course of business.
"Intercreditor Agreement" means the Intercreditor Agreement dated as of
the date hereof between Midlantic, the Partnership and the Trustees under the
Mortgage Note Indenture, PIK Indenture and Senior Note Indenture.
"Limited Partner" shall mean THCR Holdings, its successors and assigns.
"Limited Partner Priority Capital" means, at any date, an amount equal
to $15 million, less distributions made pursuant to Section 5.7.
"Midlantic" means Midlantic National Bank, together with its successors
and assigns.
"Midlantic Debt" means the indebtedness in a principal amount not to
exceed $38,000,000 evidenced by the Amended and Restated Credit Agreement, dated
as of May 29, 1992, as amended, between the Partnership, TCFI and Midlantic
National Bank and the Amended and Restated Term Note of the Partnership issued
thereunder. Said Amended and Restated Credit Agreement, as amended, is referred
to herein as the "Midlantic Credit Agreement."
"Midlantic Debt Default" shall mean the occurrence of (i) any Event of
Default (as such term is defined in the Midlantic Credit Agreement), in respect
of which Midlantic shall be obligated to give the Partnership the 90-day notice
required by Section 3.1 of the Intercreditor Agreement prior to any acceleration
of the Midlantic Debt based thereupon, but only if such a 90-day notice is given
by Midlantic, or (ii) any other Event of Default (as so defined).
"Mortgage Noteholders" shall mean the Holders (as defined in Section
1.1 of the Mortgage Note Indenture) of Mortgage Notes.
"Mortgage Note Indenture" means the Indenture, dated as of the date
hereof, by and among TCFI, the Partnership and the Trustee, relating to TCFI's
11 3/4% Mortgage Notes due 2003, as such Indenture may be supplemented, modified
or amended by one or more indentures or other instruments supplemental thereto
entered into pursuant to the applicable provisions thereof.
"Mortgage Notes" has the meaning stated in Section 1.1 of the Mortgage
Note Indenture.
"New Jersey Uniform Limited Partnership Law" means Sections 1 through
73 of Chapter 2A of Title 42 of the New Jersey Statutes Annotated, as in effect
from time to time.
"Noteholders" shall mean the Mortgage Noteholders and the PIK
Noteholders.
"Noteholder Representatives" means the Partner Representatives
appointed by the Noteholders in accordance with Section 7.2.
"Notes" shall mean the Mortgage Notes and the PIK Notes.
"Partner" means any of TC/GP, Trump and TCHI and the permitted
transferees, successors and assigns of each, including THCR Holdings.
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"Partner Representative" means a member of the Board of Partner
Representatives appointed and holding such office in accordance with Article 7.
"Partnership" has the meaning stated in the Preliminary Statement to
this Agreement.
"Partnership Interest" means the interest of a Partner in the
Partnership.
"Partnership Percentage" has the meaning stated in Section 4.5.
"Person" means any individual, partnership, corporation, company,
association, trust, joint venture, unincorporated organization, entity or
division, or any government, governmental department or agency or political
subdivision thereof.
"PIK Notes" have the meaning stated in section 1.1 of the PIK
Indenture.
"PIK Noteholders" shall mean the Holders (as defined in Section 1.1 of
the PIK Indenture) of PIK Notes.
"PIK Indenture" means the Indenture dated as of the date hereof by and
among TCFI, the Partnership and the Trustee, relating to TCFI's Increasing Rate
Subordinated Pay-in-Kind Notes due 2005, or such Indenture may be supplemented,
modified or amended by one or more indentures or other instruments supplemental
thereto entered into pursuant to the applicable provisions thereof.
"Profits" and "Losses" mean, for each fiscal year or other period of
the Partnership, the amount of profits or losses, as the case may be, for such
year or period determined in the manner prescribed in Code Section 703(a) using
the tax accounting methods used for Federal income tax purposes and as
prescribed in Regulations under Code Section 704(b) reflecting the book
adjustment of the Capital Accounts as initially reflected in Article 4. Amounts,
if any, allocated and payable pursuant to Section 5.5 shall be treated as
expenses for determining such profits and losses.
"Security Documents" shall mean the Mortgage Documents (as defined in
the Mortgage Note Indenture) and the Pledge Agreement (as defined in the PIK
Indenture).
"Senior Note Indenture" has the meaning set forth for such term in the
Mortgage Note Indenture.
"Services Agreement" means the Services Agreement dated as of the date
hereof between the Partnership and TC/GP, as the same may be supplemented,
modified or amended in accordance with Section 7.11.1.12.
"TCFI" means Trump's Castle Funding, Inc., a New Jersey corporation,
all of the capital stock of which is owned by the Partnership and which acts for
the Partnership as a nominee corporation to effect, in a conduit basis, the
borrowings evidenced by the Mortgage Notes and the PIK Notes issued under the
Mortgage Note Indenture and PIK Indenture.
"TC/GP" has the meaning set forth in the Preamble to this Agreement.
"TCHI" has the meaning set forth in the Preamble to this Agreement.
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"THCR Holdings" has the meaning set forth in the preamble to this
Agreement.
"Trump" has the meaning stated in the Preamble to this Agreement.
"Trump Representatives" means the Partner Representatives appointed by
the General Partner in accordance with Section 7.2.
"Trustee" means First Bank National Association, as trustee under the
Mortgage Note Indenture and the PIK Indenture, and any successor trustee
appointed under the provisions of said indentures.
"Withdrawing Limited Partners" shall mean TC/GP and Trump.
ARTICLE 3
Purpose
The purpose and business of the Partnership is to conduct casino gaming
and to own and operate the Trump's Castle Casino Resort and the ancillary
structures, marina and other facilities used or to be used in connection with
the operation thereof located in Atlantic City, New Jersey (collectively, the
"Castle"), with the power to: (i) buy, sell, lease, or enter into any
transaction to effectuate any of the foregoing; (ii) exercise complete control
over the Castle and all personal property attached to or used in connection
therewith and all securities or other interests or obligations arising out of
the sale, exchange or other disposition of the Castle or any of its properties
by the Partnership; (iii) borrow money for Partnership purposes and otherwise
mortgage, pledge or encumber the Castle or any part thereof either directly or
through one or more nominee corporations, including, without limitation, TCFI;
and (iv) do all things necessary, incidental, desirable or appropriate in
connection with the foregoing.
ARTICLE 4
Capital Accounts
2.3 Capital Accounts. A separate capital account shall be maintained
for each Partner (each a "Capital Account"). Capital Accounts shall be
maintained in accordance with the regulations promulgated under Section 704(b)
of the Code. The Capital Account as of the date of this Agreement of each
Partner is as follows:
(a) THCR Holdings shall have a capital account equal to the
combined capital accounts of Trump and TC/GP at the time of
the contribution of their Partnership Interests to THCR
Holdings, adjusted in accordance with Treasury Regulation
Sections 1.704-1(b)(2)(iv)(l) and 1.704-1(b)(2)(iv)(e).
(b) TCHI shall have a capital account equal to its capital
account at the time of the contribution by Trump and TC/GP
of their Partnership Interests to THCR Holdings, adjusted in
accordance with Treasury Regulations Section
1.704-1(b)(2)(iv)(e).
2.4 Maintenance of Separate Capital Accounts. There shall be credited
to each Partner's Capital Account, as set forth in Section 4.1, each Partner's
share of the Profits of the Partnership allocated to such Partner pursuant to
Article 5 and any additional contributions to the capital of the Partnership
made by such Partner in accordance with Section 4.4. There shall be charged
against each Partner's Capital Account the amount of all cash
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distributions made to such Partner (other than such distributions treated as
guaranteed payments pursuant to Section 5.5), such Partner's share of the Losses
of the Partnership allocated to such Partner pursuant to Article 5 and the fair
market value of any property (other than cash) distributed to such Partner.
2.5 Capital Account Determinations. Except as otherwise provided in
this Agreement, whenever it is necessary to determine the Capital Account of any
Partner for purposes of any provision hereof, the Capital Account of the Partner
shall be determined after giving effect to all capital contributions theretofore
made to the Partnership and all allocations of Profits and Losses for
transactions effected prior to the time as of which such determination is made
and all distributions theretofore made. The Capital Account of any Partner,
including any additional or substitute partner, who shall receive a Partnership
Interest in the Partnership or whose Partnership Interest shall be increased by
means of a transfer to such Partner of all or a part of the Partnership Interest
of another Partner shall be credited with (or charged with) the transferor's
Capital Account (or an appropriate part thereof in the case of a partial
transfer of a Partnership Interest); and, in such event, corresponding
adjustments shall be made with respect to the Capital Account of the transferor
Partner.
2.6 Additional Capital Contributions. No Partner shall be obligated to
make any additional contributions to the capital of the Partnership or, as
between Partners, to restore any deficit in its Capital Account. If a Partner
shall make any additional contributions to the capital of the Partnership, the
amount thereof shall be credited to such Partner's Capital Account; but, unless
otherwise agreed among the Partners at the time such contribution is made, such
Partner will not be entitled to the return of such contribution prior to the
termination of the Partnership. No additional contribution made by a Partner
will result in a change in the Partnership Percentages of the Partners.
2.7 Partnership Percentages. As at any date, each Partner's
"Partnership Percentage" shall mean such Partner's percentage interest in the
Profits and Losses of the Partnership determined in accordance with this Section
4.5. As at the date of this Agreement the Partnership Percentage of each Partner
is as follows:
General Limited
Partnership Partnership Partnership
Partner Percentage Percentage Percentage
- - ------- ------------- ----------- ------------
THCR Holdings -- 99.0% 99.0%
TCHI 1.0% -- 1.0%
ARTICLE 5
Allocations, Certain Payments and Distributions
2.8 Allocations. Except as is otherwise provided in this Agreement, all
Profits and Losses of the Partnership shall be allocated among the Partners for
each calendar year (or portion thereof) and credited or debited, as the case may
be, to their Capital Accounts as follows:
2.8.1 Losses. Losses shall be allocated as follows: (A) First, to those
Partners with positive balances in their Capital Accounts in proportion to and
to the extent of the respective positive balances of such Capital Accounts,
until either the full amount of such Losses
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shall have been so allocated or the Capital Account balances equal zero, and (B)
next, in accordance with the Partners' Partnership Percentages.
2.8.2 Profits. Profits shall be allocated as follows: (A) First, to
those Partners with negative balances in their Capital Accounts, in proportion
to and to the extent of the respective negative balances of the Capital
Accounts, until either the full amount of such Profit shall have been so
allocated or the Capital Account Balances of such Partners equal zero, (B) then,
if the ratio between the Capital Account Balances of the Partners is other than
in the ratio of their then prevailing Partnership Percentages (determined for
this purpose without regard to any unrecovered amounts of Limited Partner
Priority Capital), there shall be credited to the Partners with the lesser
balance so much of the Profit as may be available to eliminate or reduce the
disparity and (C) next, in accordance with the Partners' Partnership
Percentages.
2.9 Allocations for Tax Purposes.
2.9.1 Except as otherwise provided in this Section 5.2, Profits and
Losses for all income tax purposes shall be allocated to the Partners to the
greatest extent practicable in a manner consistent with the manner set forth in
Sections 5.1.1 and 5.1.2 and Code Section 704(b) and (c) and the Regulations
promulgated thereunder. Except as provided in Section 5.2.5, allocations
pursuant to this Section 5.2 shall not be reflected in the Capital Accounts of
the Partners.
2.9.2 Notwithstanding anything to the contrary in this Agreement, if
there is a net decrease in partnership minimum gain, as defined in Treasury
Regulation Section 1.704-2(b)(2), (except as a result of conversion or
refinancing of Partnership indebtedness, certain capital contributions or
revaluations of the Partnership property as further outlined in Treasury
Regulation Sections 1.704-2(d)(4), (f)(2) or (f)(3)), each Partner shall be
specially allocated items of Partnership income and gain for such year (and if
necessary, subsequent years) in an amount equal to that Partner's share of the
net decrease in Partnership minimum gain. The items to be so allocated shall be
determined in accordance with Treasury Regulation Section 1.704-2(f). This
section 5.2.2 is intended to comply with the minimum gain chargeback rule in
said Section of the Treasury Regulations and shall be interpreted consistently
therewith. Allocations pursuant to this section 5.2.2 shall be made in
proportion to the respective amounts required to be allocated to each Partner
pursuant hereto.
2.9.3 Notwithstanding anything to the contrary in this Agreement except
Section 5.2.2, if there is a net decrease in minimum gain attributable to
partner nonrecourse debt, as determined in accordance with Treasury Regulation
Section 1.704-2(i)(2), each Partner shall be specially allocated items of
Partnership income and gain for such year (and if necessary, subsequent years)
in an amount equal to that Partner's share of the net decrease in the minimum
gain attributable to partner nonrecourse debt. The items to be so allocated
shall be determined in accordance with Treasury Regulation Section 1.704-2(i)(4)
and (j)(2). This Section 5.2.3 is intended to comply with the minimum gain
chargeback requirement contained in Treasury Regulations Section 1.704-2(i)(4)
and shall be interpreted consistently therewith. Allocations pursuant to this
section 5.2.3 shall be made in proportion to the respective amounts required to
be allocated to each Partner pursuant hereto.
2.9.4 If during any taxable year of the Partnership any Partner
unexpectedly receives an adjustment, allocation or distribution described in
Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), and such
Partner has a deficit Capital Account balance, there shall be allocated to
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such Partner items of income and gain (consisting of a pro rata portion of each
item of Partnership income, including gross income and gain for such year) in an
amount and manner sufficient to eliminate such Partner's deficit Capital Account
balance as quickly as Possible. This Section 5.2.4 is intended to constitute a
"Qualified Income Offset", under Treasury Regulation Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
2.9.5 Each Partner's Capital Account shall be charged for such
Partner's allocable share of expenditures of the Partnership (based on the
Partnership Percentages prevailing on the date such expenditures were made)
described in Section 705(a)(2)(B) of the Code (relating to expenditures which
are neither deductible nor properly chargeable to capital) and expenditures
which, pursuant to the Regulations under Section 704(b) of the Code, are
characterized as Section 705(a)(2)(B) expenditures.
2.9.6 The amount of any partner nonrecourse deductions as defined in
Treasury Regulation Section 1.704-2(i)(2) attributable to debt of the
Partnership for which a Partner bears the economic risk of loss, within the
meaning of Treasury Regulation Section 1.752-2(d)(3), shall be specially
allocated to such Partner.
2.9.7 To the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Section 732, 734 or 743 of the Code is required to
be taken into account in determining Capital Accounts in accordance with
Treasury Regulations Section 1.704-1(b)(2)(iv)(m), the amount of such adjustment
to the Capital Accounts shall be treated as an item of gain (if the adjustment
decreased such basis) and such gain or loss shall be specially allocated to the
Partners in a manner consistent with the manner in which their Capital Accounts
are required to be adjusted pursuant to such Section of the Regulations.
2.10 Tax Elections. All elections required or permitted to be made by
the Partnership under any applicable tax law shall be made by the General
Partner in its sole discretion.
2.11 Interim Closing of Books. In the event of a transfer of a
Partnership Interest or a change in the Partners' Partnership Percentages, then
Profits and Losses, each item thereof and all tax items shall be allocated to
the Partners by taking into account their varying interests during the taxable
year of the transfer or change in accordance with Section 706(d) of the Code,
using the interim closing of the books method.
2.12 Certain Payments.
The payments specified in this Section 5.5 shall be made to the
specified Partner for services or the use of capital and shall be treated as
"guaranteed payments" within the purview of Section 707(c) of the Code for
Federal income tax purposes and as expenses of the Partnership for purposes of
determining partnership Profits and Losses.
Subject to the following provisions of this Section 5.5, the Limited
Partner shall be entitled to receive a distribution on February 25 and August 25
in each fiscal year (each a "distribution date") in respect of Limited Partner
Priority Capital unrecovered and outstanding during the period commencing on the
date immediately following the next preceding distribution date and ending on
such distribution date calculated at a rate per annum equal to 9.5%. The
Partnership shall pay such distribution in cash not later than the 30th day
following the applicable distribution date if, and to the extent, permitted by
Sections 10.09 of the Mortgage Note Indenture, PIK Indenture and Senior Note
Indenture. If the Partnership shall be unable to pay the entire
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amount of any such distribution in cash, the portion not paid in cash shall be
forgiven and shall not cumulate.
2.13 Distributions. Except as prohibited by contractual obligations of
the Partnership entered into in accordance with the terms and provisions of this
Agreement, the General Partner may distribute to the Partners the net cash flow
of the Partnership from time to time in amounts as determined by the General
Partner in accordance with Partnership Percentage Interests.
2.14 Priority Return of Limited Partner Priority Capital in Certain
Events. The Limited Partner shall be entitled to receive an amount equal to
Limited Partner Priority Capital upon any liquidation or winding-up of the
Partnership in priority to other distributions to the Partners.
ARTICLE 6
Management and Operation of Business
2.15 Board of Partner Representatives. The business, operations and
affairs of the Partnership shall be managed by and through a Board of Partner
Representatives (the "Board of Partner Representatives"), which shall be
comprised of those individuals who are members of the Board of Directors of the
General Partner. The Board of Partner Representatives shall conduct its
activities as set forth in Article 7. Except as otherwise provided expressly in
this Agreement, the Board of Partner Representatives shall have full authority
to do all things deemed necessary or desirable by it in the conduct of the
business, operations and affairs of the Partnership.
Except as otherwise provided expressly in this Agreement, all matters
of policy pertaining to the business of the Castle shall be approved by the
Board of Partner Representatives.
The Board of Partner Representatives shall approve an annual operating
budget prepared by the General Partner and any material changes thereto. Such
annual operating budget shall set forth in reasonable detail, consistent with
then current practice for companies which own and operate casino-hotels, all
major items of income, expense, capital and extraordinary expenditures,
investments and similar matters.
2.15.1 Audit Committee. The Board of Partner Representatives
shall have an Audit Committee consisting of two Noteholder
Representatives appointed by the Noteholder Representatives and
one Trump Representative appointed by the Trump Representatives.
Such Audit Committee shall perform the duties to be performed by
the audit committee of the Partnership in accordance with the
Casino Control Act.
2.15.2 Compensation Committee. The Board of Partner
Representatives shall have a Compensation Committee consisting of
two Noteholder Representatives appointed by the Noteholder
Representatives and two Trump Representatives appointed by the
Trump Representatives. The Compensation Committee shall review
and recommend to the Board of Partner Representatives the
compensation and benefits to be paid to the executive officers of
the Partnership. The Compensation Committee shall also review and
advise the Board of Partner Representatives in connection with
any changes to the Partnership's employee benefit policies.
2.16 Partners. The day-to-day control of the business, operations and
activities of the Partnership shall be vested in and conducted by the General
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Partner which shall be responsible for supervising the activities of the
Partnership's officers, employees and agents. Except as otherwise provided
expressly in this Agreement, and subject to the provisions of Section 6.1 and
Article 7, the General Partner shall have full authority in the name and on
behalf of the Partnership to do all things deemed necessary or desirable by it
in the conduct of the business of the Partnership, including, without
limitation, the right to enter into and perform contracts of all kinds, to bring
and defend actions at law or in equity, to buy, own, manage, sell, lease or
otherwise acquire or dispose of Partnership assets, to pay all expenses incurred
by or on behalf of the Partnership, and to cause the Partnership to enter into
partnerships, joint ventures and similar arrangements; provided, however, that
no action that would, if the Partnership were a corporation incorporated under
the laws of the State of New Jersey, require the authorization of the board of
directors of such corporation, shall be deemed authorized or be undertaken by
the Partners without the prior approval of the Board of Partner Representatives
in accordance with Article 7 hereof. The General Partner may delegate matters
within the authority of the General Partner hereunder to a third party, acting
as agent for the General Partner, pursuant to a management or similar agreement.
2.17 Compensation and Reimbursement of Partners and Board of Partner
Representatives.
2.17.1 Compensation of Partner Representatives. No Partner or member of
the Board of Partner Representatives shall be entitled to separate
compensation for services as Partner or a member of the Board of
Partner Representatives, except that Partner Representatives (other
than Trump or any of his Affiliates) shall 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 shall not
exceed $25,000 in any fiscal year), and to reimbursement of reasonable
out-of-pocket expenses incurred in connection with attendance at
meetings. The provisions of this Section 6.3.1 shall not limit any
payment made in accordance with the Services Agreement.
2.17.2 Reimbursement of Expenses. Subject to Section 7.11.1.7, the
Partners and the Partner Representatives shall 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.
ARTICLE 7
Partner Representatives; Officers; Conduct of Business
The Partners agree that, until the earlier of (i) such time as all
amounts payable under the Notes have been 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 five (5) exceeds (B) the aggregate
principal amount of the Partnership's indebtedness for borrowed money, on a
consolidated basis, outstanding as of such time, the affairs of the Partnership
shall be governed in accordance with the provisions of this Article 7.
2.18 Number. The number of Partner Representatives which shall
constitute the whole Board of Partner Representatives shall be seven.
2.19 Appointment of Partner Representatives. The Board of Partner
Representatives shall be constituted as provided in this Section 7.2, and each
of the Partners shall take whatever action is deemed necessary or desirable by
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the Noteholder Representatives then in office to ensure that the Board of
Partner Representatives is constituted from time to time in accordance with the
provisions of this Section 7.2.
There shall be three Noteholder Representatives and four Trump
Representatives on the Board of Partner Representatives. The initial Trump
Representatives shall be Trump, Nicholas L. Ribis, Robert M. Pickus and Roger P.
Wagner. The initial Noteholder Representatives shall be Asher O. Pacholder,
Thomas F. Leahy and Arthur S. Bahr. The Partnership shall give prompt written
notice to the Trustee of the appointment of any successor Trump Representative
and of any successor Noteholder Representative.
No Partner shall take any action that would result in the removal of
any Noteholder Representative, except in accordance with the written
instructions of the Trustee acting in accordance with the vote of the
Noteholders. The Noteholders, acting at a joint meeting, may remove any
Noteholder Representative. Any two Noteholder Representatives can request that
the Trustee call a joint meeting of the Noteholders for such purpose. If the
Trustee so requests, then each Partner shall take whatever action is necessary
to remove a Noteholder Representative from the Board of Partner Representatives.
Any vacancy on the Board of Partner Representatives created by the
resignation, removal, incapacity or death of any Noteholder Representative shall
be filled by a designated alternate Representative (the "Alternate Noteholder
Representative"). If there is any vacancy in the position of Noteholder
Representative or Alternate Noteholder Representative, such vacancy shall 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. If the Noteholder Representatives are unable
to agree on a replacement within 45 days after any vacancy occurs or if, as a
consequence of multiple vacancies occurring simultaneously, no Noteholder
Representatives remain, then the Partnership shall promptly notify the Trustee
of such vacancy. The Trustee shall, promptly after receipt of such Notice, call
a joint meeting of the Noteholders, at which meeting such vacancy or vacancies
shall be filled. Each Partner shall take whatever action is deemed necessary or
desirable by the Noteholder Representatives or the Trustee upon instruction of
the Noteholders, as the case may be, to ensure that the Alternate Noteholder
Representative or other Person so appointed as a Noteholder Representative shall
be appointed to the Board of Partner Representatives. Any such vacancy shall not
be filled in the absence of a new appointment by the Noteholder Representatives
or the Noteholders, as the case may be.
2.19.1 Noteholder Meetings. Any meeting of the Noteholders shall be
held in accordance with Article 15 of the Mortgage Indenture and
Article 15 of the PIK Indenture. At any such meeting, the Mortgage
Noteholders and the PIK Noteholders shall vote as a single class by
principal amount of the Notes then outstanding, and the vote of the
holders of a majority of the principal amount of the Notes then
outstanding shall be the act of the Noteholders.
2.20 Tenure. Except as otherwise provided by this Agreement, each
Partner Representative shall hold office until his or her successor is appointed
and qualified, or until he or she sooner dies, resigns, is removed or becomes
incapacitated or disqualified.
2.21 Regular Meetings. Regular meetings of the Board of Partner
Representatives may be held without call or notice at such places within or
without the State of New Jersey and at such times as the
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Board of Partner Representatives may from time to time determine, provided that
notice of the first regular meeting following any such determination shall be
given to Partner Representatives absent when such determination was made.
2.22 Special Meetings. Special meetings of the Board of Partner
Representatives may be held at any time and at any place within or without the
State of New Jersey designated in the notice of the meeting, when called by
either the General Partner or by two or more of the Partner Representatives,
reasonable notice thereof being given to each Partner Representative by the
Person calling the meeting.
2.23 Notice. It shall be reasonable and sufficient notice to any
Partner Representative to send notice by mail at least four business days or by
telecopy at least two Business Days before the meeting addressed to him or her
at his or her usual or last known business or residence address or to give
notice to him or her in person or by telephone at least twenty-four hours before
the meeting. Notice of a meeting need not be given to any Partner Representative
if a written waiver of notice, executed by him or her before or after the
meeting, is filed with the records of the meeting, or to any Partner
Representative who attends the meeting without protesting prior thereto or at
its commencement the lack of notice to him or her. Neither notice of a meeting
nor a waiver of a notice need specify the purposes of the meeting.
2.24 Quorum. Except as may be otherwise provided by law or by this
Agreement, at any meeting of the Board of Partner Representatives a majority of
the Partner Representatives then in office, including, however, at least one of
the Noteholder Representatives shall constitute a quorum; a quorum shall not in
any case be less than one-third of the total number of Partner Representatives
constituting the whole Board of Partner Representatives. 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 of this Section
7.7, participation by a Noteholder Representative shall not be necessary to form
a quorum if all of the Noteholder Representatives fail to attend three
consecutive meetings of the Board of Partner Representatives, so long as (i)
such meetings were duly scheduled or called, as the case may be, in compliance
with this Article 7, (ii) notice was duly given to each Noteholder
Representative in accordance with Section 7.6 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 Trump Representatives (but not less than one-third of the total number of
Partner Representatives constituting the whole Board of Partner Representatives)
shall constitute a quorum at such third consecutive meeting and for a six-month
period from and after the date thereof; provided, however, that immediately
following the second such consecutive meeting the Partner Representatives shall
notify the Noteholder Representatives of their failure to participate; and
provided, further, that such third consecutive meeting shall be held not less
than three business days after the second meeting at a place where conference
telephone facilities are available, and that the notice of such third meeting
clearly specifies the date, time and place of such meeting and the correct
telephone number to be called in the event that a Noteholder Representative
wishes to participate therein via conference telephone in accordance with
Section 7.10. Nothing in this Section 7.7 shall be deemed to modify the other
rights and obligations of the Partners set forth herein, including without
limitation the other provisions of this Article 7.
2.25 Action by Vote. Except as may be otherwise provided by law or by
this Agreement, when a quorum is present at any meeting the vote of a majority
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of the Partner Representatives present shall be the act of the Board of Partner
Representatives.
2.26 Action Without a Meeting. Any action required or permitted to be
taken at any meeting of the Board of Partner Representatives may be taken
without a meeting if all the members of the Board of Partner Representatives
consent thereto in writing, and such writing or writings are filed with the
records of the meetings of the Board of Partner Representatives. Such consent
shall be treated for all purposes as the act of the Board of Partner
Representatives.
2.27 Participation in Meetings by Conference Telephone. Members of the
Board of Partner Representatives may participate in a meeting of the Board of
Partner Representatives by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other or by any other means permitted from time to time by
the New Jersey Business Corporation Law for the conduct of a meeting of a board
of directors of a corporation organized thereunder. Such participation shall be
deemed to constitute presence in person at such meeting.
2.28 Special Vote of Noteholder Representatives Required
2.28.1 Vote of at least Two Noteholder Representatives. Notwithstanding
any other provisions of this Agreement, authorization by the
Partnership of the following actions shall 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:
2.28.1.1 Change in Management. Any replacement of the individual
holding the office of, or any material change in the nature of the
duties or terms of employment of, the Chief Executive Officer, the
Chief Operating Officer or the Chief Financial Officer of the
Partnership.
2.28.1.2 Capital Expenditures. The making of any Capital Expenditures
which, in the case of any individual expenditure or related series of
expenditures would exceed $500,000, or, in the aggregate in any fiscal
year of the Partnership would exceed $5,000,000.
2.28.1.3 Debt. The direct or indirect creation, incurrence, assumption
or other subjection to or maintenance of any Debt or Guarantee which,
(i) in the case of any single transaction or related series of
transactions, exceeds $5,000,000 or (ii) is not subject to the
preceding clause (i) but, together with all other such Debt and
Guarantees not subject thereto, exceeds $10,000,000 in aggregate
principal amount at any time outstanding (with this clause (ii)
pertaining solely to such excess), other than: (a) Debt and Guarantees
incurred under the Senior Note Indenture, the Mortgage Note Indenture
or the PIK Indenture and under the Notes, the Security Documents and
the Senior Notes (as hereinafter defined); (ii) the Midlantic Debt; and
(iii) Debt or Guarantees incurred for the purpose, and the proceeds of
which are applied, either (A) to redeem all, but not less than all, of
the Midlantic Debt, the Notes and the 11 3/8% Senior Secured Notes of
the Partnership due 1999 (the "Senior Notes") in accordance with the
terms of the Mortgage Note Indenture and the PIK Indenture and the
Indenture relating to the Senior Notes or (B) to repay the Notes and
the Senior Notes in full at the stated or any accelerated maturity
thereof (a "Notes Refinancing Transaction"). If the terms of a line of
credit, revolving credit facility or similar credit facility shall be
approved in accordance with this Section 7.11.1.3, then no additional
approval in
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respect of such credit facility shall be required by this Section
7.11.1.3 for any borrowing made in accordance with such terms.
2.28.1.4 Operating Leases. The direct or indirect creation, incurrence,
assumption or maintenance of any obligation under any lease (including
any lease of real property or improvements, any vehicle, vessel or
aircraft, or any other personal property) other than a Capitalized
Lease, unless the aggregate fixed rental payments to be paid or accrued
for any period of four consecutive fiscal quarters of the Partnership
under such lease (including payments required to be made by the lessee
in respect of taxes and insurance, whether or not denominated as rent)
does not exceed $1,500,000 for such period, or, during such periods the
Partnership's EBITDA exceeds $45,000,000, does not exceed $5,000,000
for such period.
2.28.1.5 Sales of Assets. Any sale, lease, sublease or other transfer
or disposition of all or any significant portion of the Partnership's
assets, or the entrance into any agreement to do any of the foregoing,
other than dispositions of surplus or obsolete equipment, dispositions
resulting from any casualty or condemnations of assets or properties,
and dispositions of equipment in the ordinary course of business to the
extent such equipment is replaced with substitute equipment of like
kind or purpose. For purposes of this Section a "significant portion of
its assets" shall mean assets having an aggregate fair market value or
book value (whichever is greater) of $2,000,000 or more which are
proposed to be sold, leased, subleased, transferred or disposed of in
any single transaction or series of related transactions.
2.28.1.6 Amendment of Midlantic Debt. Any amendment or supplement to,
or modification of, or waiver under, or any other change in, the
Midlantic Debt.
2.28.1.7 Affiliate Transactions. Any transaction to which any Partner
or any of his or its respective affiliates is a party, participant or
beneficiary.
2.28.1.8 Amendment of Indentures. Any amendment or waiver of or
supplement to or any change in the Mortgage Note Indenture or the PIK
Indenture which is permitted by the terms of such Indenture to be
accomplished without the consent of the Mortgage Noteholders or the PIK
Noteholders, as the case may be.
2.28.1.9 Merger or Liquidation. 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.
2.28.1.10 Change in the Nature of Business. Engagement in any business
other than owning and operating the Castle and other incidental
businesses in connection therewith which individually and in the
aggregate are not material to the Partnership.
2.28.1.11 Restoration. Any determination to effect a Restoration (as
such term is defined in the Note Mortgage) pursuant to Section
5.10(e)(iii) thereof or any determination that an eminent domain taking
does not constitute a Taking (as such term is defined in the Note
Mortgage).
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2.28.1.12 Services Agreement. The consent by the Partners to any
amendment or supplement to, or modification of, or waiver under, the
Services Agreement, or the approval of any other management or other
similar agreement pursuant to Section 6.2, or any amendment or
supplement thereto, or modification thereof, or waiver thereunder.
2.28.1.13 Trump Compensation. Any compensation, whether salary, bonus,
remuneration or any other payments or benefits, to Trump in excess of
that provided for in the Services Agreement.
2.28.2 Vote of at least One Noteholder Representative. Notwithstanding
the provisions of Section 7.7, 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 one Noteholder Representative
shall be required for: (i) the commencement by the Partnership of a
voluntary case under Title 11 of the United States Code, as from time
to time in effect; (ii) the seeking of relief as a debtor under any
applicable law, other than said Title 11, of any jurisdiction relating
to the liquidation or reorganization of debtors or to the modification
or alteration of the rights of creditors; (iii) the filing of an answer
or similar pleading with respect to any involuntary case under said
Title 11 or any other such applicable law; or (iv) the assignment for
the benefit of, or the entering into a composition with, the
Partnership's creditors.
2.28.3 Vote of Noteholders. Notwithstanding the foregoing provisions of
this Section 7.11, a special vote of the Noteholder Representatives
under Section 7.11.1 or 7.11.2 shall not be required to any action
approved by the Mortgage Noteholders and the PIK Noteholders pursuant,
respectively, to a meeting duly called under the Mortgage Note
Indenture and the PIK Indenture and otherwise in accordance with the
terms and provisions of such Indentures.
2.29 Officers of the Partnership.
2.29.1 Enumeration. Subject to Sections 7.2 and 7.11.1.1, the
Partnership shall 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 its
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.
2.29.2 Duties and Powers. Subject to law and to the other provisions of
this Agreement, each officer shall have such duties and powers as are
commonly incident to his or her office and, subject to Section
7.11.1.1, such additional duties and powers as the Board of Partner
Representatives may from time to time designate.
2.29.3 Tenure. Except as provided in Sections 7.11.1.1 and 7.13, each
officer and agent shall retain his or her authority at the pleasure of
the Board of Partner Representatives.
2.30 Resignations and Removals.
2.30.1 Resignations. Any Trump Representative may resign at any time by
delivering his or her resignation in writing to the Partnership and
Trump. Any Noteholder Representative may resign at any time by
delivering his or her resignation in writing to the Partnership and the
other Noteholder Representatives. Any officer may resign by delivering
his or her resignation in writing to the Board of Partner
Representatives. Such resignations shall
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be effective upon receipt unless specified to be effective at some
other time, and without in either case the necessity of its being
accepted unless the resignation shall so state.
2.30.2 Removal. The Partners may at any time remove any Trump
Representative either with or without cause.
2.31 Minutes, etc. The Secretary shall record all proceedings of the
Board of Partner Representatives in a book or series of books to be kept
therefor and shall file therein all actions by written consent of such bodies.
In the absence of the Secretary from any meeting, an Assistant Secretary, or if
there be none or he or she is absent, a temporary secretary chosen at the
meeting, shall record the proceedings thereof.
ARTICLE 8
Books, Records, Accounting and Reports
2.32 Records and Accounting. The General Partner shall maintain a
standard, modern system of accounting in which full, true and correct entries
will be made of all dealings and transactions with respect to the Partnership's
business. All books of account and other records shall at all times be kept at
the principal office of the Partnership and shall be open to the inspection and
examination of the Partners or their representatives during reasonable hours.
All books and records of the Partnership shall be kept on an accrual basis of
accounting with the fiscal year as its annual accounting period which shall end
on the date of the final dissolution or termination of the Partnership. All
references in this Agreement to a "fiscal year" are to such an annual accounting
period. Any records maintained by the Partnership in the regular course of its
business, including the books of account, and records of Partnership proceedings
may be kept on, or be in the form of, punch cards, magnetic tape, photographs,
micrographics or any other information storage device, provided that the records
so kept are convertible into clearly legible written form within a reasonable
period of time. The books of the Partnership shall be maintained for financial
reporting purposes according to generally accepted accounting principles.
2.33 Fiscal Year. The fiscal year of the Partnership shall end on
December 31.
2.34 Annual and Periodic Reports.
2.34.1 Annual Statement; Annual Budget. The General Partner shall, as
soon as practicable, but in no event later than 90 days after the close
of each fiscal year, cause to be furnished to each Partner the combined
balance sheet of the Partnership and its combined subsidiaries as at
the end of such fiscal year and the combined statements of profit and
loss, partners' capital and cash flow for such year (all in reasonable
detail), such combined statements to be accompanied by reports or
certificates of Arthur Andersen & Co., auditors of the Partners and its
consolidated subsidiaries, or other independent certified public
accountants of recognized national standing selected by the General
Partner.
2.34.2 Quarterly Reports. The General Partner shall, as soon as
available and, in any event, within 45 days after the end of each of
the first three fiscal quarters of the Partnership, furnish to each
Partner the internally prepared unaudited combined balance sheet of the
Partnership and its combined subsidiaries as of the end of such quarter
and the combined statements of profit and loss, partners' capital and
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cash flow for such quarter and for the portion of the fiscal year then
ending (all in reasonable detail), accompanied by a certificate of the
General Partner or of the chief financial officer of the Partnership to
the effect that, except for the lack of required footnotes, such
balance sheets and statements have been properly prepared in accordance
with generally accepted accounting principles and fairly present the
financial condition of the Partnership and its combined subsidiaries as
of the date thereof and the results of their operations for the
period-covered thereby, subject only to normal year-end audit
adjustments.
2.34.3 Other Information. From time to time upon request of any
Partner, the General Partner shall furnish to such Partner such other
information regarding the business, affairs and condition, financial or
otherwise, of the Partnership and its subsidiaries as such Partner may
reasonably request. The authorized officers and representatives of any
Partner shall have the right during normal business hours to examine
the books and records of the Partnership and each of its subsidiaries,
to make copies, notes and abstracts therefrom, and to make an
independent examination of its books and records.
ARTICLE 9
Income Tax Matters
2.35 Preparation of Tax Returns. The General Partner shall arrange for
the preparation (at the Partnership's expense) and timely filing of all returns
of Partnership income, gains, deductions and losses necessary for federal and
state income tax purposes. The General Partner shall use its best efforts to
furnish to the Partners within sixty days and in any event shall furnish within
ninety days of the close of the taxable year the tax information reasonably
required for federal and state income tax reporting purposes. A copy of the
Partnership's income tax returns will be furnished to any Partner upon request.
The classification, realization and recognition of income, gain, losses and
deductions and other items shall be on the accrual method of accounting for
federal income tax purposes. The taxable year of the Partnership shall end on
December 31.
2.36 Tax Controversies. Subject to the provisions hereof, the Partners
hereby designate the General Partner as the "Tax Matters Partner" (as defined in
Section 6231 of the Code), and the General Partner is authorized and required to
represent the Partnership (at the Partnership's expense) in connection with all
examinations of the Partnership's affairs by tax authorities, including
resulting administrative and judicial proceedings, and to expend Partnership
funds for professional services and costs associated therewith.
2.37 Organizational Expenses. The Partnership shall elect to deduct
expenses, if any, incurred in organizing the Partnership ratably over a
sixty-month period as provided in Section 709 of the Code.
ARTICLE 10
Transfer of Interests
2.38 Transfer. The term "transfer," when used in this Article 10 with
respect to a Partnership Interest means a transaction by which the holder of a
Partnership Interest assigns the Partnership Interest or any part thereof to
another Person, and includes a sale, assignment, gift, pledge, encumbrance,
hypothecation, mortgage, exchange or any other disposition.
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2.39 Transfers Generally. No Partnership Interests shall be
transferred, in whole or in part, provided, that, the foregoing shall not apply
to the pledges pursuant to the Bank Pledge Agreements.
Any transfer or purported transfer of any Partnership Interest not made in
accordance with this Section 10.2 shall be null and void.
ARTICLE 11
[Intentionally Omitted]
ARTICLE 12
Admission of Additional Partners
2.40 Admission of Additional Partners. The General Partner may admit
additional Partners without the consent of the Partners. In admitting additional
Partners, the Partnership shall not be obligated to offer first to the existing
Partners the right to make additional capital contributions or subscriptions.
The Percentage Interest of each additional Partner shall be determined by the
General Partner.
2.41 Amendment of Agreement in Connection with the Admission of
Additional Partners. For the admission to the Partnership of any Partner, the
Partners, shall take all steps necessary and appropriate to prepare an amendment
of this Agreement reflecting the same.
ARTICLE 13
Termination and Winding-Up of Partnership
2.42 Termination. The Partners hereby waive their right of partition
and agree not to do anything that would terminate the Partnership prior to the
expiration of its term without the prior written consent of the other Partners.
No Partner may voluntarily withdraw from the Partnership without the prior
written consent of all other Partners. Upon the withdrawal, death, retirement or
insanity of the General Partner, or any other event of dissolution under the New
Jersey Uniform Limited Partnership Law, the business of the Partnership shall be
wound up and terminated unless all remaining Partners, within ninety (90) days
thereafter, agree in writing that the Partnership shall be reconstituted and its
business continued.
2.43 Winding-Up of the Partnership. Upon any winding up of the
Partnership, the following shall be accomplished:
2.43.1 The financial officers of the Partnership shall be directed to
prepare a balance sheet of the Partnership in accordance with generally
accepted accounting principles as of the date of dissolution, which
shall be reported upon by the Partnership's independent public
accountants.
2.43.2 The assets of the Partnership shall be liquidated by the
Partners as promptly as possible, but in an orderly and businesslike
manner so as not to involve undue sacrifice.
2.43.3 The proceeds of sale of all or substantially all of the property
of the Partnership and all other assets of the Partnership to be
liquidated shall be applied and distributed as follows, and in the
following order of priority:
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2.43.3.1 To the payment of debts and liabilities of the Partnership and
the expenses of liquidation not otherwise adequately provided for; then
2.43.3.2 To the setting up of any reserves which are reasonably
necessary for any contingent liabilities or obligations of the
Partnership or of the Partners arising out of, or in connection with,
the Partnership; and then
2.43.3.3 The remaining proceeds, to the Partners in proportion to and
to the extent of their positive Capital Account balances determined
after giving effect to the allocations of Profits and Losses provided
for in Article 5 hereof.
2.43.3.4 The Partnership shall terminate when all property and assets
owned by the Partnership to be liquidated shall have been disposed of,
and the net sale proceeds, after payment of or provision for the
amounts specified in Sections 13.2.3.1 and 13.2.3.2, and any assets to
be distributed shall have been distributed to the Partners as provided
herein.
ARTICLE 14
Amendments; Etc.
2.44 Amendments. The Partners may amend any provision of this
Agreement, and any provision of this Agreement may be waived, from time to time,
with a writing executed on behalf of each of the Partners.
2.45 Non-Waiver. Except as expressly provided herein, no delay on the
part of any Partner in exercising any right hereunder shall operate as a waiver
thereof; nor shall any waiver by any Partner of any right hereunder or of any
failure to perform or breach hereof by any other Partner constitute or be deemed
a waiver of any other right hereunder or of any other failure to perform or
breach hereof by the same or any other Partner, whether of a similar or
dissimilar nature thereof.
ARTICLE 15
General Provisions
2.46 Addresses and Notices. The address of each Partner for all
purposes initially shall be the address set forth in Exhibit A to this
Agreement. Any notice or communication required hereunder shall be in writing
and either delivered personally or by overnight courier service, or mailed first
class and registered, postage prepaid, to an officer of the addressee and shall
be deemed to be given when so delivered to, or if mailed when received at, such
initial address (or to such other address or addresses as such Person may
subsequently designate by notice given hereunder).
2.47 Titles and Captions. The table of contents to this Agreement and
all article or section titles or captions in this Agreement are for convenience
only. They shall not be deemed part of this Agreement and in no way define,
limit, extend or describe the scope or intent of any provisions hereof.
2.48 Pronouns and Plurals. Whenever the context may require, any
pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa.
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2.49 Further Action. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking action as may
be necessary or appropriate to achieve the purposes of this Agreement.
2.50 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties and their heirs, executors, administrators,
successors, legal representatives and permitted assigns.
2.51 Integration. This Agreement constitutes the entire agreement among
the parties pertaining to the subject matter hereof and supersedes all prior
agreements and understandings pertaining thereto, whether written or oral.
2.52 Waiver. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.
2.53 Counterparts. This Agreement may be executed in counterparts, all
of which together shall constitute one agreement binding on all the parties,
notwithstanding that all the parties are not signatories to the original or the
same counterpart.
2.54 Applicable Law; Jurisdiction. This Agreement shall be governed by
and construed in accordance with the laws of the State of New Jersey regardless
of the laws that might otherwise govern under applicable principles of conflict
of laws thereof. Each party hereto hereby expressly and irrevocably agrees and
consents that any action, suit or proceeding arising out of or relating to this
Agreement and the transactions contemplated hereby may be instituted and
maintained in any state or federal court sitting in Atlantic County, New Jersey
or in any federal court sitting in the State of New Jersey or in any state or
federal court sitting in the Borough of Manhattan in New York, New York and, by
execution of this Agreement, each party hereto expressly waives any objection
that it may have now or hereafter to the venue or jurisdiction of any such
action, suit or proceeding and irrevocably submits to the jurisdiction of any
such court in any such action, suit or proceeding.
2.55 Invalidity of Provisions. If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not be
affected thereby.
2.56 Indemnification; Exculpation.
2.56.1 Indemnification. The Partnership shall indemnify and hold
harmless each Partner, its Affiliates, each Partner Representative (and
each director of the General Partner and his or her Affiliates, and all
officers, directors, employees and agents of such Partner, Partner
Representative or director of the General Partner, and his, her or its
Affiliates (each 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
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securities laws, regardless of whether the Indemnitee continues to be a
Partner, an Affiliate of a Partner, a Partner Representative, a
director of the General Partner or an Affiliate of a Partner
Representative or of a director of the General Partner, or an officer,
director, employee, attorney or agent of a Partner, Partner
Representative or a director of the General Partner 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 this Section 15.11 shall 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 a director of the General Partner
or an Affiliate of a Partner Representative or of a director of the
General Partner, or as an officer, director, employee, attorney or
agent of a Partner, Partner Representative or a director of the General
Partner 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
shall be denied indemnification in whole or in part under this Section
15.11 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.
2.56.2 Exculpation. No Partner Representative or director of the
General Partner shall have any liability to the Partnership or any
Partner for monetary damages for any action taken, or any failure to
take any action, as a Partner Representative or a director of the
General Partner, except liability for (a) any improper financial
benefit received by a Partner Representative or as a director of the
General Partner; (b) an intentional infliction of harm on the
Partnership or any Partner; (c) acts or omissions not in good faith or
which involve intentional misconduct; and (d) any knowing violation of
law.
2.57 Specific Performance; Third Party Beneficiaries. The Partners
agree that the Noteholders are third party beneficiaries to this Agreement and
that the legal remedies of the Noteholders and the Noteholder Representatives
may be inadequate in the event of a breach of, or other failure to perform, any
covenants or obligations in this Agreement; therefore, in addition to obtaining
any other remedy or relief available to them, the Noteholders and Noteholder
Representatives may obtain specific enforcement of this Agreement and other
equitable remedies.
2.58 Casino Control Commission Regulation. Notwithstanding anything to
the contrary in this Agreement:
(i) This Agreement will be deemed to include all provisions required by
the Casino Control Act and to the extent that anything contained in this
Agreement is inconsistent with the Casino Control Act, the provisions of the
Casino Control Act shall govern. All provisions of the Casino Control Act, to
the extent required by law to be included in this Agreement, are incorporated
herein by reference as if fully restated in this Agreement.
(ii) If the continued holding of a Partnership Interest by any Partner
will disqualify the Partnership to continue as the owner and operator of a
casino licensed in the State of New Jersey under the provisions of the Casino
Control Act, such Partner shall enter into such escrow, trust or similar
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arrangement as may be required by the Commission under the circumstances. It is
the intent of this Section 15.13 to set forth procedures to permit the
Partnership to continue, on an uninterrupted basis, as the owner and operator of
a casino licensed under the provisions of the Casino Control Act.
(iii) (a) 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 shall be subject to the right of prior approval by the
Commission; and (b) the Partnership shall 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 Commission
disapproves a transfer in accordance with the provisions of the Casino Control
Act.
(iv) Each Partner hereby agrees 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.
(v) Each Partner shall have the right to offer to acquire any
Partnership Interest required to be disposed of pursuant to this Section 15.13
on the same basis as other potential purchasers, subject to the Casino Control
Act.
2.59 Survival of Rights, Duties and Obligations. Termination of the
Partnership for any cause shall not release any party from any liability which
at the time of termination had already accrued to any other party or which
thereafter may accrue in respect of any act or omission prior to such
termination.
2.60 Certificate of Interest.
2.60.1 Form of Certificate of Interest. The interest of each Partner in
the Partnership shall be evidenced by a Certificate of Interest in the
form attached as Annex 15.15 hereto (each a "Certificate of Interest").
A certificate transfer ledger (the "Certificate Transfer Ledger")
recording the issue and transfer of Certificates of Interest in the
Partnership shall be maintained at the principal office of the
Partnership. Each such Certificate of Interest shall be serially
numbered and shall be issued by, or at the written direction of, each
of the Partners to the lawful holder of an interest in the Partnership,
upon payment by the issue of the full amount of the capital
contributions then due with respect to its interest in the Partnership
represented by such Certificate of Interest. All Certificates of
Interest shall be executed in the name of the Partnership by each of
the Partners. Each Certificate of Interest shall state on its face the
name of the registered holder thereof and the then interest in the
Partnership held by the issue; and shall bear, on both sides thereof, a
statement of the restrictions imposed by Section 105 of the Casino
Control Act.
2.60.2 Transfers of Certificates of Interest. Certificates of Interest
in the Partnership may be transferred by the lawful holders thereof
only in connection with the pledge or transfer of all or part of the
interest of such holder in the Partnership, and only in accordance with
the provisions of this Agreement. All such transfers shall be effected
by duly executed and acknowledged instruments of assignment, each of
which shall be duly recorded on the Certificate Transfer Ledger. No
effect shall be given to any purported assignment of a Certificate of
Interest, or transfer of the interest in the Partnership evidenced
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thereby, unless such assignment and transfer shall be in compliance
with the terms and provisions of this Agreement, and any attempted
assignment or transfer in contravention hereof shall be ineffectual.
2.60.3 Lost, Stolen, Destroyed or Mutilated Certificates of Interest.
In the event that a Certificate of Interest shall be lost, stolen,
destroyed or mutilated, the Partnership may cause a replacement
Certificate of Interest to be issued upon such terms and conditions as
shall be fixed by the General Partner, including, without limitation,
provision for indemnity and the posting of a bond or other adequate
security as security therefor. No replacement Certificate of Interest
shall be issued to any person unless such person has surrendered the
Certificate of Interest to be replaced, or has complied with the terms
of this Section 15.15.
2.60.4 Inspection of Certificate Transfer Ledger. The Certificate
Transfer Ledger containing the names and addresses of all Partners and
the interest of each Partner in the Partnership shall be open to the
inspection of the Partners at the principal office of the Partnership
during usual business hours upon request of any Partner. Such
Certificate Transfer Ledger shall, in addition, be available for
inspection by the Casino Control Commission or the Division of Gaming
Enforcement of the State of New Jersey and each of their respective
authorized agents at all reasonable times without notice.
2.61 Execution of Certain Documents by the Partnership in Connection
with the Acquisition. TCHI, in its capacity as General Partner of the
Partnership, shall have the authority to execute and deliver on behalf of the
Partnership all agreements, instruments and other documents to be executed and
delivered by the Partnership in connection with the Acquisition, including,
without limitation, any mortgages, security agreements and assignments
contemplated thereby and all instruments, certificates and other documents
related thereto.
25
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed as of the 7th day
of October, 1996.
General Partner
TRUMP'S CASTLE HOTEL & CASINO, INC.
By: /s/ NICHOLAS L. RIBIS
--------------------------------
Nicholas L. Ribis
Vice President
Limited Partner
TRUMP HOTELS & CASINO RESORTS
HOLDINGS, L.P.
By: TRUMP HOTELS & CASINO RESORTS, INC.
By: /s/ NICHOLAS L. RIBIS
---------------------------
Nicholas L. Ribis, President
and Chief Executive Officer
Withdrawing Limited Partners
/s/ DONALD J. TRUMP
----------------------------
Donald J. Trump
TRUMP CASINOS II, INC.
By: /s/ DONALD J. TRUMP
--------------------------------
Donald J. Trump
President
<PAGE>
STATE OF NEW YORK :
: ss.
COUNTY OF NEW YORK :
BE IT REMEMBERED that on October 7, 1996, before me, the subscriber,
personally appeared Donald J. Trump, an individual, who, I am satisfied, is the
person who has signed the within instrument on his own behalf, and I having
first made known to him the contents thereof he thereupon acknowledged that he
signed and delivered the said instrument in his personal capacity as an
individual, and that the within instrument is his voluntary act and deed.
/s/
-----------------------------
Notary Public
<PAGE>
STATE OF NEW YORK :
: ss.
COUNTY OF NEW YORK :
BE IT REMEMBERED that on October 7, 1996, before me, the subscriber,
personally appeared Donald J. Trump, the President of Trump Casinos II, Inc., a
Delaware corporation, who, I am satisfied, is the person who has signed the
within instrument on behalf of such corporation, 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 officer aforesaid, and
that the within instrument is the voluntary act and deed of said corporation,
made by virtue of authority from its Board of Directors.
/s/
---------------------------
Notary Public
<PAGE>
STATE OF NEW YORK :
: ss.
COUNTY OF NEW YORK :
BE IT REMEMBERED that on October 7, 1996, before me, the subscriber,
personally appeared Nicholas L. Ribis, the Vice President of Trump's Castle
Hotel and Casino, Inc., a New Jersey corporation, who, I am satisfied, is the
person who has signed the within instrument on behalf of such corporation, 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 officer
aforesaid, and that the within instrument is the voluntary act and deed of said
corporation, made by virtue of authority from its Board of Directors.
/s/
--------------------------------
Notary Public
<PAGE>
STATE OF NEW YORK :
: ss.
COUNTY OF NEW YORK :
BE IT REMEMBERED that on October 7, 1996, before me, the subscriber,
personally appeared Nicholas L. Ribis, the President and Chief Executive Officer
of Trump Hotels & Casino Resorts, Inc., general partner of Trump Hotels & Casino
Resorts Holdings, L.P., a Delaware limited partnership, who, I am satisfied, is
the person who has signed the within instrument on behalf of such limited
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 officer aforesaid, and that the within instrument is the
voluntary act and deed of said limited partnership, made by virtue of authority
from its Board of Directors.
/s/
--------------------------------
Notary Public
THERMAL ENERGY SERVICE AGREEMENT
THIS THERMAL ENERGY SERVICE AGREEMENT ("Agreement") is entered into as of
the 27th day of September 1996, by and between ATLANTIC JERSEY THERMAL SYSTEMS,
INC., a Delaware corporation ("Seller"), and TRUMP'S CASTLE ASSOCIATES, a New
Jersey general partnership ("Buyer").
WITNESSETH:
WHEREAS, Seller is engaged in the business of producing and selling heating
and cooling energy; and
WHEREAS, Buyer operates the Trump's Castle Casino Resort [located at 1
Castle Boulevard], Atlantic City, New Jersey, as the same may be expanded or
improved from time to time ("Buyer's Facilities"); and
WHEREAS, Seller desires to obtain the exclusive right to use the steam and
chilled water production facilities located on-site at Buyer's Facilities in
order to sell to Buyer all of Buyer's heating and cooling energy requirements
for Buyer's Facilities; and
WHEREAS, Buyer is willing to allow Seller to operate the steam and chilled
water production facilities located on-site at Buyer's Facilities on an
exclusive basis for the aforestated purposes on the terms and conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants,
conditions and agreements hereinabove and hereinafter set forth and such other
good and valuable considerations, the receipt and sufficiency of which are
hereby acknowledged, Buyer and Seller, each intending to be legally bound, do
hereby agree as follows:
1. DEFINITIONS
Except as otherwise expressly provided herein, all capitalized terms used
in this Agreement shall have the respective meanings as set forth below:
(a) "Billing Month" shall mean any calendar month, or any portion
thereof, during which Buyer receives and Seller delivers Thermal Energy to
Buyer's Facilities in accordance with the terms and conditions of this
Agreement.
(b) "Contractual Obligation" shall mean, as to either party to this
Agreement, any contract, agreement, indenture, instrument or undertaking to
which such party is a party or by which any of its properties is bound or
affected.
(c) "Governmental Authority" shall mean the federal government and
state or other political subdivision thereof, and
<PAGE>
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government and any other
governmental entity with authority over any aspect of this Agreement or the
performance of any of the obligations hereunder.
(d) "Metering Equipment" shall have the meaning set forth in Section
8.1 of this Agreement.
(e) "Points of Delivery" shall mean the physical point where Thermal
Energy is delivered to Buyer, as more specifically described on Schedule 1(e)
attached hereto and made a part hereof.
(f) "Points of Return" shall mean the physical point where Seller is
anticipated to receive the condensate from Buyer, as more specifically described
on Schedule 1(f) attached hereto and made a part hereof.
(g) "Service Commencement Date" shall have the meaning set forth in
Section 2.2 of this Agreement.
(h) "Thermal Energy" shall mean, as the context requires, quantities
of heating and cooling energy as measured in mmBtu's/hr. and tons, respectively,
extracted from the circulating flows of the steam/condensate and chilled water
provided to Buyer at Buyer's Facilities in accordance with the delivery
specifications set forth on Schedule 6.5 of this Agreement.
(i) "Thermal Energy Capacity Charges" shall mean the capacity charges
for Thermal Energy for each Billing Month determined in accordance with the
capacity charges set forth on Schedule 7.1 of this Agreement.
(j) "Thermal Energy Production Facilities" shall mean the chillers,
boilers, cooling towers, pumps and all appurtenant equipment thereto, together
with any and all parts, supplies and equipment installed or added thereto, and
all improvements, additions or replacements made thereto (on the primary side)
which constitute the steam and chilled water production facilities located at
Buyer's Facilities, all as more specifically identified on Schedule 1(j)
attached hereto and made a part hereof.
(k) "Thermal Energy Usage Charges" shall mean the usage charges for
Thermal Energy for each Billing Month determined in accordance with the usage
charges set forth on Schedule 7.1 of this Agreement.
2. TERM AND TERMINATION OF TESA
2.1. Term. This Agreement shall be in full force and effect and be legally
binding upon the parties and their
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permitted successors and assigns as of the date hereof and shall remain in
effect for a term of twenty (20) years following the Service Commencement Date,
unless otherwise terminated as provided herein (the "Term").
2.2. Service Commencement Date. Buyer and Seller shall mutually agree upon
a Service Commencement Date upon which Seller shall first make available and
deliver to Buyer's Facilities Thermal Energy, Seller as provided herein, but in
no event shall the Service Commencement Date occur any later than October 15,
1996, unless otherwise agreed to in writing by the parties.
3. LICENSE AGREEMENT
3.1. Grant of License. Buyer hereby grants to Seller (i) a non-exclusive
license throughout the Term of this Agreement to enter upon Buyer's Facilities
in order to inspect and gain access to the Thermal Energy Production Facilities;
(ii) an exclusive license commencing on the Service Commencement Date and
continuing thereafter throughout the Term of this Agreement to use, operate and
maintain the Thermal Energy Production Facilities to the extent and for the
purposes set forth herein, which license shall be irrevocable for so long as the
Agreement remains in effect and Seller is not in default of any of its
obligations hereunder; and (iii) a non-exclusive license to use, without
interruption, the electrical service, makeup water lines and fire control system
which support the Thermal Energy Production Facilities to the extent necessary
in the use, operation and maintenance of the Thermal Energy Production
Facilities; provided, however, that Seller shall at no time interfere with the
business operations of Buyer's Facilities including, without limitation, the
operation of the casino-hotel located at Buyer's Facilities.
3.2. Consideration for Licenses. In consideration for the licenses granted
to Seller by Buyer pursuant to the provisions of Section 3.1 above, Seller
hereby agrees to pay to Buyer the sum of Three Million ($3,000,000.00) Dollars
(the "License Fee"). The License fee shall be payable on the Service
Commencement Date but in no event later than September 30, 1996 in immediately
available funds, by wire transfer to an account designated by Buyer.
3.3. Rights of Buyer. Notwithstanding anything herein contained to the
contrary, until and unless Seller commences delivery of the Thermal Energy to
Buyer as provided in this Agreement, Buyer shall retain the exclusive right to
use, operate and maintain the Thermal Energy Production Facilities and Seller
may not act in any way whatsoever so as to interfere with the use, operation and
maintenance by Buyer of the Thermal Energy Production Facilities, provided that
Buyer shall cooperate with Seller to permit the transition to Seller of the
operating responsibilities for the Thermal Energy Production Facilities by the
Service Commencement Date.
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<PAGE>
4. EASEMENTS
4.1. Easements and Rights-Of-Way; Access. Buyer shall grant, or cause to be
granted, to Seller all rights-of-way, access rights, easements, licenses and
other rights with respect to Buyer's Facilities as may be reasonably necessary
for Seller to perform its obligations and exercise its rights hereunder. Buyer
shall use commercially reasonable efforts to obtain, or cause to be obtained (in
form and substance reasonably satisfactory to Seller) non-disturbance agreements
or, if applicable, waivers and/or consents from each of its mortgagees or
landlords with respect to all rights of way, access rights, easements, licenses
and other property rights which Seller is obligated to provide or cause to be
provided to Seller pursuant to this Article 4.
5. THERMAL ENERGY PRODUCTION FACILITIES AND
RELATED REQUIREMENTS
5.1. Thermal Energy Production Facilities. Seller will engineer, permit,
construct, finance, operate and maintain the Thermal Energy Production
Facilities so as to produce and deliver Thermal Energy to Buyer at the agreed
upon Points of Delivery.
5.2. Facility Operation. Seller will use, operate and maintain the Thermal
Energy Production Facilities in a manner which meets or exceeds good industry
practice, and Seller shall secure and maintain, at its sole cost and expense,
all permits necessary for the use, operation and maintenance of Buyer's Thermal
Energy Production Facilities. As soon as practicable, but in no event later than
October 15, 1996, Buyer and Seller shall enter into a definitive operating
agreement on terms mutually acceptable to each of them setting forth their
respective responsibilities for the use, operation and maintenance of the
Thermal Energy Production Facilities.
5.3. Facility Ownership. Title to the Thermal Energy Production Facilities
shall remain with Buyer and Seller shall not remove, alter (except as obligated,
required or permitted under this Agreement) or permit any lien to exist on such
Thermal Energy Production Facilities.
5.4. Buyer's Gas Requirements. Commencing on the Service Commencement Date
and continuing throughout the Term of this Agreement, Seller shall pay for all
natural gas requirements of Buyer, provided, however, that Buyer shall reimburse
Seller for the as-delivered cost of all gas quantities delivered to Buyer for
use in its kitchen facilities, on a firm basis. Seller shall maintain a separate
meter to measure and record gas delivered to Buyer's kitchen facilities. Upon
the execution and delivery of this Agreement, Seller shall proceed with due
diligence to transfer all natural gas service at Buyer's Facilities to Seller as
of the Service Commencement Date or as soon as practicable thereafter. If Seller
is proceeding diligently with such
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<PAGE>
transfer but is unable to effect the same as of the Service Commencement Date,
Buyer agrees to take gas service at such meters in its name and Seller shall
reimburse Buyer at cost for all gas service taken in Buyer's name for use in
Buyer's Facilities until such time as Seller is able to effect such transfer.
5.5. Buyer's Electric Requirements. Commencing on the Service Commencement
Date and continuing throughout the Term of this Agreement, Seller shall be
responsible for establishing and coordinating the electric submetering of
electric service to the Thermal Energy Production Facilities and Seller shall
grant a credit to Buyer on a monthly basis equal to the cost of such electricity
delivered to Buyer's Thermal Energy Production Facilities, provided, however,
that Buyer shall provide Seller with timely copies of its electric bills. The
parties intend that Buyer shall remain the customer of record for all electric
service to Buyer's Facilities.
5.6. Buyer's Water and Sewer Requirements. Seller shall be responsible for
measuring the make-up water associated with the water requirements of the
Thermal Energy Production Facilities and used by the Thermal Energy Production
Facilities and the effluent sewerage discharge from the Thermal Energy
Production Facilities. Seller shall grant to Buyer a credit on a quarterly basis
equal to the cost of such water usage and sewerage usage at the currently
applicable tariff rates.
6. PURCHASE AND SALE OF THERMAL ENERGY
6.1. Purchase and Sale of Thermal Energy. Commencing on the Service
Commencement Date and continuing thereafter throughout the Term of this
Agreement, Seller will produce and deliver for sale to Buyer, and Buyer will
purchase and receive from Seller, all of Buyer's Thermal Energy requirements for
Buyer's Facilities. Such Thermal Energy requirements will be produced by Seller
from the Thermal Energy Production Facilities; provided, however, that Seller,
at its sale reasonable discretion, may provide such Thermal Energy requirements
from a centralized thermal energy plant to be owned and operated by Seller or an
affiliate thereof, in which event Seller will maintain the Thermal Energy
Production Facilities in a stand-by condition for the Term of the Agreement.
Provided Buyer's Thermal Energy requirements do not exceed the levels of
contract capacity specified in Schedule 7.1 attached hereto on more than two (2)
occasions within any two (2) consecutive billing periods or in any Billing Month
within two (2) consecutive calendar years, the costs thereof shall be as set
forth in Schedule 7.1. Subject to the provisions of Section 7.2 hereof which
shall control in the circumstances described therein, if Buyer's Thermal Energy
requirements exceed the levels of contract capacity specified in Schedule 7.1 on
more than two (2) occasions within any two (2) consecutive billing periods, the
contract capacity specified in Schedule 7.1 shall be increased to the
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<PAGE>
maximum quantity of capacity delivered to Buyer and the cost thereof shall be as
set forth in Schedule 7.1.
6.2. Points of Delivery and Return. Buyer will obtain its Thermal Energy,
in the case of heating, by extracting heat from and, in the case of cooling, by
transferring heat to, the circulating flows of steam and chilled water that
Seller will make available to Buyer at the agreed upon Points of Delivery. Buyer
agrees to take and accept the flows of steam and chilled water at such Points of
Delivery and return the condensate and chilled water to Seller at the agreed
upon Points of Return.
6.3. Point of Transfer, Risk of Loss. The sale of Thermal Energy shall be
deemed to occur at the Points of Delivery and the risk of loss of the
circulating medium shall transfer to Buyer at such points and shall transfer
back to Seller at the Points of Return.
6.4. Delivery Specifications. The Thermal Energy delivered by Seller at the
Points of Delivery shall satisfy the conditions of temperature and pressure
specified in Schedule 6.5 attached hereto and made a part hereof.
6.5. Treatment of Condensate and Chilled Water. Buyer shall not interfere
with, or restrict (other than to extract its Thermal Energy requirements), or
contaminate in any way the flows of steam, condensate or chilled water supplied
to or collected from Buyer hereunder, Buyer agrees to compensate Seller for the
reasonable costs of treating or replacing any condensate or chilled water that
is either contaminated or not returned, after making allowance for reasonable
losses occurring within normal operating conditions by Buyer, as reasonably
demonstrated by Seller to Buyer. Further, it is agreed that Seller may suspend
service if Buyer fails to cure any contamination of steam, condensate or chilled
water caused by Buyer, as reasonably demonstrated by Seller to Buyer, within
thirty (30) days after being advised in writing by seller of such contaminating,
provided, however, that if the nature of such contamination is such that the
same cannot reasonably be cured within such thirty (30) day period, Buyer shall
not be deemed to be in default if it shall have commenced such cure within such
thirty (30) day period and thereafter diligently and continuously prosecutes
such cure to completion, and Seller may not suspend service to Buyer during such
period of cure.
6.6. Scheduled Outages. Whenever it shall become necessary for Seller to
schedule an outage so that Seller may make repairs, replacements or changes in
the Thermal Energy Production Facilities, both parties shall exercise reasonable
efforts to coordinate the timing of the scheduled outage, and, in any event,
Seller shall give Buyer not less than ten (10) days prior written notice of such
outage. Seller shall use reasonable means to limit the duration of the outage
and shall attempt to schedule chilled water outages during winter months and
steam outages
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during summer months. Both parties agree to act reasonably and in good faith,
recognizing that such outages will, from time to time, be required.
Notwithstanding anything herein contained to the contrary, Seller agrees that
outages shall not and may not result in the reduction of Thermal Energy services
required to continue to maintain and meet Buyer's Thermal Energy requirements
within reasonable levels hereunder.
6.7. Buyer's Rights During Interruption in Service. If at any time during
this Agreement, Seller shall fail to deliver Buyer's Thermal Energy requirements
and such failure is, in Buyer's reasonable judgment, attributable to Seller's
failure to diligently pursue and implement appropriate corrective actions
consistent with the facts and circumstances of the interruption, Buyer may at
its option elect to cure Seller's non performance, without being in default of
Buyer's obligations under this Agreement, by producing its own Thermal Energy
(with or without use of the Thermal Energy Production Facilities) or purchasing
and accepting deliveries of Thermal Energy from any other source. In such event,
Seller shall reimburse Buyer for the excess of any costs if incurred by Buyer to
cover over and above Seller's rates and charges hereunder.
7. CHARGES AND PAYMENTS
7.1. Charges for Heating and Cooling Service. For each Billing Month in
which Buyer receives Thermal Energy from Seller, Buyer shall pay Seller the
applicable Thermal Energy Capacity Charges for Thermal Energy set forth in
Schedule 7.1 attached hereto and made a part hereof, and shall pay Seller the
applicable charges for Thermal Energy set forth in Schedule 7.1 attached hereto
and made a part hereof.
7.2. Adjustment in Thermal Energy Capacity Charges. In the event the
Thermal Energy required by Buyer increases at any time within five (5) years of
the Service Commencement Date as the result of any expansion to Buyer's
Facilities, Seller shall, at Buyer's option exercisable within six (6) months of
Buyer's commencement of any expansion, provide such additional Thermal Energy
requirements to Buyer under the same rates, terms and conditions then applicable
under this Agreement, provided, however that Buyer shall have provided Seller
with such additional physical space at Buyer's facilities as is necessary for
Seller to complete any required improvement to the Thermal Energy Production
Facilities as a result of such additional Thermal Energy requirements of Buyer.
7.3. Capacity Charge Payments; No Set-Off. Payment of the Thermal Energy
Capacity Charges and Thermal Energy Usage Charges are each conditioned on
Seller's ability to deliver to Buyer at the Points of Delivery the full Thermal
Energy requirements of Buyer under this Agreement, but, subject to the
provisions of this Agreement, shall not otherwise be subject to any set-off,
counterclaim, abatement, or diminution. If Seller is unable to
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deliver to Buyer when required any quantity of Thermal Energy, the applicable
Thermal Energy Capacity Charges shall be adjusted to pro rate for such
deficiency.
7.4. Invoice and Payments. Within fifteen (15) days following the close of
each Billing Month, Seller shall send Buyer a detailed invoice setting forth all
charges for Thermal Energy delivered to Buyer by Seller during such calendar
month. Payment, less any credits or rebates due to Buyer pursuant to this
Agreement, will be due and payable within thirty (30) days of receipt by Buyer
of the invoice from Seller, or the first business day following such day if such
day is not a business day. Buyer shall have the right at reasonable hours to
examine the testing records and meter reading charts of Seller to the extent
reasonably necessary to verify the accuracy of any invoice. If any such
examination reveals any error or inaccuracy in Seller's invoice, than proper
adjustment and correction thereof shall be made as promptly as practicable
thereafter.
7.5. Delinquent Payments. Any invoice tendered for service rendered
hereunder shall be deemed delinquent if not paid within thirty (30) days after
becoming due and payable. The outstanding balance of any delinquent invoice
shall accrue interest from the date due until paid, at the prime rate then in
effect at Citibank, N.A., as published in the Wall Street Journal or comparable
publication, plus one percent (2%) per annum.
8. METERING
8.1. Metering Equipment. Seller will furnish, install, and maintain for the
Term of this Agreement without charge to Buyer all required meters, instruments,
recording devices, and other related data logging equipment required to measure
and record all charges payable by Buyer under this Agreement (collectively, the
"Metering Equipment").
8.2. Testing. All Metering Equipment will be tested and calibrated by
Seller periodically in accordance with the manufacturer's instructions and good
industry practice. Test and calibration records will be issued to the Buyer upon
request. Further, Buyer may request additional meter tests at any time;
provided, however, if a meter is subsequently found to have a variance for
accuracy of less than three (3%) percent, Buyer will bear the reasonable cost of
such testing.
8.3. Adjustment to Prior Invoices. If any test establishes that a meter is
not accurately performing (i.e., in accordance with the manufacturer's variance
specifications), Seller shall make an adjustment in Buyer's invoices, measured
from the date it is determined by Seller or Buyer, in good faith, that the
inaccuracy began.
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9. REPRESENTATIONS AND WARRANTIES
9.1. Seller Representations. Seller hereby represents and warrants that:
(a) It is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation and has all requisite
corporate power and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby;
(b) Seller has or will obtain all necessary corporate approvals for
the execution and delivery of this Agreement and the performance of its
obligations hereunder;
(c) This Agreement is a legal, valid and binding obligation of Seller
enforceable against Seller in accordance with its terms, subject to the
qualification, however, that the enforcement of the rights and remedies herein
is subject to (i) bankruptcy and other similar laws of general application
affecting rights and remedies of creditors and (ii) the application of general
principals of equity (regardless of whether considered in a proceeding in equity
or at law);
(d) To the best knowledge of Seller, as of the date of execution
hereof, no Governmental Approval (other than any Governmental Approvals which
have been previously obtained or disclosed, in writing, to Buyer), is required
to authorize, or is required in connection with the execution, delivery and
performance of this Agreement or the performance of Seller's obligations
hereunder which Seller has reason to believe that it will be unable to obtain in
due course; and
(e) Neither the execution nor delivery of this Agreement by Seller nor
compliance by Seller with any of the terms and provisions hereof (i) conflicts
with, breaches or contravenes the provisions of the corporate charter or bylaws
of Seller or any Contractual Obligation of Seller or (ii) results in a condition
or event that constitutes (or that, upon notice or lapse of time or both, would
constitute) an event or default under any Contractual Obligation of the Seller.
9.2. Buyer Representations. Buyer hereby represents and warrants that:
(a) It is a general partnership duly formed, validly and existing and
in good standing under the laws of the state of its formation and has all
requisite power and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
(b) The execution and delivery of this Agreement and the performance
of its obligations hereunder have been duly authorized by all necessary
partnership action;
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(c) This Agreement is a legal, valid and binding obligation of Buyer
enforceable against Buyer in accordance with its terms, subject to the
qualification, however, that the enforcement of the rights and remedies herein
is subject to (i) bankruptcy and other similar laws of general application
affecting rights and remedies of creditors and (ii) application of general
principals of equity (regardless of whether considered in a proceeding in equity
or at law);
(d) To the best knowledge of Buyer, as of the date of execution
hereof, no Governmental Approval (other than any Governmental Approvals which
have been previously obtained or disclosed, in writing, to Seller) is required
to authorize, or is required in connection with the execution, delivery and
performance of this Agreement or the performance of Buyer's obligations
hereunder which Buyer has reason to believe that it will be unable to obtain in
due course.
(e) Neither the execution and delivery of this Agreement by Buyer nor
compliance by Buyer with any of the terms and provisions hereof (i) conflicts
with, breaches or contravenes the provisions of the Partnership Agreement of
Buyer or any Contractual Obligation of Buyer or (ii) results in a condition or
event that constitutes (or that, upon notice or lapse of time or both, would
constitute) an event of default under any Contractual Obligation of the Buyer.
10. INDEMNIFICATION/INSURANCE/PERFORMANCE GUARANTY
10.1. Seller's Indemnity. Seller hereby agrees to defend, indemnify and
hold harmless Buyer, its employees, officers, shareholders, directors and agents
from and against any and all claims, demands, suits, actions, recoveries,
judgments, and costs and expenses in connection therewith (including, without
limitation, reasonable attorneys' fees and expenses), made, brought or obtained
on account of the loss of life, property, or injury or damage to the person or
property of any person or persons whomsoever, which loss of life or property, or
injury or damage to persons or property, shall arise out of or in connection
with Seller's or its employees' use, operation and maintenance of the Thermal
Energy Production Facilities, or any act required of or omission by Seller, or
any agent or employee of Seller under this Agreement or in connection therewith.
10.2. Buyer's Indemnity. Buyer hereby agrees to defend, indemnify and hold
harmless Seller, its employees, officers, shareholders, directors and agents
from and against any and all claims, demands, suits, actions, recoveries,
judgments, and costs and expenses in connection therewith (including, without
limitation, reasonable attorneys' fees and expenses), made, brought or obtained
on account of the loss of life, property, or injury or damage to the person or
property of any person or persons whomsoever, which loss of life or property, or
injury or damage to persons or property, shall arise out of or in
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connection with Sellers or its employees' operation of Buyer's Facilities
(exclusive of the Thermal Energy Production Facilities), or any act required of
or omission by Buyer, or any agent or employee of Buyer, under this Agreement or
in connection therewith.
10.3. Seller's Insurance. Seller shall maintain throughout the Term of this
Agreement, at its sole cost and expense, the policies of insurance meeting the
terms and conditions set forth on Schedule 10.3 attached hereto and made a part
hereof.
10.4. Buyer's Insurance. Commencing on the date of this Agreement and at
all times thereafter throughout the Term of this Agreement, Buyer shall
maintain, at its sole cost and expense, comprehensive general public liability
(including contractual) insurance, in an amount not less than $10,000,000, with
respect to any liability, losses, damages, expenses, claims, actions, judgments
and settlement for any personal injury, death or property or economic loss
occurring in Buyer's Facilities (exclusive of the Thermal Energy Production
Facilities) or surrounding premises and arising out of or incident to the
operation, maintenance, repair, construction, replacement or modification of
Buyer's Facilities (exclusive of the Thermal Energy Production Facilities).
10.5. Evidence of Insurance. Prior to commencing any construction or
delivering any Thermal Energy under this Agreement, Seller and Buyer shall each
furnish to the other one or more certificates of insurance evidencing the
existence of the coverages set forth in Sections 11.3 and 11.4, respectively and
naming the other an additional named insured. Each certificate shall state that
the insurance carrier will give Seller and Buyer at least thirty (30) days
written notice of any cancellation or material change in the terms and
conditions of such policy during the periods of coverage.
11. DEFAULT
11.1. Seller Default. Anyone of the following events shall constitute an
"Event of Default" hereunder with respect to Seller:
(a) In connection with itself or its assets, Seller shall (i) apply
for or consent to the appointment of or taking of possession by a receiver or
liquidator, (ii) make a general assignment for the benefit of creditors, (ii)
file a petition for relief under the Federal Bankruptcy Code or similar state
law, or (iii) take similar action to commence a proceeding for relief under any
other law relating to the bankruptcy, insolvency, reorganization, or winding up
of itself or the composition or adjustment of its debts;
(b) An action or proceeding shall be commenced, without the
application or consent of Seller, in any court of
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competent jurisdiction for (i) the liquidation, reorganization, dissolution, or
winding up of Seller of the composition or adjustment of its debts, (ii) the
appointment of a trustee, receiver, liquidator or custodian of Seller or
substantially of all its assets, or (iii) any similar relief under any law
relating to Seller's bankruptcy or insolvency, provided such proceeding shall
continue undismissed, or an order, judgment or decree approving or ordering any
of the foregoing shall be entered and continues unstayed for ninety (90) days;
(c) Any representation or warranty made by Seller and contained in
this Agreement shall prove to have been incorrect in any material respect when
made; or
(d) Seller shall fail to (i) timely make any payment required
hereunder, or (ii) comply with any non-payment obligation under this Agreement
and shall fail to cure or remedy such default within thirty (30) days following
notice and written demand by Buyer to cure the same; provided, however, that
Seller's failure to provide and deliver to Buyer the Thermal Energy required
pursuant to this Agreement for any period of three (3) consecutive days, unless
excused due to Force Majeure or actions or inactions of Buyer, its agents,
representatives or employees, shall constitute an immediate Event of Default.
11.2. Buyer Default. Any one of the following events shall constitute an
"Event of Default" hereunder with respect to Buyer.
(a) In connection with itself or its assets, Buyer shall (i) apply for
or consent to the appointment of or taking of possession by a receiver or
liquidator, (ii) make a general assignment for the benefit of creditors, (ii)
file a petition of relief under the Federal Bankruptcy Code or similar state
law, or (iii) take similar action to commence a proceeding for relief under any
other law relating to the bankruptcy, insolvency, reorganization, or winding up
of itself or the composition or adjustment of its debts;
(b) An action or proceeding shall be commenced, without the
application or consent of Buyer, in any court of competent jurisdiction for (i)
the liquidation, reorganization, dissolution, or winding up of the buyer or the
composition or adjustment of its debts, (ii) the appointment of a trustee,
receiver, liquidator or custodian of Buyer or substantially all of its assets,
or (iii) any similar relief under any law relating to Buyer's bankruptcy or
insolvency, provided such proceeding shall continue undismissed or order,
judgment or decree approving or ordering any of the foregoing shall be entered
and continue unstayed for ninety (90) days;
(c) Any representation or warranty made by Buyer and contained in this
Agreement shall prove to have been incorrect in any material respect when made
by Buyer; or
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(d) Buyer shall fail to comply with any provision of this Agreement
and shall fail to cure or remedy such default within thirty (30) days following
notice and written demand by Seller to cure the same.
12. REMEDIES
12.1. Seller's Remedies. Upon an Event of Default by Buyer, Seller may
declare the Buyer to be in material breach of this Agreement and (i) suspend
service until Buyer either cures the default or, in the case of nonpayment,
provides Seller with such assurances and security as Seller may reasonably
request, (ii) terminate this Agreement by written notice to Buyer, or (iii) seek
such other relief to which Seller may be entitled at law or equity.
12.2. Buyer's Remedies. Upon an Event of Default by Seller, Buyer may (i)
to the extent commercially practicable, cure the default by Seller and obtain
reimbursement (through direct cash payment, credit, offset or otherwise as Buyer
may elect) from Seller for all costs and expenses incurred by Buyer in
connection with such cure, (ii) terminate this Agreement by written notice to
Seller, or (iii) seek whatever relief to which Buyer may be entitled at law or
equity.
13. FORCE MAJEURE
13.1. Suspension of Performance. Neither Buyer nor Seller shall be in
default in respect of any obligation under this Agreement if the party is unable
to perform its obligation by reason of an event of Force Majeure, provided (i)
that the suspension of performance shall be commensurate with the nature and
duration of the event of Force Majeure and the non-performing party is using its
best efforts to restore its ability to perform, (ii) that for so long as an
event of Force Majeure relieves Seller of its obligation to deliver Thermal
Energy to Buyer as required under this Agreement, Buyer may elect, without being
in default of its obligations hereunder, to produce its own Thermal Energy or to
purchase and accept deliveries of Thermal Energy from any other source.
13.2. Termination by Reason of Force Majeure. Notwithstanding anything in
this Agreement contained to the contrary, if a party's performance is suspended
for more than one (1) year, the other party may terminate this Agreement upon
thirty (30) days written notice to the other, provided (with respect to an event
of Force Majeure by Seller) that upon such termination Buyer is able to generate
its own Thermal Energy or to obtain Thermal Energy from a third party.
13.3. Force Majeure Defined. Force Majeure shall mean any event that
prevents or delays a party from performing in whole or in part any obligation
arising under this Agreement and neither was within the reasonable control of
the non-performing party nor
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could have been prevented by reasonable actions taken by the non-performing
party, including, without limitation, an act of God, explosion, fire,
lightening, earthquake, hurricane, storm, civil disturbance, strike, lock-out,
unavailability of fuel or power, changes in law, orders of governmental
authorities, and equipment failures that are not due to the negligence of the
non-performing party.
14. TERMINATION
This Agreement shall terminate at the end of the Term and may otherwise be
sooner terminated only: (i) by Buyer upon the occurrence of an Event of Default
by Seller, (ii) by Seller upon the occurrence of an Event of Default by Buyer,
(iii) by either party in accordance with the provisions of Section 14.2 of this
Agreement, or (iv) by Buyer in the event of any increase in the cost of Thermal
Energy hereunder by more than ten (10%) percent and actually paid or to be paid
by Buyer resulting solely from the assertion of rate jurisdiction and imposition
of any law or regulation respecting rates, whether now existing or hereafter
enacted, (including without limitation any rate regulation by the State of New
Jersey Board of Public Utilities) or directly resulting form the administration
or interpretation of any such law or regulation respecting rate regulation by
any Governmental Authority.
15. MISCELLANEOUS
15.1. Assignment. Neither Party shall assign this Agreement without first
having obtained the written consent of the other party, provided, however, that
either party may assign its rights and delegate its duties hereunder without
first obtaining the other party's consent to any subsidiary or affiliated entity
controlled by the assigning party, on the condition that the assignee agrees in
writing to assume all of the obligations of the assigning party hereunder,
further provided, however, that either parry may assign, pledge or mortgage this
Agreement as security for the obligations or indebtedness of such party without
the approval of the other party, including Seller's financing of the District
Thermal Energy Facilities.
15.2. Notice. All notices hereunder shall be sufficient if sent by
registered or certified mail postage prepaid, addressed, if to Seller: Atlantic
Jersey Thermal Systems, Inc., 5100 Harding Highway, Route 40 & 32 Avenue, Mays
Landing, New Jersey 08330, Attention: President; and if to Buyer: Trump Plaza
Associates, 1000 Boardwalk at Virginia Avenue, Atlantic City, New Jersey 08401,
Attention: President and Chief Operating Officer, provided that either Seller or
Buyer may by like notice designate any further or different address or addresses
or person to which notices shall be sent.
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15.3. Limitation of Liability. Except in the case of willful misconduct or
gross negligence, neither Seller nor Buyer, nor their respective officers,
officials, partners, agents, employees, subsidiaries, parents or affiliates
shall be liable to the other party, or their respective officers, officials,
directors, partners, agents, employees, subsidiaries, parents or affiliates for
claims for incidental, special, direct or consequential damages of any nature,
including lost profits and opportunity costs in connection with or resulting
from performance or non-performance of their respective obligations under or in
connection with this Agreement. Nothing in this Section 16.3, however, shall
limit either party's rights or remedies to recover any direct damages for a
breach of this Agreement.
15.4. Confidentiality. Each of the parties agrees to hold in confidence any
information supplied to it by the other and designated in writing as
confidential unless the recipient is required to disclose the information as a
matter of law, in which case, the recipient shall give the other party prior
written notice.
15.5. Counterparts. This Agreement may be executed in separate and several
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same instrument.
15.6. Severability. Any provision hereof that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction and to the
fullest extent permitted by applicable law, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof and without affecting the validity or enforceability of any provision in
any other jurisdiction.
15.7. Casino Control Commission Approval. During the Term of this
Agreement, all provisions of the New Jersey Casino Control Act shall be complied
with by Buyer and Seller, and Seller agrees to apply for a casino service
industry license, if required by the New Jersey Casino Control Commission. In
addition, Seller agrees to file a vendor registration if it has not already done
so.
15.8. Governing Law. his Agreement shall be construed in accordance with
and shall be enforceable under the laws of the State of New Jersey.
15.9. Entire Agreement. The Agreement constitutes the entire agreement
between the Parties with respect to the matters contained herein and all prior
agreements with respect thereto are superseded hereby. No amendment or
modification hereof shall be binding unless duly executed by both Parties.
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed and delivered as of the date and day first above written.
ATLANTIC JERSEY THERMAL SYSTEMS, INC.
By: /s/ Carl H. Fogler
-----------------------------------
Name: Carl H. Fogler
Title: President
TRUMP CASTLE ASSOCIATES
By: /s/ Roger P. Wagner
-----------------------------------
Name: Roger P. Wagner
Title: President
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SCHEDULE 1(e)
POINTS OF DELIVERY
"Steam" point of delivery is defined as the point of exit from the
boiler mechanical room of the steam piping system located in Buyer's Facilities.
Metering of steam usage will occur within the boiler mechanical room.
"Chilled Water Supply" point of delivery is defined as the point of
exit from the chiller mechanical room of the chilled water supply piping system
located in Buyer's Facilities. Metering of chilled water usage will occur within
the chiller mechanical room.
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SCHEDULE 1(f)
POINTS OF RETURN
"Condensate" point of return is defined as the point of entry into the
boiler mechanical room of the condensate piping system located in Buyer's
Facilities.
"Chilled Water Return" point of return is defined as the point of
entry into the chiller mechanical room of the chilled water return piping system
located in Buyer's Facilities.
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SCHEDULE 7.1
Thermal Energy Capacity Charges and Thermal Energy Usage Charges
I. CHARGES FOR HEATING SERVICE
The charges for heating service in any billing month shall equal the sum of
the Monthly Capacity Charges and Monthly Usage Charges.
A. MONTHLY CAPACITY CHARGES
The Monthly Steam Capacity Charge shall equal the product of the Steam
Contract Capacity times the sum of the Steam Capital Capacity Rate and the Steam
O&M Capacity Rate, i.e.,
MSCC = SCC x (SCCR + SOMCR)
where,
MSCC = Monthly Steam Capacity Charge ($)
SCC = Steam Contract Capacity (MMBtu/hr.), and
SCCR = Steam Capital Capacity Rate ($ per MMBtu/hr.)
SOMCR = Steam O&M Capacity Rate ($ per MMBtu/hr.)
The initial Steam Contract Capacity shall equal 30 MMBtu/hr.
The initial Steam Capital Capacity Rate shall equal $668.39 per MMBtu/hr
and the initial Steam O&M Capacity Rate shall equal $273.81 per MMBtu/hr. These
rates shall be adjusted annually commencing on January 1, 1997. The new rates
shall be determined by multiplying the old rates times the fraction whose
numerator shall equal the latest available "Consumer Price Index, All Items,
Urban Consumers, Wilmington - Philadelphia" as published by the U.S. Department
of Commerce and whose denominator shall equal the same index as of twelve months
immediately preceding, provided that with respect to the Steam Capital Capacity
Rate, such fraction shall be no less than 1.03 nor more than 1.04.
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B. MONTHLY USAGE CHARGE
The Monthly Steam Usage Charge shall equal the product of the Monthly Steam
Energy Deliveries times the quantity determined by adding the Monthly Steam Base
Usage Rate and the Monthly Steam Energy Usage Rate, i.e.,
MSUC = MSED x ( MSBUR + MSEUR )
where,
MSUC = Monthly Steam Usage Charge ($)
MSED = Monthly Steam Energy Deliveries (Mmbtu)
MSBUR = Monthly Steam Base Usage Rate ($/Mmbtu), and
MSEUR = Monthly Steam Energy Usage Rate ($/MMBtu)
The initial Monthly Base Usage Charge shall equal $0.750 per MMBtu. This
rate shall be adjusted annually commencing on January 1, 1997. The new rates
shall be determined by multiplying the old rate times the fraction whose
numerator shall equal the latest available "Consumer Price Index, All Items,
Urban Consumers, Wilmington - Philadelphia" as published by the U.S. Department
of Commerce and whose denominator shall equal the same index as of twelve months
immediately preceding.
The initial Monthly Energy Usage Charge shall equal $4.00 per MMBtu. This
charge shall be adjusted quarterly commencing on January 1, 1997. The new rate
shall be determined by multiplying the old rate times the fraction whose
numerator shall equal the latest available Energy Usage Index Steam, as defined
below, and whose denominator shall equal the same index as of the immediately
preceding quarter.
"Energy Usage Index Steam" shall mean, for any quarter, the quantity
obtained by performing the following calculation:
[80%(NG Index - Current Quarter) + 20%(No. 2 Fuel Oil Index
- Current Quarter)]
[80%(NG Index - Previous Quarter) + 20%(No. 2 Fuel Oil Index
- Previous Quarter)]
Where,
"NG Index" means, for any month, the arithmetic mean of the City Gate
Prices for NY/NJ for such month, as published in Inside FERC Gas Market Report
(or any successor publication mutually acceptable to Seller and Purchaser).
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"No. 2 Fuel Oil Index" means, for any month, the price on the first
business day of such month of the Philadelphia Reseller Tank Car Price of No. 2
Oil, as published daily in the Journal of Commerce (or any successor publication
mutually acceptable to Seller and Purchaser).
II. CHARGES FOR COOLING SERVICE
The charges for cooling service in any billing month shall equal the sum of
the Monthly Capacity Charges and Monthly Usage Charges.
A. MONTHLY CAPACITY CHARGES
The Monthly Chilled Water Capacity Charge shall equal the product of the
Chilled Water Contract Capacity times the sum of the Chilled Water Capital
Capacity Rate and the Chilled Water O&M Capital Rate, i.e.,
MCWCC = CWCC x (CWCCR + CWOMCR)
where,
MCWCC = Monthly Chilled Water Capacity Charge ($)
CWCC = Chilled Water Contract Capacity (Tons), and
CWCCR = Chilled Water Capital Capacity Rate ($ per Ton)
CWOMCR - Chilled Water O&M Capacity Rate ($ per Ton)
The initial Chilled Water Contract Capacity shall equal 3600 Tons.
The initial Chilled Water Capital Capacity Rate shall equal $9.03 per Ton
and the initial Chilled Water O&M Capacity Rate shall equal $8.97 per Ton. This
rate shall be adjusted annually commencing on January 1, 1997. The new rates
shall be determined by multiplying the old rate times the fraction whose
numerator shall equal the latest available "Consumer Price Index, All Items,
Urban Consumers, Wilmington - Philadelphia" as published by the U.S. Department
of Commerce and whose denominator shall equal the same index as of twelve months
immediately preceding, provided that fraction with respect to Chilled Water
Capital Capacity Rate, such shall be no less than 1.03 nor more than 1.04.
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B. MONTHLY USAGE CHARGE
The Monthly Chilled Water Usage Charge shall equal the product of the
Monthly Chilled Water Energy Deliveries times the quantity determined by adding
the Monthly Chilled Water Base Usage Rate and the Monthly Chilled Water Energy
Usage Rate, i.e.,
MCWUC = MCWED x ( MCWBUR + MCWEUR )
where,
MCWUC = Monthly Chilled Water Usage Charge ($)
MCWED = Monthly Chilled Water Energy Deliveries
(MMBtu)
MCWBUR = Monthly Chilled Water Base Usage Rate
($/MMBtu), And
MCWEUR = Monthly Chilled Water Energy Usage Rate
($/MMBtu)
The initial Monthly Chilled Water Base Usage Charge shall equal $0.0390 per
Ton-hr. This rate shall be adjusted annually commencing on January 1, 1997. The
new rates shall be determined by multiplying the old rate times the fraction
whose numerator shall equal the latest available "Consumer Price Index, All
Items, Urban Consumers, Wilmington - Philadelphia" as published by the U.S.
Department of Commerce and whose denominator shall equal the same index as of
twelve months immediately preceding.
The initial Monthly Chilled Water Energy Usage Charge shall equal $0.0529
per Ton-hr. This charge shall be adjusted quarterly commencing on January 1,
1997. The new rate shall be determined by multiplying the old rate times the
Energy Usage Index Chilled Water, as defined below.
"Energy Usage Index Chilled Water" means, during any quarter, the fraction
whose numerator shall equal the currently applicable AE Transmission Gen
Service (TGS) Tariffed Rate for energy components only as of the end of
such quarter (including applicable riders or adjustments) and whose
denominator shall equal the same quantity for the immediately preceding
quarter.
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SCHEDULE 1(j)
THERMAL ENERGY PRODUCTION FACILITIES
The "Thermal Energy Production Facilities" are defined as all
equipment identified on the following Chilled Water Piping Schematic and Steam
Piping Schematic. All equipment shown on these schematics reside in the
respective Chiller and Boiler Mechanical Rooms located within Buyer's
Facilities.
Also included is the entire condenser water system including pumps,
piping and cooling towers.
All associated electrical and controls equipment required for the
operation of the above-mentioned equipment is also included.
[Steam Piping Schematic to be Added].
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[Schematic of Existing Chilled Water System at Trump's Castle Casino Resort.]
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[Schematic of Existing Condenser Water Piping for Trump's Castle Casino Resort.]
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SCHEDULE 6.5
THERMAL ENERGY DELIVERY SPECIFICATIONS
Chilled Water Supply 42 F
Chilled Water Return 54 F
Minimum Minimum
Temperature Pressure
Steam Supply 235 F 8 PSI
Condensate Return 180 F to 190 F ------
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Schedule 10.3
INSURANCE
A. Prior to the commencement and during the course of any work performed on
the Premises by Seller and/or any of its Contractors and Subcontractors after
the date of execution and delivery of this Agreement and for the purpose of
performing Seller's duties hereunder, Seller shall, at its sole cost and
expense, maintain the following insurance (with insurance companies satisfactory
to Purchaser) on its own behalf, and furnish to Purchaser certificates of
insurance evidencing same as follows (it being understood that the terms
"Contractor and Subcontractor" as used in this Exhibit, shall mean and include
any and all contractors and/or subcontractors of every tier):
1. Worker's Compensation and Occupational Disease Insurance in accordance
with all applicable laws and regulations. Employer's Liability Insurance
with a Limit of Liability equal to the greater of such statutory
requirements or Five Hundred Thousand ($500,000.00) Dollars.
2. Commercial General Liability Insurance with a combined Bodily Injury and
Property Damage Minimum Limit of One Million ($1,000,000.00) Dollars per
occurrence and Two Million ($2,000,000.00) Dollars in the aggregate,
including the following perils:
a. Broad Form Blanket Contractual Liability for Liability assumed
under this Agreement and all other agreements, documents, instruments
and/or contracts related to the Project;
b. Completed Operations/Products Liability with a three (3) year
extension beyond Final Completion and acceptance of the Project by
Purchaser;
c. Broad Form Property Damage;
d. Explosion, Collapse and Underground Utilities ("XC&U") Perils,
where applicable;
e. Personal Injury Liability; and
f. Other Insurance clause to be deleted, and such insurance is to be
primary as to Seller, Purchaser and all other persons and/or entities
entitled to indemnities as set forth in the Agreement.
3. Comprehensive Automobile Liability Insurance covering the use of all
owned, non-owned, and hired vehicles with a Bodily Injury and Property
Damage limit of One Million ($1,000,000.00) Dollars per occurrence.
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4. "Umbrella" Excess Insurance with coverage for Worker's Compensation and
Occupational Disease, Commercial General Liability and Comprehensive
Automobile Liability with a Limit of Liability equal to Nine Million
($9,000,000.00) Dollars per occurrence and in the aggregate.
5. "All Risk" Coverage covering the project and all materials, equipment
and supplies which are to become a permanent part of the construction
thereof, while awaiting erection and until completion of erection. Coverage
is to be provided on a replacement value basis, it being specifically
understood and acknowledged that:
a. Seller's and its Contractors' and Subcontractors' tools and
equipment are to be excluded from such coverage;
b. Losses resulting from flood and earthquakes are covered subject to
no greater than a $25,000 deductible; and
c. All covered losses are subject to a $25,000 deductible for named
perils and for All Risk perils, which deductible shall be the
responsibility of Seller, except to the extent such losses are attributable
to the negligence or wilful acts of Purchaser.
B. Prior to the commencement of any work under this Agreement, Seller shall
deliver to Purchaser Certificates of Insurance which shall be subject to
Purchaser's approval as to adequacy of protection, and the Certificate of
Insurance shall evidence that such insurance is in full force and effect and
that Seller's insurer shall endeavor to notify Purchaser of any cancellation or
non-payment of such policy. Each of such policies of insurance shall name
Purchaser as additional insured. In no event shall Purchaser be responsible for
premium payment, deductible or self-insured retention (except as otherwise
specified in this Exhibit). If the policy period ends before the end of the work
performed on the Premises by Seller and/or any of its Contractors and
Subcontractors for the purpose of performing Seller's duties under this
Agreement, Purchaser shall have the right to require that Seller, as soon as
practicable, deliver to Purchaser a Certificate of Insurance evidencing a
replacement policy to be effective immediately upon the termination of the
previous policy.
C. In the event of the failure of Seller to furnish and maintain said
insurance and to furnish satisfactory evidence thereof, Purchaser may provide
written notice to Seller setting forth in detail the nature of such
deficiencies, whereupon Seller shall have thirty (30) days to correct such
deficiencies and deliver re-issued certificates of insurance or other
appropriate evidence to Purchaser that such deficiencies have been corrected. If
Seller fails to deliver such evidence within such time, Purchaser shall have the
right (but not the obligation) to effect and maintain the same on behalf of
Seller; in such event, Seller
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agrees to furnish all necessary information and to pay the cost thereof to
Purchaser immediately upon presentation of a bill therefor, and Seller
shall have the right to participate in any negotiations with prospective
insurers.
D. All policies providing coverage shall contain provisions that no
cancellation or material changes to the policies shall become effective except
on thirty (30) days written notice by the insurer(s) (via registered mail) of
such intent to Purchaser. In no event shall Seller permit any lapse in the
insurance coverage required under this Exhibit.
E. Any type of insurance or any increase of limits of liability not
described above which Seller requires for its own protection or on account of
statute shall be its own responsibility and at its own expense.
F. The maintenance of the insurance hereinabove described shall in no way
be interpreted as relieving Seller of any responsibility or liability under this
Agreement.
G. All of the above-described policies and coverages on owned and/or rented
equipment and materials shall contain a provision requiring the insurance
carriers to waive their rights of subrogation against Purchaser.
H. Should Seller engage a Subcontractor, the same conditions will apply
under this Agreement to each such Subcontractor, provided that the limits in the
coverages obtained by any Subcontractor(s) shall be limits reasonably
appropriate in light of the services such Subcontractor performs.
AMENDED AND RESTATED SERVICES AGREEMENT
SERVICES AGREEMENT (the "Agreement") made as of the 23rd day of October,
1996, by and among TRUMP CASINO SERVICES, L.L.C., a New Jersey limited liability
company ("TCS"), TRUMP PLAZA ASSOCIATES, a New Jersey general partnership
("Plaza Associates"), TRUMP TAJ MAHAL ASSOCIATES, a New Jersey general
partnership ("Taj Associates") and TRUMP'S CASTLE ASSOCIATES, L.P., a New Jersey
limited partnership ("Castle Associates").
W I T N E S S E T H:
WHEREAS, TCS, Plaza Associates and Taj Associates entered into that certain
Services Agreement, dated as of July 8, 1996 (the "Original Agreement"),
pursuant to which TCS has provided certain management, financial and other
functions necessary and incidental to the operations of each of Plaza
Associates' and Taj Associates' respective casino hotels, together with all
other activities and services reasonably necessary to carry out any of the
foregoing (the "Services");
WHEREAS, as of October 7, 1996, Trump Hotels & Casino Resorts Holdings,
L.P., a Delaware limited partnership that wholly owns Plaza Associates and Taj
Associates ("THCR Holdings"), acquired 100% of the outstanding equity interests
of Castle Associates (the "Castle Acquisition");
WHEREAS, TCS desires to provide the Services to Plaza Associates, Taj
Associates and Castle Associates, and Plaza Associates, Taj Associates and
Castle Associates desire to receive the Services and to reimburse TCS for its
expenses as set forth herein; and
WHEREAS, TCS, Plaza Associates and Taj Associates desire to amend and
restate the Original Agreement in order to, among other things, include Castle
Associates as a party.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
Section 1. Appointment. Plaza Associates, the owner and operator of the
Trump Plaza Hotel and Casino and Trump World's Fair Casino at Trump Plaza
(collectively, "Trump Plaza"); Taj Associates, the owner and operator of the
Trump Taj Mahal Casino Resort (the "Taj Mahal"); and Castle Associates, the
owner and operator of Trump's Castle Casino Resort ("Trump's Castle") each
hereby appoint TCS to act as provider of the Services to Plaza Associates, Taj
Associates and Castle Associates, respectively. TCS hereby accepts such
appointment and agrees to furnish the Services in accordance with the terms of
this Agreement.
Section 2. Services to be Provided. (a) TCS hereby agrees to render such
Services to Plaza Associates, Taj Associates and/or Castle Associates as may be
reasonably requested from time to time by Plaza Associates, Taj Associates
and/or Castle Associates, as the case
<PAGE>
may be. TCS shall provide the Services in the manner and at a level of
service consistent in all material respects with those furnished by TCS to Plaza
Associates and Taj Associates, and by Castle Associates on its own behalf,
immediately prior to the date hereof and in conformance with all applicable
statutes and regulatory requirements. TCS shall provide the Services in such a
manner that (i) neither Plaza Associates, Taj Associates nor Castle Associates
is unfairly advantaged or discriminated against and (ii) neither Plaza
Associates, Taj Associates nor Castle Associates realizes a competitive
advantage over the other.
(b) In providing the Services hereunder, the management of TCS shall be
directed by its Chief Executive Officer and its Operating Committee regarding
matters of policy, purpose, responsibility and authority. The Operating
Committee of TCS shall be comprised of the Executive Vice President of TCS and
the Chief Operating Officers of Plaza Associates, Taj Associates and Castle
Associates, each of whom shall retain the ability to direct management and
employees of TCS regarding administrative matters and daily operations with
respect to each of their respective casino hotel operations.
Section 3. Compensation. Except for payments made in accordance with
Section 4 of this Agreement, TCS shall receive no compensation for providing the
Services to Plaza Associates, Taj Associates and/or Castle Associates.
Section 4. Payment of Expenses. (a) With respect to the Services provided,
Plaza Associates, Taj Associates and/or Castle Associates, as the case may be,
shall pay to TCS an amount sufficient to fund all of the costs and expenses
incurred by TCS in providing such Services to Plaza Associates, Taj Associates
and/or Castle Associates, as the case may be ("Services Expenses"), including,
without limitation, the following:
(i) all payroll and employee benefits and related costs associated with the
employees utilized by TCS in providing the Services;
(ii) all secretarial, photocopying, telecommunications, office supplies and
other support services utilized by TCS in providing the Services;
(iii) all reasonable travel, food and lodging expenses incurred by TCS in
connection with providing the Services;
(iv) all fees and expenses of outside vendors and consultants utilized by
TCS in providing the Services;
(v) all overhead and other expenses incurred in the ordinary course of
providing the Services to Plaza Associates, Taj Associates and/or Castle
Associates; and
(vi) all insurance premiums and all expenses for legal and independent
accountants' services utilized by TCS in providing the Services.
(b) In the event that Services are provided to more than one of Plaza
Associates, Taj Associates and/or Castle Associates, Services Expenses shall be
apportioned
-2-
<PAGE>
among Plaza Associates, Taj Associates and/or Castle Associates in
accordance with their respective use of such Services.
(c) Services Expenses and Organizational Expenses (as defined) shall be
invoiced by TCS to Plaza Associates, Taj Associates and/or Castle Associates, as
the case may be, in such manner and at such times as determined by mutual
agreement of the parties hereto. Plaza Associates, Taj Associates and/or Castle
Associates, as the case may be, shall pay such Services Expenses and
Organizational Expenses as invoiced promptly upon receipt thereof.
Alternatively, accounts may be established with TCS in the name of Plaza
Associates, Taj Associates and/or Castle Associates, as the case may be, for
payment in respect of Services Expenses and Organizational Expenses incurred by
them.
(d) All organizational expenses incurred by TCS following the date of this
Agreement, including, without limitation, fees of the Secretary of State of the
State of New Jersey, the Casino Control Commission of the State of New Jersey
(the "CCC"), the New Jersey Division of Gaming Enforcement (the "NJDGE") and any
other fees or expenses that are or may be required to be paid or incurred in
order for TCS to preserve and keep in full force its existence as a limited
liability company ("Organizational Expenses") shall be paid by Plaza Associates,
Taj Associates and Castle Associates, each being individually responsible for
33-1/3% of the Organizational Expenses.
(e) At the end of each calendar year, TCS, Plaza Associates, Taj Associates
and Castle Associates shall, based upon the audited financial statements for
such prior calendar year, reconcile any overpayments or underpayments which may
have occurred during such prior calendar year.
Section 5. Independent Contractor Status. (a) For all purposes herein, TCS
shall be deemed to be an independent contractor of Plaza Associates, Taj
Associates and/or Castle Associates, as the case may be, and none of the parties
hereto shall act, represent or hold itself out as having authority to act as an
agent or partner of either of the other parties hereto. Nothing contained in
this Agreement shall be construed as creating a partnership, joint venture,
agency, trust or other association of any kind, each party to this Agreement
being individually responsible only for its own obligations as set forth in this
Agreement.
(b) Nothing in this Agreement shall in any way limit Plaza Associates, Taj
Associates or Castle Associates in the ownership and operation of Trump Plaza,
the Taj Mahal or Trump's Castle, respectively, it being hereby acknowledged and
agreed that Plaza Associates, Taj Associates and Castle Associates are
responsible for the entire operation of Trump Plaza, the Taj Mahal and Trump's
Castle, respectively.
Section 6. Term. This Agreement shall be deemed to have commenced on the
date hereof and shall continue for a term of ten years unless terminated earlier
by any party hereto upon ninety (90) days prior written notice to each of the
other parties hereto.
Section 7. Miscellaneous.
-3-
<PAGE>
(a) Waiver, Amendment. Neither this Agreement nor any provision hereof
shall be waived, amended, modified, changed, discharged or terminated except by
an instrument in writing executed by TCS, Plaza Associates, Taj Associates and
Castle Associates.
(b) Assignment. Neither this Agreement nor any right, remedy, obligation or
liability arising hereunder or by reason hereof shall be assignable by TCS,
Plaza Associates, Taj Associates or Castle Associates, without the prior written
consent of each of the other parties hereto. Any such attempted assignment
without such prior written consent shall be void and of no force or effect.
(c) Entire Agreement. This Agreement sets forth the entire agreement and
understanding of the parties hereto with respect to the transactions
contemplated hereby and supersedes any and all prior and contemporaneous
agreements and understandings relating to the subject matter hereof. No
representation, promise or statement of intention has been made by any party
hereto which is not embodied in this Agreement and no party hereto shall be
bound by or liable for any alleged representation, promise or statement of
intention not set forth herein.
(d) Severability. If any one or more of the provisions of this Agreement or
the application of any such provision or provisions to any person or
circumstance shall be held invalid, illegal or unenforceable in any respect for
any reason, the validity, legality and enforceability of any such provision or
provisions in every other respect and of the remaining provisions shall not in
any way be affected or impaired thereby, it being understood that all of the
provisions of this Agreement shall be enforceable to the full extent permitted
by law.
(e) Section Headings. The section headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW JERSEY, WITHOUT GIVING EFFECT TO
THE CONFLICTS OF LAWS PRINCIPLES THEREOF. TCS, PLAZA ASSOCIATES, TAJ ASSOCIATES
AND CASTLE ASSOCIATES HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY NEW
JERSEY STATE COURT SITTING IN ATLANTIC CITY, NEW JERSEY OR ANY FEDERAL COURT
SITTING IN CAMDEN, NEW JERSEY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY ACCEPT FOR
THEMSELVES AND IN RESPECT OF THEIR PROPERTY, GENERALLY AND UNCONDITIONALLY,
JURISDICTION OF THE AFORESAID COURTS. TCS, PLAZA ASSOCIATES, TAJ ASSOCIATES AND
CASTLE ASSOCIATES IRREVOCABLY WAIVE, TO THE FULLEST EXTENT THEY MAY EFFECTIVELY
DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE
TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN ANY INCONVENIENT FORUM.
-4-
<PAGE>
(g) Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed to be
an original as against any party whose signature appears thereon and all of
which shall together constitute one and the same instrument.
(h) Gaming Laws. Each of the provisions of this Agreement is subject to and
shall be enforced in compliance with the provisions, regulations or approvals
required by any state gaming authority, including, without limitation, the CCC
and the NJDGE.
(i) Third Party Rights. Nothing in this Agreement is intended or shall be
construed to confer upon or give any person, other than the parties hereto,
Trump Atlantic City Associates, Trump Hotels & Casino Resorts, Inc. and THCR
Holdings and each of their respective successors and permitted assigns, any
rights or remedies under or by reason of this Agreement or any transaction
contemplated hereby.
(j) Limitation on Damages. No party shall be liable to the other parties
for any consequential damages resulting from a breach of this Agreement.
(k) No Adverse Interpretation of Other Agreements. This Agreement may not
be used to interpret any other agreement of the parties hereto, and no such
agreement may be used to interpret this Agreement.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first written above.
TRUMP CASINO SERVICES, L.L.C.
By: Trump Atlantic City Corporation
member
By: /s/ NICHOLAS L. RIBIS
-------------------------------------
Name: Nicholas L. Ribis
Title: Vice President
TRUMP PLAZA ASSOCIATES
By: /s/ BARRY J. CREGAN
-------------------------------------
Name: Barry J. Cregan
Title: Chief Operating Officer
TRUMP TAJ MAHAL ASSOCIATES
By: /s/ RUDOLF E. PRIETO
-------------------------------------
Name: Rudolf E. Prieto
Title: Chief Operating Officer
TRUMP'S CASTLE ASSOCIATES, L.P.
By: Trump's Castle Hotel & Casino, Inc.
its general partner
By: /s/ R. BRUCE MCKEE
-------------------------------------
Name: R. Bruce McKee
Title: Chief Operating Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information from Trump's Castle Funding,
Inc. This data has been extracted from the Consolidated Balance Sheets and
Consolidated Statements of Operations for the nine month period ended
September 30, 1996 and is qualified in its entirety by reference to such
Financial Statements.
</LEGEND>
<CIK> 0000770618
<NAME> Trump's Castle Funding, Inc.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 293,985
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 200
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 293,985
<SALES> 0
<TOTAL-REVENUES> 32,242
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (32,242)
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information from Trump's Castle
Associates, L.P. This data has been extracted from the Consolidated Balance
Sheets and Consolidated Statements of Operations for the nine month period ended
September 30, 1996 and is qualified in its entirety by reference to such
Financial Statements.
</LEGEND>
<CIK> 0000911534
<NAME> Trump's Castle Associates, L.P.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 21,049
<SECURITIES> 0
<RECEIVABLES> 8,191<F1>
<ALLOWANCES> 0
<INVENTORY> 1,357
<CURRENT-ASSETS> 2,522
<PP&E> 515,307
<DEPRECIATION> (198,292)
<TOTAL-ASSETS> 360,944
<CURRENT-LIABILITIES> 44,203
<BONDS> 266,985
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 360,944
<SALES> 0
<TOTAL-REVENUES> 210,684
<CGS> 0
<TOTAL-COSTS> 191,083
<OTHER-EXPENSES> 11,779
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (36,157)
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (24,869)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1> Asset values represent net assets.
</FN>
</TABLE>
