<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 9, 1996
REGISTRATION NO. 333-643
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
TRUMP ATLANTIC CITY ASSOCIATES
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 7011 22-3213714
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
INCORPORATION OR
ORGANIZATION)
MISSISSIPPI AVENUE AND THE BOARDWALK
ATLANTIC CITY, NEW JERSEY 08401
(609) 441-6060
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
NICHOLAS L. RIBIS
VICE PRESIDENT
TRUMP PLAZA HOLDING, INC.
MISSISSIPPI AVENUE AND THE BOARDWALK
ATLANTIC CITY, NEW JERSEY 08401
(609) 441-6060
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
---------------
TRUMP ATLANTIC CITY FUNDING, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 9999 22-3418939
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
INCORPORATION OR
ORGANIZATION)
MISSISSIPPI AVENUE AND THE BOARDWALK
ATLANTIC CITY, NEW JERSEY 08401
(609) 441-6060
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
NICHOLAS L. RIBIS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
TRUMP ATLANTIC CITY FUNDING, INC.
MISSISSIPPI AVENUE AND THE BOARDWALK
ATLANTIC CITY, NEW JERSEY 08401
(609) 441-6060
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
(continued on next page)
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<PAGE>
(continued from previous page)
--------------
TRUMP PLAZA ASSOCIATES
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY 7011 22-3241643
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
INCORPORATION OR
ORGANIZATION)
MISSISSIPPI AVENUE AND THE BOARDWALK
ATLANTIC CITY, NEW JERSEY 08401
(609) 441-6060
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
NICHOLAS L. RIBIS
CHIEF EXECUTIVE OFFICER
TRUMP PLAZA ASSOCIATES
MISSISSIPPI AVENUE AND THE BOARDWALK
ATLANTIC CITY, NEW JERSEY 08401
(609) 441-6060
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
--------------
WITH COPIES TO:
DANIEL D. RUBINO, ESQ. ROBERT M. PICKUS, ESQ. NICHOLAS P. SAGGESE, ESQ.
WILLKIE FARR & GALLAGHER EXECUTIVE VICE PRESIDENT SKADDEN, ARPS, SLATE,
ONE CITICORP CENTER MEAGHER & FLOM
TRUMP HOTELS & CASINO RESORTS, INC.
153 EAST 53RD STREET
MISSISSIPPI AVENUE AND THE BOARDWALK
300 SOUTH GRAND AVENUE
NEW YORK, NEW YORK 10022
ATLANTIC CITY, NEW JERSEY 08401 SUITE 3400
(212) 821-8000 (609) 441-6060 LOS ANGELES, CALIFORNIA
90071
(213) 687-5000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of this Registration
Statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
--------------
On February 1, 1996, a fee of $406,897 was paid in connection with the
registration of up to $1,180,000,000 principal amount of First Mortgage Notes.
--------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
TRUMP ATLANTIC CITY FUNDING, INC.
TRUMP PLAZA ASSOCIATES
CROSS-REFERENCE SHEET
Cross-reference sheet furnished pursuant to Item 501(b) of Regulation S-K
showing location in the Prospectus of information required by Items of Form S-
1.
<TABLE>
<CAPTION>
ITEM IN FORM S-1 LOCATION IN PROSPECTUS
---------------- ----------------------
<C> <S> <C>
1. Forepart of the Registration Statement
and Outside Front Cover Page of
Prospectus........................... Facing Page; Cross-Reference
Page; Outside Front Cover Page
2. Inside Front and Outside Back Cover
Pages of Prospectus.................. Inside Front and Outside Back
Cover Pages; Available
Information
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges... Prospectus Summary; Risk Factors
4. Use of Proceeds....................... Prospectus Summary; Use of
Proceeds
5. Determination of Offering Price....... Not Applicable
6. Dilution.............................. Not Applicable
7. Selling Security Holders.............. Not Applicable
8. Plan of Distribution.................. Outside Front Cover Page;
Underwriting
9. Description of Securities to be
Registered........................... Prospectus Summary; Risk Factors;
Description of the First
Mortgage Notes; Certain Federal
Income Tax Considerations
10. Interests of Named Experts and
Counsel.............................. Experts
11. Information with Respect to the
Registrant........................... Prospectus Summary; Risk Factors;
Use of Proceeds; Capitalization;
Selected Historical Financial
Information; Management's
Discussion and Analysis of
Financial Condition and Results
of Operations; Unaudited Pro
Forma Financial Information;
Business; Regulatory Matters;
Management; Certain
Transactions; Security Ownership
of Certain Beneficial Owners and
Management; Description of the
Trump Atlantic City Partnership
Agreement; Legal Matters
12. Disclosure of Commission Position on
Indemnification of Securities Act
Liabilities.......................... Not Applicable
</TABLE>
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS SUBJECT TO COMPLETION, DATED April 9, 1996
APRIL , 1996
$1,100,000,000
TRUMP ATLANTIC CITY ASSOCIATES
TRUMP ATLANTIC CITY FUNDING, INC.
% FIRST MORTGAGE NOTES DUE 2006
The % First Mortgage Notes due 2006 (the "First Mortgage Notes") are being
issued (the "First Mortgage Note Offering") by Trump Atlantic City Associates
("Trump AC") and its wholly owned subsidiary Trump Atlantic City Funding, Inc.
("Trump AC Funding" and, together with Trump AC, the "Issuers"). The First
Mortgage Notes are joint and several obligations of the Issuers.
The First Mortgage Note Offering is part of a comprehensive plan (the "Merger
Transaction") relating to the acquisition (the "Merger") by Trump Hotels &
Casino Resorts, Inc. ("THCR") of Trump Taj Mahal Associates ("Taj Associates"),
the partnership that owns and operates the Trump Taj Mahal Casino Resort, and
the refinancing of the debt obligations of Taj Associates and Trump Plaza
Associates ("Plaza Associates"), the partnership that owns and operates Trump
Plaza Hotel and Casino. Upon consummation of the Merger Transaction, Taj
Associates and Plaza Associates will become wholly owned subsidiaries of Trump
AC. Trump AC is a wholly owned subsidiary of Trump Hotels & Casino Resorts
Holdings, L.P. ("THCR Holdings"), which in turn is a subsidiary of THCR. The
Issuers' payment obligations under the First Mortgage Notes will be fully and
unconditionally guaranteed on a senior secured basis by Plaza Associates, Taj
Associates and all other existing and future Subsidiaries (as defined) of Trump
AC (collectively, the "Guarantors"), other than Trump AC Funding, which is one
of the Issuers. THCR is concurrently issuing shares of its common stock (the
"THCR Common Stock") in an underwritten public offering (the "Stock Offering")
and may issue shares pursuant to the Merger. Consummation of the First Mortgage
Note Offering is conditioned upon the consummation of the other elements of the
Merger Transaction (including the Stock Offering).
Interest on the First Mortgage Notes is payable in cash, semiannually in
arrears on April and October of each year, commencing on October , 1996.
The First Mortgage Notes will mature on April , 2006. The First Mortgage Notes
are not redeemable prior to April , 2001, other than pursuant to a Required
Regulatory Redemption (as defined). Thereafter, the First Mortgage Notes may be
redeemed at the redemption prices set forth herein, together with accrued and
unpaid interest to the date of redemption. Upon the occurrence of a Change of
Control (as defined), each holder of the First Mortgage Notes may require the
Issuers to repurchase such holder's First Mortgage Notes at 101% of the
principal amount thereof, together with accrued and unpaid interest to the date
of repurchase. See "Description of the First Mortgage Notes." Trump AC's
consolidated outstanding indebtedness at December 31, 1995 would have been, on
a pro forma basis after giving effect to the transactions comprising the Merger
Transaction (including the First Mortgage Note Offering and the application of
the net proceeds thereof), approximately $1.1 billion, consisting of $1.1
billion of principal amount of First Mortgage Notes and approximately $3.0
million of senior indebtedness.
The Issuers' payment obligations under the First Mortgage Notes, and the
guarantees thereof, will be secured on a senior basis by substantially all of
the real and personal property owned or leased by Plaza Associates and Taj
Associates. The liens securing the First Mortgage Notes (i) are subordinate to
the liens securing approximately $3.0 million of senior indebtedness, and (ii)
would be pari passu to liens permitted to secure an up to $25 million working
capital facility and up to $75 million principal amount of expansion debt which
may be incurred in the future. The First Mortgage Notes will not be secured by
a pledge of the equity of any subsidiary of THCR Holdings, which equity has
been pledged for the exclusive benefit of the Senior Notes (as defined).
SEE "RISK FACTORS" BEGINNING ON PAGE 23 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE FIRST
MORTGAGE NOTES OFFERED HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
NEITHER THE NEW JERSEY CASINO CONTROL COMMISSION NOR ANY OTHER REGULATORY
AUTHORITY HAS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
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<TABLE>
<CAPTION>
PRICE UNDERWRITING PROCEEDS
TO THE DISCOUNTS AND TO THE
PUBLIC(1) COMMISSIONS(2) ISSUERS(3)
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<S> <C> <C> <C>
Per First Mortgage Note..................... % % %
Total....................................... $ $ $
- --------------------------------------------------------------------------------
</TABLE>
(1)Plus accrued interest, if any, from the date of issuance.
(2) Trump AC and its Subsidiaries have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Underwriting."
(3) Before deducting expenses estimated at $ , payable by Trump AC.
The First Mortgage Notes are offered by the several Underwriters when, as and
if delivered to and accepted by the Underwriters and subject to various prior
conditions, including their right to reject orders in whole or in part. It is
expected that delivery of the First Mortgage Notes will be made in New York,
New York on or about April , 1996.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
SALOMON BROTHERS INC BT SECURITIES CORPORATION
<PAGE>
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE FIRST
MORTGAGE NOTES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE OVER-
THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
2
<PAGE>
PROSPECTUS SUMMARY
The following is a summary of certain information contained elsewhere in this
Prospectus and is qualified in its entirety by the more detailed information
and financial statements, and notes thereto, contained elsewhere in this
Prospectus. Unless otherwise indicated, (i) the term "Trump AC" as used in this
Prospectus includes Trump AC and its subsidiaries and gives effect to the
Merger Transaction, and (ii) the information in this Prospectus assumes no
exercise of the Underwriters' over-allotment option in connection with the
Stock Offering. Prospective investors are urged to read this Prospectus
carefully in its entirety. This Prospectus contains forward-looking information
that involves risks and uncertainties and such information is subject to the
assumptions set forth in connection therewith and the information contained
herein.
TRUMP ATLANTIC CITY ASSOCIATES
Upon consummation of the Merger Transaction, Trump Atlantic City Associates
("Trump AC"), an indirect subsidiary of Trump Hotels & Casino Resorts, Inc.,
will own and operate two "Four Star" Atlantic City casino hotels (the "Atlantic
City Properties"): the Trump Taj Mahal Casino Resort (the "Taj Mahal") and
Trump Plaza Hotel and Casino ("Trump Plaza"). The Taj Mahal is currently
Atlantic City's largest casino, and Trump Plaza will have the largest casino in
Atlantic City upon completion of its ongoing expansion program (the "Trump
Plaza Expansion"). Through its ownership of two successful land-based casino
hotels, Trump AC will have a leading presence in the growing Atlantic City
market, which, in terms of gaming revenues, has demonstrated a ten-year
compound annual growth rate of approximately 5.8% and a growth rate of
approximately 9.5% for calendar year 1995 versus calendar year 1994. After
giving effect to the Merger Transaction and the Trump Plaza Expansion, Trump AC
will have approximately one-quarter of Atlantic City's casino square footage,
slot machines, table games and hotel room inventory. In addition, the
combination of the Taj Mahal with Trump Plaza's existing operations will also
provide opportunities for operational efficiencies, economies of scale and
other benefits from the expertise and experience of management at the two
operating entities. Trump AC also plans to undertake an expansion program at
the Taj Mahal designed to increase its hotel room inventory and casino floor
space and expand its entertainment and parking facilities (the "Taj Mahal
Expansion").
Management believes Trump AC will benefit from the following factors:
. LEADING ATLANTIC CITY FACILITIES. Upon consummation of the Trump Plaza
Expansion, Trump AC will own and operate the two largest casino hotel
properties in Atlantic City, both of which are strategically located on
The Boardwalk. Trump AC believes that the Atlantic City Properties' prime
locations, reputations for high quality amenities and first-class
customer service and targeted marketing strategies are ideally suited to
capitalize on the expected continued growth in the Atlantic City gaming
market. Management believes that its leading size and market share in
Atlantic City following the consummation of the Merger Transaction will
provide it with a competitive advantage in marketing the Atlantic City
Properties, particularly to large convention groups and multi-day stay
destination resort visitors.
. ATLANTIC CITY PROPERTIES EXPANSION. Trump AC has nearly completed the
Trump Plaza Expansion and is developing the plans for the Taj Mahal
Expansion, which projects will increase the Atlantic City Properties'
gaming space and hotel room capacity, allowing Trump AC to meet both
existing demand and the anticipated demand from the increased number of
available rooms and infrastructure improvements that are currently under
development to enhance further the "vacation destination appeal" of
Atlantic City.
3
<PAGE>
The following table profiles Trump AC's casino and hotel capacity
following the planned expansions at the Atlantic City Properties:
<TABLE>
<CAPTION>
TRUMP TAJ TRUMP PLAZA TAJ MAHAL
PLAZA(a) MAHAL EXPANSION(b) EXPANSION(c) TOTAL
-------- ------- ------------ ------------ -------
<S> <C> <C> <C> <C> <C>
Casino square footage... 75,395 120,000(d) 64,158 60,000 319,553
Slot machines........... 2,368 3,550 1,898 2,500 10,316
Table games............. 97 169 44 -- 310
Hotel rooms............. 555 1,250 849 800 3,454
</TABLE>
--------------------
(a) Includes the 2,000 square foot area connecting the existing facility
with Trump Plaza East (as defined) and the 75 slot machines included in
this area.
(b) Includes the 15,000 square foot casino with 400 slot machines and 13
table games and 326 hotel rooms which have already opened at Trump
Plaza East. The remaining 14 hotel rooms and suites at Trump Plaza East
are scheduled to be opened by the end of April 1996. Also reflects nine
super suites scheduled to open early in 1997 and not otherwise included
in the "Trump Plaza Expansion." The remaining portion of the Trump
Plaza Expansion, Trump World's Fair (as defined), is scheduled to open
in the second quarter of 1996.
(c) Plans for the Taj Mahal Expansion, scheduled to be completed in phases
from the first quarter of 1997 through early 1998, are subject to
modification.
(d) Excludes a 12,000 square foot poker, keno and race simulcasting room
which contains 64 poker tables.
. OPERATING SYNERGIES. Trump AC intends to capitalize on the opportunities
for efficiencies which can be generated by integrating certain operations
of the Atlantic City Properties, which previously have been operated
separately. Management has identified cost savings which management
estimates, by the end of the second year following the Merger
Transaction, to be approximately $18-20 million on an annual basis,
although no assurance may be made as to the amount which will be
realized. Management believes that it will be able to consolidate certain
departments at the Atlantic City Properties, reduce general and
administrative expenses through possible personnel reductions and the
consolidation of certain marketing efforts, and reduce operating costs
through efficiencies that are expected to result from the combined
purchasing power of the Atlantic City Properties.
. THE "TRUMP" NAME. Trump AC capitalizes on the widespread recognition of
the "Trump" name and its association with high quality amenities and
first-class service. To this end, Trump AC provides a broadly diversified
gaming and entertainment experience consistent with the "Trump" name and
reputation for quality.
ATLANTIC CITY PROPERTIES
Trump Plaza. Management believes that Trump Plaza's "Four Star" Mobil Travel
Guide rating and "Four Diamond" American Automobile Association rating reflect
the high quality amenities and services that Trump Plaza provides to its casino
patrons and hotel guests. These amenities and services include a broad
selection of dining choices, headline entertainment, deluxe accommodations,
tennis courts and swimming and health spa facilities.
Trump Plaza Expansion. Management is seeking to enhance further Trump Plaza's
position as an industry leader through the Trump Plaza Expansion, scheduled to
be completed in the second quarter of 1996, which involves expanding and
renovating Trump Plaza's gaming space, increasing its hotel capacity and
constructing retail operations and entertainment venues. As part of the Trump
Plaza Expansion, management has renovated and integrated into Trump Plaza a
hotel located adjacent to Trump Plaza's main tower ("Trump Plaza East"), the
grand opening for which was held on February 16, 1996, and is in the process of
renovating and integrating the former Trump Regency Hotel ("Trump World's
Fair"), located on The Boardwalk adjacent to the existing Atlantic City
Convention Center, which is next to Trump Plaza.
4
<PAGE>
In February 1996, Trump Plaza East opened the 15,000 square foot Ocean View
Casino and Bar, and has to date opened 326 of its 349 hotel rooms. The Ocean
View Casino and Bar is the first gaming room in Atlantic City to combine a
casino, bar and entertainment area and features a 70-foot long bar with 27 bar-
top slot machines, live entertainment and a 58 square foot video wall. With its
high ceilings and windows overlooking the Atlantic Ocean and The Boardwalk,
Trump Plaza is creating a new and exciting entertainment environment for its
casino patrons.
Upon completion of the Trump Plaza Expansion, Trump Plaza's casino floor
space will be the largest in Atlantic City, increasing from approximately
75,000 square feet to an aggregate of approximately 140,000 square feet,
housing a total of approximately 4,270 slot machines and 140 table games. Trump
Plaza's hotel capacity will increase to a total of 1,404 guest rooms from 555
guest rooms, making Trump Plaza's guest room inventory one of the largest in
Atlantic City. Management believes the increased hotel capacity as a result of
the Trump Plaza Expansion will better enable Trump Plaza to meet demand and
accommodate its casino guests, as well as to host additional and larger
conventions and corporate meetings. The following table details plans for the
Trump Plaza Expansion:
<TABLE>
<CAPTION>
TRUMP
TRUMP PLAZA TRUMP WORLD'S
FACILITY(a) PLAZA EAST(b) FAIR(c) TOTAL
----------- ------------- ------- ------
<S> <C> <C> <C> <C>
Casino square footage................. 75,395 14,886 49,272 139,553
Slot machines......................... 2,368 405 1,493 4,266
Table games........................... 97 12 32 141
Hotel rooms........................... 555 349 500 1,404
</TABLE>
- --------------------
(a) Includes the 2,000 square foot area connecting the existing facility with
Trump Plaza East (as defined) and the 75 slot machines included in their
area.
(b) The casino and 326 hotel rooms have already opened. The remaining 14 hotel
rooms and suites are scheduled to be opened by the end of April 1996. Also
reflects nine super suites scheduled to open early in 1997 and not
otherwise included in the "Trump Plaza Expansion."
(c) Scheduled to open in the second quarter of 1996.
The Trump Plaza Expansion will increase Trump Plaza's prime central frontage
on The Boardwalk to nearly a quarter of a mile. Furthermore, Trump World's Fair
will add approximately 50,000 square feet of casino floor space, approximately
16,000 of which will be directly accessible from The Boardwalk, and Trump Plaza
has been reconfigured to provide a new entranceway to Trump Plaza directly off
the Atlantic City Expressway. Management believes that the construction of a
new convention center and "tourist corridor" linking the new convention center
with The Boardwalk will enhance the desirability of Atlantic City generally
and, as a result of Trump Plaza's central location, will benefit Trump Plaza in
particular. Trump Plaza's location on The Boardwalk at the end of the main
highway into Atlantic City makes it highly accessible for both "drive-in" and
"walk-in" patrons.
The Taj Mahal. The Taj Mahal currently has the largest casino in Atlantic
City and has ranked first among all Atlantic City casinos in terms of total
gaming revenues, table revenues and slot revenues since it commenced operations
in 1990. The Taj Mahal capitalizes on the widespread recognition and marquee
status of the "Trump" name and its association with high quality amenities and
first-class service as evidenced by its "Four Star" Mobil Travel Guide rating.
Management believes that the breadth and diversity of the Taj Mahal's casino,
entertainment and convention facilities and its status as a "must-see"
attraction will enable the Taj Mahal to benefit from the expected continued
growth in the Atlantic City market. In order to enhance its status as a "must-
see" attraction, the Taj Mahal has recently signed agreements for the
development of Hard Rock Cafe(R), Rainforest Cafe(R) and All Star Cafe(R)
themed restaurants on the property. In addition, in order to continue to
attract high end players, the Taj Mahal has recently opened the Dragon Room, a
new Asian themed table game area, and plans to open the Sultan's Palace, a new
high-end "slots only" lounge and private club in the second quarter of 1996.
5
<PAGE>
The Taj Mahal Expansion. The Taj Mahal Expansion is scheduled to be completed
in phases from the first quarter of 1997 through early 1998. The Taj Mahal
Expansion, the plans for which are subject to modification, involves the
construction of an approximately 2,000 space expansion of the Taj Mahal's
existing self-parking facilities and a new 10,000 seat arena adjacent to the
Taj Mahal, each scheduled to be completed in the first quarter of 1997; the
conversion of the current site of the Mark Etess Arena into a new 60,000
square-foot circus-themed casino with 2,500 slot machines, scheduled to be
completed in mid-1997; and the construction of an approximately 800 room hotel
tower adjacent to the Taj Mahal's existing hotel tower, which is scheduled to
be completed early in 1998.
THE ATLANTIC CITY MARKET. The Atlantic City gaming market has demonstrated
continued growth despite the recent proliferation of new gaming venues across
the country. The 12 casino hotels in Atlantic City generated approximately
$3.75 billion in gaming revenues in 1995, an approximately 9.5% increase over
1994 gaming revenues of approximately $3.42 billion. During 1995, all 12
casinos experienced increased gaming revenues compared to 1994.
The approximately $3.75 billion of gaming revenues produced by the 12
Atlantic City casino hotels in 1995 exceeded the approximately $3.12 billion of
gaming revenues produced by the 18 largest (based on net revenues) casino
hotels on the Las Vegas Strip for the same period, even though the 12 Atlantic
City casino hotels have less than one-quarter the number of hotel rooms of such
Las Vegas Strip casino hotels. Management believes, however, that given current
high occupancy levels, future casino revenue growth in the Atlantic City market
will be dependent in part upon expansion in hotel capacity.
Due principally to an improved regulatory environment, the general
improvement of economic conditions in 1993, 1994 and 1995 and existing high
occupancy rates, significant investment in the Atlantic City market has been
initiated and/or announced. For example, Trump Plaza will be located at the end
of the planned "tourist corridor" featuring an entertainment and retail complex
that will link The Boardwalk with downtown Atlantic City. In addition, The New
Jersey Casino Redevelopment Authority ("CRDA") is currently overseeing the
development of a new convention center. When completed, the approximately $250
million convention center will be the largest exhibition space between New York
City and Washington, D.C. The new convention center, currently scheduled to
open in January 1997, will be located at the base of the Atlantic City
Expressway. Trump Plaza is adjacent to the existing Atlantic City Convention
Center and will also be one of the closest casino hotels to the new convention
center, which as currently planned would hold approximately 500,000 square feet
of exhibit and pre-function space, 45 meeting rooms, various food-service
facilities and a 1,600-car underground parking garage. An additional planned
infrastructure improvement is the State of New Jersey's approximately $125
million capital plan to upgrade and expand the Atlantic City International
Airport. Trump AC believes that the Taj Mahal's and Trump Plaza's positions as
leading Atlantic City attractions will enable them to attract a large portion
of any increase in the number of potential casino hotel patrons.
6
<PAGE>
THE FIRST MORTGAGE NOTE OFFERING
ISSUERs..................... Trump AC and Trump AC Funding as joint and
several obligors.
PRINCIPAL AMOUNT............ $1,100,000,000 aggregate principal amount of %
First Mortgage Notes due 2006.
MATURITY.................... April , 2006.
INTEREST.................... % per annum, payable in cash, semi-annually in
arrears, calculated on the basis of a 360-day
year consisting of twelve 30-day months.
INTEREST PAYMENT DATES...... April and October , commencing October ,
1996.
GUARANTORS.................. The First Mortgage Notes will be fully and
unconditionally guaranteed on a joint and
several, senior secured basis by Plaza
Associates, Taj Associates, TTMC and each other
present and future majority owned or controlled
subsidiary (other than "unrestricted
subsidiaries," a "Subsidiary") of Trump AC, other
than Trump AC Funding (which is one of the
Issuers).
OPTIONAL REDEMPTION......... The First Mortgage Notes will be redeemable in
cash at the option of the Issuers, in whole or in
part, at any time on or after , 2001 at the
redemption prices set forth herein, together with
accrued and unpaid interest through the
redemption date. In addition, the First Mortgage
Notes are subject at any time to redemption in
accordance with an order of a governmental
authority having jurisdiction over Taj Associates
or Plaza Associates' casino licenses.
SINKING FUND................ None.
CHANGE OF CONTROL...........
Upon the occurrence of a Change in Control (as
defined in "Description of the First Mortgage
Notes--Certain Covenants--Repurchase of the First
Mortgage Notes at the Option of the Holder Upon a
Change in Control"), each holder of First
Mortgage Notes may require Trump AC to repurchase
such holder's First Mortgage Notes at 101% of the
principal amount thereof, together with accrued
and unpaid interest to the date of repurchase.
SECURITY....................
The First Mortgage Notes will be secured by one
or more mortgages (the "Mortgage") representing a
first lien and security interest (subject to
approximately $3.0 million of indebtedness
secured by mortgages) on substantially all of the
assets comprising Trump Plaza and the Taj Mahal,
including the Specified Parcels (as defined in
"--Use of Proceeds") and related facilities. The
security interest held by a collateral agent on
behalf of, among others, the Trustee also
includes assignments of leases and rents and
operating assets and encumbers furniture,
fixtures, machinery and equipment. However, THCR
Holdings' direct and indirect equity interests in
Trump Atlantic City and its subsidiaries,
including Plaza Associates and Taj Associates,
will be pledged exclusively for the benefit of
the holders of the 15 1/2% Senior Secured Notes
due 2005 issued by THCR Holdings and its
subsidiary, Trump Hotels & Casino Resorts
Funding, Inc. ("THCR Funding") (the "Senior
Notes").
NON-RECOURSE................ No direct or indirect stockholder, partner,
employee, officer or director, as such, past,
present or future, of either the Issuers, any
7
<PAGE>
Guarantor or any successor entity shall have any
personal liability in respect of the obligations
of the Issuers or any Guarantor under the
indenture under which the First Mortgage Notes
will be issued (the "First Mortgage Note
Indenture"), the First Mortgage Notes or the
guarantees thereof by reason of the status as
such stockholder, partner, employee, officer or
director except to the extent such party is an
Issuer or Guarantor.
CERTAIN COVENANTS........... The First Mortgage Note Indenture will contain
certain covenants which, among other things, will
(i) limit Trump AC's and its Subsidiaries'
ability to incur certain indebtedness unless,
among other things, Trump AC's Consolidated
Coverage Ratio (as defined) for the four fiscal
quarters immediately preceding such event, taken
as one period, would have been at least equal to
the ratios set forth in the First Mortgage Note
Indenture, subject to certain exceptions; (ii)
limit the making of certain dividends,
distributions and other restricted payments by
Trump AC and its Subsidiaries, (iii) limit the
lines of business in which Trump AC and its
Subsidiaries may engage to those relating to the
casino hotel business in AC; (iv) limit the
existence of certain liens on assets of Trump AC
and its Subsidiaries; (v) restrict the use of
proceeds from certain asset sales by Trump AC and
its Subsidiaries; (vi) limit transactions by
Trump AC and its Subsidiaries with affiliates of
Trump AC (other than wholly-owned Subsidiaries);
(vii) restrict Trump AC and its Subsidiaries from
engaging in certain leasing activities; (viii)
limit the Issuers' ability to merge, sell or
consolidate; (ix) limit the obligations of Trump
AC Funding to those incident to its obligations
under the First Mortgage Note Indenture; (x)
prohibit Trump AC and its Subsidiaries from
paying services fees under a certain services
agreement with a corporation wholly owned by
Trump, or any expenses relating thereto, under
certain circumstances, including if a Default (as
defined) or an Event of Default (as defined) has
occurred and is continuing; (xi) prohibit Trump
AC and its Subsidiaries from paying any other
amounts pursuant to other management, services or
similar agreements with Trump; (xii) require the
maintenance of insurance; and (xiii) limit the
issuing or selling of equity interests by any of
Trump AC's Subsidiaries (except to Trump AC or a
wholly-owned Subsidiary thereof).
EVENTS OF DEFAULT........... Events of Default will include (i) default in
payment of interest when due for a period of 30
days; (ii) default in payment of principal or
premium, if any, when due; (iii) default in the
performance or breach of certain specified
covenants, including those relating to merger,
consolidation or sale of assets, failure to make
or consummate a Change of Control Offer (as
defined) or an Asset Sale Offer (as defined) as
required; (iv) default in the performance or
breach of certain other covenants of the Issuers
(other than those specifically covered elsewhere
in the First Mortgage Note Indenture) for 30 days
after notice; (v) certain events of bankruptcy,
insolvency or reorganization relating to the
Issuers or significant subsidiaries, which, if
involuntary, continue for 60 days, (vi)
revocation,
8
<PAGE>
suspension or loss of certain permits resulting
in a cessation of a substantial portion of the
operations of Trump Plaza or the Taj Mahal for
more than 90 consecutive days; (vii) acceleration
prior to the maturity of certain indebtedness or
the default in the payment when due of certain
indebtedness of Trump AC or its subsidiaries;
(viii) except as permitted by the First Mortgage
Note Indenture or the First Mortgage Notes, the
cessation of any guarantee in any material
respect or the finding by any judicial proceeding
that the guarantee is unenforceable or invalid in
any material respect or the denial or
disaffirmation by any Guarantor of its
obligations under its guarantee; and (ix) certain
events of default under the documents governing
the Mortgage (as defined). An Event of Default
under the First Mortgage Note Indenture could
permit acceleration of the First Mortgage Notes
and acceleration of certain other existing or
future indebtedness of the Issuers and their
affiliates under other instruments that may
contain cross-acceleration or cross-default
provisions. See "Risk Factors--Restrictions on
Certain Activities."
MODIFICATION OF INDENTURE... Amendments to the First Mortgage Note Indenture
will be permitted with the consent of the holders
of not less than a majority of the principal
amount of the outstanding First Mortgage Notes;
provided, however, that the consent of all
holders will be required to release any of the
collateral from the Liens created by the
documents governing the Mortgage other than in
accordance with the terms thereof or to make
certain changes, including those that would
change the time of payment of interest or
principal or reduce the principal amount or
interest rate payable on any First Mortgage Note
or that would reduce the percentage in principal
amount of outstanding First Mortgage Notes, the
consent of whose holders is required for any such
modification or waiver; and provided further,
that the holders of at least two-thirds in
aggregate principal amount will be required to
approve any change in the obligations of the
Issuers to make an offer to repurchase holders'
First Mortgage Notes upon a Change of Control.
Certain changes may be made without the consent
of the holders, for example to cure any
ambiguities in the documents that do not
materially adversely affect the rights of the
holders.
9
<PAGE>
THE STOCK OFFERING
(Offered by THCR exclusively pursuant to a separate prospectus.)
Concurrently with and as a condition to consummation of the First Mortgage
Note Offering, THCR, Trump AC's indirect corporate parent, will issue up to
12.5 million shares of its THCR Common Stock in an underwritten public offering
(together with up to an additional 1.875 million shares subject to an over-
allotment option) pursuant to the Stock Offering.
The Stock Offering and the First Mortgage Note Offering (collectively, the
"Offerings") are part of a comprehensive plan relating to the merger (the
"Merger") of a subsidiary of THCR with and into Taj Mahal Holding Corp. ("Taj
Holding"), which currently beneficially owns a 50% equity interest in Taj
Associates; the contribution by THCR to Trump AC (on behalf, and at the
direction, of THCR Holdings) of all of its direct and indirect ownership
interests in Taj Associates acquired in the Merger; the contribution by Donald
J. Trump ("Trump") of the remaining 50% equity interest in Taj Associates to
Trump AC (on behalf, and at the direction, of THCR Holdings); and the
refinancing of substantially all of the outstanding indebtedness of Taj
Associates and Plaza Associates.
The consummation of the First Mortgage Note Offering is conditioned upon the
consummation of each transaction contemplated by the Merger Transaction,
including the Senior Note Consent Solicitation (as defined), the Plaza Note
Consent Solicitation (as defined), the Plaza Note Purchase (as defined) and the
Stock Offering.
RISK FACTORS
Prospective investors should carefully evaluate the matters set forth herein,
including those under the heading "Risk Factors." Factors to be considered
include:
. the high leverage and fixed charges of Trump Atlantic City
. Trump AC's holding company structure
. the risk in refinancing and repaying indebtedness, and Trump AC's need
for additional financing
. the risks associated with changes of control
. the restrictions imposed on certain activities by certain debt
instruments
. the non-recourse nature of the First Mortgage Notes
. the historical results and net losses of Trump Plaza and the Taj Mahal
. conflicts of interest
. control by and the involvement of Trump
. risks associated with financial forecasts
. risks associated with the Atlantic City Properties expansions
. the absence of a public trading market, and the potential volatility of
market prices, for the First Mortgage Notes
. competition in the gaming industry
. reliance on certain key personnel
. the strict regulation by gaming authorities, including the potential
disqualification of holders of First Mortgage Notes
. limitations on the license of the "Trump" name
. fraudulent transfer considerations.
10
<PAGE>
USE OF PROCEEDS
The net proceeds to Trump AC from the First Mortgage Note Offering, after
payment of underwriting discounts and expenses of the First Mortgage Note
Offering, are estimated to be $ billion. The proceeds from the First
Mortgage Note Offering, together with the proceeds from the Stock Offering,
which will be paid as Merger consideration or contributed to Trump AC (on
behalf, and at the direction, of THCR Holdings), and available cash, will be
used as set forth below:
(i) pay cash to those holders of Class A Common Stock, par value $.01 share,
of Taj Holding (the "Taj Holding Class A Common Stock") electing to receive
cash in the Merger (see note (b) below);
(ii) redeem the outstanding 11.35% Mortgage Bonds, Series A, due 1999 of Taj
Funding (the "Taj Bonds") (the "Taj Bond Redemption"), at a redemption price
equal to 100% of the principal amount thereof, plus accrued interest to the
date of redemption;
(iii) redeem the outstanding shares of the Class B Common Stock, par value
$.01 per share, of Taj Holding (the "Taj Holding Class B Common Stock"), as
required in connection with the Taj Bond Redemption at the redemption price of
$.50 per share;
(iv) retire the outstanding 10 7/8% First Mortgage Notes due 2001 (the "Plaza
Notes") of Trump Plaza Funding, Inc. ("Plaza Funding") (the "Plaza Note
Purchase");
(v) satisfy the indebtedness of Taj Associates under a loan agreement with
National Westminster Bank USA ("NatWest") (the "NatWest Loan");
(vi) purchase certain real property used in the operation of the Taj Mahal
that is currently leased from a corporation wholly owned by Trump and satisfy
certain related indebtedness owed to First Fidelity Bank, National Association
(now known as First Union National Bank) ("First Fidelity") (the "First
Fidelity Loan");
(vii) purchase certain real property used in the operation of Trump Plaza
that is currently leased from an unaffiliated third party, pursuant to the
purchase option (the "Trump Plaza East Purchase Option") held by Plaza
Associates;
(viii) pay Bankers Trust Company ("Bankers Trust") $10 million to obtain
releases of liens and guarantees that Bankers Trust has in connection with
certain outstanding indebtedness owed by Trump to Bankers Trust (the "Trump
Indebtedness"); and
(ix) pay related fees and expenses and provide for working capital.
11
<PAGE>
The following table sets forth the anticipated sources and uses of funds for
the Merger Transaction (assuming an April 15, 1996 consummation):
(DOLLARS IN MILLIONS)
ANTICIPATED SOURCES OF FUNDS
<TABLE>
<CAPTION>
CASH SOURCES
<S> <C>
First Mortgage Note Offering.... $1,100.0
THCR Stock Offering(b)(d)....... 300.0
Available Cash.................. 9.8
--------
Total Cash Sources............. 1,409.8
<CAPTION>
NON-CASH SOURCES
<S> <C>
THCR Common Stock Equivalents to
be issued to Trump(c).......... 40.5
THCR Common Stock to be issued
to First Fidelity(d)........... 12.0
--------
Total Non-Cash Sources......... 52.5
--------
TOTAL SOURCES................... $1,462.3
========
</TABLE>
ANTICIPATED USES OF FUNDS
<TABLE>
<CAPTION>
CASH USES
<S> <C>
Redeem Taj Bonds(a)............. $ 794.4
Retire Plaza Notes.............. 370.0
Satisfy NatWest Loan............ 36.5
Exercise Trump Plaza East
Purchase Option................. 28.0
Financing Fees and Expenses..... 49.4
Payment to First Fidelity....... 50.0
Payment to Bankers Trust........ 10.0
Payment to Holders of Taj
Holding Class A Common
Stock(b)...................... 40.5
Redeem Taj Holding Class B
Common Stock.................... 0.4
Transaction Fees and Expenses
and Working Capital............. 30.6
--------
Total Cash Uses............... 1,409.8
NON-CASH USES
Acquisition of Trump's direct
and indirect equity interests
in Taj Associates............. 40.5
THCR Common Stock issued to
First Fidelity(d)............... 12.0
--------
Total Non-Cash Uses........... 52.5
--------
TOTAL USES...................... $1,462.3
========
</TABLE>
(a) Includes the Additional Amount (as defined) through April 15, 1996. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
(b) Assumes all holders of Taj Holding Class A Common Stock elect Cash
Consideration (as defined) in the Merger. In the event that any holder of
Taj Holding Class A Common Stock elects Stock Consideration (as defined),
THCR may decrease the size of the Stock Offering. See "--The Merger
Transaction."
(c) Represents the value as of the effective time of the Merger of the shares
of THCR Common Stock into which the limited partnership interests in THCR
Holdings to be issued to Trump and Trump Taj Mahal, Inc., a corporation
wholly owned by Trump, in connection with the Merger Transaction will be
convertible.
(d) Assumes a price of $24.00 per share of THCR Common Stock.
12
<PAGE>
SUMMARY FINANCIAL INFORMATION
SUMMARY FINANCIAL INFORMATION OF TRUMP AC
The following tables set forth (a) certain historical consolidated financial
information of Trump AC (formerly Trump Plaza Holding Associates) and Plaza
Associates for each of the five years ended December 31, 1991 through 1995 and
(b) certain unaudited pro forma financial information of Trump AC. The
unaudited pro forma financial information also gives effect to the Merger
Transaction (including the Offerings, the Taj Bond Redemption, the Plaza Note
Purchase and the consolidation of Taj Associates in Trump AC's financial
statements). The historical financial information of Trump AC and Plaza
Associates as of December 31, 1994 and 1995 and for the years ended December
31, 1993, 1994 and 1995 as set forth below has been derived from the audited
consolidated financial statements of Trump AC and Plaza Associates included
elsewhere in this Prospectus. The historical financial information of Trump AC
and Plaza Associates as of December 31, 1991, 1992 and 1993 and for the years
ended December 31, 1991 and 1992 as set forth has been derived from the audited
consolidated financial statements of Trump AC and Plaza Associates not included
in this Prospectus. Trump AC Funding was recently formed and has had no
operations to date.
The pro forma Statement of Operations Data and Other Data give effect to the
Merger Transaction as if it had occurred on January 1, 1995 and the pro forma
Balance Sheet Data gives effect to the same as if the same had occurred on
December 31, 1995. The pro forma financial information should not be considered
indicative of actual results that would have been achieved had the transactions
occurred on the date or for the period indicated and does not purport to
indicate results of operations as of any future date or for any future period.
All financial information should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Unaudited Pro Forma Financial Information" and the consolidated and condensed
financial statements and the related notes thereto included elsewhere in this
Prospectus.
13
<PAGE>
<TABLE>
<CAPTION>
HISTORICAL
---------------------------------------------------------------
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------
1991 1992 1993 1994 1995
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net revenues........... $ 279,684 $ 313,318 $ 300,491 $ 295,063 $ 333,321
Depreciation and amor-
tization.............. 16,193 15,842 17,554 15,653 16,213
Income from opera-
tions................. 16,087 35,003 49,640 43,415 59,787
Interest expense, net.. 33,363 31,356 39,889 48,219 43,261
Extraordinary gain
(loss) (a)............ -- (38,205) 4,120 -- (9,250)
Net income (loss) (b).. (29,230) (35,787) 9,338 (8,870) 1,533
OTHER DATA:
EBITDA (c)............. $ 44,000 $ 60,399 $ 68,241 $ 60,524 $ 75,290
Capital expenditures
(d)................... 5,509 8,643 10,052 20,489 109,756
Ratio of earnings to
fixed charges (defi-
ciency) (e)........... (32,094) 1.1x 1.1x (9,735) 1.2x
Cash flows provided by
(used in)
Operating activities... 9,514 26,191 21,820 19,950 26,923
Investing activities... (6,175) (10,469) (12,679) (21,691) (112,934)
Financing activities... (2,870) (7,367) (13,550) (1,508) 90,804
BALANCE SHEET DATA (AT
END OF PERIODS):
Total assets........... $ 378,398 $ 370,349 $ 374,498 $ 375,643 $ 480,024
Total long-term debt,
net of current
maturities (f)........ 33,326 249,723 395,948 403,214 332,721
Total capital (defi-
cit).................. 54,043 11,362 (54,710) (63,580) 110,812
OPERATING DATA (AT END
OF PERIOD): (g)
Casino square footage
(h)................... 60,000 60,000 60,000 73,000(h) 73,604
Number of hotel rooms.. 557 557 557 555 732
Hotel occupancy rate... 87.1% 86.9% 87.6% 88.6% 89.7%
TABLE GAMES:
Total Atlantic City
table drop (i)........ $7,219,192 $7,055,034 $6,835,572 $6,832,517 $7,110,612
Atlantic City table
drop growth........... (8.7)% (2.3)% (3.1)% 0.0% 4.1%
Trump Plaza table drop
(i)................... $ 646,480 $ 689,919 $ 626,621 $ 599,881 $ 626,832
Trump Plaza table games
market share (j)...... 9.0% 9.8% 9.2% 8.8% 8.8%
Trump Plaza table games
fair share (k)........ 8.5% 8.2% 7.8% 8.0% 8.6%
Trump Plaza table games
efficiency (l)........ 105.1% 118.8% 118.0% 110.6% 102.5%
Trump Plaza table
units................. 112 98 87 89 97
Trump Plaza table
revenue............... $ 98,905 $ 95,864 $ 93,392 $ 92,770 $ 96,518
Trump Plaza table
revenue per unit per
day (actual dollars).. $ 2,419 $ 2,679 $ 2,940 $ 2,855 $ 2,726
SLOTS:
Total Atlantic City
slot revenue.......... $1,851,070 $2,113,829 $2,214,638 $2,297,280 $2,572,719
Atlantic City slot
revenue growth........ 7.4% 14.2% 4.8% 3.7% 12.0%
Trump Plaza slot
revenue (m)........... $ 136,128 $ 168,388 $ 173,215 $ 170,316 $ 204,230
Trump Plaza slot market
share (j)............. 7.4% 8.0% 7.8% 7.4% 7.9%
Trump Plaza slot fair
share (k)............. 7.8% 7.8% 7.6% 8.0% 8.2%
Trump Plaza slot
efficiency (l)........ 94.5% 102.6% 103.1% 92.5% 96.7%
Trump Plaza slot
units................. 1,659 1,727 1,812 2,076 2,339
Trump Plaza slot
revenue per unit per
day (actual
dollars) (m).......... $ 225 $ 267 $ 262 $ 225 $ 239
</TABLE>
(footnotes on following page)
14
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA (n)
--------------------------------
YEAR ENDED DECEMBER 31, 1995
----------------------------
(DOLLARS IN THOUSANDS)
STATEMENT OF OPERATIONS DATA: (UNAUDITED)
<S> <C>
Net revenues................................. $ 887,069
Depreciation and amortization................ 64,747
Income from operations....................... 156,942
Interest expense, net (o) (excludes
amortization of deferred financing costs)... 117,586
Net income................................... 29,884
OTHER DATA:
EBITDA (c)(o)................................ $ 224,069
Ratio of earnings to fixed charges (e)....... 1.23x
Cash flows provided by (used in)
Operating activities......................... 129,068
Investing activities......................... (145,505)
Financing activities......................... 89,775
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets................................. $1,531,410
Total long-term debt, net of current
maturities.................................. 1,106,378
Total capital................................ 338,198
</TABLE>
- --------------------
(a) The extraordinary loss for the year ended December 31, 1992 consists of the
effect of stating Plaza Funding's Preferred Stock issued at fair value as
compared to the carrying value of these securities and the write off of
certain deferred financing charges and costs. The excess of the carrying
value of a note obligation over the amount of the settlement payment net of
related repaid expenses in the amount of $4,120,000 has been reported as an
extraordinary gain for the year ended December 31, 1993. The extraordinary
loss of $9,250,000 for the period from January 1, 1995 through June 12,
1995 relates to the redemption of the 12 1/2% Pay-in-Kind Notes due 2003 of
Trump AC ("PIK Notes") and related warrants to acquire PIK Notes (the "PIK
Note Warrants") and the write off of related unamortized deferred financing
costs.
(b) Net loss for the year ended December 31, 1991, includes a $10.9 million
charge associated with the rejection of the lease of the former Trump
Regency Hotel and $4.0 million of costs associated with certain litigation.
Net loss for 1992 includes $1.5 million of costs associated with certain
litigation. Net income (loss) for the years ended December 31, 1993, 1994,
and 1995, includes $3.9, $4.9, and $3.7 million, respectively, of real
estate taxes and leasing costs associated with Trump Plaza East.
(c) EBITDA represents income from operations before interest expense, taxes,
depreciation, amortization, restructuring costs, and the non-cash write-
down of CRDA investments. EBITDA should not be construed as an alternative
to net income or any other measure of performance determined in accordance
with generally accepted accounting principles or as an indicator of Trump
AC's operating performance, liquidity or cash flows generated by operating,
investing and financing activities. Management has included information
concerning EBITDA as management understands that it is used by certain
investors as one measure of Trump Atlantic City's historical ability to
service its debt.
(d) Capital expenditures attributable to Trump Plaza East were approximately
$2.8 million, $8.7 million and $24.9 million for the years ended December
31, 1993, 1994 and 1995, respectively. Capital expenditures for
improvements to existing facilities were $7.3 million, $11.8 million and
$11.2 million for the years ended December 31, 1993, 1994 and 1995.
(e) For purposes of computing this ratio, earnings consist of income (loss)
before income taxes, extraordinary items, and fixed charges, adjusted to
exclude capitalized interest. Fixed charges consist of interest expense,
including amounts capitalized, preferred partnership distribution
requirements and the portion of operating lease rental expense that is
representative of the interest factor (deemed to be one-third of operating
lease rental expense). Earnings were insufficient to cover fixed charges
for the years ended 1991 and 1994, and, on a pro forma basis, for the year
ended 1994.
(f) Reflects reclassification in 1991 of indebtedness relating to outstanding
mortgage bonds as a current liability due to then existing events of
default.
(g) Atlantic City industry data has been compiled from information filed with
and published by the New Jersey Casino Control Commission (the "CCC") and
is unaudited.
(h) The expansion of 13,000 square feet was commenced in April 1994 and
completed at the end of that year.
(i) Table drop represents the total dollar value of chips purchased for table
games for the period indicated.
(j) Market share represents the total Trump Plaza table drop or slot revenues,
as applicable, expressed as a percentage of total Atlantic City gaming
table drop or slot revenues, as applicable.
(k) Fair share is the percentage of the total number of gaming units (table
games or slot machines, as applicable) in Trump Plaza to the total number
of such units in casino hotels in Atlantic City.
(l) Efficiency is the ratio of Trump Plaza's market share to its fair share.
(m) Slot revenue is shown on the cash basis and excludes amounts reserved for
progressive jackpot accruals.
(n) The Pro Forma Statement of Operations Data and Other Data give effect to
the Merger Transaction as if the same had occurred on January 1, 1995 and
the Pro Forma Balance Sheet Data gives effect to the Merger Transaction as
if the same had occurred on December 31, 1995.
(o) Does not give effect to any return on investment of the net proceeds of the
June 1995 Offerings (as defined) for the period in 1995 prior to the June
1995 Offerings.
15
<PAGE>
SUMMARY FINANCIAL INFORMATION OF TAJ ASSOCIATES
The following table sets forth certain historical consolidated financial
information of Taj Associates for each of the five years ended December 31,
1991 through 1995. The financial information of Taj Associates as of December
31, 1991, 1992, 1993, 1994 and 1995 for the years then ended set forth below
has been derived from the audited consolidated financial statements of Taj
Associates. The audited financial information as of December 31, 1994 and 1995
and for the years ended December 31, 1993, 1994 and 1995 are included elsewhere
in this Prospectus. The audited financial information as of December 31, 1991,
1992, 1993 and for the years ended December 31, 1991 and 1992 has been derived
from the audited consolidated financial statements of Taj Associates not
included herein. This information should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations of Taj Associates," "Unaudited Pro Forma Financial Information" and
the consolidated financial statements and the related notes thereto included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1991(A) 1992 1993 1994 1995
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS
DATA:
Net Revenues........... $ 438,313 $ 469,753 $ 498,911 $ 517,182 $ 553,748
Depreciation and
amortization.......... 36,202 36,388 36,858 39,750 43,387
Income from
operations............ 31,828 68,027 84,458 76,634 89,890
Interest expense, net.. (100,683) (103,126) (106,997) (113,292) (116,513)
Extraordinary gain .... 259,618 0 0 0 0
Net income (loss)...... 188,513 (35,099) (22,539) (36,658) (26,623)
OTHER DATA:
EBITDA(b).............. $ 99,883 $ 111,022 $ 128,371 $ 127,796 $ 140,835
Capital expenditures... 17,045 12,111 16,752 23,030 26,498
Ratio of earnings to
fixed charges
(deficiency)(c)....... (71,105) (35,099) (22,539) (36,658) (26,623)
Cash flows provided by
(used in)
Operating activities.. 35,126 31,786 48,634 33,422 62,899
Investing activities... (18,901) (17,759) (22,160) (27,231) (32,571)
Financing activities... (16,170) (2,500) (2,492) (3,039) (2,583)
BALANCE SHEET DATA (AT
END OF PERIOD):
Total assets........... $ 814,051 $ 802,556 $ 811,508 $ 807,612 $ 821,793
Total long-term debt,
net of current
maturities(d)......... 573,844 595,682 625,765 656,701 694,192
Total capital.......... 167,837 130,913 106,641 67,812 39,635
OPERATING DATA (AT END
OF PERIOD)(E):
Casino square
footage(f)............ 120,000 120,000 130,110 132,317 132,856
Number of hotel rooms.. 1,250 1,250 1,250 1,250 1,250
Hotel occupancy rate... 87.3 % 91.3 % 92.3 % 92.4% 91.2%
TABLE GAMES:
Total Atlantic City
table drop(g)......... $7,219,192 $7,055,034 $6,835,572 $6,832,517 $7,110,612
Atlantic City table
drop growth........... (8.7)% (2.3)% (3.1)% 0.0% 4.1%
Taj Mahal table
drop(g)............... $1,160,714 $1,067,595 $1,062,042 $1,125,029 $1,192,200
Taj Mahal table games
market share(h)....... 16.1 % 15.1 % 15.5 % 16.5% 16.8%
Taj Mahal table games
fair share(i)......... 12.7 % 13.3 % 14.5 % 14.2% 13.3%
Taj Mahal table games
efficiency(j)......... 126.8 % 113.5 % 106.9 % 116.2% 126.3%
Taj Mahal table units.. 166 159 163 159 150
Taj Mahal table
revenue............... $ 186,644 $ 169,112 $ 173,432 $ 184,774 $ 201,817
Taj Mahal table revenue
per unit per day
(actual dollars)...... 3,080 2,913 2,915 3,184 3,686
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1991(b) 1992 1993 1994 1995
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
SLOTS:
Total Atlantic City
slot revenue(k)....... $1,851,070 $2,113,829 $2,214,638 $2,297,280 $2,572,719
Atlantic City slot rev-
enue growth........... 7.4% 14.2% 4.8% 3.7% 12.0%
Taj Mahal slot
revenue(k)............ $ 197,383 $ 246,947 $ 264,504 $ 259,114 $ 285,248
Taj Mahal slot market
share(h).............. 10.7% 11.7% 11.9% 11.3% 11.1%
Taj Mahal slot fair
share(i).............. 13.0% 12.7% 13.1% 12.6% 12.3%
Taj Mahal slot
efficiency(j)......... 82.3% 92.1% 90.8% 89.7% 90.2%
Taj Mahal slot units... 2,778 2,840 3,146 3,342 3,514
Taj Mahal slot revenue
per unit per day (ac-
tual dollars)(k)...... $ 195 $ 238 $ 230 $ 213 $ 222
</TABLE>
- --------
(a) Taj Associates and Taj Funding completed the 1991 Taj Restructuring (as
defined) on October 4, 1991, which may affect the comparability of prior
periods.
(b) EBITDA represents income from operations before depreciation, amortization,
restructuring costs, the non-cash write-down of CRDA investments, a
nonrecurring cost of a litigation settlement in 1994, lease payments on the
Specified Parcels and payments under the Taj Services Agreement. In
connection with the Merger Transaction, the lease payments and payments
under the Taj Services Agreement will be terminated. EBITDA should not be
construed as an alternative to net income or any other measure of
performance determined in accordance with generally accepted accounting
principles or as an indicator of Taj Associates' operating performance,
liquidity or cash flows generated by operating, investing and financing
activities. Management has included information concerning EBITDA, as
management understands that it is used by certain investors as one measure
of Taj Associates' historical ability to service its debt.
(c) For purposes of computing this ratio, earnings consist of loss before
income taxes and extraordinary items and fixed charges, adjusted to exclude
capitalized interest. Fixed charges consist of interest expense, including
amounts capitalized, partnership distribution requirements and the portion
of operating lease rental expense that is representative of the interest
factor (deemed to be one-third of operating lease rental expense).
(d) The years ended December 31, 1991, 1992, 1993, 1994 and 1995 include
approximately $528,124, $550,140, $580,464, $611,533 and $649,139 of Taj
Bonds, net of discount of approximately $201,334, $188,162, $172,417,
$153,597 and $131,103, respectively, which is being accreted as additional
interest expense to maturity and results in an effective interest rate of
approximately 18.0%. See Note 2 of Notes to Consolidated Financial
Statements of Taj Associates. The carrying value of the Taj Bonds was
$611,533 and $649,139, at December 31, 1994 and 1995, respectively, with a
face value of $765,130 and $780,242, respectively.
(e) Atlantic City industry data has been compiled from information filed with
and published by the CCC and is unaudited.
(f) 1993, 1994 and 1995 casino square footage includes an approximately 12,000
square foot poker, keno and race simulcasting room.
(g) Table drop represents the total dollar value of chips purchased for table
games for the period indicated.
(h) Market share represents the total Taj Mahal table drop or slot revenues, as
applicable, expressed as a percentage of total Atlantic City table drop or
slot revenues, as applicable.
(i) Fair share is the percentage of the total number of gaming units (table
games or slot machines, as applicable) in the Taj Mahal to the total number
of such units in casinos in Atlantic City.
(j) Efficiency is the ratio of the Taj Mahal's market share to its fair share.
(k) Slot revenue is shown on the cash basis and excludes amounts reserved for
progressive jackpot accruals.
17
<PAGE>
THE MERGER TRANSACTION
Upon consummation of the Merger Transaction, THCR Holdings, through
subsidiaries of Trump AC, will own and operate Trump Plaza and the Taj Mahal.
Pursuant to the Agreement and Plan of Merger, dated as of January 8, 1996, as
amended on January 31, 1996, among THCR, Taj Holding and THCR Merger Corp.
("Merger Sub") (the "Merger Agreement"), each outstanding share of Taj Holding
Class A Common Stock will be converted into the right to receive, at each
holder's election, either (i) $30.00 in cash ("Cash Consideration") or (ii)
that number of shares of THCR Common Stock as is determined by dividing $30.00
by the Market Value of such shares ("Stock Consideration"). Market Value is
defined as the average of the high and low per share sales price on the NYSE of
a share of THCR Common Stock on a random selection of ten trading days within
the fifteen trading day period ending five trading days immediately preceding
the effective time of the Merger (the "Effective Time"). In addition to the
Merger, the Stock Offering and the First Mortgage Note Offering, the Merger
Transaction includes the transactions discussed below.
Real Property Purchases. Upon consummation of the Merger Transaction, Trump
AC intends to purchase from Trump Taj Mahal Realty Corp. ("Realty Corp."), a
corporation wholly owned by Trump, certain real property used in the operation
of the Taj Mahal, including land underlying a 20,000 square-foot multi-purpose
entertainment complex known as the Xanadu Theater with a seating capacity for
approximately 1,200 people, which can be used as a theater, concert hall,
boxing arena or exhibition hall (the "Taj Entertainment Complex"), land
adjacent to the Taj Mahal used by it for surface parking and bus terminals, the
pier located across The Boardwalk from the Taj Mahal (the "Steel Pier"), and a
warehouse complex (collectively, the "Specified Parcels"). The Specified
Parcels are currently leased by Taj Associates from Realty Corp. for
approximately $3.3 million per year. See "Business--Certain Indebtedness--Taj
Associates--First Fidelity Loan/Specified Parcels." Realty Corp. has
outstanding indebtedness of approximately $78 million under the First Fidelity
Loan, which is due November 15, 1999. The First Fidelity Loan is currently
secured by a mortgage on the Specified Parcels, and Taj Associates has
previously guaranteed the repayment of the First Fidelity Loan up to a maximum
of $30 million. Trump has also previously personally guaranteed (up to a
maximum of approximately $19.2 million), and pledged his direct and indirect
equity interests in Taj Associates as collateral for, the First Fidelity Loan.
As mortgagee, First Fidelity has the right to terminate the lease on the
Specified Parcels under certain circumstances. See "Business--Certain
Indebtedness--Taj Associates--First Fidelity Loan/Specified Parcels."
In order to secure future use of the Specified Parcels and eliminate all
future lease payments on the Specified Parcels, Taj Associates expects to
satisfy the First Fidelity Loan through the payment of $50 million in cash and
500,000 shares of THCR Common Stock and purchase the Specified Parcels from
Realty Corp. for ten dollars by exercising a purchase option with respect to
the Specified Parcels. Upon consummation of the purchase of the Specified
Parcels, (i) the lease relating to the Specified Parcels will be terminated,
thus eliminating Taj Associates' rental obligations thereunder; (ii) the $30
million guaranty by Taj Associates of the First Fidelity Loan will be released;
and (iii) Trump's guaranty of such indebtedness will be released and First
Fidelity will relinquish its lien on Trump's direct and indirect equity
interests in Taj Associates. The Specified Parcels will be part of the
collateral securing the First Mortgage Notes. See "Business--Certain
Indebtedness--Taj Associates--First Fidelity Loan/Specified Parcels."
Pursuant to the Trump Plaza East Purchase Option, Plaza Associates has the
right to purchase Trump Plaza East for a purchase price of $28.0 million
through December 31, 1996, increasing by $1.0 million annually thereafter until
expiration on June 30, 1998. Plaza Associates intends to exercise the Trump
Plaza East Purchase Option in connection with the Merger Transaction and
purchase Trump Plaza East, thereby eliminating approximately $3.1 million of
annual lease payments associated with Trump Plaza East. Plaza Associates will
thereby secure future use of Trump Plaza East. As a result of such purchase,
Trump will obtain a release of a contingent debt obligation, which, if the
conditions thereunder are not satisfied (including, without limitation, the
failure by Plaza Associates to exercise the Trump Plaza East Purchase Option),
would result in an obligation of Trump for approximately $18 million of
contingent indebtedness owed by him, which obligation was associated with
Trump's original purchase of Trump Plaza East. Should Plaza Associates be
unable to finance the purchase price of Trump Plaza East pursuant to the Trump
Plaza East Purchase Option and its leasehold
18
<PAGE>
interest therein is terminated, any amounts expended with respect to Trump
Plaza East and any improvements thereon would inure to the benefit of the
unaffiliated third party that owns Trump Plaza East and not to Plaza
Associates. See "Business--Properties--Trump Plaza--Trump Plaza East."
Consent and Release Payment. The Trump Indebtedness is currently secured by,
among other things, a lien on Trump's direct and indirect equity interests in
Taj Associates, as well as the pledge of a promissory note from Trump Taj
Mahal, Inc. ("TTMI"), a corporation wholly owned by Trump and the holder of a
49.995% general partnership interest in Taj Associates, to Trump (the "TTMI
Note"). As part of the Merger Transaction, Taj Associates will pay $10 million
to Bankers Trust to obtain the consent of Bankers Trust to the Merger
Transaction and to obtain releases of certain liens on Trump's direct and
indirect equity interests in Taj Associates and related guarantees, and on the
TTMI Note, all of which secure a portion of the Trump Indebtedness. See
"Business--Certain Indebtedness--Taj Associates--TTMI Note."
Plaza Note Purchase; Consent Solicitations. As part of the Merger
Transaction, Plaza Funding will retire the Plaza Notes. Any such purchase of
Plaza Notes will be conditioned upon, among other things, the concurrent
consummation of the other transactions contemplated by the Merger Transaction.
Plaza Associates and Plaza Funding are soliciting the consent of holders of a
majority in aggregate principal amount of the Plaza Notes (the "Plaza Note
Consent Solicitation") to amend certain provisions in the indenture pursuant to
which the Plaza Notes were issued (the "Plaza Note Indenture"). The requisite
number of consents has been obtained.
To effect the Merger Transaction, THCR Holdings and its subsidiary THCR
Funding, the issuers of the Senior Notes, solicited from the holders of the
Senior Notes the waiver of, and consent to modify, certain provisions of the
indenture pursuant to which the Senior Notes were issued (the "Senior Note
Indenture") (the "Senior Note Consent Solicitation"). Consent of holders of a
majority in aggregate principal amount of outstanding Senior Notes is required
in connection with the Senior Note Consent Solicitation. The holders of
approximately $154 million principal amount of Senior Notes, representing
approximately 99.6% of the outstanding Senior Notes, have consented.
The successful completion of both the Plaza Note Consent Solicitation and the
Senior Note Consent Solicitation are conditions to the consummation of the
First Mortgage Note Offering.
Trump Contribution and Consideration. In connection with the Merger
Transaction, Trump will contribute or cause to be contributed all of his direct
and indirect equity interests in Taj Associates (representing a 50% economic
interest) to Trump AC (on behalf, and at the direction of, THCR Holdings).
Trump will contribute to Trump AC his shares (consisting of 50% of the
outstanding capital stock) of The Trump Taj Mahal Corporation, the holder of a
.01% general partnership interest in Taj Associates ("TTMC"), and will cause
TTMI to contribute to Trump AC (on behalf, and at the direction, of THCR
Holdings) TTMI's 49.995% general partnership interest in Taj Associates.
In addition, Trump will contribute to Taj Holding all of his Class C Common
Stock of Taj Holding ("Taj Holding Class C Common Stock") which will be
canceled pursuant to the Merger Agreement. The Taj Holding Class C Common Stock
provides Trump with the ability to elect a majority of the members of the Board
of Directors of, and thereby control, Taj Holding. It also affords Trump
separate class voting rights in certain events, including in connection with
the Merger. The Taj Services Agreement (as defined herein), pursuant to which
Trump has received or will receive approximately $1.7 million, $1.4 million and
$1.6 million (less $575,000 which was paid annually by Trump to First Fidelity
to reduce the amount owed by Taj Associates under the lease for the Specified
Parcels) in respect of the years ended 1995, 1994 and 1993, respectively, as
compensation for services rendered to Taj Associates, will also be terminated
in connection with the Merger Transaction.
In exchange for the contribution by Trump and TTMI to Trump AC (on behalf,
and at the direction, of THCR Holdings), Trump's directly held limited
partnership interest in THCR Holdings will be modified and TTMI will receive a
limited partnership interest in THCR Holdings. As a result of the Merger
Transaction, Trump's aggregate beneficial ownership of limited partnership
interests in THCR Holdings will decrease from approximately 40% to
approximately 27%, of which an approximately 5% interest will be held directly
by TTMI (assuming a price of $24.00 per share of THCR Common Stock as the
Market Value in connection with the Merger and as the public offering price in
the Stock Offering).
19
<PAGE>
Trump's current limited partnership interest in THCR Holdings represents his
economic interest in the assets and operations of THCR Holdings and is
convertible, at Trump's option, into 6,666,667 shares of THCR Common Stock
(representing approximately 40% of the outstanding shares of THCR Common Stock
after giving effect to such conversion). Upon consummation of the Merger
Transaction (assuming a price of $24.00 per share of THCR Common Stock as the
Market Value in connection with the Merger and as the public offering price in
the Stock Offering). Trump's and TTMI's limited partnership interests in THCR
Holdings will be convertible into an aggregate of 8,354,167 shares of THCR
Common Stock, representing approximately 27% of the then outstanding shares of
THCR Common Stock (after giving effect to the Merger Transaction and such
conversion). At the time that TTMI becomes a limited partner of THCR Holdings,
Trump will contribute 200 shares of Class B Common Stock of THCR, par value
$.01 per share ("THCR Class B Common Stock") to TTMI. THCR Class B Common Stock
has voting power equivalent to the voting power of the THCR Common Stock into
which a THCR Class B Common Stockholder's limited partnership interest in THCR
Holdings is convertible. The THCR Class B Common Stock is not entitled to
dividends or distributions. Upon conversion of all or any portion of a holder's
THCR Holdings limited partnership interest into shares of THCR Common Stock,
the corresponding voting power of the THCR Class B Common Stock (equal in
voting power to the number of shares of THCR Common Stock issued upon such
conversion) will be proportionately diminished.
Concurrent with the consummation of the Merger Transaction, THCR will issue
to Trump a warrant to purchase an aggregate of 1.8 million shares of THCR
Common Stock, (i) 600,000 of such underlying shares of which may be purchased
on or prior to the third anniversary of the issuance of the warrant at $30.00
per share, (ii) 600,000 of such underlying shares of which may be purchased on
or prior to the fourth anniversary of the issuance of warrant at $35.00 per
share and (iii) 600,000 of such underlying shares of which may be purchased on
or prior to the fifth anniversary of the issuance of the warrant at $40.00 per
share.
Trump, through TTMI, has the right to reduce the equity interest of the Taj
Holding Class A Common Stock in Taj Associates from 50% to 20% by causing Taj
Associates to make a payment to the holders of the Taj Bonds in an amount
calculated to provide them with a cumulative return equal to approximately 14%
per annum (the "14% Payment"). If the 14% Payment is made (which can occur only
if the Taj Bonds are retired, redeemed or paid in full), Trump would
beneficially own 80% of Taj Associates. Moreover, the 14% Payment is permitted
to be financed with Taj Associates' borrowings. In connection with the Merger
Transaction, TTMI will not exercise its right to cause Taj Associates to make
such payment and such right will terminate upon the redemption of the Taj
Bonds.
THCR Contribution and Consideration. In connection with the Merger
Transaction, THCR will cause TM/GP Corporation ("TM/GP"), which will become an
indirect wholly owned subsidiary of THCR after the Effective Time and which
holds a 49.995% general partnership interest in Taj Associates, to contribute
to Trump AC (on behalf, and at the direction, of THCR Holdings) its general
partnership interest in Taj Associates, and will cause Taj Holding, which will
become a direct wholly owned subsidiary of THCR after the Effective Time, to
contribute to TM/GP and will then cause TM/GP to contribute to Trump AC (on
behalf, and at the direction, of THCR Holdings) its shares (consisting of 50%
of the outstanding capital stock) of TTMC (the holder of a .01% general
partnership interest in Taj Associates). As a result of the Merger Transaction,
THCR's beneficial equity interest in THCR Holdings will increase from
approximately 60% to approximately 73%, of which an approximately 5% interest
will be held directly by TM/GP (assuming a $24.00 price per share of THCR
Common Stock as the Market Value in connection with the Merger and as the
public offering price in the Stock Offering).
Redemption of the Taj Bonds and the Taj Holding Class B Common Stock. The Taj
Holding Class B Common Stock is essentially a nonparticipating stock issued as
part of a unit ("Unit"), consisting of $1,000 principal amount of Taj Bonds and
one share of Taj Holding Class B Common Stock, that entitles the holders
thereof to elect the Class B Directors, to vote on matters presented to the
stockholders of Taj Holding and to separately approve certain matters. The Taj
Holding Certificate of Incorporation provides that the outstanding shares of
Taj Holding Class B Common Stock must be redeemed at such time as the principal
amount of Taj Bonds are redeemed, defeased or paid, at the redemption price of
$.50 per share. In connection with the Merger Transaction, Taj Funding will
redeem the outstanding Taj Bonds at a redemption price equal to 100% of the
20
<PAGE>
principal amount thereof plus accrued interest to the date of redemption and
Taj Holding will cause each outstanding share of Taj Holding Class B Common
Stock to be redeemed at the redemption price of $.50 per share in accordance
with the provisions of the Taj Holding Certificate of Incorporation.
MANAGEMENT AND CORPORATE STRUCTURE
Trump AC is an indirect subsidiary of THCR. THCR is a holding company with no
independent operations, the principal asset of which is its general partnership
interest in THCR Holdings. THCR Holdings is also a holding company with no
independent operations, the principal assets of which are its ownership
interests in subsidiary corporations and partnerships, including Trump AC.
Trump AC holds THCR Holdings' 100% equity interest in Trump Plaza Associates,
the partnership that owns and operates Trump Plaza. Trump is THCR's Chairman of
the Board and Nicholas L. Ribis is THCR's President, Chief Executive Officer
and Chief Financial Officer. The partnership agreement governing THCR Holdings
provides that all business activities of THCR must be conducted through THCR
Holdings or its subsidiary corporations and partnerships. As the sole general
partner of THCR Holdings, THCR generally has the exclusive rights,
responsibilities and discretion in the management and control of THCR Holdings.
Neither THCR nor THCR Holdings will be an obligor or a guarantor with respect
to the First Mortgage Notes.
THCR Holdings' subsidiary corporations and partnerships currently include
Plaza Associates, Plaza Funding, Trump Indiana, Inc. ("Trump Indiana"), Trump
AC (formerly Trump Plaza Holding Associates ("Plaza Holding")), Trump Plaza
Holding, Inc. ("Plaza Holding Inc."), Trump AC Funding and Trump Hotels &
Casino Resorts Funding, Inc. ("THCR Funding"). THCR Funding and THCR Holdings
are the co-obligors of the Senior Notes. Plaza Associates owns and operates
Trump Plaza and is the guarantor of Plaza Funding's 10 7/8% First Mortgage
Notes due 2001 (the "Plaza Notes"). Plaza Funding is the issuer of the Plaza
Notes and currently owns a 1% equity interest in Plaza Associates which will be
transferred to TTMC in connection with the Merger Transaction. The Plaza Notes
will be repurchased or defeased in connection with the Merger Transaction. See
"--The Merger Transaction--Plaza Note Purchase; Consult Solicitations." Trump
AC currently owns a 99% equity interest in Plaza Associates, and Plaza Holding
Inc. owns a 1% equity interest in Trump AC. Trump Indiana is in the process of
developing a riverboat casino project to be located at Buffington Harbor on
Lake Michigan. Trump Indiana will not be an obligor or a guarantor with respect
to the First Mortgage Notes.
Upon consummation of the Merger Transaction, Trump AC will indirectly wholly
own each of Plaza Associates and Taj Associates through its ownership of a 99%
equity interest in each of Plaza Associates and Taj Associates, and its
ownership of all of the capital stock of TTMC, which will own a 1% equity
interest in each of Plaza Associates and Taj Associates. In connection with the
consummation of the Merger Transaction, THCR will cause the amendment of the
Amended and Restated Partnership Agreement of Taj Associates to increase TTMC's
equity interest in Taj Associates from .01% to 1.0% and to reduce Trump AC's
equity interest from 99.99% to 99%. In connection with the Merger Transaction,
Plaza Funding will contribute its 1% interest in Plaza Associates to TTMC,
which would assume Plaza Funding's obligations on the defeased Plaza Notes.
Trump AC and its subsidiary Trump AC Funding will be the issuers and co-
obligors of the First Mortgage Notes.
Trump AC, a New Jersey general partnership, was formed under the name Trump
Plaza Holding Associates on February 17, 1993. Trump AC Funding, a Delaware
corporation, was formed on January 30, 1996 for the purpose of acting as co-
issuer of the First Mortgage Notes. Plaza Associates was organized as a New
Jersey general partnership in June 1992. The principal executive offices of
each of Trump AC, Trump AC Funding and Plaza Associates are located at
Mississippi Avenue and The Boardwalk, Atlantic City, New Jersey 08401, and
their telephone number is (609) 441-6060. Taj Associates was originally formed
as a limited partnership under the laws of the State of New Jersey on June 23,
1988. On December 11, 1990, Taj Associates was converted to a
general partnership. The principal executive offices of Taj Associates are
located at 1000 The Boardwalk, Atlantic City, New Jersey 08401, and its
telephone number is (609) 449-5540.
21
<PAGE>
OWNERSHIP STRUCTURE AFTER THE MERGER TRANSACTION
[CHART APPEARS HERE]
(1) Trump's and TTMI's economic interest in the Company will be held through
limited partnership interests in THCR Holdings. The Class B Common Stock
will represent Trump's and TTMI's non-economic voting interest in the
Company, which will be proportionate to their respective economic interest
in THCR Holdings.
(2) Assumes a price of $24.00 per share of Common Stock as the Market Value in
connection with the Merger and as the public offering price in the Stock
Offering.
(3) Co-issuers of the Mortgage Notes.
(4) Guarantors of the Mortgage Notes.
22
<PAGE>
RISK FACTORS
Each prospective investor should consider carefully all information
contained in this Prospectus and should give particular consideration to the
following factors before deciding to purchase the First Mortgage Notes offered
hereby.
HIGH LEVERAGE AND FIXED CHARGES
Upon consummation of the Merger Transaction, Trump AC and its subsidiaries
will have a substantial amount of indebtedness on a consolidated basis. At
December 31, 1995, after giving pro forma effect to the Merger Transaction,
Trump AC's consolidated indebtedness for borrowed money would have totaled
approximately $1.1 billion, principally representing the First Mortgage Notes.
See "Use of Proceeds" and "Business--Certain Indebtedness." Assuming that the
Merger Transaction had been consummated on January 1, 1995, Trump AC's ratio
of consolidated earnings to fixed changes on a pro forma basis was 1.23x for
the year ended December 31, 1995.
Interest on the First Mortgage Notes will be payable semiannually in cash.
The ability of the Issuers to pay interest on the First Mortgage Notes will be
dependent upon the ability of Plaza Associates and Taj Associates to generate
enough cash from operations sufficient for such purposes. See "--Holding
Company Structure;" "Risk in Refinancing and Repayment of Indebtedness; Need
for Additional Financing," "--Historical Results; Past Net Losses--Trump
Plaza," and "--Recent Results--Taj Mahal."
Taj Associates has a working capital facility (the "Working Capital
Facility") which matures in 1999 and permits borrowings of up to $25 million.
During 1994 and 1995, no amounts were borrowed under the Working Capital
Facility. Taj Associates will terminate the Working Capital Facility in
connection with the Merger Transaction and Trump AC anticipates replacing it
with a new $25 million facility which would be available to Trump AC and its
subsidiaries, although there can be no assurance that a replacement facility
could be obtained on acceptable terms, if at all. See "--Business--Certain
Indebtedness--Taj Associates--Working Capital Facility" and "Description of
the First Mortgage Notes."
The substantial consolidated indebtedness and fixed charges of Trump AC may
limit its ability to respond to changing business and economic conditions, to
fund capital expenditures for future expansion or otherwise, either through
cash flow or additional indebtedness, to absorb adverse operating results or
to maintain its facilities at an operating level that will continue to attract
patrons. Although management believes that the Merger Transaction will allow
Trump AC to realize certain cost savings (expected by management to be
approximately $18-$20 million per year by the end of the second year following
the Merger Transaction), no assurance can be given as to the amount, if any,
that will be realized from these cost savings. Future operating results are
subject to significant business, economic, regulatory and competitive
uncertainties and contingencies, many of which are outside its control. Trump
AC may be required to reduce or delay planned capital expenditures, sell
assets, restructure debt or raise additional equity to meet principal
repayment and other obligations of it and its Subsidiaries in later years. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Plaza Associates--Liquidity and Capital Resources." There is no
assurance that any of these alternatives could be effected on satisfactory
terms, if at all. See "--Risk in Refinancing and Repayment of Indebtedness;
Need for Additional Financing." Furthermore, such alternatives could impair
Trump AC's competitive position, reduce cash flow and/or have a material
adverse effect on its results of operations. See "--Atlantic City Properties
Expansion."
HOLDING COMPANY STRUCTURE
Trump AC Funding has no material assets, and Trump AC is a holding company,
the principal asset of which is its direct and indirect ownership of
partnership interests in Taj Associates and Plaza Associates, and it has no
independent means of generating revenue. As a holding company, Trump AC
depends on distributions and other permitted payments from Taj Associates and
Plaza Associates to meet its cash needs. The ability of such entities to make
such payments may be restricted by, among other things, the regulations of the
CCC. See "Regulatory Matters."
23
<PAGE>
RISK IN REFINANCING AND REPAYMENT OF INDEBTEDNESS; NEED FOR ADDITIONAL
FINANCING
The ability of the Issuers to pay their indebtedness when due will depend
upon the ability of Plaza Associates and Taj Associates to generate cash from
operations sufficient for such purpose or to refinance such indebtedness on or
before the date on which it becomes due. Management does not currently
anticipate being able to generate sufficient cash flow from operations to
repay a substantial portion of the principal amount of the First Mortgage
Notes. Thus, the repayment of the principal amount of the First Mortgage Notes
will likely depend primarily upon the ability to refinance the First Mortgage
Notes when due. The future operating performance and the ability to refinance
the First Mortgage Notes 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 Trump AC. There can be
no assurance that the future operating performance of Trump AC and its
subsidiaries 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 and to
Trump AC will be conducive to refinancing the First Mortgage Notes or other
attempts to raise capital. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources."
Management contemplates obtaining an aggregate of approximately $17.5
million of equipment financing in connection with the acquisition of slot
machines and related gaming equipment for Trump Plaza's existing facilities,
Trump World's Fair and Trump Plaza East. Plaza Associates has obtained
commitments for $7.2 million of such financing and is seeking commitments for
the remainder of the financing. The Taj Mahal Expansion is expected to depend
in part on additional debt financing, for which no commitments are in place.
In addition, no assurances may be made that Trump AC will successfully replace
the Working Capital Facility. Finally, Taj Associates' obligations to make
certain improvements to the Steel Pier may require additional financing. See
"Business--Properties." The failure of management to obtain all or a
significant portion of the financings discussed above may have a material
adverse effect on Trump AC. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources."
RISKS ASSOCIATED WITH A CHANGE OF CONTROL
The First Mortgage Note Indenture will contain provisions relating to
certain changes of control of THCR, THCR Holdings, Trump AC, Plaza Associates
and Taj Associates. Upon the occurrence of such a change of control, Trump AC
would be obligated to make an offer to purchase all of the First Mortgage
Notes then outstanding at a purchase price equal to 101% of the principal
amount thereof, plus accrued and unpaid interest to the date of purchase.
There can be no assurance that funds necessary to effect such a purchase would
be available if such an event were to occur. See "Description of the First
Mortgage Notes."
RESTRICTIONS ON CERTAIN ACTIVITIES
The First Mortgage Note Indenture will impose restrictions on Trump AC and
its subsidiaries. Generally, the restrictions contained in these instruments
relate to the incurrence of additional indebtedness, the distribution of cash
and/or property to partners, the repayment or repurchase of pari passu or
junior securities, investments, mergers and sales of assets and the creation
of liens. These restrictions could limit the ability of Trump AC (including
Plaza Associates and Taj Associates) to respond to changing business and
economic conditions. A failure to comply with any of these obligations could
also result in an event of default under the First Mortgage Note Indenture,
which could permit acceleration of the First Mortgage Notes and acceleration
of certain other indebtedness of THCR and its subsidiaries under other
instruments that may contain cross-acceleration or cross-default provisions.
NON-RECOURSE NATURE OF THE FIRST MORTGAGE NOTES
No direct or indirect partner, employee, officer, stockholder or director,
as such, past, present or future, of either of the Issuers, any Guarantor, or
any successor entity of any Issuer or Guarantor, will have any personal
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liability in respect of the obligations of the Issuers under the First
Mortgage Note Indenture, the First Mortgage Notes or any guarantees thereof by
reason of the status as such partner, employee, officer, stockholder or
director unless such person is an Issuer or Guarantor of the First Mortgage
Notes.
HISTORICAL RESULTS; PAST NET LOSSES
Trump Plaza. Plaza Associates had net losses of $29.2 million, $35.8 million
(including an extraordinary loss of $38.2 million) and $8.9 million for the
years ended December 31, 1991, 1992 and 1994, respectively, and net income of
$9.3 million and $1.5 million (including an extraordinary gain of $4.1
million) for the years ended December 31, 1993 and 1995, respectively. In
1991, Plaza Associates began to experience liquidity problems, principally due
to amortization requirements of its long-term debt. On May 29, 1992, Plaza
Associates and Plaza Funding completed a restructuring (the "1992 Plaza
Restructuring"), the purpose of which was to improve the amortization schedule
and extend the maturity of Plaza Associates' indebtedness. Management believes
that the deterioration in results experienced in 1990 and 1991 was
attributable primarily to a recession in the Northeast and increased industry
competition, primarily due to the opening of the Taj Mahal in April 1990,
which had a disproportionate impact on Trump Plaza as compared to certain
other Atlantic City casinos due in part to the common use of the "Trump" name.
In June 1993, Plaza Associates, Plaza Funding and Trump AC completed a
refinancing, the purpose of which was to enhance Plaza Associates' liquidity
and to position Plaza Associates for a subsequent deleveraging transaction.
See "Business--Restructurings--The 1992 Plaza Restructuring." A portion of the
proceeds from the June 1995 Offerings was contributed to Plaza Associates to
help reduce its indebtedness.
Taj Mahal. Taj Associates had net losses of $35.1 million, $22.5 million,
$36.7 million and $26.6 million for the years ended December 31, 1992, 1993,
1994 and 1995, respectively. From the opening of the Taj Mahal in April 1990
through the spring of 1991, cash generated from Taj Associates' operations was
insufficient to cover its fixed charges. As a result, Taj Associates failed to
provide Taj Funding with sufficient funds to meet its debt servicing needs.
During 1991, Taj Funding, Taj Associates and Taj Associates' then existing
general partners (TTMI and TTMC) restructured their existing indebtedness (the
"1991 Taj Restructuring"). Pursuant to the terms of the 1991 Taj
Restructuring, Taj Funding's 14% First Mortgage Bonds, Series A, due 1998 (the
"Old Taj Bonds") were exchanged for the Taj Bonds and certain modifications
were made to the terms of bank borrowings and amounts owed to both Trump and
his affiliates. In addition, approximately 50% of the ownership interest in
Taj Associates was transferred indirectly to the holders of the Old Taj Bonds.
See "Business--Restructurings--The 1991 Taj Restructuring."
CONFLICTS OF INTEREST
Conflicts Relating to Trump's Ownership of Trump's Castle. Trump is
currently the beneficial owner of 100% of Trump's Castle Casino Resort
("Trump's Castle"), which competes directly with the Taj Mahal and Trump
Plaza, and Trump could, under certain circumstances, have an incentive to
operate Trump's Castle to the competitive detriment of the Taj Mahal and Trump
Plaza. Trump and TC/GP, Inc. ("TC/GP"), a corporation beneficially owned by
Trump, have entered into a services agreement (the "Trump's Castle Services
Agreement") with Trump's Castle Associates ("TCA"), the partnership that owns
and operates Trump's Castle, pursuant to which TC/GP has agreed to provide
marketing, advertising and promotional and other similar and related services
to Trump's Castle. Pursuant to the Trump's Castle Services Agreement, in
respect of any matter or matters involving employees, contractors,
entertainers, celebrities, vendors, patrons, marketing programs, promotions,
special events, or otherwise, Trump will, and will cause his affiliates to the
best of his ability and consistent with his fiduciary obligations to TCA,
Trump Plaza and the Taj Mahal to act fairly and in a commercially reasonable
manner so that on an annual overall basis (x) neither Trump Plaza nor the Taj
Mahal shall realize a competitive advantage over Trump's Castle, by reason of
any activity, transaction or action engaged in by Trump or his affiliates and
(y) Trump's Castle shall not be discriminated against.
Conflicts Relating to Common Officers. Nicholas L. Ribis, the Chief
Executive Officer of THCR and Taj Associates, is also the Chief Executive
Officer of TCA. Messrs. Robert M. Pickus and John P. Burke, officers of THCR
and Plaza Associates, are each executive officers of TCA, and Mr. Pickus is an
officer of Taj Associates.
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In addition, Messrs. Trump, Ribis, Pickus and Burke serve on one or more of
the governing bodies of THCR, Plaza Associates, Taj Holding, TCA and their
affiliated entities. As a result of Trump's interests in three competing
Atlantic City casino hotels, the common chief executive officer and other
common officers, a conflict of interest may be deemed to exist, including by
reason of such persons' access to information and business opportunities
possibly useful to any or all of such casino hotels. Furthermore, Trump has
agreed that he will pursue, develop, control and conduct all new gaming
activities through THCR. Although no specific procedures have been devised for
resolving conflicts of interest confronting, or which may confront, Trump,
such persons and all the casinos affiliated with Trump, Messrs. Trump, Ribis,
Pickus and Burke have informed THCR that they will not engage in any activity
which they reasonably expect will harm THCR or its affiliates (including
Trump) or is otherwise inconsistent with their obligations as officers and
directors of THCR, or its affiliates. See "Management--Compensation Committee
Interlocks and Insider Participation--Certain Related Party Transactions of
Trump."
CONTROL AND INVOLVEMENT OF TRUMP
Trump's Substantial Voting Power. Upon consummation of the Merger
Transaction, through his beneficial ownership of the THCR Class B Common
Stock, Trump will continue to exercise considerable influence over the affairs
of THCR and will control approximately 27% of the total voting power of THCR
(assuming a price of $24.00 per share of THCR Common Stock as Market Value in
connection with the Merger and as the public offering price in the Stock
Offering). Management believes that the involvement of Trump in the affairs of
THCR is an important factor that will affect the prospects of Trump AC.
Following the Merger Transaction, Trump will continue to pursue, develop,
control and conduct all of his gaming business (except for Trump's Castle)
through THCR. See "--Conflicts of Interest."
Trump's Personal Indebtedness. Although Trump has no obligation to
contribute funds to THCR, THCR Holdings or Trump AC and is not providing any
personal guarantees in connection with the Merger Transaction, management
believes that Trump's financial condition and general business success
together with the public's perception of such success may be relevant to the
success of Trump AC due, in part, to the marquee value of the "Trump" name.
The association of the "Trump" name with high quality amenities and first
class service at Trump AC's properties could be diminished in the event that
Trump experienced business reversals or the public perceived such reversals,
and accordingly, the value of a holder's First Mortgage Notes could be
adversely affected. Trump is engaged, through various enterprises, in a wide
range of business activities. During 1989 through 1992, certain of Trump's
businesses, including businesses for which Trump supplied personal guarantees,
experienced financial difficulties that necessitated a comprehensive financial
restructuring of certain of his properties and holdings, including Trump's
interest in Trump Plaza, Trump's Castle and the Taj Mahal, and his personal
indebtedness. See "Management." Since 1990, Trump has engaged in a series of
transactions designed to reduce his personal indebtedness. However, Trump will
continue to have a substantial amount of personal indebtedness following the
Merger Transaction. See "Business--Properties."
Trump will have ongoing requirements to make payments of principal and
interest on his outstanding indebtedness following the consummation of the
Merger Transaction. In addition, the agreements with respect to Trump's
indebtedness generally contain comprehensive covenants and events of default
which relate to the operations of certain of his affiliates. If such covenants
are breached or if events of default otherwise occur, either of which could
occur at any time, such indebtedness could be subject to acceleration by the
applicable lenders. Any such acceleration could have a material adverse effect
on Trump. Furthermore, a substantial portion of Trump's assets consist of real
property or interests in regulated enterprises, which may affect the liquidity
of such assets. Trump has advised Trump AC that he is actively pursuing all
reasonable means of providing for the repayment or rescheduling of such
indebtedness. There can be no assurance that Trump will be successful in
repaying or rescheduling his indebtedness or that his assets will appreciate
sufficiently to provide a source of repayment for such indebtedness. Trump's
ability to repay his indebtedness is subject to significant business,
economic, regulatory and competitive uncertainties, many of which are beyond
his control. Any failure by Trump
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to repay or reschedule his indebtedness or to otherwise maintain financial
stability may have a material adverse effect on Trump AC. Moreover, if the CCC
at any time finds Trump to be financially unstable under the New Jersey Casino
Control Act (the "Casino Control Act"), the CCC is authorized to take any
necessary public action to protect the public interest, including the
suspension or revocation of the casino licenses of Plaza Associates and/or Taj
Associates. See "--Strict Regulation by Gaming Authorities" and "Regulatory
Matters."
Trump has informed Trump AC that certain of his current or proposed lenders,
including an affiliate of Donaldson, Lufkin & Jenrette Securities Corporation
("DLJ"), are expected to refinance certain of his personal indebtedness, which
new indebtedness would have covenants and events of default similar in scope
to those contained in his existing indebtedness. As security for some or all
of the new indebtedness, it is anticipated that Trump will pledge, and cause
TTMI to pledge, all of their interests in THCR and THCR Holdings. In the event
that Trump is unable to pay such indebtedness when due, subject to applicable
regulatory approval, such lenders would have the right to foreclose on the
pledged THCR Class B Common Stock and the pledged limited partnership
interests in THCR Holdings and cause such limited partnership interests to be
converted into shares of THCR Common Stock and to have such shares registered
for resale under the Securities Act. Trump is currently subject to certain
loan agreements which contain covenants that relate to his equity interests in
Taj Associates. In connection with the Merger Transaction, Trump is seeking to
obtain from his personal creditors, among other things, releases of liens on
his equity interests in Taj Associates, which releases are required to
consummate the Merger Transaction. See "The Merger Transaction" and
"Business--Certain Indebtedness--Taj Associates." Bankers Trust, an affiliate
of BT Securities Corporation ("BT Securities"), is a significant creditor of
Trump and will be receiving a payment of $10 million in connecting with the
Merger Transaction in order to release certain liens and guarantees. See
"Business--Certain Indebtedness--Taj Associates--TTMI Note." Both DLJ and BT
Securities have rendered financial advisory services to THCR, Trump AC and Taj
Associates in the past, acted as a co-manager in the June 1995 Offerings and
are serving as underwriters in the Offerings. See "Underwriting."
FINANCIAL FORECAST
The forecasted financial information included this Prospectus (the
"Financial Forecast") represents, to the best of management's knowledge and
belief, the expected results of operations for Plaza Associates, Taj
Associates and Trump AC for the fiscal years ending December 31, 1996 and
December 31, 1997. The Financial Forecast, which consists of forward-looking
statements, was prepared by management of Trump AC and is qualified by, and
subject to, the assumptions set forth herein and the other information
contained in this Prospectus. These assumptions are inherently uncertain and,
though considered reasonable by Trump AC, are subject to significant business,
economic, competitive, regulatory and other uncertainties and contingencies,
all of which are difficult or impossible to predict accurately, and many of
which are beyond the control of Trump AC. Accordingly, there can be no
assurance that the Financial Forecast will be realized or that actual results
will not be significantly lower. Trump AC was the sole preparer of the
Financial Forecast, which was prepared in accordance with standards
established by the American Institute of Certified Public Accountants, except
that it omits the effects of non-operating items, income taxes, extraordinary
items and the calculation of net income. The Financial Forecast has not been
audited by, examined by, compiled by or subjected to agreed-upon procedures
by, independent accountants, and no third-party (including the Underwriters)
has independently verified or reviewed the Financial Forecast. Prospective
investors in the First Mortgage Notes should consider this fact in evaluating
the Financial Forecast and information contained in this Prospectus.
The assumptions disclosed in the Financial Forecast are those that Trump AC
believes are significant to the Financial Forecast and reflects management's
subjective judgment as of the date hereof (which is subject to change).
However, not all assumptions used in the preparation of the Financial Forecast
have been set forth. There will be differences between the values used by
management in deriving the key assumptions and the actual results causing
differences between forecasted and actual results. Events and circumstances
usually do not occur
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as expected, and the differences between actual, and expected results may be
material. In addition, as disclosed elsewhere in this Prospectus under "Risk
Factors," the business and operations of Trump AC are subject to substantial
risks which increase the uncertainty inherent in the Financial Forecast. Many
of the factors disclosed under "Risk Factors" in this Prospectus could cause
actual results to differ materially from those expressed in the Financial
Forecast. Trump AC does not intend to update or otherwise revise the Financial
Forecast to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events. The inclusion of the Financial
Forecast in this Prospectus should not be regarded as a representation by
Trump AC or any other person (including the Underwriters) that the Financial
Forecast will be achieved.
In light of the foregoing, prospective investors in the First Mortgage Notes
are cautioned not to place undue reliance on the Financial Forecast.
ATLANTIC CITY PROPERTIES EXPANSION
Construction and Regulatory Approvals. The Trump Plaza Expansion is expected
to be completed in the second quarter of 1996, and the Taj Mahal Expansion,
the plans for which are subject to modification, is expected to be completed
in phases from the first quarter of 1997 through early 1998. Construction
projects, however, such as those contemplated by the Trump Plaza Expansion and
the Taj Mahal Expansion, can entail significant development and construction
risks including, but not limited to, labor disputes, shortages of material and
skilled labor, weather interference, unforeseen engineering problems,
environmental problems, geological problems, construction, demolition,
excavation, zoning or equipment problems and unanticipated cost increases, any
of which could give rise to delays or cost overruns. There can be no assurance
that Plaza Associates and Taj Associates will receive the licenses and
regulatory approvals necessary to undertake, in the case of the Taj Mahal
Expansion, and to complete, in the case of each of the renovation of Trump
World's Fair and the Taj Mahal Expansion, their respective expansion plans, or
that such licenses and regulatory approvals will be obtained within the
anticipated time frames.
The Trump World's Fair and the Taj Mahal Expansion will each require various
licenses and regulatory approvals, including the approval of the CCC.
Furthermore, the Casino Control Act requires that the additional guest rooms
contemplated by the Taj Mahal Expansion and at Trump Plaza East be put in
service within a specified time period after any such casino expansion and
that the Trump World's Fair open all guest rooms prior to or at the time of
opening its casino. If Plaza Associates, with respect to Trump Plaza East, or
Taj Associates completed any casino expansion and subsequently did not
complete the requisite number of additional guest rooms within the specified
time period, such party might have to close all or a portion of the expanded
casino in order to comply with regulatory requirements, which could have a
material adverse effect on the results of operations and financial condition
of Plaza Associates or Taj Associates, as applicable. In addition, in order to
operate the additional casino space contemplated by the Taj Mahal Expansion,
Taj Associates must obtain, among other regulatory approvals, the approval of
the CCC and determinations by the CCC that the Taj Mahal's additional casino
space, together with its current casino space, is a "single room" under the
Casino Control Act and that the operation of this additional casino space by
Taj Associates will not constitute undue economic concentration of Atlantic
City casino operations. Taj Associates will file a petition with the CCC
seeking such determinations. See "Regulatory Matters--New Jersey Gaming
Regulations--Casino Licensee" and "Regulatory Matters--New Jersey Gaming
Regulations--Approved Hotel Facilities," and "Management--Compensation
Committee Interlocks and Insider Participation--Certain Related Party
Transactions of Trump."
Trump Plaza East. Plaza Associates has opened the casino and 326 hotel rooms
at Trump Plaza East and intends to exercise the Trump Plaza East Purchase
Option in connection with the Merger Transaction. If Plaza Associates were
unable to finance the purchase price of Trump Plaza East pursuant to the Trump
Plaza East Purchase Option and its leasehold interest therein were terminated,
any amounts expended with respect to Trump Plaza East, including payments
under the Trump Plaza East Purchase Option and the lease pursuant to which
Plaza Associates leases Trump Plaza East, and any improvements thereon, would
inure to the benefit of the unaffiliated third party that owns Trump Plaza
East and not to Plaza Associates and would increase the cost of
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demolition of any improvements for which Plaza Associates would be liable. As
of December 31, 1995, Plaza Associates had capitalized approximately $35.7
million in construction costs related to Trump Plaza East. If the development
of Trump Plaza East is not successful, Plaza Associates would be required to
write off the capitalized construction costs associated with the project. See
"Management--Compensation Committee Interlocks and Insider Participation--
Certain Related Party Transactions of Trump."
In September 1993, Trump (as predecessor in interest to Plaza Associates
under the lease for Trump Plaza East) entered into a sublease (the "Time
Warner Sublease") with Time Warner pursuant to which Time Warner subleased the
entire first floor of retail space at Trump Plaza East for a Warner Brothers
Studio Store which opened in July 1994. Rent under the Time Warner Sublease is
currently accruing and will not become due and payable to Plaza Associates
until the satisfaction of certain conditions designed to protect Time Warner
from the termination of the Time Warner Sublease by reason of the termination
of Plaza Associates' leasehold estate in Trump Plaza East or the foreclosure
of a certain mortgage (which will be extinguished by the exercise of the Trump
Plaza East Purchase Option) and until Time Warner's unamortized construction
costs are less than accrued rent. No assurances can be made that such
conditions will be satisfied. In addition, Time Warner may terminate the Time
Warner Sublease at any time after July 1996 in the event that gross sales for
the store do not meet certain threshold amounts or if, at any time after July
1996, Plaza Associates fails to operate a first-class hotel on Trump Plaza
East. No assurances can be made that Trump Plaza East will continually be
operated as a first-class hotel or that sales for the Warner Brothers Studio
Store will exceed the threshold amounts. See "Management--Compensation
Committee Interlocks and Insider Participation--Certain Related Party
Transactions of Trump."
Trump World's Fair. The ongoing renovation of Trump World's Fair is
currently expected to be completed in the second quarter of 1996, although
there can be no assurance that the project will be completed by such time.
Upon the completion of such renovation, management intends to operate Trump
World's Fair as a casino hotel. In order to operate the casino space in Trump
World's Fair, Plaza Associates must obtain all necessary regulatory approvals,
including approval of the CCC, which approval cannot be assured. Plaza
Associates has applied for a separate casino license with respect to Trump
World's Fair. The CCC was required to determine that the operation of the
casino by Plaza Associates will not result in undue economic concentration in
Atlantic City. On May 18, 1995, the CCC ruled that the operation of Trump
World's Fair by Plaza Associates will not result in undue economic
concentration. Although this determination is a required condition precedent
to the CCC's ultimate issuance of a casino license for Trump World's Fair, and
management believes that a casino license will ultimately be issued for Trump
World's Fair, there can be no assurance that the CCC will issue this casino
license or what conditions may be imposed, if any, with respect thereto. See
"Regulatory Matters--New Jersey Gaming Regulations--Casino Licensee" and
"Regulatory Matters--New Jersey Gaming Regulations--Approved Hotel
Facilities." Although construction at Trump World's Fair has commenced, if the
costs of developing, constructing, equipping and opening Trump World's Fair
exceed the proceeds allocated from the June 1995 Offerings for such
expenditures, Plaza Associates may be forced to rely on alternative methods of
financing, which may not be available and which could impair the competitive
position of Trump Plaza and reduce Plaza Associates' cash flow. See "--High
Leverage and Fixed Charges," "--Need for Additional Financing" and "--
Restrictions on Certain Activities."
The Taj Mahal. It is expected that the Taj Mahal Expansion, the plans for
which are subject to modification, will be principally funded out of the cash
from the operations of the Taj Mahal and Trump Plaza. The ability to complete
such expansion may depend in part on the ability to obtain debt financing for
such purpose. There can be no assurance that Taj Associates and Plaza
Associates will be able to generate sufficient cash flow from operations or
that financing could be obtained on terms satisfactory to Trump AC, if at all.
In addition, any indebtedness to be incurred in connection with the Taj Mahal
Expansion would be subject to the limitations set forth in the Senior Note
Indenture and the First Mortgage Note Indenture. See "--High Leverage and
Fixed Charges," "--Holding Company Structure," "Risk in Refinancing and
Repayment of Indebtedness; Need for Additional Financing," "--Restrictions on
Certain Activities" and "Business--Business Strategy--The Taj Mahal."
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ABSENCE OF PUBLIC MARKET; POTENTIAL VOLATILITY OF MARKET PRICES
The Issuers do not intend to list the First Mortgage Notes on a national
securities exchange or to seek the admission thereof for trading in the
National Association of Securities Dealers Automated Quotation System. The
Underwriters have advised the Issuers that, following the consummation of the
First Mortgage Note Offering, they intend to make a market in the First
Mortgage Notes, but are not obligated to do so and may discontinue any such
market making at any time without notice. Further, there can be no assurance
as to the liquidity of, or that an active trading market will develop for, the
First Mortgage Notes.
In addition, factors such as quarterly fluctuations in Taj Associates' and
Plaza Associates' financial and operating results, announcements by the
Issuers or others and developments affecting Taj Associates and Plaza
Associates, their customers or Atlantic City market or the gaming industry
generally could cause the market price of the First Mortgage Notes to
fluctuate substantially.
COMPETITION
The Atlantic City Market. Competition in the Atlantic City casino hotel
market is intense. Trump Plaza and the Taj Mahal compete with each other and
with the other casino hotels located in Atlantic City, including the other
casino hotel owned by Trump, Trump's Castle. See "--Conflicts of Interest."
Trump Plaza and the Taj Mahal are located on The Boardwalk, approximately 1.2
miles apart from each other. At present, there are 12 casino hotels located in
Atlantic City, including the Taj Mahal and Trump Plaza, all of which compete
for patrons. In addition, there are several sites on The Boardwalk and in the
Atlantic City Marina area on which casino hotels could be built in the future
and various applications for casino licenses have been filed and announcements
with respect thereto made from time to time (including a proposal by Mirage
Resorts, Inc.), although management is not aware of any current construction
on such sites by third parties. No new casino hotels have commenced operations
in Atlantic City since 1990, although several existing casino hotels have
recently expanded or are in the process of expanding their operations. While
management believes that the addition of hotel capacity would be beneficial to
the Atlantic City market generally, there can be no assurance that such
expansion would not be materially disadvantageous to either Trump Plaza or the
Taj Mahal. There also can be no assurance that the Atlantic City development
projects which are planned or underway will be completed.
Total Atlantic City gaming revenues have increased over the past four years,
although at varying rates. Although all 12 Atlantic City casinos reported
increases in gaming revenues in 1992 as compared to 1991, management believes
that this was due, in part, to the depressed industry conditions in 1991. In
1993, nine casinos experienced increased gaming revenues compared to 1992
(including the Taj Mahal), while three casinos (including Trump Plaza)
experienced decreased revenues. In 1994, ten casinos experienced increased
gaming revenues compared to 1993 (including the Taj Mahal), while two casinos
(including Trump Plaza) experienced decreased revenues. During 1995, all 12
casinos experienced increased gaming revenues compared to 1994.
In 1990, the Atlantic City casino industry experienced a significant
increase in room capacity and in available casino floor space, including the
rooms and floor space made available by the opening of the Taj Mahal. The
effects of such expansion were to increase competition and to contribute to a
decline in 1990 in gaming revenues per square foot of casino floor space. In
1990, the Atlantic City casino industry experienced a decline in gaming
revenues per square foot of 5.0%, which trend continued in 1991, although at
the reduced rate of 2.9%. In 1992, however, the Atlantic City casino industry
experienced an increase of 6.9% in gaming revenues per square foot from 1991.
Gaming revenues per square foot increased by 1.4% for 1993 (excluding poker
and race simulcast rooms, which were introduced for the first time in such
year), compared to 1992. In 1994, gaming revenues per square foot decreased
2.5% (or 4.5% including square footage devoted to poker, keno and race
simulcasting). The 1994 decline was due, in part, to the increase in casino
floor space in Atlantic City as a result of expansion of a number of casinos
and to the severe weather conditions which affected the Northeast during the
winter of 1994. Between April 30, 1993 and December 31, 1995, many operators
in Atlantic City expanded their facilities in anticipation of and in
connection with the June 1993 legalization of simulcasting and poker,
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increasing total gaming square footage by approximately 181,200 square feet
(23.3%) of which approximately 83,700 square feet is currently devoted to
poker, keno and race simulcasting. During this same period, 172 poker tables
and 5,500 slot machines were added. See "Business--Atlantic City Market."
Trump Plaza and the Taj Mahal also compete, or will compete, with facilities
in the northeastern and mid- Atlantic regions of the United States at which
casino gaming or other forms of wagering are currently, or in the future may
be, authorized. To a lesser extent, Trump Plaza and the Taj Mahal face
competition from gaming facilities nationwide, including land-based, cruise
line, riverboat and dockside casinos located in Colorado, Illinois, Indiana,
Iowa, Louisiana, Mississippi, Missouri, Nevada, South Dakota, Ontario
(Windsor), the Bahamas, Puerto Rico and other locations inside and outside the
United States, and from other forms of legalized gaming in New Jersey and in
its surrounding states such as lotteries, horse racing (including off-track
betting), jai alai, bingo and dog racing, and from illegal wagering of various
types. New or expanded operations by other persons can be expected to increase
competition and could result in the saturation of certain gaming markets. In
September 1995, New York introduced a keno lottery game, which is played on
video terminals that have been set up in approximately 1,800 bars, restaurants
and bowling alleys across the state. In addition to competing with other
casino hotels in Atlantic City and elsewhere, by virtue of their proximity to
each other and the common aspects of certain of their respective marketing
efforts, including the common use of the "Trump" name, Trump Plaza and the Taj
Mahal compete directly with each other and with Trump's Castle for gaming
patrons. Although management does not intend to operate Trump Plaza and the
Taj Mahal to the competitive detriment of each other, the effect may be that
Trump Plaza or Taj Mahal will operate to the competitive detriment of the
other.
Other Competition. In addition, Trump Plaza and the Taj Mahal face
competition from casino facilities in a number of states operated by federally
recognized Native American tribes. Pursuant to the Indian Gaming Regulatory
Act ("IGRA"), which was passed by Congress in 1988, any state which permits
casino style gaming (even if only for limited charity purposes) is required to
negotiate gaming compacts with federally recognized Native American tribes.
Under IGRA, Native American tribes enjoy comparative freedom from regulation
and taxation of gaming operations, which provides them with an advantage over
their competitors, including Trump Plaza and the Taj Mahal. In March 1996, the
United States Supreme Court struck down a provision of IGRA which allowed
Native American tribes to sue states in federal court for failing to negotiate
gaming compacts in good faith. Trump AC cannot predict the impact of this
decision on the ability of Native American tribes to negotiate compacts with
states. See "Business--Competition."
Legislation permitting other forms of casino gaming has been proposed, from
time to time, in various states, including those bordering New Jersey. Plans
to begin operating slot machines at race tracks in the State of Delaware are
underway, including the slot machines currently operating at the Dover Downs
and Delaware Park race tracks. Six states have presently legalized riverboat
gambling while others are considering its approval, including New York and
Pennsylvania, and New York City is considering a plan under which it would be
the embarking point for gambling cruises into international waters three miles
offshore. Several states are considering or have approved large scale land-
based casinos. Additionally, since 1993, gaming floor space in Las Vegas has
expanded significantly, with additional capacity planned and currently under
construction. The operations of Trump Plaza and the Taj Mahal could be
adversely affected by such competition, particularly if casino gaming were
permitted in jurisdictions near or elsewhere in New Jersey or in other states
in the Northeast. In December 1993, the Rhode Island Lottery Commission
approved the addition of slot machine games on video terminals at Lincoln
Greyhound Park and Newport Jai Alai, where poker and blackjack have been
offered for over two years. Currently, casino gaming, other than Native
American gaming, is not allowed in other areas of New Jersey or in
Connecticut, New York or Pennsylvania. On November 17, 1995, a proposal to
allow casino gaming in Bridgeport, Connecticut, was voted down by that state's
Senate. A New York State Assembly plan has the potential of legalizing non-
Native American gaming in portions of upstate New York. Essential to this plan
is a proposed New York State constitutional amendment that would legalize
gambling. To amend the New York Constitution, the next elected New York State
Legislature must repass a proposal legalizing gaming and a statewide
referendum, held no sooner than November 1997, must approve the constitutional
amendment. To the extent that legalized gaming becomes more prevalent in New
Jersey or other jurisdictions near Atlantic City,
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competition would intensify. In particular, in the past, proposals have been
introduced to legalize gaming in other locations, including Philadelphia,
Pennsylvania. In addition, legislation has from time to time been introduced
in the New Jersey State Legislature relating to types of statewide legalized
gaming, such as video games with small wagers. To date, no such legislation,
which may require a state constitutional amendment, has been enacted.
Management is unable to predict whether any such legislation, in New Jersey or
elsewhere, will be enacted or whether, if passed, it would have a material
adverse impact on Trump AC's results of operations or financial condition.
RELIANCE ON KEY PERSONNEL
The ability of Trump AC to operate successfully is dependent, in part, upon
the continued services of certain of its employees, including Nicholas L.
Ribis, the President and Chief Executive Officer of THCR, the Chief Executive
Officer of THCR Holdings and the Chief Executive Officer of Taj Associates.
Mr. Ribis' employment agreements with THCR and THCR Holdings on the one hand
and Taj Associates on the other will expire on June 7, 2000 and September 25,
1996, respectively (subject to earlier termination upon the occurrence of
certain events). There can be no assurance that a suitable replacement for Mr.
Ribis could be found in the event of a termination of his employment. A
shortage of skilled management-level employees currently exists in the gaming
industry which may make it difficult and expensive to attract and retain
qualified employees. In addition, Mr. Ribis and certain other executives of
THCR and Taj Associates currently allocate their time among THCR's and Taj
Associates' various operations as well as certain other enterprises owned by
Trump. Following the consummation of the Merger Transaction, Mr. Ribis will
devote approximately 75% of his professional time to the affairs of THCR and
its subsidiaries. See "Management."
STRICT REGULATION BY GAMING AUTHORITIES
The ownership and operation of the gaming-related businesses of Plaza
Associates and Taj Associates are subject to strict state regulation under the
Casino Control Act. Plaza Associates and Taj Associates and their various
officers and other qualifiers have received the licenses, permits and
authorizations required to operate Trump Plaza and the Taj Mahal,
respectively. Failure to maintain or obtain the requisite casino licenses
would have a material adverse effect on Trump AC. On June 22, 1995, the CCC
renewed Taj Associates' casino license through March 31, 1999 and renewed
Plaza Associates' casino license through June 30, 1999, subject to revocation
or suspension upon the occurrence of certain events. No assurance can be given
as to the term for which the CCC will renew these licenses or as to what
license conditions, if any, may be imposed by the CCC in connection with any
future renewals. The Merger Transaction is subject to approval by the CCC. See
"Regulatory Matters--New Jersey Gaming Regulation."
The Casino Control Act imposes substantial restrictions on the ownership of
securities of Trump AC and its subsidiaries. See "Regulatory Matters." A
holder of First Mortgage Notes may be required to meet the qualification
provisions of the Casino Control Act relating to financial sources and/or
security holders. The CCC will determine the qualification of specific
security holders, including Institutional Investors (as defined in the Casino
Control Act) subsequent to consummation of the First Mortgage Note Offering.
The First Mortgage Note Indenture will provide that if the CCC requires a
holder of securities (whether the record or beneficial owner) to qualify under
the Casino Control Act and such holder does not so qualify, then such holder
must dispose of his interest in the First Mortgage Notes within 30 days after
receipt by the Issuers of notice of such finding that such holder does not so
qualify, or the Issuers may redeem such First Mortgage Notes at the lower of
outstanding principal amount or their value calculated as if the investment
had been made on the date of disqualification of such First Mortgage Notes (or
such lesser amount as may be required by the CCC).
Trump AC's current gaming operations are, and any future gaming operations
are likely to be, subject to significant taxes and fees in addition to normal
federal and state corporate income taxes, and such taxes and fees are subject
to increase at any time. Any material increase in these taxes or fees would
adversely affect Trump AC.
LIMITATIONS ON LICENSE OF THE TRUMP NAME
Subject to certain restrictions, THCR has the exclusive right (except with
respect to the Taj Mahal (during the period prior to the consummation of the
Merger Transaction) and Trump's Castle) to use the "Trump" name and likeness
in connection with gaming and related activities pursuant to a trademark
license agreement between
32
<PAGE>
Trump and THCR (the "License Agreement"). See "Business--Trademark/Licensing."
THCR's rights under the License Agreement are secured by a security interest
in the names "Trump," "Donald Trump" and "Donald J. Trump" (including
variations thereon, the "Trump Names") and related intellectual property
rights (collectively, the "Marks") for use in connection with casino services,
pursuant to a security agreement (the "Trademark Security Agreement"). If
there were a default under the License Agreement or the Trademark Security
Agreement, THCR would have rights, subject to the requirements of applicable
state law, to enforce the rights and remedies contained in the Trademark
Security Agreement. In the event of a foreclosure sale of the Marks, the net
amount realized in such sale by THCR might not yield the full amount of
damages that THCR could sustain as a result of the default. In addition, the
existence of rights of others to the use of the Trump Names, including
pursuant to the existing security interests with respect to trademarks
associated with Trump's Castle as well as to any other security interests in
trademarks for non-gaming hotels, could adversely affect the ability of THCR
to realize the benefits of the Trademark Security Agreement. THCR's right to
repossess and dispose of the Marks upon a breach of the License Agreement may
be significantly impaired if the owner of the Marks were to become the subject
of a case under the United States Bankruptcy Code (the "Bankruptcy Code")
prior to THCR's having repossessed and disposed of the Marks. Under the
Bankruptcy Code, secured creditors, such as THCR, are automatically stayed
from repossessing or disposing of their collateral without bankruptcy court
approval. Moreover, the Bankruptcy Code permits a defaulting debtor to retain
and continue to use the collateral if the secured creditor is given "adequate
protection" of its interest in the collateral. Such adequate protection under
the Bankruptcy Code may take various forms, including the granting of a
replacement lien or other relief that will enable the secured creditor to
realize the "indubitable equivalent" of its interest in the collateral.
Accordingly, it is impossible to predict whether or when THCR would repossess
or dispose of the Marks, or whether or to what extent THCR would then be
compensated for any delay in payment or loss of value of the Marks through the
requirement of "adequate protection" if the owner of the Marks were to become
the subject of a bankruptcy or reorganization case. Furthermore, the License
Agreement could be rejected in connection with a bankruptcy of the licensor
if, in the business judgment of a trustee or the licensor, as debtor-in-
possession, rejection of the contract would benefit the licensor's estate. In
the event of such rejection, THCR could assert a claim for damages, secured by
THCR's lien on the Marks.
FRAUDULENT TRANSFER CONSIDERATIONS
The obligations of Trump AC under the First Mortgage Notes may be subject to
review under state or federal fraudulent transfer laws in the event of the
bankruptcy or other financial difficulty of Trump AC. Under those laws, if a
court in a lawsuit by an unpaid creditor or representative of creditors of
Trump AC, such as a trustee in bankruptcy, or Trump AC as debtor-in-
possession, were to find that at the time Trump AC incurred its obligations
under the First Mortgage Notes, it (a) did so with actual intent to hinder,
delay or defraud its creditors or (b) did not receive reasonably equivalent
value or fair consideration therefor, and either (i) was insolvent, (ii) was
rendered insolvent, (iii) was engaged in a business or transaction for which
its remaining unencumbered assets constituted unreasonably small capital or
(iv) intended to incur or believed that it would incur debts beyond its
ability to pay as such debts matured, such court could avoid Trump AC's
obligations under the First Mortgage Notes and direct the return of any
amounts paid thereunder to Trump AC or to a fund for the benefit of its
creditors.
Similarly, the obligations of Taj Associates, Plaza Associates or any other
Guarantor under its guarantee of the First Mortgage Notes, as well as the
security interest granted by such Guarantor in its assets to secure the First
Mortgage Notes and such guarantee, may be subject to review under such laws in
the event of the bankruptcy or other financial difficulty of such Guarantor.
In the event that a court were to find that at the time such Guarantor
incurred such obligations or granted such security interest the factors set
forth in either clause (a) or (b) in the foregoing paragraph applied to such
Guarantor, such court could avoid such Guarantor's obligations under its
guarantee, as well as the security interests securing such guarantee, and
direct the return of any amounts paid under such guarantee to such Guarantor
or to a fund for the benefit of its creditors. The First Mortgage Notes do not
have the benefit of a pledge of the equity interests of the Subsidiaries of
Trump AC, which interests are exclusively pledged for the benefit of the
Senior Notes.
33
<PAGE>
Among other things, a court might conclude that a Guarantor did not receive
reasonably equivalent value or fair consideration for its guarantee to the
extent that the economic benefits realized by it in the Merger Transaction
(including the payment of its outstanding obligations) were less than the
aggregate amount of its liability under its guarantee.
The measure of insolvency for purposes of the foregoing will vary depending
on the law of the jurisdiction being applied. Generally, however, an entity
would be considered insolvent if the sum of its debts (including contingent or
unliquidated debts) is greater than all of its property at a fair valuation or
if the present fair salable value of its assets is less than the amount that
would be required to pay its probable liability on its existing debts as they
become absolute and matured.
34
<PAGE>
USE OF PROCEEDS
The net proceeds to Trump AC from the First Mortgage Note Offering, after
payment of underwriting discounts and expenses, are estimated to be $
billion. In connection with the Merger Transaction, the net proceeds from the
First Mortgage Note Offering, together with the proceeds from the Stock
Offering and available cash, will be used as set forth below.
The following table sets forth the anticipated sources and uses of funds for
the Merger Transaction (assuming an April 15, 1996 consummation):
(DOLLARS IN MILLIONS)
ANTICIPATED SOURCES OF FUND
<TABLE>
<CAPTION>
CASH SOURCES
<S> <C>
First Mortgage Note Offering.... $1,100.0
THCR Stock Offering (b)(d)...... 300.0
Available Cash.................. 9.8
--------
Total Cash Sources............. 1,409.8
--------
<CAPTION>
NON-CASH SOURCES
<S> <C>
THCR
Common Stock Equivalents to be issued
to Trump(c).................... 40.5
THCR Common Stock to be issued
to First Fidelity(d)........... 12.0
--------
Total Non-Cash Sources......... 52.5
--------
TOTAL SOURCES................... $1,462.3
========
</TABLE>
ANTICIPATED USES OF FUNDS
<TABLE>
<CAPTION>
CASH USES
<S> <C>
Redeem Taj Bonds(a)............ $ 794.4
Retire Plaza Notes............. 370.0
Satisfy NatWest Loan........... 36.5
Exercise Trump Plaza East
Purchase Option............... 28.0
Financing fees and expenses.... 49.4
Payment to First Fidelity...... 50.0
Payment to Bankers Trust and
Working Capital............... 10.0
Payments to Holders of Taj
Holding Class A Common
Stock(b)...................... 40.5
Redeem Taj Holding Class B
Common Stock.................. 0.4
Transaction Fees and Expenses.. 30.6
-------
Total Cash Uses............... 1,409.8
-------
NON-CASH USES
Acquisition of Trump's direct
and indirect equity interests
in Taj Associates............. 40.5
THCR Common Stock issued to
First Fidelity(d)............. 12.0
-------
Total Non-Cash Uses........... 52.5
-------
TOTAL USES..................... 1,462.3
=======
</TABLE>
- ---------------------
(a) Includes the additional Amount (as defined) through April 15, 1996. See
"Management's Discussion and Analysis of Financial Condition and Results
of Operations."
(b) Assumes all holders of Taj Holding Class A Common Stock elect Cash
Consideration in the Merger. To the extent holders of Taj Holding Class A
Common Stock elect to receive Stock Consideration, THCR may reduce the
size of the THCR Stock Offering. See "Summary--The Merger Transaction."
(c) Represents the value as of the effective time of the Merger of the shares
of THCR Common Stock into which the limited partnership interests in THCR
Holdings to be issued to Trump and TTMI in connection with the Merger
Transaction will be convertible.
(d) Assumes a price of $24.00 per share of THCR Common Stock.
35
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization as of December 31, 1995 of
Taj Associates, Trump AC, Taj Associates and Trump AC on a combined basis, and
Trump AC as adjusted to give effect to the Merger Transaction. This table
should be read in conjunction with Trump AC's consolidated financial
statements and notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1995
---------------------------------------------------
ACTUAL
-----------------------
TAJ ASSOCIATES TRUMP AC COMBINED PRO FORMA
-------------- -------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Cash: .................. $ 88,941 $ 15,937 $ 104,878 $ 55,225
======== ======== ========== ==========
Debt:
First Mortgage Notes.. $ -- $ -- $ -- $1,100,000
Plaza Notes........... -- 330,000(b) 330,000(b) --
Taj Bonds............. 780,242(a) -- 780,242(a) --
Other debt............ 45,973 8,970 54,943 9,999
-------- -------- ---------- ----------
Total debt.............. 826,215 338,970 1,165,185 1,109,999
-------- -------- ---------- ----------
Partners' capital:
Contributed capital... 123,765 94,087 217,852 375,587
Retained earnings
(deficit)............ (84,130) 16,725 (67,405) (37,389)
-------- -------- ---------- ----------
Total partners'
capital................ 39,635 110,812 150,447 338,198
-------- -------- ---------- ----------
Total capitalization.. $865,850 $449,782 $1,315,632 $1,448,197
======== ======== ========== ==========
</TABLE>
- ---------------------
(a)Does not include unamortized discount of $131,103.
(b)Does not include unamortized discount of $3,348.
36
<PAGE>
SELECTED HISTORICAL
CONSOLIDATED FINANCIAL INFORMATION
TRUMP PLAZA ASSOCIATES
The following table sets forth certain historical consolidated financial
information of Plaza Associates and Trump AC for each of the five years ended
December 31, 1991 through 1995. The historical financial information of Trump
AC and Plaza Associates as of December 31, 1994 and 1995 and for the years
ended December 31, 1993, 1994 and 1995 as set forth below has been derived
from the audited consolidated financial statements of Trump AC and Plaza
Associates included elsewhere in this Prospectus. The historical financial
information of Trump AC and Plaza Associates as of December 31, 1991, 1992 and
1993 and for the years ended December 31, 1991 and 1992 as set forth below has
been derived from the audited consolidated financial statements of Trump AC
and Plaza Associates not included in this Prospectus. Trump AC Funding was
recently formed and has had no operations to date.
All financial information should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Unaudited Pro Forma Financial Information" and the consolidated and condensed
financial statements and the related notes thereto included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------
1991 1992 1993 1994 1995
-------- -------- -------- -------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Gaming...................... $233,265 $265,448 $264,081 $261,451 298,073
Other....................... 66,411 73,270 69,203 66,869 74,182
Trump World's Fair (formerly
Trump Regency Hotel)....... 11,547 9,465 -- -- --
-------- -------- -------- -------- -------
Gross revenues............. 311,223 348,183 333,284 328,320 372,255
Promotional allowances...... 31,539 34,865 32,793 33,257 38,934
-------- -------- -------- -------- -------
Net revenues............... 279,684 313,318 300,491 295,063 333,321
-------- -------- -------- -------- -------
Costs and expenses:
Gaming...................... 133,547 146,328 136,895 139,540 164,839
Other....................... 23,404 23,670 24,778 23,380 23,932
General and administrative.. 69,631 75,459 71,624 73,075 68,550
Depreciation and
amortization............... 16,193 15,842 17,554 15,653 16,213
Restructuring charges....... 943 5,177 -- -- --
Trump World's Fair (formerly
Trump Regency Hotel)....... 19,879 11,839 -- -- --
-------- -------- -------- -------- -------
Total costs and expenses... 263,597 278,315 250,851 251,648 273,534
-------- -------- -------- -------- -------
Income from operations...... 16,087 35,003 49,640 43,415 59,787
-------- -------- -------- -------- -------
Interest expense, net....... 33,363 31,356 39,889 48,219 43,261
Other non-operating (income)
expense(a)................. 14,818 1,462 3,873 4,931 5,743
Extraordinary (loss)
gain(b).................... -- (38,205) 4,120 -- (9,250)
Provision (benefit) for
income taxes............... (2,864) (233) 660 (865) --
-------- -------- -------- -------- -------
Net income (loss)........... $(29,230) $(35,787) $ 9,338 $ (8,870) $ 1,533
======== ======== ======== ======== =======
BALANCE SHEET DATA (AT END OF
PERIOD):
Cash and cash equivalents... $ 10,474 $ 18,802 $ 14,393 $ 11,144 $15,937
Property and equipment,
net........................ 306,834 300,266 293,141 298,354 395,942
Total assets................ 378,398 370,349 374,498 375,643 480,024
Total long-term debt, net of
current maturities(c)...... 33,326 249,723 395,948 403,214 332,721
Preferred partnership
interest................... -- 58,092 -- -- --
Total capital (deficit)..... 54,043 11,362 (54,710) (63,580) 110,812
</TABLE>
- -------
(a) Other non-operating (income) expense for the year ended December 31, 1991
includes a $10.9 million charge associated with the rejection of the lease
associated with the former Trump Regency Hotel and $4.0 million of costs
associated with certain litigation. Other non-operating (income) expense
for 1992 includes $1.5 million of costs associated with certain
litigation. Other non-operating (income) expense for the years ended
December 31, 1993, 1994 and 1995 includes $3.9, $4.9, and 3.7 million,
respectively, of real estate taxes and leasing costs associated with Trump
Plaza East.
(b) The extraordinary loss for the year ended December 31, 1992 consists of
the effect of stating Plaza Funding's Preferred Stock issued at fair value
as compared to the carrying value of these securities and the write off of
certain deferred financing charges and costs. The excess of the carrying
value of a note obligation over the amount of the settlement payment net
of related prepaid expenses in the amount of $4,120,000 has been reported
as an extraordinary gain for the year ended December 31, 1993. The
extraordinary loss of $9,250,000 for the period from January 1, 1995
through June 12, 1995 relates to the redemption of the PIK Notes and PIK
Note Warrants and the write off of related unamortized deferred financing
costs.
(c) Reflects reclassification in 1991 of indebtedness relating to outstanding
mortgage bonds as a current liability due to then existing events of
default.
37
<PAGE>
TAJ ASSOCIATES
The following table sets forth certain historical consolidated financial
information of Taj Associates for each of the five years ended December 31,
1991 through 1995. The historical financial information of Taj Associates as
of December 31, 1994 and 1995, and for the years ended December 31, 1993, 1994
and 1995 as set forth below has been derived from the audited consolidated
financial statements of Taj Associates included elsewhere in this Prospectus.
The historical financial information of Taj Associates as of December 31,
1991, 1992 and 1993, and for the years ended December 31, 1991 and 1992 as set
forth below has been derived from the audited consolidated financial
statements of Taj Associates not included in this Prospectus.
All financial information should be read in conjunction with "Management's
Discussion and Analysis and Results of Operations--Taj Associates," and
"Unaudited Pro Forma Financial Information" and the consolidated and condensed
financial statements and related notes thereto included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1991 1992 1993 1994 1995
--------- --------- --------- --------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues:
Gaming.................. $ 380,997 $ 414,045 $ 442,064 $ 461,622 $501,378
Other................... 111,251 116,958 113,291 117,738 116,368
--------- --------- --------- --------- --------
Gross Revenues......... 492,248 531,003 555,355 579,360 617,746
Promotional allowances.. 53,935 61,250 56,444 62,178 63,998
--------- --------- --------- --------- --------
Net Revenues........... 438,313 469,753 498,911 517,182 553,748
Costs and Expenses:
Gaming.................. 204,513 227,394 237,566 260,472 283,786
Other................... 39,181 39,125 40,605 40,697 39,842
General and
Administrative......... 100,191 98,819 99,424 99,629 96,843
Depreciation and
Amortization........... 36,202 36,388 36,858 39,750 43,387
Restructuring costs..... 26,398 -- -- -- --
--------- --------- --------- --------- --------
Income from Operations.. 31,828 68,027 84,458 76,634 89,890
Net interest expense.... (100,683) (103,126) (106,997) (113,292) (116,513)
Extraordinary gain(a)... 259,618 -- -- -- --
--------- --------- --------- --------- --------
Net Income (loss)....... $ 188,513 $ (35,099) $ (22,539) $ (36,658) $(26,623)
========= ========= ========= ========= ========
BALANCE SHEET DATA (AT
END OF PERIOD):
Cash and cash
equivalents............ $ 22,535 $ 34,062 $ 58,044 $ 61,196 $ 88,941
Property and equipment-
net.................... 766,135 742,129 722,834 706,785 690,987
Total assets............ 814,051 802,556 811,508 807,612 821,793
Total long-term debt,
net of current
maturities............. 573,844 595,682 625,765 656,701 694,192
Total capital........... 167,837 130,913 106,641 67,812 39,635
</TABLE>
- --------
(a) The extraordinary gain of $259,618 for the year ended December 31, 1991
reflects a $204,276 accounting adjustment to carry the Old Taj Bonds at
fair market value based on current interest rates at the date of issuance
(effective rate of approximately 18%), and $20,000 related to settlement
of the subcontractors' note payable, with the balance representing a
discharge of accrued interest on indebtedness.
38
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
Set forth below is a discussion and analysis of the financial condition and
results of operations of Plaza Associates. Also set forth below is a
discussion and analysis of the financial condition and results of operations
of Taj Associates.
PLAZA ASSOCIATES
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
Gaming revenues were $298.1 million for the year ended December 31, 1995, an
increase of $36.6 million or 14.0% from gaming revenues of $261.5 million in
1994. This increase in gaming revenues consisted of an increase in both table
games and slot revenues. While 1994 was adversely affected by unfavorable
winter weather, construction and management turnover, management believes that
the increase in gaming revenues in 1995 is also due to an increased level of
demand evident in the Atlantic City market generally, as well as to
management's marketing and other initiatives, including the introduction of
new slot machines and table games, the addition of bill acceptors on slot
machines, an increase in casino floor square footage and an increase in
promotional allowances.
Slot revenues were $201.7 million for the year ended December 31, 1995, an
increase of $33.0 million or 19.5% from $168.7 million in 1994. This increase
was primarily due to certain factors mentioned in the foregoing paragraph
including the implementation of an aggressive slot marketing program.
Table games revenues were $96.4 million for the year ended December 31,
1995, an increase of $3.6 million or 3.9% from table games revenues of $92.8
million in 1994. This was primarily due to an increase in table games drop
(i.e., the dollar value of chips purchased) by $27.0 million or 4.5% for the
year ended December 31, 1995 from 1994.
During the year ended December 31, 1995, gaming credit extended to customers
was approximately 17.7% of overall table play, an increase of approximately
0.7% from 1994. At December 31, 1995, gaming receivables amounted to
approximately $13.8 million, an increase of approximately $0.1 million from
1994, with allowances for doubtful gaming receivables of approximately $7.9
million, a decrease of approximately $0.6 million from 1994.
Other revenues were $74.2 million for the year ended December 31, 1995, an
increase of $7.3 million or 10.9% from other revenues of $66.9 million in
1994. Other revenues include revenues from rooms, food and beverage and
miscellaneous items. This increase primarily reflects increases in food and
beverage revenues attendant to higher levels of gaming activity and
promotional allowances and expenses.
Promotional allowances were $38.9 million for the year ended December 31,
1995, an increase of $5.6 million or 16.8% from $33.3 million in 1994. This
increase is primarily attributable to an increase in gaming activity.
Gaming costs and expenses were $164.8 million for the year ended December
31, 1995, an increase of $25.3 million or 18.1% from gaming costs and expenses
of $139.5 million in 1994. This increase is primarily due to increased
promotional and operating expense and taxes associated with increased levels
of gaming revenues from 1994.
General and administrative expenses were $68.6 million for the year ended
December 31, 1995, a decrease of $4.5 million or 6.2% from general and
administrative expenses of $73.1 million in 1994. This decrease is primarily
the result of cost containment measures.
Income from operations was $59.8 million for the year ended December 31,
1995, an increase of $16.4 million or 37.8% from income from operations of
$43.4 million in 1994.
39
<PAGE>
Net interest expense was $43.3 million for the year ended December 31, 1995,
a decrease of $4.9 million or 10.2% from net interest expense of $48.2 million
in 1994. This decrease is attributable to the retirement of the PIK Notes in
June 1995 partly offset by the increased interest expense associated with
equipment financing and capital leases incurred during 1995.
Other non-operating expense was $5.7 million for the year ended December 31,
1995, an increase of $0.8 million or 16.3% from non-operating expense of $4.9
million in 1994. This increase is primarily attributable to costs associated
with Trump World's Fair.
The extraordinary loss of $9,250,000 for the year ended December 31, 1995
relates to the redemption and write-off of unamortized deferred financing
costs relating to the repurchase and redemption on June 12, 1995 of all of the
PIK Notes and related PIK Note Warrants.
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
Gaming revenues were $261.5 million for the year ended December 31, 1994, a
decrease of $2.6 million or 1.0% from gaming revenues of $264.1 million in
1993, although gaming revenues increased for the industry generally in
Atlantic City for the year ended December 31, 1994 compared to the year ended
December 31, 1993. This decrease in gaming revenues consisted of a reduction
in both table games and slot revenues. These results were impacted by a number
of major ice and snow storms throughout the northeastern United States during
the three months ended March 31, 1994 which severely restricted travel in the
region. Bad weather also impacted the Atlantic City market's results for the
three months ended March 31, 1993; however, the weather during the comparable
period in 1994 was much more severe. The decrease in gaming revenues was also
due in part to disruptions caused by an expansion of the casino floor which
created operating inefficiencies by temporarily disrupting the normal flow of
patrons upon entrance to the casino, as well as detracting from the overall
appearance of the casino floor. Also, in 1994 Trump Plaza experienced turnover
of certain key management positions which had a negative impact on operations.
This negative impact was mitigated by the end of 1994 as new management was
hired and began implementing new policies and marketing programs. See
"Business--Business Strategy" and "Management--Employment Agreements."
Slot revenues were $168.7 million for the year ended December 31, 1994, a
decrease of $1.8 million or 1.1% from slot revenues of $170.5 million in 1993.
This decrease was due in part to the sensitivity of slot revenues to certain
of the factors specified in the foregoing paragraph. Plaza Associates elected
to discontinue certain progressive slot programs, thereby reversing certain
accruals into revenue which had the effect of improving slot revenue by $0.6
million for the year ended December 31, 1994.
Table games revenues were $92.8 million for the year ended December 31,
1994, a decrease of $0.8 million or 0.9% from table games revenues of $93.6
million in 1993. This decrease was primarily due to a reduction in table games
drop by $26.7 million or 4.3% for the year ended December 31, 1994 from 1993,
offset by an increase in the table game hold percentage (the percentage of
table drop retained by Plaza Associates) to 15.5% for the year ended December
31, 1994 from 14.9% in 1993.
During the year ended December 31, 1994, gaming credit extended to customers
was approximately 17% of overall table play, a decrease of 1% from 1993. At
December 31, 1994, gaming receivables amounted to approximately $13.7 million,
a decrease of approximately $2.3 million from 1993, with allowances for
doubtful gaming receivables of approximately $8.5 million, a decrease of
approximately $1.9 million from 1993.
Other revenues were $66.9 million for the year ended December 31, 1994, a
decrease of $2.3 million or 3.3% from other revenues of $69.2 million in 1993.
This decrease in other revenues primarily reflects decreases in food and
beverage revenue resulting from changes in bus couponing.
Promotional allowances were $33.3 million for the year ended December 31,
1994, an increase of $0.5 million or 1.5% from $32.8 million in 1993. This
increase is attributable to increased marketing and promotional activities.
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Gaming costs and expenses were $139.5 million for the year ended December
31, 1994, an increase of $2.6 million or 1.9% from gaming costs and expenses
of $136.9 million in 1993. This increase was primarily due to increased
marketing costs instituted toward the end of 1994. These marketing programs
consisted of increased bus programs and direct marketing activities. The
increase in marketing costs was offset by decreased gaming taxes associated
with the decreased levels of gaming activity and revenues from 1993.
General and administrative expenses were $73.1 million for the year ended
December 31, 1994, an increase of $1.5 million or 2.1% from the general and
administrative expenses of $71.6 million in 1993. This increase resulted
primarily from $1.1 million in cash associated with donations to the CRDA for
the year ended December 31, 1994.
Income from operations was $43.4 million for the year ended December 31,
1994, a decrease of $6.2 million or 12.5% from income from operations of $49.6
million for 1993.
Net interest expense was $48.2 million for the year ended December 31, 1994,
an increase of $8.3 million or 20.8% from net interest expense of $39.9
million in 1993. This increase is primarily attributable to increased interest
expenses associated with the Plaza Notes and the PIK Notes which were
outstanding for all of 1994.
Other non-operating expense was $4.9 million (including $3.1 million of
leasing costs) for the year ended December 31, 1994, an increase of $1.0
million or 25.6% from other non-operating expense of $3.9 million in 1993.
This increase is directly attributable to twelve months of costs associated
with Trump Plaza East. See Note 6 to the accompanying Financial Statements of
Trump AC and Plaza Associates.
TAJ ASSOCIATES
The following information has been prepared by Taj Associates and provides
historical information regarding Taj Associates' operations.
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
Net revenues were approximately $553.7 million for the year ended December
31, 1995, an increase of $36.5 million or 7.1% from net revenues of $517.2
million for the year ended December 31, 1994. This increase was primarily due
to an increase in gaming revenues.
Gaming revenues comprise the major component of net revenues and consist of
win from table games, poker, slot machines, horserace simulcasting and keno.
Total gaming revenues were $501.4 million for the year ended December 31,
1995, an increase of $39.8 million or 8.6% from total gaming revenues of
$461.6 million for the year ended December 31, 1994. These revenues represent
a market share of 13.5% of the Atlantic City gaming market in each of 1995 and
1994, based on figures filed with the CCC.
Table game win was approximately $201.8 million for the year ended December
31, 1995, an increase of $17.1 million or 9.3% from table game win of $184.7
million for the year ended December 31, 1994. Dollars wagered at table games
were $1,192.2 million for the year ended December 31, 1995, an increase of
$67.2 million or 6.0% from dollars wagered at table games of $1,125.0 million
for the year ended December 31, 1994. Table win percentage was 16.9% for the
year ended December 31, 1995, an increase from 16.4% in 1994. Table win
percentage, which represents the percentage of dollars wagered retained by Taj
Associates, tends to be fairly constant over the long term, but may vary
significantly in the short term, due to large wagers by "high rollers." The
win percentage for the year ended December 31, 1995 is significantly above Taj
Associates' and the industry's historical win percentage, and Taj Associates'
win percentage could decrease in the future. During the twelve months ending
December 31, 1994 and 1993, Taj Associates' win percentage was approximately
16.4% and 16.3% respectively. The Atlantic City average for the years ended
December 31, 1995, 1994 and 1993 was approximately 15.8%, 15.8% and 15.6%
respectively. Management believes that a significant factor in Taj Associates'
table game win being higher than the Atlantic City average is its mix of
higher hold table games.
Slot revenues were approximately $279.2 million for the year ended December
31, 1995, an increase of $21.3 million or 8.3% from slot revenues of $257.9
million for the year ended December 31, 1994. Dollars wagered in slot machines
was $3,376.5 million for the year ended December 31, 1995, an increase of
$436.4
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million or 14.8% from dollars wagered in slot machines of $2,940.0 million for
the year ended December 31, 1994. This increase was offset by a decrease in
slot win percentage to 8.3% in 1995 from 8.8% in 1994. The increase in slot
machine wagering and the reduced slot win percentage is consistent with the
industry trend in Atlantic City in recent years.
In addition to table game and slot revenues, Taj Associates'
keno/poker/simulcasting operations generated approximately $17.2 million in
poker revenues, $1.4 million of simulcasting revenue and $1.8 million of keno
revenue in 1995, compared to $16.3 million of poker revenue, $1.4 million of
simulcasting revenue and $1.3 million of keno revenue in 1994. Keno operations
commenced June 15, 1994.
Increases in gaming revenues during the year ended December 31, 1995 as
compared to the year ended December 31, 1994 were attributable primarily to
(i) the increase in dollars wagered on slots relative to the depressed 1994
levels caused by severe winter weather during the first three months of the
year, (ii) the increase in dollars wagered on table games and the improved win
percentage, both of which were substantially attributable to international
high level players and (iii) the general growth of the Atlantic City market.
Nongaming revenues consist primarily of room, food, beverage and
entertainment. For the years ended December 31, 1995 and 1994, these revenues
totaled $116.4 million and $117.8 million, respectively. Room revenue of
approximately $43.3 million in 1995 was the result of an occupancy rate of
91.2% and an average room rate of $104.04. In 1994, room revenue of $41.8
million was the result of an occupancy rate of 92.4% and an average room rate
of $99.19.
In the food and beverage outlets, Taj Associates generated revenues of
approximately $57.2 million and $58.0 million during 1995 and 1994,
respectively. The approximately $0.8 million decrease is primarily
attributable to the decrease in the average food check to $11.62 in 1995 from
$11.68 in 1994 and the elimination of the private bar in guest rooms. The
decrease in food and beverage revenue reflects both fewer complimentaries
offered to patrons (which are recorded both as revenue and as a promotional
allowance) and reduced food prices designed to stimulate cash sales.
The decrease in other revenue of approximately $2.0 million was primarily
attributable to a decrease in entertainment revenue of approximately $1.6
million resulting from fewer in-house sponsored events and an increased
emphasis on promoter sponsored entertainment events in 1995 versus events
sponsored by Taj Associates in 1994.
Promotional allowances were $64.0 million for the year ended December 31,
1995, an increase of $1.8 million from promotional allowances of $62.2 million
for the year ended December 31, 1994. Promotional allowances were 10.4% of
gross revenues in 1995 compared to 10.7% in 1994, reflecting Taj Associates'
efforts to increase control over complimentaries while increasing gaming
revenues.
Gaming expenses increased approximately $23.3 million or 9.0% for the year
ended December 31, 1995 from the year ended December 31, 1994, primarily due
to increased marketing/promotional costs associated with increased gaming
revenues. Both room and food and beverage expenses remained generally
constant. General and administrative expenses decreased primarily due to the
nonrecurrence of costs for settlement of litigation which were incurred during
1994. Costs for settlement of litigation for the year ended December 31, 1995
decreased by approximately $3.7 million or 100% to $0 from the year ended
December 31, 1994. Depreciation expense increased in 1995 compared to 1994 due
to increased capital expenditures on replacement furniture, fixtures and
equipment and the shorter lives associated therewith.
Total operating expenses as a percentage of net revenue decreased to 83.8%
for the year ended December 31, 1995 compared to 85.2% for the year ended
December 31, 1994.
As a result of the foregoing factors, income from operations was $89.9
million for the year ended December 31, 1995, an increase of $13.3 million or
17.3% from income from operations of $76.6 million for the year ended December
31, 1994.
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The $5.1 million or 4.4% increase in interest expense is attributable to (i)
the increased amount of principal outstanding resulting from the issuance of
Taj Bonds to satisfy the Additional Amount (as defined in the Taj Bond
Indenture) and (ii) the increased accretion of the discount on the Taj Bonds
as they approach maturity.
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
Net revenues were $517.2 million for the year ended December 31, 1994, an
increase of $18.3 million or 3.7% from net revenues of $498.9 million for the
year December 31, 1993.
Gaming revenues, which comprise the major component of total revenues and
consist of win from table games, poker, slot machines, horse race simulcasting
and keno, were approximately $461.6 million in 1994, an increase of $19.5
million or 4.4% from gaming revenues of $442.1 million in 1993. The increase
in gaming revenues occurred while the overall Atlantic City gaming industry
experienced an increase in gaming revenue of 3.9%. These revenues represent a
market share of the Atlantic City market of approximately 13.5% in each of
1994 and 1993, based on figures filed with the CCC.
Table game win was approximately $184.7 million for the year ended December
31, 1994, an increase of $11.3 million or 6.5% from table game win of $173.4
million in 1993. Dollars wagered at table games was $1,125.0 million in 1994,
an increase of $63.0 million or 5.9% from dollars wagered at table games of
$1,062.0 million in 1993. Table win percentage (i.e., percentage of dollars
wagered that were retained by Taj Associates) increased to 16.4% in 1994 from
16.3% in 1993.
For the year ended December 31, 1994, slot win was approximately $257.9
million, a decrease of $2.4 million or 0.9% from slot win of $260.3 million in
1993. The decrease was largely due to a decrease in the slot
win percentage. Slot win percentages were 8.8% in 1994 and 9.3% in 1993.
Dollars wagered at slot machines were $2,940.1 million in 1994, an increase of
$82.2 million or 2.9% from the dollars wagered at slot machines of $2,857.9
million in 1993. The decrease in slot win percentage and the increase in slot
machine wagering is consistent with the industry trend in Atlantic City in
recent years.
In addition to table game and slot revenues, Taj Associates' newly opened
keno room and expanded poker/simulcasting operations generated approximately
$16.3 million of revenues from poker, $1.4 million of revenues from
simulcasting and $1.3 million of revenues from keno in 1994 compared to
approximately $7.5 million in poker revenue and $0.8 million in simulcasting
revenue for the year ended December 31, 1993. Poker/simulcasting operations
commenced in June 1993 while keno operations commenced on June 15, 1994.
Nongaming revenues consist primarily of room, food, beverage and
entertainment revenues. Nongaming revenues were $117.7 million for the year
ended December 31, 1994, an increase of $4.4 million or 3.9% from nongaming
revenues of $113.3 million in 1993. This increase was attributable primarily
to an increase in food and beverage revenue of approximately $2.1 million or
3.8%, and an increase in room revenue of approximately $1.2 million or 2.9%.
Food and beverage revenue and room revenue were $58.0 million and $41.8
million, respectively, for the fiscal year ended December 31, 1994, an
increase from food and beverage revenue and room revenue of $56.0 million and
$40.7 million, respectively, in 1993. The increase in food and beverage
revenue was partially attributable to the increase of the average food check
to $11.68 in 1994 from $10.82 in 1993 and the increased banquet functions
associated with gaming promotions. Room occupancy was 92.4% and 92.5% and the
average room rate was $99.19 and $96.38 for the years ended December 31, 1994
and 1993, respectively.
Promotional allowances were $62.2 million in 1994, an increase of $5.8
million from promotional allowances of $56.4 million in 1993. Promotional
allowances were 10.7% of gross revenues in 1994 compared to 10.2% of gross
revenues in 1993, reflecting the more aggressive marketing posture necessary
in order to maintain or achieve increases in gaming revenues comparable to
1993.
Gaming expenses were $260.5 million in 1994, an increase of $22.9 million or
9.6% from gaming expenses of $237.6 million in 1993, primarily due to
increased marketing promotional costs directed at slot machine and table game
play and operating expenses associated with the new or expanded games of
poker, simulcasting and keno.
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During the year ended December 31, 1994, room expenses increased slightly
and food and beverage expenses decreased slightly over the comparable period
in 1993, reflecting continuing cost controls in this area. General and
administrative expenses increased slightly, primarily due to costs associated
with a settlement of outstanding litigation, offset by decreases in real
property taxes resulting from settlement of appeals. Costs for settlement of
litigation were approximately $3.7 million in 1994, an increase of $3.7
million or 100% from 1993. Real property taxes were $12.2 million in 1994, a
decrease of approximately $4.9 million or 28.7% from real property taxes of
$17.1 million for 1993. Were it not for these items, costs in this category
would have increased approximately $2.0 million over the comparable period in
1993. Depreciation expense increased in 1994 compared to 1993 due to increased
capital expenditures on replacement furniture, fixtures and equipment and the
shorter lives associated therewith.
Total operating expenses as a percentage of net revenue increased to 85.2%
in 1994 from 83.1% in 1993.
Interest expense was $115.3 million in 1994, an increase of $6.9 million or
6.4% from interest expense of $108.4 million in 1993. The increase is
attributable to the increased amount of principal outstanding resulting from
the issuance of the Taj Bonds to satisfy the Additional Amount (as defined),
the increased accretion of discount on the Taj Bonds as they approach maturity
and professional fees incurred during the first six months of 1994 related to
a proposed recapitalization, which was not consummated.
As a result of the foregoing factors, income from operations was $76.6
million in 1994, a decrease of $7.9 million or 9.3% from income from
operations of $84.5 million in 1993.
Taj Associates experienced a net loss of $36.7 million for 1994 as compared
to a net loss of $22.5 million for 1993.
LIQUIDITY AND CAPITAL RESOURCES
General. On June 12, 1995, THCR consummated the initial public offering by
THCR of 10 million shares of THCR Common Stock at an offering price of $14.00
per share (the "June 1995 Stock Offering"), resulting in aggregate gross
proceeds to THCR of $140,000,000, and THCR Holdings and THCR Funding
consummated the public offering by THCR and THCR Holding of $155,000,000
Senior Notes (the "June 1995 Note Offering" and, together with the June 1995
Stock Offering, the "June 1995 Offerings"). The proceeds to THCR from the June
1995 Stock Offering were contributed by THCR to THCR Holdings in return for an
approximately 60% general partnership interest in THCR Holdings. THCR
Holdings, in turn, has used net proceeds from the June 1995 Offerings through
December 31, 1995 for the following Plaza Associates--related purposes: (a)
repurchase and redemption of the PIK Notes and PIK Note Warrants (including
accrued interest payable) for $86,209,000, (b) exercise of the option to
acquire Trump World's Fair (the "Trump World's Fair Purchase Option") for
$58,150,000, (c) construction costs for Trump World's Fair of $13,346,000, (d)
construction costs at Trump Plaza East for $15,150,000 and (e) construction
and land acquisition costs of $29,999,000 for THCR Holdings' Indiana riverboat
project. A portion of the balance of the proceeds have been and will be used
for the completion of the construction at Trump Plaza, Trump Plaza East and
Trump World's Fair and THCR's Indiana riverboat project, as well as for
general corporate purposes.
Plaza Associates. Cash flow from operating activities is Plaza Associates'
principal source of liquidity. Cash flow from operating activities was $26.9
million for the year ended 1995. The increase of $6.9 million in net cash
provided by operating activities as compared to 1994 principally reflects
increased income from operations.
Capital expenditures of $109.8 million for the year ended December 31, 1995
increased approximately $89.3 million from 1994. Capital expenditures
attributable to Trump Plaza East were approximately $8.7 million and $24.9
million for the years ended December 31, 1994 and 1995. Capital expenditures
attributable to Trump World's Fair were approximately $73.7 million for 1995.
Capital expenditures for improvements to existing facilities were $11.8
million and $11.2 million for the years ended December 31, 1994 and 1995. See
"Business--Facilities and Amenities--Trump Plaza."
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Plaza Associates has approximately $2.9 million of indebtedness maturing
through December 31, 1996. Management expects that this debt will be repaid
with cash from operating activities.
At December 31, 1995, Plaza Associates had combined working capital of $6.6
million, which included a receivable from the CRDA for $6.0 million for
reimbursable improvements made to the Trump Plaza East, which receivable is
currently the subject of litigation. See "Business--Legal Proceedings." At
December 31, 1994, Plaza Associates had a combined working capital deficit
totalling $7.1 million, which also included such receivable.
In 1993, Plaza Associates received the approval of the CCC, subject to
certain conditions, for the expansion of its hotel facilities at Trump Plaza
East. As part of the Trump Plaza Expansion, management commenced the expansion
and renovation of rooms at Trump Plaza East and as of the date hereof, the
casino and 326 (of 349) hotel rooms and suites had opened. Trump World's Fair
renovations are scheduled for completion during the second quarter of 1996. See
"Risk Factors--High Leverage and Fixed Charges" and "--Atlantic City Properties
Expansion."
As a result of the Trump Plaza Expansion, Plaza Associates will be permitted,
subject to certain conditions, to increase, and is in the process of
increasing, Trump Plaza's casino floor space to 90,000 square feet. Plaza
Associates petitioned the CCC to permit it to increase such space to 100,000
square feet pursuant to a statutory amendment which became effective January
25, 1995. In its May 18, 1995 declaratory rulings with respect to this
petition, the CCC determined, among other things, that the approved hotel
comprised of Trump Plaza's main tower and Trump Plaza East is permitted to
contain a maximum of 100,000 square feet of casino space. Plaza Associates
added to Trump Plaza approximately 9,000 square feet in April 1994, 1,000
square feet in July 1994, and 3,000 square feet in December 1994. At December
31, 1995, the total casino square footage was approximately 73,600 square feet.
On February 16, 1996, an additional approximately 17,000 square feet of casino
space was opened at Trump Plaza and Trump Plaza East.
Pursuant to the Trump Plaza East Purchase Option, which expires on June 30,
1998, Plaza Associates may purchase both the fee and leasehold interest
comprising Trump Plaza East. See "Management--Compensation Committee Interlocks
and Insider Participation--Certain Related Party Transactions of Trump." Until
such time as the Trump Plaza East Purchase Option is exercised or expires,
Plaza Associates is obligated to pay the net expenses associated with Trump
Plaza East, including, without limitation, current real estate taxes
(approximately $1.2 million per year based upon current assessed valuation) and
annual lease payments of $3.1 million per year. Under the Trump Plaza East
Purchase Option, Plaza Associates has the right to acquire Trump Plaza East for
a purchase price of $28.0 million through December 31, 1996, increasing by $1.0
million annually thereafter until expiration on June 30, 1998. In addition,
Plaza Associates has the right of first offer upon any proposed sale of all or
any portion of the fee interest in Trump Plaza East during the term of the
Trump Plaza East Purchase Option (the "Right of First Offer"). Under the terms
of the Trump Plaza East Purchase Option, if Plaza Associates defaults in making
payments due under the terms of the Trump Plaza East Purchase Option, Plaza
Associates would be liable to the grantor of the Trump Plaza East Purchase
Option for the sum of (a) the present value of all remaining payments to be
made by Plaza Associates pursuant to the Trump Plaza East Purchase Option
during the term thereof and (b) the cost of demolition of all improvements then
located at Trump Plaza East unless such improvements had been accepted in
writing by the grantor. See "Risk Factors-- Atlantic City Properties
Expansion." Plaza Associates intends to exercise the Trump Plaza East Purchase
Option in connection with the Merger Transaction.
Management believes that the net proceeds of the June 1995 Offerings and
equipment financings allocated to Trump Plaza East and cash flow from
operations should be sufficient to complete the planned renovations of Trump
Plaza East at a remaining cost, at December 31, 1995, of approximately $8.7
million. Pursuant to the Right of First Offer, Plaza Associates has ten days
after receiving written notice from the grantor of the proposed sale to commit
to exercise the right to acquire Trump Plaza East at the lesser of the proposed
sale price and the applicable exercise price under the Trump Plaza East
Purchase Option. If Plaza Associates commits to exercise the Right of First
Offer, it has ten days from the date of the commitment to deposit $3,000,000
with the grantor,
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to be credited towards the purchase price or to be retained by the grantor if
the closing, through no fault of the grantor, does not occur within 90 days
(or, subject to certain conditions, 120 days) of the date of the commitment.
There can be no assurance that Plaza Associates would have the liquidity
necessary to exercise its Right of First Offer on a timely basis should it be
required; however, a portion of the proceeds from the Offerings will be used
to exercise the Trump Plaza East Purchase Option.
Approximately $58 million of the net proceeds of the June 1995 Offerings
were used to exercise the Trump World's Fair Purchase Option. Management
believes that the net proceeds of the June 1995 Offerings, together with
additional equipment financing, will be sufficient to fund the additional
approximately $42.5 million required to complete renovation of and open Trump
World's Fair in the second quarter of 1996, although there can be no assurance
given to that effect. Associated with the opening of Trump World's Fair,
management anticipates incurring approximately $5.3 million of pre-opening
costs, which will be expensed at the time of its opening.
Pursuant to the terms of an agreement dated January 24, 1993 by and between
Plaza Associates and Trump Plaza Management Corp. ("TPM") (the "TPM Services
Agreement"), in consideration for services provided, Plaza Associates pays TPM
each year an annual fee of $1.0 million in equal monthly installments and
reimburses TPM on a monthly basis for all reasonable out-of-pocket expenses
incurred by TPM in performing its obligations under the TPM Services
Agreement, up to certain amounts. Approximately $1.3 million, $1.3 million and
$1.2 million of payments under the TPM Services Agreement were expensed for
the years ended December 31, 1995, 1994 and 1993, respectively. Payments
received under the TPM Services Agreement are currently pledged by TPM to
secure lease payments for a helicopter that TPM makes available to Plaza
Associates. Pending approval by the lessor of the helicopter, it is currently
contemplated that the stock of TPM will be transferred by Trump to THCR
Holdings, which will in turn assume the lease and related obligations. See
"Management--Compensation Committee Interlocks and Insider Participation--
Certain Related Party Transactions of Trump."
In addition, Plaza Associates may be obligated to comply with certain
proposed regulations of the Occupational Safety and Health Administration
("OSHA"), if adopted. Trump AC is unable to estimate the cost, if any, to
Plaza Associates of such compliance. See "Regulatory Matters--Other Laws and
Regulations."
Giving pro forma effect to the consolidation of Taj Associates and the other
elements of the Merger Transaction, Trump AC will have approximately $1.1
billion of indebtedness for borrowed money on a consolidated basis,
principally representing the First Mortgage Notes. See "Capitalization" and
"Unaudited Pro Forma Financial Information."
Taj Associates. Following the consummation of the Merger Transaction, the
Taj Mahal plans to undertake an expansion plan of its existing operations,
which plans are subject to modification. It is currently expected that the
expansion will be funded principally out of cash from the operations of the
Atlantic City Properties and is scheduled to be completed in phases from the
first quarter of 1997 through early 1998. The Taj Mahal Expansion is expected
to involve the construction of an approximately 800 room hotel tower adjacent
to the Taj Mahal's existing hotel tower, each containing at least 640 rooms,
an approximately 2,000 space expansion of the Taj Mahal's existing self-
parking facilities, conversion of the Mark Etess Arena into a new 60,000
square foot circus-themed casino with 2,500 slot machines, and construction of
a new arena on a surface parking area located adjacent to the Taj Mahal.
In addition, the Taj Mahal is adding three new nationally recognized themed
restaurants: the Hard Rock Cafe, the Rainforest Cafe and the All Star Cafe.
Construction costs for each of the three themed restaurants will be the
obligation of the lessees. However, the lease for the Rainforest Cafe will
require Taj Associates to contribute $2.5 million towards construction after
the project is completed and the restaurant opens for business.
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Capital expenditures by Taj Associates totaled approximately $26.5 million,
$23.0 million and $16.8 million for the years ended 1995, 1994 and 1993,
respectively. Major 1995 capital expenditures included the replacement of slot
machines with new slot machines having bill acceptors, hotel room renovations,
opening the Dragon Room (an Asian themed table gaming area), new telephone
reservation equipment, continued casino floor reconfiguration, carpet
replacement, casino signage and limousine replacements. Major 1994 capital
expenditures included the expansion of the poker room, the addition of the
game of keno to the casino floor, relocation of the lobby cocktail lounge,
construction of a new slot player's club, continued casino floor
reconfiguration, purchase of new slot machines and hotel room renovations.
Major 1993 capital expenditures included parking garage upgrades, restaurant
and room renovations, carpet replacement, and ongoing casino floor
reconfiguration, including additional slot machines, completion of the Taj
Entertainment Complex and modification of existing space to accommodate the
new games of race simulcasting and poker.
Taj Associates' capital budget for fiscal 1996 is approximately $28.6
million (excluding any amounts to be expended for the Taj Mahal Expansion) and
is expected to be financed principally by cash from operations. The budget
includes provisions for hotel tower and room renovations, completion of a
program to replace older slot machines, construction of a high end slot player
gaming area and club, ongoing casino floor reconfiguration and limousine
replacements. Taj Associates may be obligated to expend up to $30 million in
improvements to the Steel Pier in order to maintain its Coastal Area
Facilities Review Act ("CAFRA") permit, which is a condition to its casino
license. In March 1993, Taj Associates obtained a modification of its CAFRA
permit providing for the extension of the required commencement and completion
dates of these improvements for one year based upon an interim use of the
Steel Pier for an amusement park. Taj Associates received additional one-year
extensions, most recently through March 1997, of the required commencement and
completion dates of the improvements based upon the same interim use of the
Steel Pier for an amusement park pursuant to a sublease with an amusement park
operator. See "Business--Properties--Steel Pier." In addition, Taj Associates
may be obligated to comply with certain proposed regulations of the OSHA, if
adopted. Taj Associates is unable to estimate the cost, if any, to Taj
Associates of such compliance. See "Regulatory Matters--Other Laws and
Regulations."
Taj Associates' capital expenditures historically included a component to
expand the facility as well as maintain its first-class operation.
Historically, amounts necessary to maintain the first class nature of the
facility were approximately $24.0 million, $19.2 million and $6.4 million for
the years ended 1995, 1994 and 1993, respectively. Taj Associates' capital
budget for fiscal 1996 is approximately $28.6 million (excluding any amounts
to be expended for the Taj Mahal Expansion) and approximately $24.3 million to
maintain Taj Associates' facilities. The capital budget is expected to be
financed principally by cash from operations.
Except with respect to the Taj Mahal Expansion, management believes that
following the Merger Transaction, cash from the Atlantic City Properties'
operations, together with equipment financings, should be sufficient to meet
anticipated capital and debt service requirements through 1999. Commitments
are currently in place for only a portion of necessary equipment financings,
although management believes that it will be able to obtain the remainder of
such financings on customary terms acceptable to Trump AC. The Taj Mahal
Expansion is expected to depend in part on additional debt financing, for
which no commitments are in place. In addition, no assurances may be made that
Trump AC will successfully replace the Working Capital Facility. Finally, Taj
Associates' obligations to the CCC with respect to the Steel Pier may require
additional financing. See "Business--Prospectus." See "Risk Factors--Holding
Company Structure," "--Risk in Refinancing and Repayment of Indebtedness; Need
for Additional Financing" and "--Atlantic City Properties Expansion."
SEASONALITY
The gaming industry in Atlantic City is seasonal, with the heaviest activity
at Trump Plaza and the Taj Mahal occurring during the period from May through
September. Consequently, Trump AC's operating results during the two quarters
ending in March and December would not likely be as profitable as the two
quarters ending in June and September.
INFLATION
There was no significant impact on Plaza Associates' or Taj Associates'
respective operations as a result of inflation during 1995, 1994 or 1993.
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UNAUDITED PRO FORMA FINANCIAL INFORMATION
TRUMP ATLANTIC CITY ASSOCIATES
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The Unaudited Pro Forma Consolidated Balance Sheet of Trump AC as of
December 31, 1995 and the Unaudited Pro Forma Consolidated Statement of
Operations for the year ended December 31, 1995 (the "Unaudited Pro Forma
Consolidated Financial Statements") are set forth below.
The Unaudited Pro Forma Consolidated Balance Sheet has been prepared
assuming the Merger Transaction had occurred on December 31, 1995. The
Unaudited Pro Forma Consolidated Statements of Operations have been prepared
assuming that the Merger Transaction had occurred on January 1, 1995.
The Unaudited Pro Forma Financial Statements are presented for informational
purposes only and do not purport to present what the Balance Sheet would have
been had the Merger Transaction, in fact, occurred on December 31, 1995 or
what the results of operations for the year ended December 31, 1995 would have
been had the Merger Transaction, in fact, occurred on January 1, 1995, or to
project the results of operations for any future period.
The Unaudited Pro Forma Financial Statements of Trump AC give effect to (a)
consolidation of Taj Associates, which will be an indirect wholly owned
subsidiary of Trump AC after the Merger Transaction, (b) the redemption of the
Taj Bonds and the Taj Holding Class B Common Stock and the retirement of the
Plaza Notes, (c) the First Mortgage Note Offering, (d) the contribution by
THCR of a portion of the net proceeds of the Stock Offering to Trump AC, (e)
the "push down" by THCR of the purchase accounting adjustments associated with
the Merger with Taj Associates, (f) the termination of the Taj Services
Agreement, (g) the cancellation of payments to Realty Corp. and First Fidelity
in connection with the acquisition of the Specified Parcels and (h) the
payment to Bankers Trust to obtain releases of the liens and guarantees that
Bankers Trust has with respect to the Trump Indebtedness. See "Summary--The
Merger Transaction."
The pro forma financial statements do not include (i) the financial
statements of Taj Holding as Taj Holding will not be an operating entity or
incur any further costs and (ii) the financial statements of Merger Sub,
TM/GP, TTMI and TTMC as such companies are not operating entities and have
incurred no prior costs.
The Merger is expected to be accounted for as a "purchase" for accounting
and reporting purposes.
The Unaudited Pro Forma Financial Statements should be read in conjunction
with the Financial Statements and related notes thereto included elsewhere in
this Prospectus and the information set forth in "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
48
<PAGE>
UNAUDITED PRO FORMA FINANCIAL INFORMATION
TRUMP ATLANTIC CITY ASSOCIATES
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MORTGAGE THCR OTHER
TAJ NOTE STOCK MERGER TRUMP AC
TRUMP AC ASSOCIATES OFFERING OFFERING TRANSACTIONS PRO FORMA
------------ ------------ ---------- -------- ------------ ----------
(HISTORICAL) (HISTORICAL)
<S> <C> <C> <C> <C> <C> <C>
Current Assets:
Cash and cash
equivalents........... $ 15,937 $ 88,941 $1,100,000 (a) $200,000(j) $(10,000)(k) $ 55,225
(780,243)(b) (50,000)(l)
(390)(c) (9,900)(g)
(370,900)(d)
(28,000)(e)
(18,775)(f)
(43,450)(g)
(36,500)(h)
(1,495)(i)
Investment in THCR
Common Stock........... 10,500(j) (10,500)(l)
Accounts receivable,
net.................... 14,058 17,215 31,273
Inventories............. 2,609 7,161 9,770
Due from affiliates..... 1,298 1,298
Prepaid expenses and
other current assets... 5,045 3,864 8,909
-------- -------- ----------
Total current assets... 38,947 117,181 106,475
Property and Equipment,
net.................... 395,942 690,987 28,000 (e) 9,900 (g) 1,332,591
43,347 (l)
40,500 (m)
40,500 (m)
83,415 (n)
Land rights............. 29,320 29,320
Deferred loan costs..... 9,866 43,450 (g) 43,450
(9,866)(d)
Other assets............ 5,949 13,625 19,574
-------- -------- ----------
Total assets........... $480,024 $821,793 $1,531,410
======== ======== ==========
Current Liabilities:
Current maturities of
long-term debt........ $ 2,901 $ 920 (200)(h) $ 3,621
Accounts payable and
accrued expenses...... 22,655 8,335 30,990
Accrued interest
payable............... 1,497 9,154 (9,144)(f) 12
(1,495)(i)
Due to affiliates,
net................... 974 974
Other current
liabilities........... 5,257 35,210 40,467
-------- -------- ----------
Total current liabili-
ties.................. 32,310 54,593 76,064
Other long-term
liabilities............ 33,373 (9,631)(f) (17,153)(l) 6,589
Taj Bonds, net of
discount............... 649,139 (649,139)(b)
Plaza Notes, net of
discount............... 326,652 (326,652)(d)
First Mortgage Notes.... 1,100,000 (a) 1,100,000
Other long term debt.... 6,069 45,053 (44,744)(h) 6,378
Distribution payable to
Plaza Funding.......... 3,822 3,822
Deferred state income
taxes.................. 359 359
-------- -------- ----------
Total liabilities...... 369,212 782,158 1,193,212
Partners' Capital:
Contributed capital.... 94,087 123,765 210,500(j) (10,000)(k) 375,587
40,500 (m)
40,500 (m)
(123,765)(o)
Retained Earnings
(Deficit)............. 16,725 (84,130) (131,104)(b) 83,415 (n) (37,389)
(390)(c) 123,765 (o)
(54,114)(d)
8,444 (h)
-------- -------- ----------
Total Partners' capi-
tal................... 110,812 39,635 338,198
-------- -------- ----------
Total Liabilities and
Capital.............. $480,024 $821,793 $1,531,410
======== ======== ==========
</TABLE>
See Notes to Unaudited Pro Forma Financial Information.
49
<PAGE>
UNAUDITED PRO FORMA FINANCIAL INFORMATION
TRUMP ATLANTIC CITY ASSOCIATES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
TAJ PRO FORMA TRUMP AC
TRUMP AC ASSOCIATES ADJUSTMENTS PRO FORMA
------------ ------------ ----------- ---------
(HISTORICAL) (HISTORICAL)
<S> <C> <C> <C> <C>
Revenues:
Gaming................... $298,073 $501,378 $ 799,451
Rooms.................... 19,986 43,309 63,295
Food and Beverage........ 44,602 57,195 101,797
Other.................... 9,594 15,864 25,458
-------- -------- ---------
Gross Revenues.......... 372,255 617,746 990,001
Less--Promotional
Allowances.............. 38,934 63,998 102,932
-------- -------- ---------
Net Revenues............ 333,321 553,748 887,069
-------- -------- ---------
Cost and Expenses:
Gaming................... 164,839 283,786 448,625
Rooms.................... 2,263 15,230 17,493
Food and Beverage........ 18,306 24,612 42,918
General and
Administrative.......... 68,550 96,843 $(2,725)(l) 152,981
(1,743)(r)
(7,944)(s)
Depreciation and
Amortization............ 16,213 43,387 416 (l) 64,747
4,731 (t)
Other.................... 3,363 3,363
-------- -------- ---------
273,534 463,858 730,127
-------- -------- ---------
Income from Operations..... 59,787 89,890 156,942
Interest Income............ 1,003 3,922 4,925
Interest Expense........... (44,264) (120,435) 30,281 (p) (129,360)
5,058 (q)
Other non-operating
expense................... (5,743) 3,120 (e) (2,623)
-------- -------- ---------
Income (loss) before
Extraordinary Loss and
state income taxes........ 10,783 (26,623) 29,884
Provision for state income
taxes(u).................. 0 0 0
-------- -------- ---------
Income (loss) before
Extraordinary Loss........ $ 10,783 $(26,623) $ 29,884
======== ======== =========
</TABLE>
See Notes to Unaudited Pro Forma Financial Information.
50
<PAGE>
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION(DOLLARS IN THOUSANDS,
EXCEPT SHARE INFORMATION)
PRO FORMA ADJUSTMENTS:
(a) To record the issuance of $1,100,000 aggregate principal amount of
Mortgage Notes issued by Trump AC and Trump AC Funding.
(b) To record the redemption of the Taj Bonds at par which had a face value
of $780,243 and a book value of $649,139 as of December 31, 1995, and
an extraordinary loss of $131,494 which includes the redemption of the
Taj Holding Class B Common Stock (see note (c) below).
(c) To record the payment of $.50 for the redemption of the 780,243
outstanding shares of Taj Holding Class B Common Stock as an
extraordinary loss.
(d) To record the retirement of the Plaza Notes which have a face value of
$330,000 and a book value of $326,652 as of December 31, 1995 for
$370,900 and related deferred loan costs, resulting in an extraordinary
loss of $54,114.
(e) To record the payment of $28,000 in connection with exercise of the
Trump Plaza East Purchase Option and the effect of the termination of
the Trump Plaza East Lease (as defined) and the $3,120 of associated
annual expenses.
(f) To record the payment of accrued interest on the redemption of the Taj
Bonds as of December 31, 1995, including $9,631 of the Additional
Amount.
(g) To record the payment of fees and expenses associated with the Merger
Transaction.
(h) To record the satisfaction of indebtedness under the NatWest Loan which
had a book value of $44,944 for $36,500 and an extraordinary gain of
$8,444 resulting from such satisfaction.
(i) To record the payment of accrued interest on the retirement of the
Plaza Notes as of December 31, 1995.
(j) To record the contribution by THCR to Trump AC (on behalf of and at the
direction of THCR Holdings) of a portion of the net proceeds from the
Stock Offering and 500,000 shares of THCR Common Stock for the purchase
of the Specified Parcels (see note (l) below). Assumes the
underwriters' over-allotment option is not exercised.
(k) To record the payment to Bankers Trust to obtain certain releases of
the liens and guarantees that Bankers Trust has in connection with
certain indebtedness owed by Trump to Bankers Trust. The obligation
under this indebtedness is a personal liability of Trump and,
accordingly, the release of indebtedness is considered a payment to
Trump and a reduction of the interests attributable to him as such
payment would only occur as part of the Merger Transaction.
(l) To record the purchase of the Specified Parcels and the release of the
Taj Associates-First Fidelity Guarantee, the elimination of the lease
payments on the Specified Parcels and the additional depreciation
associated with the purchase. The aggregate cost of acquiring the
Specified Parcels is $50,000 in cash and the contribution by THCR to
Trump AC (on behalf of and at the direction of THCR Holdings) of
500,000 shares of THCR Common Stock valued at $10,500 (an average value
of $21 per share of THCR Common Stock based on the price of the THCR
Common Stock several days before and after the date of the amended
Agreement and Plan of Merger). Taj Associates had accrued $17,153 with
respect of its obligations under the Taj Associates - First Fidelity
Guarantee.
(m) To record the contribution by Trump to Trump AC (on behalf and at the
direction of THCR Holdings) of all of his direct and indirect ownership
interest in 50% of Taj Associates and the purchase of the Taj Holding
Class A Common Stock by THCR which is pushed down to Taj Associates.
THCR will pay $30 for each of the 1,350,000 outstanding shares of Taj
Holding Class A Common Stock which is payable at the option of the
holder in cash or shares of THCR Common Stock. It is assumed herein
that all holders elect to receive cash. As Trump's ownership interest
is 50%, the amount of
51
<PAGE>
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS EXCEPT SHARE INFORMATION)
PRO FORMA ADJUSTMENTS:
consideration paid for the publicly held 50% (represented by Taj Holding
Class A Common Stock, has been described as the value of his
contribution.
(n) To record the historical book value of Taj Associates and Taj Funding
($39,635), as adjusted for the pro forma extraordinary loss on the
redemption of the Taj Bonds ($131,494) and the extraordinary gain
resulting from the satisfaction of indebtedness under the NatWest Loan
($8,444), which results in a negative book value of $83,415, as part of
the push down of the cost of the purchase of the Taj Holding Class A
Common Stock by THCR.
(o) To reclassify the remaining capital deficit of Taj Associates to
contributed capital as the carryforward accumulated deficit should be
that of the Company in accordance with purchase accounting.
(p) To record adjustments to historical interest expense to give effect to
the Merger Transaction as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1995
------------
<S> <C>
(i) Elimination of interest and discount accretion on the
redemption of the Taj Bonds and the Plaza Notes......... $ (146,714)
(ii) Elimination of accretion on the Taj Associates--First
Fidelity
Guarantee.............................................. (2,375)
(iii) Elimination of interest on the NatWest Loan............ (4,281)
(iv) Elimination of refinancing transaction expenses......... (1,787)
(v) Elimination of amortization of deferred offering costs... (2,973)
(vi) Reflects interest and amortization of deferred loan
costs on the Mortgage Notes................................. 127,849
----------
Pro Forma Adjustment......................................... $ (30,281)
==========
</TABLE>
For every 0.5% change in interest rate, the correlative change in interest
expense for the period would be $5,500 on a pre-tax basis, with an
identical change to the denominator in debt service coverage ratios.
(q) To eliminate interest expense (including amortization of deferred
financing costs) on the PIK Notes which were redeemed with the proceeds
contributed by THCR Holdings to Trump AC from the offering of the
Senior Notes.
(r) To record the elimination of the fee resulting from the termination of
the Taj Services Agreement.
(s) To reflect the reduction of identifiable costs resulting from the
consolidation of departments and the reduction of personnel. Management
believes that within two years annual cost savings from the Merger
Transaction will total $18-20 million, although there can be no
assurance made as to the amount that can be realized.
(t) To record the additional depreciation expense resulting from the
allocation of the purchase price ($174,315--see notes (g), (m) and (n)
above) to property and equipment based on an appraisal. Amounts are
being allocated to land ($8,715) and building ($165,600) on a pro rata
basis and are being depreciated over the remaining life of the building
(35 years).
(u) A provision for state taxes is not required as the state tax net
operating losses are used to offset pro forma taxable income.
52
<PAGE>
BUSINESS
GENERAL
Upon consummation of the Merger Transaction, Trump Atlantic City Associates,
an indirect subsidiary of Trump Hotels & Casino Resorts, Inc., will own and
operate two "Four Star" Atlantic City casino hotels: the Trump Taj Mahal
Casino Resort and Trump Plaza Hotel and Casino. The Taj Mahal is currently
Atlantic City's largest casino (in terms of casino square footage), and Trump
Plaza will have the largest casino in Atlantic City (in terms of casino square
footage) upon completion of its ongoing expansion program. Through its
ownership of two successful land-based casino hotels, Trump AC will have a
leading presence in the growing Atlantic City market, which, in terms of
gaming revenues, has demonstrated a ten-year compound annual growth rate of
approximately 5.8% and a growth rate of approximately 9.5% for calendar year
1995 versus calendar year 1994. After giving effect to the Merger Transaction
and the Trump Plaza Expansion, Trump AC will have approximately one-quarter of
Atlantic City's casino square footage, slot machines, table games and hotel
room inventory. In addition the combination of the Taj Mahal with Trump
Plaza's existing operations will also provide opportunities for operational
efficiencies, economies of scale and other benefits from the expertise and
experience of management at the two operating entities. Trump AC also plans to
undertake an expansion program at the Taj Mahal designed to increase its hotel
room inventory and casino floor space and expand its entertainment and parking
facilities.
Management believes Trump AC will benefit from the following factors:
. LEADING ATLANTIC CITY FACILITIES. Upon consummation of the Trump Plaza
Expansion, Trump AC will own and operate the two largest casino hotel
properties in Atlantic City (in terms of casino square footage), both of
which are strategically located on The Boardwalk. Trump AC believes that
the Atlantic City Properties' prime locations, reputations for high
quality amenities and first-class customer service and targeted marketing
strategies are ideally suited to capitalize on the expected continued
growth in the Atlantic City gaming market. Management believes that its
leading size and market share in Atlantic City following the consummation
of the Merger Transaction will provide it with a competitive advantage in
marketing the Atlantic City Properties, particularly to large convention
groups and multi-day stay destination resort visitors.
. ATLANTIC CITY PROPERTIES EXPANSION. Trump AC has nearly completed the
Trump Plaza Expansion and is developing the plans for the Trump Taj Mahal
Expansion, which projects will increase the Atlantic City Properties'
gaming space and hotel room capacity, allowing Trump AC to meet both
existing demand and the anticipated demand from the increased number of
available rooms and infrastructure improvements that are currently under
development to enhance further the "vacation destination appeal" of
Atlantic City.
The following table profiles Trump AC's casino and hotel capacity
following the expansion of the Atlantic City Properties:
<TABLE>
<CAPTION>
TRUMP TAJ TRUMP PLAZA TAJ MAHAL
PLAZA(a) MAHAL EXPANSION(b) EXPANSION(c) TOTAL
-------- ------- ------------ ------------ -------
<S> <C> <C> <C> <C> <C>
Casino square footage... 75,395 120,000(d) 64,158 60,000 319,553
Slot machines........... 2,368 3,550 1,898 2,500 10,316
Table games............. 97 169 44 -- 310
Hotel rooms............. 555 1,250 849 800 3,454
</TABLE>
---------------------
(a) Includes the 2,000 square foot area which connects the existing
facility with Trump Plaza East and the 75 slot machines included in
this area.
(b) Includes the 15,000 square foot casino with 400 slot machines and 13
table games and 326 hotel rooms which have already opened at Trump
Plaza East. The remaining 14 hotel rooms and suites at Trump Plaza East
are scheduled to be opened by the end of April 1996. Also reflects nine
super suites scheduled to open early in 1997 and not otherwise included
in the "Trump Plaza Expansion." The remaining portion of the Trump
Plaza Expansion, Trump World's Fair (as defined), is scheduled to open
in the second quarter of 1996.
(c) Plans for the Taj Mahal Expansion, scheduled to be completed in phases
from the first quarter of 1997 through early in 1998, are subject to
modification.
(d) Excludes a 12,000 square foot poker, keno and race simulcasting room
which contains 64 poker tables.
53
<PAGE>
. OPERATING SYNERGIES. Trump AC intends to capitalize on the opportunities
for efficiencies which can be generated by integrating certain operations
of the Atlantic City Properties which have previously been operated
separately. Management has identified certain potential cost savings
which management estimates, by the end of the second year following the
Merger Transaction, to be approximately $18-20 million on an annual
basis, although no assurance may be made as to the amount which will be
realized. Management believes that it will be able to consolidate certain
departments at the Atlantic City Properties, reduce general and
administrative expenses through possible personnel reductions and the
consolidation of certain marketing efforts, and reduce operating costs
through efficiencies that are expected to result from the combined
purchasing power of the Atlantic City Properties.
. THE "TRUMP" NAME. Trump AC capitalizes on the widespread recognition of
the "Trump" name and its association with high quality amenities and
first-class service. To this end, Trump AC provides a broadly diversified
gaming and entertainment experience consistent with the "Trump" name and
reputation for quality, tailored to the gaming patron in the Atlantic
City market.
ATLANTIC CITY PROPERTIES
TRUMP PLAZA
Management believes that Trump Plaza's "Four Star" Mobil Travel Guide rating
and "Four Diamond" American Automobile Association rating reflect the high
quality amenities and services that Trump Plaza provides to its casino patrons
and hotel guests. These amenities and services include a broad selection of
dining choices, headline entertainment, deluxe accommodations, tennis courts
and swimming and health spa facilities.
Trump Plaza Expansion. Management believes that as a result of the Trump
Plaza Expansion and Trump Plaza's strategic location, Trump Plaza is well
positioned to become one of the premier host properties in Atlantic City. The
Trump Plaza Expansion is currently scheduled to be completed in the second
quarter of 1996 and would increase Trump Plaza's prime central frontage on The
Boardwalk to nearly a quarter of a mile. Management also believes that the
construction of the new convention center and tourist corridor linking the new
convention center with The Boardwalk will enhance the desirability of Atlantic
City generally and, as a result of Trump Plaza's central location, will
benefit Trump Plaza in particular. In addition, management expects to be able
to take advantage of recent gaming regulatory changes that will allow casino
space to be directly visible and accessible from The Boardwalk. Trump Plaza's
location on The Boardwalk at the end of the main highway into Atlantic City
makes it highly accessible for both "drive-in" and "walk-in" patrons.
Trump AC is in the process of renovating and integrating into Trump Plaza,
Trump World's Fair, located on The Boardwalk adjacent to the existing Atlantic
City Convention Center, which is next to Trump Plaza, at a remaining cost of
$42.5 million. Upon completion, Trump World's Fair would add 49,272 square
feet of casino floor space, approximately 16,000 of which will be directly
accessible from The Boardwalk and 500 hotel rooms, connected with the current
Trump Plaza's main tower by an enclosed walkway overlooking The Boardwalk.
Renovations are ongoing at Trump World's Fair and management expects, although
there can be no assurances, that the renovations at Trump World's Fair will be
completed in the second quarter of 1996. See "Risk Factors--Atlantic City
Properties Expansion."
Trump Plaza has opened the casino and 326 rooms at Trump Plaza East.
Management intends to open the remaining 14 hotel rooms and suites at Trump
Plaza East by the end of April 1996. Trump Plaza East has approximately 15,000
square feet of casino space and, when fully opened, will have 349 hotel rooms,
including nine super suites scheduled to be opened early in 1997. Trump Plaza
currently leases Trump Plaza East and intends to exercise its option to
acquire it from an unaffiliated entity. See "Management--Compensation
Committee Interlocks and Insider Participation--Certain Related Party
Transactions of Trump." Trump Plaza has been reconfigured to provide a new
entranceway to Trump Plaza directly off the Atlantic City Expressway.
Management believes the increased hotel capacity as a result of the Trump
Plaza Expansion will enable Trump Plaza to better meet demand and accommodate
its casino guests, as well as to host additional and larger conventions and
corporate meetings.
54
<PAGE>
The following table details plans for the Trump Plaza Expansion:
<TABLE>
<CAPTION>
TRUMP PLAZA TRUMP PLAZA TRUMP WORLD'S
FACILITY(a) EAST(b) FAIR(c) TOTAL
----------- ----------- ------------- -------
<S> <C> <C> <C> <C>
Casino square footage............. 75,395 14,886 49,272 139,553
Slot machines..................... 2,368 405 1,493 4,266
Table games....................... 97 12 32 141
Hotel rooms....................... 555 349 500 1,404
</TABLE>
- ---------------------
(a) Includes the 2,000 square foot area connecting the existing facility with
Trump Plaza East and the 75 slot machines included in this area.
(b) The casino and 326 hotel rooms have already opened. The remaining 14 hotel
rooms and suites are scheduled to be opened by the end of April 1996. Also
reflects the nine super suites are scheduled to be opened early in 1997
and not otherwise included in the "Trump Plaza Expansion."
(c) Scheduled to open in the second quarter of 1996.
Management commenced the Trump Plaza Expansion in 1995 and has recently
launched a variety of new initiatives designed to increase the level of casino
gaming activity generally at its casino and, in particular, to attract casino
patrons who tend to wager more frequently and in larger denominations than the
typical Atlantic City patron. These initiatives include targeted marketing and
advertising campaigns directed to select groups of customers in the Boston-New
York-Washington, D.C. corridor, the introduction of new slot machines and
table games and the addition of bill acceptors on slot machines.
THE TAJ MAHAL
The Taj Mahal is currently the largest casino hotel facility in Atlantic
City (in terms of casino floor square footage) and has ranked first among all
Atlantic City casinos in terms of total gaming revenues, table revenues and
slot revenues since it commenced operations in 1990. The Taj Mahal capitalizes
on the widespread recognition and marquee status of the "Trump" name and its
association with high quality amenities and first-class service as evidenced
by its "Four Star" Mobil Travel Guide rating. Management believes that the
breadth and diversity of the Taj Mahal's casino, entertainment and convention
facilities and its status as a "must see" attraction will enable the Taj Mahal
to benefit from the expected continued growth of the Atlantic City market.
In recent years, under the direction of Trump and the management team led by
Nicholas L. Ribis, its Chief Executive Officer, Taj Associates has completed
construction of the Taj Entertainment Complex, reconfigured and expanded the
casino floor to provide race simulcasting, poker wagering and the recently
introduced game of keno, opened a Asian themed table game area and increased
the number of poker tables and slot machines. The Taj Mahal's poker room is
the largest in Atlantic City, which management believes adds to its overall
gaming mix. Taj Associates continually monitors operations to adapt to and
anticipate industry trends. Since 1994, the Taj Mahal has embarked on a
strategy to refurbish all of its hotel guest rooms and corridors by April 1996
and to replace all of its existing slot machines by April 1996 with new, more
efficient machines with bill collectors. Moreover, to further attract high-end
players, the Taj Mahal has recently opened the Dragon Room, an Asian themed
table gaming area with 16 table games, and is currently in the process of
constructing the Sultan's Palace, a separate 5,900 square-foot high-end slot
lounge and private club to be completed in the second quarter of 1996.
The Taj Mahal Expansion. Following the consummation of the Merger
Transaction, management plans to undertake an expansion plan at the Taj Mahal
to meet both existing demand and the increase in demand that management
anticipates will result from the increased number of rooms and infrastructure
improvements that are currently being implemented to enhance further the
"vacation destination appeal" of Atlantic City. It is currently expected that
the Taj Mahal Expansion will be funded principally out of the Atlantic City
Properties' cash from operations and is scheduled to be completed in phases
from the first quarter of 1997 through early 1998. The Taj Mahal Expansion,
the plans for which are subject to modification, involves the construction of
an
55
<PAGE>
approximately 2,000 space expansion of the Taj Mahal's existing self-parking
facilities and a new 10,000 seat arena adjacent to the Taj Mahal, each
scheduled to be completed in mid-1997; the conversion of the current site of
the Mark Etess Arena into a new 60,000 square foot circus-themed casino with
2,500 slot machines, scheduled to be completed in 1997; and the construction
of an approximately 800 room hotel tower adjacent to the Taj Mahal's existing
hotel tower, scheduled to be completed early in 1998. See "Risk Factors--
Atlantic City Properties Expansion--The Taj Mahal."
The following table details the plans for the Taj Mahal Expansion:
<TABLE>
<CAPTION>
CURRENT TAJ
TAJ MAHAL MAHAL
FACILITIES EXPANSION TOTAL
---------- --------- -------
<S> <C> <C> <C>
Casino square footage............................. 120,000(a) 60,000 180,000
Slot machines..................................... 3,550 2,500 6,050
Table games....................................... 169 -- 169
Hotel rooms....................................... 1,250 800 2,050
</TABLE>
- ---------------------
(a) Excludes a 12,000 square-foot poker, keno and race simulcasting room which
contains 64 poker tables.
The following table summarizes the different phases of the Taj Mahal
Expansion with their associated cost estimates:
<TABLE>
<CAPTION>
PROJECT
PROJECT COST
------- -------
(IN MILLIONS)
<S> <C>
Parking facility, approximately 2,000 spaces................... $ 26.0
New arena...................................................... 15.0
Circus themed casino........................................... 53.3
Hotel tower, 800 rooms......................................... 100.9
------
Total.......................................................... $195.2
======
</TABLE>
It is expected that the Taj Mahal Expansion, the plans for which are subject
to modification, will be principally funded out of the cash from operations of
the Atlantic City Properties. If the operations of the Atlantic City
Properties do not generate the anticipated cash flow to fund the Taj Mahal
Expansion, the ability to complete such expansion will depend on the ability
to obtain debt financing for such purposes in addition to that currently
contemplated. There can be no assurance that Taj Associates and Plaza
Associates will be able to generate sufficient cash flow from operations or to
obtain debt financing on terms satisfactory to Trump AC, if at all.
ATLANTIC CITY MARKETING STRATEGY
In order to provide a sharpened marketing focus at the different properties
and appeal to a variety of segments in the Atlantic City marketplace,
management intends to pursue a targeted marketing approach with respect to the
Atlantic City Properties:
Trump Plaza. Trump Plaza East has been integrated into Trump Plaza and
together are operated as a single casino hotel facility. Trump Plaza will
continue the marketing strategies it has found successful in the past,
including targeting lucrative high-end drive-in slot customers. Management
believes the additional hotel rooms and gaming facilities at Trump Plaza East
will better enable Trump Plaza to accommodate the more profitable weekend
drive-in patron, who tends to wager more per play and per visit than the
typical walk-in or bus patron.
Trump World's Fair. Trump World's Fair, which will be part of Trump Plaza,
will seek to attract the "middle market" segment (primarily bus customers and
Boardwalk pedestrian traffic) by offering high value food and entertainment
attractions in a festive "World's Fair" atmosphere. The first floor of Trump's
World's Fair will feature a Boardwalk level casino offering walk-in customers
direct access from The Boardwalk to 581 slot machines. In addition, Trump
World's Fair is constructing a new bus terminal that will have a dedicated
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escalator leading directly to a separate casino entertainment area. The
separate casino entertainment area will contain a 500-seat buffet-style
restaurant, an Oriental Pavilion and a casino with 538 slot machines. The new
bus terminal and dedicated casino facilities will allow Trump World's Fair to
efficiently serve a high volume of bus customers. A smoke-free casino with
approximately 385 slot machines and 32 table games along with additional
restaurants will be located on the second floor of Trump World's Fair.
Moreover, with its prime location adjoining the current Atlantic City
Convention Center and near the new Atlantic City Convention Center, and with
its newly refurbished room base of 500 rooms and approximately 50,000 square
feet of total gaming space, management believes that Trump World's Fair is
ideally suited to attract convention visitor traffic.
The Taj Mahal. The Taj Mahal will continue to capitalize on its status as
Atlantic City's "must see" casino entertainment facility by offering
"something for everyone." The Taj Mahal has been successful in attracting all
segments of the gaming market because of the size and diversity of its
entertainment and gaming facilities. The Taj Mahal has been particularly
successful in attracting the segments of the Atlantic City gaming market that
tend to wager more frequently and in larger denominations than the typical
Atlantic City gaming customer. To attract these high-end players, the Taj
Mahal offers international musical and entertainment attractions and has
recently opened the Dragon Room, an Asian themed gaming table game area, and
is in the process of constructing the Sultan's Palace, a high-end slot lounge
and private club.
BUSINESS STRATEGY
"Comping" Strategy. In order to compete effectively with other Atlantic City
casino hotels, the Atlantic City Properties offer complimentary drinks, meals,
room accommodations and/or travel arrangements to their patrons
("complimentaries" or "comps"). Management focuses the Atlantic City
Properties' promotional activities, including complimentaries, on middle and
upper middle market "drive in" patrons who visit Atlantic City frequently and
have proven to be the most profitable market segment. Additionally, as a
result of increased regulatory flexibility, the Taj Mahal has implemented a
cash comping policy to high-end players in order to compete with similar
practices in Las Vegas and to attract international business.
Entertainment. Management believes headline entertainment, as well as other
entertainment and revue shows, are effective in attracting and retaining
gaming patrons. Trump Plaza offers headline entertainment as part of its
strategy to attract high-end and other patrons. Trump Plaza offers headline
entertainment weekly during the summer and monthly during the off-season, and
also features other entertainment and revue shows. The Xanadu Theater allows
the Taj Mahal to offer longer running, more established productions that cater
to the tastes of the Taj Mahal's high-end international guests. The Taj
Mahal's facilities also include the Mark Etess Arena, an approximately 63,000
square-foot exhibition hall and entertainment facility. The Xanadu Theater,
together with the Mark Etess Arena, and subsequent to the conversion of the
Mark Etess Arena, the new arena that is intended to be constructed in
connection with the Taj Mahal Expansion, afford, and are expected to afford,
the Taj Mahal more flexibility in the use of its facilities for sporting and
other headline programs. The Taj Mahal regularly engages well-known musicians
and entertainment personalities and will continue to emphasize weekend
"marquee" events such as Broadway revues, high visibility sporting events,
festivals and contemporary concerts to maintain the highest level of glamour
and excitement. Mid-week uses for the facilities include convention events and
casino marketing sweepstakes.
Player Development/Casino Hosts. The Atlantic City Properties currently
employ gaming representatives in New Jersey, New York and other states, as
well as several international representatives, to promote the Atlantic City
Properties to prospective gaming patrons. Player development personnel host
special events, offer incentives and contact patrons directly in an effort to
attract high-end table game patrons from the United States, Canada and South
America. The Atlantic City Properties' casino hosts assist patrons on the
casino floor, make room and dinner reservations and provide general
assistance. In addition, targeted marketing to international clientele will be
continued and expanded at the Taj Mahal through new sales representatives in
Latin America, Mexico, Europe, the Far East and the Middle East. As a special
bonus to high-end players, the Taj Mahal offers three clubs for the exclusive
use of select customers: the Maharajah Club for table game players, the
Presidents
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Club for high-end slot players, and the Bengal Club for other preferred slot
players. The Atlantic City Properties also plan to continue the development of
their slot and coin programs through direct mail and targeted marketing
campaigns emphasizing the high-end player.
Promotional Activities. The Trump Card constitutes a key element in the
Atlantic City Properties' direct marketing program. Subject to regulatory
constraints, the Trump Card will be used in all of THCR's gaming facilities so
as to build a national database of gaming patrons. Slot machine players are
encouraged to register for and utilize their personalized Trump Card to earn
various complimentaries based upon their level of play. The Trump Card is
inserted during play into a card reader attached to the slot machine for use
in computerized rating systems. THCR's computer systems record data about the
cardholders, including playing preferences, frequency and denomination of play
and the amount of gaming revenues produced. The Atlantic City Properties
design promotional offers, conveyed via direct mail and telemarketing, to
patrons expected to provide revenues based upon their historical gaming
patterns. Such information is gathered on slot wagering by the Trump Card and
on table game wagering by the casino game supervisors. Promotional activities
include the mailing of vouchers for complimentary slot play. The Atlantic City
Properties also utilize a special events calendar (e.g., birthday parties,
sweepstakes and special competitions) to promote its gaming operations.
Bus Program. Trump Plaza and the Taj Mahal each have bus programs which
transport approximately 2,400 and 2,700 gaming patrons per day during the week
and 3,500 and 3,600 gaming patrons per day on the weekends, respectively.
Trump Plaza's Transportation Facility (as defined) contains 13 bus bays and is
connected by an enclosed pedestrian walkway to Trump Plaza, and the Taj Mahal
has an 18 bay bus terminal.
Credit Policy. Historically, the Atlantic City Properties have extended
credit to certain qualified patrons. For the years ended December 31, 1993,
1994 and 1995, credit play as a percentage of total dollars wagered at Trump
Plaza was approximately 18%, 17%, and 18%, respectively. As part of Trump
Plaza's business strategy, Trump Plaza has imposed stricter standards on
applications for new or additional credit. For the years ended December 31,
1993, 1994 and 1995, the Taj Mahal's credit play as a percentage of total
dollars wagered was approximately 23.5%, 22.8% and 24.5%, respectively.
FACILITIES AND AMENITIES
Trump Plaza. The casino in the existing facility of Trump Plaza currently
offers 97 table games and 2,368 slot machines. In addition to the casino,
Trump Plaza's main tower consists of a 31-story tower with 555 guest rooms,
including 62 suites. Trump Plaza's main tower also offers 10 restaurants, a
750-seat cabaret theater, four cocktail lounges, 28,000 square feet of
convention, ballroom and meeting room space, a swimming pool, tennis courts
and a health spa.
In February 1996, Trump Plaza East opened the 15,000 square foot Ocean View
Casino and Bar, and has to date opened 326 of its 349 hotel rooms. The Ocean
View Casino and Bar is the first gaming room in Atlantic City to combine a
casino, bar and entertainment area and features a 70-foot long bar with 27
bar-top slot machines, live entertainment and a 58 square foot video wall.
With its high ceilings and windows overlooking the Atlantic Ocean and The
Boardwalk, Trump Plaza provides a new and exciting entertainment environment
for its casino patrons.
The entry level of Trump Plaza's main tower includes a cocktail lounge, two
gift shops, a deli, a coffee shop, an ice cream parlor and a buffet. The
casino level houses the casino, a fast food restaurant, an exclusive slot
lounge for high-end patrons and a new oceanfront baccarat gaming area. Upon
completion, an enclosed walkway will connect Trump Plaza at the casino level
with the Atlantic City Convention Center and with Trump World's Fair.
Trump Plaza's guest rooms are located in two towers which afford most guest
rooms a view of the ocean. While rooms are of varying size, a typical guest
room consists of approximately 400 square feet. Trump Plaza also features 16
one-bedroom suites, 28 two-bedroom suites and 18 "Super Suites." The Super
Suites are located on the top two floors of Trump Plaza's main tower and offer
luxurious accommodations and 24-hour butler and maid service. The Super Suites
and certain other suites are located on the "Club Level" which requires guests
to use a special elevator key for access and contains a lounge area that
offers food and bar facilities.
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Trump Plaza's main tower is connected by an enclosed pedestrian walkway to a
ten-story parking garage, which can accommodate approximately 2,650 cars, and
contains 13 bus bays, a comfortable lounge, a gift shop and waiting area (the
"Transportation Facility"). The Transportation Facility provides patrons with
immediate access to the casino and is located directly off the Atlantic City
Expressway, the main highway into Atlantic City.
In July 1994, Time Warner opened its second largest Warner Brothers Studio
Store pursuant to a sublease of the entire first floor of retail space on The
Boardwalk at Trump Plaza East (approximately 17,000 square feet). THCR
management believes that the commitment of Time Warner at Trump Plaza East,
together with other retail, restaurant and entertainment establishments
expected to participate in the Trump Plaza Expansion, evidences the continued
growth of, and highlights Trump Plaza's favored place within, the Atlantic
City casino market.
Trump World's Fair. Upon completion of the renovation in the second quarter
of 1996, Trump World's Fair will be connected to Trump Plaza's main tower by
an enclosed walkway overlooking The Boardwalk and will add an additional 500
hotel rooms to Trump Plaza. In addition, Trump World's Fair will be outfitted
with approximately 50,000 square feet of casino floor space housing 1,493 slot
machines and 32 table games. In addition to the casino, Trump World's Fair
will feature three restaurants, including a state-of-the-art buffet, a
cocktail lounge, convention, ballroom and meeting room space, a swimming pool
and a health spa. The enclosed walkway will run through a portion of the
Atlantic City Convention Center, which is located between Trump World's Fair
and Trump Plaza's main tower. In this connection, Plaza Associates has
acquired an easement with regard to portions of the Atlantic City Convention
Center. See "--Properties--Trump Plaza--Trump World's Fair" and "Regulatory
Matters--New Jersey Gaming Regulations--Approved Hotel Facilities."
THE TAJ MAHAL
The Taj Mahal currently features Atlantic City's largest casino, with
120,000-square-feet of gaming space, 169 table games and 3,550 slot machines.
In addition, the Taj Mahal has a 12,000-square-foot poker, keno and race
simulcasting room with 64 poker tables, which was added in 1993 and expanded
in 1994. The casino's offerings include blackjack, progressive blackjack,
craps, roulette, baccarat, mini baccarat, red dog, sic-bo, pai gow, pai gow
poker, Caribbean stud poker, big six, mini big six and let it ride poker. In
December 1995, the Taj Mahal opened an Asian themed table game area which
offers 16 popular Asian table games catering to the Taj Mahal's growing Asian
clientele. In addition, as a special bonus to high-end players, Taj Associates
offers three clubs for the exclusive use of select customers: the Maharajah
Club for table game players, the President's Club for high-end slot players,
and the Bengal Club for other preferred slot players.
The Taj Mahal currently consists of a 42-story hotel tower and contiguous
low-rise structure sited on approximately 17 acres of land. The Taj Mahal has
1,250 guest rooms (including 242 suites), 16 dining and 10 beverage locations,
parking for approximately 5,200 cars, an 18-bay bus terminal and approximately
65,000-square-feet of ballroom, meeting room and pre-function area space. The
Taj Mahal has also signed agreements for the development of the Hard Rock
Cafe, Rainforest Cafe and All-Star Cafe themed restaurants on the property. In
addition, the Taj Mahal features the Taj Entertainment Complex, a 20,000-
square-foot multi-purpose entertainment complex known as the Xanadu Theater
with seating capacity for approximately 1,200 people, which can be used as a
theater, concert hall, boxing arena or exhibition hall, and the Mark Etess
Arena, which comprises an approximately 63,000-square foot exhibition hall and
entertainment facility. The Xanadu Theater and the Mark Etess Arena have
allowed the Taj Mahal to offer longer running, more established productions
that cater to the tastes of the Taj Mahal's high-end international guests, and
has afforded the Taj Mahal more flexibility in the use of its facilities for
sporting and other headline programs. The Taj Mahal regularly engages well-
known musicians and entertainment personalities and will continue to emphasize
weekend marquee events such as Broadway revues, high visibility sporting
events, international festivals and contemporary concerts to maximize casino
traffic and to maintain the highest level of glamour and excitement at the Taj
Mahal.
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Management believes that the Taj Mahal's 1,250-room capacity and vast casino,
entertainment, convention and exhibition space, including the Mark Etess Arena,
make it a highly attractive convention and destination resort facility at which
visitors may stay for extended periods. In addition to its normal advertising,
Taj Associates actively promotes the Taj Mahal with various local chambers of
commerce, travel agencies which specialize in convention travel and various
corporate travel departments in order to attract convention business.
ATLANTIC CITY MARKET
The Atlantic City gaming market has demonstrated continued growth despite the
recent proliferation of new gaming venues across the country. The 12 casino
hotels in Atlantic City generated approximately $3.75 billion in gaming
revenues in 1995, an approximately 9.5% increase over 1994 gaming revenues of
approximately $3.42 billion. From 1990 to 1995, total gaming revenues in
Atlantic City have increased approximately 27%, while hotel rooms increased
approximately 10% during that period. Although total visitor volume to Atlantic
City remained relatively constant in 1995, the volume of bus customers dropped
to 9.6 million in 1995, continuing a decline from 11.7 million in 1990. The
volume of customers traveling by other means to Atlantic City has grown from
20.1 million in 1990 to 23.7 million in 1995.
Casino revenue growth in Atlantic City has lagged behind that of other
traditional gaming markets, principally Las Vegas, for the last five years.
Management believes that this relatively slower growth is primarily
attributable to two key factors. First, there have been no significant
additions to hotel capacity in Atlantic City since 1990. Las Vegas visitor
volumes have increased, in part, due to the continued addition of new hotel
capacity. Both markets have exhibited a strong historical correlation between
hotel room inventory and total casino revenues. Secondly, the regulatory
environment and infrastructure problems in Atlantic City have made it more
difficult and costly to operate. Total regulatory costs and tax levies in New
Jersey have exceeded those in Nevada since inception, and there is generally a
higher level of regulatory oversight in New Jersey than in Nevada.The
infrastructure problems, manifested by impaired accessibility of the casinos,
downtown Atlantic City congestion and the condition of the areas surrounding
the casinos, have made Atlantic City less attractive to the gaming customer.
Total Atlantic City slot revenues increased 12.2% in 1995, continuing a solid
trend of increases over the past five years. From 1990 through 1995, slot
revenue growth in Atlantic City has averaged 8.3% per year. Total table revenue
increased 4.4% in 1995, while table game revenue from 1990 to 1995 has
decreased on average 0.7% per year. Management believes the slow growth in
table revenue is primarily attributable to two factors. First, the slot product
has been significantly improved over the last five years. Dollar bill
acceptors, new slot machines, video poker and blackjack and other improvements
have increased the popularity of slot play among a wider universe of casino
patrons. Casino operators in Atlantic City have added slot machines in favor of
table games due to increased public acceptance of slot play and due to slot
machines' comparatively higher profitability as a result of lower labor and
support costs. Since 1990, the number of slot machines in Atlantic City has
increased 37.2%, while the number of table games has decreased by 4.0%. Slot
revenues increased from 58% of total casino revenues in 1990 to 69% in 1995.
The second reason for historic slow growth in table revenue is that table game
players are typically higher end players and are more likely to be interested
in overnight stays and other amenities. During peak season and weekends, room
availability in Atlantic City is currently inadequate to meet demand, making it
difficult for casino operators to aggressively promote table play.
Despite lower overall growth rates than the Las Vegas market, management
believes that Atlantic City possesses similar revenue and cash flow generation
capabilities. The approximately $3.75 billion of gaming revenue produced by the
12 casino hotels in Atlantic City in 1995 exceeded the approximately $3.12
billion of gaming revenues produced by the 18 largest (based on net revenues)
casino hotels on the Las Vegas Strip for the same period, even though the 12
Atlantic City casino hotels have less than one-quarter the number of hotel
rooms of such Las Vegas Strip casino hotels. Win per unit figures in Atlantic
City are at a significant premium to Las Vegas win-per-unit performance,
primarily due to the constrained supply of gaming positions in Atlantic City
compared to Las Vegas.
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The regulatory environment in Atlantic City has improved recently. Most
significantly, 24-hour gaming has been approved, poker and keno have been
added and regulatory burdens have been reduced. In particular, Bill A61 was
passed in January of 1995, which has eliminated duplicative regulatory
oversight and channeled operator's funds from regulatory support into CRDA
uses. Administrative costs of regulation will be reduced while increasing
funds available for new development.
In addition to the planned casino expansions, major infrastructure
improvements have begun. The CRDA is currently overseeing the development of
the "tourist corridor" that will link the new convention center with The
Boardwalk and will, when completed, feature an entertainment and retail
complex. The tourist corridor is scheduled to be completed in conjunction with
the completion of the new convention center.
Trump Plaza is adjacent to the existing Atlantic City Convention Center and
will also be one of the closest casino hotels to the new convention center,
which, as currently planned, would hold approximately 500,000 square feet of
exhibit and pre-function space, 45 meeting rooms, food-service facilities and
a 1,600-car underground parking garage. The Taj Mahal is approximately 1.5
miles from the site of the new convention center. When completed, the new,
approximately $250 million convention center would be the largest exhibition
space between New York City and Washington, D.C. It will be located at the
base of the Atlantic City Expressway and is currently planned to open in
January 1997. The State of New Jersey is also implementing an approximately
$125 million capital plan to upgrade and expand the Atlantic City
International Airport.
Management believes that recent gaming regulatory reforms will serve to
permit future reductions in operating expenses of casinos in Atlantic City and
to increase the funds available for additional infrastructure development
through the CRDA. Due principally to an improved regulatory environment,
general improvement of economic conditions in 1993, 1994 and 1995 and high
occupancy rates, significant investment in the Atlantic City market has been
initiated and/or announced. Bally recently bought a Boardwalk lot for $7.5
million, the Sands just completed a major renovation, and in December of 1994,
approval by the CRDA was given to TropWorld to add 626 hotel rooms, the Grand
to add 295 rooms (both of which are under construction) and to the Taj Mahal
to add approximately 800 rooms and a 1,500 space parking garage (with an
application pending to increase the size to 2,000 spaces). Overall, various
casinos in the market have applied to the CRDA for funding to construct 3,400
new hotel rooms. Management believes that these increases in hotel capacity,
together with infrastructure improvements, will be instrumental in stimulating
future revenue growth in the Atlantic City market. See "--Competition."
SEASONALITY
The gaming industry in Atlantic City is seasonal, with the heaviest activity
at Trump Plaza and at the Taj Mahal during the period from May through
September, and with December and January showing substantial decreases in
activity. Revenues have been significantly higher on Fridays, Saturdays,
Sundays and holidays than on other days.
EMPLOYEES AND LABOR RELATIONS
TRUMP PLAZA
Plaza Associates has approximately 3,700 employees of whom approximately
1,100 are covered by collective bargaining agreements. Management believes
that its relationships with its employees are satisfactory. Certain of Plaza
Associates' employees must be licensed under the Casino Control Act. See
"Regulatory Matters--New Jersey Gaming Regulations--Qualification of
Employees." Plaza Funding has no employees.
In April 1993, the National Labor Relations Board (the "NLRB") found that
Plaza Associates had violated the National Labor Relations Act (the "NLRA") in
the context of a union organizing campaign by table game dealers of Plaza
Associates in association with the Sports Arena and Casino Employees Union
Local 137, a/w Laborers' International Union of North America, AFL-CIO ("Local
137"). In connection with such finding,
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Plaza Associates was ordered to refrain from interfering with, restraining or
coercing employees in the exercise of the rights guaranteed them by Section 7
of the NLRA, to notify its employees of such rights and to hold an election by
secret ballot among its employees regarding whether they desire to be
represented for collective bargaining by Local 137. The election was held on
May 20 and 21, 1994 and the vote, which has been certified by the NLRB, was in
favor of management and against representation by Local 137.
TAJ MAHAL
Taj Associates has approximately 6,100 employees for the operation of the
Taj Mahal, of whom approximately 1,850 employees are covered by collective
bargaining agreements. Taj Associates believes that its relationships with its
employees are satisfactory and that its staffing levels are sufficient to
provide superior service. Since opening in April 1990, during which time some
collective bargaining agreements with various unions have expired prior to the
execution of new agreements, the business of Taj Associates has not been
interrupted due to any labor disputes. The collective bargaining agreement
with HERE Local 54, which covers substantially all of Taj Associates' hotel
and restaurant employees, was renegotiated in September 1994 and will expire
on September 14, 1999.
Certain Taj Associates' employees must be licensed under the Casino Control
Act. See "Regulatory Matters--New Jersey Gaming Regulations--Qualification of
Employees."
PROPERTIES
TRUMP PLAZA
Plaza Associates owns and leases several parcels of land in and around
Atlantic City, New Jersey, each of which is used in connection with the
operation of Trump Plaza and each of which is currently subject to the liens
of the mortgages associated with the Plaza Notes (collectively, the "Plaza
Mortgages") and certain other liens. Upon consummation of the Merger
Transaction, these parcels of land will secure the First Mortgage Notes. Upon
its acquisition, Trump Plaza East would also become subject to the mortgage
securing the First Mortgage Notes. See "Description of the First Mortgage
Notes--Security for the First Mortgage Notes."
Plaza Casino Parcel. Trump Plaza's main tower is located on The Boardwalk in
Atlantic City, New Jersey, next to the existing Atlantic City Convention
Center. It occupies the entire city block (approximately 2.38 acres) bounded
by The Boardwalk, Mississippi Avenue, Pacific Avenue and Columbia Place (the
"Plaza Casino Parcel").
The Plaza Casino Parcel consists of four tracts of land, one of which is
owned by Plaza Associates and three of which are leased to Plaza Associates
pursuant to three non-renewable ground leases, each of which expires on
December 31, 2078 (each, a "Plaza Ground Lease"). Trump Seashore Associates
("Trump Seashore"), Seashore Four Associates ("Seashore Four") and Plaza Hotel
Management Company (each, a "Plaza Ground Lessor") are the owners/lessors
under such respective Plaza Ground Leases (respectively, the "TSA Lease," "SFA
Lease" and "PHMC Lease"; the land which is subject to the Plaza Ground Leases
(which includes Additional Parcel 1, as defined) is referred to collectively
as the "Plaza Leasehold Tracts" and individually as a "Plaza Leasehold
Tract"). Trump Seashore and Seashore Four are 100% beneficially owned by Trump
and are, therefore, affiliates of THCR.
The Plaza Ground Leases provide that each Plaza Ground Lessor may encumber
its fee estate with mortgage liens, but any such fee mortgage will not
increase the rent under the applicable Plaza Ground Lease and must be
subordinate to such Plaza Ground Lease. Accordingly, any default by a Plaza
Ground Lessor under any such fee mortgage will not result in a termination of
the applicable Plaza Ground Lease but would permit the fee mortgagee to bring
a foreclosure action and succeed to the interests of the Plaza Ground Lessor
in the fee estate, subject to Plaza Associates' leasehold estate under such
Plaza Ground Lease. Each Plaza Ground Lease also specifically provides that
the Plaza Ground Lessor may sell its interest in the applicable Plaza
Leasehold Tract, but any such sale would be made subject to Plaza Associates'
interest in the applicable Plaza Ground Lease.
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On August 1, 1991, as security for indebtedness owed to a third party, Trump
Seashore transferred its interest in the TSA Lease to United States Trust
Company of New York ("UST"), as trustee for the benefit of such third party
creditor. The trust agreement among UST, Trump Seashore and such creditor
provides that the trust shall terminate on the earlier of (i) August 1, 2012
or (ii) the date on which such third party creditor certifies to UST that all
principal, interest and other sums due and owing from Trump Seashore to such
third party creditor have been paid.
On September 20, 1995, Trump Seashore and its third party lender entered
into a mortgage note modification and extension agreement, pursuant to which
Trump Seashore and such third party lender extended the term of the
indebtedness described above, which matured in October 1993, to September 30,
1996, and increased the interest rate to be paid on such indebtedness to one
and one-half percent in excess of the interest rate stated by such third party
lender to be its prime rate.
The SFA Lease, TSA Lease and the PHMC Lease each contain options pursuant to
which Plaza Associates may purchase the Plaza Leasehold Tract covered by such
Plaza Ground Lease at certain times during the term of such Plaza Ground Lease
under certain circumstances. The purchase price pursuant to each option is
specified in the SFA Lease, TSA Lease and the PHMC Lease, respectively.
The Plaza Ground Leases are "net leases" pursuant to which Plaza Associates,
in addition to the payment of fixed rent, is responsible for all costs and
expenses with respect to the use, operation and ownership of the Plaza
Leasehold Tracts and the improvements now, or which may in the future be,
located thereon, including, but not limited to, all maintenance and repair
costs, insurance premiums, real estate taxes, assessments and utility charges.
The improvements located on the Plaza Leasehold Tracts are owned by Plaza
Associates during the terms of the respective Plaza Ground Leases and upon the
expiration of the term of each Plaza Ground Lease (for whatever reason),
ownership of such improvements will vest in the Plaza Ground Lessor.
If a bankruptcy case is filed by or commenced against a Plaza Ground Lessor
under applicable bankruptcy law, the trustee in bankruptcy in a liquidation or
reorganization case under the applicable bankruptcy law, or a debtor-in-
possession in a reorganization case under the applicable bankruptcy law, has
the right, at its option, to assume or reject the Plaza Ground Lease of the
debtor-lessor (subject, in each case, to court approval). If the Plaza Ground
Lease is assumed, the rights and obligations of Plaza Associates thereunder,
and the rights of the trustee with respect to the Plaza Notes (the "Plaza Note
Trustee") (and, following the issuance of the First Mortgage Notes, the rights
of the trustee for the First Mortgage Notes (the "First Mortgage Note
Trustee") as leasehold mortgagee under the agreements relating to the issuance
of the Plaza Notes (the "Plaza Note Agreements"), would continue in full force
and effect). If the Plaza Ground Lease is rejected, Plaza Associates would
have the right, at its election, either (i) to treat the Plaza Ground Lease as
terminated or (ii) to continue in possession of the land and improvements
under the Plaza Ground Lease for the balance of the term thereof and at the
rental set forth therein (with a right to offset against such rent any damages
caused by the Plaza Ground Lessor's failure to thereafter perform its
obligations under such Plaza Ground Lease). Under the Plaza Note Agreements,
Plaza Associates assigned to the Plaza Note Trustee its rights to elect
whether to treat the Plaza Ground Lease as terminated or to remain in
possession of the leased premises if the Plaza Ground Leases are rejected. In
connection with the issuance of the First Mortgage Notes, the Mortgage will
provide that Plaza Associates will assign such rights to the First Mortgage
Note Trustee.
In the case of the Plaza Ground Leases, the rejection of a Plaza Ground
Lease by a trustee in bankruptcy or debtor-lessor (as debtor-in-possession)
may result in termination of any options to purchase the fee estate of the
debtor-lessor and the Plaza Note Trustee's option (as leasehold mortgagee as
described above), if the Plaza Ground Lease is terminated, to enter into a new
lease directly with the lessor. In addition, under an interpretation of New
Jersey law, it is possible that a court would regard such options as separate
contracts and, therefore, severable from the Plaza Ground Lease. In such
event, the trustee in bankruptcy or debtor-lessor (as debtor-in-
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possession) could assume the Plaza Ground Lease, while rejecting some or all
of such options under the Plaza Ground Lease.
Parking Parcels. Plaza Associates owns a parcel of land (the "Plaza Garage
Parcel") located across the street from the Plaza Casino Parcel and along
Pacific Avenue in a portion of the block bounded by Pacific Avenue,
Mississippi Avenue, Atlantic Avenue and Missouri Avenue. Plaza Associates has
constructed on the Plaza Garage Parcel a ten-story parking garage capable of
accommodating approximately 2,650 cars and which includes offices and a bus
transportation center with bays accommodating up to 13 buses at one time. An
enclosed pedestrian walkway from the parking garage accesses Trump Plaza at
the casino level. Parking at the parking garage is available to Trump Plaza's
guests, as well as to the general public. One of the tracts comprising a
portion of the Plaza Garage Parcel is subject to a first mortgage on Plaza
Associates' fee interest in such tract. As of December 31, 1995, such mortgage
secured indebtedness had an approximate outstanding principal balance of $0.1
million.
Plaza Associates leases, pursuant to the PHMC Lease, a parcel of land
located on the northwest corner of the intersection of Mississippi and Pacific
Avenues consisting of approximately 11,800 square feet ("Additional Parcel 1")
and owns another parcel on Mississippi Avenue adjacent to Additional Parcel 1
consisting of approximately 5,750 square feet (the "Bordonaro Parcel").
Additional Parcel 1 and the Bordonaro Parcel are presently paved and used for
surface parking.
Plaza Associates also owns five parcels of land, aggregating approximately
43,300 square feet, and subleases one parcel consisting of approximately 3,125
square feet. All of such parcels are contiguous and are located along Atlantic
Avenue, in the same block as the Plaza Garage Parcel. They are used for
signage and surface parking and are not encumbered by any mortgage liens other
than those of the Plaza Mortgages.
Warehouse Parcel. Plaza Associates owns a warehouse and office facility
located in Egg Harbor Township, New Jersey, containing approximately 64,000
square feet of space (the "Egg Harbor Parcel"). The Egg Harbor Parcel is
encumbered by a first mortgage having an outstanding principal balance, as of
December 31, 1995, of approximately $1.5 million and is encumbered by the
Plaza Mortgage.
Trump Plaza East. In connection with the Merger Transaction, Plaza
Associates intends to exercise the Trump Plaza East Purchase Option, a five-
year option to purchase the fee and leasehold interests comprising Trump Plaza
East. In October 1993, Plaza Associates assumed the leases associated with
Trump Plaza East. Until such time as the Trump Plaza East Purchase Option is
exercised or expires, Plaza Associates is obligated to pay the net expenses
associated with Trump Plaza East. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Plaza Associates--Liquidity and
Capital Resources" and "Management--Compensation Committee Interlocks and
Insider Participation--Certain Related Party Transactions of Trump." During
the years ended December 31, 1995 and 1994, Plaza Associates incurred
approximately $3.8 million and $4.9 million, respectively, of such expenses.
Under the Trump Plaza East Purchase Option, Plaza Associates has the right to
acquire the fee interest in Trump Plaza East for a purchase price of $28.0
million through December 31, 1996 increasing by $1.0 million annually
thereafter until expiration on June 30, 1998.
Plaza Associates currently intends to exercise the Trump Plaza East Purchase
Option in connection with the Merger Transaction. However, if Plaza Associates
does not exercise the Trump Plaza East Purchase Option in connection with the
Merger Transaction, up to $30.0 million of internally generated funds and/or
additional financing would be required to fund the acquisition pursuant to the
existing purchase option. There can be no assurance that such financing would
be available on attractive terms, if at all. In addition, the exercise of the
Trump Plaza East Purchase Option may require the consent of certain of Trump's
personal creditors, and there can be no assurance that such consent will be
obtained at the time Plaza Associates desires to exercise the Trump Plaza East
Purchase Option. The CCC has required that Plaza Associates exercise the Trump
Plaza East Purchase Option no later than July 1, 1996. Plaza Associates
intends to request that the CCC extend the July 1, 1996 deadline for
exercising the Trump Plaza East Purchase Option if it is not exercised in
connection with the Merger Transaction, although there can be no assurance
that such extension would be granted. Failure of Trump AC to
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acquire Trump Plaza East, to obtain an extension of the July 1, 1996 deadline
or to obtain an extension of the existing lease of the premises beyond its
current June 30, 1998 expiration date would have a material adverse effect on
Trump Atlantic City. See "Certain Transactions--Plaza Associates--Trump Plaza
East."
Plaza Associates has substantially completed its renovation and integration
of Trump Plaza East. If Plaza Associates is unable to finance the purchase
price of Trump Plaza East pursuant to the Trump Plaza East Purchase Option,
any amounts expended with respect to Trump Plaza East, including payments
under the Trump Plaza East Purchase Option and the lease pursuant to which
Plaza Associates leases Trump Plaza East, and any improvements thereon, would
inure to the benefit of the owner of Trump Plaza East and not to Plaza
Associates and would increase the cost of demolition of any improvements for
which Plaza Associates would be liable. As of December 31, 1995, Plaza
Associates had capitalized approximately $35.7 million in construction costs
related to Trump Plaza East. If the development of Trump Plaza East is not
successful, Trump AC would be required to write off the capitalized
construction costs associated with the project.
In September 1993, Trump (as predecessor in interest to Plaza Associates
under the lease for Trump Plaza East) entered into the Time Warner Sublease
with Time Warner pursuant to which Time Warner subleased the entire first
floor of retail space for a new Warner Brothers Studio Store which opened in
July 1994. The Time Warner Sublease provides for a ten-year term which expires
on the last day of the month immediately preceding the tenth anniversary of
the commencement date and contains two five-year renewal options exercisable
by Time Warner. Time Warner renovated the premises in connection with opening
the studio store. Rent under the Time Warner Sublease is currently accruing
and will not become due and payable to Plaza Associates until the satisfaction
of certain conditions designed to protect Time Warner from the termination of
the Time Warner Sublease by reason of the termination of Plaza Associates'
leasehold estate in Trump Plaza East or the foreclosure of a certain mortgage
(prior to the exercise of the Trump Plaza East Purchase Option) and until Time
Warner's unamortized construction costs are less than accrued rent. No
assurances can be made that such conditions will be satisfied. In addition,
Time Warner may terminate the Time Warner Sublease at any time after July 1996
in the event that gross sales for the store do not meet certain threshold
amounts or at any time if Plaza Associates fails to operate a first-class
hotel on Trump Plaza East. See "Management--Compensation Committee Interlocks
and Insider Participation--Certain Related Party Transactions of Trump."
Trump World's Fair. Pursuant to the Trump World's Fair Purchase Option, on
June 12, 1995, Plaza Associates acquired title to Trump World's Fair. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Plaza Associates--Liquidity and Capital Resources." Pursuant to an
easement agreement with The New Jersey Sports and Exposition Authority
("NJSEA"), Plaza Associates has an exclusive easement over, in and through the
portions of the Atlantic City Convention Center to be used as the pedestrian
walkway connecting Trump Plaza's main tower and Trump World's Fair. The
easement is for a 25-year term and may be renewed at the option of Plaza
Associates for one additional 25-year period. In consideration of the granting
of the easement, Plaza Associates must pay to NJSEA the sum of $2,000,000
annually, such annual payment to be adjusted every five years to reflect
changes in the consumer price index. Plaza Associates will have the right to
terminate the easement agreement at any time upon six months' notice to NJSEA
in consideration of a termination payment of $1,000,000. See also
"Management--Compensation Committee Interlocks and Insider Participation--
Certain Related Party Transactions of Trump" and "Regulatory Matters--New
Jersey Gaming Regulations--Approved Hotel Facilities."
Superior Mortgages. The liens securing the indebtedness on the Plaza Garage
Parcel and the Egg Harbor Parcel (all of such liens are collectively called
the "Existing Senior Plaza Mortgages") are all senior to the liens of the
Plaza Mortgages and will be senior to the liens of mortgages associated with
the First Mortgage Notes. The principal amount currently secured by such
Existing Senior Plaza Mortgages as of December 31, 1995 was, in the aggregate,
approximately $3.0 million.
Plaza Associates has financed or leased and from time to time will finance
or lease its acquisition of furniture, fixtures and equipment. The lien in
favor of any such lender or lessor may be senior to the liens of
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mortgages associated with the First Mortgage Notes. See "Description of the
First Mortgage Notes--Security for the First Mortgage Notes."
TAJ MAHAL
Taj Associates owns and leases several parcels of land in Atlantic City, New
Jersey, each of which is used in connection with the operation of the Taj
Mahal and each of which is encumbered by the amended mortgage securing the Taj
Bonds, and the mortgage securing the $25 million Working Capital Facility.
Upon consummation of the Merger Transaction, these parcels of land will secure
the First Mortgage Notes and could secure any replacement of the Working
Capital Facility as well as certain expansion debt that Trump AC and its
subsidiaries are permitted to incur. All of the following properties (other
than certain property underlying the casino parcel and the facilities, which
are owned by Taj Associates and the office space leased in The Trump Tower)
comprise the Specified Parcels. See "Description of the Mortgage Notes--
Security for the Mortgage Notes."
The Casino Parcel. The land comprising the site upon which the Taj Mahal is
located consists of approximately 17 acres, which are bounded by The Boardwalk
to the south, Maryland Avenue to the east, Pennsylvania Avenue to the west and
which extends to the north towards Pacific Avenue for approximately three-
quarters of a city block on the western portion of the site and two-thirds of
a city block on the eastern portion of the site. Construction was
substantially completed and the Taj Mahal was opened to the public on April 2,
1990.
Taj Entertainment Complex. The Taj Entertainment Complex is situated on a
parcel of land leased from Realty Corp. and features a 20,000-square-foot
multi-purpose entertainment complex known as the Xanadu Theater with seating
capacity for approximately 1,200 people, which can be used as a theater,
concert hall, boxing arena or exhibition hall. In connection with the Merger
Transaction, Taj Associates will purchase the Taj Entertainment Complex.
Steel Pier. Taj Associates leases the Steel Pier from Realty Corp. In
connection with the Merger Transaction, Taj Associates will purchase the Steel
Pier. A condition imposed on Taj Associates' CAFRA Permit (which, in turn, is
a condition of Taj Associates' casino license) initially required that Taj
Associates begin construction of certain improvements on the Steel Pier by
October 1992, which improvements were to be completed within 18 months of
commencement. Taj Associates initially proposed a concept to improve the Steel
Pier, the estimated cost of which improvements was $30 million. Such concept
was approved by the New Jersey Department of Environmental Protection
("NJDEP"), the agency which administers CAFRA. In March 1993, Taj Associates
obtained a modification of its CAFRA permit providing for the extension of the
required commencement and completion dates of the improvements to the Steel
Pier for one year based upon an interim use of the Steel Pier for an amusement
park. Taj Associates received additional one-year extensions, most recently
through March 1997, of the required commencement and completion dates of the
improvements of the Steel Pier based upon the same interim use of the Steel
Pier for an amusement park pursuant to a sublease ("Pier Sublease") with an
amusement park operator ("Pier Subtenant"). The Pier Sublease provides for a
five-year lease term through December 31, 1999. However, Taj Associates may
terminate the Pier Sublease after December 31 of each year if written notice
of termination is given to the Pier Subtenant on or before September 1 of such
year.
Office and Warehouse Space. Taj Associates owns an office building located
on South Pennsylvania Avenue adjacent to the Taj Mahal. In addition, Taj
Associates, in April 1991, purchased for approximately $1.7 million certain
facilities (the "Pleasantville Warehouse") of TCA which are presently leased
to commercial tenants and used for office space and vehicle maintenance
facilities. Taj Associates currently leases from Realty Corp. a warehouse
complex (the "Realty Warehouse") of approximately 34,500 square feet. As a
part of the Specified Parcels purchase in connection with the Merger
Transaction, Taj Associates will purchase such warehouse.
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Taj Associates has entered into a lease with The Trump-Equitable Fifth
Avenue Co., a corporation wholly owned by Trump, for the lease of office space
in The Trump Tower in New York City, which Taj Associates uses as a marketing
office. The monthly payments under the lease had been $1,000, and the premises
were leased at such rent for four months in 1992, the full twelve months in
1993 and 1994 and eight months in 1995. On September 1, 1995, the lease was
renewed for a term of five years with an option for Taj Associates to cancel
the lease on September 1 of each year, upon six months' notice and payment of
six months' rent. Under the renewed lease, the monthly payments are $2,184.
Parking. The Taj Mahal provides parking for approximately 5,200 cars of
which 4,600 spaces are located in indoor parking garages and 600 spaces are
located on land leased to Taj Associates by Realty Corp. In addition, Taj
Associates entered into a lease agreement with TCA to share its employee
parking facilities. In connection with the Taj Mahal Expansion, Taj Associates
will expand its self-parking facilities by 2,000 spaces.
Themed Restaurants. Hard Rock Cafe International (N.J.), Inc. ("Hard Rock")
has entered into a fifteen-year lease (the "Hard Rock Cafe Lease") with Taj
Associates for the lease of space at the Taj Mahal for a Hard Rock Cafe. The
basic rent under the Hard Rock Cafe Lease is $750,000 per year, paid in equal
monthly installments, for the first 10 years of the lease term, and will be
$825,000 per year, paid in equal monthly installments, for the remaining 5
years of the lease term. In addition, Hard Rock will pay percentage rent in an
amount equal to 10% of Hard Rock's annual gross sales in excess of
$10,000,000. Hard Rock has the right to terminate the Hard Rock Cafe Lease on
the tenth anniversary thereof and also has the option to extend the term of
the lease for an additional five year period at an annual basic rental of
$907,500 during such renewal term.
Rainforest Cafe, Inc.-Atlantic City ("Rainforest") has entered into a ten-
year lease (the "Rainforest Cafe Lease") with Taj Associates for the lease of
space at the Taj Mahal for a Rainforest Cafe. The basic rent under the
Rainforest Cafe Lease is $2,500,000 per year, paid in equal monthly
installments. In addition, Rainforest will pay percentage rent in an amount
equal to the difference, if any, between (i) 10% of Rainforest's gross sales
made during each calendar month during the lease term and (ii) one-twelfth of
the annual basic rent. Rainforest has the option to extend the term of the
Rainforest Cafe Lease for two successive additional terms of five years each
at an annual basic rental of $2,750,000 during the first renewal term and an
annual basic rental of $3,025,000 during the second renewal term. The
Rainforest Cafe Lease will require Taj Associates to contribute $2,500,000
toward construction, payable after the project is completed and the restaurant
opens for business.
All Star Cafe, Inc. ("All Star") has entered into a twenty-year lease (the
"All Star Cafe Lease"), with Taj Associates for the lease of space at the Taj
Mahal for an All Star Cafe. The basic rent under the All Star Cafe Lease is
$1,000,000 per year, paid in equal monthly installments. In addition, All Star
will pay percentage rent in an amount equal to the difference, if any, between
(i) 8% of All Star's gross sales made during each calendar month during the
first lease year, 9% of All Star's gross sales made during each calendar month
during the second lease year and 10% of All Star's gross sales made during
each calendar month during the third through the twentieth lease years, and
(ii) one-twelfth of the annual basic rent.
The total minimum annual rental payments payable under these three leases
will be $4.25 million.
TRADEMARK/LICENSING
Pursuant to the License Agreement, Trump granted to THCR (on behalf of
itself and its subsidiaries, including Trump AC) the world-wide right and
license to use the Marks in connection with casino and gaming activities and
related services and products. The license is exclusive, subject to existing
licenses of the Marks to the Taj Mahal (prior to the Merger Transaction) and
Trump's Castle. The License Agreement does not restrict or restrain Trump from
the right to use or further license the Trump Names in connection with
services and products other than casino services and products.
The license is for a term of the later of (i) June 2015; (ii) such time as
Trump and his affiliates no longer hold a 15% or greater voting interest in
THCR; or (iii) such time as Trump ceases to be employed or retained
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pursuant to an employment, management, consulting or similar services
agreement with THCR. Upon expiration of the term of the license, Trump has
agreed to grant THCR a non-exclusive license for a reasonable period of
transition on terms to be mutually agreed upon between Trump and THCR. Trump's
obligations under the License Agreement are secured by the Trademark Security
Agreement, pursuant to which Trump granted THCR a first priority security
interest in the Marks for use in connection with casino services, as well as
related hotel, bar and restaurant services. See "Risk Factors--Limitations on
License of the Trump Name."
RESTRUCTURINGS
THE 1992 PLAZA RESTRUCTURING
In 1991, Trump Plaza experienced liquidity problems. Management believes
that those liquidity problems were attributable, in part, to an overall
deterioration in the Atlantic City gaming market, as indicated by reduced
rates of casino revenue growth for the industry for the two prior years,
aggravated by an economic recession in the Northeast. In addition, increased
casino gaming capacity in Atlantic City, due in part to the opening of the Taj
Mahal in April 1990, may also have contributed to Trump Plaza's liquidity
problems.
In order to alleviate its liquidity problem, pursuant to the 1992 Plaza
Restructuring, Plaza Associates and Plaza Funding restructured their
indebtedness through a prepackaged plan of reorganization under Chapter 11 of
the Bankruptcy Code.
The purpose of the 1992 Plaza Restructuring was to improve the amortization
schedule and extend the maturity of Plaza Associates' indebtedness by (i)
eliminating the sinking fund requirement on Plaza Funding's 12 7/8% Mortgage
Bonds, due 1998 (the "Original Plaza Bonds"), (ii) extending the maturity of
such indebtedness from 1998 to 2002, (iii) lowering the interest rate from 12
7/8% per annum to 12% per annum, (iv) reducing the aggregate principal amount
of the indebtedness under the Original Plaza Bonds and certain other
indebtedness from $250 million to $225 million and (v) eliminating certain
other indebtedness by reconstituting such debt in part as new bonds (the
"Successor Plaza Bonds") and in part as Stock Units (as defined). The 1992
Plaza Restructuring was necessitated by the inability to either generate cash
flow or obtain additional financing sufficient to make the scheduled sinking
fund payment on the Original Plaza Bonds. In connection with the 1992 Plaza
Restructuring, each holder of $1,000 principal amount of Original Plaza Bonds
and such other indebtedness received (i) $900 principal amount of Successor
Plaza Bonds, (ii) 12 Stock Units, each representing one share of Common Stock
and one share of Preferred Stock of Plaza Funding (the "Stock Units") and
(iii) cash payments of approximately $58.65, reflecting accrued interest.
On May 29, 1992, Plaza Funding, which theretofore had no interest in Plaza
Associates, received a 50% beneficial interest in TP/GP, Inc. ("Trump Plaza
GP"), and Plaza Funding and Trump Plaza GP were admitted as partners of Plaza
Associates. Plaza Funding also issued approximately three million Stock Units
to holders of the Original Plaza Bonds and certain other indebtedness.
Pursuant to the terms of the Plaza Associates partnership agreement, Plaza
Funding was issued a preferred partnership interest, which provided Plaza
Funding with partnership distributions designed to pay dividends on, and the
redemption price of, the Stock Units. Trump Plaza GP became the managing
general partner of Plaza Associates, and, through its Board of Directors,
managed the affairs of Plaza Associates. Trump Plaza GP was subsequently
merged with and into Plaza Funding, which became the managing general partner
of Plaza Associates.
The Successor Plaza Bonds and the Stock Units were redeemed in 1993 out of
the proceeds of a refinancing designed to enhance Trump Plaza's liquidity and
to position the Trump Plaza for a subsequent deleveraging transaction. The
1993 refinancing included (i) the sale by Plaza Funding of $330 million in
aggregate principal amount of Plaza Notes and (ii) the sale by Trump AC of $60
million aggregate principal amount of PIK Notes and PIK Note Warrants to
acquire an aggregate of $12 million in principal amount of additional PIK
Notes. Upon consummation of the refinancing, Plaza Funding held a 1% equity
interest in Plaza Associates and Plaza Holding held a 99% equity interest.
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THE 1991 TAJ RESTRUCTURING
During 1990 and 1991, Taj Associates experienced liquidity problems. Taj
Associates believes that these problems were attributable, in part, to an
overall deterioration in the Atlantic City gaming market, as indicated by
reduced rates of casino revenue growth for the industry for the two prior
years, aggravated by an economic recession in the Northeast and the Persian
Gulf War, as well as the risks inherent in the establishment of a new business
enterprise. Comparatively, excessive casino gaming capacity in Atlantic City
may also have contributed to Taj Associates' liquidity problems.
As a result of Taj Associates' liquidity problems, Taj Funding failed to
make its November 15, 1990 and May 15, 1991 interest payments on its Old Taj
Bonds, resulting in an event of default under the indenture with respect to
such Old Taj Bonds. During 1990 and 1991, Taj Associates also failed to pay
certain principal and interest installments on certain indebtedness due under
its loan with NatWest.
In order to alleviate its liquidity problems, during 1991, TTMC, Taj
Funding, Taj Associates and TTMI (together, the "Debtors") restructured their
indebtedness through the 1991 Taj Restructuring, which was a "prepackaged"
plan of reorganization under Chapter 11 of the Bankruptcy Code. At the time,
the Debtors believed that there was no alternative to their liquidity problems
other than filing petitions under the Bankruptcy Code. Taj Associates had been
unable to obtain additional financing, and Taj Funding was restricted from
amending the payment terms of the Old Taj Bonds outside of a case under the
Bankruptcy Code without the unanimous consent of the holders thereof. The
purpose of the 1991 Taj Restructuring was to improve the amortization schedule
and extend the maturity of Taj Associates' indebtedness by reducing and
deferring the Debtors' annual debt service requirements by (i) restructuring
Taj Associates' and affiliated entities' long-term indebtedness to NatWest,
First Fidelity and Bankers Trust and (ii) issuing the Taj Bonds with an
overall lower rate of interest as compared with Taj Funding's Old Taj Bonds.
Upon consummation of the 1991 Taj Restructuring on October 4, 1991, Taj
Associates issued to the holders of the Old Taj Bonds a general partnership
interest representing 49.995% of the equity of Taj Associates. Such holders in
turn contributed such partnership interest to Taj Holding. Taj Funding and Taj
Holding also issued the Units to the holders of the Old Taj Bonds. As part of
the 1991 Taj Restructuring, TM/GP, which has no other assets, received a
49.995% partnership interest in Taj Associates from Taj Holding. Trump also
contributed to Taj Holding a 50% ownership interest in TTMC, which owns a .01%
interest in Taj Associates, in exchange for the Taj Holding Class C Common
Stock, as described below.
At the time of these transfers, Taj Holding issued 1,350,000 shares of Taj
Holding Class A Common Stock and 729,458 shares of Taj Holding Class B Common
Stock to the holders of the Old Taj Bonds and 1,350,000 shares of Taj Holding
Class C Common Stock to Trump. In accordance with the terms of the Taj Bond
Indenture, a portion of the interest on the Taj Bonds may be paid in
additional Taj Bonds. At May 15, 1992, 1993, 1994 and 1995, 8,844 Units
comprised of $8,844,000 of Taj Bonds and 8,844 shares of Taj Holding Class B
Common Stock, 14,579 Units comprised of $14,579,000 of Taj Bonds and 14,579
shares of Taj Holding Class B Common Stock, 12,249 Units comprised of
$12,249,000 of Taj Bonds and 12,249 shares of Taj Holding Class B Common Stock
and 15,112 Units comprised of $15,112,000 of Taj Bonds and 15,112 shares of
Taj Holding Class B Common Stock, respectively, were issued in lieu of the
payment of a portion of the cash interest on the outstanding Taj Bonds.
CERTAIN INDEBTEDNESS
THCR
THCR Holdings and THCR Funding (the "THCR Obligors") are the issuers of $155
million principal amount of Senior Notes. The Senior Notes are the joint and
several obligations of the THCR Obligors. Interest on the Senior Notes is
payable semiannually in arrears. In connection with the Merger Transaction,
the THCR Obligors will solicit from the holders of the Senior Notes the waiver
of, and the consent to modify, certain provisions of the Senior Note
Indenture.
The Senior Notes mature on June 15, 2005. The Senior Notes are not
redeemable prior to June 15, 2000, except pursuant to a Required Regulatory
Redemption (as defined in the Senior Note Indenture). Thereafter, the
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Senior Notes may be redeemed at the option of the THCR Obligors, in whole or
in part, at any time on or after June 15, 2000 at the redemption prices set
forth in the Senior Note Indenture, together with accrued and unpaid interest
to the date of redemption.
The obligations of the THCR Obligors under the Senior Note Indenture are
secured by (1) an assignment and pledge to the trustee under the Senior Note
Indenture (the "Senior Note Trustee") of (a) 99% of the general partnership
interests in Plaza Associates, (b) 100% of the capital stock of Plaza Funding
(the holder of the remaining 1% general partnership interest in Plaza
Associates, which 1% is pledged exclusively for the benefit of the holders of
the Plaza Notes until the Plaza Note Purchase, at which time such interest
will be pledged for the exclusive benefit of the holders of the Senior Notes),
(c) 100% of the general partnership interests in Trump AC, (d) 100% of the
capital stock of Plaza Holding Inc., a direct wholly owned subsidiary of THCR
Holdings which owns a 1% general partnership interest in Trump AC, (e) 100% of
the capital stock of Trump Indiana, (f) 100% of the capital stock of THCR
Funding, (g) other equity interests issued from time to time by THCR Holdings
or any of its Subsidiaries (as defined in the Senior Note Indenture) and (h)
promissory notes issued by THCR Holdings or any of its Subsidiaries, excluding
Unrestricted Subsidiaries (as defined in the Senior Note Indenture), from time
to time directly owned or acquired by THCR Holdings; (2) certain remaining net
proceeds from the June 1995 Offerings; and (3) certain proceeds from time to
time received, receivable or otherwise distributed in respect of the assets
described in clauses (1) and (2) above (collectively, the "Senior Note
Collateral"). The security interests in the Senior Note Collateral are first
priority security interests and are exclusive except to the extent required by
the Plaza Note Indenture to equally and ratably secure the Plaza Notes (prior
to the retirement of the Plaza Notes) with respect to any of the direct or
indirect equity interests in Plaza Associates, Plaza Funding, Trump AC and
Plaza Holding Inc. (as described below). Any equity interests in Subsidiaries
of THCR Holdings which are acquired by THCR Holdings will be assigned and
pledged to the Senior Note Trustee and the security interests granted in such
equity interests will be exclusive, first priority security interests.
PLAZA ASSOCIATES
The Plaza Notes, $330 million of which are outstanding, were issued by Plaza
Funding, with Plaza Associates providing a full and unconditional guaranty
thereof. In connection with the Merger Transaction, the Plaza Notes will be
retired. The Plaza Notes mature in 2001 and bear interest semiannually in
arrears. The Plaza Notes are subject to redemption at any time on or after
June 15, 1998, at the option of Plaza Funding or Plaza Associates, in whole or
in part, at the redemption prices set forth in the Plaza Note Indenture. In
addition, upon the occurrence of a Plaza Note Change of Control (as defined in
the Plaza Note Indenture), each holder of Plaza Notes may require Plaza
Funding or Plaza Associates to repurchase such holder's Plaza Notes at 101% of
the principal amount thereof, together with accrued and unpaid interest to the
date of repurchase.
Until the Plaza Note Purchase, Plaza Funding and Plaza Associates'
obligations under the Plaza Note Indenture are secured principally by (i) the
Mortgage encumbering substantially all of Plaza Associates' assets (the "Plaza
Note Mortgage") (see "--Properties") and (ii) the pledge by Plaza Funding of
its 1% general partnership interest in Plaza Associates and, equally and
ratably with the Senior Notes to the extent required by the Plaza Note
Indenture, by a pledge of (x) 100% of the general partnership interest in
Trump AC, (y) Trump AC's 99% general partnership interest in Plaza Associates
and (z) 100% of the capital stock of Plaza Funding and Plaza Holding Inc. (the
holder of the remaining 1% of the equity interests in Trump AC (collectively,
the "Plaza Note Security"). Following the Plaza Note Purchase in connection
with the Merger Transaction, the Plaza Note Security will be released and (i)
subject to clause (ii), Plaza Associates' assets, together with Taj
Associates' assets will secure the First Mortgage Notes and (ii) the direct or
indirect Senior Notes will have an exclusive security interest in 100% of the
equity of all of THCR Holdings' Subsidiaries (as defined in the Senior Note
Indenture).
In addition to the foregoing, Plaza Associates' consolidated long-term
indebtedness includes approximately $3.0 million of outstanding mortgage notes
as of December 31, 1995, described under "--Properties."
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TAJ ASSOCIATES
Taj Bonds. In connection with the 1991 Taj Restructuring, Taj Funding and
Taj Holding issued Units, each of which was comprised of $1,000 principal
amount of Taj Bonds and one share of Taj Holding Class B Common Stock.
Pursuant to the Taj Bond Indenture, Taj Funding may issue up to $860 million
of Taj Bonds. On October 4, 1991, at the time the Units were issued, the
principal amount of Taj Bonds issued was $729,458,000.
As of December 31, 1995, the principal amount of Taj Bonds issued was
$780,242,000. The Taj Bonds have a stated maturity date of November 15, 1999.
The Taj Bonds bear interest at 11.35% per annum. Interest on the Taj Bonds is
due semi-annually on each November 15 and May 15. Interest on the Taj Bonds
must be paid in cash on each interest payment date at a rate of 9.375% per
annum, and, in addition, effective May 15, 1992, and annually thereafter, an
additional amount of interest in cash or additional Taj Bonds or a combination
thereof, is payable in an amount to increase the interest paid to 11.35% per
annum. The obligations of Taj Funding to pay the principal of, premium, if
any, and interest on the Taj Bonds are guaranteed by Taj Associates. The Taj
Bonds are secured by an assignment by Taj Funding to the trustee under the Taj
Bond Indenture (the "Taj Bond Trustee") of a promissory note, dated as of
October 4, 1991, issued by Taj Associates to Taj Funding (the "Taj Bond
Partnership Note") in a principal amount of $675 million, with payment terms
substantially similar to the payment terms of the Taj Bonds, which is in turn
secured by an amended mortgage, dated as of October 4, 1991, by Taj Associates
as mortgagor and Taj Funding as mortgagee, securing payment of the Taj Bond
Partnership Note, as amended to reflect the terms of the Taj Bonds (the
"Amended Taj Mortgage"), which has been assigned to the Taj Bond Trustee and
encumbers Taj Associates' interest in the Taj Mahal and substantially all of
the other assets of Taj Associates, excluding certain furniture, furnishings,
fixtures, machinery and equipment which is subject to the lien of the NatWest
Loan. In addition, the Taj Bond Partnership Note is secured by a second,
subordinated lien on all the real estate owned by Realty Corp. Moreover, Taj
Associates has acquired an option to purchase the real estate owned by Realty
Corp., and such option has been assigned to the Taj Bond Trustee as security
for the Taj Bonds.
NatWest Loan. On November 3, 1989, Taj Associates entered into the NatWest
Loan, which provided financing of $50 million for certain items of furniture,
fixtures and equipment installed in the Taj Mahal. On October 4, 1991, in
connection with the 1991 Taj Restructuring, the NatWest Loan was amended in
order to, among other things, modify the interest rate and other payment
terms.
As of December 31, 1995, the outstanding principal amount outstanding under
the NatWest Loan was $44,944,000, and the interest rate was 9.375% per annum.
Principal and interest on the NatWest Loan are payable as follows:
(i) on the last business day of each month until the earlier of the last
business day of October 1999 or the date the NatWest Loan, together with
all interest thereon, is paid in full, the sum of $416,667, to be applied
first in respect of accrued interest on the NatWest Loan and thereafter, to
the extent available, in reduction of the principal of the NatWest Loan;
provided, however, up to $525,000 of such payments received by NatWest in
any year shall be paid to either First Fidelity or Bankers Trust for
application by First Fidelity in payment of obligations of Taj Associates
to First Fidelity, and by Bankers Trust on behalf of Taj Associates on
behalf of TTMI in payment of interest on the TTMI Note. Such amounts paid
by NatWest shall not have been applied by NatWest in payment of the
principal of, interest on or any other sums due in respect of the NatWest
Loan or otherwise payable to NatWest;
(ii) on May 15 of each year (if any of the principal of or interest on
the NatWest Loan is then outstanding), commencing on May 15, 1992 to and
including May 15, 1999, an amount (the "EACF Payment") equal to 16.5% (or,
if the First Fidelity Loan shall have been paid in full on or prior to any
such May 15, 20%) of Excess Available Cash Flow (as defined in the Taj Bond
Indenture) for the preceding calendar year in excess of the Additional
Amount (as defined in the Taj Bond Indenture) payable on such
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May 15 (such remaining Excess Available Cash Flow, the "Remaining EACF
Amount"), if any, to be applied first in reduction of then accrued but
unpaid interest on and then to principal of the NatWest Loan; and
(iii) on November 15, 1999 the outstanding principal of and all accrued
but unpaid interest on the NatWest Loan.
The NatWest Loan is secured by a first priority lien on the furniture,
fixtures and equipment acquired with the proceeds of the NatWest Loan plus any
after-acquired furniture, fixtures and equipment that replaces such property,
or of the same type; provided, however, that the NatWest Loan may be
subordinated to a lien to secure purchase money financing of such after-
acquired property which does not exceed 50% of the purchase price of such
after-acquired property.
Upon the occurrence of an event of default under the NatWest Loan,
including, without limitation, the sale of any real estate by Realty Corp. for
less than the release price set forth in the First Fidelity Loan without the
prior written consent of NatWest, NatWest may accelerate any and all
indebtedness outstanding under the NatWest Loan.
Taj Associates will satisfy the NatWest Loan in connection with the Merger
Transaction.
First Fidelity Loan/Specified Parcels. On November 22, 1988, First Fidelity,
Realty Corp. and Trump, as guarantor, entered into the First Fidelity Loan in
the aggregate principal amount of $75,000,000. Pursuant to an amendment to the
First Fidelity Loan, effective as of October 4, 1991, the rate of interest
payable was modified, the dates of payment of principal and interest were
deferred and accrued interest in the amount of $1,793,750 was capitalized. As
of December 31, 1995, the principal amount outstanding on the First Fidelity
Loan was approximately $78 million. Unpaid principal and accrued interest on
the First Fidelity Loan is due and payable on November 15, 1999, unless
otherwise extended in connection with the extension of the maturity of the Taj
Bonds.
Taj Associates currently leases the Specified Parcels from Realty Corp.
pursuant to an Amended and Restated Lease Agreement, dated as of October 4,
1991 (the "Specified Parcels Lease"). Pursuant to the Specified Parcels Lease,
Taj Associates is obligated to pay Realty Corp. $3.3 million plus 3.5% of the
Remaining EACF Amount per year. Such annual payment, however, is reduced by
(i) all of the Base Fees (as defined therein) and the first $75,000 of the
Incentive Fees (as defined therein) payable to Trump pursuant to the Taj
Services Agreement which are assigned by Trump to First Fidelity (which
amounts were $575,000 in 1995) and (ii) the portion of monies payable by Taj
Associates to NatWest to be remitted to First Fidelity (which amounts were
$525,000 in 1995). The Specified Parcels Lease expires on December 31, 2023;
however, the lease may be terminated prior to such date following a
foreclosure or similar proceeding on the Specified Parcels by First Fidelity,
the holder of a first mortgage lien on the Specified Parcels which secures the
First Fidelity Loan (the "First Fidelity Mortgage") or any other mortgagee
thereof.
The Specified Parcels Lease provides that, upon payment of the First
Fidelity Loan, and upon discharge of the First Fidelity Mortgage, Taj
Associates may purchase the Specified Parcels for ten dollars. Payment of the
First Fidelity Loan is guaranteed by a guarantee (limited to any deficiency in
the amount owed under the First Fidelity Loan when due, up to a maximum of $30
million) by Taj Associates (the "Taj Associates-First Fidelity Guarantee"), a
personal guarantee by Trump (pursuant to which First Fidelity has agreed to
forbear from asserting any personal claim with respect thereto in excess of
approximately $19.2 million) (the "Trump-First Fidelity Guarantee") and
limited recourse guarantees by TTMC (the "TTMC-First Fidelity Guarantee") and
TTMI (as amended, the "TTMI-First Fidelity Guarantee" and, together with the
Trump-First Fidelity Guarantee and the TTMC-First Fidelity Guarantee, the
"Other First Fidelity Guarantees"). The Other First Fidelity Guarantees are
secured by pledges by Trump of 62.5% of his Taj Holding Class C Common Stock,
TTMC, Common Stock and TTMI, Common Stock and all of his shares of Realty
Corp., Common Stock, and pledges by TTMI and TTMC of 62.5% and 31.25%,
respectively, of their equity and financial interests as general partners
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in Taj Associates (all such interests pledged to First Fidelity as security
for the Other First Fidelity Guarantees are referred to herein as the "Other
First Fidelity Guarantee Collateral"). First Fidelity's recourse under the
TTMC-First Fidelity Guarantee and the TTMI-First Fidelity Guarantee is limited
to the collateral pledged by TTMC and TTMI, respectively.
Upon the satisfaction in full of the obligations due under the First
Fidelity Loan at a negotiated amount of $50 million and 500,000 shares of THCR
Common Stock, Taj Associates will purchase the Specified Parcels from Realty
Corp. In connection therewith, First Fidelity will (i) release and discharge
Realty Corp. from the First Fidelity Loan and release its lien on the
Specified Parcels, (ii) release Taj Associates from the Taj Associates-First
Fidelity Guarantee, (iii) release each of Trump, TTMC and TTMI from their
respective obligations under the Other First Fidelity Guarantees and (iv)
release its lien on the Other First Fidelity Guarantee Collateral. In
addition, the purchase of the Specified Parcels will eliminate Taj Associates'
current obligations under the Specified Parcels Lease and the termination
rights with respect to the Specified Parcels Lease, thereby facilitating the
Taj Mahal Expansion by securing the future use of the Specified Parcels by Taj
Associates. Holders of the First Mortgage Notes will have a first priority
security interest in the Specified Parcels.
TTMI Note. On April 30, 1990, Trump loaned $25 million to Taj Associates on
an unsecured basis, in exchange for a note payable to Trump (the "Old Taj
Associates Note"). The Old Taj Associates Note was pledged to certain lenders
of Trump, including Bankers Trust, as security for certain of Trump's personal
indebtedness. On October 4, 1991, in connection with the 1991 Taj
Restructuring and in order to facilitate the reorganization of Taj Associates
and certain of its affiliates, the Old Taj Associates Note was canceled and,
in lieu thereof, TTMI, a corporation wholly owned by Trump which was formed
for the purpose of holding a general partnership interest in Taj Associates,
executed the TTMI Note, a promissory note payable to Trump in the principal
amount of $27,188,000. At such time, in order to secure the Trump
Indebtedness, Trump pledged to certain lenders, including Bankers Trust, his
right, title and interest in the TTMI Note. As additional security for the
Trump Indebtedness, Trump pledged to Bankers Trust all of his shares of Taj
Holding Class C Common Stock, TTMC, Common Stock and TTMI, Common Stock, which
pledges are subordinate, in part, to the liens of First Fidelity in such
collateral. In addition, TTMI and TTMC have each guaranteed the repayment of
the Trump Indebtedness, which limited recourse guarantees are secured by
pledges by TTMI and TTMC to Bankers Trust and certain other lenders of 100%
and 50%, respectively, of their equity and financial interests as general
partners in Taj Associates, which pledges are subordinate, in part, to the
liens of First Fidelity in such collateral.
In connection with the Merger Transaction, Bankers Trust will receive $10
million from Taj Associates in respect of certain of the Trump Indebtedness.
Upon such payment, Bankers Trust will release (i) its lien on the TTMI Note,
(ii) its liens on the remaining collateral pledged by Trump to Bankers Trust
and (iii) TTMI and TTMC from their respective obligations as guarantors of
certain of Trump's personal indebtedness and the liens securing such
obligations. See "Underwriting." All other liens in respect of the foregoing
in favor of other lenders holding a portion of the Trump Indebtedness will be
released at such time.
Working Capital Facility. On November 14, 1991, Taj Associates entered into
the Working Capital Facility with Foothill Capital Corporation ("Foothill") in
the amount of $25 million, which is secured by a lien on Taj Associates'
assets senior to the lien of the Taj Bond Mortgage securing the Taj Bonds. On
September 1, 1994, Taj Associates and Foothill extended the maturity of the
Working Capital Facility to November 13, 1999, in consideration of
modifications of the terms thereof. Borrowings under the Working Capital
Facility bear interest at a rate equal to the prime lending rate plus 3%, with
a minimum of 0.666% per month. The agreement further provides for a .75%
annual fee and a .50% unused line fee. As of December 31, 1995, no amounts
were outstanding under the Working Capital Facility.
The occurrence of any of the following events constitutes an event of
default under the Working Capital Facility: (i) failure to pay principal,
interest, fees, charges or reimbursements due to Foothill, when due and
payable or when declared due and payable; (ii) failure or neglect to perform
certain duties and covenants under
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the agreement; (iii) any material portion of Taj Associates' assets is
attached, seized, subjected to a writ or distress warrant, levied upon, or
comes into the possession of any judicial officer or assignee and such
attachment or writ is not dismissed within 60 days; (iv) an insolvency
proceeding is commenced by Taj Associates; (v) an insolvency proceeding is
commenced against Taj Associates, and is not dismissed within 60 days; (vi)
Taj Associates is enjoined, restrained, or in any way prevented by certain
governmental agencies from continuing to conduct all or any material part of
its business affairs; (vii) Taj Associates fails to pay certain liens, levies
or assessments on the payment date thereof; (viii) certain judgments or claims
in excess of $500,000 become a lien or encumbrance upon a material portion of
Taj Associates' assets; (ix) Taj Associates defaults in payments owing to
NatWest or the Taj Bond Trustee; (x) Taj Associates makes unauthorized
payments on debt subordinated to the Working Capital Facility; (xi)
misrepresentations are made by Taj Associates to Foothill in any warranty,
representation, certificate or report; (xii) certain ERISA violations occur
which could have a material adverse effect on the financial condition of Taj
Associates; or (xiii) Taj Associates incurs or enters into a commitment to
incur any indebtedness which is secured by Taj Associates assets subject to
the Working Capital Facility.
Upon the occurrence of an event of default, Foothill may, at its election,
without notice of its election and without demand, do any one or more of the
following: (i) declare all obligations immediately due and payable; (ii) cease
advancing money or extending credit; (iii) terminate the Working Capital
Facility without affecting Foothill's rights and security interest in Taj
Associates' assets; (iv) settle disputes and claims directly with certain Taj
Associates' debtors; (v) make such payments and perform such acts as Foothill
deems necessary to protect its security interests; (vi) set off amounts owed
under the Working Capital Facility by other Taj Associates' accounts or
deposits held by Foothill; (vii) prepare for sale and sell, after giving
proper notice, Taj Associates' assets securing the Working Capital Facility in
a commercially reasonable manner; (viii) exercise its rights under certain
mortgage and assignment documents between Taj Associates and Foothill; (ix)
credit bid and purchase at any public sale subject to the provisions of the
Casino Control Act; or (x) any deficiency which exists after disposition of
Taj Associates' assets securing the Working Capital Facility will be paid
immediately by Taj Associates; any excess will be returned to Taj Associates,
without interest.
In connection with the Merger Transaction, Taj Associates will terminate the
Working Capital Facility and Trump AC anticipates replacing it with a new $25
million facility which would be available to Trump AC and its subsidiaries,
although there can be no assurance that a replacement facility could be
obtained on acceptable terms, if at all. See "Risk Factors--High Leverage and
Fixed Charges" and --"Risk in Refinancing and Repayment of Indebtedness; Need
for Additional Financing."
LEGAL PROCEEDINGS
PLAZA ASSOCIATES
General. Plaza Associates, its partners, certain members of its former
Executive Committee, and certain of its employees, have been involved in
various legal proceedings. In general, Plaza Associates has 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.
Trump Plaza East. From monies made available to it, the CRDA is required to
set aside $100 million for investment in hotel development projects in
Atlantic City undertaken by casino licensees which result in the construction
or rehabilitation of at least 200 hotel rooms by December 31, 1996. These
investments are to fund up to 35% of the cost to casino licensees of such
projects. See "Regulatory Matters--New Jersey Gaming Regulations--Investment
Alternative Tax Obligations." Plaza Associates made application for such
funding to the CRDA with respect to its proposed construction and
rehabilitation of the Trump Plaza East hotel rooms and related Boardwalk and
second level facilities, proposed demolition of an existing hotel expansion
structure attached thereto and development of an appurtenant public park,
roadway and parking area on the site thereof and proposed acquisition of the
entire project site.
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The CRDA, in rulings through January 10, 1995, approved the hotel
development project and, with respect to same, reserved to Plaza Associates
the right to take investment tax credits in an amount equal to 27% ($14.1
million) of $52.4 million of eligible estimated project development costs. In
October 1994, following a September 1994 CCC ruling authorizing same, Plaza
Associates advised the CRDA of its intention to, without affecting either the
project development costs or the tax credits, locate approximately 15,000
square feet of casino space on the second floor of Trump Plaza East and was
advised by the CRDA that its proposed use of such space would not affect the
approval of the hotel development project.
As part of its approval and on the basis of its powers of eminent domain,
the CRDA, during 1994, initiated five condemnation proceedings in the Superior
Court of New Jersey, Atlantic County, to acquire certain small parcels of land
within the project site. The defendants in three of those matters, with
respect to parcels which impact only the public park and parking areas, Casino
Reinvestment Development Authority v. Banin, et al., Docket No. ATL-L-2676-94,
Casino Reinvestment Development Authority v. Sabatini, et al., Docket No.
ATL-L-2976-94, and Casino Reinvestment Development Authority v. Coking, et
al., Docket No. ATL-L-2974-94, asserted numerous defenses to the condemnation
complaints and filed counterclaims against CRDA and third-party complaints
against Plaza Associates alleging, inter alia, an improper exercise of CRDA
power for private purposes and conspiracy between the CRDA and Plaza
Associates. After the filing of briefs and a hearing, a New Jersey Superior
Court judge issued an opinion that the Trump Plaza East acquisition and
renovation was not eligible for CRDA funding and, as a result, the CRDA could
not exercise its power of eminent domain because the project included casino
floor space. The court, by order dated April 18, 1995, dismissed the
condemnation complaints with prejudice. On April 17, 1995, the same judge
dismissed the counter claims and third-party complaints without prejudice.
Notices of appeal were filed with the New Jersey Superior Court, Appellate
Division, on April 21, 1995 by the CRDA and on April 24, 1995 by Plaza
Associates. On May 1, 1995, the Casino Association of New Jersey on behalf of
its members, 11 of the 12 Atlantic City casino hotels, filed a motion to
intervene or, in the alternative, for leave to appear as an amicus curiae.
Briefs have been filed by all parties and the matter has been scheduled for
oral argument during the week beginning April 15, 1996.
The completion of the planned renovations of Trump Plaza East is not
dependent upon the utilization of CRDA funding or upon the CRDA's acquisition
of the real estate subject to the condemnation proceedings. Plaza Associates
intends to pursue this appeal vigorously and believes it will be successful,
based in part on the March 29, 1995 opinion of the New Jersey Office of
Legislative Services ("OLS"), which serves as legal counsel to the New Jersey
State Legislature, that N.J.S.A. 5:12-173.8 empowered the CRDA to approve and
fund projects such as Trump Plaza East and, in part, on the fact that Section
173.8 expressly exempts hotel development projects from the statutory
limitation with respect to any CRDA investment or project which directly and
exclusively benefits the casino hotel or related facility. The OLS opinion
cannot be offered by Plaza Associates and the CRDA in support of their
position on the current appeal, however, because it was not considered by the
trial court when it rendered its opinion.
In a related matter, Vera Coking, et al. v. Atlantic City Planning Board and
Trump Plaza Associates, Docket No. ATL-L-339-94, the Atlantic City Planning
Board's approval of the Trump Plaza East renovation was challenged on various
grounds. In July 1994, a New Jersey Superior Court judge upheld the Atlantic
City Planning Board approvals with respect to the hotel renovation component
of Trump Plaza East and the new roadway but invalidated the approval of the
valet parking lot and the public park because Plaza Associates lacked site
control with respect to the small parcels of land CRDA sought to condemn.
Plaintiff appealed the court's decision upholding the approval of the hotel
renovation and new roadway and Plaza Associates cross-appealed the court's
decision invalidating the approval of the public park and valet parking area.
Plaza Associates withdrew its cross-appeal and plaintiff's appeal is pending
in the Superior Court of New Jersey, Appellate Division, Docket No. A-1511-94-
T1. Plaza Associates received land-use approval for and has constructed the
valet parking area after deletion of the small parcels.
In another related matter, Josef Banin and Vera Coking v. Atlantic City
Planning Board and Trump Plaza Associates, Docket No. L-2188-95, the land-use
approval for this area has been challenged on various grounds. Plaza
Associates filed its answer to the complaint denying the allegations of the
complaint. The land-use approval
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involves certain minor amendments to the previously granted site plan
approvals for the hotel renovation component of Trump Plaza East and the new
roadway. The amendments included certain design changes with respect to the
Trump Plaza East and certain design changes to the roadway. The amendments did
not require any variance relief and the amendments fully complied with the
Land Use Ordinance of the City of Atlantic City. The plaintiffs allege the
Atlantic City Planning Board acted in an arbitrary and capricious manner in
approving the amendments and further argue that the chairperson of the
Atlantic City Planning Board had a conflict of interest in hearing the matter
because of her status as an employee of the CRDA, the entity that had approved
certain funding for the project. On January 26, 1996, the New Jersey Superior
Court upheld the approval of the amendment by the Atlantic City Planning Board
and rejected the plaintiffs' claim with respect to the chairwoman's conflict
of interest. The plaintiffs have filed a motion to the New Jersey Superior
Court for reconsideration of its decision, which motion is currently pending.
The plaintiffs may thereafter appeal such decision.
Penthouse Litigation. On April 3, 1989, BPHC Acquisition, Inc. and BPHC
Parking Corp. (collectively, "BPHC") filed a third-party complaint (the
"Complaint") against Plaza Associates and Trump. The Complaint arose in
connection with the action entitled Boardwalk Properties, Inc. and Penthouse
International Ltd. v. BPHC Acquisition, Inc. and BPHC Parking Corp., which was
instituted on March 20, 1989 in the New Jersey Superior Court, Chancery
Division, Atlantic County.
The suit arose in connection with the conditional sale by Boardwalk
Properties, Inc. ("BPI") (or, with respect to certain of the property, BPI's
agreement to sell) to Trump of BPI's fee and leasehold interests in (i) Trump
Plaza East, (ii) an approximately 4.2-acre parcel of land located on Atlantic
Avenue, diagonally across from Trump Plaza's parking garage (the "Columbus
Plaza Site") which was then owned by an entity in which 50% of the interests
were each owned by BPHC and BPI and (iii) an additional 1,462 square foot
parcel of land located within the area of Trump Plaza East (the "Bongiovanni
Site"). Prior to BPI entering into its agreement with Trump, BPI had entered
into agreements with BPHC which provided, among other things, for the sale to
BPHC of Trump Plaza East, as well as BPI's interest in the Columbus Plaza
Site, assuming that certain contingencies were satisfied by a certain date.
Additionally, by agreement between BPHC and BPI, in the event BPHC failed to
close on Trump Plaza East, BPHC would convey to BPI the Bongiovanni Site. Upon
BPHC's failure to close on Trump Plaza East, BPI entered into its agreement
with Trump pursuant to which it sold Trump Plaza East to Trump and instituted
a lawsuit against BPHC for specific performance to compel BPHC to transfer to
BPI, BPHC's interest in the Columbus Plaza Site and Bongiovanni Site, as
provided for in the various agreements between BPHC and BPI and in the
agreement between BPI and Trump.
The Complaint alleged that Plaza Associates and/or Trump engaged in the
following activities: civil conspiracy, violations of the New Jersey Antitrust
Act, violations of the New Jersey RICO statute, malicious interference with
contractual relations, malicious interference with prospective economic
advantage, inducement to breach a fiduciary duty and malicious abuse of
process. The relief sought in the Complaint included, among other things,
compensatory damages, punitive damages, treble damages, injunctive relief, the
revocation of all of Plaza Associates' and Trump's casino licenses, the
revocation of Plaza Associates' current Certificate of Partnership, the
revocation of any other licenses or permits issued to Plaza Associates and
Trump by the State of New Jersey, and a declaration voiding the conveyance by
BPI to Trump of BPI's interest in Trump Plaza East, as well as BPI's and/or
Trump's rights to obtain title to the Columbus Plaza Site.
On October 13, 1993, a final judgment as to Trump and Plaza Associates was
filed. That judgment dismissed each and every claim against Trump and Plaza
Associates. The case remained open as to final resolution of all claims
between BPI and BPHC. Following the entry of a subsequent judgment as to those
claims, BPHC and BPI have settled all claims between them. BPHC is pursuing
its appeal as to Trump and Plaza Associates but only as to its money damages
claims of interference with contract and prospective economic advantage and of
inducing BPI to breach its fiduciary duty to BPHC. All other claims raised in
BPHC's complaint as to Trump and Plaza Associates and dismissed by the October
13, 1993 judgment have been finally determined in favor of Trump and Plaza
Associates. All briefs due in connection with BPHC's appeal are being filed.
No argument date has been set.
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Other Litigation. Various legal proceedings are now pending against Plaza
Associates. Trump AC 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 Trump AC believes that the
resolution of these claims, to the extent not covered by insurance, will not,
individually or in the aggregate, have a material adverse effect on the
financial condition or results of operations of Trump AC.
From time to time, Plaza Associates may be involved in routine
administrative proceedings involving allegations that it has violated certain
provisions of the Casino Control Act. However, management believes that the
final outcome of these proceedings will not, either individually or in the
aggregate, have a material adverse effect on Trump AC or on the ability of
Plaza Associates to otherwise retain or renew any casino or other licenses
required under the Casino Control Act for the operation of Trump Plaza.
TAJ ASSOCIATES
General. Taj Holding, TM/GP, TTMI and TTMC are not parties to any material
legal proceedings. Taj Associates, its partners, certain members of its former
Executive Committee, Taj Funding, TTMI and certain of their employees are or
were involved in various legal proceedings, some of which are described below.
Taj Associates and Taj 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.
Atlantic City Lease Agreement. On March 29, 1990, Taj Associates entered
into a lease agreement with the City of Atlantic City for a term of seven
years, subject to the express, prior approval of NJDEP to continue to use the
land beyond April 2, 1992, pursuant to which Taj Associates leased a parcel of
land containing approximately 1,300 spaces for employee intercept parking at a
cost of approximately $1 million. In addition, Taj Associates has expended in
excess of $1.4 million in improving the site. The permit under which the lease
is operated was issued by NJDEP on December 20, 1989 for five years and
contains several conditions, one of which required Taj Associates to find
another location "off-island" for employee parking by April 2, 1992. NJDEP
extended this condition for two successive one-year periods through April 2,
1994. On November 14, 1994, as a result of the non-renewal of the permit, Taj
Associates notified Atlantic City that the lease agreement had become
inoperative and was therefore being canceled as of December 20, 1994. Taj
Associates subsequently obtained "off-island" parking with TCA sufficient to
meet its employee parking requirements. Atlantic City has indicated in letters
to Taj Associates that it contests the cancellation of the lease agreement and
claims certain extensions to the permit apply, to which Taj Associates does
not agree. No legal proceedings have been commenced by Atlantic City to date.
There can be no assurances that Atlantic City will not institute or pursue
such an action.
Other Litigation. Various legal proceedings are now pending against Taj
Associates. Taj Associates considers all such proceedings to be ordinary
litigation incident to the character of its business. The majority of such
claims are covered by liability insurance (subject to applicable deductibles),
and Taj Associates believes that the resolution of these claims, to the extent
not covered by insurance, will not, individually or in the aggregate, have a
material adverse effect on the financial condition or results of operations of
Taj Associates.
Taj Associates is also a party to a routine administrative proceeding
involving allegations that it has violated certain provisions of the Casino
Control Act. Management believes that the final outcome of this proceeding
will not have a material adverse effect on Taj Associates or on its ability to
otherwise retain or renew any casino or other licenses required under the
Casino Control Act for the operation of the Taj Mahal. At this juncture, the
prospects of a favorable outcome in the action described above cannot be
assessed. Taj Associates intends to vigorously contest the allegations made
against it.
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COMPETITION
Competition in the Atlantic City casino hotel market is intense. Trump Plaza
and the Taj Mahal compete with each other and with the other casino hotels
located in Atlantic City, including the other casino hotel owned by Trump,
Trump's Castle. See "Risk Factors--Conflicts of Interest." Trump Plaza and the
Taj Mahal are located on The Boardwalk, approximately 1.2 miles apart from
each other. At present, there are 12 casino hotels located in Atlantic City,
including the Taj Mahal and Trump Plaza, all of which compete for patrons.
Trump Plaza and the Taj Mahal primarily compete with other Atlantic City
casinos by, among other things, providing superior products and facilities,
premier locations, name recognition and targeted marketing strategies. See
"Business--Atlantic City Marketing Strategy," "--Business Strategy," and "--
Facilities and Amenities." In addition, there are several sites on The
Boardwalk and in the Atlantic City Marina area on which casino hotels could be
built in the future and various applications for casino licenses have been
filed and announcements with respect thereto made from time to time (including
a proposal by Mirage Resorts, Inc.), although management is not aware of any
current construction on such sites by third parties. No new casino hotels have
commenced operations in Atlantic City since 1990, although several existing
casino hotels have recently expanded or are in the process of expanding their
operations. While management believes that the addition of hotel capacity
would be beneficial to the Atlantic City market generally, there can be no
assurance that such expansion would not be materially disadvantageous to
either Trump Plaza or the Taj Mahal. There also can be no assurance that the
Atlantic City development projects which are planned or underway will be
completed.
Trump Plaza and the Taj Mahal also compete, or will compete, with facilities
in the northeastern and mid- Atlantic regions of the United States at which
casino gaming or other forms of wagering are currently, or in the future may
be, authorized. To a lesser extent, Trump Plaza and the Taj Mahal face
competition from gaming facilities nationwide, including land-based, cruise
line, riverboat and dockside casinos located in Colorado, Illinois, Indiana,
Iowa, Louisiana, Mississippi, Missouri, Nevada, South Dakota, Ontario
(Windsor), the Bahamas, Puerto Rico and other locations inside and outside the
United States, and from other forms of legalized gaming in New Jersey and in
its surrounding states such as lotteries, horse racing (including off-track
betting), jai alai, bingo and dog racing, and from illegal wagering of various
types. New or expanded operations by other persons can be expected to increase
competition and could result in the saturation of certain gaming markets. In
September 1995, New York introduced a keno lottery game, which is played on
video terminals that have been set up in approximately 1,800 bars, restaurants
and bowling alleys across the state. In addition to competing with other
casino hotels in Atlantic City and elsewhere, by virtue of their proximity to
each other and the common aspects of certain of their respective marketing
efforts, including the common use of the "Trump" name, Trump Plaza and the Taj
Mahal compete directly with each other for gaming patrons. Although management
does not intend to operate Trump Plaza and the Taj Mahal to the competitive
detriment of each other, the effect may be that Trump Plaza or the Taj Mahal
will operate to the competitive detriment of the other.
In addition, Trump Plaza and the Taj Mahal face competition from casino
facilities in a number of states operated by federally recognized Native
American tribes. Pursuant to IGRA, any state which permits casino-style gaming
(even if only for limited charity purposes) is required to negotiate gaming
contracts with federally recognized Native American tribes. Under IGRA, Native
American tribes enjoy comparative freedom from regulation and taxation of
gaming operations, which provides them with an advantage over their
competitors, including Trump Plaza and the Taj Mahal. The United States
Supreme Court has struck down a provision of IGRA allowing Native American
tribes to sue states in federal court for failing to negotiate gaming compacts
in good faith. Trump AC cannot predict the impact of this decision on the
ability of Native American tribes to negotiate compacts with the states.
In 1991, the Mashantucket Pequot Nation opened Foxwoods Casino Resort
("Foxwoods"), a casino facility in Ledyard, Connecticut, located in the far
eastern portion of such state, an approximately three-hour drive from New York
City and an approximately two and one-half hour drive from Boston, which
currently offers 24-hour gaming and contains over 4,000 slot machines. The
Mashantucket Pequot Nation has announced various expansion plans, including
its intention to build another casino in Ledyard together with hotels,
restaurants and a theme park. In addition, the Mohegan Nation has commenced
construction of a casino resort to be located ten miles from Foxwoods. The
Mohegan Nation resort which will be built and managed by a joint venture
managed by Sun International Hotels Ltd., is scheduled to have approximately
75% of the gaming capacity of Foxwoods
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and is scheduled to open in October 1996. In addition, the Eastern Pequots are
seeking formal recognition as a Native American tribe for the purpose of
opening a casino. There can be no assurance that any continued expansion of
gaming operations by the Mashantucket Pequot Nation or that any commencement of
gaming operations by the Mohegan Nation or the Eastern Pequots would not have a
materially adverse impact on Trump Plaza's or the Taj Mahal's operations.
A group in New Jersey calling itself the "Ramapough Indians" has applied to
the U.S. Department of the Interior to be federally recognized as a Native
American tribe, which recognition would permit it to require the State of New
Jersey to negotiate a gaming compact under IGRA. In 1993, the Bureau of Indian
Affairs denied the Ramapough Indians federal recognition. The Ramapough
Indians' appeal of this decision has been denied. Similarly, a group in
Cumberland County, New Jersey calling itself the "Nanticoke Lenni Lenape" tribe
has filed a notice of intent with the Bureau of Indian Affairs seeking formal
federal recognition as a Native American tribe. Also, it has been reported that
a Sussex County, New Jersey businessman has offered to donate land he owns
there to the Oklahoma-based Lenape/Delaware Indian Nation which originated in
New Jersey and already has federal recognition but does not have a reservation
in New Jersey. The Lenape/Delaware Indian Nation has signed an agreement with
the town of Wildwood, New Jersey to open a casino; however, the plan requires
federal and state approval in order to proceed. In July 1993, the Oneida Nation
opened a casino featuring 24-hour table gaming and electronic gaming systems,
but without slot machines, near Syracuse, New York, and has announced an
intention to open expanded gaming facilities. Representatives of the St. Regis
Mohawk Nation signed a gaming compact with New York State officials for the
opening of a casino, without slot machines, in the northern portion of the
state close to the Canadian border. The St. Regis Mohawks have also announced
their intent to open a casino at the Monticello Race Track in the Catskill
Mountains region of New York; however, any Indian gaming operation in the
Catskills is subject to the approval of the Governor of New York. The
Narragansett Nation of Rhode Island, which has federal recognition, is seeking
to open a casino in Rhode Island. The Gay Head Wampanoag tribe is seeking to
open a casino in New Bedford, Massachusetts. Other Native American nations are
seeking federal recognition, land and negotiation of gaming compacts in New
York, Pennsylvania, Connecticut and other states near Atlantic City.
Legislation permitting other forms of casino gaming has been proposed, from
time to time, in various states, including those bordering New Jersey. Plans to
begin operating slot machines at race tracks in the State of Delaware are
underway, including the slot machines currently operating at the Dover Downs
and Delaware Park race tracks. Six states have presently legalized riverboat
gambling while others are considering its approval, including New York and
Pennsylvania, and New York City is considering a plan under which it would be
the embarking point for gambling cruises into international waters three miles
offshore. Several states are considering or have approved large scale land-
based casinos. Additionally, since 1993, the gaming space in Las Vegas has
expanded significantly, with additional capacity planned and currently under
construction. The operations of Trump Plaza and the Taj Mahal could be
adversely affected by such competition, particularly if casino gaming were
permitted in jurisdictions near or elsewhere in New Jersey or in other states
in the Northeast. In December 1993, the Rhode Island Lottery Commission
approved the addition of slot machine games on video terminals at Lincoln
Greyhound Park and Newport Jai Alai, where poker and blackjack have been
offered for over two years. Currently, casino gaming, other than Native
American gaming, is not allowed in other areas of New Jersey or in Connecticut,
New York or Pennsylvania. On November 17, 1995, a proposal to allow casino
gaming in Bridgeport, Connecticut, was voted down by that state's Senate. A New
York State Assembly plan has the potential of legalizing non-Native American
gaming in portions of upstate New York. Essential to this plan is a proposed
New York State constitutional amendment that would legalize gambling. To amend
the New York Constitution, the next elected New York State Legislature must
repass a proposal legalizing gaming and a statewide referendum, held no sooner
than November 1997, must approve the constitutional amendment. To the extent
that legalized gaming becomes more prevalent in New Jersey or other
jurisdictions near Atlantic City, competition would intensify. In particular, a
proposal has been introduced to legalize gaming in other locations, including
Philadelphia, Pennsylvania. In addition, legislation has from time to time been
introduced in the New Jersey State Legislature relating to types of statewide
legalized gaming, such as video games with small wagers. To date, no such
legislation, which may require a state constitutional amendment, has been
enacted. Management is unable to predict whether any such legislation, in New
Jersey or elsewhere, will be enacted or whether, if passed, it would have a
material adverse impact on Trump AC.
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REGULATORY MATTERS
The following is only a summary of the applicable provisions of the Casino
Control Act of the State of New Jersey and certain other laws and regulations.
It does not purport to be a full description thereof and is qualified in its
entirety by reference to the New Jersey Casino Control Act and such other laws
and regulations. Unless otherwise indicated, all references to "Trump Plaza"
include (a) Trump Plaza's main tower, including Trump Plaza East (which
operates pursuant to a casino license held by Plaza Associates) and (b) Trump
World's Fair (which will operate pursuant to a separate casino license that is
expected to be issued to Plaza Associates).
Management believes that it and its respective affiliates are in material
compliance with all applicable laws, rules and regulations discussed below.
NEW JERSEY GAMING REGULATIONS
In general, the Casino Control Act and its implementing regulations contain
detailed provisions concerning, among other things: the granting and renewal
of casino licenses; the suitability of the approved hotel facility, and the
amount of authorized casino space and gaming units permitted therein; the
qualification of natural persons and entities related to the casino licensee;
the licensing of certain employees and vendors of casino licensees; rules of
the games; the selling and redeeming of gaming chips; the granting and
duration of credit and the enforceability of gaming debts; management control
procedures, accounting and cash control methods and reports to gaming
agencies; security standards; the manufacture and distribution of gaming
equipment; the simulcasting of horse races by casino licensees; equal
employment opportunities for employees of casino operators, contractors of
casino facilities and others; and advertising, entertainment and alcoholic
beverages.
Casino Control Commission. The ownership and operation of casino/hotel
facilities in Atlantic City are the subject of strict state regulation under
the Casino Control Act. The CCC is empowered to regulate a wide spectrum of
gaming and non-gaming related activities and to approve the form of ownership
and financial structure of not only a casino licensee, but also its entity
qualifiers and intermediary and holding companies and any other related entity
required to be qualified ("CCC Regulations").
Operating Licenses. Taj Associates was issued its initial casino license in
April 1990. On June 22, 1995, the CCC renewed Taj Associates' casino license
through March 31, 1999. Plaza Associates was issued its initial casino license
on May 14, 1984. On June 22, 1995, the CCC renewed Plaza Associates' casino
license through June 30, 1999. Management believes that a casino license will
ultimately be issued for Trump World's Fair, although there can be no
assurance that the CCC will issue this casino license or what conditions may
be imposed, if any, with respect thereto.
Casino Licensee. No casino hotel facility may operate unless the appropriate
license and approvals are obtained from the CCC, which has broad discretion
with regard to the issuance, renewal, revocation and suspension of such
licenses and approvals, which are non-transferable. The qualification criteria
with respect to the holder of a casino license include its financial
stability, integrity and responsibility; the integrity and adequacy of its
financial resources which bear any relation to the casino project; its good
character, honesty and integrity; and the sufficiency of its business ability
and casino experience to establish the likelihood of a successful, efficient
casino operation. The casino licenses currently held by Taj Associates and
Plaza Associates are renewable for periods of up to four years. The CCC may
reopen licensing hearings at any time, and must reopen a licensing hearing at
the request of the Division of Gaming Enforcement (the "Division").
Each casino license entitles the holder to operate one casino, which must
consist of a "single room." Further, no person may be the holder of a casino
license if the holding of such license will result in undue economic
concentration in Atlantic City casino operations by that person. On May 17,
1995, the CCC adopted a regulation defining the criteria for determining undue
economic concentration which codifies the content of existing CCC precedent
with respect to the subject. In April 1995, Plaza Associates petitioned the
CCC for certain approvals. In its May 18, 1995 declaratory rulings with
respect to such petition, the CCC, among other things, (i) determined that
Trump World's Fair is an approved hotel permitted to contain a maximum of
60,000 square feet of casino space, that the 40,000 square feet of casino
space therein is a "single room" and that its operation by Plaza Associates
would not result in undue economic concentration in Atlantic City casino
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operations; (ii) approved the operation of Trump World's Fair by Plaza
Associates under a separate casino license subject to an application for and
the issuance of such license and approved the proposed easement agreements
with respect to the proposed enclosed Atlantic City Convention Center walkway;
(iii) approved in concept the proposed physical connection and integrated
operation by Plaza Associates of Trump Plaza's main tower, Trump Plaza East
and Trump World's Fair; and (iv) determined that the approved hotel comprised
of the main tower and Trump Plaza East is permitted to contain a maximum of
100,000 square feet of casino space. In addition, on December 13, 1995, Plaza
Associates received CCC authorization for 49,340 square feet of casino space
at Trump World's Fair. A separate Plaza Associates casino license with respect
to Trump World's Fair would have a renewable term of one year for each of its
first three years and thereafter be renewable for periods of up to four years.
Plaza Associates has made application for such separate casino license with
respect to Trump World's Fair but there can be no assurance that the CCC will
issue this casino license or what conditions may be imposed, if any, with
respect thereto. In addition, Taj Associates will be required to obtain a
prior determination from the CCC that the operation of the additional casino
space created by the Taj Mahal Expansion will not constitute undue economic
concentration of Atlantic City casino operations, and that such casino space,
together with the Taj Mahal's existing casino space, is a "single room" under
the Casino Control Act. See "Risk Factors--Atlantic City Properties
Expansion."
To be considered financially stable, a licensee must demonstrate the
following ability: to pay winning wagers when due; to achieve an annual gross
operating profit; to pay all local, state and federal taxes and all taxes and
fees imposed by the Casino Control Act or the CCC when due; to make necessary
capital and maintenance expenditures to insure that it has a superior first-
class facility of exceptional quality; and to pay, exchange, refinance or
extend debts which will mature or become due and payable during the license
term or otherwise manage such debts or any defaults of such debts. The CCC is
required to review and approve a transaction such as the Merger Transaction
with regard to the financial stability standards.
In the event a licensee fails to demonstrate financial stability, the CCC
may take such action as it deems necessary to fulfill the purposes of the
Casino Control Act and protect the public interest, including: issuing
conditional licenses, approvals or determinations; establishing an appropriate
cure period; imposing reporting requirements; placing restrictions on the
transfer of cash or the assumption of liabilities; requiring reasonable
reserves or trust accounts; denying licensure; or appointing a conservator.
See "--Conservatorship."
Management believes that, upon consummation of the Merger Transaction, Taj
Associates and Plaza Associates will each have, and will each continue to
have, adequate financial resources to meet the financial stability
requirements of the CCC for the foreseeable future. Taj Associates and Plaza
Associates plan to petition the CCC to approve the transactions contemplated
by the Merger Transaction. It is a condition to the consummation of the Merger
that the Merger Transaction is approved by the CCC.
Pursuant to the Casino Control Act, CCC Regulations and precedent, no entity
may hold a casino license unless each officer, director, principal employee,
person who directly or indirectly holds any beneficial interest or ownership
in the licensee, each person who in the opinion of the CCC has the ability to
control the licensee or elect a majority of the board of directors of the
licensee (other than a banking or other licensed lending institution which
makes a loan or holds a mortgage or other lien acquired in the ordinary course
of business) and any lender, underwriter, agent or employee of the licensee or
other person whom the CCC may consider appropriate, obtains and maintains
qualification approval from the CCC. Qualification approval means that such
person must, but for residence, individually meet the qualification
requirements as a casino key employee. Pursuant to a condition of its casino
license, payments by Plaza Associates to or for the benefit of any related
entity or partner, with certain exceptions, are subject to prior CCC approval;
and, if the Working Capital Facility is not replaced and Plaza Associates' or
Taj Associates' cash position falls below $5.0 million for three consecutive
business days, Plaza Associates or Taj Associates, as the case may be, must
present to the CCC and the Division evidence as to why it should not obtain a
working capital facility in an appropriate amount.
Control Persons. An entity qualifier or intermediary or holding company,
such as Taj Holding, TM/GP, Trump AC, Plaza Holding Inc., Plaza Funding, THCR
Holdings, THCR Funding or THCR is required to register with the CCC and meet
the same basic standards for approval as a casino licensee; provided, however,
that the CCC, with the concurrence of the Director of the Division, may waive
compliance by a publicly-traded corporate
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holding company with the requirement that an officer, director, lender,
underwriter, agent or employee thereof, or person directly or indirectly
holding a beneficial interest or ownership of the securities thereof,
individually qualify for approval under casino key employee standards so long
as the CCC and the Director of the Division are, and remain, satisfied that
such officer, director, lender, underwriter, agent or employee is not
significantly involved in the activities of the casino licensee, or that such
security holder does not have the ability to control the publicly-traded
corporate holding company or elect one or more of its directors. Persons
holding five percent or more of the equity securities of such holding company
are presumed to have the ability to control the company or elect one or more
of its directors and will, unless this presumption is rebutted, be required to
individually qualify. Equity securities are defined as any voting stock or any
security similar to or convertible into or carrying a right to acquire any
security having a direct or indirect participation in the profits of the
issuer.
Financial Sources. The CCC may require all financial backers, investors,
mortgagees, bond holders and holders of notes or other evidence of
indebtedness, either in effect or proposed, which bear any relation to any
casino project, including holders of publicly-traded securities of an entity
which holds a casino license or is an entity qualifier, subsidiary or holding
company of a casino licensee (a "Regulated Company"), to qualify as financial
sources. In the past, the CCC has waived the qualification requirement for
holders of less than 15% of a series of publicly-traded mortgage bonds so long
as the bonds remained widely distributed and freely traded in the public
market and the holder had no ability to control the casino licensee. Taj
Associates and Plaza Associates will each petition the CCC for a determination
that the First Mortgage Notes will be widely distributed and freely traded in
the public market. There can be no assurance, however, that the CCC will grant
such a petition, will determine that the holders of First Mortgage Notes have
no ability to control either Taj Associates or Plaza Associates as a casino
licensee or will continue the practice of granting such waivers and, in any
event, the CCC may require holders of less than 15% of a series of debt to
qualify as financial sources even if not active in the management of the
issuer or casino licensee.
Institutional Investors. An institutional investor ("Institutional
Investor") is defined by the Casino Control Act as any retirement fund
administered by a public agency for the exclusive benefit of Federal, state or
local public employees; any investment company registered under the Investment
Company Act of 1940, as amended; any collective investment trust organized by
banks under Part Nine of the Rules of the Comptroller of the Currency; any
closed end investment trust; any chartered or licensed life insurance company
or property and casualty insurance company; any banking and other chartered or
licensed lending institution; any investment advisor registered under the
Investment Advisers Act of 1940, as amended; and such other persons as the CCC
may determine for reasons consistent with the policies of the Casino Control
Act.
An Institutional Investor may be granted a waiver by the CCC from financial
source or other qualification requirements applicable to a holder of publicly-
traded securities, in the absence of a prima facie showing by the Division
that there is any cause to believe that the holder may be found unqualified,
on the basis of CCC findings that: (i) its holdings were purchased for
investment purposes only and, upon request by the CCC, it files a certified
statement to the effect that it has no intention of influencing or affecting
the affairs of the issuer, the casino licensee or its holding or intermediary
companies; provided, however, that the Institutional Investor will be
permitted to vote on matters put to the vote of the outstanding security
holders; and (ii) if (x) the securities are debt securities of a casino
licensee's holding or intermediary companies or another subsidiary company of
the casino licensee's holding or intermediary companies which is related in
any way to the financing of the casino licensee and represent either (A) 20%
or less of the total outstanding debt of the company or (B) 50% or less of any
issue of outstanding debt of the company, (y) the securities are equity
securities and represent less than 10% of the equity securities of a casino
licensee's holding or intermediary companies or (z) the securities so held
exceed such percentages, upon a showing of good cause. There can be no
assurance, however, that the CCC will make such findings or grant such waiver
and, in any event, an Institutional Investor may be required to produce for
the CCC or the Division upon request, any document or information which bears
any relation to such debt or equity securities.
Generally, the CCC requires each institutional holder seeking waiver of
qualification to execute a certification to the effect that (i) the holder has
reviewed the definition of Institutional Investor under the Casino
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Control Act and believes that it meets the definition of Institutional
Investor; (ii) the holder purchased the securities for investment purposes
only and holds them in the ordinary course of business; (iii) the holder has
no involvement in the business activities of and no intention of influencing
or affecting the affairs of the issuer, the casino licensee or any affiliate;
and (iv) if the holder subsequently determines to influence or affect the
affairs of the issuer, the casino licensee or any affiliate, it shall provide
not less than 30 days' prior notice of such intent and shall file with the CCC
an application for qualification before taking any such action. If an
Institutional Investor changes its investment intent, or if the CCC finds
reasonable cause to believe that it may be found unqualified, the
Institutional Investor may take no action with respect to the security
holdings, other than to divest itself of such holdings, until it has applied
for interim casino authorization and has executed a trust agreement pursuant
to such an application. See "--New Jersey Gaming Regulations--Interim Casino
Authorization."
Declaratory Rulings. Taj Associates and Plaza Associates will petition the
CCC for declaratory rulings approving the Merger Transaction and determining,
among other things, that after consummation thereof, Taj Associates and Plaza
Associates will continue to satisfy the CCC's financial stability
requirements; Trump will continue to demonstrate his financial stability; the
Regulated Companies and natural person qualifiers are qualified; the
certificates of incorporation and partnership agreements of the Regulated
Companies contain required provisions with respect to the transfer of
securities and qualification of security holders under the Casino Control Act;
the First Mortgage Notes are publicly-traded securities and CCC approval of
the issuance or subsequent transfer of the securities is not required; the
individual holders of the First Mortgage Notes need not be qualified as
financial sources and security holders, and their qualification may be waived
by the CCC; and qualification of the holders of THCR Common Stock be waived by
the CCC.
Ownership and Transfer of Securities. The Casino Control Act imposes certain
restrictions upon the issuance, ownership and transfer of securities of a
Regulated Company and defines the term "security" to include instruments which
evidence a direct or indirect beneficial ownership or creditor interest in a
Regulated Company including, but not limited to, mortgages, debentures,
security agreements, notes and warrants. Currently, each of TM/GP, TTMC, Taj
Holding, Taj Funding, Taj Associates, TTMI, certain other entities that own
the Taj Holding Class A Common Stock or the Taj Holding Class B Common Stock,
Plaza Funding, Trump AC, Plaza Holding Inc., Plaza Associates, THCR Holdings,
THCR Funding and THCR are each deemed to be a Regulated Company, and
instruments evidencing a beneficial ownership or creditor interest therein,
including a partnership interest, are deemed to be the securities of a
Regulated Company.
If the CCC finds that a holder of such securities is not qualified under the
Casino Control Act, it has the right to take any remedial action it may deem
appropriate, including the right to force divestiture by such disqualified
holder of such securities. In the event that certain disqualified holders fail
to divest themselves of such securities, the CCC has the power to revoke or
suspend the casino license affiliated with the Regulated Company which issued
the securities. If a holder is found unqualified, it is unlawful for the
holder (i) to exercise, directly or through any trustee or nominee, any right
conferred by such securities or (ii) to receive any dividends or interest upon
such securities or any remuneration, in any form, from its affiliated casino
licensee for services rendered or otherwise.
With respect to non-publicly-traded securities, the Casino Control Act and
CCC Regulations require that the corporate charter or partnership agreement of
a Regulated Company establish a right in the CCC of prior approval with regard
to transfers of securities, shares and other interests and an absolute right
in the Regulated Company to repurchase at the market price or the purchase
price, whichever is the lesser, any such security, share or other interest in
the event that the CCC disapproves a transfer. With respect to publicly-traded
securities, such corporate charter or partnership agreement is required to
establish that any such securities of the entity are held subject to the
condition that, if a holder thereof is found to be disqualified by the CCC,
such holder shall dispose of such securities. See "Description of the First
Mortgage Notes--Gaming Laws."
Interim Casino Authorization. Interim casino authorization is a process
which permits a person who enters into a contract to obtain property relating
to a casino operation or who obtains publicly-traded securities relating
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to a casino licensee to close on the contract or own the securities until
plenary licensure or qualification. During the period of interim casino
authorization, the property relating to the casino operation or the securities
is held in trust.
Whenever any person enters into a contract to transfer any property which
relates to an ongoing casino operation, including a security of the casino
licensee or a holding or intermediary company or entity qualifier, under
circumstances which would require that the transferee obtain licensure or be
qualified under the Casino Control Act, and that person is not already
licensed or qualified, the transferee is required to apply for interim casino
authorization. Furthermore, except as set forth below with respect to
publicly-traded securities, the closing or settlement date in the contract at
issue may not be earlier than the 121st day after the submission of a complete
application for licensure or qualification together with a fully executed
trust agreement in a form approved by the CCC. If, after the report of the
Division and a hearing by the CCC, the CCC grants interim authorization, the
property will be subject to a trust. If the CCC denies interim authorization,
the contract may not close or settle until the CCC makes a determination on
the qualifications of the applicant. If the CCC denies qualification, the
contract will be terminated for all purposes and there will be no liability on
the part of the transferor.
If, as the result of a transfer of publicly-traded securities of a licensee,
a holding or intermediary company or entity qualifier of a licensee or a
financing entity of a licensee, any person is required to qualify under the
Casino Control Act, that person is required to file an application for
licensure or qualification within 30 days after the CCC determines that
qualification is required or declines to waive qualification. The application
must include a fully executed trust agreement in a form approved by the CCC
or, in the alternative, within 120 days after the CCC determines that
qualification is required, the person whose qualification is required must
divest such securities as the CCC may require in order to remove the need to
qualify.
The CCC may grant interim casino authorization where it finds by clear and
convincing evidence that: (i) statements of compliance have been issued
pursuant to the Casino Control Act; (ii) the casino hotel is an approved hotel
in accordance with the Casino Control Act; (iii) the trustee satisfies
qualification criteria applicable to key casino employees, except for
residency; and (iv) interim operation will best serve the interests of the
public.
When the CCC finds the applicant qualified, the trust will terminate. If the
CCC denies qualification to a person who has received interim casino
authorization, the trustee is required to endeavor, and is authorized, to
sell, assign, convey or otherwise dispose of the property subject to the trust
to such persons who are licensed or qualified or shall themselves obtain
interim casino authorization.
Where a holder of publicly-traded securities is required, in applying for
qualification as a financial source or qualifier, to transfer such securities
to a trust in application for interim casino authorization and the CCC
thereafter orders that the trust become operative: (i) during the time the
trust is operative, the holder may not participate in the earnings of the
casino hotel or receive any return on its investment or debt security holdings
and (ii) after disposition, if any, of the securities by the trustee, proceeds
distributed to the unqualified holder may not exceed the lower of their actual
cost to the unqualified holder or their value calculated as if the investment
had been made on the date the trust became operative.
Approved Hotel Facilities. The CCC may permit an existing licensee, such as
Taj Associates and Plaza Associates, to increase its casino space if the
licensee agrees to add a prescribed number of qualifying sleeping units within
two years after the commencement of gaming operations in the additional casino
space. However, if the casino licensee does not fulfill such agreement due to
conditions within its control, the licensee will be required to close the
additional casino space, or any portion thereof that the CCC determines should
be closed. See "Risk Factors--Atlantic City Properties Expansion."
Persons who are parties to the lease for an approved hotel building or who
have an agreement to lease a building which may in the judgment of the CCC
become an approved hotel building are required to hold a casino license unless
the CCC, with the concurrence of the Attorney General of the State of New
Jersey, determines
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that such persons do not have the ability to exercise significant control over
the building or the operation of the casino therein.
Unless otherwise determined by the CCC, agreements to lease an approved
hotel building or the land under the building must be for a durational term
exceeding 30 years, must concern 100% of the entire approved hotel building or
the land upon which it is located and must include a buy-out provision
conferring upon the lessee the absolute right to purchase the lessor's entire
interest for a fixed sum in the event that the lessor is found by the CCC to
be unsuitable.
In its May 18, 1995 declaratory rulings with respect to the proposed
enclosed Atlantic City Convention Center walkway to Trump World's Fair, the
CCC, among other things, approved the proposed easement agreements with
respect to such walkway and determined, with the concurrence of the Attorney
General, that no CCC license is required to grant the easement and that the
easements satisfy the durational term requirement and need not concern 100% of
the entire approved hotel building or include such a buy-out provision. See
"Business--Properties--Trump Plaza--Trump World's Fair."
Agreement for Management of Casino. Each party to an agreement for the
management of a casino is required to hold a casino license, and the party who
is to manage the casino must own at least 10% of all the outstanding equity
securities of the casino licensee or any eligible applicant for a casino
license. Such an agreement shall: (i) provide for the complete management of
the casino; (ii) provide for the unrestricted power to direct the casino
operations; and (iii) provide for a term long enough to ensure the reasonable
continuity, stability and independence and management of the casino.
License Fees. The CCC is authorized to establish annual fees for the renewal
of casino licenses. The renewal fee is based upon the cost of maintaining
control and regulatory activities prescribed by the Casino Control Act, and
may not be less than $200,000 for a four-year casino license. Additionally,
casino licensees are subject to potential assessments to fund any annual
operating deficits incurred by the CCC or the Division. There is also an
annual license fee of $500 for each slot machine maintained for use or in use
in any casino.
Gross Revenue Tax. Each casino licensee is also required to pay an annual
tax of 8% on its gross casino revenues. For the years ended December 31, 1993,
1994 and 1995, Plaza Associates' gross revenue tax was approximately $21.3
million, $21.0 million and $24.0 million, respectively, and its license,
investigation and other fees and assessments totaled approximately $4.0
million, $4.2 million and $4.4 million, respectively. For the years ended
December 31, 1993, 1994 and 1995, Taj Associates' gross revenue tax was
approximately $35.4 million, $36.7 million and $40.2 million, respectively,
and its license, investigation and other fees and assessments totaled
approximately $5.2 million, $5.2 million and $5.2 million, respectively.
Investment Alternative Tax Obligations. An investment alternative tax
imposed on the gross casino revenues of each licensee in the amount of 2.5% is
due and payable on the last day of April following the end of the calendar
year. A licensee is obligated to pay the investment alternative tax for a
period of 30 years. Estimated payments of the investment alternative tax
obligation must be made quarterly in an amount equal to 1.25% of estimated
gross revenues for the preceding three-month period. Investment tax credits
may be obtained by making qualified investments or by the purchase of bonds
issued by the CRDA. CRDA bonds may have terms as long as 50 years and bear
interest at below market rates, resulting in a value lower than the face value
of such CRDA bonds.
For the first ten years of its tax obligation, the licensee is entitled to
an investment tax credit against the investment alternative tax in an amount
equal to twice the purchase price of bonds issued to the licensee by the CRDA.
Thereafter, the licensee (i) is entitled to an investment tax credit in an
amount equal to twice the purchase price of such bonds or twice the amount of
its investments authorized in lieu of such bond investments or made in
projects designated as eligible by the CRDA and (ii) has the option of
entering into a contract with the CRDA
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to have its tax credit comprised of direct investments in approved eligible
projects which may not comprise more than 50% of its eligible tax credit in
any one year.
From the monies made available to the CRDA, the CRDA is required to set
aside $100 million for investment in hotel development projects in Atlantic
City undertaken by a licensee which result in the construction or
rehabilitation of at least 200 hotel rooms. These monies will be held to fund
up to 35% of the cost to casino licensees of expanding their hotel facilities
to provide additional hotel rooms, a portion of which will be required to be
available upon the opening of the new Atlantic City convention center and
dedicated to convention events. The CRDA has determined at this time that
eligible casino licensees will receive up to 27% of the cost of additional
hotel rooms out of these monies set aside and may, in the future, increase the
percentage to no greater than 35%.
Minimum Casino Parking Charges. As of July 1, 1993, each casino licensee was
required to pay the New Jersey State Treasurer a $1.50 charge for every use of
a parking space for the purpose of parking, garaging or storing motor vehicles
in a parking facility owned or leased by a casino licensee or by any person on
behalf of a casino licensee. This amount is paid into a special fund
established and held by the New Jersey State Treasurer for the exclusive use
of the CRDA. Plaza Associates and Taj Associates currently charge their
respective parking patrons $2.00 in order to make their required payments to
the New Jersey State Treasurer and cover related expenses. Amounts in the
special fund will be expended by the CRDA for eligible projects in the
corridor region of Atlantic City related to improving the highways, roads,
infrastructure, traffic regulation and public safety of Atlantic City or
otherwise necessary or useful to the economic development and redevelopment of
Atlantic City in this regard.
Atlantic City Fund. On each October 31 during the years 1996 through 2003,
each casino licensee shall pay into an account established in the CRDA and
known as the Atlantic City Fund, its proportional share of an amount related
to the amount by which annual operating expenses of the CCC and the Antitrust
Division are less than a certain fixed sum. Additionally, a portion of the
investment alternative tax obligation of each casino licensee for the years
1994 through 1998 allocated for projects in Northern New Jersey shall be paid
into and credited to the Atlantic City Fund. Amounts in the Atlantic City Fund
will be expended by the CRDA for economic development projects of a revenue
producing nature that foster the redevelopment of Atlantic City other than the
construction and renovation of casino hotels.
Conservatorship. If, at any time, it is determined that TM/GP, TTMC, Taj
Holding, Taj Funding, Taj Associates, TTMI, Plaza Associates, Plaza Funding,
Plaza Holding Inc., Trump AC, THCR, THCR Holdings, THCR Funding or any other
entity qualifier has violated the Casino Control Act or that any of such
entities cannot meet the qualification requirements of the Casino Control Act,
such entity could be subject to fines or the suspension or revocation of its
license or qualification. If a casino license is suspended for a period in
excess of 120 days or is revoked, or if the CCC fails or refuses to renew such
casino license, the CCC could appoint a conservator to operate and dispose of
such licensee's casino hotel facilities. A conservator would be vested with
title to all property of such licensee relating to the casino and the approved
hotel subject to valid liens and/or encumbrances. The conservator would be
required to act under the direct supervision of the CCC and would be charged
with the duty of conserving, preserving and, if permitted, continuing the
operation of the casino hotel. During the period of the conservatorship, a
former or suspended casino licensee is entitled to a fair rate of return out
of net earnings, if any, on the property retained by the conservator. The CCC
may also discontinue any conservatorship action and direct the conservator to
take such steps as are necessary to effect an orderly transfer of the property
of a former or suspended casino licensee.
Qualification of Employees. Certain employees of Taj Associates and Plaza
Associates must be licensed by or registered with the CCC, depending on the
nature of the position held. Casino employees are subject to more stringent
requirements than non-casino employees and must meet applicable standards
pertaining to financial stability, integrity and responsibility, good
character, honesty and integrity, business ability and casino experience and
New Jersey residency. These requirements have resulted in significant
competition among Atlantic City casino operators for the services of qualified
employees.
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Gaming Credit. Taj Associates' and Plaza Associates' casino games are
conducted on a credit as well as cash basis. Gaming debts arising in Atlantic
City in accordance with applicable regulations are enforceable in the courts
of the State of New Jersey. The extension of gaming credit is subject to
regulations that detail procedures which casinos must follow when granting
gaming credit and recording counter checks which have been exchanged, redeemed
or consolidated.
Control Procedures. Gaming at the Taj Mahal and Trump Plaza is conducted by
trained and supervised personnel. Taj Associates and Plaza Associates employ
extensive security and internal controls. Security checks are made to
determine, among other matters, that job applicants for key positions have had
no criminal history or associations. Security controls utilized by the
surveillance department include closed circuit video camera to monitor the
casino floor and money counting areas. The count of moneys from gaming also is
observed daily by representatives of the CCC.
OTHER LAWS AND REGULATIONS
The U.S. Department of the Treasury has adopted regulations pursuant to
which a casino is required to file a report of each deposit, withdrawal,
exchange of currency, gambling tokens or chips, or other payments or transfers
by, through or to such casino which involve a transaction in currency of more
than $10,000 per patron, per gaming day. Such reports are required to be made
on forms prescribed by the Secretary of the Treasury and are filed with the
Commissioner of the Internal Revenue Service (the "Service"). In addition,
Trump AC is required to maintain detailed records (including the names,
addresses, social security numbers and other information with respect to its
gaming customers) dealing with, among other items, the deposit and withdrawal
of funds and the maintenance of a line of credit.
In the past, the Service had taken the position that gaming winnings from
table games by nonresident aliens were subject to a 30% withholding tax. The
Service, however, subsequently adopted a practice of not collecting such tax.
Recently enacted legislation exempts from withholding tax table game winnings
by nonresident aliens, unless the Secretary of the Treasury determines by
regulation that such collections have become administratively feasible.
As the result of an audit conducted by the U.S. Department of the Treasury,
Office of Financial Enforcement, Plaza Associates was alleged to have failed
to timely file the "Currency Transaction Report by Casino" in connection with
65 individual currency transactions in excess of $10,000 during the period
from October 31, 1986 to December 10, 1988. Plaza Associates paid a fine of
$292,500 in connection with these violations. Plaza Associates has revised its
internal control procedures to ensure continued compliance with these
regulations. From 1992 through 1995, the Service conducted an audit of
"Currency Transaction Reports by Casino" filed by Taj Associates for the
period from April 2, 1990 through December 31, 1991. The U.S. Department of
Treasury has received a report detailing the audit as well as the response of
Taj Associates. Recently, as a result of the audit of Taj Associates, the U.S.
Department of Treasury has notified Taj Associates that it failed to timely
file the "Currency Transaction Report by Casino" in connection with 173
individual currency transactions. The U.S. Department of Treasury has
indicated in their notification that the matter can be resolved by the payment
of a penalty which is significantly lower than the maximum penalty allowed by
law. Management believes that any such amounts will not be material to Trump
AC.
On April 5, 1994, OSHA proposed a regulation that would require, inter alia,
that employers who permit smoking in workplaces establish designated smoking
areas, permit smoking only in such areas, and assure that designated smoking
areas be enclosed, exhausted directly to the outside, and maintained under
negative pressure sufficient to contain tobacco smoke within the designated
area. Plaza Associates has estimated construction costs to build enclosed,
exhausted, negative-pressure smoking rooms in Trump Plaza to be $1.5 million
for its casino and $2.5 million for its restaurants. Plaza Associates has also
estimated construction costs to provide negative-pressure exhaust systems for
Trump Plaza hotel rooms to be $1,500 per room; however, management believes
that it is highly unlikely that the regulation, if promulgated, would require
hotel rooms to be equipped with exhaust systems if smoking is prohibited in
the rooms during housekeeping and maintenance activities. If the regulation is
promulgated and is applicable to Trump Plaza hotel rooms, the number of rooms
that would be
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affected is not known at this time. Taj Associates is unable to estimate the
cost, if any, of compliance with these proposed regulations and is unable to
determine if the cost, if any, of such compliance would have a material
adverse effect on Taj Associates.
Trump AC is subject to other federal, state and local regulations and, on a
periodic basis, must obtain various licenses and permits, including those
required to sell alcoholic beverages in the State of New Jersey. Management
believes all required licenses and permits necessary to conduct business of
Trump AC has been obtained for operations in the State of New Jersey.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The managing general partner of Trump AC is THCR Holdings. The managing
general partner of THCR Holdings is THCR. The partnership agreement governing
THCR Holdings provides that all business activities of THCR must be conducted
through THCR Holdings or subsidiary partnerships or corporations, such as
Trump AC. As the sole general partner of THCR Holdings, THCR will generally
have the exclusive rights, responsibilities and discretion in the management
and control of THCR Holdings, and as such, of Trump Atlantic City.
The following table sets forth certain information concerning each of THCR's
directors and executive officers:
<TABLE>
<CAPTION>
NAME POSITION
---- --------
<S> <C>
Donald J. Trump......... Chairman of the Board
Nicholas L. Ribis....... President, Chief Executive Officer, Chief Financial Officer and Director
Robert M. Pickus........ Executive Vice President and Secretary
John P. Burke........... Senior Vice President of Corporate Finance and Corporate Treasurer
Wallace B. Askins....... Director
Don M. Thomas........... Director
Peter M. Ryan........... Director
</TABLE>
Donald J. Trump--Mr. Trump, 49 years old, has been Chairman of the Board of
THCR and THCR Funding since their formation in 1995. Mr. Trump is also
Chairman of the Board of Directors, President and Treasurer of Plaza Funding,
the managing general partner of Plaza Associates. Trump was a 50% shareholder,
Chairman of the Board of Directors, President and Treasurer of Trump Plaza GP
and the managing general partner of Plaza Associates prior to its merger into
Plaza Funding in June 1993. Trump was Chairman of the Executive Committee and
President of Plaza Associates from May 1986 to May 1992 and was a general
partner of Plaza Associates until June 1993. Trump has been a director and
President of Plaza Holding Inc. since February 1993 and was a partner in Trump
Atlantic City from February 1993 until June 1995. Trump has been Chairman of
the Board of Directors of Trump AC Funding since its formation in January
1996. Trump has been Chairman of the Board of Directors and a Class C Director
of Taj Holding and TM/GP since October 1991; President and Treasurer of Taj
Holding since March 4, 1991; Chairman of the Board of Directors, President and
Treasurer of Taj Funding and TTMI since June 1988; sole director, President
and Treasurer of TTMC since March 1991; Chairman of the Executive Committee of
Taj Associates from June 1988 to October 1991; and President and sole Director
of Realty Corp. since May 1986. Trump has been the sole director of Trump
Indiana since its formation. Trump has been Chairman of the Board of Partner
Representatives of TCA, the partnership that owns Trump's Castle, since May
1992; and was Chairman of the Executive Committee of TCA from June 1985 to May
1992. In addition, Trump is the managing general partner of TCA. Trump is also
the President of The Trump Organization, which has been in the business,
through its affiliates and subsidiaries, of acquiring, developing and managing
real estate properties for more than the past five years. Trump was a member
of the Board of Directors of Alexander's Inc. from 1987 to March 1992.
Nicholas L. Ribis--Mr. Ribis, 51 years old, has been President, Chief
Executive Officer, Chief Financial Officer, and a director of THCR and THCR
Funding and Chief Executive Officer of THCR Holdings since their formation in
1995. Mr. Ribis has been the Chief Executive Officer of Plaza Associates since
February 1991, was President from April 1994 to February 1995, was a member of
the Executive Committee of Plaza Associates from April 1991 to May 29, 1992
and was a director and Vice President of Trump Plaza GP from May 1992 until
its merger into Plaza Funding in June 1993. Mr. Ribis has been Vice President
of Plaza Funding since February 1995 and Vice President of Plaza Holding Inc.
since February 1995. Mr. Ribis has served as a director of Plaza Holding Inc.
since June 1993 and of Plaza Funding since July 1993. Mr. Ribis has been Chief
Executive Officer, President and director of Trump AC Funding since its
formation in January 1996. Mr. Ribis has been a Class C Director of TM/GP and
Taj Holding since October 1991 and was Vice President of TM/GP and Taj
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Holding until June 1995; Chief Executive Officer of Taj Associates since
February 1991; Vice President of Taj Funding since September 1991; Vice
President of TTMI since February 1991 and Secretary of TTMI since September
1991; Director of Realty Corp. since October 1991; and a member of the
Executive Committee of Taj Associates from April 1991 to October 1991. Mr.
Ribis has been the President and Chief Executive Officer of Trump Indiana
since its formation. He has also been Chief Executive Officer of TCA since
March 1991; member of the Executive Committee of TCA from April 1991 to May
1992; member of the Board of Partner Representatives of TCA since May 1992;
and has served as the Vice President and Assistant Secretary of Trump's Castle
Hotel & Casino, Inc. an entity beneficially owned by Trump, since December
1993 and January 1991, respectively. Mr. Ribis has served as Vice President of
TC/GP, Inc. since December 1993 and had served as Secretary of TC/GP, Inc.
from November 1991 to May 1992. Mr. Ribis has been Vice President of Trump
Corp. since September 1991. From January 1993 to January 1995, Mr. Ribis
served as the Chairman of the Casino Association of New Jersey and has been a
member of the Board of Trustees of the CRDA since October 1993. From January
1980 to January 1991, Mr. Ribis was Senior Partner in, and from February 1991
to December 1995, was Counsel to, the law firm of Ribis, Graham & Curtin (now
practicing as Graham, Curtin & Sheridan, A Professional Association), which
serves as New Jersey legal counsel to all of the above-named companies and
certain of their affiliated entities.
Robert M. Pickus--Mr. Pickus, 41 years old, has been Executive Vice
President and Secretary of THCR since its formation in 1995. He has also been
the Executive Vice President of Corporate and Legal Affairs of Plaza
Associates since February 1995. From December 1993 to February 1995, Mr.
Pickus was the Senior Vice President and General Counsel of Plaza Associates
and, since April 1994, he has been the Vice President and Assistant Secretary
of Plaza Funding and Assistant Secretary of Plaza Holding Inc. Mr. Pickus has
been Secretary and a director of Trump AC Funding since its formation in
January 1996. Mr. Pickus has been the Executive Vice President of Corporate
and Legal Affairs of Taj Associates since February 1995, and a Class C
Director of Taj Holding and TM/GP since November 1995. Mr. Pickus has been the
Executive Vice President and Secretary of Trump Indiana since its formation.
He was the Senior Vice President and Secretary of Trump's Castle Funding, Inc.
from June 1988 to December 1993 and General Counsel of TCA from June 1985 to
December 1993. Mr. Pickus was also Secretary of Trump's Castle Hotel & Casino,
Inc., an entity beneficially owned by Trump, from October 1991 until December
1993. Mr. Pickus has been the Executive Vice President of Corporate and Legal
Affairs of TCA since February 1995 and a member of the Board of Partner
Representatives of TCA since October 1995.
John P. Burke--Mr. Burke, 48 years old, has been Senior Vice President of
Corporate Finance of THCR, THCR Holdings and THCR Funding since January 1996,
and has been the Corporate Treasurer of THCR, THCR Holdings and THCR Funding
since their formation in 1995. He has also been Corporate Treasurer of Plaza
Associates and Taj Associates since October 1991. Mr. Burke has been Treasurer
of Trump AC Funding since its formation in January 1996. Mr. Burke has been a
Class C Director of TM/GP and Taj Holding since October 1991 and was Vice
President of TM/GP until June 1995. Mr. Burke has been the Treasurer of Trump
Indiana since its formation. Mr. Burke has been the Corporate Treasurer of TCA
since October 1991, the Vice President of TCA, Trump's Castle Funding, Inc.,
TC/GP and Trump's Castle Hotel & Casino, Inc. since December 1993, and the
Vice President-Finance of The Trump Organization since September 1990. Mr.
Burke was an Executive Vice President and Chief Administrative Officer of
Imperial Corporation of America from April 1989 through September 1990.
Wallace B. Askins--Mr. Askins, 65 years old, has been a director of THCR and
THCR Funding since June 1995. He has also been a director of Plaza Funding and
Plaza Holding Inc. since April 11, 1994, and was a partner representative of
the Board of Partner Representatives of TCA from May 1992 to June 1995. Mr.
Askins served as a director of TC/GP from May 1992 to December 1993. From June
1984 to November 1992, Mr. Askins served as Executive Vice President, Chief
Financial Officer and as a director of Armco Inc. Mr. Askins also serves as a
director of EnviroSource, Inc.
Don M. Thomas--Mr. Thomas, 65 years old, has been a director of THCR and
THCR Funding since June 1995. He has also been the Senior Vice President of
Corporate Affairs of the Pepsi-Cola Bottling Co. of New
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York since January 1985. Mr. Thomas was the Acting Chairman, and a
Commissioner, of the CRDA from 1985 through 1987, and a Commissioner of the
CCC from 1980 through 1984. Mr. Thomas was a director of Trump Plaza GP until
its merger into Plaza Funding in June 1993 and has been a director of Plaza
Funding and Plaza Holding Inc. since June 1993. Mr. Thomas is an attorney
licensed to practice law in the State of New York.
Peter M. Ryan--Mr. Ryan, 58 years old, has been a director of THCR and THCR
Funding since June 1995. He has also been the President of each of The Marlin
Group, LLC and The Brookwood Carrington Fund, LLC, real estate financial
advisory groups, since January 1995. Prior to that, Mr. Ryan was the Senior
Vice President of The Chase Manhattan Bank for more than five years. Mr. Ryan
has been a director of the Childrens Hospital FTD since October 1995.
The officers of THCR serve at the pleasure of the Board of Directors of
THCR.
All of the persons listed above are citizens of the United States and have
been qualified or licensed by the CCC.
Trump and Nicholas L. Ribis served as either executive officers and/or
directors of Taj Associates and its affiliated entities when such parties
filed their petition for reorganization under Chapter 11 of the Bankruptcy
Code on July 17, 1991. The Second Amended Joint Plan of Reorganization of such
parties was confirmed on August 28, 1991, and was declared effective on
October 4, 1991. Trump, Nicholas L. Ribis, John P. Burke and Robert M. Pickus
also served as Executive Committee members, officers and/or directors of TCA
and its affiliated entities at the time such parties filed a petition for
reorganization under Chapter 11 of the Bankruptcy Code on March 9, 1992. The
First Amended Joint Plan of Reorganization of such parties was confirmed on
May 5, 1992, and was declared effective on May 29, 1992. Trump, Nicholas L.
Ribis and John P. Burke served as either executive officers and/or directors
of Plaza Associates and its affiliated entities when such parties filed their
petition for reorganization under Chapter 11 of the Bankruptcy Code in March
1992. The First Amended Joint Plan of Reorganization of such parties was
confirmed on April 30, 1992, and was declared effective on May 29, 1992. Trump
was a partner of Plaza Operating Partners Ltd. when it filed a petition for
reorganization under Chapter 11 of the Bankruptcy Code on November 2, 1992.
The plan of reorganization for Plaza Operating Partners Ltd. was confirmed on
December 11, 1992 and declared effective in January 1993.
THCR is the general partner of THCR Holdings. As the sole general partner of
THCR Holdings, THCR generally has the exclusive rights, responsibilities and
discretion in the management and control of THCR Holdings. Upon consummation
of the Merger Transaction, TM/GP will also be a limited partner of THCR
Holdings.
MANAGEMENT OF TRUMP PLAZA
Plaza Funding is, and until the consummation of the Merger Transaction will
remain, the managing general partner of Plaza Associates. The Board of
Directors of each of Plaza Funding and Plaza Holding Inc. consists of Messrs.
Trump, Ribis, Wallace B. Askins and Don M. Thomas. The Plaza Note Indenture
requires that two directors of each of Plaza Funding and Plaza Holding Inc. be
persons who would qualify as "Independent Directors" as such term is defined
by the rules of the American Stock Exchange, Inc. ("Amex") (the "Independent
Directors"). The Amex rules define "independent directors" as those who are
not officers of the company, are neither related to its officers nor represent
concentrated family holdings of its shares and who, in view of the company's
board of directors, are free of any relationship that would interfere with the
exercise of independent judgment.
Set forth below are the names, ages, positions and offices held with Plaza
Funding and Plaza Associates and a brief account of the business experience
during the past five years of each of the executive officers of Plaza Funding
and Plaza Associates other than those who are also directors or executive
officers of THCR.
Barry J. Cregan--Mr. Cregan, 41 years old, has been Chief Operating Officer
of Plaza Associates since September 19, 1994 and President since March 1995.
Since February 21, 1995, Mr. Cregan has been Vice
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President of Plaza Funding and Plaza Holding Inc. Prior to accepting these
positions at Trump Plaza, Mr. Cregan was President of The Plaza Hotel in New
York for approximately three years. Prior to joining The Plaza Hotel, he was
Vice President of Hotel Operations at Trump's Castle in Atlantic City. In
addition, Mr. Cregan has worked for Hilton and Hyatt in executive capacities
as well as working in Las Vegas and Atlantic City in executive capacities.
Francis X. McCarthy, Jr.--Mr. McCarthy, 43 years old, was Vice President of
Finance and Accounting of Trump Plaza GP from October 1992 until June 1993,
the date of Trump Plaza GP's merger into Plaza Funding, was Senior Vice
President of Finance and Administration of Plaza Associates from August 1990
to June 1994 and has been Executive Vice President of Finance and
Administration since June 1994; Chief Accounting Officer of Plaza Funding
since May 1992; Vice President and Chief Financial Officer of Plaza Funding
since July 1992 and Assistant Treasurer of Plaza Funding since March 1991. Mr.
McCarthy previously served in a variety of financial positions for Greate Bay
Hotel and Casino, Inc. from June 1980 through August 1990.
Fred A. Buro--Mr. Buro, 39 years old, has been the Senior Vice President of
Marketing of Plaza Associates since May 1994. Mr. Buro previously served as
the President of Casino Resources, Inc., a casino marketing, management and
development organization from 1991 through 1994. Prior to that, Mr. Buro
served from 1984 through 1991 as the President of a professional services
consulting firm.
James A. Rigot--Mr. Rigot, 44 years old, has been Executive Vice President
of Casino Operations of Plaza Associates since November 1994. Mr. Rigot served
as Vice President of Casino Operations of TropWorld Casino and Entertainment
Resort from July 1989 through November 1994. From January 1989 through July
1989, Mr. Rigot was Assistant Casino Manager of Resorts Casino Hotel.
Kevin S. Smith--Mr. Smith, 39 years old, has been the Vice President,
General Counsel of Plaza Associates since February 1995. Mr. Smith was
previously associated with Cooper Perskie April Niedelman Wagenheim &
Levenson, an Atlantic City law firm specializing in trial litigation. From
1989 until February 1992, Mr. Smith handled criminal trial litigation for the
State of New Jersey, Department of Public Defender, assigned to the Cape May
and Atlantic County Conflict Unit.
Patrick J. O'Malley--Mr. O'Malley, 41 years old, has been the Executive Vice
President of Hotel Operations of Plaza Associates since September 1995. Prior
to joining Trump Plaza, from September 1994 until September 1995, Mr. O'Malley
was President of The Plaza Hotel in New York City. From December 1989 until
September 1994, Mr. O'Malley was the Vice President of Finance of the Plaza
Hotel in New York City. Prior to joining the Plaza Hotel in New York City,
from 1986 to 1989, Mr. O'Malley was a Regional Financial Controller for the
Four Seasons Hotel and Resorts, Ltd. From 1979 to 1986, Mr. O'Malley worked in
the Middle East and Europe as Hotel Controller for Marriot International
Hotels.
Steven C. Hann--Mr. Hann, 39 years old, has been the Executive Vice
President of Casino Sales and Marketing of Plaza Associates since May 1995.
Prior to joining Trump Plaza, Mr. Hann served in various marketing positions
at the Sands Hotel and Casino since 1989, most recently Vice President of
Casino Marketing and previously as Director of Casino Credit for Greate Bay
Hotel and Casino.
All of the persons listed above are citizens of the United States and are
qualified or licensed by the CCC.
MANAGEMENT OF THE TAJ MAHAL
Until the consummation of the Merger Transaction, TM/GP will be the managing
general partner of Taj Associates.
Set forth below are the names, ages, positions and offices, and a brief
account of the business experience during the past five years, of each of the
executive officers of Taj Holding and a key employee of Taj Associates other
than those who are also directors or executive officers of THCR.
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R. Bruce McKee--Mr. McKee, 50 years old, has been acting Chief Operating
Officer of Taj Associates since October 1995; Senior Vice President, Finance
of Taj Associates since July 1993; Vice President, Finance of Taj Associates
from September 1990 through June 1993; Assistant Treasurer of Taj Funding,
TM/GP, Taj Holding, Realty Corp., TTMC and TTMI since September 1991; Vice
President of Finance of Elsinore Shore Associates, the owner and operator of
the Atlantis Casino Hotel, Atlantic City, from April 1984 to September 1990;
and Treasurer of Elsinore Finance Corp., Elsinore of Atlantic City and Elsub
Corp. from June 1986 to September 1990. The Atlantis Casino Hotel now
constitutes the portion of Trump Plaza known as Trump World's Fair.
Nicholas F. Moles--Mr. Moles, 42 years old, has been Assistant Secretary of
Taj Holding and TM/GP from October 1991 to February 1995; Secretary of Taj
Holding and TM/GP since February 1995; Senior Vice President, Law of Taj
Associates since January 1989 and General Counsel of Taj Associates since June
1993; Assistant Secretary of Taj Funding since September 1991 and Assistant
Secretary of TTMI since January 1989. From May 1986 to May 1988, Mr. Moles was
General Counsel of Plaza Associates and was Vice President and General Counsel
of Plaza Associates from May 1988 to December 1988. Mr. Moles was Vice
President and General Counsel of Elsinore Shore Associates from May 1985 to
May 1986 and was Director and Assistant Secretary of Elsinore Finance
Corporation from November 1985 to May 1986.
Larry W. Clark--Mr. Clark, 52 years old, has been Executive Vice President,
Casino Operations of Taj Associates since November 1991; Senior Vice
President, Casino Operations of Taj Associates from May 1991 to November 1991;
Vice President, Casino Administration of Taj Associates from April 1991 to May
1991; and was Vice President, Casino Operations, Dunes Hotel & Country Club
from November 1990 to April 1991.
Rudolfo E. Prieto--Mr. Prieto, 52 years old, has been Executive Vice
President, Operations of Taj Associates since December 1995. Prior to joining
the Taj Mahal, Mr. Prieto was Executive Vice President and Chief Operating
Officer for Elsinore Corporation from May 1995 to November 1995; Senior Vice
President in charge of the development of the Mojave Valley Resort for
Elsinore Corporation from December 1994 to April 1995 and Executive Vice
President and Assistant General Manager for the Tropicana Resort and Casino
from May 1988 to November 1994.
Walter Kohlross--Mr. Kohlross, 54 years old, has been Senior Vice President,
Food & Beverage of Taj Associates since June 1992; Vice President of
International Marketing of Taj Associates from June 1993 through October 1995;
Vice President, Hotel Operations of Taj Associates from June 1991 to June 1992
and was Vice President, Food & Beverage of Taj Associates from 1988 to June
1991.
Nicholas J. Niglio--Mr. Niglio, 49 years old, has been Senior Vice
President, Casino Marketing of Taj Associates since November 1995. From
February 1995 to October 1995, Mr. Niglio was Vice President, International
Marketing of Taj Associates. Prior to joining Taj Associates, Mr. Niglio was
Executive Vice President of International Marketing/Player Development for
TCA, the partnership that owns and operates Trump's Castle, from 1993 until
1995. Prior to that, Mr. Niglio served as Senior Vice President, Marketing of
Caesar's World Marketing Corporation from 1991 until 1993.
All of the persons listed above are citizens of the United States and are
qualified or licensed by the CCC.
Trump, Nicholas L. Ribis, John P. Burke, R. Bruce McKee, Nicholas F. Moles,
Larry W. Clark and Walter Kohlross served as either executive officers and/or
directors of Taj Associates and its affiliated entities when such parties
filed their petition for reorganization under Chapter 11 of the Bankruptcy
Code on July 17, 1991. The Second Amended Joint Plan of Reorganization of such
parties was confirmed on August 28, 1991, and was declared effective on
October 4, 1991. Trump, Nicholas L. Ribis, John P. Burke and Robert M. Pickus
served as Executive Committee members, officers and/or directors of TCA and
its affiliated entities at the time such parties filed a petition for
reorganization under Chapter 11 of the Bankruptcy Code on March 9, 1992. The
First Amended Joint Plan of Reorganization of such parties was confirmed on
May 5, 1992, and was declared effective on May 29, 1992. Trump, Nicholas L.
Ribis and John P. Burke served as either executive officers and/or directors
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of Plaza Associates and its affiliated entities when such parties filed their
petition for reorganization under Chapter 11 of the Bankruptcy Code in March
1992. The First Amended Joint Plan of Reorganization of such parties was
confirmed on April 30, 1992, and was declared effective on May 29, 1992. Trump
was a partner of Plaza Operating Partners Ltd. when it filed a petition for
reorganization under Chapter 11 of the Bankruptcy Code on November 2, 1992.
The plan of reorganization for Plaza Operating Partners Ltd. was confirmed on
December 11, 1992 and declared effective in January 1993. Rudolfo E. Prieto
was an Executive Vice President and the Chief Operating Officer for Elsinore
Corporation when it filed a petition for reorganization under Chapter 11 of
the Bankruptcy Code on October 31, 1995. Elsinore Corporation filed a Plan of
Reorganization on February 28, 1996.
EXECUTIVE COMPENSATION
General. Because THCR was formed in 1995, there was no salary or bonus paid
to, deferred or accrued for the benefit of, THCR's Chief Executive Officer or
any of the four remaining most highly compensated executive officers (whose
annual salary and bonus exceeded $100,000 for the year ended December 31, 1995
(collectively, the "Executive Group")) by THCR or THCR Holdings prior to or
during the fiscal year ended December 31, 1994. Similarly, no member of the
Executive Group received any other annual compensation, restricted stock
awards, stock options, stock appreciation rights ("SARs"), long-term incentive
performance ("LTIP") payouts or other compensation from THCR or THCR Holdings
prior to or for the fiscal year ended December 31, 1994. All cash compensation
paid to the Executive Group in respect of services provided to THCR since its
inception was paid and will continue to be paid by THCR Holdings in accordance
with the THCR Holdings Partnership Agreement.
1995 Stock Incentive Plan. The Board of Directors of THCR adopted the 1995
Stock Incentive Plan (the "1995 Stock Plan"), pursuant to which, directors,
employees and consultants of THCR and certain of its subsidiaries and
affiliates who have been selected as participants are eligible to receive
awards of various forms of equity-based incentive compensation, including
stock options, stock appreciation rights, stock bonuses, restricted stock
awards, performance units and phantom stock, and awards consisting of
combinations of such incentives. The 1995 Stock Plan is administered by the
Stock Incentive Plan Committee of the Board of Directors of THCR (the "Stock
Incentive Plan Committee"). Subject to the provisions of the 1995 Stock Plan,
the Stock Incentive Plan Committee has sole discretionary authority to
interpret the 1995 Stock Plan and to determine the type of awards to grant,
when, if and to whom awards are granted, the number of shares covered by each
award and the terms and conditions of the award.
Options granted under the 1995 Stock Plan may be "incentive stock options"
("ISOs"), within the meaning of Section 422 of the Code, or nonqualified stock
options ("NQSOs"). The vesting, exercisability and exercise price of the
options are determined by the Stock Incentive Plan Committee when the options
are granted, subject to a minimum price in the case of ISOs of the Fair Market
Value (as defined in the 1995 Stock Plan) of the THCR Common Stock on the date
of grant and a minimum price in the case of NQSOs of the par value of THCR
Common Stock. In the discretion of the Stock Incentive Plan Committee, the
option exercise price may be paid in cash or in shares of THCR Common Stock or
other property having a fair market value on the date of exercise equal to the
option exercise price, or by delivering to THCR a copy of irrevocable
instructions to a stockbroker to deliver promptly to THCR an amount of sale or
loan proceeds sufficient to pay the exercise price. Except as provided by the
Stock Incentive Plan Committee in an underlying stock option agreement, in the
event of a Change of Control (as defined in the 1995 Stock Plan or in the
stock option agreement), all options subject to such agreement will be fully
exercisable.
The 1995 Stock Plan permits the Stock Incentive Plan Committee to grant
SARs, either alone or in connection with an option. A SAR entitles its holder
to be paid an amount equal to the fair market value of THCR Common Stock
subject to the SAR on the date of exercise of the SAR, less the exercise price
of the related stock option in the case of a SAR granted in connection with a
stock option, or the fair market value of one share of stock on the date the
SAR was granted, in the case of a SAR granted independent of an option. Shares
of THCR Common Stock covered by a restricted stock award are issued to the
recipient at the time the award is granted, but are subject to forfeiture in
the event continued employment and/or other restrictions and conditions
established by the Stock Incentive Plan Committee at the time the award is
granted are not satisfied. Unless otherwise determined by the Stock Incentive
Plan Committee, a recipient of a restricted stock award has
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the same rights as an owner of THCR Common Stock, including the right to
receive cash dividends and to vote the shares. A performance unit or phantom
stock award provides for the future payment of cash or the issuance of shares
of THCR Common Stock to the recipient if continued employment and/or other
performance objectives established by the Stock Incentive Plan Committee at
the time of grant are attained. The 1995 Stock Plan also provides that
performance unit and phantom stock awards may be settled in cash, in the
discretion of the Stock Incentive Plan Committee and if indicated in the
applicable award agreement, on each date on which shares of THCR Common Stock
covered by the awards would otherwise have been delivered or become
unrestricted, in an amount equal to the fair market value of such shares on
such date. Except as provided in a particular award agreement, in the event of
a Change in Control (as defined in the 1995 Stock Plan), notwithstanding any
vesting schedule with respect to an award of options, SARs, phantom stock
units or restricted stock, such options or SAR will become immediately
exercisable with respect to the shares subject to such option or SAR, and
restrictions with respect to such phantom stock units or shares of restricted
stock will immediately expire. In addition, payment will be made as determined
by the Stock Incentive Plan Committee with respect to performance units. The
1995 Stock Plan also provides for the grant of unrestricted stock bonus
awards.
THCR has reserved 1,000,000 shares of THCR Common Stock for issuance under
the 1995 Stock Plan, provided, however, that in the event of changes in the
outstanding stock or the capital structure of THCR, adjustments will be made
by the Stock Incentive Plan Committee as to (i) the number, price or kind of a
share of stock or other consideration subject to outstanding awards and (ii)
the maximum number of shares of stock subject to all awards under the 1995
Stock Plan.
In 1995, the Stock Incentive Plan Committee granted to Nicholas L. Ribis,
under the 1995 Stock Plan: (a) a stock bonus award of 66,667 shares of THCR
Common Stock, which was fully vested when issued, (b) a phantom stock unit
award of 66,666 units, entitling Mr. Ribis to receive 66,666 shares of THCR
Common Stock on June 12, 1997, subject to certain conditions and (c) an award
of NQSOs entitling Mr. Ribis to purchase 133,333 shares of the THCR Common
Stock, subject to certain conditions (including vesting at a rate of 20% per
year over a five-year period). The options have an exercise price of $14.00
per share.
Summary Compensation Table. The following table sets forth information
regarding compensation paid to or accrued by all the executive officers of
THCR for each of the last three completed fiscal years. Compensation accrued
during one year and paid in another is recorded under the year of accrual.
Because THCR was formed in 1995, compensation for the years ended December 31,
1994 and 1993 reflect solely the compensation paid to or accrued by these
individuals as executive officers of Plaza Associates and Taj Associates.
Compensation for the year ended December 31, 1995 includes compensation paid
to or accrued by these individuals as executive officers of THCR, Plaza
Associates and Taj Associates.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------ --------------------------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) AWARDS ($) OPTIONS ($) COMPENSATION
- --------------------------- ---- ---------- --------- --------------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Donald J. Trump......... 1995 $ 583,333 $ -- $ -- -- -- $3,064,000(/2/)
Chairman of the Board 1994 -- -- -- -- -- 2,641,000(/2/)(/3/)
1993 -- -- -- -- -- 2,813,000(/2/)
Nicholas L. Ribis(/4/).. 1995 $1,355,636 $ 933,338 $ -- 933,324(/5/) 133,333 $ --
Chief Executive Officer 1994 1,306,000 250,000 169,407 -- -- --
1993 748,253 500,000 383,497 -- -- --
Robert M. Pickus........ 1995 $ 198,972 $ 85,000 $ -- -- -- $ 4,004(/6/)
Executive Vice President 1994 163,759 32,500 -- -- -- 3,291(/6/)
and
Secretary 1993 5,808 -- -- -- -- --
John P. Burke........... 1995 $ 100,000 $ 51,666 $ -- -- -- $ --
Senior Vice President of 1994 100,000 -- 46,000 -- -- --
Corporate Finance and 1993 95,590 28,000 46,000 -- -- --
Corporate Treasurer
</TABLE>
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- ---------------------
(1) Represents the dollar value of annual compensation not properly
categorized as salary or bonus, including amounts reimbursed for income
taxes. Following SEC rules, perquisites and other personal benefits are
not included in this table because the aggregate amount of that
compensation is less than the lesser of $50,000 or 10% of the total of
salary and bonus for each member of the Executive Group.
(2) The amounts listed represent amounts paid to Trump and TPM, a corporation
wholly owned by Trump, pursuant to the services agreements with Taj
Associates and Plaza Associates, respectively. See "--Compensation
Committee Interlocks and Insider Participation: THCR and Plaza
Associates--Certain Related Party Transactions of Trump" and "--
Compensation Committee Interlocks and Insider Participation: Taj
Associates--Certain Related Party Transactions of Trump." Payments
received by TPM under the TPM Services Agreement (as defined) are
currently pledged by TPM to secure lease payments for a helicopter that
TPM makes available to Plaza Associates. See "Certain Transactions--Plaza
Associates--TPM Services Agreement" and "--Taj Associates and Affiliates--
Taj Services Agreement." Trump is neither an employee of Plaza Associates
nor Taj Associates and receives no compensation from Plaza Associates or
Taj Associates other than pursuant to the TPM Services Agreement and the
Taj Services Agreement, respectively.
(3) In addition to the amount listed as payments under the TPM Services
Agreement and the Taj Services Agreement, during 1994, Plaza Associates
paid to Trump an aggregate of $1,572,000 under a construction service
agreement and as a commission to secure a retail lease at Trump Plaza. See
Note 8 to Consolidated Financial Statement of Trump AC and Plaza
Associates.
(4) Mr. Ribis devotes a majority of his time to the affairs of THCR. See "--
Employment Agreements."
(5) As of December 31, 1995 Mr. Ribis also held 66,666 phantom stock units
issued pursuant to the 1995 Stock Plan. These units had a value as of
December 31, 1995 of $1,433,319. These phantom stock units were issued to
Mr. Ribis in connection with his employment agreement with THCR. Each
phantom stock unit entitles Mr. Ribis to one share of Common Stock on the
vesting date of the phantom stock unit. All of the phantom stock units are
scheduled to vest on June 12, 1997. Vesting will accelerate in the event
of Mr. Ribis' termination of employment with THCR (i) because of his death
or disability, (ii) by THCR without cause or (iii) voluntarily by Mr.
Ribis under circumstances which constitute a constructive termination.
Alternatively, the phantom stock units may expire prior to June 12, 1997
in the event Mr. Ribis voluntarily terminates his employment with THCR
under circumstances which do not constitute constructive termination or if
he is terminated by THCR with cause. Dividend equivalents with respect to
the phantom stock units will be credited to a bookkeeping account on
behalf of Mr. Ribis and will be paid out in cash at the time the phantom
stock units vest or will expire along with the phantom stock units.
(6) Represents vested and unvested contributions made by Plaza Associates to
the Trump Plaza Hotel and Casino Retirement Savings Plan. Funds
accumulated for an employee under this plan consisting of a certain
percentage of the employee's compensation plus Plaza Associates' employer
matching contributions equaling 50% of the participant's contributions,
are retained until termination of employment, attainment of age 59 1/2 or
financial hardship, at which time the employee may withdraw his or her
vested funds.
The following table sets forth options granted to Mr. Ribis in 1995. No
other member of the Executive Group received stock options in 1995. THCR did
not issue any stock appreciation rights in 1995. This table also sets forth
the hypothetical gains that would exist for the options at the end of their
ten-year terms at assumed annual rates of stock price appreciation of 5% and
10%. The actual future value of the options will depend on the market value of
the THCR Common Stock, continued employment with THCR and other factors.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZED
VALUE AT ASSUMED
ANNUAL RATES OF
INDIVIDUAL STOCK APPRECIATION
GRANTS FOR OPTION TERM
----------------------------------------------------- ---------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED EXERCISE OR
OPTIONS TO EMPLOYEES BASE PRICE EXPIRATION
NAME GRANTED(#) IN FISCAL YEAR ($/SH) DATE 5%($) 10%($)
---- ------------ -------------- ----------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Nicholas L. Ribis....... 133,333(/1/) 100% $14.00 June 12, 2005 $1,173,060 $2,960,580
</TABLE>
(1) The options vest at the rate of 20% per year on each anniversary of the
date of the grant subject to acceleration in certain circumstances. See
"--Employment Agreements."
The following table sets forth the number of shares covered by options held
by Mr. Ribis and the value of the options as of December 31, 1995. Mr. Ribis
was the only member of the Executive Group who held options in 1995. None of
these options were exercisable in 1995.
FY-END OPTION VALUE
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT FY-END(#) OPTIONS AT FY-END($)(/1/)
-------------------------- --------------------------
NAME EXERCISABLE/ UNEXERCISABLE EXERCISABLE/ UNEXERCISABLE
---- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Nicholas L. Ribis........ N/A 133,333 N/A $2,866,660
</TABLE>
(1) Based on a closing price of $21 1/2 per share of THCR Common Stock on
December 31, 1995.
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EMPLOYMENT AGREEMENTS
THCR and Plaza Associates. Trump serves as the Chairman of the Board of
Directors of THCR pursuant to the Executive Agreement dated as of June 12,
1995, among Trump, THCR and THCR Holdings (the "Executive Agreement"). In
consideration for Trump's services under the Executive Agreement, Trump
receives a salary of $1 million per year. Pursuant to the terms of the
Executive Agreement, Trump provides to THCR, from time to time, when
reasonably requested, marketing, advertising, professional and other similar
and related services with respect to the operation and business of THCR. The
Executive Agreement continues in effect (i) for an initial term of five years
and (ii) thereafter, for a three-year rolling term until either Trump or THCR
provides notice to the other of its election not to continue extending the
term, in which case the term of the Executive Agreement will end three years
from the date such notice is given. The Executive Agreement also provides that
Trump may devote time and effort to the Taj Mahal and Trump's Castle and,
subject to the terms of the Contribution Agreement, to other business matters,
and that the Executive Agreement will not be construed to restrict Trump from
operating the Taj Mahal and Trump's Castle in a commercially reasonable manner
and/or having an interest therein or conducting any other activity not
prohibited under the Contribution Agreement. See "Risk Factors--Conflicts of
Interest."
Plaza Associates had an employment agreement with Nicholas L. Ribis (the
"Ribis Plaza Agreement") pursuant to which Mr. Ribis acted as Chief Executive
Officer of Plaza Associates. The Ribis Plaza Agreement provided for an annual
salary of $550,000 with annual increases of 10% on each anniversary. Mr. Ribis
received a $250,000 signing bonus. Pursuant to the terms of the Ribis Plaza
Agreement, in the event Plaza Associates engaged in an offering of common
shares to the public, Plaza Associates and Mr. Ribis would agree to negotiate
new compensation arrangements to include equity participation for Mr. Ribis.
As a result of the June 1995 Offerings, THCR and THCR Holdings entered into a
revised employment agreement with Mr. Ribis (the "Revised Ribis Plaza
Agreement") to replace the Ribis Plaza Agreement, pursuant to which he agreed
to serve as President and Chief Executive Officer of THCR and Chief Executive
Officer of THCR Holdings. The term of the Revised Ribis Plaza Agreement is
five years and Mr. Ribis is required to devote not less than 50% of his
professional time to the affairs of THCR, as measured on a quarterly basis,
based on a 40-hour work week. Under the Revised Ribis Plaza Agreement, Mr.
Ribis's annual salary is $988,250, which is 50% of the aggregate current
annual base salary ($1,996,500) that Mr. Ribis receives as Chief Executive
Officer of THCR ($988,250), Taj Mahal ($499,125) and Trump's Castle
($499,125). Following the consummation of the Merger Transaction, Mr. Ribis
will devote 75% of his professional time to the operations of THCR, Plaza
Associates and Taj Associates, and his annual salary will be $1,497,375 per
year with respect to his services to these entities. Mr. Ribis will continue
to receive $499,125 per year with respect to his services to Trump's Castle.
In 1995, the Stock Incentive Plan Committee granted to Mr. Ribis, under the
1995 Stock Plan: (a) a stock bonus award of 66,667 shares of THCR Common
Stock, which was fully vested when issued, (b) a phantom stock unit award of
66,666 units, entitling him to receive 66,666 shares of THCR Common Stock on
June 12, 1997, subject to certain conditions and (c) an award of NQSOs
entitling Mr. Ribis to purchase 133,333 shares of the THCR Common Stock (and
associated registration rights) at an exercise price of $14.00 per share. The
options will vest at the rate of 20% per year over a five-year period and be
subject to certain other conditions. In the event Mr. Ribis's employment is
terminated by THCR other than for "cause" or if he incurs a "constructive
termination without cause," Mr. Ribis will receive a severance payment equal
to one year's base salary, and the phantom stock units and options will become
fully vested. The Revised Ribis Plaza Agreement defines (a) "cause" as Mr.
Ribis's (i) conviction of certain crimes, (ii) gross negligence or willful
misconduct in carrying out his duties, (iii) revocation of his casino key
employee license or (iv) material breach of the agreement, and (b)
"constructive termination without cause" as the termination of Mr. Ribis's
employment at his initiative following the occurrence of certain events,
including (i) a reduction in compensation, (ii) failure to elect Mr. Ribis as
Chief Executive Officer of THCR, (iii) failure to elect Mr. Ribis a director
of THCR or (iv) a material diminution of his duties. The phantom stock units
will also automatically vest upon the death or disability of Mr. Ribis. The
Revised Ribis Plaza Agreement also provides for up to an aggregate of $2.0
million of loans to Mr. Ribis to be used by him to pay his income tax
liability in connection with stock options, phantom stock units and stock
bonus awards, which loans will be forgiven, including both principal and
interest, in the event of a "change of control." The Revised Ribis Plaza
Agreement defines "change of control" as the occurrence of any of the
following events: (i) any person (other
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<PAGE>
than THCR Holdings, Trump or an affiliate of either) becomes a beneficial
owner of 50% or more of the voting stock of THCR, (ii) the majority of the
Board of Directors of THCR consists of individuals that were not directors on
June 12, 1995 (the "June 12 Directors") provided, however, that any person who
becomes a director subsequent to June 12, 1995, shall be considered a June 12
Director if his election or nomination was supported by three-quarters of the
June 12 Directors, (iii) THCR adopts and implements a plan of liquidation or
(iv) all or substantially all of the assets or business of THCR are disposed
of in a sale or business combination in which shareholders of THCR would not
beneficially own the same proportion of voting stock of the successor entity.
The Revised Ribis Plaza Agreement also provides certain demand and piggyback
registration rights for THCR Common Stock issued pursuant to the foregoing.
Pursuant to the Revised Ribis Plaza Agreement, Mr. Ribis has agreed that upon
termination of his employment other than for "cause" or following a "change of
control," he would not engage in any activity competitive with THCR for a
period of up to one year.
Mr. Ribis is also Chief Executive Officer of TCA, the partnership that owns
Trump's Castle, and receives compensation from this entity for such services
as set forth above. Pursuant to the Revised Ribis Plaza Agreement, he is
required to devote the majority of his time to the affairs of THCR, and
following the consummation of the Merger Transaction, Mr. Ribis will devote
approximately 75% of his professional time to THCR. All other executive
officers of Plaza Associates, except Messrs. Burke and Pickus, devote
substantially all of their time to the business of Plaza Associates.
THCR Holdings has an employment agreement with Robert M. Pickus (the "Pickus
Agreement") pursuant to which he serves as Executive Vice President and
General Counsel. The Pickus Agreement, the initial term of which expires on
July 9, 1998 if not extended, provides for annual compensation of $275,000
plus bonus. Employment may be terminated only for "cause," which is defined in
the Pickus Agreement as Mr. Pickus's (i) revocation of his casino key employee
license, (ii) conviction of certain crimes, (iii) disability or death or (iv)
breach of his duty to THCR Holdings. Upon termination for cause, Mr. Pickus
will receive only compensation earned to the date of termination. Pursuant to
the Pickus Agreement, Mr. Pickus has agreed not to accept employment for or on
behalf of any other casino hotel located in Atlantic City during the term of
the Pickus Agreement.
Plaza Funding and Plaza Associates have an employment agreement with Barry
J. Cregan (the "Cregan Agreement") pursuant to which Mr. Cregan acts as
President and Chief Operating Officer of Plaza Associates. The Cregan
Agreement, which will expire on September 18, 1996, provides for an annual
base salary of $600,000 during the first year and an annual base salary of
$700,000 during the second year, and can be extended at Mr. Cregan's option
for one additional year at an annual base salary of $750,000 during his third
year of employment. Pursuant to the Cregan Agreement, Mr. Cregan devotes all
of his professional time to Plaza Associates. In the event that Plaza Funding
or Plaza Associates terminates Mr. Cregan's employment for Cause (defined as
the revocation of Mr. Cregan's casino key employee license, his conviction of
certain crimes, death, disability or the breach of his duty of trust to Plaza
Associates), Plaza Associates shall pay Mr. Cregan all compensation earned to
the date of such termination. In the event Mr. Cregan terminates the Cregan
Agreement for Good Cause, Plaza Associates is required to pay Mr. Cregan all
compensation, reimbursements and benefits provided for under the Cregan
Agreement (a) due as of the date of such termination and (b) payable from such
date of termination through the expiration date of the Cregan Agreement. "Good
Cause" is defined in the Cregan Agreement as (i) the assignment to Mr. Cregan,
without his consent, of any duties inconsistent with the position of Chief
Operating Officer, a demotion or change in Mr. Cregan's title or office, any
removal from his position or a change in control of Plaza Associates, except
in connection with the termination of Mr. Cregan's employment upon revocation
of his casino key employee license, death or disability, (ii) the filing of a
bankruptcy petition under Chapter 7 of the Bankruptcy Code by Plaza
Associates, Plaza Funding or its respective creditors, (iii) revocation by the
CCC or its refusal to renew Plaza Associates' casino license or the
appointment of a conservator in connection with Trump Plaza, (iv) the failure
by Plaza Associates to pay Mr. Cregan the compensation due under the Cregan
Agreement on the dates and at such times such compensation is due, (v) a sale
or long term lease of Trump Plaza or substantially all of its assets except to
an entity wholly owned by Plaza Associates or Trump or (vi) Nicholas L. Ribis
no longer acting as the Chief Executive Officer of THCR;
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<PAGE>
provided that, Mr. Cregan shall not be entitled to compensation described in
(b) of the prior sentence following the occurrence of an event described in (v)
or (vi) of this sentence. Until the Expiration Date or the earlier termination
of the Cregan Agreement as provided therein and provided Mr. Cregan is being
paid the compensation, reimbursement and benefits set forth in the Cregan
Agreement on the dates and at the times such compensation, reimbursement and
benefits are due to be paid, Mr. Cregan shall not accept employment, either as
an employee, consultant or independent contractor, for or on behalf of any
other casino hotel located within a 300 mile radius of Atlantic City, New
Jersey.
Plaza Associates has an employment agreement with James A. Rigot (the "Rigot
Agreement") pursuant to which Mr. Rigot acts as Executive Vice President of
Casino Operations of Plaza Associates. The Rigot Agreement, which expires on
November 30, 1997, provides for a bonus of $100,000 upon commencement of
employment, an annual base salary of $250,000, with any bonus and increases in
salary provided in Plaza Associates' sole and absolute discretion, however, at
no time shall such salary be less than $250,000. Pursuant to the Rigot
Agreement, Mr. Rigot devotes all of his professional time to Plaza Associates.
In the event that Plaza Associates terminates the Rigot Agreement (i) because
Mr. Rigot's CCC license is terminated or (ii) because Mr. Rigot has committed
an act constituting Cause (defined as a breach by Mr. Rigot of any provision of
the Rigot Agreement or any employee conduct rules, an act of dishonesty, the
deliberate and intentional refusal by Mr. Rigot to perform his duties under the
Rigot Agreement, certain disabilities or death), Plaza Associates shall pay to
Mr. Rigot all compensation earned to the date of such termination. In the event
that Plaza Associates terminates the Rigot Agreement for any other reason,
Plaza Associates shall offer to pay Mr. Rigot an amount equal to twelve months
of Mr. Rigot's then current salary, which offer, if accepted, will constitute
complete satisfaction of all obligations and liabilities arising out of the
Rigot Agreement. So long as Plaza Associates continues to pay Mr. Rigot's
salary pursuant to the Rigot Agreement, Mr. Rigot shall not accept employment,
either as an employee, consultant or independent contractor, for or on behalf
of any other casino hotel located in Atlantic City, New Jersey.
Plaza Associates has an employment agreement with Kevin S. Smith, Esq. (the
"Smith Agreement") pursuant to which Mr. Smith acts as the Vice
President/General Counsel of Plaza Associates. The Smith Agreement, which
expires on February 9, 1998, provides for an annual base salary of $110,000,
with any bonus and increases in salary provided in Plaza Associates' sole and
absolute discretion. Pursuant to the Smith Agreement, Mr. Smith devotes all of
his professional time to Plaza Associates. In the event that Plaza Associates
terminates the Smith Agreement due to the fact that Mr. Smith no longer holds
his CCC license, Mr. Smith shall be entitled to no further compensation. In the
event that the Smith Agreement is terminated for any other reason, Mr. Smith
shall be entitled to compensation in the amount of one year's salary (plus
salary for the remainder of the month in which the Smith Agreement was
terminated), including benefits.
Plaza Associates has an agreement with Patrick O'Malley (the "O'Malley
Agreement"), pursuant to which Mr. O'Malley serves as Executive Vice President
of Hotel Operations of Plaza Associates. The O'Malley Agreement, which expires
on September 17, 1997, provides for a $50,000 signing bonus and an annual base
salary of $250,000 per year. In the event Plaza Associates terminates the
O'Malley Agreement because Mr. O'Malley's casino license is revoked, terminated
and/or suspended for more than 30 days or for Cause (defined as a breach by Mr.
O'Malley of the material provisions of the O'Malley Agreement or an act of
dishonesty), Plaza Associates is required to pay Mr. O'Malley an amount equal
to his salary earned to the date of such termination. In the event Mr. O'Malley
terminates the O'Malley Agreement for Good Cause (defined as the assignment to
Mr. O'Malley, without his consent, of any duties inconsistent with the position
of Executive Vice President of Hotel Operations, a demotion or change in Mr.
O'Malley's title or office, any removal from his position or a change in
control of Plaza Associates, except in connection with the termination of Mr.
O'Malley's employment upon revocation of his casino key employee license, death
or disability), or if Plaza Associates terminates the O'Malley Agreement
without Cause, Plaza Associates shall pay Mr. O'Malley all compensation,
reimbursements and benefits provided for under the O'Malley Agreement (i) due
on the date of such termination and (ii) payable from such date of termination
through the expiration date of the O'Malley Agreement, which amount shall not
be less than one year annual base salary then payable, and any bonuses accrued
to such date of
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<PAGE>
termination. Mr. O'Malley may renew the O'Malley Agreement for a period of one
year upon the same terms as the O'Malley Agreement except that Mr. O'Malley's
base salary will be negotiated upward in good faith by the parties and will
not be less than $250,000 per year. Upon termination of the O'Malley
Agreement, Mr. O'Malley will not accept employment, either as an employee,
consultant or independent contractor, for or on behalf of any other casino
hotel located within a 300-mile radius of Atlantic City, New Jersey.
The Cregan Agreement, Rigot Agreement, Smith Agreement and O'Malley
Agreement provide for discretionary bonuses. Factors considered by Plaza
Associates in the awarding of all discretionary bonuses generally are the
attainment by Plaza Associates of budgeted or forecasted goals and the
individual's perceived contribution to the attainment of such goals.
Taj Associates. Taj Associates has an employment agreement with Nicholas L.
Ribis (the "Ribis Taj Agreement") pursuant to which Mr. Ribis acts as Chief
Executive Officer of Taj Associates, the term of which expires on September
25, 1996. Mr. Ribis received a $250,000 signing bonus. Pursuant to the terms
of the Ribis Taj Agreement, in the event that Taj Associates, or any entity
which acquires substantially all of Taj Associates, proposes to engage in an
offering of common shares to the public, Taj Associates and Mr. Ribis will
negotiate new compensation arrangements to include equity participation for
Mr. Ribis. Taj Associates may at any time terminate Mr. Ribis's employment for
"cause," which is defined in the Ribis Taj Agreement as Mr. Ribis's (i)
conviction of a felony or (ii) revocation or termination of his casino key
employee license issued by the CCC. Pursuant to the Ribis Taj Agreement, Mr.
Ribis has agreed that upon termination of his employment for cause by Taj
Associates or voluntarily by Mr. Ribis (other than following a material breach
of the agreement by Taj Associates), he would not engage in employment for or
on behalf of any other casino hotel located in Atlantic City for the lesser of
one year or the period then remaining in the term of the agreement, provided
that this covenant not to compete shall not be applicable in the case there is
a public offering of common shares and Mr. Ribis voluntarily terminates his
employment as the result of his and Taj Associates' failure to negotiate
mutually satisfactory compensation arrangements. Taj Associates and Mr. Ribis
expect to amend the Ribis Taj Agreement, retroactive to June 12, 1995,
pursuant to which, among other things, Mr. Ribis's annual salary will change
from $550,000 (with annual increases of 10% on each anniversary) to $499,125.
Mr. Ribis acts as President, Chief Executive Officer and Chief Financial
Officer of THCR and THCR Holdings, the Chief Executive Officer of TCA and
Plaza Associates, the partnerships that own Trump's Castle and Trump Plaza,
and receives additional compensation from such entities. Mr. Ribis devotes
approximately one quarter of his professional time to the affairs of Taj
Associates. Following the consummation of the Merger Transaction, Mr. Ribis
will devote 75% of his professional time to the operations of THCR, Plaza
Associates and Taj Associates. See "--Employment Agreements."
Taj Associates has an employment agreement with R. Bruce McKee (the "McKee
Agreement") pursuant to which he serves as Senior Vice President and Chief
Financial Officer of Taj Associates. The McKee Agreement, which expires on
September 30, 1997, provides for an annual salary of $175,000, a guaranteed
bonus of $25,000 and is terminable by Mr. McKee on each anniversary date of
the agreement. Mr. McKee will be considered further for additional bonus
compensation at Taj Associates' sole discretion. Factors considered by Taj
Associates in the awarding of all discretionary bonuses generally are the
attainment by Taj Associates of budgeted or forecasted goals and the
individual's perceived contribution to the attainment of such goals.
Taj Associates has an employment agreement with Larry W. Clark (the "Clark
Agreement") pursuant to which he serves as Executive Vice President, Casino
Operations of Taj Associates. The Clark Agreement, which expires on November
30, 1997, provides for an annual salary of $300,000 and, in addition, a
minimum guaranteed bonus of at least $124,200 per annum. Pursuant to the Clark
Agreement, Mr. Clark has agreed that in the event the agreement is terminated
by him for any reason or by Taj Associates for cause, he would not engage in
employment for or on behalf of any other casino hotel located in Atlantic City
for a period of one year.
Taj Associates has an employment agreement with Nicholas J. Niglio (the
"Niglio Agreement") which was assigned to Taj Associates by TCA on February 6,
1995, pursuant to which he serves as Senior Vice President, Casino Marketing
of Taj Associates. The Niglio Agreement, which expires on December 31, 1996,
provides for
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an annual salary of $250,000 and an annual bonus at the sole discretion of
management of Taj Associates. Pursuant to the Niglio Agreement, Mr. Niglio has
agreed that upon termination of his employment he would not solicit or
contact, directly or through any other casino in Atlantic City, any customers
whom he had developed during his employment with Taj Associates for a period
of ninety days. Mr. Niglio previously served as Executive Vice President of
TCA.
Taj Associates may terminate the employment agreements of Messrs. Clark,
McKee and Niglio in its sole discretion, without cause. If Mr. Clark's
employment agreement is terminated without cause, Taj Associates would be
obligated to pay Mr. Clark the greater of one year's salary or his salary for
the number of months remaining in the agreement, each at his then current
salary. If Mr. McKee's employment agreement is terminated without cause, Taj
Associates would be obligated to pay Mr. McKee an amount equal to one year's
then current salary. If Mr. Niglio's employment agreement is terminated
without cause, Taj Associates would be obligated to pay Mr. Niglio the lesser
of three month's salary or his salary for the number of months remaining in
the agreement, each at his then current salary. Taj Associates may also
terminate the McKee Agreement, the Clark Agreement and the Niglio Agreement
(a) in the event that the CCC license of Mr. McKee, Mr. Clark or Mr. Niglio,
respectively, is revoked or terminated or (b) for "cause," which is defined in
each of the agreements as (i) a material breach of the agreement or of any
employee conduct rules, (ii) dishonesty, (iii) intentional refusal to perform
duties or to properly perform them upon notice, (iv) alcohol or drug abuse or
(v) disability or death.
Taj Associates entered into a severance agreement with Nicholas F. Moles
(the "Moles Agreement") on August 11, 1994. The Moles Agreement provides that
upon Mr. Moles' termination other than for "cause," loss of his casino key
employee license from the CCC or voluntary resignation, Taj Associates will
pay Mr. Moles a severance payment equal to the amount of his salary at its
then current rate for the period of one year. The Moles Agreement defines
"cause" as Mr. Moles' (i) material breach of the agreement or of any employee
conduct rules, (ii) dishonesty, (iii) intentional refusal to perform his
duties or to properly perform them upon notice, (iv) alcohol or drug abuse or
(v) disability or death.
Taj Associates had an employment agreement with Dennis C. Gomes, pursuant to
which Mr. Gomes served as President and Chief Operating Officer of Taj
Associates. The agreement provided for an annual salary of $1,500,000 and
annual increases of 10% on each anniversary. Mr. Gomes received a signing
bonus of $600,000. On September 19, 1995, pursuant to the terms of the
employment agreement, Mr. Gomes terminated his employment agreement as
President and Chief Operating Officer of Taj Associates and continued to serve
in that position as an employee-at-will. On October 3, 1995, the Board of
Directors of TM/GP terminated Mr. Gomes from his position as President and
Chief Operating Officer of Taj Associates and Vice President of Taj Holding.
On that same date, Trump, the holder of the Taj Holding Class C Common Stock,
terminated Mr. Gomes as a Class C Director of TM/GP and Taj Holding. Mr. Gomes
did not receive any severance compensation in connection with his termination.
COMPENSATION OF DIRECTORS
Directors of THCR who are also employees or consultants of THCR and its
affiliates receive no directors' fees. Non-employee directors are paid an
annual directors' fee of $50,000, plus $2,000 per meeting attended plus
reasonable out-of-pocket expenses incurred in attending these meetings,
provided that directors currently serving on the Board of Directors of Plaza
Funding or Plaza Holding Inc. receive no additional compensation. All such
fees are reimbursed to THCR by THCR Holdings in accordance with the THCR
Holdings Partnership Agreement.
COMMITTEES OF THE BOARD OF DIRECTORS
THCR has an Executive Committee, an Audit Committee, a Special Committee, a
Stock Incentive Plan Committee and a Compensation Committee. The Executive
Committee is composed of Messrs. Trump and Ribis. The Audit Committee and the
Special Committee are composed of Messrs. Askins, Ryan and Thomas, each of
whom is an independent director of THCR. The Stock Incentive Plan Committee is
composed of Messrs. Trump,
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Askins, Ryan and Thomas. The Compensation Committee is composed of Messrs.
Trump, Ribis, Askins and Thomas. The Special Committee was established
pursuant to THCR By-Laws and the THCR Holdings Partnership Agreement and is
empowered to vote on any matters which require approval of a majority of the
independent directors of THCR, including affiliated transactions.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION: THCR AND PLAZA
ASSOCIATES
In general, the compensation of executive officers of THCR is determined by
the Compensation Committee of the Board of Directors of THCR, which consists
of Messrs. Trump, Ribis, Askins and Thomas. No officer or employee of THCR,
other than Messrs. Trump and Ribis, who serve on the Board of Directors of
THCR, participated in the deliberations of the Board of Directors of THCR
concerning executive compensation.
Certain Related Party Transactions of Trump. Trump entered into the
Executive Agreement, the Contribution Agreement and the License Agreement in
June 1995, and is currently the sole limited partner of THCR Holdings. See "--
Employment Agreements," "Business of THCR--Trademark/Licensing" and
"Description of the THCR Holdings Partnership Agreement."
Upon consummation of the June 1995 Offerings, Trump contributed to the
capital of Trump Indiana and other new jurisdiction subsidiaries payments made
by him relating to expenditures for the development of the Indiana Riverboat
and other gaming ventures. As of June 12, 1995 these advances totaled
approximately $4.4 million. Of these amounts, approximately $3.0 million were
used to fund expenses related to the development of Trump Indiana. In order to
fund such expenses, THCR Holdings lent to Trump $3.0 million and Trump issued
to THCR Holdings a five-year promissory note bearing interest at a fixed rate
of 10%, payable annually. The promissory note provided that it would be
automatically canceled in the event that at any time during the periods set
forth below, the THCR Common Stock traded on the NYSE, or any other applicable
national exchange or over-the-counter market, at a price per share equal to or
greater than the prices set forth below (subject to adjustment in certain
circumstances) for any ten trading days during any 15 consecutive trading day
period:
<TABLE>
<S> <C>
If on or prior to June 12, 1997 ...................................... $25.00
If on or prior to June 12, 1998 ...................................... $27.50
If on or prior to June 12, 1999 ...................................... $30.00
If on or prior to June 12, 2000 ...................................... $32.50
</TABLE>
On March 27, 1996, the $3.0 million promissory note was canceled in accordance
with its terms.
THCR has entered into a ten-year lease with The Trump-Equitable Fifth Avenue
Company, a corporation wholly owned by Trump, dated as of July 1, 1995, for
the lease of office space in The Trump Tower in New York City, which THCR may
use for its general executive and administrative offices. The fixed rent is
$115,500 per year, paid in equal monthly installments, for the period from
July 1, 1995 to June 30, 2000 and will be $129,250 per year, paid in equal
monthly installments, for the period from July 1, 2000 to June 30, 2005. In
addition, THCR will pay as additional rent, among other things, a portion of
the property taxes due each year. THCR has the option to terminate this lease
upon ninety days' written notice and payment of $32,312.50.
In connection with the Merger Transaction, Trump and THCR entered into an
agreement, dated January 8, 1996, pursuant to which Trump agreed to take the
actions contemplated to be taken by Trump in connection with the Merger
Transaction, including to vote, or cause to be voted, all shares of THCR
Common Stock and THCR Class B Common Stock beneficially owned by Trump in
favor of the approval of the Merger Transaction. THCR agreed to use reasonable
efforts to fulfill, and cause to be fulfilled, those obligations owed to Trump
in connection with the Merger Transaction.
Through February 1, 1993, Plaza Associates also leased from Trump
approximately 120 parking spaces at Trump Plaza East for approximately $5.50
per parking space per day, with payments under such arrangement for the years
ended December 31, 1993 and December 31, 1992 totaling $21,000 and $227,000,
respectively.
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Seashore Four is the fee owner of a parcel of land constituting a portion of
the Plaza Casino Parcel, which it leases to Plaza Associates pursuant to the
SFA Lease. Seashore Four was assigned the lessor's interest in the existing
SFA Lease in connection with its acquisition of fee title to such parcel from
a non-affiliated third party in November 1983. The SFA Lease was entered into
by Plaza Associates with such third party on an arm's-length basis. Plaza
Associates recorded rental expenses of approximately $950,000, $900,000 and
$900,000 in 1995, 1994 and 1993, respectively, concerning rent owed to
Seashore Four.
Trump Seashore is the fee owner of a parcel of land constituting a portion
of the Plaza Casino Parcel, which it leases to Plaza Associates pursuant to
the TSA Lease. In July 1988, Trump Seashore exercised a $10 million option to
purchase the fee title to such parcel from a non-affiliated third party. In
connection therewith, Trump Seashore was assigned the lessors' interest in the
Trump Seashore Lease, which interest has, however, been transferred to UST.
See "Business of THCR--Properties." Plaza Associates made rental payments to
Trump Seashore of approximately $1.2 million, $1.0 million and $1.0 million in
1995, 1994 and 1993, respectively.
In June 1989, Trump Crystal Tower Associates Limited Partnership ("Trump
Crystal"), a New Jersey limited partnership wholly owned by Trump, acquired
from Elsinore Shore Associates all of the assets constituting the former
Atlantis Casino Hotel ("Atlantis"), which is located on The Boardwalk adjacent
to the Atlantic City Convention Center on the opposite side from Trump Plaza
and is otherwise referred to herein as Trump World's Fair. Prior to such
acquisition, all of the Atlantis' gaming operations were discontinued. The
facility was renamed the Trump Regency Hotel and, in August 1990, pursuant to
a triple net lease with an affiliate of Plaza Associates, leased to Plaza
Associates, which operated it solely as a non-casino hotel. During such period
of operation, losses attributable to the former Trump Regency Hotel
aggregating approximately $14.1 million adversely affected the results of
operations of Plaza Associates. Pursuant to the 1992 Plaza Restructuring,
Plaza Associates ceased operating the former Trump Regency Hotel as of
September 30, 1992. As part of the 1992 Plaza Restructuring, the triple-net
lease was terminated and Plaza Associates issued to Manufacturers Hanover
Trust Company, which has since been acquired by Chemical Bank ("Chemical"),
the assignee of rents payable under such lease, a promissory note in the
original principal amount of $17.5 million (the "Regency Note"). At such time,
title to the former Trump Regency Hotel was transferred by Trump to ACFH Inc.
("ACFH"), a wholly owned subsidiary of Chemical. From that time until June 12,
1995, the former Trump Regency Hotel was operated on behalf of ACFH as a non-
casino hotel by Sovereign Management, a third party unaffiliated with THCR,
Trump or their respective affiliates. Pursuant to an agreement between Trump
Crystal and ACFH, Trump Crystal granted ACFH a non-exclusive license to use
the "Trump" name in connection with such property. Plaza Associates repaid the
Regency Note with a portion of the proceeds from the sale of the Plaza Notes
and PIK Notes.
In December 1993, Trump entered into an option agreement (the "Original
Chemical Option Agreement") with Chemical and ACFH. The Original Chemical
Option Agreement granted to Trump an option to purchase (i) the former Trump
Regency Hotel (including the land, improvements and personal property used in
the operation of the hotel) and (ii) certain promissory notes (including a
personal promissory note of Trump payable to Chemical for $35.9 million (the
"Trump Note")) made by Trump and/or certain of his affiliates and payable to
Chemical (the "Chemical Notes") which are secured by certain real estate
assets located in New York, unrelated to Plaza Associates, including the Trump
Note which was made by Trump on July 20, 1987. As of September 30, 1995, the
aggregate amount owed by Trump and his affiliates under the Chemical Notes
(none of which constitutes an obligation of Plaza Associates) was
approximately $65.8 million. In connection with exercise of the Trump World's
Fair Purchase Option, as discussed below, the Trump Note was canceled.
The aggregate purchase price payable for the assets subject to the Original
Chemical Option Agreement was $80 million. Under the terms of the Original
Chemical Option Agreement, $1 million was required to be paid for the option
by January 5, 1994. In addition, the Original Chemical Option Agreement
provided for an expiration of the option on May 8, 1994, subject to an
extension until June 30, 1994 upon payment of an additional $250,000 on or
before May 8, 1994. The Original Chemical Option Agreement did not allocate
the purchase price among the assets subject to the option or permit the option
to be exercised for some, but not all, of such assets.
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In connection with the execution of the Original Chemical Option Agreement,
Plaza Associates was to make the initial $1 million payment, and, in
consideration of such payment to be made by Plaza Associates, Trump agreed
with Plaza Associates that, if Trump was able to acquire the former Trump
Regency Hotel pursuant to the exercise of the option, he would make it
available for the sole benefit of Plaza Associates on a basis consistent with
Plaza Associates' contractual obligations and requirements. Trump further
agreed that Plaza Associates would not be required to pay any additional
consideration to Trump in connection with any assignment to Plaza Associates
of the option to purchase the former Trump Regency Hotel. On January 5, 1994,
Plaza Associates obtained the approval of the CCC to make the $1 million
payment, and the payment was made on that date.
On June 16, 1994, Trump, Chemical and ACFH amended and restated the Original
Chemical Option Agreement (the "First Amended Chemical Option Agreement"). The
First Amended Chemical Option Agreement provided for an extension of the
expiration of the option through September 30, 1994, upon payment of $250,000.
Such payment was made on June 27, 1994. The First Amended Chemical Option
Agreement provided for a $60 million option price for the former Trump Regency
Hotel and the Trump Note, and a separate $20 million option price for the
other Chemical Notes. On August 30, 1994, Trump, Chemical and ACFH entered
into an amendment to the First Amended Chemical Option Agreement (the "Second
Amended Chemical Option Agreement"). The Second Amended Chemical Option
Agreement provided for an extension of the expiration of the option through
March 31, 1995 upon the payment of $50,000 a month for the period October
through December 1994, and $150,000 a month for the period January through
March 1995. Plaza Associates received the approval of the CCC and has made
such payments. On March 6, 1995, Trump, Chemical and ACFH entered into an
amendment to the Second Amended Chemical Option Agreement (the "Third Amended
Chemical Option Agreement") or the Trump World's Fair Purchase Option. On June
12, 1995, Trump exercised the Trump World's Fair Purchase Option for
$58,150,000 ($60 million less $1,850,000 in option payments which were
available as of that date to offset the original exercise price), and title to
Trump World's Fair was transferred via directed deed from ACFH to Plaza
Associates. In connection with the exercise of the Trump World's Fair Purchase
Option, the Trump Note was canceled. THCR is currently in the process of
renovating and integrating Trump World's Fair into Trump Plaza. See "Business
of THCR--Trump Plaza--The Trump Plaza Expansion."
In 1993, Plaza Associates received the approval of the CCC, subject to
certain conditions, for the expansion of its hotel facilities at Trump Plaza
East. On June 24, 1993, in connection with the 1993 refinancing of Trump
Plaza, (i) Trump transferred title to Trump Plaza East to Missouri Boardwalk,
Inc., a wholly owned subsidiary of Midlantic National Bank ("Midlantic"), in
exchange for a reduction in indebtedness to Midlantic in an amount equal to
the sum of fair market value of Trump Plaza East and all rent payments made to
Boardwalk by Trump under the Trump Plaza East Lease (as defined), (ii)
Boardwalk leased Trump Plaza East to Trump (the "Trump Plaza East Lease") for
a term of five years, which expires on June 30, 1998, during which time Trump
was obligated to pay Boardwalk $260,000 per month in lease payments, and (iii)
Plaza Associates acquired the Trump Plaza East Purchase Option. In October
1993, Plaza Associates assumed the Trump Plaza East Lease and related
expenses. In addition, Plaza Associates has the Right of First Offer upon any
proposed sale of all or any portion of the fee interest in Trump Plaza East
during the term of the Trump Plaza East Purchase Option. Pursuant to the Right
of First Offer, Plaza Associates has ten days after receiving written notice
from the grantor of the proposed sale to commit to exercise the Right of First
Offer. If Plaza Associates commits to exercise the Right of First Offer, it
has ten days from the date of commitment to deposit $3,000,000 with the
grantor, to be credited towards the purchase price or to be retained by the
grantor if the closing, through no fault of the grantor, does not occur within
90 days (or, subject to certain conditions, 120 days) of the date of the
commitment. If Plaza Associates determines not to timely exercise the Right of
First Offer, the grantor thereof may sell Trump Plaza East to a third party,
subject, however, to the Trump Plaza East Purchase Option and the lease
associated with Trump Plaza East. Trump, individually, also has been granted
by such lender the Right of First Offer upon a proposed sale of all or any
portion of Trump Plaza East during the term of the Trump Plaza East Purchase
Option. Trump has agreed with Plaza Associates that his Right of First Offer
will be subject to Plaza Associates' prior exercise of its Right of First
Offer (with any decision of Plaza Associates requiring the approval of the
independent directors of Plaza Funding, acting as the managing general partner
of Plaza Associates). Acquisition of Trump Plaza East by Plaza Associates
would under certain circumstances (provided there are no events of
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default under the Trump Plaza East Lease or the Trump Plaza East Purchase
Option and provided that certain other events had not theretofore or do not
thereafter occur) discharge Trump's approximately $18 million obligation to
Midlantic in full.
On June 24, 1993, Plaza Associates and TPM entered into an agreement (the
"TPM Services Agreement") which amended and restated an earlier services
agreement. Pursuant to the TPM Services Agreement, TPM is required to provide
to Plaza Associates, from time to time when reasonably requested, consulting
services on a non-exclusive basis, relating to marketing, advertising,
promotional and other similar and related services (the "TPM Services") with
respect to the business and operations of Plaza Associates. In addition, the
TPM Services Agreement contains a non-exclusive "license" of the "Trump" name.
TPM is not required to devote any prescribed amount of time to the performance
of its duties. In consideration for the TPM Services, Plaza Associates pays
TPM an annual fee of $1.0 million in equal monthly installments. In addition
to such annual fee, Plaza Associates reimburses TPM on a monthly basis for all
reasonable out-of-pocket expenses incurred by TPM in performing its
obligations under the TPM Services Agreement. Plaza Associates paid TPM
$1,321,000, $1,288,000 and $1,247,000 in 1995, 1994 and 1993, respectively,
for the TPM Services. Pursuant to the TPM Services Agreement, Plaza Associates
has agreed to hold TPM, its officers, directors and employees harmless from
and against any loss arising out of or in connection with the performance of
the TPM Services and to hold Trump harmless from and against any loss arising
out of the license of the "Trump" name. The TPM Services Agreement provides
that its term is coextensive with the period during which any Plaza Notes
remain outstanding.
Payments received under the TPM Services Agreement are currently pledged by
TPM to secure payments made under a lease for a helicopter (the "Super Puma
Helicopter Lease") that TPM makes available to Plaza Associates. Pending
approval by the lessor of the helicopter, it is currently contemplated that
the stock of TPM will be transferred by Trump to THCR Holdings, which will in
turn assume the lease and related obligations, as well as become entitled to
all amounts payable under the TPM Services Agreement.
John Barry, Trump's brother-in-law, is a partner of Barry & McMoran, a New
Jersey law firm which provides, from time to time, legal services to Plaza
Associates.
Other Relationships. The Securities and Exchange Commission (the "SEC")
requires issuers to disclose the existence of any other corporation in which
both (i) an executive officer of the registrant serves on the board of
directors and/or compensation committee, and (ii) a director of the registrant
serves as an executive officer. Messrs. Ribis, Pickus and Burke, executive
officers of THCR, have served on the boards of directors of other entities in
which members of the Board of Directors (namely, Messrs. Trump and Ribis)
served and continue to serve as executive officers. Management believes that
such relationships have not affected the compensation decisions made by the
Board of Directors in the last fiscal year.
Messrs. Trump and Ribis serve on the Board of Directors of Plaza Funding,
the managing general partner of Plaza Associates, of which Messrs. Trump and
Ribis are executive officers. Messrs. Trump and Ribis also serve on the Board
of Directors of Plaza Holding Inc., of which Messrs. Trump, Ribis and Burke
are also executive officers. Trump is not compensated by such entities for
serving as an executive officer, however, he has entered into a personal
services agreement with Plaza Associates and THCR. Messrs. Ribis and Burke are
not compensated by the foregoing entities, however, they are compensated by
Plaza Associates for their service as executive officers.
Messrs. Ribis, Pickus and Burke serve on the Board of Directors of Taj
Holding, which holds an indirect equity interest in Taj Associates, the
partnership that owns the Taj Mahal, of which Trump is an executive officer.
Such persons also serve on the Board of Directors of TM/GP, the managing
general partner of Taj Associates, of which Messrs. Trump and Ribis are
executive officers. Mr. Ribis is compensated by Taj Associates for his
services as its Chief Executive Officer. See "--Employment Agreements."
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Mr. Ribis also serves on the Board of Directors of Realty Corp., which
leases certain real property to Taj Associates, of which Trump is an executive
officer. Trump, however, does not receive any compensation for serving as an
executive officer of Realty Corp. Mr. Ribis receives compensation from TCA for
acting as its Chief Executive Officer. See "--Employment Agreements." Prior to
December 1995, Mr. Ribis was Counsel to the law firm of Ribis, Graham and
Curtin (now practicing as Graham, Curtin & Sheridan, A Professional
Association), which serves as New Jersey legal counsel to THCR, THCR Holdings,
Trump AC, Plaza Associates, Taj Associates and certain of their affiliated
entities.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION: TAJ ASSOCIATES
In general, the compensation of executive officers of Taj Associates is
determined (prior to the Merger Transaction) by the Board of Directors of Taj
Holding and TM/GP. No officer or employee of Taj Associates other than Mr.
Ribis, who serves on the Boards of Directors of Taj Holding and TM/GP
participated in the deliberations concerning executive compensation.
Certain Related Party Transactions of Trump. On January 8, 1996, as an
inducement for Taj Holding, THCR and Merger Sub to enter into the Merger
Agreement, Trump agreed to vote, or cause to be voted, all shares of Taj
Holding Class C Common Stock beneficially owned by Trump in favor of the
approval and adoption of the Merger Agreement.
Taj Associates has entered into a lease with The Trump-Equitable Fifth
Avenue Co., a corporation wholly owned by Trump, for the lease of office space
in The Trump Tower in New York City, which Taj Associates uses as a marketing
office. The monthly payments under the lease had been $1,000, and the premises
were leased at such rent for four months in 1992, the full twelve months in
1993 and 1994 and eight months in 1995. On September 1, 1995, the lease was
renewed for a term of five years with an option for Taj Associates to cancel
the lease on September 1 of each year, upon six months' notice and payment of
six months' rent. Under the renewed lease, the monthly payments are $2,184.
Taj Associates currently leases the Specified Parcels from Realty Corp.,
consisting of land adjacent to the site of the Taj Mahal, which is being used
primarily for a bus terminal, surface parking and the Taj Entertainment
Complex, as well as the Steel Pier and a warehouse complex. During 1993, 1994
and 1995, lease obligations to Realty Corp. for these facilities were
approximately $3.3 million per year. Upon consummation of the Merger
Transaction, Taj Associates will purchase the Specified Parcels from Realty
Corp. See "The Merger Transaction."
On October 4, 1991, Taj Associates entered into the Taj Associates-First
Fidelity Guarantee to guarantee performance by Realty Corp. of its obligations
under the First Fidelity Loan. The Taj Associates-First Fidelity Guarantee is
limited to any deficiency in the amount owed under the First Fidelity Loan
when due, up to a maximum of $30 million. In connection with the purchase of
the Specified Parcels, First Fidelity will, among other things, release Taj
Associates from the Taj Associates-First Fidelity Guarantee. See "Business of
Taj Holding--Certain Indebtedness--First Fidelity Loan/Specified Parcels."
During 1992 and prior years, Taj Associates had an arrangement with the
Trump Shuttle, Inc. (the "Trump Shuttle"), which at the time was beneficially
owned by Trump, for the provision of airline services to Atlantic City on
behalf of Taj Associates patrons. During 1992, Taj Associates incurred $29,000
in charges from the Trump Shuttle, all of which was paid.
Taj Associates and Trump have entered into the Taj Services Agreement, which
became effective in April 1991, and which provides that Trump will render to
Taj Associates marketing, advertising, promotional and related services with
respect to the business operations of Taj Associates through December 31,
1999. In consideration for the services to be rendered, Taj Associates pays an
annual fee (the "Annual Fee") equal to 1 1/2% of Taj Associates' earnings
before interest, taxes and depreciation less capital expenditures for such
year, with a minimum base fee of $500,000 per annum. The base fee is payable
monthly with the balance due April
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15 of the following year. During 1993, 1994 and 1995, Trump earned
approximately $1.6 million, $1.4 million and $1.7 million, respectively, in
respect of the Annual Fee, including amounts paid to a third party pursuant to
an assignment agreement. In addition to the Annual Fee, Taj Associates
reimburses Trump on a monthly basis for all reasonable out-of-pocket expenses
up to certain aggregate amounts incurred by Trump in performing his
obligations under the Taj Services Agreement. During 1993, 1994 and 1995, Taj
Associates reimbursed Trump $232,000, $224,000 and $261,000, respectively, for
expenses pursuant to the Taj Services Agreement, of which $127,000, $148,000
and $164,000, respectively, was incurred to an affiliate for air
transportation. Taj Associates has agreed to indemnify Trump from and against
any licensing fees arising out of his performance of the Taj Services
Agreement, and against any liability arising out of his performance of the Taj
Services Agreement, other than that due to his gross negligence or willful
misconduct. In connection with the Merger, the Taj Services Agreement will be
terminated.
On April 1, 1991, in connection with the Taj Services Agreement, Taj
Associates and Trump entered into an Amended and Restated License Agreement
(the "Taj License Agreement") which amended and restated an earlier license
agreement between the parties. Pursuant to the Taj License Agreement, Taj
Associates has the non-exclusive right to use the name and likeness of Trump,
and the exclusive right to use the name and related marks and designs of the
Trump Taj Mahal Casino Resort (collectively, the "Taj Marks"), in its
advertising, marketing and promotional activities through December 31, 1999.
All uses by Taj Associates of the names, marks, licenses and designs under the
Taj License Agreement are subject to the prior written approval of Trump.
Trump has agreed to indemnify Taj Associates against any liability for
trademark or copyright infringement (in connection with the use by Taj
Associates of the Taj Marks in accordance with the Taj License Agreement)
arising solely by reason of any license agreement or other agreement entered
into by Trump with respect to the Taj Marks. Taj Associates has collaterally
assigned its right under the Taj License Agreement to the Taj Bond Trustee.
Upon consummation of the Merger Transaction the Taj License Agreement will be
terminated and the Taj Marks licensed to THCR.
John Barry, Trump's brother-in-law, is a partner of Barry & McMoran, a New
Jersey law firm which provides, from time to time, legal services to Taj
Associates.
Other Relationships. The SEC requires registrants to disclose the existence
of any other corporation in which both (i) an executive officer of the
registrant serves on the board of directors and/or compensation committee, and
(ii) a director of the registrant serves as an executive officer. Mr. Ribis,
an executive officer of Taj Associates, is a member of the Board of Directors
of other entities in which members of the Board of Directors of TM/GP, the
managing general partner of Taj Associates (namely, Messrs. Trump, Ribis and
Burke), are executive officers. Mr. Trump, an executive officer of Taj
Holding, is a member of the Board of Directors of other entities in which
members of the Board of Directors of Taj Holding (namely, Messrs. Trump, Ribis
and Burke) are executive officers. Mr. Ribis, an executive officer of Taj
Funding and TTMI, serves on the Board of Directors of other entities in which
the sole Director of Taj Funding and TTMI (namely, Trump) serves as an
executive officer. In addition, Trump or entities owned by him receive
management or services fees pursuant to fixed formulas provided for in
agreements with Taj Associates, Plaza Associates, THCR and TCA, of which Mr.
Ribis is a director or a director of the managing general partner.
Mr. Ribis serves on the Board of Directors of Taj Holding, which is the 100%
beneficial owner of TM/GP, of which Trump is an executive officer. Messrs.
Trump and Ribis serve on the Board of Directors of TM/GP, which is the
managing general partner of Taj Associates, of which Messrs. Ribis and Burke
are executive officers. Trump, however, does not receive any compensation for
serving as an executive officer of TM/GP or Taj Holding. Messrs. Trump and
Ribis also serve on the Board of Directors of Realty Corp., which leases
certain real property to Taj Associates, of which Messrs. Trump and Ribis are
executive officers. Messrs. Trump and Ribis, however, do not receive any
compensation for serving as executive officers of Realty Corp. Trump is also a
director of TTMI, TTMC and Taj Funding; Mr. Ribis serves as an executive
officer of one or more of such entities; however, he does not receive any
compensation for serving in such capacities.
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Messrs. Trump and Ribis serve on the Board of Directors of Plaza Funding,
Inc., the managing general partner of Plaza Associates, of which Messrs. Trump
and Ribis are executive officers. Messrs. Trump and Ribis also serve on the
Board of Directors of Plaza Holding, Inc., of which Messrs. Trump, Ribis and
Burke are also executive officers. Trump is not compensated by such entities
for serving as an executive officer; however, he has entered into a personal
services agreement with Plaza Associates and THCR. Messrs. Ribis and Burke are
not compensated by the foregoing entities; however, they are compensated by
Plaza Associates for their service as executive officers.
Trump serves on the Boards of Directors of THCR and TC/GP, Inc., of which
Messrs. Ribis and Burke are executive officers. Trump is not compensated by
such entities for serving as an executive officer; however, a corporation
controlled by him has entered into a services agreement with TCA. Messrs.
Ribis and Burke are not compensated by the foregoing entities; however, they
are compensated by TCA for their service as executive officers.
Prior to December 1995, Mr. Ribis was Counsel to the law firm of Ribis,
Graham and Curtin (now practicing as Graham, Curtin & Sheridan, A Professional
Association), which serves as New Jersey legal counsel to THCR, THCR Holdings,
Plaza Associates, Trump AC, Taj Associates and certain of their affiliated
entities.
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CERTAIN TRANSACTIONS
Payments to affiliates in connection with any such transactions are governed
by the provisions of the First Mortgage Note Indenture, which provisions will
generally require that such transactions be on terms as favorable as would be
obtainable from an unaffiliated party, and require the approval of a majority
of the independent directors of Trump AC Funding for certain affiliated
transactions.
THCR AND PLAZA ASSOCIATES
Trump and certain affiliates have engaged in certain related party
transactions with respect to THCR and Plaza Associates. See "Management--
Compensation Committee Interlocks and Insider Participation: THCR and Plaza
Associates--Certain Related Party Transactions of Trump" and "--Other
Relationships."
Plaza Associates has joint property insurance coverage with TCA, Taj
Associates and other entities affiliated with Trump for which the annual
premium paid by Plaza Associates was approximately $1.4 million for the 12
months ended May 1996.
Plaza Associates leased from Taj Associates certain office facilities
located in Pleasantville, New Jersey. In 1993 and 1992, lease payments by
Plaza Associates to Taj Associates totaled approximately $30,000 and $138,000,
respectively. Such lease terminated on March 19, 1993, and Plaza Associates
vacated the premises. Through February 1, 1993, Plaza Associates also leased
from Trump approximately 120 parking spaces at Trump Plaza East for
approximately $5.50 per parking space per day, with payments under such
arrangement for the years ended December 31, 1993 and December 31, 1992
totaling $21,000 and $227,000, respectively.
Plaza Associates also leased portions of its warehouse facility located in
Egg Harbor Township, New Jersey to TCA; lease payments by TCA to Plaza
Associates totaled $6,000, $6,000 and $15,000 in 1995, 1994 and 1993,
respectively.
Indemnification Agreements. In addition to the indemnification provisions
in THCR's and its subsidiaries' employment agreements (see "Management--
Employment Agreements"), certain former and current Directors of Plaza Funding
entered into separate indemnification agreements in May 1992 with Plaza
Associates pursuant to which such persons are afforded the full benefits of
the indemnification provisions of the partnership agreement governing Plaza
Associates. Plaza Associates also entered into an Indemnification Trust
Agreement in November 1992 (the "Trust Agreement") with Midlantic (the
"Indemnification Trustee") pursuant to which the sum of $100,000 was deposited
by Plaza Associates with the Indemnification Trustee for the benefit of the
Directors of Plaza Funding and certain former directors of Trump Plaza GP to
provide a source for indemnification for such persons if Plaza Associates,
Plaza Funding or Trump Plaza GP, as the case may be, fails to immediately
honor a demand for indemnification by such persons. The indemnification
agreements with the directors of Plaza Funding and directors of Trump Plaza GP
were amended in June 1993 to provide, among other things, that Plaza
Associates would maintain directors' and officers' insurance covering such
persons during the ten-year term (subject to extension) of the indemnification
agreements; provided, however, that if such insurance would not be available
on a commercially practicable basis, Plaza Associates could, in lieu of
obtaining such insurance, annually deposit an amount in the Indemnification
Trust Fund equal to $500,000 for the benefit of such directors; provided,
however, that deposits relating to the failure to obtain such insurance shall
not exceed $2.5 million. Such directors are covered by directors' and
officers' insurance maintained by Plaza Associates.
TAJ ASSOCIATES AND AFFILIATES
Trump and certain affiliates have engaged in certain related party
transactions with respect to Taj Associates. See "Management--Compensation
Committee Interlocks and Insider Participation: Taj Associates--Certain
Related Party Transactions of Trump" and "--Other Relationships."
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During the fiscal years ended December 31, 1993, 1994 and 1995, Taj
Associates reimbursed Taj Holding $1,733,000, $2,171,000 and $1,554,000,
respectively, for all amounts necessary to permit TM/GP or Taj Holding (a) to
make payments that TM/GP or Taj Holding was required to make pursuant to the
terms of TM/GP's Certificate of Incorporation and the Taj Holding Certificate
of Incorporation (generally for indemnification of officers and directors),
(b) to pay fees to directors (including fees for serving on a committee), (c)
to pay all other expenses of TM/GP and Taj Holding and (d) to permit Taj
Holding to redeem the Taj Holding Class B Common Stock when required to make
such redemption pursuant to the terms of the Taj Holding Certificate of
Incorporation. Taj Holding did not engage in any other transactions with its
affiliates during the fiscal years ended December 31, 1993, 1994 and 1995.
Taj Funding has not engaged in any transactions with its affiliates, except
for the loan of funds made to Taj Associates in exchange for an intercompany
note secured by a mortgage. Both the note and the mortgage were amended in
1991 pursuant to the 1991 Taj Restructuring.
In April 1991, Taj Associates purchased from TCA for $1,687,000 two adjacent
parcels of land on the Pleasantville-Egg Harbor Township border, constituting
approximately ten acres. The first parcel contains two buildings, certain
fleet maintenance facilities and an office building and warehouse facility,
portions of which were leased to Plaza Associates. The lease expired in March
1993 and Plaza Associates has vacated. Taj Associates currently leases the
space to commercial tenants. The second parcel is unimproved.
In December 1994, Taj Associates entered into a one-year agreement with TCA
pursuant to which TCA leases to Taj Associates 300 parking spaces (500 parking
spaces during the months of May to September) at a rate of 50 cents per space
per day, to be used for employee parking. The agreement expired in December
1995, however, TCA and Taj Associates are currently negotiating an extension
of the agreement and have agreed to continue the lease on a month-to-month
basis.
Taj Associates engages in various transactions with Trump Plaza and Trump's
Castle. These transactions are charged at cost or normal selling price in the
case of retail items and include certain shared payroll costs as well as
complimentary services offered to customers. Expenses incurred by Taj
Associates payable to TCA for the years ended December 31, 1993, 1994 and 1995
were approximately $1,100,000, $1,167,000 and $1,072,000, respectively, of
which all but $69,000, $30,000 and $164,000, respectively, was paid or offset
against amounts owed to Taj Associates by TCA. Expenses incurred by Taj
Associates payable to Plaza Associates for the years ended December 31, 1993,
1994 and 1995 were approximately $83,000, $149,000 and $445,000, respectively,
all of which were offset against amounts owed to Taj Associates by Plaza
Associates, with the exception of $167,000 at December 31, 1995.
Indemnification Agreements. In addition to the indemnification provisions in
Taj Associates' employment agreements, the Merger Agreement provides for
indemnification of any present or former director, officer, employee or agent
of Taj Holding and TM/GP, arising from his services as such, within six years
of the Effective Time.
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DESCRIPTION OF THE FIRST MORTGAGE NOTES
Set forth below is a summary of certain provisions of the First Mortgage
Notes. The First Mortgage Notes will be issued pursuant to an indenture (the
"First Mortgage Note Indenture"), to be dated as of the Effective Time, by and
among Trump Atlantic City Associates ("Trump AC"), and Trump Atlantic City
Funding, Inc. ("Trump AC Funding"), as joint and several obligors (the
"Issuers"); Trump Taj Mahal Associates ("Taj Associates"), Trump Plaza
Associates ("Plaza Associates") and The Trump Taj Mahal Corporation ("TTMC"),
as guarantors; and First Bank National Association, as trustee (the
"Trustee"), a copy of which is filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The terms of the First Mortgage
Note Indenture are also governed by certain provisions contained in the Trust
Indenture Act. The following summaries of certain provisions of the First
Mortgage Note Indenture and related documents are summaries only, do not
purport to be complete and are subject to, and qualified in their entirety by
reference to, all of the provisions of the First Mortgage Note Indenture and
exhibits thereto, including those terms made a part of the First Mortgage Note
Indenture by reference to the Trust Indenture Act as in effect on the date of
the First Mortgage Note Indenture. Wherever particular provisions of the First
Mortgage Note Indenture or related documents are referred to in this summary,
such provisions are incorporated by reference as a part of the statements made
and such statements are qualified in their entirety by such reference.
GENERAL
The First Mortgage Notes will be senior obligations of the Issuers, limited
in aggregate principal amount to $1.1 billion and secured as set forth under
"--Security for the First Mortgage Notes" below. The First Mortgage Notes will
be guaranteed on a senior secured basis by Trump AC's existing Subsidiaries,
Plaza Associates, Taj Associates, TTMC, and by each future Subsidiary of Trump
AC (collectively, the "Guarantors"), other than Trump AC Funding, which is one
of the Issuers. The term "Subsidiary," however, does not include Unrestricted
Subsidiaries. The First Mortgage Notes will be issued only in fully registered
form, without coupons, in denominations of $l,000 and integral multiples
thereof. The First Mortgage Notes are non-recourse to the Partners of Trump
AC. See "--No Personal Liability of Partners, Stockholders, Officers,
Directors; Non-recourse" below.
The First Mortgage Notes will mature on April , 2006. The First Mortgage
Notes will bear interest at the rate per annum stated on the cover page hereof
from the date of issuance or from the most recent Interest Payment Date to
which interest has been paid or provided for, payable semi-annually in arrears
on April and October of each year, commencing October , 1996, to the
persons in whose names such First Mortgage Notes are registered at the close
of business on the April or October immediately preceding such Interest
Payment Date. Interest will be calculated on the basis of a 360-day year
consisting of twelve 30-day months.
The Trustee will initially act as Paying Agent and Registrar. The Issuers
may change the Paying Agent or Registrar without prior notice to holders of
the First Mortgage Notes. Unless a Default or Event of Default has occurred
and is continuing, the Issuers or any of their Subsidiaries may act as Paying
Agent or Registrar.
Principal of, premium, if any, and interest on the First Mortgage Notes will
be payable, and the First Mortgage Notes may be presented for registration of
transfer or exchange, at the office or agency of the Issuers maintained for
such purpose, which office or agency shall be maintained in the Borough of
Manhattan, The City of New York. No service charge will be made for any
registration of transfer, exchange or redemption of First Mortgage Notes, but
the Issuers may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. Until otherwise
designated by the Issuers, the Issuers' office or agency will be the corporate
trust office of the Trustee presently located in the Borough of Manhattan, The
City of New York.
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SECURITY FOR THE FIRST MORTGAGE NOTES
The obligations of the Issuers with respect to the First Mortgage Notes will
be secured by one or more mortgages and assignments of leases and rents
(collectively, the "Mortgage"), which will encumber Plaza Associates' and Taj
Associates' respective interests in the Casino Hotels, including the Specified
Parcels (see "Business--Properties--Taj Mahal") and certain other facilities
owned or leased by Plaza Associates or Taj Associates, any additions and
improvements constructed thereon and the interest of Plaza Associates and Taj
Associates in furniture, furnishings, fixtures, machinery and equipment at any
time forming a part thereof, or used in connection therewith, and
substantially all of the other assets of Plaza Associates and Taj Associates,
except as described below (collectively the "Collateral"). The Mortgage
represents a first lien and security interest on Plaza Associates' and Taj
Associates' interests in the Casino Hotels and such other assets (subject to
certain Superior Mortgages, the associated Indebtedness of which aggregated
approximately $3.0 million principal amount as of December 31, 1995). See "--
The Mortgage" below. Certain of the assets not covered by the Mortgage have
also been assigned to the Collateral Agent, under the Collateral Agency
Agreement as security for the First Mortgage Notes pursuant to other
agreements. Any future Working Capital Facility may have a security interest
in the Collateral on an equal and ratable basis with the First Mortgage Notes
pursuant to the terms of the Collateral Agency Agreement. In addition, subject
to certain limited exceptions, all Equity Interests owned by the Issuers and
their Subsidiaries, including without limitation 100% of the Equity Interests
of Trump AC Funding, TTMC, Plaza Associates and Taj Associates, are required
to be pledged exclusively as security for THCR Holdings' obligations under the
Senior Note Indenture and therefore are not included in the Collateral.
Although distributions by the Issuers and the Guarantors, directly or
indirectly, to THCR Holdings will be restricted by the terms of the First
Mortgage Note Indenture, upon an "event of default" under the Senior Note
pledge, distributions by a Guarantor on its equity interests (but not on
Indebtedness owed to Trump AC) would become property of the Senior Notes
trustee to the extent such distributions would be permitted to be paid to THCR
Holdings under the First Mortgage Note Indenture.
The First Mortgage Note Indenture will contain certain covenants limiting
the ability of Trump AC and its Subsidiaries to incur Indebtedness. Subject to
certain limitations, the First Mortgage Note Indenture and the Collateral
Agency Agreement permit the incurrence of additional indebtedness, under the
Working Capital Facility in connection with expansions of the Casino Hotels to
be secured by the liens securing the First Mortgage Notes. See clauses (c) and
(e) of the covenant "Limitation on Incurrence of Additional Indebtedness and
Disqualified Capital Stock" below. The lien and security interest of the
Mortgage will also be subordinated to security interests in furniture,
fixtures and equipment acquired by Plaza Associates or Taj Associates that may
be granted in connection with the acquisition of such assets. If any agreement
granting such security interest in respect of existing or acquired furniture,
fixtures and equipment prohibits subordinate liens, the property in question
will not be included in the Collateral. As a result, such assets will be
available to pay Obligations in respect of the First Mortgage Notes, if at
all, only after such secured Indebtedness has been paid in full. Cash and Cash
Equivalents held by Plaza Associates or Taj Associates (other than proceeds
from Collateral) are generally not included within the Collateral. In
addition, certain of Plaza Associates' and Taj Associates' intangible assets
that may be significant to its operations, such as computer software licenses,
are by their terms not assignable and, accordingly, are not included in the
property subject to the Mortgage.
Following an Event of Default, the Collateral Agent, if so instructed by
holders of at least a majority in aggregate principal amount of Indebtedness
then secured pursuant to the Collateral Agency Agreement, may take such action
as it deems advisable to protect and enforce its rights in the Collateral,
including the institution of foreclosure proceedings. The ability of the
holders of the First Mortgage Notes to operate the casino facilities of the
Casino Hotels after any foreclosure on the Collateral is subject to (x)
restrictions under the Casino Control Act, including the approval of the CCC
and (y) such other restrictions as may be applicable under the laws of other
jurisdictions. See "Regulatory Matters." If the Trustee takes possession of or
otherwise acquires either of the Casino Hotels, the Trustee would be required
to obtain a license under the Casino Control Act to operate the casino
facilities of the Casino Hotels and an entity licensed under the Casino
Control Act would be required to be retained to operate such casino
facilities. Because potential bidders must satisfy licensing requirements, the
number of potential bidders in a foreclosure sale will be less than in
foreclosure of other types of facilities and
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such requirements may delay the sale of, and may adversely affect the sales
price for, the Casino Hotels and other Collateral. In addition, the ability of
the holders of First Mortgage Notes to realize upon the Collateral may be
subject to certain other bankruptcy law or fraudulent transfer limitations in
the event of a bankruptcy. Enforcement of each of the terms of the First
Mortgage Note Indenture, the mortgage and the other documents and instruments
executed in connection therewith is also subject to general principles of
equity.
FIRST MORTGAGE NOTE GUARANTEES
The Issuers' obligations under the First Mortgage Notes, the First Mortgage
Note Indenture and the Mortgage Documents will be jointly and severally
irrevocably and unconditionally guaranteed by the Guarantors. Each guarantee
will be a senior obligation of the respective Guarantor and secured by all of
the Collateral owned by such Guarantor, subject to certain exceptions. See "--
Security for the First Mortgage Notes" above. The obligations of each Guarantor
under its guarantee and the Mortgage will be limited in a manner intended to
avoid it being deemed a fraudulent conveyance under applicable law. See "--
Certain Bankruptcy Limitations" below.
The First Mortgage Note Indenture will provide that no Guarantor shall
consolidate or merge with or into (whether or not such Guarantor is the
surviving Person) another Person unless (i) subject to the provisions of the
following paragraph and certain other provisions of the First Mortgage Note
Indenture, the Person formed by or surviving any such consolidation or merger
(if other than such Guarantor) assumes all the obligations of such Guarantor
pursuant to a supplemental indenture and supplemental Mortgage Documents in
form reasonably satisfactory to the Trustee, pursuant to which such Person
shall unconditionally guarantee, on a senior secured basis, all of such
Guarantor's obligations under such Guarantor's guarantee, the First Mortgage
Note Indenture and the Mortgage Documents on the terms set forth in the First
Mortgage Note Indenture; (ii) immediately before and immediately after giving
effect to such transaction on a pro forma basis, no Default or Event of Default
shall have occurred or be continuing; and (iii) immediately after such
transaction, the surviving Person holds all Permits required for operation of
the business of, and such entity is controlled by a Person or entity (or has
retained a Person or entity which is) experienced in, operating casino hotels
or otherwise holds all Permits (including those required from Gaming
Authorities) to operate its business.
The First Mortgage Note Indenture will further provide that in the event of a
sale or other disposition of all of the Equity Interests of any Guarantor
(including pursuant to a merger or consolidation) to any person other than a
Subsidiary Guarantor, then such Guarantor may be released and relieved of any
obligation under its guarantee; provided, that (x) immediately after giving
effect to such transaction, no Default or Event of Default shall haver occurred
and be continuing and (y) such Asset Sale and the application of the Net Cash
Proceeds therefrom are in accordance with the applicable provisions of the
Indenture, including without limitation the covenants "Limitation on Sale of
Assets and Subsidiary Stock; Event of Loss" and "Limitation on Merger, Sale or
Consolidation."
CERTAIN BANKRUPTCY LIMITATIONS
The right of the Trustee to foreclose on the Collateral upon the occurrence
of an Event of Default will likely be significantly impaired if a bankruptcy
case under Title 11 of the Bankruptcy Code is commenced by or against any of
the Issuers or Guarantors prior to such foreclosure. Once such a case is
commenced, the Bankruptcy Code prohibits a secured creditor, such as the
Trustee, from commencing or pursuing a foreclosure on its collateral without
bankruptcy court approval. Moreover, the bankruptcy court may decline to grant
such approval, even if the debtor is in default under the applicable debt
instruments, if it concludes that there exists or that the debtor can provide
"adequate protection" for the interest of such secured creditor. The meaning of
the term "adequate protection" may vary according to circumstances, but it is
intended in general to protect the value of the secured creditor's interest in
the collateral, as of the commencement of the case, and may include cash
payments or the granting of additional security, if and at such times as the
court in its discretion determines, for any diminution in the value of the
collateral as a result of the stay of foreclosure during the pendency of the
bankruptcy case. In view of the lack of a precise definition of the term
"adequate protection" and the broad discretionary powers of
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a bankruptcy court, it is impossible to predict, in the event of the
bankruptcy of an Issuer or Guarantor, whether and for how long payments under
the First Mortgage Notes would be delayed, whether or when the Trustee would
be permitted to foreclose on the Collateral or whether or to what extent
holders of the First Mortgage Notes would be compensated for any delay in
payment or loss of value of the Collateral through the requirement of
"adequate protection." See "Risk Factors--Fraudulent Transfer Considerations."
Trump AC is a holding company, conducting all of its business through
Subsidiaries, which have guaranteed or will guarantee the Issuers' Obligations
with respect to the First Mortgage Notes. See "Risk Factors." Holders of the
First Mortgage Notes will be direct creditors of each Guarantor by virtue of
its guarantee. Nonetheless, in the event of the bankruptcy or financial
difficulty of a Guarantor, such Guarantor's obligations under its guarantee,
and any security interest granted to secure such guarantee, may be subject to
review and avoidance under state or federal fraudulent transfer laws. Among
other things, such obligations may be avoided if a court concludes that such
obligations were incurred and such security interests granted for less than
reasonably equivalent value or fair consideration at a time when the Guarantor
was insolvent, was rendered insolvent, or was left with inadequate capital to
conduct its business. A court would likely conclude that a Guarantor did not
receive reasonably equivalent value or fair consideration to the extent that
the aggregate amount of its liability on its guarantee exceeds the economic
benefits it realizes in the Merger Transaction. See "Risk Factors--Fraudulent
Transfer Considerations" and "Business--Properties--Trump Plaza."
If the obligations of a Guarantor under its guarantee and the security
interests granted to secure such guarantee were avoided, Holders of First
Mortgage Notes would have to look to the assets of any remaining Guarantors
for payment. There can be no assurance in that event that such assets would
suffice to pay the outstanding principal and interest on the First Mortgage
Notes. Equity Interests in Subsidiaries and certain other assets will not be
included in the Collateral. See "--Security for the First Mortgage Notes"
above.
OPTIONAL REDEMPTION
Except as indicated in the next succeeding paragraph, the Issuers will not
have the right to redeem any First Mortgage Notes prior to April , 2001. The
First Mortgage Notes will be redeemable at the option of the Issuers, in whole
or in part, at any time on or after April , 2001, upon not less than 30 nor
more than 60 days' notice, in amounts of $1,000 or an integral multiple of
$1,000, at the following redemption prices (expressed as percentages of the
principal amount) if redeemed during the 12-month period commencing April of
the years indicated below, in each case (subject to the right of holders of
record on a record date to receive interest due on an interest payment date
that is on or prior to such redemption date) together with accrued and unpaid
interest thereon to the redemption date:
<TABLE>
<CAPTION>
REDEMPTION
12-MONTH PERIOD BEGINNING APRIL , PRICE
----------------------------------- ----------
<S> <C>
2001........................................................... %
2002........................................................... %
2003........................................................... %
2004 and thereafter............................................ 100.000%
</TABLE>
The First Mortgage Notes will also be redeemable, in whole or in part, at
any time upon not less than 30 nor more than 60 days' prior notice (or such
earlier date as may be required by any Gaming Authority) at 100% of the
principal amount thereof, together with accrued and unpaid interest through
the date on which the holder receives notice of disqualification (or such
lesser amount as may be required by applicable law or by order of any Gaming
Authority), pursuant to a Required Regulatory Redemption. See "--Gaming Laws."
In the event of a redemption of less than all of the First Mortgage Notes
issued pursuant to the First Mortgage Note Indenture (other than a Required
Regulatory Redemption), First Mortgage Notes will be chosen for redemption by
the Trustee as provided in the First Mortgage Note Indenture, but, in general,
pro rata or by lot. On and after the redemption date, interest ceases to
accrue on such First Mortgage Notes or portions thereof called for redemption
unless the Issuers default in the payment therefor. If a First Mortgage Note
is redeemed
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subsequent to an interest record date but on or prior to the related interest
payment date, then any accrued interest will be paid to the person in whose
name such First Mortgage Note is registered at the close of business on such
record date.
The First Mortgage Notes will not have the benefit of any sinking fund.
Notice of any redemption will be sent, by first-class mail, at least 30 days
and not more than 60 days (unless another notice period shall be required by
applicable law or by order of any Gaming Authority) prior to the date fixed for
redemption to the holder of each First Mortgage Note to be redeemed to such
holder's last address as then shown upon the registry books of the Registrar.
Any notice which relates to a First Mortgage Note to be redeemed in part only
must state the portion of the principal amount equal to the unredeemed portion
thereof and must state that on and after the date of redemption, upon surrender
of such First Mortgage Note, a new First Mortgage Note or Notes in a principal
amount equal to the unredeemed portion thereof will be issued.
CERTAIN COVENANTS
REPURCHASE OF FIRST MORTGAGE NOTES AT THE OPTION OF THE HOLDER UPON A CHANGE
OF CONTROL
The First Mortgage Note Indenture will provide that in the event that a
Change of Control has occurred, each holder of First Mortgage Notes will have
the right, at such holder's option, pursuant to an irrevocable and
unconditional offer by Trump AC (the "Change of Control Offer"), to require
Trump AC to repurchase all or any part of such holder's First Mortgage Notes
(provided, that the principal amount of such First Mortgage Notes must be
$1,000 or an integral multiple thereof) on a date (the "Change of Control
Purchase Date") that is no later than 75 days after the occurrence of such
Change of Control, at a cash price (the "Change of Control Purchase Price")
equal to 101% of the principal amount thereof, together with accrued interest
to the Change of Control Purchase Date. The Change of Control Offer shall be
made within 30 days following a Change of Control and shall remain open for 20
Business Days following its commencement (the "Change of Control Offer
Period"). Upon expiration of the Change of Control Offer Period, Trump AC shall
purchase all First Mortgage Notes properly tendered in response to the Change
of Control Offer. If required by applicable law, the Change of Control Purchase
Date and the Change of Control Offer Period may be extended as so required;
however, if so extended, it shall nevertheless constitute an Event of Default
if the Change of Control Purchase Date does not occur within 90 days of the
Change of Control.
As used herein, a "Change of Control" means any of the following events:
(i) THCR Holdings ceases to be the "beneficial owner," directly or
indirectly, of 100% of the Equity Interests of Trump AC;
(ii) any sale, transfer or other conveyance, whether direct or indirect,
of all or substantially all of the assets of THCR Holdings or THCR, on a
Consolidated basis, in one transaction or a series of related transactions,
if, immediately after giving effect to such transaction, any "person" or
"group" (as such terms are used for purposes of Sections 13(d) and 14(d) of
the Exchange Act, whether or not applicable), other than the Permitted
Holder, or if applicable in the case of THCR Holdings, THCR, becomes the
"beneficial owner" (as defined), directly or indirectly, of more than 35%
of the total voting power of the Voting Stock of the transferee unless the
Permitted Holder "beneficially owns" (as so defined), directly or
indirectly, in the aggregate a greater percentage of the total voting power
of the Voting Stock of the transferee than such other person or group and
has the right or ability by voting power, contract or otherwise to elect or
designate a majority of the Board of Directors of THCR;
(iii) any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable),
other than the Permitted Holder, is or becomes the "beneficial owner" (as
defined in Rules 13d-3 and l3d-5 under the Exchange Act), directly or
indirectly, of more than 35% of the total voting power of the Voting Stock
of THCR, or any successor thereto by merger, consolidation or otherwise,
unless the Permitted Holder "beneficially owns" (as so defined), directly
or indirectly, in the aggregate a greater percentage of the total voting
power of the Voting Stock of THCR
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than such other person or group and has the right or ability by voting
power, contract or otherwise to elect or designate for election a majority
of the Board of Directors of THCR (for purposes of this definition, such
other person shall be deemed to beneficially own any Voting Stock of a
specified corporation held by a parent corporation, if such other person
"beneficially owns" (as so defined), directly or indirectly, more than 35%
of the voting power of the Voting Stock of such parent corporation and the
Permitted Holder "beneficially owns" (as so defined), directly or
indirectly, in the aggregate, a lesser percentage of the voting power of
the Voting Stock of such parent corporation and does not have the right or
ability by voting power, contract or otherwise to elect or designate for
election a majority of the Board of Directors of such parent corporation);
or
(iv) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of THCR or
Trump AC Funding (together with any new directors whose election by such
Board of Directors or whose nomination for election by the stockholders of
THCR or Trump AC Funding, as applicable, is approved by the Permitted
Holder or by a vote of the 66 2/3% of the directors of THCR or Trump AC
Funding, as applicable, then still in office who are either directors at
the beginning of such period or whose election or nomination for election
was previously so approved) have ceased for any reason to constitute a
majority of the Board of Directors of THCR or Trump AC Funding, as
applicable, then in office.
On or before the Change of Control Purchase Date, Trump AC will (i) accept
for payment First Mortgage Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent
cash sufficient to pay the Change of Control Purchase Price (together with
accrued and unpaid interest) of all First Mortgage Notes so tendered and (iii)
deliver to the Trustee First Mortgage Notes so accepted together with an
Officers' Certificate listing the First Mortgage Notes or portions thereof
being purchased. The Paying Agent will promptly mail to the holders of First
Mortgage Notes so accepted payment in an amount equal to the Change of Control
Purchase Price (together with accrued and unpaid interest), and the Trustee
will promptly authenticate and mail or deliver to such holders a new First
Mortgage Note or Notes equal in principal amount to any unpurchased portion of
the First Mortgage Note or Notes surrendered. Any First Mortgage Notes not so
accepted will be promptly mailed or delivered to the holder thereof. Trump AC
will publicly announce the results of the Change of Control Offer on or as
soon as practicable after the Change of Control Purchase Date.
The Change of Control purchase feature of the First Mortgage Notes may make
more difficult or discourage a takeover of THCR or THCR Holdings and, thus,
the removal of incumbent management.
The phrase "all or substantially all" of the assets will likely be
interpreted under applicable state law and will be dependent upon particular
facts and circumstances. As a result, there may be a degree of uncertainty in
ascertaining whether a sale or transfer of "all or substantially all" of the
assets of THCR Holdings or THCR has occurred. In addition, no assurances can
be given that Trump AC will have adequate financial resources to acquire First
Mortgage Notes tendered upon the occurrence of a Change of Control.
Any Change of Control Offer will be made in compliance with all applicable
laws, rules and regulations, including, if applicable, Regulation 14E under
the Exchange Act and the rules thereunder and all other applicable federal and
state securities laws.
LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS AND DISQUALIFIED CAPITAL
STOCK
The First Mortgage Note Indenture will provide that, except as set forth
below in this covenant, Trump AC will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create, issue, assume, guaranty,
incur, become directly or indirectly liable with respect to (including as a
result of an Acquisition), or otherwise become responsible for, contingently
or otherwise (individually and collectively, to "incur" or, as appropriate, an
"incurrence"), any Indebtedness or any Disqualified Capital Stock (including
Acquired Indebtedness). Notwithstanding the foregoing:
(a) if (i) no Default or Event of Default shall have occurred and be
continuing at the time of, or would occur after giving effect on a pro
forma basis to, such incurrence of Indebtedness or Disqualified Capital
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Stock and (ii) on the date of such incurrence (the "Incurrence Date"), the
Consolidated Coverage Ratio of Trump AC for the Reference Period
immediately preceding the Incurrence Date, after giving effect on a pro
forma basis to such incurrence of such Indebtedness or Disqualified Capital
Stock and, to the extent set forth in the definition of Consolidated
Coverage Ratio, the use of proceeds thereof, would be at least 2.0 to 1 for
incurrences on or prior to October , 1998 and at least 2.25 to 1 for
incurrences thereafter (the "Debt Incurrence Ratio"), then Trump AC may
incur such Indebtedness or Disqualified Capital Stock, provided, that
except in the case of Acquired Indebtedness, such Indebtedness incurred
pursuant to this clause (a) has an Average Life to Stated Maturity that
exceeds the remaining Average Life to Stated Maturity of the First Mortgage
Notes and has a Stated Maturity for its final scheduled principal or (in
the case of Disqualified Capital Stock) redemption payment, as applicable,
later than the Stated Maturity for the final scheduled principal payment of
the First Mortgage Notes;
(b) Trump AC and the Guarantors may incur Indebtedness evidenced by the
First Mortgage Notes and represented by the First Mortgage Note Indenture;
(c) Trump AC may incur Indebtedness not to exceed $75.0 million in
aggregate principal amount outstanding at any time pursuant to this clause
(c) the proceeds of which are used for further acquisitions, renovations or
constructions of Improvements with respect to, or related to (including
related demolitions), the Casino Hotels or the financing of equipment to be
used therein, provided, that no Indebtedness shall be incurred pursuant to
this clause (c) in an aggregate principal amount which exceeds 75% of the
cost of the assets or Improvements, as the case may be, financed thereby,
and provided further, that except in the case of Acquired Indebtedness,
such Indebtedness incurred pursuant to this clause (c) has an Average Life
to Stated Maturity that equals or exceeds the remaining Average Life to
Stated Maturity of the First Mortgage Notes and has a Stated Maturity for
its final scheduled principal or (in the case of Disqualified Capital
Stock) redemption payment, as applicable, on or later than the Stated
Maturity for the final scheduled principal payment of the First Mortgage
Notes;
(d) Plaza Associates and Taj Associates may incur Indebtedness
represented by F,F&E Financing Agreements and/or Capitalized Lease
Obligations relating to after-acquired gaming or related equipment (or
other after-acquired equipment necessary to conduct a Related Business and
consistent in amount and nature with industry practices) of (or, in the
case of Capitalized Lease Obligations, leased by) Plaza Associates or Taj
Associates, as applicable, not to exceed (for Plaza Associates and Taj
Associates, collectively) $50.0 million in aggregate principal amount
outstanding at any time pursuant to this clause (d) (including any
Indebtedness issued to refinance, refund or replace such Indebtedness);
(e) Trump AC may incur Indebtedness pursuant to the Working Capital
Facility up to an aggregate amount outstanding (including any Indebtedness
issued to refinance, refund or replace such Indebtedness) at any time of
$25.0 million;
(f) Trump AC, Plaza Associates and Taj Associates, as applicable, may
incur Refinancing Indebtedness with respect to any Indebtedness or
Disqualified Capital Stock, as applicable, described in clauses (a), (b)
and (c) of this covenant or which is outstanding on the Issue Date so long
as such Refinancing Indebtedness is secured only by the assets (if any)
that secured the Indebtedness so refinanced;
(g) Trump AC, Plaza Associates, Taj Associates and their Subsidiaries may
incur Permitted Indebtedness; and
(h) Trump AC may incur Indebtedness in an aggregate amount outstanding at
any time pursuant to this clause (h) (including any Indebtedness issued to
refinance, replace, or refund such Indebtedness) of up to $30.0 million.
Indebtedness of any Person which is outstanding at the time such Person
becomes a Subsidiary of Trump AC, including by designation, or is merged with
or into or consolidated with Trump AC or a Subsidiary of Trump AC shall be
deemed to have been incurred at the time such Person becomes such a Subsidiary
of Trump AC or is merged with or into or consolidated with Trump AC or a
Subsidiary of Trump AC, as applicable. Except to the extent provided otherwise
in the definition of Permitted Indebtedness, any Guarantor may guarantee
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Indebtedness of Trump AC or another Guarantor to the extent and at the time
Trump AC or such other Guarantor incurs such Indebtedness in compliance with
this covenant.
LIMITATION ON RESTRICTED PAYMENTS
The First Mortgage Note Indenture will provide that Trump AC will not, and
will not permit any of its Subsidiaries to, directly or indirectly, make any
Restricted Payment if, after giving effect to such Restricted Payment on a pro
forma basis, (1) a Default or an Event of Default shall have occurred and be
continuing, (2) Trump Atlantic City is not permitted to incur at least $1.00
of additional Indebtedness pursuant to the Debt Incurrence Ratio in paragraph
(a) of the covenant "Limitation on Incurrence of Additional Indebtedness and
Disqualified Capital Stock," or (3) the aggregate amount of all Restricted
Payments made by Trump AC and its Subsidiaries, including after giving effect
to such proposed Restricted Payment, from and after the Issue Date, would
exceed the sum of (a) 50% of the aggregate Consolidated Net Income of Trump AC
and its Consolidated Subsidiaries for the period (taken as one accounting
period), commencing on the first day of the first fiscal quarter commencing
prior to the Issue Date, to and including the last day of the fiscal quarter
ended immediately prior to the date of each such calculation (or, in the event
Consolidated Net Income for such period is a deficit, then minus 100% of such
deficit), plus (b) the aggregate Net Cash Proceeds received by Trump AC after
the Issue Date and on or prior to the date of such proposed Restricted Payment
from (i) the sale of its Qualified Equity Interests (other than (x) to a
Subsidiary of Trump AC, (y) to the extent applied in connection with a
Qualified Exchange and (z) in connection with the Stock Offering, including
any exercise of the underwriters' overallotment option, until Trump AC has
received therefrom at least $ million or (ii) other Capital Contributions.
The foregoing clauses (2) and (3) of the immediately preceding paragraph,
however, will not prohibit (v) (I) distributions by Trump AC pursuant to the
terms of the Partnership Agreement as in effect on the Issue Date to THCR
Holdings to the extent promptly distributed to and/or applied by THCR Holdings
or THCR (A) to pay reasonable general and administrative expenses of such
persons, including directors' fees and premiums for directors' and officers'
liability insurance, which distributions shall not exceed $10.0 million in any
consecutive four-quarter period, (B) to make indemnification payments as
required by the Certificate of Incorporation of THCR as in effect on the Issue
Date or (C) to effect redemption of any Equity Interest of THCR if (x) counsel
to THCR delivers an opinion that failure to so redeem would subject THCR to an
adverse action by a Gaming Authority (or, if applicable, a failure to act by a
Gaming Authority that is adverse to THCR) and (y) THCR determines (as
evidenced by a resolution of its Board of Directors delivered to the Trustee)
that such adverse action (or, if applicable, such failure to act) would be
likely to have a material adverse effect on THCR, and (II) distributions by
Trump AC to THCR Holdings to the extent promptly distributed to and applied by
THCR to pay any tax liability resulting from the distributions provided for in
(I) above, as required by the Partnership Agreement, (w) distributions by
Trump AC to THCR Holdings in an amount not to exceed $50.0 million in the
aggregate to the extent applied by THCR Holdings, within 20 Business Days of
receiving such distribution, to the next scheduled interest payment on the
Senior Notes or any Refinancing Indebtedness with respect thereto (provided,
that solely in the case of this clause (w), clause (1) of the immediately
preceding paragraph will not prohibit a distribution hereunder except in the
case of an Event of Default under clause (i) or (ii) thereof), (x) a Qualified
Exchange, (y) for so long as Trump AC is a partnership or substantially
similar pass-through entity for Federal income tax purposes, cash
distributions made by Trump AC to its Partners from time to time in amounts
not to exceed the Permitted Tax Distributions, so long as the payments are
made at the time permitted by the second sentence of the definition of
Permitted Tax Distributions contained herein, or (z) the payment of any
dividend within 60 days after the date of its declaration if such dividend
could have been made on the date of such declaration in compliance with the
foregoing provisions. In addition, the immediately preceding paragraph will
not prohibit the purchase by Trump AC of Indebtedness incurred pursuant to
clause (c) of the covenant "Limitation on Incurrence of Additional
Indebtedness and Disqualified Capital Stock" substantially concurrently with a
purchase by Trump AC of First Mortgage Notes pursuant to a Change of Control
Offer or an Asset Sale Offer, provided, that (i) in the case of a purchase
pursuant to an Asset Sale Offer, such purchase of First Mortgage Notes
represents a pro rata application of the Asset Sale Offer Amount to the First
Mortgage Notes
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and such other Indebtedness, based upon the aggregate principal amount then
outstanding, and (ii) the terms of such other Indebtedness do not restrict
such purchase of the First Mortgage Notes pursuant to a Change of Control
Offer or an Asset Sale Offer. The full amount of any Restricted Payment made
pursuant to the foregoing clauses (v), (w), (y) and (z) of the second
preceding sentence (but not pursuant to the immediately preceding sentence or
to clause (x) of the second preceding sentence), however, will be deducted in
the calculation of the aggregate amount of Restricted Payments available to be
made referred to in clause (3) of the immediately preceding paragraph.
LIMITATION ON LEASES
The First Mortgage Note Indenture will provide that Trump AC will not, nor
will any of its Subsidiaries be permitted to, lease as tenant or subtenant
real or personal property (except Permitted Leases), unless Trump AC's
Consolidated Coverage Ratio for the four full fiscal quarters immediately
preceding such event, taken as one period (and also after giving pro forma
effect to any such lease as if such lease was entered into at the beginning of
such four-quarter period), would have been at least equal to the ratios set
forth below for the applicable period during which such determination is being
made:
<TABLE>
<CAPTION>
PERIOD RATIO
------ ---------
<S> <C>
First 24 months from and including the Issue Date............... 2.00 to 1
Thereafter...................................................... 2.25 to 1
</TABLE>
In giving effect to the lease as of such four full fiscal quarters, it will be
assumed that the rent for such prior four fiscal quarters was the greater of
the (i) average annualized rent over the term of such lease and (ii) rent
payable for the first four fiscal quarters of such lease.
LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
The First Mortgage Note Indenture will provide that Trump AC will not, and
will not permit any of its Subsidiaries to, directly or indirectly, create,
assume or otherwise cause or suffer to exist any consensual encumbrance or
restriction of any kind on the ability of any Subsidiary of Trump AC to pay
dividends or make other distributions to or on behalf of, or to pay any
obligation to or on behalf of, or otherwise to transfer assets or property to
or on behalf of, or make or pay loans or advances to or on behalf of, Trump AC
or any Subsidiary of Trump AC, except (a) any restrictions, with respect to a
Subsidiary that is not a Subsidiary on the date of the Indenture, in existence
at the time such Person becomes a Subsidiary of Trump AC (but not created in
connection with or in contemplation of such Person becoming a Subsidiary and
not applicable to any Person, or property, asset or business, other than the
Person, property, asset or business so acquired), (b) any restrictions with
respect to a Subsidiary imposed pursuant to an agreement which has been
entered into for the sale or disposition of all or substantially all of the
Equity Interests or assets of such Subsidiary (which restrictions shall be for
the benefit of the purchaser thereof and no other Person and apply only to the
assets of the Subsidiary to be sold), (c) restrictions imposed by a Permitted
Lien on the transfer of the respective assets subject thereto, (d)
restrictions contained in the First Mortgage Note Indenture and the Mortgage
Documents, as the same may be amended from time to time in accordance with the
terms thereof, (e) restrictions imposed by Gaming Authorities on the payment
of dividends by entities holding Gaming Licenses and (f) any restrictions
existing under any agreement which refinances or replaces the agreements
containing the restrictions in clause (a), provided, that the terms and
conditions of any such agreement are not more restrictive than those under or
pursuant to the agreement evidencing the Indebtedness refinanced.
LIMITATION ON LIENS
The First Mortgage Note Indenture will provide that Trump AC will not, and
will not permit any of its Subsidiaries to, create, incur, assume or suffer to
exist any Lien of any kind, other than Permitted Liens, upon any of their
respective assets now owned or acquired after the date of the First Mortgage
Note Indenture or upon any income or profits therefrom.
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LIMITATION ON SALE OF ASSETS AND SUBSIDIARY STOCK; EVENT OF LOSS
The First Mortgage Note Indenture will provide that Trump AC will not, and
will not permit any of its Subsidiaries to, in one or a series of related
transactions, convey, sell, transfer, assign or otherwise dispose of, directly
or indirectly, any of its property, business or assets, including, without
limitation, upon any sale or other transfer or issuance of any Equity
Interests of any Subsidiary or any sale and leaseback transaction, whether by
Trump AC or a Subsidiary of Trump AC or through the issuance, sale or transfer
of Equity Interests by a Subsidiary of Trump AC (an "Asset Sale"), unless
(1)(a) within 210 days after the date of such Asset Sale, the Net Cash
Proceeds therefrom (the "Asset Sale Offer Amount") are applied to the optional
redemption of the First Mortgage Notes in accordance with the terms of the
First Mortgage Note Indenture or to the repurchase of the First Mortgage Notes
pursuant to an irrevocable, unconditional cash offer by Trump AC (the "Asset
Sale Offer") to repurchase First Mortgage Notes at a purchase price (the
"Asset Sale Offer Price") of 100% of principal amount, plus accrued interest
to the date of payment, made within 180 days of such Asset Sale and/or (b)
within 180 days following such Asset Sale, the Asset Sale Offer Amount (less
that portion of the Asset Sale Offer Amount applied as provided in clause (a)
above) is reinvested by Trump AC or its Subsidiaries to make replacements,
improvements or additions to existing properties or new properties directly
related to a Related Business and such reinvestment is made or committed to be
made (such commitment to be established by (A) the purchase of a new property,
the ground-breaking or the commencement of construction, in each case within
180 days of such Asset Sale or (B) promptly placing the Net Cash Proceeds in a
Restricted Funds Account, provided, that such Net Cash Proceeds are invested
as aforesaid in existing properties or new properties within 365 days of being
placed in such Restricted Funds Account) and provided further, that in the
case of any Asset Sale involving all or substantially all of (x) the Capital
Stock of a Subsidiary, the assets of which constitute all or substantially all
of either Casino Hotel (or both) or (y) the assets of either Casino Hotel (or
both) (a "Casino Sale"), such Net Cash Proceeds must be used to make an Asset
Sale Offer in accordance with clause 1(a), and not reinvested under clause
1(b), (2) with respect to any Asset Sale or related series of Asset Sales
involving securities, property or assets with an aggregate fair market value
in excess of $5.0 million, at least 75% (or 90%, in the case of a Casino Sale)
of the consideration for such Asset Sale or series of related Asset Sales
consists of cash or Cash Equivalents (treating for this purpose as cash or
Cash Equivalents (A) property that promptly after such Asset Sale is converted
into cash or Cash Equivalents and (B) except in the case of a Casino Sale, any
senior Indebtedness that secured the subject assets that are assumed by the
transferee in such Asset Sale), (3) no Default or Event of Default shall have
occurred and be continuing at the time of, or would occur after giving effect,
on a pro forma basis, to, such Asset Sale, and (4) Trump AC determines in good
faith that Trump AC or such Subsidiary, as applicable, receives fair market
value for such Asset Sale. For purposes of this covenant with respect to the
application of the Net Cash Proceeds thereof, the receipt by Trump AC or any
of its Subsidiaries of proceeds due to an Event of Loss shall constitute an
Asset Sale. All Net Cash Proceeds from an Event of Loss shall be reinvested or
used to repurchase First Mortgage Notes, all within the period and as
otherwise provided above in clause (1)(a) of the first paragraph of this
covenant.
The First Mortgage Note Indenture will provide that an Asset Sale Offer may
be deferred until the accumulated Net Cash Proceeds from Asset Sales not
applied to the uses set forth in (1) above (the "Excess Proceeds") exceeds
$15.0 million and that each Asset Sale Offer shall remain open for 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Asset Sale Offer Period").
Upon expiration of the Asset Sale Offer Period, Trump AC shall apply the Asset
Sale Offer Amount plus an amount equal to accrued interest to the purchase of
all First Mortgage Notes tendered (on a pro rata basis if the Asset Sale Offer
Amount is insufficient to purchase all First Mortgage Notes so tendered) at
the Asset Sale Offer Price (together with accrued interest).
Notwithstanding the foregoing, if an Asset Sale Offer is commenced and
securities of Trump AC ranking pari passu in right of payment with the First
Mortgage Notes and incurred pursuant to clause (c) of the covenant "Limitation
on Incurrence of Additional Indebtedness and Disqualified Capital Stock" are
outstanding at the date of commencement thereof, the terms of which provide
that a substantially similar offer must be made with respect thereto, then the
Asset Sale Offer shall be made concurrently with such other offer, and
securities of each issue which the holders of securities of such issue elect
to have purchased will be accepted pro rata in proportion to the aggregate
principal amount thereof, provided, that in so repurchasing such other
securities Trump AC is in compliance with the provisions of "Limitation on
Restricted Payments."
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Notwithstanding the foregoing:
(i) Trump AC and its Subsidiaries may, without complying with the
foregoing, in the ordinary course of business for the casino industry,
convey, sell, lease, transfer, assign or otherwise dispose of assets
acquired and held for resale in the ordinary course of business;
(ii) other than a Casino Sale, Trump AC and its Subsidiaries may, without
complying with the foregoing, convey, sell, lease, transfer, assign or
otherwise dispose of assets pursuant to and in accordance with the
limitation on mergers, sales or consolidations provisions in the Indenture;
(iii) Trump AC and its Subsidiaries may, without complying with the
foregoing, convey, sell, lease, transfer, assign or otherwise dispose of
three warehouses and related facilities (the Egg Harbor Parcel, the
Pleasantville Warehouse and the Realty Warehouse) in exchange for any type
of consideration so long as Trump AC determines in good faith that Trump AC
or such Subsidiary, as applicable, receives fair market value; and
(iv) Trump AC and its Subsidiaries may, without complying with the
foregoing, convey, sell, transfer, assign or otherwise dispose of assets to
Trump AC or any Wholly-owned Subsidiaries of Trump AC; and
(v) Trump AC and its Subsidiaries may, without complying with the
foregoing, sell or dispose of, free from the Liens under the Mortgage
Documents, any tangible personal property which, in Trump AC's reasonable
opinion, may have become obsolete or unfit for use or which is no longer
necessary in the conduct of its businesses.
Notwithstanding the foregoing, Trump AC will not, and will not permit any of
its Subsidiaries to, directly or indirectly make any Asset Sale of any of the
Equity Interests of such Subsidiary except pursuant to an Asset Sale of all
the Equity Interests of such Subsidiary.
In addition, if the amount required to acquire all First Mortgage Notes
tendered by holders pursuant to the Asset Sale Offer (the "Acceptance Amount")
is less than the Asset Sale Offer Amount, the excess of the Asset Sale Offer
Amount over the Acceptance Amount may be used by Trump AC and its Subsidiaries
for general corporate or partnership purposes without restriction, other than
dividends, repurchases or other distributions in respect of Equity Interests,
and unless otherwise restricted by the other provisions of the Indenture. Upon
consummation of any Asset Sale Offer, the Asset Sale Offer Amount will be
reduced to zero.
Any Asset Sale Offer will be made in compliance with all applicable laws,
rules and regulations, including, if applicable, Regulation 14E under the
Exchange Act and the rules thereunder and all other applicable federal and
state securities laws.
LIMITATION ON TRANSACTIONS WITH AFFILIATES
The First Mortgage Note Indenture will provide that Trump AC will not, and
will not permit any of its Subsidiaries to, directly or indirectly, enter into
or suffer to exist any contract, agreement, arrangement, understanding or
transaction or series of related transactions (including, without limitation,
the sale, purchase, exchange or lease of assets, property or services) with
any Affiliate of Trump AC (other than a Wholly-owned Subsidiary of Trump AC)
unless (a) such transaction or series of related transactions is on terms that
are no less favorable to Trump AC or such Subsidiary, as the case may be, than
would be available at the time of such transaction or transactions in a
comparable transaction in arm's-length dealings with an unaffiliated third
party and, with respect to a transaction or series of related transactions
involving aggregate payments equal to or greater than (x) $2.0 million, such
transaction or series of related transactions is approved by a majority of the
Independent Directors of the Board of Directors of Trump AC Funding, or (y)
$10.0 million, prior to the consummation of such transaction or series of
related transactions, Trump AC also obtains a written favorable opinion as to
the fairness thereof to Trump AC from a financial point of view from an
independent investment
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banking firm of national reputation, and (b) Trump AC delivers an officers'
certificate to the Trustee certifying that such transaction or transactions
comply with clause (a) above. The foregoing restriction will not apply to (1)
pro rata dividends or distributions paid in cash on any class of Equity
Interests and not prohibited under "Limitation on Restricted Payments," (2) the
Partnership Agreement as in effect on the Issue Date, (3) the Affiliated Ground
Leases as in effect on the Issue Date or (4) certain existing arrangements
referred to under "Certain Transactions," as in effect on the Issue Date.
Trump AC Funding will maintain at least two Independent Directors on its
Board of Directors.
LIMITATION ON MERGER, SALE OR CONSOLIDATION
The First Mortgage Note Indenture will provide that neither of the Issuers
may consolidate with, merge with or into any other Person or sell, assign,
convey, transfer, lease or otherwise dispose of all or substantially all of its
properties and assets (as an entirety or substantially as an entirety in one
transaction or series of related transactions) to any Person or group of
affiliated Persons or permit any of Trump AC's Subsidiaries to enter into any
such transaction or transactions if such transaction or transactions, in the
aggregate, would result in a transfer of all or substantially all of the assets
of Trump AC on a Consolidated basis or Trump AC Funding, as applicable, to any
other Person, unless, among other things: (a) Trump AC or Trump AC Funding, as
applicable, shall be the continuing Person, or the Person (if other than Trump
AC or Trump AC Funding) formed by such consolidation or into which Trump AC or
Trump AC Funding is merged or to which the properties and assets of Trump AC or
Trump AC Funding are transferred (the "Surviving Entity") shall be a
partnership or corporation, in the case of Trump AC, and a corporation, in the
case of Trump AC Funding, duly organized and validly existing under the laws of
the United States or any state thereof or the District of Columbia and shall
expressly assume, by a supplemental indenture, all of the obligations of Trump
AC or Trump AC Funding, as applicable, under the First Mortgage Notes and the
First Mortgage Note Indenture, and the First Mortgage Note Indenture shall
remain in full force and effect; (b) immediately before and immediately after
giving effect to such transaction on a pro forma basis, no Event of Default or
Default shall have occurred and be continuing; (c) immediately after giving
effect to such transaction on a pro forma basis, the Consolidated Net Worth of
Trump AC or the Surviving Entity, as applicable, is at least equal to the
Consolidated Net Worth of Trump AC immediately prior to such transaction or
series of transactions; (d) immediately before and after giving effect to such
transaction on a pro forma basis, Trump AC or the Surviving Entity, as
applicable, could incur at least $1.00 of additional Indebtedness pursuant to
the Debt Incurrence Ratio set forth in paragraph (a) of the covenant
"Limitation on Incurrence of Additional Indebtedness and Disqualified Capital
Stock"; and (e) immediately after such transaction, such Issuer or the
Surviving Entity, as applicable, holds all Permits required for operation of
the business of, and such entity is controlled by a Person or entity (or has
retained a Person or entity which is) experienced in, operating casino hotels
or otherwise holds all Permits (including those required from Gaming
Authorities) to operate its business. Trump AC Funding shall also deliver to
the Trustee an officers' certificate and an opinion of counsel, each stating
that (a) such consolidation, merger, sale, assignment, conveyance, transfer,
lease or disposition and such supplemental indenture comply with the First
Mortgage Note Indenture and (b) the transaction shall not impair the rights and
powers of the Trustee and holders of the First Mortgage Notes thereunder.
In the event of any transaction (other than a lease) described in and
complying with the conditions listed in the immediately preceding paragraph in
which Trump AC or Trump AC Funding, as applicable, is not the continuing
Person, the successor Person formed or remaining shall succeed to, and be
substituted for, and may exercise every right and power of, provisions of Trump
AC or Trump AC Funding, as applicable, and Trump AC or Trump AC Funding shall
in such case be discharged from all obligations and covenants under the First
Mortgage Note Indenture, the First Mortgage Notes and the Mortgage Documents.
LIMITATION ON LINES OF BUSINESS
The First Mortgage Note Indenture will provide that neither Trump AC nor any
of its Subsidiaries shall directly or indirectly engage to any substantial
extent in any line or lines of business activity other than that
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which, in the reasonable good faith judgment of the Board of Directors of Trump
AC Funding is a Related Business.
LIMITATION ON ACTIVITIES OF TRUMP AC FUNDING
Trump AC Funding will not conduct any business (including having any
Subsidiary) whatsoever, other than to comply with its obligations under the
First Mortgage Note Indenture and the First Mortgage Notes. Trump AC Funding
will not incur or otherwise become liable for any Indebtedness (other than the
First Mortgage Notes and any renewal, extension, substitution, refunding,
refinancing or replacement thereof in accordance with the First Mortgage Note
Indenture) or make any Restricted Payments.
RESTRICTION ON CERTAIN AGREEMENTS
The First Mortgage Note Indenture will provide that other than employment
agreements in the ordinary course of business consistent with industry practice
and approved by the compensation committee of Trump AC Funding, Trump AC will
not, and will not permit any of its Subsidiaries to, enter into any management,
services or consulting agreement with Trump or any Affiliate of Trump, other
than the TPM Services Agreement; provided, that no Services Fee thereunder
shall be paid (i) to any person other than Trump AC or a Subsidiary of the
Company if the TPM Services Agreement is assigned or transferred by Trump Plaza
Management Corp. and (ii) to Trump Plaza Management Corp. after expiration of
the Super Puma Helicopter Lease. Trump AC will not, and will not permit its
Subsidiaries to, pay any Services Fee under the TPM Services Agreement to Trump
Plaza Management Corp. or pay or reimburse any expenses relating thereto if a
Default or Event of Default has occurred and is continuing. The terms of the
TPM Services Agreement shall not be amended to increase the amounts to be paid
thereunder in the aggregate or on any particular date, or in any other manner
which would be adverse to Trump AC or its Subsidiaries.
MAINTENANCE OF INSURANCE
The First Mortgage Note Indenture will provide that Trump AC will, and will
cause its Subsidiaries to, (a) obtain, prior to the Issue Date, mortgagee title
insurance policies insuring a first mortgage lien on the real estate portion of
the Collateral, as constituted on the Issue Date, subject to certain
exceptions, in an amount not less than the principal amount of First Mortgage
Notes (covering the First Mortgage Notes, the Taj Mahal expansion debt and any
replacement Working Capital Facility) and (b) from and at all times after the
Issue Date until the First Mortgage Notes have been paid in full, have and
maintain in effect insurance with responsible carriers against such risks and
in such amounts as is customarily carried by similar businesses with such
deductibles, retentions, self insured amounts and coinsurance provisions as are
customarily carried by similar businesses of similar size, including, without
limitation, property and casualty, and, with respect to insurance on the
Collateral, shall have provided insurance certificates evidencing such
insurance to the Collateral Agent prior to the Issue Date and shall thereafter
provide such certificates prior to the anniversary or renewal date of each such
policy referred to in this clause (b), which certificate shall expressly state
the expiration date for each policy listed. All insurance with respect to the
Collateral required under the Indenture (except worker's compensation) shall
name the Issuers, Taj Associates, Plaza Associates and the Collateral Agent as
additional insureds or loss payees, as the case may be, with losses in excess
of $10.0 million payable jointly to the Issuers, Taj Associates, Plaza
Associates and the Collateral Agent (unless a Default or Event of Default has
occurred and is then continuing, in which case all losses are payable solely to
the Collateral Agent), with no recourse against the Collateral Agent for the
payment of premiums, deductibles, commissions or club calls, and for at least
30 days notice of cancellation. All such insurance policies will be issued by
carriers having an A.M. Best & Company, Inc. rating of A- or higher and a
financial size category of not less than X, or if such carrier is not rated by
A.M. Best & Company, Inc., having the financial stability and size deemed
appropriate by an opinion from a reputable insurance broker.
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RESTRICTION ON SALE AND ISSUANCE OF SUBSIDIARY STOCK
The First Mortgage Note Indenture will provide that Trump AC will not sell,
and will not permit any of its Subsidiaries to issue or sell, any shares of
Equity Interests of any Subsidiary of Trump AC to any Person other than Trump
AC or a Wholly-owned Subsidiary of Trump AC, except that all of the Equity
Interests of a Subsidiary may be sold if such Asset Sale complies with the
other provisions of the First Mortgage Note Indenture, including the covenants
"Limitation on Sale of Assets and Subsidiary Stock; Event of Loss" and
"Limitation on Merger, Sale or Consolidation." See "--First Mortgage Note
Guarantees" above.
FUTURE SUBSIDIARY GUARANTORS
The First Mortgage Note Indenture will provide that all present and future
Subsidiaries of Trump AC (other than Trump AC Funding, which is one of the
Issuers and Taj Funding, so long as it conducts no business, receives no
Investment from the Issuers or any of their Subsidiaries and is dissolved
within 90 days of the Issue Date) jointly and severally will guarantee
irrevocably and unconditionally all principal, premium, if any, and interest on
the First Mortgage Notes on a senior basis.
LIMITATION ON STATUS AS INVESTMENT COMPANY
The First Mortgage Note Indenture will prohibit Trump AC and its Subsidiaries
from being required to register as an "investment company" (as that term is
defined in the Investment Company Act of 1940, as amended), or from otherwise
becoming subject to regulation under the Investment Company Act.
REPORTS
The First Mortgage Note Indenture will provide that whether or not Trump AC
or Trump AC Funding is subject to the reporting requirements of Section 13(a)
or 15(d) of the Exchange Act, each of Trump AC and Trump AC Funding will file
with the SEC the annual reports, quarterly reports and other documents which
each such Person would have been required to file with the SEC (to the extent
permitted by applicable law) pursuant to such Section 13(a) or 15(d) if such
Person were so subject, such documents to be filed with the SEC on or prior to
the respective dates (the "Required Filing Dates") by which such Person would
have been required so to file such documents if such Person were so subject.
Each such Person will also in any event within 15 days of each Required Filing
Date (i) transmit by mail to all Holders, as their names and addresses appear
in the First Mortgage Note Register, without cost to such Holders and (ii) file
with the Trustee copies of the annual reports, quarterly reports and other
documents which each such Person would have been required to file with the SEC
pursuant to Section 13(a) or 15(d) of the Exchange Act if such Person were
subject to such Sections, together with supplemental information in respect of
summary financial data for each of the Casino Hotels at Trump AC's cost.
EVENTS OF DEFAULT AND REMEDIES
The First Mortgage Note Indenture will define an Event of Default as, among
other things, (i) the failure by the Issuers to pay any installment of interest
(including any defaulted interest) on the First Mortgage Notes as and when the
same becomes due and payable and the continuance of any such failure for 30
days, (ii) the failure by the Issuers to pay all or any part of the principal,
or premium, if any, on the First Mortgage Notes when and as the same becomes
due and payable at maturity, redemption, by acceleration or otherwise,
including, without limitation, payment of the Change of Control Purchase Price
or the Asset Sale Offer Price, or otherwise, (iii) the failure by Trump AC or
any of its Subsidiaries to observe or perform any other covenant or agreement
contained in the First Mortgage Notes or the First Mortgage Note Indenture and,
subject to certain exceptions, the continuance of such failure for a period of
30 days after written notice is given to the Issuers by the Trustee or to the
Issuers and the Trustee by the Holders of at least 25% in aggregate principal
amount of the First Mortgage Notes outstanding, (iv) certain events of
bankruptcy, insolvency or reorganization in respect of either or both of
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the Issuers or any of their Significant Subsidiaries, (v) a default in
Indebtedness of either or both of the Issuers or any of their Subsidiaries with
an aggregate principal amount in excess of $20.0 million, (vi) final
unsatisfied judgments aggregating in excess of $20.0 million, at any one time
rendered against either or both of the Issuers or any of their Subsidiaries and
not stayed, bonded or discharged within 60 days, (vii) the revocation,
suspension or involuntary loss of any Permit which results in the cessation of
all or a substantial portion of the operations of either Casino Hotel for a
period of more than 90 consecutive days, (viii) except as permitted by the
First Mortgage Note Indenture and the First Mortgage Notes, the cessation of
effectiveness of any guarantee of the Obligations in any material respect or
the finding by any judicial proceeding that any such guarantee is unenforceable
or invalid in any material respect or the denial or disaffirmation by any
Guarantor in writing of its obligations under its guarantee or (ix) certain
events of default relating to or under any of the Mortgage Documents. The First
Mortgage Note Indenture provides that if a Default occurs and is continuing,
the Trustee generally shall, within 90 days after the occurrence of such
default, give to the Holders notice of such default.
If an Event of Default occurs and is continuing (other than an Event of
Default specified in clause (iv), above), then in every such case, unless the
principal of all of the First Mortgage Notes shall have already become due and
payable, either the Trustee or the Holders of 25% in aggregate principal amount
of the First Mortgage Notes then outstanding, by notice in writing to the
Issuers (and to the Trustee if given by Holders) (an "Acceleration Notice"),
may, and the Trustee at the request of such Holders shall, declare all
principal, determined as set forth below, and accrued interest thereon to be
due and payable immediately. If an Event of Default specified in clause (iv),
above, occurs, all principal and accrued interest thereon will be immediately
due and payable on all outstanding First Mortgage Notes without any declaration
or other act on the part of Trustee or the Holders. The Holders of a majority
in aggregate principal amount of First Mortgage Notes (or such higher
percentage as would be required to amend such provision) generally are
authorized to rescind such acceleration if all existing Events of Default,
other than the non-payment of the principal of, premium, if any, and interest
on the First Mortgage Notes which have become due solely by such acceleration,
have been cured or waived.
Prior to the declaration of acceleration of the maturity of the First
Mortgage Notes, the holders of not less than specified percentages in aggregate
principal amount of the First Mortgage Notes at the time outstanding may waive
on behalf of all the holders any default, except a default in the payment of
principal of or interest on any First Mortgage Note not yet cured or a default
with respect to any covenant or provision which cannot be modified or amended
without the consent of the holder of each outstanding Note affected. Subject to
the provisions of the First Mortgage Note Indenture relating to the duties of
the Trustee, the Trustee will be under no obligation to exercise any of its
rights or powers under the First Mortgage Note Indenture at the request, order
or direction of any of the holders, unless such holders have offered to the
Trustee reasonable security or indemnity. Subject to all provisions of the
First Mortgage Note Indenture and applicable law, the holders of not less than
a majority in aggregate principal amount of the First Mortgage Notes at the
time outstanding will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee.
The Trust Indenture Act contains limitations on the rights of the Trustee,
should it become a creditor of the Issuers, to obtain payment of claims in
certain cases or to realize on certain property received by it in respect of
any such claims, as security or otherwise. The Trustee is permitted to engage
in other transactions, provided, that if it acquires any conflicting interest
it must eliminate such conflict upon the occurrence of an Event of Default or
else resign.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The First Mortgage Note Indenture will provide that the Issuers may, at their
option and at any time within one year of the final Stated Maturity of the
First Mortgage Notes, elect to have their Obligations and the Obligations of
the Guarantors discharged with respect to the outstanding First Mortgage Notes
("Legal
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Defeasance"). Such Legal Defeasance means that the Issuers shall be deemed to
have paid and discharged the entire indebtedness represented, the Collateral
will be released from the Liens in favor of the First Mortgage Notes and the
Indenture shall cease to be of further effect as to all outstanding First
Mortgage Notes and guarantees thereof, except as to (i) rights of Holders to
receive payments in respect of the principal of, premium, if any, and interest
on such First Mortgage Notes when such payments are due from the trust funds;
(ii) the Issuers' obligations with respect to such First Mortgage Notes
concerning issuing temporary First Mortgage Notes, registration of First
Mortgage Notes, mutilated, destroyed, lost or stolen First Mortgage Notes, and
the maintenance of an office or agency for payment and money for security
payments held in trust; (iii) the rights, powers, trust, duties and immunities
of the Trustee, and the Issuers' obligations in connection therewith; and (iv)
the Legal Defeasance provisions of the First Mortgage Note Indenture. In
addition, the Issuers may, at their option and at any time, elect to have the
Obligations of the Issuers and the Guarantors released with respect to certain
covenants that are described in the First Mortgage Note Indenture ("Covenant
Defeasance") and thereafter any omission to comply with such obligations shall
not constitute a Default or Event of Default with respect to the First
Mortgage Notes. In the event Covenant Defeasance occurs, the Collateral will
be released from the Liens in favor of the First Mortgage Notes and certain
events (not including non-payment, bankruptcy, receivership, rehabilitation
and insolvency events) described under "Events of Default" will no longer
constitute an Event of Default with respect to the First Mortgage Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i) the
Issuers must irrevocably deposit with the Trustee, in trust, for the benefit
of the holders of the First Mortgage Notes, U.S. Legal Tender, U.S. Government
Obligations or a combination thereof, in such amounts as will be sufficient,
in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest on such
First Mortgage Notes on the stated date for payment thereof or on the
redemption date of such principal or installment of principal of, premium, if
any, or interest on such First Mortgage Notes, and the holders of First
Mortgage Notes must have a valid, perfected, exclusive security interest in
such trust; (ii) in the case of the Legal Defeasance, the Issuers shall have
delivered to the Trustee an opinion of counsel in the United States reasonably
acceptable to Trustee confirming that (A) the Issuers have received from, or
there has been published by the Internal Revenue Service, a ruling or (B)
since the date of the First Mortgage Note Indenture, there has been a change
in the applicable federal income tax law, in either case to the effect that,
and based thereon, such opinion of counsel shall confirm that, the holders of
such First Mortgage Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Legal Defeasance and will be subject
to federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Legal Defeasance had not occurred;
(iii) in the case of the Covenant Defeasance, the Issuers shall have delivered
to the Trustee an opinion of counsel in the United States reasonably
acceptable to such Trustee confirming that the holders of such First Mortgage
Notes will not recognize income, gain or loss for federal income tax purposes
as a result of such Covenant Defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same times as would
have been the case if such Covenant Defeasance had not occurred; (iv) no
Default or Event of Default shall have occurred and be continuing on the date
of such deposit or insofar as Events of Default from bankruptcy or insolvency
events are concerned, at any time in the period ending on the 91st day after
the date of deposit; (v) such Legal Defeasance or Covenant Defeasance shall
not result in a breach or violation of, or constitute a default under the
First Mortgage Note Indenture or any other material agreement or instrument to
which Trump AC or any of its Subsidiaries is a party or by which Trump AC or
any of its Subsidiaries is bound; (vi) the Issuers shall have delivered to the
Trustee an Officers' Certificate stating that the deposit was not made by the
Issuers with the intent of preferring the holders of such First Mortgage Notes
over any other creditors of Trump AC or any of its Subsidiaries or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
Trump AC, its Subsidiaries or others; and (vii) the Issuers shall have
delivered to the Trustee an Officers' Certificate and an opinion of counsel,
each stating that the conditions precedent provided for in, in the case of the
officers' certificate, (i) through (vi) and, in the case of the opinion of
counsel, clauses (i) (with respect to the validity and perfection of the
security interest), (ii), (iii) and (v) of this paragraph have been complied
with.
If the funds deposited with the Trustee to effect the Legal Defeasance or
Covenant Defeasance are insufficient to pay the principal of, premium, if any,
and interest on the First Mortgage Notes when due, then the
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obligations of the Issuers under the First Mortgage Note Indenture will be
revived, and no such Legal Defeasance or Covenant Defeasance will be deemed to
have occurred.
AMENDMENTS AND SUPPLEMENTS
The First Mortgage Note Indenture will contain provisions permitting the
Issuers, the Guarantors and the Trustee to enter into a supplemental indenture
or may amend, modify or supplement the First Mortgage Notes, or the Mortgage
Documents for certain limited purposes without the consent of the holders.
With the consent of the holders of not less than a majority in aggregate
principal amount of the First Mortgage Notes at the time outstanding, the
Issuers, the Guarantors and the Trustee are permitted to amend or supplement
the First Mortgage Note Indenture or any supplemental indenture, the Mortgage
Documents, the First Mortgage Notes or modify the rights of the holders;
provided, that no such modification may, without the consent of each Holder
affected thereby: (i) change the Stated Maturity on any First Mortgage Note,
or reduce the principal amount thereof or the rate (or extend the time for
payment) of interest thereon or change the place of payment where, or the coin
or currency in which, any First Mortgage Note or any premium or the interest
thereon is payable, or impair the right to institute suit for the enforcement
of any such payment on or after the Stated Maturity thereof (or, in the case
of redemption, on or after the Redemption Date), or reduce the Change of
Control Purchase Price or the Asset Sale Offer Price or alter the provisions
of "Optional Redemption" above in a manner adverse to the Holders, or (ii)
reduce the percentage in principal amount of the outstanding First Mortgage
Notes, the consent of whose Holders is required for any such amendment,
supplemental indenture or waiver provided for in the First Mortgage Note
Indenture or (iii) release any Collateral from the Liens created by the
Mortgage Documents, except in accordance with the First Mortgage Note
Indenture and such documents, or modify any of the waiver provisions (except
to increase any required percentage or to provide that certain other
provisions of the First Mortgage Note Indenture cannot be modified or waived);
and provided further, that only the holders of not less than two-thirds in
aggregate principal amount of the then outstanding First Mortgage Notes
affected thereby (except as set forth in the immediately preceding proviso
clause) may modify the obligations of the Issuers to make and consummate a
Change of Control Offer or modify any of the provisions or definitions with
respect thereto. Amendments may be made to the Collateral Agency Agreement
only with the consent of holders of at least a majority in aggregate principal
amount of Indebtedness then secured pursuant thereto.
The holders of the applicable percentages of aggregate principal amount
outstanding of the First Mortgage Notes specified in the preceding paragraph
may waive compliance with certain restrictive covenants and provisions of the
First Mortgage Note Indenture and the Mortgage Documents.
GAMING LAWS
In certain circumstances, holders of the First Mortgage Notes may be
required to qualify under the Casino Control Act as a financial source to
Plaza Associates or Taj Associates and as holders of securities of the
Issuers. See "Regulatory Matters." The First Mortgage Note Indenture provides
that if the CCC requires that a First Mortgage Noteholder (whether the record
or beneficial owner) qualify under the Casino Control Act and if such holder
does not so qualify, then such holder must dispose of his interest in the
First Mortgage Notes within 30 days after receipt of notice of such finding,
or within such earlier time as the CCC may require, or the Issuers may redeem
such First Mortgage Notes. If any holder is found unqualified by the CCC, it
is unlawful for the holder (i) to receive any interest upon the First Mortgage
Notes, (ii) to exercise, directly or through any trustee or nominee, any right
conferred by the First Mortgage Notes or (iii) to receive any remuneration, in
any form from any "Regulated Company" (including the Issuers, the Guarantors
or the Trustee) for services rendered or otherwise. See "--Optional
Redemption."
The First Mortgage Note Indenture further requires the Trustee to report the
names of all record holders of the First Mortgage Notes to certain Gaming
Authorities promptly after the initial issuance of the First Mortgage Notes
and prior to the scheduled expiration date of the applicable casino license.
The First Mortgage Note Indenture also requires the Trustee to provide to such
Gaming Authorities copies of all written communications from the Trustee to
the holders, notice of any default under the First Mortgage Notes, certain
other information concerning the Trustee's enforcement of rights under the
First Mortgage Note Indenture and other matters respecting the security for
the First Mortgage Notes.
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TRUSTEE
The Trustee will be First Bank National Association, a national banking
association. First Bank National Association also serves as trustee for the
respective indentures governing the Senior Notes and the Plaza Notes.
The First Mortgage Note Indenture provides that, except during the
continuance of an Event of Default, the Trustee will perform only such duties
as are specifically set forth in the Indenture. During the existence of an
Event of Default, the Trustee will exercise such of the rights and powers
vested in it under the First Mortgage Note Indenture and will use the same
degree of care and skill in its exercise as a prudent person would exercise
under the circumstances in the conduct of such person's own affairs.
NO PERSONAL LIABILITY OF PARTNERS, STOCKHOLDERS, OFFICERS, DIRECTORS; NON-
RECOURSE
The First Mortgage Note Indenture will provide that no direct or indirect
stockholder, partner, employee, officer or director, as such, past, present or
future of either of the Issuers, any Guarantor or any successor entity shall
have any personal liability in respect of the obligations of the Issuers or
any Guarantor under the First Mortgage Note Indenture or the First Mortgage
Notes or the guarantees thereof by reason of his or its status as such
stockholder, partner, employee, officer or director, except to the extent such
is an Issuer or a Guarantor.
THE MORTGAGE
The First Mortgage Notes will be secured by the Mortgage in favor of the
Collateral Agent for the benefit of the holders of the First Mortgage Notes,
subject to the terms of the Collateral Agreement. The Mortgage shall encumber
the Issuers' and the Guarantors' (collectively, the "Mortgagor") respective
fee and leasehold interests in the Casino Hotels, including the Specified
Parcels and certain other facilities owned or leased by the Issuers or any of
the Guarantors, any additions and improvements constructed thereon and the
interest of the Issuers and the Guarantors in furniture, furnishings,
fixtures, machinery and equipment at any time forming a part thereof, or used
in connection therewith, and substantially all of the other assets of the
Issuers and the Guarantors, except as described herein. The Mortgagor will
have the right to sell, free and clear from the Lien of the Mortgage
Documents, certain tangible personal property which has become obsolete or
unfit for use or which is no longer necessary in the conduct of its businesses
or the operation of the Collateral. See "Security for the First Mortgage
Notes."
Enforceability of certain provisions of the First Mortgage Note Indenture,
the guarantees in respect thereof and the Mortgage Documents may be limited by
general principles of equity. In general, courts will not allow acceleration
of mortgage indebtedness by reason of defaults or other circumstances which
are not deemed material to the security of the holder of such indebtedness.
CERTAIN DEFINITIONS
"Acquired Indebtedness" means Indebtedness or Disqualified Capital Stock of
any Person (a) existing at the time such person becomes a Subsidiary of Trump
AC, including by designation, or is merged or consolidated into or with Trump
AC or one of its Subsidiaries or (b) assumed in connection with the
Acquisition of assets from such Person, in each case, other than Indebtedness
incurred in connection with, or in contemplation of, such Person becoming a
Subsidiary or such acquisition, consolidation or merger. Indebtedness shall be
deemed to be incurred on the date of the related acquisition of assets from
any Person or the date the acquired Person becomes a Subsidiary, including by
designation, or the date of such merger or consolidation, as applicable.
"Acquisition" means the purchase or other acquisition of any person or
substantially all the assets of any person by any other person, whether by
purchase, merger, consolidation, or other transfer, and whether or not for
consideration.
"Affiliate" means, with respect to any specified Person, (a) any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person or (b) any
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other Person that owns, directly or indirectly, 5% or more of such Person's
Equity Interests or any officer or director of any such Person or other person
or with respect to any natural Person, any person having a relationship with
such Person by blood, marriage or adoption not more remote than first cousin.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person directly or indirectly, whether through ownership of voting securities,
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Affiliated Ground Leases" means the TSA Lease and the SFA Lease.
"Average Life" means, as of the date of determination, with respect to any
security or instrument, the quotient obtained by dividing (i) the sum of (a)
the product of the number of years from the date of determination to the date
or dates of each successive scheduled principal (or redemption) payment of
such security or instrument and (b) the amount of each such respective
principal (or redemption) payment by (ii) the sum of all such principal (or
redemption) payments.
"Beneficial Owner" or "beneficial owner" for purposes of the definition of
Change of Control has the meaning attributed to it in Rules l3d-3 and l3d-5
under the Exchange Act (as in effect on the Issue Date), whether or not
applicable, except that a "person" shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.
"Capital Contribution" shall mean, with respect to any Person, that amount
of money or the Fair Market Value of any Property (net of liabilities to which
such Property is subject) irrevocably and unconditionally contributed to such
Person in exchange for Qualified Equity Interests of such Person; provided,
however, that such term shall not include any such contribution of funds
obtained from the proceeds of the Stock Offering (including proceeds from any
exercise of the underwriters' overallotment option) except for such
contributions of proceeds therefrom in excess of $ million.
"Capital Stock" means, with respect to any corporation, any and all shares,
interests, rights to purchase (other than convertible or exchangeable
Indebtedness), warrants, options, participations or other equivalents of or
interests (however designated) in stock issued by that corporation.
"Capitalized Lease Obligation" of any Person means any obligation of such
Person or its Subsidiaries on a Consolidated basis under a lease that is
required to be capitalized for financial reporting purposes in accordance with
GAAP, and the amount of Indebtedness represented by such obligation shall be
the capitalized amount of such obligations, as determined in accordance with
GAAP.
"Cash Equivalent" means (a) any evidence of Indebtedness, maturing not more
than one year after the date of acquisition, issued by the United States of
America, or an instrumentality or agency thereof and guaranteed fully as to
principal, premium, if any, and interest by the United States of America, (b)
any certificate of deposit, maturing not more than one year after the date of
acquisition, issued by, or time deposit of, a commercial banking institution
that is a member of the Federal Reserve System and that has combined capital
and surplus and undivided profits of not less than $300.0 million and whose
debt has a rating, at the time as of which any investment therein is made, of
"P-1" (or higher) according to Moody's Investors Service, Inc. or any
successor rating agency, or "A-1" (or higher) according to Standard & Poor's
Ratings Service, a division of McGraw-Hill, Inc., or any successor rating
agency, (c) commercial paper, maturing not more than one year after the date
of acquisition, issued by a corporation (other than an Affiliate or Subsidiary
of Trump AC) organized and existing under the laws of the United States of
America with a rating, at the time as of which any investment therein i s
made, of "P-1" (or higher) according to Moody's Investors Service, Inc. or any
successor rating agency, or
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"A-1" (or higher) according to Standard & Poor's Ratings Service, a division
of McGraw-Hill, Inc., or any successor rating agency and (d) any money market
deposit accounts issued or offered by a domestic commercial bank having
capital and surplus in excess of $300.0 million.
"Casino Hotels" means collectively the (i) casino and hotel complex
currently known as the "Trump Plaza Hotel and Casino" in Atlantic City, New
Jersey and ancillary structures and facilities located on the premises and all
furniture, fixtures and equipment at any time contained therein, in each case
owned by or leased to Plaza Associates which are covered by the Lien of the
Mortgage Documents and (ii) the casino and hotel complex currently known as
the "Trump Taj Mahal Casino Resort" in Atlantic City, New Jersey and ancillary
structures and facilities located on the premises and all furniture, fixtures
and equipment at any time contained therein to each case owned by or leased to
Taj Associates which are covered by the Lien of the Mortgage Documents.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Agency Agreement" means that agreement dated the date hereof by
and among the Collateral Agent and the Trustee as well as such other persons
as may be permitted to become parties thereunder as a result of their status
as lenders of Indebtedness permitted to be incurred pursuant to clause (c) of
the covenant "Limitations on Incurrence of Additional Indebtedness and
Disqualified Capital Stock" (including Refinancing Indebtedness in respect
thereof) or clause (c) thereof.
"Collateral Agent" shall mean First Bank National Association, as collateral
agent under the Collateral Agency Agreement.
"Consolidated Coverage Ratio" of any person on any date of determination
(the "Transaction Date") means the ratio, on a pro forma basis, of (a) the
aggregate amount of Consolidated EBITDA of such person attributable to
continuing operations and businesses (exclusive of amounts attributable to
operations and businesses permanently discontinued or disposed of) for the
Reference Period to (b) the aggregate Consolidated Fixed Charges of such
person (exclusive of amounts attributable to operations and businesses
permanently discontinued or disposed of, but only to the extent that the
obligations giving rise to such Consolidated Fixed Charges would no longer be
obligations contributing to such person's Consolidated Fixed Charges
subsequent to the Transaction Date) during the Reference Period; provided,
that for purposes of such calculation, (i) Acquisitions which occurred during
the Reference Period or subsequent to the Reference Period and on or prior to
the Transaction Date shall be assumed to have occurred on the first day of the
Reference Period, (ii) transactions giving rise to the need to calculate the
Consolidated Coverage Ratio shall be assumed to have occurred on the first day
of the Reference Period, (iii) the incurrence of any Indebtedness or issuance
of any Disqualified Capital Stock during the Reference Period or subsequent to
the Reference Period and on or prior to the Transaction Date (and the
application of the proceeds therefrom to the extent used to refinance or
retire other Indebtedness) shall be assumed to have occurred on the first day
of such Reference Period, and (iv) the Consolidated Fixed Charges of such
person attributable to interest on any Indebtedness or dividends on any
Disqualified Capital Stock bearing a floating interest (or dividend) rate
shall be computed on a pro forma basis as if the average rate in effect from
the beginning of the Reference Period to the Transaction Date had been the
applicable rate for the entire period, unless such Person or any of its
Subsidiaries is a party to an Interest Swap and Hedging Obligation (which
shall remain in effect for the 12-month period immediately following the
Transaction Date) that has the effect of fixing the interest rate on the date
of computation, in which case such rate (whether higher or lower) shall be
used.
"Consolidated EBITDA" means, with respect to any person, for any period, the
Consolidated Net Income of such person for such period (determined, for
purposes of this definition only, without taking into effect clause (x) of the
last sentence of the definition thereof) adjusted to add thereto (to the
extent deducted from net revenues in determining Consolidated Net Income),
without duplication, the sum of (i) Consolidated income tax expense, (ii)
Consolidated depreciation and amortization expense, provided, that
consolidated depreciation and amortization of a Subsidiary that is a less than
Wholly-owned Subsidiary shall only be added to the extent of the equity
interest of such person in such Subsidiary and (iii) Consolidated Fixed
Charges, less the amount of all cash payments made by such person or any of
its Subsidiaries during such period to the extent such payments relate to non-
cash charges that were added back in determining Consolidated EBITDA for such
period or any prior period.
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"Consolidated Fixed Charges" of any person means, for any period, the
aggregate amount (without duplication and determined in each case in
accordance with GAAP) of (a) interest expensed or capitalized, paid, accrued,
or scheduled to be paid or accrued (including, in accordance with the
following sentence, interest attributable to Capitalized Lease Obligations) of
such person and its Consolidated Subsidiaries during such period, including
(i) original issue discount and non-cash interest payments or accruals on any
Indebtedness, (ii) the interest portion of all deferred payment obligations
and (iii) all commissions, discounts and other fees and charges owed with
respect to bankers' acceptances and letters of credit financings and currency
and Interest Swap and Hedging Obligations, in each case to the extent
attributable to such period, (b) one-third of Consolidated Rental Payments for
such period attributable to operating leases of such person and its
Consolidated Subsidiaries, and (c) the amount of dividends accrued or payable
by such person or any of its Consolidated Subsidiaries in respect of Preferred
Stock (other than by Subsidiaries of such person to such person or such
person's Wholly-owned Subsidiaries). For purposes of this definition, (x)
interest on a Capitalized Lease Obligation shall be deemed to accrue at an
interest rate reasonably determined by the Issuers to be the rate of interest
implicit in such Capitalized Lease Obligation in accordance with GAAP and (y)
interest expense attributable to any Indebtedness represented by the guarantee
by such person or a Subsidiary of such person of an obligation of another
person shall be deemed to be the interest expense attributable to the
Indebtedness guaranteed.
"Consolidated Net Income" means, with respect to any person for any period,
the net income (or loss) of such person and its Consolidated Subsidiaries
(determined on a consolidated basis in accordance with GAAP) for such period,
adjusted to exclude (only to the extent included in computing such net income
(or loss) and without duplication): (a) all gains (but not losses) which are
either extraordinary (as determined in accordance with GAAP) or are either
unusual or nonrecurring (including any gain from the sale or other disposition
of assets outside the ordinary course of business or from the issuance or sale
of any capital stock), less all fees and expenses relating thereto, (b) the
net income, if positive, of any person, other than a Consolidated Wholly-owned
Subsidiary, in which such person or any of its Consolidated Subsidiaries has
an interest, except to the extent of the amount of any dividends or
distributions actually paid in cash to such person or a Consolidated Wholly-
owned Subsidiary of such person during such period, but in any case not in
excess of such person's pro rata share of such person's net income for such
period, (c) the net income or loss of any person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition,
(d) the net income, if positive, of any of such person's Consolidated
Subsidiaries to the extent that the declaration or payment of dividends or
similar distributions is not at the time permitted by operation of the terms
of its charter or bylaws or any other agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to such
Consolidated Subsidiary and (e) net gains or losses in respect of the
redemption and repurchase, respectively, of the PIK Notes, the Taj Bonds or
the Plaza Notes. To the extent not already reduced thereby, Consolidated Net
Income of Trump AC for any period shall be reduced by the aggregate amount of
(x) all Permitted Tax Distributions made during, or distributable in respect
of, such period and (y) all payments made during such period pursuant to the
TPM Services Agreement.
"Consolidated Net Worth" of any person at any date means, in the case of a
partnership, such person's partners' capital and, in the case of a
corporation, the aggregate Consolidated stockholders' equity of such person
(plus amounts of equity attributable to preferred stock) and its Consolidated
Subsidiaries, as would be shown on the consolidated balance sheet of such
person prepared in accordance with GAAP, adjusted to exclude (to the extent
included in calculating such equity), (a) the amount of any such stockholders'
equity attributable to Disqualified Capital Stock or treasury stock of such
person and its Consolidated Subsidiaries, (b) all upward revaluations and
other write-ups in the book value of any asset of such person or a
Consolidated Subsidiary of such person subsequent to the Issue Date, and (c)
all investments in Subsidiaries that are not Consolidated Subsidiaries and in
persons that are not Subsidiaries.
"Consolidated Rental Payments" of any Person means the aggregate rental
obligations of such Person and its Consolidated Subsidiaries (not including
taxes, insurance, maintenance and similar expenses that the lessee is
obligated to pay under the terms of the relevant leases), determined on a
Consolidated basis in conformity with GAAP, payable in respect of such period
under leases of real or personal property (net of income from subleases
thereof, not including taxes, insurance, maintenance and similar expenses that
the sublessee is obligated to pay under the terms of such sublease), whether
or not such obligations are reflected as liabilities or commitments on
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a Consolidated balance sheet of such Person and its Subsidiaries or in the
notes thereto, excluding, however, in any event, that portion of Consolidated
Fixed Charges of such Person representing payments by such Person or any of
its Consolidated Subsidiaries in respect of Capitalized Lease Obligations.
"Consolidated Subsidiary" means, for any person, each Subsidiary of such
person (whether now existing or hereafter created or acquired), the financial
statements of which are consolidated for financial statement reporting
purposes with the financial statements of such person in accordance with GAAP.
"Consolidation" means, with respect to any Person, the consolidation of the
accounts of such Person and each of its Subsidiaries if and to the extent the
accounts of such Person and each of its Subsidiaries would normally be
consolidated with those of such Person, all in accordance with GAAP
consistently applied. The term "Consolidated" shall have a similar meaning.
"CRDA" means the New Jersey Casino Reinvestment Development Authority or any
successor entity thereto.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Disqualified Capital Stock" means, with respect to any person, an Equity
Interest of such person that, by its terms or by the terms of any security
into which it is convertible, exercisable or exchangeable, is, or upon the
happening of an event (other than the disqualification of the holder thereof
by a Gaming Authority) or the passage of time would be, required to be
redeemed or repurchased (including at the option of the holder thereof) in
whole or in part, on or prior to the final Stated Maturity of the First
Mortgage Notes.
"Equity Interest" of any Person means any shares, interests, participations
or other equivalents (however designated) in such Person's equity, and shall
in any event include any Capital Stock issued by, or partnership interests in,
such Person.
"Event of Loss" means, with respect to any property or asset, any (i) loss,
destruction or damage of such property or asset or (ii) any condemnation,
seizure or taking, by exercise of the power of eminent domain or otherwise, of
such property or asset, or confiscation or requisition of the use of such
property or asset.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"F, F&E Financing Agreement" means an agreement which creates a Lien upon
any after-acquired tangible personal property and/or other items constituting
operating assets, which are financed, purchased or leased for the purpose of
engaging in or developing a Related Business.
"Fair Market Value" means, with respect to any asset or property, the sale
value that would be obtained in an arm's-length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy and, with respect to any redemption
of First Mortgage Notes pursuant to the applicable gaming laws, means (a) the
last sales price regular way on the last trading day prior to the date of
determination of such value on the largest national securities exchange (or,
if said security is not listed on a national securities exchange, on the
National Market System of the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ")) on which such First Mortgage Notes
shall have traded on such trading day, or (b) if no such sales of such First
Mortgage Notes occurred on such trading day, the mean between the "bid" and
"asked" prices on such national securities exchange or as quoted on the
National Market System of NASDAQ, as the case may be, on such last trading
day, or (c) if the First Mortgage Notes are not listed or quoted on any
national securities exchange or the National Market System of NASDAQ, the
average of the closing bid and asked prices on such day in the over-the-
counter market as reported by NASDAQ or, if bid and asked prices for the First
Mortgage Notes have not been reported through NASDAQ, the average of the bid
and asked prices on such day as furnished by any New York Stock Exchange
member firm regularly making a market in the First Mortgage Notes, selected
for such purpose by Trump AC Funding or (d) if none of clauses (a) through (c)
are applicable, the fair market value of such First Mortgage Notes as of the
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date of determination as determined in such manner as shall be satisfactory to
Trump AC Funding, which shall be entitled to rely for such purpose on the
advice of any firm of investment bankers or securities dealers having
familiarity with the First Mortgage Notes.
"Gaming Authority" means the New Jersey Casino Control Commission, New
Jersey Division of Gaming Enforcement or any other governmental agency which
regulates gaming in a jurisdiction in which Trump AC or any of its
Subsidiaries conducts gaming activities.
"Gaming Licenses" means every material license, material franchise, or other
material authorization required to own, lease, operate or otherwise conduct or
manage gaming in any state or jurisdiction where Trump AC or its Subsidiaries
conduct business, and any applicable liquor licenses.
"Generally Accepted Accounting Principles" or "GAAP" means United States
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such other
entity as approved by a significant segment of the accounting profession as in
effect on the Issue Date.
"Ground Leases" means the ground leases, as amended or supplemented in
accordance with the Mortgage Documents, each of which expires on December 31,
2078, pursuant to which Plaza Associates is the current lessee, and each of
Trump Seashore Associates (the "TSA Lease"), Seashore Four Associates (the
"SFA Lease") and Plaza Hotel Management Company (the "PHMC Lease") are the
current respective lessors.
"Guaranteed Debt" of any Person means, without duplication, all indebtedness
of any other Person referred to in the definition of Indebtedness contained in
this section guaranteed directly or indirectly in any manner by such Person,
or in effect guaranteed directly or indirectly by such Person through an
agreement (a) to pay or purchase such Indebtedness or to advance or supply
funds for the payment or purchase of such Indebtedness, (b) to purchase, sell
or lease (as lessee or lessor) property, or to purchase or sell services,
primarily for the purpose of enabling the debtor to make payment of such
Indebtedness or to assure the holder of such Indebtedness against loss, (c) to
supply funds to, or in any other manner invest in, the debtor (including any
agreement to pay for property or services without requiring that such property
be received or such services be rendered), (d) to maintain working capital or
equity capital of the debtor, or otherwise to maintain the net worth, solvency
or other financial condition of the debtor or (e) otherwise to assure a
creditor against loss; provided, that the term "guarantee" shall not include
endorsements for collection or deposit, in either case in the ordinary course
of business, and provided, further, that the obligations of Plaza Associates
pursuant to the TPM Services Agreement or the Ground Leases, in each case in
effect on the Issue Date or as amended pursuant to terms substantially similar
to the terms in effect on the Issue Date, shall not be deemed to be Guaranteed
Debt of Plaza Associates.
"Improvements" shall mean, with respect to either or both of the Casino
Hotels, all improvements thereto, including any alteration thereof and the
acquisition, construction of any additions related thereto (including adjacent
property) or renovations thereof, including without limitation the
construction or renovation of additional gaming space or facilities, hotel and
restaurant facilities and parking facilities, with all landscaping and other
off- and on-site work related thereto.
"Indebtedness" means, with respect to any Person, without duplication, (a)
all liabilities and obligations, contingent and otherwise, of such Person for
borrowed money or representing the balance deferred and unpaid of the purchase
price of property or services, excluding any trade payables and other accrued
current liabilities arising in the ordinary course of business, but including,
without limitation, all obligations, contingent or otherwise, of such Person
in connection with any letters of credit issued under letter of credit
facilities, acceptance facilities or other similar facilities or in connection
with any agreement to purchase, redeem, exchange, convert or otherwise acquire
for value any Equity Interest of such Person, or any warrants, rights or
options to acquire such Equity Interest, now or hereafter outstanding, (b) all
obligations of such Person evidenced by bonds, notes, debentures or other
similar instruments, (c) every obligation of such Person issued as payment in
consideration of the purchase by such Person or an Affiliate of such Person of
the Equity Interest or all or
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substantially all of the assets of another Person or in consideration for the
merger or consolidation with respect to which such Person or an Affiliate of
such Person was a party, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even if the rights and remedies of the seller or
lender under such agreement in the event of default are limited to
repossession or sale of such property), but excluding trade payables and other
accrued current liabilities arising in the ordinary course of business, (e)
all obligations under Interest Swap and Hedging Obligations of such Person,
(f) all Capitalized Lease Obligations of such Person, (g) all Indebtedness
referred to in clauses (a) through (f) above of other Persons and all
dividends of other Persons, the payment of which are secured by (or for which
the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien, upon or in property (including, without
limitation, accounts and contract rights) owned by such Person, even though
such Person has not assumed or become liable for the payment of such
Indebtedness, (h) all Guaranteed Debt of such Person and (i) all Disqualified
Capital Stock of such Person (valued at the greater of its voluntary or
involuntary maximum fixed repurchase price plus accrued and unpaid dividends).
For purposes hereof, the "maximum fixed repurchase price" of any Disqualified
Capital Stock which does not have a fixed repurchase price shall be calculated
in accordance with the terms of such Disqualified Capital Stock as if such
Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to the Indenture, and if such
price is based upon, or measured by, the Fair Market Value of such
Disqualified Capital Stock, such Fair Market Value to be determined in good
faith by the Board of Directors of the issuer (or managing general partner of
the issuer) of such Disqualified Capital Stock.
"Independent Directors" shall mean directors who are not officers or
employees of THCR or any of its Subsidiaries and who are not Affiliates of
Trump or any of his Affiliates.
"Interest Swap and Hedging Obligation" means any obligation of any person
pursuant to any interest rate swap agreement, interest rate cap agreement,
interest rate collar agreement, interest rate exchange agreement, currency
exchange agreement or any other agreement or arrangement designed to protect
against fluctuations in interest rates or currency values, including, without
limitation, any arrangement whereby, directly or indirectly, such person is
entitled to receive from time to time periodic payments calculated by applying
either a fixed or floating rate of interest on a stated notional amount in
exchange for periodic payments made by such person calculated by applying a
fixed or floating rate of interest on the same notional amount.
"Investment" means, with respect to any Person, directly or indirectly, (a)
any advance, loan or other extension of credit or capital contribution to any
other Person (by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of others), (b)
any purchase or other acquisition by such Person of any Equity Interest,
bonds, notes, debentures or other securities issued or owned by, any other
Person or (c) other than guarantees of Indebtedness of the Issuers or any
Subsidiary to the extent permitted by the covenant "Limitation on Incurrence
of Additional Indebtedness and Disqualified Capital Stock," the entering into
by such Person of any guarantee of, or other credit support or contingent
obligation with respect to, Indebtedness or other liability of any other
Person.
"Issue Date" means the date of first issuance of the First Mortgage Notes
under the First Mortgage Note Indenture.
"Legal Requirements" means all applicable laws, statutes, codes, acts,
ordinances, orders, judgments, decrees, injunctions, rules, regulations,
permits, licenses, authorizations, directions and requirements of all
governments, departments, commissions, boards, courts, authorities, agencies,
officials and officers, of governments, federal, state and municipal.
"Lien" means any mortgage, charge, pledge, lien (statutory or otherwise),
privilege, security interest, hypothecation or other encumbrance upon or with
respect to any property of any kind, real or personal, movable or immovable,
now owned or hereafter acquired by an Issuer or Guarantor.
"Mortgage Documents" shall have the meaning provided in the Mortgage Note
Indenture.
"Net Cash Proceeds" (x) of an issuance of Indebtedness or Equity Interests
means the cash proceeds of such issuance, net of attorneys' fees, accountants'
fees, brokerage, consultant, underwriting and other fees and
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expenses actually incurred in connection with such issuance, sale, conversion
or exchange and net of any taxes paid or payable as a result thereof by the
entity making such sale and (y) of an Asset Sale (including an Event of Loss)
means the aggregate amount of cash and Cash Equivalents received by Trump AC
and its Subsidiaries in respect of such Asset Sale less the sum of all fees,
commissions and other expenses incurred in connection with such Asset Sale
less, in the case of an Asset Sale only, the amount (estimated reasonably and
in good faith by Trump AC) of income, franchise, sales and other applicable
taxes required to be paid by Trump AC or any of its Subsidiaries or
distributable by Trump AC as a Permitted Tax Distribution, in each case, within
twelve months of consummating the Asset Sale, in connection with such Asset
Sale.
"Net Proceeds" means the aggregate Net Cash Proceeds and fair market value of
property and assets (valued at the fair market value thereof at the time of
receipt in good faith by Trump AC).
"Obligation" means any principal, premium or interest payment, or monetary
penalty, or damages, due by the Issuers or the Guarantors under the terms of
the First Mortgage Notes or the First Mortgage Note Indenture.
"Partners" means each of THCR Holdings and Plaza Holding Inc. or any
additional or substitute partners admitted under the Partnership Agreement so
long as (i) each is a partner under the Partnership Agreement, unless removed
as a partner in accordance with the Partnership Agreement and (ii) no Default
or Event of Default occurs as a result thereof.
"Partnership Agreement" means the Amended and Restated Partnership Agreement
of Trump AC, dated as of the Issue Date, as amended from time to time in
accordance with its terms.
"Permit" means any license (including, without limitation, all Gaming
Licenses), franchise, authorization, statement of compliance, certificate of
operation, certificate of occupancy and permit required for the lawful
ownership, occupancy, operation and use of all or a material portion of either
of the Casino Hotels, whether held by Plaza Associates, Taj Associates or any
other Person (which may be temporary or permanent) (including, without
limitation, those required for the use of either of the Casino Hotels as a
licensed casino facility), in accordance with all applicable Legal
Requirements.
"Permitted Holder" means Trump and the spouse and descendants of Trump
(including any related grantor trusts controlled by, and established and
maintained for the sole benefit of, Trump or such spouse or descendants), and
the estate of any of the foregoing, but no other Person.
"Permitted Indebtedness" means the following:
(a) Trump AC may incur Indebtedness to any Wholly-owned Subsidiary
Guarantor, and any Wholly-owned Subsidiary Guarantor may incur Indebtedness
to any other Wholly-owned Subsidiary Guarantor or to Trump AC, provided,
that, in the case of Indebtedness of Trump AC such obligations shall be
unsecured and expressly subordinated in right of payment to Trump AC's
Obligations pursuant to the First Mortgage Notes, and that the date of any
event that causes such Subsidiary Guarantor to no longer be a Wholly-owned
Subsidiary Guarantor shall be an Incurrence Date;
(b) the Super Puma Helicopter Lease, but only to the extent no Services
Fees are thereafter paid under the TPM Services Agreement; and
(c) Indebtedness existing on the Issue Date, after giving effect to the
transactions contemplated by the Merger Transaction.
"Permitted Investment" means (a) Investments in any of the First Mortgage
Notes; (b) Cash Equivalents; (c) intercompany notes to the extent permitted
under clause (a) of the definition of "Permitted Indebtedness"; (d) loans,
advances or investments existing on the Issue Date; (e) any Investment in any
Wholly-owned Subsidiary of Trump AC; and (f) any Investment consisting of the
extension of gaming credit to customers consistent with industry practice in
the ordinary course of business.
"Permitted Leases" means the following:
(a) any Capitalized Lease Obligation of Trump AC or any of its
Subsidiaries incurred in accordance with the covenant "Limitation on
Incurrence of Additional Indebtedness and Disqualified Capital Stock";
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(b) any lease of Plaza Associates or Taj Associates, as tenant or
subtenant, existing on the date of the Indenture and listed on a schedule
thereto or referred to in a Mortgage or schedule thereto, including any
modifications, amendments, renewals or supplements thereof, provided, that
the aggregate annual rent and other costs thereunder are not increased
thereby, except as such rent or costs may be increased during any renewed
lease term pursuant to the terms of such leases as they exist on the date
of the Indenture; and
(c) any operating leases of Trump AC or any of its Subsidiaries other
than the leases set forth above, provided, that the aggregate average
annual rent and other payments required thereunder over the terms of such
leases shall not exceed $10.0 million.
"Permitted Liens" means
(a) Liens existing on the Issue Date after giving effect to the Merger
Transaction, and Liens securing Refinancing Indebtedness in respect of
secured Indebtedness existing on the Issue Date;
(b) the Lien of the Trustee as provided for in the Indenture and the
Mortgage Documents;
(c) Indebtedness incurred in accordance with clause (d) of the covenant
"Limitation on Incurrence of Additional Indebtedness and Disqualified
Capital Stock" may be secured by the assets acquired pursuant to the
respective capital lease (in the case of Capitalized Lease Obligations) or
with the proceeds of the respective F, F&E Financing Agreements, so long as
such Liens do not extend to any other assets;
(d) Indebtedness of Trump AC and the Guarantors incurred pursuant to
clause (e) of the covenant "Limitation on Incurrence of Additional
Indebtedness and Disqualified Capital Stock" (and refinancings thereof
pursuant to clause (e) of such covenant) may be secured by the assets of
Trump AC and the Guarantors, as applicable, provided, that the First
Mortgage Notes are secured by the assets securing such Indebtedness on a
senior or an equal and ratable basis pursuant to the terms of the
Collateral Agency Agreement;
(e) Indebtedness of the Company, Plaza Associates or Taj Associates
incurred pursuant to clause (c) of the covenant "Limitation on Incurrence
of Additional Indebtedness and Disqualified Capital Stock" (and
refinancings thereof pursuant to clause (f) of such covenant) may be
secured by the assets of the Company, Plaza Associates or Taj Associates,
as applicable, provided, that the Mortgage Notes are secured by the assets
securing such Indebtedness on a senior or an equal and ratable basis
pursuant to the terms of the Collateral Agency Agreement;
(f) any Lien arising by reason of (i) any judgment, decree or order of
any court, so long as such Lien is adequately bonded and any appropriate
legal proceedings which may have been duly initiated for the review of such
judgment, decree or order shall not have been finally terminated or the
period within which such proceedings may be initiated shall not have
expired; (ii) security for payment of workmen's compensation or other
insurance; (iii) good faith deposits in connection with tenders, leases and
contracts (other than contracts for the payment of money); and (iv)
deposits to secure public or statutory obligations, or in lieu of surety or
appeal bonds;
(g) Liens for taxes, assessments or other governmental charges not yet
due or which are being contested in good faith and by appropriate
proceedings by Trump AC or any of its Subsidiaries if adequate reserves
with respect thereto are maintained on the books of Trump AC or any of its
Subsidiaries, as the case may be, in accordance with GAAP;
(h) statutory Liens of carriers, warehousemen, mechanics, landlords,
laborers, materialmen, repairmen or other like Liens arising by operation
of law in the ordinary course of business and consistent with industry
practices and Liens on deposits made to obtain the release of such Liens if
(i) the underlying obligations are not overdue for a period of more than 60
days or (ii) such Liens are being contested in good faith and by
appropriate proceedings by Trump AC or any of its Subsidiaries and adequate
reserves with respect thereto are maintained on the books of Trump AC or
any of its Subsidiaries, as the case may be, in accordance with GAAP;
(i) easements, rights-of-way, zoning and similar restrictions and other
similar encumbrances or title defects, which, if they are incurred by Trump
AC or any of its Subsidiaries after it acquires the property
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subject thereto, are incurred in the ordinary course of business and
consistent with industry practices which, individually or in the aggregate,
do not materially detract from the value of the property subject thereto
(as such property is used or proposed to be used by Trump AC or any of its
Subsidiaries) or interfere with the ordinary conduct of the business of
Trump AC or any of its Subsidiaries; provided, that any such Liens are not
incurred in connection with any borrowing of money or any commitment to
loan any money or to extend any credit;
(j) Liens that secure Acquired Indebtedness (and refinancings thereof
pursuant to clause (f) of the covenant "Limitation of Incurrence of
Additional Indebtedness and Disqualified Capital Stock"), provided, in each
case, that such Liens do not secure any property or assets other than the
property or assets so acquired and were not put in place in connection with
or in anticipation of such acquisition, merger or consolidation;
(k) leases or subleases granted to other persons in the ordinary course
of business not materially interfering with the conduct of the business of
Trump AC or any of its Subsidiaries or materially detracting from the value
of the relative assets of Trump AC or such Subsidiary;
(l) Liens arising from precautionary Uniform Commercial Code financing
statement filings regarding operating leases entered into by Trump AC or
any of its Subsidiaries in the ordinary course of business; and
(m) Liens on the Equity Interests of Trump AC or any of its Subsidiaries
to the extent required to be pledged for the benefit of holders of Senior
Notes or of any Refinancing Indebtedness in respect thereof.
"Permitted Tax Distributions" means for each tax year that Trump AC qualifies
as a partnership or substantially similar pass-through entity under the Code or
any similar provision of state or local law, distributions of Tax Amounts in
respect of the jurisdictions in which Trump AC so qualifies as a partnership or
substantially similar pass-through entity; provided, that (A) prior to any
Permitted Tax Distribution a knowledgeable and duly authorized officer of Trump
AC Funding shall certify, and counsel reasonably acceptable to the Trustee
shall opine, that Trump AC qualifies as a partnership or substantially similar
pass-through entity for federal income tax purposes and under similar laws of
the states in respect of which such distributions are being made and (B) at the
time of such distributions, the most recent audited financial statements of
Trump AC provide that Trump AC was treated as a partnership for federal
income tax purposes for the period of such financial statements. Distributions
of Tax Amounts may be made between the tenth and twentieth day of each January
(provided, that payments in respect of estimated state or local taxes due in
January may instead, at the option of Trump AC, be paid during the last five
days of the immediately preceding December), April, June and September, based
upon the minimum estimated tax payments in respect of Tax Amounts which would
then be due and payable, and during the tenth through twentieth day of April or
within ten days of the reconciliation described in the immediately succeeding
sentence, with respect to any additional tax payments owing in respect of the
prior fiscal year. Within 60 days of Trump AC's filing of the Internal Revenue
Service Form 1065 for the applicable tax year, a reconciliation shall be made
of the Permitted Tax Distributions actually paid versus the amount permitted to
be paid as Permitted Tax Distributions based upon the final results of the
applicable tax year. In addition, prior to any Permitted Tax Distributions,
each Partner shall have entered into a binding agreement promptly to reimburse
Trump AC for any positive difference between the distributed amount and the Tax
Amount as finally determined; provided, however, that, if the Partners of Trump
AC do not promptly reimburse Trump AC for any positive difference between the
distributed amount and the Tax Amount, then the Permitted Tax Distributions
during the year in which such reimbursement should have been made shall be
reduced by the unreimbursed amount until the Permitted Tax Distributions for
such year are zero and, thereafter, Permitted Tax Distributions shall be
reduced in the succeeding years until the unreimbursed amount not used to
reduce Permitted Tax Distributions is zero.
"Person" or "person" means any individual, corporation, limited or general
partnership, joint venture, association, joint stock company, trust, limited
liability company, unincorporated organization or government or any agency or
political subdivision thereof.
"Qualified Capital Stock" means any Equity Interest of Trump AC that is not
Disqualified Capital Stock.
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"Qualified Exchange" means (a) any repurchase, redemption or other
acquisition or retirement of any shares of any class of Equity Interests of
Trump AC on or after the Issue Date in exchange for (including any such
exchange pursuant to the exercise of a conversion right or privilege in
connection with which cash is paid in lieu of the issuance of fractional
shares, interests or scrip), or out of the Net Cash Proceeds of a
substantially concurrent issuance and sale (other than to a Subsidiary of
Trump AC) of, Qualified Capital Stock of Trump AC; or (b) the redemption,
repayment, defeasance, repurchase or other acquisition or retirement for value
of any Indebtedness of, or guaranteed by, Trump AC on or after the Issue Date
in exchange for, or out of the Net Cash Proceeds of a substantially concurrent
issuance and sale of, Qualified Equity Interests of Trump AC.
"Reference Period" with regard to any person means the four full fiscal
quarters (or such lesser period during which such person has been in
existence) ended immediately preceding any date upon which any determination
is to be made pursuant to the terms of the First Mortgage Notes or the First
Mortgage Note Indenture.
"Refinancing Indebtedness" means Indebtedness or Disqualified Capital Stock
issued in exchange for, or the proceeds from the issuance and sale of which
are used substantially concurrently to repay, redeem, defease, refund,
refinance, discharge or otherwise retire for value, in whole or in part, or
constituting an amendment, modification or supplement to, or a deferral or
renewal of (collectively, a "Refinancing"), any Indebtedness or Disqualified
Capital Stock in a principal amount or, in the case of Disqualified Capital
Stock, liquidation preference, not to exceed (after deduction of reasonable
and customary fees and expenses incurred in connection with the Refinancing)
the lesser of (i) the principal amount or, in the case of Disqualified Capital
Stock, liquidation preference, of the Indebtedness or Disqualified Capital
Stock so Refinanced and (ii) if such Indebtedness being Refinanced was issued
with an original issue discount, the accreted value thereof (as determined in
accordance with GAAP) at the time of such Refinancing; provided, that (A) such
Refinancing Indebtedness of any Subsidiary shall only be used to Refinance
outstanding Indebtedness or Disqualified Capital Stock of such Subsidiary, (B)
Refinancing Indebtedness shall (x) not have an Average Life shorter than the
Indebtedness or Disqualified Capital Stock to be so refinanced at the time of
such Refinancing and (y) in all respects, be no less subordinated or junior,
if applicable, to the rights of holders of the First Mortgage Notes than was
the Indebtedness or Disqualified Capital Stock to be so refinanced, (C) such
Refinancing Indebtedness shall be secured only by the assets (if any) securing
the Indebtedness to be so refinanced and (D) such Refinancing Indebtedness
shall have no installment of principal (or redemption payment) scheduled to
come due earlier than the scheduled maturity of the corresponding installment
of principal of the Indebtedness or Disqualified Capital Stock to be so
refinanced which was scheduled to come due prior to the Stated Maturity.
"Related Business" means the business conducted (or proposed to be
conducted) by Plaza Associates or Taj Associates as of the Issue Date and any
and all businesses that in the good faith judgment of the Board of Directors
of Trump AC Funding are related businesses in Atlantic County, New Jersey or
are related to the Casino Hotels.
"Required Regulatory Redemption" means a redemption by the Issuers of any of
such holder's First Mortgage Notes pursuant to, and in accordance with, any
order of any Governmental Authority with appropriate jurisdiction and
authority relating to a Gaming License, or to the extent necessary in the
reasonable, good faith judgment of the Issuers to prevent the loss, failure to
obtain or material impairment or to secure the reinstatement of, any material
Gaming License, where such redemption or acquisition is required because the
holder or beneficial owner of such First Mortgage Note is required to be found
suitable or to otherwise qualify under any gaming laws and is not found
suitable or so qualified within a reasonable period of time.
"Restricted Funds Account" means a segregated bank account of Trump AC or
any of its Subsidiaries, subject to the Lien of the Collateral Agent under the
Collateral Agency Agreement, the proceeds of which are invested in cash or
Cash Equivalents pending any use permitted by the covenant "Limitation on the
Sale of Assets and Subsidiary Stock; Event of Loss."
"Restricted Investment" means, in one or a series of related transactions,
any Investment, other than investments in Cash Equivalents.
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<PAGE>
"Restricted Payment" means, with respect to any person, (a) the declaration
or payment of any dividend or other distribution in respect of Equity
Interests of such person or any subsidiary or parent of such person, (b) any
payment on account of the purchase, redemption or other acquisition or
retirement for value of Equity Interests of such person or any Subsidiary or
parent of such person, (c) any purchase, redemption, or other acquisition or
retirement for value of, any payment in respect of any amendment of the terms
of or any defeasance of, any Indebtedness of, or guaranteed by, such Person,
any parent of such Person or any Subsidiary prior to the scheduled maturity,
any scheduled repayment of principal, or scheduled sinking fund payment, as
the case may be, of such Indebtedness (including any payment in respect of any
amendment of the terms of any such Indebtedness, which amendment is sought in
connection with any such acquisition of such Indebtedness or seeks to shorten
any such due date), (d) in connection with the designation of a Person as an
Unrestricted Subsidiary, a Restricted Payment shall be deemed to exist in the
amount provided in the definition of Unrestricted Subsidiary contained herein
and (e) any Restricted Investment by such person; provided, that the term
"Restricted Payment" does not include (i) any dividend, distribution or other
payment on or with respect to Equity Interests of an issuer to the extent
payable solely in shares of Qualified Capital Stock of such issuer; or (ii)
any dividend, distribution or other payment to Trump AC or to any of its
Wholly-owned Subsidiaries or any Subsidiary Guarantor.
"Services Fee" means, for any period, the amount of the fee payable by Plaza
Associates under the TPM Services Agreement for such period.
"Significant Subsidiary" shall have the meaning provided under Regulation S-
X of the Securities Act, as in effect on the Issue Date.
"Stated Maturity," when used with respect to any First Mortgage Note, means
April , 2006, and when used with respect to any other Indebtedness means the
dates specified in such other Indebtedness as the fixed date on which the
principal of such Indebtedness is due and payable.
"Subsidiary" of any Person means (i) a corporation a majority of whose
Voting Stock is at the time, directly or indirectly, owned by such Person, by
such Person and one or more Subsidiaries of such Person or by one or more
Subsidiaries of such Person, (ii) any other Person (other than a corporation)
in which such Person, one or more Subsidiaries of such Person, or such Person
and one or more Subsidiaries of such Person, directly or indirectly, at the
date of determination thereof has a majority ownership interest, or (iii) a
partnership in which such Person or a Subsidiary of such Person is, at the
time, a general partner and has a majority ownership interest. Notwithstanding
the foregoing, no Unrestricted Subsidiary shall be considered a Subsidiary of
Trump AC or any of its other Subsidiaries for purposes of the First Mortgage
Notes and the Indenture. Unless the context otherwise requires, all references
herein to "Subsidiaries" shall be to the direct and indirect to Subsidiaries
of Trump AC for purposes of the First Mortgage Notes and the First Mortgage
Note Indenture.
"Superior Mortgages" means those certain mortgages, each as in effect on the
Issue Date, known as the "Rothenberg" and "Mutual Benefit" mortgages, securing
the Plaza Garage Parcel and the Egg Harbor Parcel more fully described in the
Mortgage Documents.
"Tax Amounts" with respect to any year means an amount no greater than (a)
the higher of (i) the product of (A) the taxable income of Trump AC (computed
as if Trump AC were an individual taxpayer) for such year as determined in
good faith by the Board of Directors of Trump AC Funding and (B) the Tax
Percentage and (ii) the product of (A) the alternative minimum taxable income
attributable to Trump AC (computed as if Trump AC were an individual taxpayer)
for such year as determined in good faith by Board of Directors of Trump AC
Funding and (B) the Tax Percentage, reduced by (b) to the extent not
previously taken into account, any income tax benefit attributable to Trump AC
which could be realized (without regard to the actual realization) by its
Partners in the current or any prior taxable year, or portion thereof,
commencing on or after the Issue Date (including any tax losses or tax
credits), computed at the applicable Tax Percentage for the year that such
benefit is taken into account for purposes of this computation. Any part of
the Tax Amount not distributed in respect of a tax period for which it is
calculated shall be available for distribution in subsequent tax periods.
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<PAGE>
"Tax Percentage" means the highest, aggregate effective marginal rate of
federal, state and local income tax or, when applicable, alternative minimum
tax, to which any Partner of Trump AC would be subject in the relevant year of
determination (as certified to the Trustee by a nationally recognized tax
accounting firm); provided, that in no event shall the Tax Percentage be
greater than the sum of (x) the highest, aggregate effective marginal rate of
federal, state, and local income tax or, when applicable, alternative minimum
tax, to which Trump AC would have been subject if it were a C corporation, for
federal income tax purposes, and (y) 5 percentage points. If any Partner or
Upper Tier Owner of Trump AC is an S corporation, partnership or similar pass-
through entity for federal income tax purposes, the Tax Percentage shall be
computed based upon the tax rates applicable to the shareholder or partner of
such Partner or Upper Tier Owner, as the case may be.
"TPM Services Agreement" shall mean the Amended and Restated Services
Agreement, dated June 24, 1993, between Plaza Associates and Trump Plaza
Management Corp.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
"Unrestricted Subsidiary" means any Subsidiary of Trump AC that, at the time
of determination, shall be an Unrestricted Subsidiary (as designated by Trump
AC, as provided below) provided that such Subsidiary does not and shall not
engage, to any substantial extent, in any line or lines of business activity
other than a Related Business. Trump AC may designate any Person (other than
Plaza Associates, Taj Associates, TTMC, Trump AC Funding and any direct or
indirect holder of Equity Interest therein) to be an Unrestricted Subsidiary
if (a) no Default or Event of Default is existing or will occur as a
consequence thereof, (b) either (x) such Subsidiary, at the time of
designation thereof, has no assets, (y) such Subsidiary is designated an
"Unrestricted Subsidiary" at the time of Acquisition by Trump AC, in the case
of Subsidiaries acquired after the Issue Date or (z) immediately after giving
effect to such designation, on a pro forma basis, Trump AC could incur at
least $1.00 of additional Indebtedness pursuant to the Debt Incurrence Ratio
in paragraph (a) of the covenants "Limitation on Incurrence of Additional
Indebtedness and Disqualified Capital Stock" and (c) such Subsidiary does not
own any Equity Interests in, or own or hold any Lien on any property of, Trump
AC or any other Subsidiary (excluding other Unrestricted Subsidiaries). Any
such designation also constitutes a Restricted Payment (to the extent such
amount is in excess of $0.00) in an amount equal to the sum of (x) net assets
of such Subsidiary at the time of the designation, unless in the case of this
clause (x) the designation is made pursuant to clause (b)(y) of the first
sentence of this definition, in which case the amount of consideration paid by
Trump AC and its Subsidiaries to effect such Acquisition (excluding Qualified
Equity Interests of THCR issued in connection therewith) shall be the amount
for purpose of this clause (x),and (y) the maximum amount of Guaranteed Debt
of Trump AC and its Subsidiaries in respect of the designated Subsidiary which
is to be outstanding immediately after such designation, in each case for
purposes of the covenant "Limitation on Restricted Payments." Subject to the
foregoing, Trump AC may designate any Unrestricted Subsidiary to be a
Subsidiary, provided, that (i) no Default or Event of Default is existing or
will occur as a consequence thereof and (ii) immediately after giving effect
to such designation, on a pro forma basis, Trump AC could incur at least $1.00
of Indebtedness pursuant to the Debt Incurrence Ratio test in paragraph (a) of
the covenants "Limitation on Incurrence of Additional Indebtedness and
Disqualified Capital Stock." Each such designation shall be evidenced by
filing with the Trustee a certified copy of the resolution giving effect to
such designation and an officers' certificate certifying that such designation
complied with the foregoing conditions.
"Upper Tier Owner" means (i) if a Partner is an S corporation, partnership
or similar pass-through entity for federal income tax purposes, any
shareholder or partner of such Partner and (ii) if any such shareholder or
partner referred to in (i) above is an S corporation, partnership or similar
pass-through entity for federal income tax purposes, any shareholder or
partner of such person.
"Voting Stock" with respect to any Person means all classes of Equity
Interests of such Person then outstanding and normally entitled to vote in
elections of directors of such Person.
"Wholly-owned Subsidiary" means a Subsidiary all the Equity Interests of
which are owned by Trump AC or another Wholly-owned Subsidiaries of Trump AC.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 1, 1996 (without giving effect
to the transactions contemplated by the Merger Transaction), certain
information regarding the beneficial ownership of THCR Common Stock by (i)
each of THCR's executive officers, (ii) each director of THCR, (iii) each
person who is known to THCR to own beneficially more than 5% of the THCR
Common Stock and (iv) all officers and directors of THCR as a group. Such
information is based, in part, upon information provided by certain
stockholders of THCR. In the case of persons other than members of the
officers and directors of THCR, such information is based solely on a review
of Schedules 13G filed with the SEC.
<TABLE>
<CAPTION>
BENEFICIAL
OWNERSHIP
----------------------
NAME NUMBER PERCENT
---- --------- -------
<S> <C> <C>
Donald J. Trump.......................................... 6,667,217(/1/) 39.8%
Nicholas L. Ribis........................................ 72,487(/2/) *
John P. Burke............................................ 400(/3/) *
Robert M. Pickus......................................... 200 *
Wallace B. Askins........................................ 3,000 *
Don M. Thomas............................................ 200 *
Peter M. Ryan............................................ -- --
INVESCO PLC.............................................. 527,300(/4/) 5.2
Hellman, Jordan Management Co., Inc. .................... 882,700(/5/) 8.8
The Capital Group Companies, Inc. ....................... 1,064,000(/6/) 10.6
State Street Research & Management Company............... 1,270,300(/7/) 12.6
Oppenheimer Group, Inc. ................................. 1,490,075(/8/) 14.8
All officers and directors of THCR (7 persons)........... 6,743,504 40.2
</TABLE>
The above persons have sole voting and investment power, unless otherwise
indicated.
- ---------------------
* Less than 1%.
(1) 725 Fifth Avenue, New York, New York 10022. These shares include 6,666,667
shares of THCR Common Stock, into which Trump's limited partnership
interest in THCR Holdings is convertible, subject to certain adjustments.
These shares do not include 300 shares of THCR Common Stock held by his
wife, Mrs. Marla M. Trump, of which shares Trump disclaims beneficial
ownership. Trump is also the beneficial owner of the outstanding shares of
the THCR Class B Common Stock (1,000 shares). The THCR Class B Common
Stock has voting power equivalent to the voting power of the THCR Common
Stock into which Trump's limited partnership interest is convertible. Upon
conversion of all or any portion of the THCR Holdings limited partnership
interest into shares of THCR Common Stock, the corresponding voting power
of the THCR Class B Common Stock will be proportionately diminished.
(2) Represents the vested portion of a stock bonus awarded to the President of
THCR pursuant to the 1995 Stock Plan. See "Management--Executive
Compensation." These shares include 3,081 shares and 2,739 shares held by
Mr. Ribis as custodian for his son, Nicholas L. Ribis, Jr., and his
daughter, Alexandria Ribis, respectively, of which shares Mr. Ribis
disclaims beneficial ownership.
(3) Mr. Burke shares voting and dispositive power of 100 of these shares with
his wife. These shares also include 100 shares beneficially owned solely
by his wife, of which shares Mr. Burke disclaims beneficial ownership.
(4) 11 Devonshire Square, London EC2M 4YR, England. INVESCO PLC ("Invesco"),
the parent holding company, shares voting and dispositive power over these
shares (with four of its subsidiaries). Invesco and its subsidiaries
disclaim beneficial ownership of these shares, which are held by them on
behalf of other persons who have the right to receive (or direct the
receipt) of dividends and proceeds from the sale of such shares.
(5) 75 State Street, Suite 2420, Boston, Massachusetts 02109. Hellman, Jordan
Management Co., Inc. ("Hellman") is an investment adviser which has sole
dispositive power over all of these shares and has sole voting power over
817,700 of these shares. Hellman's clients have the power to revoke
Hellman's dispositive power upon 30 days' written notice.
(6) 333 South Hope Street, Los Angeles, California 90071. The Capital Group
Companies, Inc. ("Capital Group") has sole dispositive power over these
shares and sole voting power over 256,000 of these shares. These shares
include 654,000 shares beneficially owned by Capital Guardian Trust
Company ("Capital Guardian"). Capital Group is the parent holding company
of Capital Guardian. Capital Group and Capital Guardian disclaim
beneficial ownership of these shares.
(7) One Financial Center, 30th Floor, Boston, Massachusetts 02111. State
Street Research & Management Company ("State Street") is an investment
adviser and disclaims beneficial ownership of these shares. Metropolitan
Life Insurance Company, One Madison Avenue, New York, New York 10010, is
the parent holding company of State Street.
(8) Oppenheimer Tower, World Financial Center, New York, New York 10281.
Oppenheimer Group, Inc. ("Oppenheimer") has shared voting and dispositive
power over these shares. These shares include 886,400 shares beneficially
owned by Oppenheimer Capital, an investment adviser, of which Oppenheimer
is the parent holding company.
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<PAGE>
DESCRIPTION OF THE TRUMP AC PARTNERSHIP AGREEMENT
The following summary of the Amended and Restated Partnership Agreement of
Trump AC, as amended to date (the "Trump AC Partnership Agreement"), and the
description of certain provisions set forth elsewhere in this Prospectus, are
qualified in their entirety by reference to such partnership agreement, which
is filed as an exhibit to the Registration Statement of which this Prospectus
is a part. Trump AC was formed on February 17, 1993 under the laws of the
State of New Jersey. The partners of Trump AC, THCR Holdings and Plaza Holding
Inc. (each, a "Partner") amended the Trump AC Partnership Agreement on March
4, 1996 to change the name of the partnership from Trump Plaza Holding
Associates to Trump Atlantic City Associates and certain other amendments were
made in connection with the Merger Transaction.
DISTRIBUTIONS AND ALLOCATIONS OF PROFITS AND LOSSES
Trump AC will make any required distributions to each Partner for taxes
("Tax Amounts") in one or more payments from time to time during each year,
but in no event later than March 1 of the year immediately following such
year, in an aggregate cash sum equal to such Partner's percentage interest in
Tax Amounts in respect of such year. In general, Tax Amounts for any year are
the product of the highest marginal tax rate applicable to any of the Partners
(subject to certain limitations) and Trump AC's taxable income for such year.
The Trump AC Partnership Agreement provides that after making the required tax
distributions, additional distributions will be made from time to time as
determined by a majority of the Board of Directors of Plaza Holding Inc., but
in any case pro rata in accordance with the Partners' percentage interests.
Profits and losses for tax purposes are generally allocated among the
partners in accordance with their percentage interests, subject to compliance
with the provisions of Section 704(b) and 704(c) of the Code and the Treasury
Regulations thereunder governing special allocations of certain partnership
items, including the "ceiling rule" set forth in Treasury Regulations Section
1.704-3 (which are not subject to cure by special allocation except as
specifically provided in the Trump AC Partnership Agreement).
TERM
The term of Trump AC's partnership continues until December 31, 2030. A
Partner may terminate his membership in Trump AC (a "Withdrawing Partner")
only upon the written consent of all the other Partners in Trump AC. The
distribution of the interest of the Withdrawing Partner will be determined by
the unanimous consent of all the other Partners at the time of the withdrawal
of the Withdrawing Partner. Trump AC shall be dissolved and its affairs wound
up only upon the unanimous consent of all the Partners or as otherwise
required by law.
MANAGEMENT
All decisions affecting the business and affairs of Trump AC, including, but
not limited to, the financing, refinancing, sale, management or leasing of any
partnership property, or any part thereof, the acquisition, development,
financing, sale or leasing of other property, and all matters arising under
the Trump AC Partnership Agreement shall be decided by Plaza Holding Inc., the
Managing General Partner of Trump AC.
PARTNER CONTRIBUTIONS
The contributions of all Partners to Trump AC shall be returned only upon
dissolution or termination of Trump AC and after payment of all debts of Trump
AC and only out of net assets or net proceeds remaining thereafter.
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ADMISSION OF THCR HOLDINGS
In connection with the June 1995 Offerings, the Partners amended the Trump AC
Partnership Agreement to provide for (i)(A) Trump's contribution of his 99%
general partnership interest in Trump AC to THCR Holdings, and (B) Trump's
withdrawal as a general partner of Trump AC, and (ii) the admittance of THCR
Holdings general partner in Trump AC. The amendment provided for the
indemnification of Trump by Trump AC for all expenses incurred in connection
with any threatened, pending or completed action, suit or proceeding in
connection with the business or internal affairs of Trump AC or any act of
omission of Trump as a general partner of Plaza Holding (as predecessor to
Trump AC).
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of certain federal income tax
consequences of acquiring, owning and disposing of the First Mortgage Notes.
This discussion is based upon the provisions of the federal income tax law now
in effect which is subject to change, possibly with retroactive effect. This
summary does not discuss all aspects of federal income taxation that may be
relevant to a particular investor in the First Mortgage Notes in light of his
personal investment circumstances or to certain types of investors subject to
special treatment under the federal income tax laws (for example, banks,
insurance companies, tax-exempt organizations, dealers in securities or
currencies, and except to the extent described below, foreign investors) and
does not discuss any aspect of state, local or foreign taxation. This
discussion is limited to those initial investors who will hold the First
Mortgage Notes as "capital assets" (generally, property held for investment)
within the meaning of the Code.
Each prospective investor is urged to consult his or its own tax advisor
regarding the federal, state, local and other tax consequences attendant upon
the acquisition, ownership and disposition of the First Mortgage Notes.
INTEREST
A holder of the First Mortgage Notes will be required to include in ordinary
income, for federal income tax purposes, stated interest received or accrued
on the First Mortgage Notes in accordance with the holder's regular method of
accounting.
SALE, EXCHANGE OR REDEMPTION OF THE FIRST MORTGAGE NOTES
The sale, exchange or redemption of the First Mortgage Notes will result in
capital gain or loss equal to the difference between the amount realized
(other than an amount attributable to accrued and unpaid interest) and the
holder's adjusted tax basis in the First Mortgage Notes immediately before
such disposition. Such gain or loss will generally be long-term if the holding
period for the First Mortgage Notes is more than one year.
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS APPLICABLE TO FOREIGN HOLDERS
The following discussion summarizes certain United States federal tax
consequences of the acquisition, ownership and disposition of First Mortgage
Notes by an initial purchaser of First Mortgage Notes that, for United States
federal income tax purposes, is not a "United States person" (a "Non-United
States Holder"). For purposes of this discussion, a "United States person"
means a citizen or resident of the United States; a corporation, partnership
or other entity created or organized in the United States or under the laws of
the United States or of any political subdivision thereof; or an estate or
trust whose income is includible in gross income for United States federal
income tax purposes regardless of its source. This discussion does not
consider any specific facts or circumstances that may apply to a particular
Non-United States Holder. Prospective investors are urged to consult their tax
advisors regarding the United States federal tax consequences of acquiring,
holding, and disposing of First Mortgage Notes, as well as any tax
consequences that may arise under the laws of any foreign, state, local or
other taxing jurisdiction.
INTEREST
Interest paid by the Issuers to a Non-United States Holder will not be
subject to United States federal income or withholding tax if such interest is
not effectively connected with the conduct of a trade or business within the
United States by such Non-United States Holder and (i) the Non-United States
Holder does not actually or constructively own a 10% or more interest in Taj
Funding and is not a controlled foreign corporation with respect to which the
Issuers are a "related person" within the meaning of the Code and (ii) the
beneficial owner of the First Mortgage Notes certifies, under penalties of
perjury, that the beneficial owner is not a United States person and provides
the beneficial owner's name and address.
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<PAGE>
GAIN ON DISPOSITION
A Non-United States Holder will generally not be subject to United States
federal income tax on gain recognized on a sale, redemption or other
disposition of a First Mortgage Note unless (i) the gain is effectively
connected with the conduct of a trade or business within the United States by
the Non-United States Holder or (ii) in the case of a Non-United States Holder
who is a non-resident alien individual and holds the First Mortgage Note as a
capital asset, such holder is present in the United States for 183 or more
days in the taxable year and certain other requirements are met.
FEDERAL ESTATE TAXES
If interest on the First Mortgage Notes is exempt from withholding of United
States federal income tax under the rules described above, the First Mortgage
Notes will not be included in the estate of a deceased Non-United States
Holder for United States federal estate tax purposes.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The Issuers will, where required, report to the holders of First Mortgage
Notes and the Internal Revenue Service the amount of any interest paid on the
First Mortgage Notes in each calendar year and the amounts of tax withheld, if
any, with respect to such payments.
In the case of payments of interest to Non-United States Holders, temporary
Treasury regulations provide that the 31% backup withholding tax and certain
information reporting will not apply to such payments with respect to which
either the requisite certification, as described above, has been received or
an exemption has otherwise been established; provided that neither the Issuers
nor their payment agents have actual knowledge that the holder is a United
States person or that the conditions of any other exemption are not in fact
satisfied. Under temporary Treasury regulations, these information reporting
and backup withholding requirements will apply, however, to the gross proceeds
paid to a Non-United States Holder on the disposition of the First Mortgage
Notes by or through a United States office of a United States or foreign
broker, unless the holder certifies to the broker under penalties of perjury
as to its name, address and status as a foreign person or the holder otherwise
establishes an exemption. Information reporting requirements, but not backup
withholding, will also apply to a payment of the proceeds of a disposition of
the First Mortgage Notes by or through a foreign office of a United States
broker or foreign brokers with certain types of relationships to the United
States. Neither information reporting nor backup withholding generally will
apply to a payment of the proceeds of a disposition of the First Mortgage
Notes by or through a foreign office of a foreign broker not subject to the
preceding sentence.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules will be refunded or credited against the Non-United
States Holder's United States federal income tax liability, provided that the
required information is furnished to the Internal Revenue Service.
These information reporting and backup withholding rules are under review by
the United States Treasury and their application to the First Mortgage Notes
could be changed by future regulations.
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<PAGE>
UNDERWRITING
Subject to certain conditions contained in the Underwriting Agreement,
Donaldson, Lufkin & Jenrette ("DLJ"), Salomon Brothers Inc ("Salomon") and BT
Securities Corporation ("BT Securities," and together with DLJ and Salomon,
the "Underwriters") have severally agreed to purchase from the Issuers and the
Guarantors $1,100,000,000 aggregate principal amount of First Mortgage Notes.
The principal amount of First Mortgage Notes that each Underwriter has agreed
to purchase is set forth opposite its name below.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
OF FIRST MORTGAGE
UNDERWRITERS NOTES
------------ -----------------
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation........
Salomon Brothers Inc ......................................
BT Securities Corporation..................................
--------------
Total.................................................... $1,100,000,000
==============
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares of First Mortgage
Notes offered hereby are subject to approval of certain legal matters by
counsel and to certain other conditions. The Underwriters are obligated to
take and pay for all the First Mortgage Notes offered hereby if any are taken.
The Underwriters have advised the Issuers and the Guarantors that the
Underwriters propose to offer the First Mortgage Notes directly to the public
initially at the public offering price set forth on the cover page of this
Prospectus and to certain dealers at such price less a concession not in
excess of % of the principal amount. Any Underwriter may allow, and such
dealers may reallow, a discount not in excess of % of the principal amount to
any other Underwriter and to certain other dealers. After the initial public
offering of the First Mortgage Notes, the public offering price and other
selling terms may be changed by the Underwriters.
Prior to this offering, there has been no public market for the First
Mortgage Notes. The Issuers do not intend to list any of the First Mortgage
Notes on a national securities exchange or to seek the admission thereof for
trading in the National Association of Securities Dealers Automated Quotation
System. The Underwriters have advised the Issuers that they currently intend
to make a market in the First Mortgage Notes, but are not obligated to do so
and may discontinue any such market-making at any time without notice.
Accordingly, there can be no assurance as to the liquidity of, or that an
active trading market will develop for, the First Mortgage Notes.
Trump AC and its subsidiaries have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act or
to contribute to payments the Underwriters may be required to make in respect
thereof.
Each of the Underwriters from time to time performs investment banking and
other financial services for THCR and its affiliates for which they receive
advisory or transaction fees, as applicable, plus out-of-pocket expenses, of
the nature and in amounts customary in the industry for such services. The
Underwriters are also acting as lead underwriters for the Stock Offering. In
addition, DLJ has acted as THCR's financial advisor in connection with the
Merger Transaction, for which services THCR has agreed to pay DLJ a customary
fee for rendering a fairness opinion and a fee upon consummation of the
Merger. Following consummation of the Merger Transaction, it is expected that
an affiliate of DLJ will become a secured creditor of Trump and certain of his
affiliates (other than THCR) in connection with a loan proposed to be made to
Trump by such DLJ affiliate, for which it will receive a customary fee and
reimbursement of its expenses. See "Risk Factors--Control and
146
<PAGE>
Involvement of Trump." Bankers Trust, an affiliate of BT Securities, is a
significant secured creditor of Trump and certain of his affiliates other than
THCR. See "Risk Factors--Conflicts of Interest." Bankers Trust held a $500,000
unsecured demand note owed by Trump Indiana, a subsidiary of THCR Holdings.
Following demand by that lender, such amount was paid in full by Trump on June
6, 1995, and is now owed by Trump Indiana to Trump. In connection with the
Merger Transaction, Bankers Trust will receive $10 million in respect of
certain of the Trump Indebtedness. In exchange for such payment, Bankers Trust
will consent to the Merger Transaction and release certain liens on Trump's
direct and indirect equity interests in Taj Associates and related guarantees
and the pledge of TTMI Note.
LEGAL MATTERS
Certain legal matters, including certain tax matters, in connection with the
securities offered hereby are being passed upon for the Issuers by Willkie Farr
& Gallagher, New York, New York. Certain legal matters in connection with the
securities offered hereby are being passed upon for the Underwriters by
Skadden, Arps, Slate, Meagher & Flom, Los Angeles, California.
The statements as to matters of law and legal conclusions concerning New
Jersey gaming laws included under the captions "Risk Factors--Strict Regulation
by Gaming Authorities," and "Regulatory Matters" (other than the subcaption
"Other Laws and Regulations") have been prepared by Sterns & Weinroth, Trenton,
New Jersey, gaming counsel for the Issuers. Sterns & Weinroth offers no opinion
and does not purport to opine on the application of federal securities laws and
regulations or the securities laws and regulations of any state with respect to
the securities offered hereby.
EXPERTS
The audited financial statements and schedules of Trump Atlantic City
Associates and Trump Plaza Associates, Trump Taj Mahal Associates and
Subsidiary and Trump Atlantic City Funding, Inc. included in this Prospectus
and elsewhere in the Registration Statement have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports
with respect thereto, and are included herein in reliance upon the authority of
said firm as experts in giving said reports.
AVAILABLE INFORMATION
Trump AC, Trump AC Funding and Plaza Associates have filed with the office of
the SEC in Washington, DC a Registration Statement on Form S-1 (the
"Registration Statement") under the Securities Act, with respect to the
securities offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain portions of which
have been omitted as permitted by the rules and regulations of the SEC. Such
additional information can be inspected at, and obtained from, the SEC in the
manner set forth below. For further information pertaining to the securities
offered hereby and to Trump AC, Trump AC Funding, Plaza Associates and Taj
Associates, reference is made to the Registration Statement, including the
exhibits filed as parts thereof.
THCR, THCR Holdings, Trump AC, Trump AC Funding, Plaza Associates, Taj
Holding, Taj Funding and Taj Associates are subject to the informational
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and, accordingly, have filed reports and other information
with the SEC. Reports, proxy statements and other information of THCR, THCR
Holdings, Trump AC, Trump AC Funding, Plaza Associates, Taj Holding, Taj
Funding and Taj Associates filed with the SEC, as well as the Registration
Statement, are available for inspection and copying at the public reference
facilities maintained by the SEC at Room 1024, 450 Fifth Street, N.W.,
Washington, DC 20549 and at certain regional offices of the SEC located at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60621-2511 and 7 World
147
<PAGE>
Trade Center, New York, New York 10048. Copies of such material can be
obtained from the Public Reference Section of the SEC, 450 Fifth Street, N.W.,
Washington, DC 20549 at prescribed rates. It is expected that upon
consummation of the Merger Transaction, Plaza Associates, Taj Holding, Taj
Funding and Taj Associates will not be subject to the informational reporting
requirements of the Exchange Act. Until the consummation of the Merger, units,
each of which consists of $1,000 principal amount of Taj Bonds and one share
of Taj Holding Class B Common Stock, will be listed on the American Stock
Exchange, and reports and other information concerning Taj Holding, Taj
Funding and Taj Associates can be inspected at the offices of the American
Stock Exchange, 86 Trinity Place, New York, New York 10006.
148
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Trump Atlantic City Funding, Inc.
Report of Independent Accountants....................................... F-2
Balance Sheet as of January 30, 1996.................................... F-3
Notes to Balance Sheet (unaudited)...................................... F-4
Trump Atlantic City Associates and Trump Plaza Associates
Report of Independent Public Accountants................................ F-5
Consolidated Balance Sheet as of December 31, 1994 and 1995............. F-6
Consolidated Statements of Operations for the years ended December 31,
1993, 1994
and 1995............................................................... F-7
Consolidated Statements of Capital (Deficit) for the years ended
December 31, 1993, 1994
and 1995............................................................... F-8
Consolidated Statements of Cash Flows for the years ended December 31,
1993, 1994
and 1995............................................................... F-9
Notes to Consolidated Financial Statements.............................. F-10
Trump Taj Mahal Associates and Subsidiary
Report of Independent Public Accountants................................ F-21
Consolidated Balance Sheet as of December 31, 1994 and 1995............. F-22
Consolidated Statements of Operations for the years ended December 31,
1993, 1994 and 1995.................................................... F-23
Consolidated Statements of Capital (Deficit) for the years ended Decem-
ber 31, 1993, 1994
and 1995............................................................... F-24
Consolidated Statements of Cash Flows for the years ended December 31,
1993, 1994
and 1995............................................................... F-25
Notes to Consolidated Financial Statements.............................. F-26
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Trump Atlantic City Funding, Inc.
We have audited the accompanying balance sheet of Trump Atlantic City
Funding, Inc. (a Delaware Corporation) as of January 30, 1996. This balance
sheet is the responsibility of the management of Trump Atlantic City Funding,
Inc. Our responsibility is to express an opinion on this balance sheet based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Trump Atlantic City Funding, Inc.
as of January 30, 1996, in conformity with generally accepted accounting
principles.
Arthur Andersen LLP
Roseland, New Jersey
January 31, 1996
F-2
<PAGE>
TRUMP ATLANTIC CITY FUNDING, INC.
BALANCE SHEET
JANUARY 30, 1996
ASSETS
<TABLE>
<S> <C>
Cash...................................................................... $100
----
Total Assets............................................................ $100
====
LIABILITIES AND SHAREHOLDER'S EQUITY
Commitments and Contingencies
Common Stock, $.01 par value, 1,000 shares authorized, 100 shares issued
and outstanding.......................................................... $100
----
Total Shareholder's Equity.............................................. 100
----
Total Liabilities and Shareholder's Equity.............................. $100
====
</TABLE>
The accompanying notes to balance sheet are an integral part of this balance
sheet.
F-3
<PAGE>
TRUMP ATLANTIC CITY FUNDING, INC.
NOTES TO BALANCE SHEET
JANUARY 30, 1996
(1) ORGANIZATION AND OPERATIONS
Trump Atlantic City Funding, Inc. ("Trump AC Funding"), which is wholly owned
by Trump Atlantic City Associates ("Trump AC"), was formed on January 30, 1996
to raise funds through the issuance and sale of debt securities for the benefit
of Trump Taj Mahal Associates ("Taj Associates") and Trump Plaza Associates
("Plaza Associates").
As Trump AC Funding has no operations, its ability to service its debt is
dependent upon the successful operations of Taj Associates and Plaza
Associates.
(2) PROPOSED ISSUANCE OF FIRST MORTGAGE NOTES
Trump AC, Trump AC Funding, Plaza Associates and Taj Associates have filed
registration statements for the issuance and sale of $1,100,000,000 of mortgage
notes due 2006. The proceeds of the mortgage notes are to be used, among other
things, to purchase Trump Taj Mahal Funding, Inc.'s outstanding 11.35% Mortgage
Bonds, Series A due 1999 and Trump Plaza Funding, Inc.'s 10 7/8% First Mortgage
Notes due 2001.
Existing and prospective investors should consider among other things, (i)
the high leverage and fixed charges of Trump Hotels & Casino Resorts, Inc.
("THCR") and Taj Mahal Holding Corp.; (ii) the risk in refinancing and
repayment of indebtedness and the need for additional financing; (iii) the
restrictions imposed on certain activities by certain debt instruments; (iv)
the recent results of Trump Plaza Hotel and Casino ("Trump Plaza") and the
Trump Taj Mahal Casino Resort (the "Taj Mahal"); and (v) risks associated with
the expansion of Trump Plaza ("Trump Plaza Expansion"), the expansion of the
Taj Mahal (the "Taj Mahal Expansion") and the riverboat gaming project
approximately 25 miles from downtown Chicago (the "Indiana Riverboat"). There
can be no assurance that the Trump Plaza Expansion or the Taj Mahal Expansion
will be completed or that the Indiana Riverboat or any other gaming venture,
will open or that any of THCR's or the Taj Mahal's operations will be
successful. See "Risk Factors" included elsewhere in this Prospectus for a
discussion of these and other factors.
F-4
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Trump Atlantic City Associates and
Trump Plaza Associates:
We have audited the accompanying consolidated balance sheets of Trump
Atlantic City Associates (a New Jersey general partnership) and Trump Plaza
Associates (a New Jersey general partnership) as of December 31, 1994 and 1995,
and the related consolidated statements of operations, capital (deficit) and
cash flows for each of the three years in the period ended December 31, 1995.
These consolidated financial statements are the responsibility of the
management of Trump Atlantic City Associates and Trump Plaza Associates. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Trump Atlantic City Associates
and Trump Plaza Associates as of December 31, 1994 and 1995, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles.
Arthur Andersen LLP
Roseland, New Jersey
February 21, 1996
F-5
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES AND TRUMP PLAZA ASSOCIATES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND 1995
<TABLE>
<CAPTION>
1994 1995
------------- -------------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents....................... $ 11,144,000 $ 15,937,000
Trade receivables, net of allowances for
doubtful accounts of $8,493,000 and $8,077,000,
respectively................................... 6,685,000 7,576,000
Accounts receivable, other (Note 6)............. 112,000 6,482,000
Inventories..................................... 2,477,000 2,609,000
Prepaid expenses and other current assets....... 4,280,000 5,045,000
Due from affiliates, net........................ -- 1,298,000
------------- -------------
Total current assets............................ 24,698,000 38,947,000
------------- -------------
PROPERTY AND EQUIPMENT (Notes 4, 6 and 8):
Land and land improvements...................... 36,463,000 48,308,000
Buildings and building improvements............. 297,573,000 350,366,000
Furniture, fixtures and equipment............... 84,709,000 90,965,000
Leasehold improvements.......................... 2,404,000 2,404,000
Construction in progress........................ 14,864,000 51,183,000
------------- -------------
436,013,000 543,226,000
Less--Accumulated depreciation and
amortization................................... (137,659,000) (147,284,000)
------------- -------------
Net property and equipment...................... 298,354,000 395,942,000
------------- -------------
LAND RIGHTS, net of accumulated amortization of
$3,780,000 and $4,149,000, respectively......... 29,688,000 29,320,000
------------- -------------
OTHER ASSETS:
Deferred bond issuance costs, net of accumulated
amortization of $3,270,000 and $7,525,000,
respectively (Note 3).......................... 14,125,000 9,866,000
Other Assets.................................... 8,778,000 5,949,000
------------- -------------
Total other assets.............................. 22,903,000 15,815,000
------------- -------------
Total assets.................................... $ 375,643,000 $ 480,024,000
============= =============
LIABILITIES AND CAPITAL
CURRENT LIABILITIES:
Current maturities of long-term debt (Note 3)... $ 2,969,000 $ 2,901,000
Accounts payable................................ 9,156,000 8,290,000
Accrued payroll................................. 4,026,000 6,815,000
Self insurance reserves (Note 6)................ 4,039,000 3,750,000
Accrued interest payable (Note 3)............... 1,871,000 1,497,000
Other accrued expenses.......................... 7,693,000 6,399,000
Other current liabilities....................... 1,868,000 2,658,000
Due to affiliates, net (Note 8)................. 206,000 --
------------- -------------
Total current liabilities....................... 31,828,000 32,310,000
------------- -------------
NON-CURRENT LIABILITIES:
Long-term debt, net of current maturities (Note
3)............................................. 403,214,000 332,721,000
Distribution payable to Trump Plaza Funding,
Inc. .......................................... 3,822,000 3,822,000
Deferred state income taxes..................... 359,000 359,000
------------- -------------
Total non-current liabilities................... 407,395,000 336,902,000
------------- -------------
Total liabilities............................... 439,223,000 369,212,000
------------- -------------
COMMITMENTS AND CONTINGENCIES (Notes 4 and 6).... -- --
CAPITAL (DEFICIT):
Partners' Equity (Deficit)...................... (78,772,000) 94,087,000
Retained Earnings............................... 15,192,000 16,725,000
------------- -------------
Total Capital (Deficit)......................... (63,580,000) 110,812,000
------------- -------------
Total liabilities and capital................... $ 375,643,000 $ 480,024,000
============= =============
</TABLE>
The accompanying notes to financial statements are an integral part of these
consolidated financial statements.
F-6
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES AND TRUMP PLAZA ASSOCIATES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
<TABLE>
<CAPTION>
1993 1994 1995
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES:
Gaming............................. $264,081,000 $261,451,000 $298,073,000
Rooms.............................. 18,324,000 18,312,000 19,986,000
Food and Beverage.................. 41,941,000 40,149,000 44,602,000
Other.............................. 8,938,000 8,408,000 9,594,000
------------ ------------ ------------
Gross Revenues................... 333,284,000 328,320,000 372,255,000
Less-Promotional allowances........ 32,793,000 33,257,000 38,934,000
------------ ------------ ------------
Net Revenues..................... 300,491,000 295,063,000 333,321,000
------------ ------------ ------------
COSTS AND EXPENSES:
Gaming............................. 136,895,000 139,540,000 164,839,000
Rooms.............................. 2,831,000 2,715,000 2,263,000
Food and Beverage.................. 18,093,000 17,050,000 18,306,000
General and Administrative......... 71,624,000 73,075,000 68,550,000
Depreciation and Amortization...... 17,554,000 15,653,000 16,213,000
Other.............................. 3,854,000 3,615,000 3,363,000
------------ ------------ ------------
250,851,000 251,648,000 273,534,000
------------ ------------ ------------
Income from operations........... 49,640,000 43,415,000 59,787,000
------------ ------------ ------------
NON-OPERATING INCOME (EXPENSE):
Interest income.................... 546,000 842,000 1,003,000
Interest expense (Note 3).......... (40,435,000) (49,061,000) (44,264,000)
Non-operating expense (Note 5)..... (3,873,000) (4,931,000) (5,743,000)
------------ ------------ ------------
Non-operating expense, net....... (43,762,000) (53,150,000) (49,004,000)
------------ ------------ ------------
Income (loss) before state income
taxes and extraordinary items....... 5,878,000 (9,735,000) 10,783,000
PROVISION (BENEFIT) FOR STATE INCOME
TAXES............................... 660,000 (865,000) --
------------ ------------ ------------
Income (loss) before extraordinary
items............................... 5,218,000 (8,870,000) 10,783,000
Extraordinary gain (loss) (Note 5)... 4,120,000 -- (9,250,000)
------------ ------------ ------------
Net income (loss).................... $ 9,338,000 $ (8,870,000) $ 1,533,000
============ ============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
consolidated financial statements.
F-7
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES AND TRUMP PLAZA ASSOCIATES
CONSOLIDATED STATEMENTS OF CAPITAL (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
<TABLE>
<CAPTION>
PARTNERS' RETAINED
CAPITAL EARNINGS TOTAL
------------ ----------- ------------
<S> <C> <C> <C>
Balance, December 31, 1992............ $ (3,362,000) $14,724,000 $ 11,362,000
Net Income............................ -- 9,338,000 9,338,000
Preferred Plaza Associates Interest
Distribution......................... (6,317,000) -- (6,317,000)
Distribution to Donald J. Trump to re-
pay certain personal indebtedness.... (52,500,000) -- (52,500,000)
Distribution to Donald J. Trump to re-
deem Trump Plaza Funding, Inc. Pre-
ferred Stock Units................... (35,000,000) -- (35,000,000)
Conversion of Preferred Plaza Associ-
ates Interest into General Plaza As-
sociates Interest.................... 18,407,000 -- 18,407,000
------------ ----------- ------------
Balance, December 31, 1993............ (78,772,000) 24,062,000 (54,710,000)
Net Loss.............................. -- (8,870,000) (8,870,000)
------------ ----------- ------------
Balance, December 31, 1994............ $(78,772,000) $15,192,000 $(63,580,000)
Contributed Capital Trump Hotels and
Casino Resorts Holdings, L.P......... 172,859,000 -- 172,859,000
Net Income............................ -- 1,533,000 1,533,000
------------ ----------- ------------
Balance, December 31, 1995............ $ 94,087,000 $16,725,000 $110,812,000
============ =========== ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
consolidated financial statements.
F-8
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES AND TRUMP PLAZA ASSOCIATES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
<TABLE>
<CAPTION>
1993 1994 1995
------------- ------------ -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss)................. $ 9,338,000 $ (8,870,000) $ 1,533,000
Adjustments to reconcile net
income (loss) to net cash flows
provided by operating activities:
Noncash charges:
Extraordinary loss (gain)........ (4,120,000) -- 9,250,000
Depreciation and amortization.... 17,554,000 15,653,000 16,213,000
Accretion of discount on
indebtedness.................... 862,000 1,916,000 1,130,000
Provision for losses on
receivables..................... 90,000 396,000 1,057,000
Deferred state income taxes...... 729,000 (865,000) --
Utilization of CRDA credits and
donations....................... -- 1,062,000 388,000
Valuation allowance of CRDA
investments..................... 1,047,000 394,000 (1,098,000)
------------- ------------ -------------
25,500,000 9,686,000 28,473,000
Decrease (increase) in
receivables..................... 823,000 (236,000) (8,318,000)
Increase in inventories.......... (498,000) (91,000) 371,000
Increase in prepaid expenses and
other current assets............ (199,000) (1,385,000) (765,000)
(Increase) decrease in other
assets.......................... 2,530,000 1,504,000 8,074,000
Increase (decrease) in amounts
due to (from) affiliates........ 188,000 109,000 (1,504,000)
Increase (decrease) in accounts
payable, accrued expenses and
other current liabilities....... (6,524,000) 10,464,000 592,000
Decrease in distribution payable
to Trump Plaza Funding, Inc. ... -- (101,000) --
------------- ------------ -------------
Net cash flows provided by
operating activities........... $ 21,820,000 $ 19,950,000 $ 26,923,000
------------- ------------ -------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of property and
equipment........................ $ (10,052,000) $(20,489,000) (109,756,000)
Purchases of CRDA investments..... (2,823,000) (2,525,000) (3,178,000)
Cash refund of CRDA deposits...... 196,000 1,323,000 --
------------- ------------ -------------
Net cash flows used in investing
activities..................... (12,679,000) (21,691,000) (112,934,000)
------------- ------------ -------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Deferred financing costs.......... (17,342,000) -- --
Distributions to Donald J. Trump.. (87,500,000) -- --
Distributions to Plaza Funding.... (40,000,000) -- --
Preferred Plaza Associates
Interest Distribution............ (6,282,000) -- --
Additional Borrowings............. 386,147,000 375,000 4,218,000
Payments and current maturities of
long-term debt................... (248,573,000) (1,883,000) (4,527,000)
Redemption of PIK Notes........... -- -- (81,746,000)
Contributed Capital--Trump Hotel
and Casino Resorts
Holdings, L.P. .................. -- -- 172,859,000
------------- ------------ -------------
Net cash flows provided by (used
in) financing activities....... (13,550,000) (1,508,000) 90,804,000
------------- ------------ -------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS.................. (4,409,000) (3,249,000) 4,793,000
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR................. 18,802,000 14,393,000 11,144,000
------------- ------------ -------------
CASH AND CASH EQUIVALENTS AT END OF
YEAR.............................. $ 14,393,000 $ 11,144,000 $ 15,937,000
============= ============ =============
</TABLE>
The accompanying notes to financial statements are an integral part of these
consolidated financial statements.
F-9
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND TRUMP PLAZA ASSOCIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) ORGANIZATION
The accompanying financial statements include those of Trump Atlantic City
Associates ("Trump AC"), a New Jersey general partnership (formerly Trump Plaza
Holding Associates), and its 99% owned subsidiary, Trump Plaza Associates
("Plaza Associates"), a New Jersey general partnership, which owns and operates
Trump Plaza Hotel and Casino ("Trump Plaza") located in Atlantic City, New
Jersey. Trump Plaza Funding, Inc. ("Plaza Funding"), a New Jersey corporation,
owns the remaining 1% interest in Plaza Associates. Trump AC's sole source of
liquidity is distributions in respect of its interest in Plaza Associates.
Trump AC is owned by Trump Hotels and Casino Resorts Holdings, L.P. ("THCR
Holdings").
All significant intercompany balances and transactions have been eliminated
in the accompanying consolidated financial statements. The minority interest in
Plaza Associates has not been separately reflected in the consolidated
financial statements of Trump AC since it is not material.
Plaza Funding was incorporated on March 14, 1986 and was originally formed
solely to raise funds through the issuance and sale of its debt securities for
the benefit of Plaza Associates. As part of a Prepackaged Plan or
Reorganization under Chapter 11 of the U.S. Bankruptcy Code consummated on
May 29, 1992, Plaza Funding became a partner of Plaza Associates and issued
approximately three million stock units, each comprised of one share of
Preferred Stock and one share of Common Stock of Plaza Funding. On June 25,
1993, the stock units were redeemed with a portion of the proceeds of Plaza
Funding's 10 7/8% First Mortgage Notes due 2001 (the "Plaza Notes") as well as
Trump AC's stock units.
Trump AC was formed in February, 1993 for the purpose of raising funds for
Plaza Associates. On June 25, 1993, Trump AC completed the sale of 12,000 Units
(the "Units"), each Unit consisting of $5,000 principal amount of 12 1/2% Pay-
In-Kind Notes, due 2003 (the "PIK Notes"), and one PIK Note Warrant (the "PIK
Note Warrants") to acquire $1,000 principal amount of PIK Notes. The PIK Notes
and the PIK Note Warrants are separately transferable. Trump AC has no other
assets or business other than its 99% equity interest in Plaza Associates.
Plaza Associates was organized in June 1982. Prior to the date of the
consummation of the Offerings (as defined), Plaza Associates, three partners
were TP/GP Inc. ("Trump Plaza/GP"), the managing general partner of Plaza
Associates, Plaza Funding and Donald J. Trump ("Trump"). On June 25, 1993,
Trump contributed his interest in Trump Plaza/GP to Plaza Funding and Trump
Plaza/GP merged with and into Plaza Funding. Plaza Funding then became the
managing general partner of Plaza Associates. In addition, Trump contributed
his interest in Plaza Associates to Trump AC, and Plaza Funding and Trump AC,
each of which are wholly owned by Trump, became the sole partners of Plaza
Associates.
On June 12, 1995, Trump Hotels & Casino Resorts, Inc., ("THCR"), completed a
public offering of 10,000,000 shares of common stock at $14.00 per share (the
"Stock Offering") for gross proceeds of $140,000,000. Concurrently with the
Stock Offering, Trump Hotels & Casino Resorts Holdings, L.P. ("THCR Holdings"),
and 60% of THCR, together with its subsidiary, Trump Hotels & Casino Resorts
Funding, Inc. ("THCR Funding"), issued 15 1/2% Senior Secured Notes (the
"Senior Secured Notes") for gross proceeds of $155,000,000 (the "Note Offering"
and, together with the Stock Offerings, the "1995 Offerings"). From the
proceeds from the Stock Offering, THCR contributed $126,848,000 to THCR
Holdings. THCR Holdings subsequently contributed $172,859,000 to Trump AC.
Prior to the 1995 Offerings, Trump was the sole stockholder of THCR and sole
beneficial owner of THCR Holdings. Concurrent with the 1995 Offerings, Trump
contributed to THCR Holdings all of his beneficial interest in Plaza Associates
(consisting of all of the outstanding capital stock of Plaza Funding, a
F-10
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND TRUMP PLAZA ASSOCIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
99% equity interest in Trump AC and all of the outstanding capital stock of
Trump Plaza Holding Inc. which owns the remaining 1% equity interest in Trump
AC). Trump also contributed to THCR Holdings all of his existing interest and
rights to new gaming activities in both emerging and established gaming
jurisdictions, including Trump Indiana but excluding his interests in the Trump
Taj Mahal Casino Resort (the "Taj Mahal") and Trump's Castle Casino Resort.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Basis of Presentation
Plaza Associates operates a luxury casino hotel, Trump Plaza Hotel and Casino
("Trump Plaza") located on The Boardwalk in Atlantic City which provides high
quality amenities and services to its casino patrons and hotel guests. A
substantial portion of Trump Plaza's revenues are derived from its gaming
operations and in the past Trump Plaza has targeted the higher-end drive-in
slot customer. Competition in the Atlantic City casino total market is intense
and management believes that this competition will continue as more casinos are
opened and new entrants into the gaming industry become operational.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Revenue Recognition
Gaming revenues represent the net win from gaming activities which is the
difference between amounts wagered and amounts won by patrons. Revenue from
hotel and other services are recognized at the time the related service is
performed.
Plaza Associates provides an allowance for doubtful accounts arising from
casino, hotel and other services, which is based upon a specific review of
certain outstanding receivables as well as historical collection information.
In determining the amount of the allowance, management is required to make
certain estimates and assumptions regarding the timing and amount of
collection. Actual results could differ from those estimates and assumptions.
Promotional Allowances
The retail value of accommodations, food, beverage and other services
provided to customers without charge is included in gross revenue and deducted
as promotional allowances. The estimated departmental costs of providing such
promotional allowances are included in gaming costs and expenses as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1993 1994 1995
----------- ----------- -----------
<S> <C> <C> <C>
Rooms.................................... $ 4,190,000 $ 4,311,000 $ 4,836,000
Food and Beverage........................ 14,726,000 15,373,000 17,167,000
Other.................................... 3,688,000 4,169,000 4,076,000
----------- ----------- -----------
$22,604,000 $23,853,000 $26,079,000
=========== =========== ===========
</TABLE>
During 1994, certain Progressive Slot Jackpot Programs were discontinued
which resulted in $585,000 of related accruals being taken into income.
Inventories
Inventories of provisions and supplies are carried at the lower of cost
(weighted average) or market.
F-11
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND TRUMP PLAZA ASSOCIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Property and Equipment
Property and equipment is carried at cost and is depreciated on the straight-
line method using rates based on the following estimated useful lives:
<TABLE>
<S> <C>
Buildings and building improvements............................ 40 years
Furniture, fixtures and equipment.............................. 3-10 years
Leasehold improvements......................................... 10-40 years
</TABLE>
Interest associated with borrowings used to finance construction projects has
been capitalized and is being amortized over the estimated useful lives of the
assets.
Land Rights
Land rights represent the fair value of such rights at the time of
contribution to Plaza Associates by the Trump Plaza Corporation, an affiliate
of Plaza Associates. These rights are being amortized over the period of the
underlying operating leases which extend through 2078.
Long-Lived Assets
During 1995, Plaza Associates adopted the provisions of Statement of
Financial Accounting Standard No. 121 "Accounting for the Impairment of Long-
Lived Assets" ("SFAS No. 121"). SFAS No. 121 requires, among other things, that
an entity review its long-lived assets and certain related intangibles for
impairment whenever changes in circumstances indicate that the carrying amount
of an asset may not be fully recoverable. Impairment of long-lived assets
exists if, at a minimum, the future expected cash flows (undiscounted and
without interest charges) from an entity's operations are less than the
carrying value of these assets. As a result of its review, Plaza Associates
does not believe that any impairment exists in the recoverability of its long-
lived assets.
Income Taxes
Plaza Funding, Trump AC and Plaza Associates adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109"),
effective January 1, 1993. Adoption of this new standard did not have a
significant impact on the respective statements of financial condition or
results of operations SFAS No. 109 requires recognition of deferred tax
liabilities and assets for the expected future tax consequences of events that
have been included in the financial statements or tax returns. Under this
method, deferred tax liabilities and assets are determined based on the
difference between the financial statement and the tax basis of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.
The accompanying consolidated financial statements of Trump AC and Plaza
Associates do not include a provision for federal income taxes since any income
or losses allocated to its partners are reportable for federal income tax
purposes by the partners.
Under the New Jersey Casino Control Act (the "Casino Control Act"), Plaza
Associates is required to file a New Jersey corporation business tax return.
Accordingly, a provision (benefit) for state income taxes has been reflected in
the accompanying consolidated financial statements of Trump AC and Plaza
Associates. For state income tax purposes, available net operating loss
carryforwards have been utilized to offset 1995 taxable income. As of December
31, 1995, Trump AC and Plaza Associates had state tax net operating loss
carryforwards of approximately $31,000,000 which are available to offset future
state taxable income. Such carryforwards expire from 1997 to 2001. The net
operating loss carryforwards result in a deferred tax asset
F-12
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND TRUMP PLAZA ASSOCIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
of $2,790,000 which has been offset by a valuation allowance of $2,790,000 as
utilization of such carryforwards is not considered to be more likely than not.
Plaza Associates deferred state income taxes result primarily from
differences in the timing of reporting depreciation for tax and financial
statement purposes.
Statements of Cash Flows
For purposes of the statements of cash flows, Trump AC and Plaza Associates
consider all highly liquid debt instruments purchased with a maturity of three
months or less at time of acquisition to be cash equivalents. The following
supplemental disclosures are made to the statements of cash flows.
<TABLE>
<CAPTION>
1993 1994 1995
----------- ----------- -----------
<S> <C> <C> <C>
Cash paid during the year for interest.. $41,118,000 $36,538,000 $41,288,000
=========== =========== ===========
Cash paid for state and Federal income
taxes.................................. $ 81,000 $ -- $ --
=========== =========== ===========
Issuance of debt in exchange for accrued
interest............................... $ 3,562,000 $ 8,194,000 $ --
=========== =========== ===========
</TABLE>
Reclassifications
Certain reclassifications have been made to prior year financial statements
to conform to the current year presentation.
(3) LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1994 1995
------------ ------------
<S> <C> <C>
Plaza Associates Note (10 7/8% Mortgage Notes, due
2001 net of unamortized discount of $3,766,000
and $3,348,000, respectively) (A)................ $326,234,000 $326,652,000
PIK Notes (12 1/2% Notes, due 2003 net of discount
of $11,310,000 and $9,769,000, respectively (B)
................................................. 73,987,000 --
Mortgage notes payable (C)........................ 5,494,000 2,953,000
Other notes payable............................... 468,000 6,017,000
------------ ------------
406,183,000 335,622,000
Less--Current maturities.......................... 2,969,000 2,901,000
------------ ------------
$403,214,000 $332,721,000
============ ============
</TABLE>
(A) On June 25, 1993 Plaza Funding issued $330,000,000 principal amount of
10 7/8% Mortgage Notes, due 2001 (the "Plaza Notes"), net of discount
of $4,313,000. Net proceeds of the offering were used to redeem all of
Plaza Funding's outstanding $225,000,000 principal amount 12% Mortgage
Bonds, due 2002 and together with other funds (see (B) (re: PIK
Notes)), to redeem all of Plaza Funding's stock units, comprised of
$75,000,000 liquidation preference participating cumulative redeemable
Preferred Stock with associated shares of Common Stock, to repay
$17,500,000 principal amount 9.14% Regency Note due 2003, to make a
portion of a distribution to Trump to pay certain personal
indebtedness, and to pay transaction expenses.
The Plaza Notes mature on June 15, 2001 and are redeemable at any time
on or after June 15, 1998, at the option of Plaza Funding or Plaza
Associates, in whole or in part, at the principal amount plus a premium
which declines ratably each year to zero in the year of maturity. The
Plaza Notes bear interest at the stated rate of 10 7/8% per annum from
the date of issuance, payable semi-annually on each June 15 and
December 15, commencing December 15, 1993 and are secured by
substantially all of Plaza Associates' assets. The accompanying
consolidated financial statements reflect interest expense at the
effective interest rate of 11.12% per annum.
F-13
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND TRUMP PLAZA ASSOCIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The indenture governing the Plaza Notes (the "Plaza Note Indenture")
contains certain covenants limiting the ability of Plaza Associates to
incur indebtedness, including indebtedness secured by liens on Trump
Plaza. In addition, Plaza Associates may, under certain circumstances,
incur up to $25.0 million of indebtedness to finance the expansion of
its facilities, which indebtedness may be secured by a lien on the
hotel facilities of Plaza Associates ("Trump Plaza East") (see Note 6)
senior to the liens of one of the Plaza Mortgages (the "Plaza Note
Mortgage") and another of the Plaza Mortgages (the "Plaza Guarantee
Mortgage") thereon. The Plaza Notes represent the senior indebtedness
of Plaza Funding. The note from Plaza Associates to Plaza Funding in
the same principal amount of the Plaza Notes (the "Plaza Associates
Note") and the guarantee of the Plaza Notes rank pari passu in right of
payment with all existing and future senior indebtedness of Plaza
Associates.
The Plaza Notes, the Plaza Associates Note, the Plaza Note Mortgage,
the Plaza Guarantee and the Plaza Guarantee Mortgage are non-recourse
to the partners of Plaza Associates, to the shareholders of Plaza
Funding and to all other persons and entities (other than Plaza Funding
and Plaza Associates), including Trump. Upon an event of default,
holders of the Plaza Notes would have recourse only to the assets of
Plaza Funding and Plaza Associates.
(B) On June 25, 1993, Trump AC issued $60,000,000 principal amount of 12
1/2% Pay-in-Kind Notes, due 2003 (the "PIK Notes"), together with PIK
Note Warrants to acquire an additional $12,000,000 of PIK Notes at no
additional cost. The PIK Note Warrants were exercised prior to June 12,
1995. The PIK Notes and the PIK Note Warrants were subsequently
redeemed with a portion of the proceeds contributed to Trump AC by THCR
Holdings (See Note 1). Such redemption resulted in the recognition of
an extraordinary loss of $9,250,000, including the write-off of related
unamortized deferred financing costs.
(C) Interest on these notes is payable with interest rates ranging from
10.0% to 11.0%. The notes are due at various dates between 1996 and
1998 and are secured by real property.
The aggregate maturities of long-term debt in each of the years
subsequent to 1995 are:
<TABLE>
<S> <C>
1996.................................................... $ 2,901,000
1997.................................................... 4,503,000
1998.................................................... 1,196,000
1999.................................................... 274,000
2000.................................................... 96,000
Thereafter.............................................. 330,000,000(1)
------------
$338,970,000
============
</TABLE>
- ---------------------
(1) Includes accretion to maturity of $3,348,000. However, this does not
give effect to the proposed merger agreement (see Note 10).
(D) Interest on these leases are payable with interest rate ranging from
9.9% to 13.5%. The leases are due at various dates between 1996 and
2000 and are secured by equipment.
The ability of Plaza Associates and Plaza Funding to repay their long-
term debt when due will depend on their ability to either generate cash
from operations sufficient for such purposes or to refinance such
indebtedness. Management does not currently anticipate that cash flow
will be sufficient and that repayment will likely depend upon the
ability to refinance such indebtedness. The future operating
performance and the ability to refinance such indebtedness 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 Plaza Funding or Plaza Associates.
F-14
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND TRUMP PLAZA ASSOCIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
There can be no assurance that the future operating performance of
Plaza Associates 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 or other attempts to
raise capital.
(4) LEASES
Plaza Associates leases property (primarily land), certain parking space, and
various equipment under operating leases. Rent expense for the years ended
December 31, 1993, 1994, and 1995 was $4,338,000, $3,613,000 and $3,609,000,
respectively, of which $2,127,000, $2,513,000 and $1,900,000, respectively,
relates to affiliates of Plaza Associates.
Future minimum lease payments under the noncancelable operating leases are as
follows:
<TABLE>
<CAPTION>
AMOUNTS
RELATING TO
TOTAL AFFILIATES
------------ ------------
<S> <C> <C>
1996............................................. $ 6,770,000 $ 2,450,000
1997............................................. 6,814,000 2,494,000
1998............................................. 5,254,000 2,494,000
1999............................................. 3,533,000 2,450,000
2000............................................. 3,525,000 2,525,000
Thereafter....................................... 483,925,000 404,925,000
------------ ------------
$509,821,000 $417,338,000
============ ============
</TABLE>
Certain of these leases contain options to purchase the leased properties at
various prices throughout the leased terms.
In October 1993, Plaza Associates assumed the lease to Trump of Trump Plaza
East (the "Trump Plaza East Lease") and related expenses which are included in
the above lease commitment amounts. On June 25, 1993, Plaza Associates acquired
a five-year option to purchase Trump Plaza East. See Note 6.
(5) EXTRAORDINARY GAIN (LOSS) AND NON-OPERATING EXPENSE
The extraordinary loss of $9,250,000 for the year ended December 31, 1995
relates to the redemption and write-off of related unamortized deferred
financing costs on redemption of the PIK Notes and the PIK Note Warrants on
June 12, 1995. (See Note 3).
The $4,120,000 excess of the carrying value of a note obligation over the
amount of the settlement payment, net of related prepaid expenses, has been
reported as an extraordinary gain for the year ended December 31, 1993.
Non-operating expense in 1995 and 1994 includes $3,939,000 and $4,931,000,
respectively, of costs associated with Trump Plaza East (see Note 6), net of
miscellaneous non-operating credits.
(6) COMMITMENTS AND CONTINGENCIES
Casino License Renewal
The operation of an Atlantic City hotel and casino is subject to significant
regulatory controls which affect virtually all of its operations. Under the New
Jersey Casino Control Act (the "Casino Control Act"), Plaza Associates is
required to maintain certain licenses.
In June 1995, the New Jersey Casino Control Commission ("CCC") renewed Plaza
Associates license to operate Trump Plaza. This license must be renewed in June
1999, is not transferable and will require a
F-15
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND TRUMP PLAZA ASSOCIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
determination of the financial stability of Plaza Associates. Upon revocation,
suspension for more than 120 days, or failure to renew the casino license, the
Casino Control Act provides for the mandatory appointment of a conservator to
take possession of the hotel and casino's business and property, subject to all
valid liens, claims and encumbrances.
Legal Proceedings
Plaza Associates, its Partners, certain members of its former Executive
Committee, and certain of its employees, have been involved in various legal
proceedings. In general, Plaza Associates has agreed to indemnify such persons
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, judgements, fines and penalties)
incurred by them in said legal proceedings.
Various legal proceedings are now pending against Plaza Associates. Plaza
Associates considers all such proceedings to be ordinary litigation incident to
the character of its business. Plaza Associates believes that the resolution of
these claims will not, individually or in the aggregate, have a material
adverse effect on its financial condition or results of operations.
Plaza Associates is also a party to various administrative proceedings
involving allegations that it has violated certain provisions of the Casino
Control Act. Plaza Associates believes that the final outcome of these
proceedings will not, either individually or in the aggregate, have a material
adverse effect on its financial condition, results of operations or on the
ability of Plaza Associates to otherwise retain or renew any casino or other
licenses required under the Casino Control Act for the operation of Trump
Plaza.
Self Insurance Reserves
Self insurance reserves represent the estimated amounts of uninsured claims
related to employee health medical costs, workmen's compensation and personal
injury claims that have occurred in the usual course of business. These
reserves are established by management based upon specific review of open
claims, with consideration of incurred but not reported claims as of the
balance sheet date. Actual results may differ from these reserve amounts.
Casino Reinvestment Development Authority Obligations
Pursuant to the provisions of the Casino Control Act, Plaza Associates,
commencing twelve months after the date of opening of Trump Plaza in May 1984,
and continuing for a period of twenty-five years thereafter, must either obtain
investment tax credits (as defined in the Casino Control Act), in an amount
equivalent to 1.25% of its gross casino revenues, or pay an alternative tax of
2.5% of its gross casino revenues (as defined in the Casino Control Act).
Investment tax credits may be obtained by making qualified investments or by
the purchase of bonds at below market interest rates from the Casino
Reinvestment Development Authority ("CRDA"). Plaza Associates is required to
make quarterly deposits with the CRDA based on 1.25% of its gross revenue. For
the years ended December 31, 1993, 1994 and 1995, Plaza Associates charged to
operations $1,047,000, $838,000 and $1,141,000, respectively, to give effect to
the below market interest rates associated with CRDA bonds that have either
been issued or are expected to be issued from funds deposited. Additionally,
for the year ended December 31, 1995, Plaza Associates credited operations for
$2,239,000, resulting from the recapture of the valuation allowance on the CRDA
receivable. Bonds issued by the CRDA will be accounted for under SFAS No. 121,
as such bonds are not marketable.
In connection with Trump Plaza East (see below), the CRDA has approved the
use of up to $14,135,000 in deposits made by Plaza Associates for site
improvements. At December 31, 1995, Plaza Associates had
F-16
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND TRUMP PLAZA ASSOCIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
recorded a receivable from the CRDA of $6,022,000 which is included in Accounts
Receivable, other. A lawsuit has been filed to prevent the CRDA from returning
to Plaza Associates such deposits. Although the court has ruled that such
deposits cannot be returned, Plaza Associates has appealed their decision.
Management believes that their decision will be overturned. In the event that
the decision is not overturned, a charge to operations of approximately
$2,000,000 would be required to reestablish the valuation allowance.
Concentrations of Credit Risks
In accordance with casino industry practice, Plaza Associates extends credit
to a limited number of casino patrons, after extensive background checks and
investigations of credit worthiness. At December 31, 1995 approximately 27% of
Plaza Associates casino receivables (before allowances) were from customers
whose primary residence is outside the United States, with no significant
concentration in any one foreign country.
Trump Plaza East
In 1993, Plaza Associates received the approval of the CCC, subject to
certain conditions, for the expansion of its hotel facilities at Trump Plaza
East. On June 24, 1993, in connection with the 1993 refinancing of Trump Plaza,
(i) Trump transferred title to Trump Plaza East to Missouri Boardwalk, Inc.
("Boardwalk"), a wholly owned subsidiary of Midlantic National Bank
("Midlantic"), in exchange for a reduction in indebtedness to Midlantic in an
amount equal to the sum of the fair market value of Trump Plaza East and all
rent payments made to Boardwalk by Trump under the Trump Plaza East Lease, (ii)
Boardwalk leased Trump Plaza East to Trump under the Trump Plaza East Lease for
a term of five years, which expires on June 30, 1998, during which time Trump
was obligated to pay Boardwalk $260,000 per month in lease payments, and (iii)
Plaza Associates acquired a five-year option to purchase Trump Plaza East (the
"Trump Plaza East Purchase Option"). In October 1993, Plaza Associates assumed
the Trump Plaza East Lease and related expenses. In addition, Plaza Associates
has a right of first refusal (the "Right of First Offer") upon any proposed
sale of all or any portion of the fee interest in Trump Plaza East during the
term of the Trump Plaza East Purchase Option. Acquisition of Trump Plaza East
by Plaza Associates would under certain circumstances (provided there are no
events of default under the Trump Plaza East Lease or the Trump Plaza East
Purchase Option and provided that certain other events had not theretofore or
do not thereafter occur) discharge Trump's obligation to Midlantic in full.
Until such time as the Trump Plaza East Purchase Option is exercised or
expires, Plaza Associates will be obligated, from and after the date it entered
into the Trump Plaza East Purchase Option, to pay the net expenses associated
with Trump Plaza East. During 1995, THCR incurred approximately $2,340,000 of
such expenses of which $2,045,000 are included in non-operating expenses in the
accompanying consolidated financial statements. Under the Trump Plaza East
Purchase Option, Plaza Associates has the right to acquire Trump Plaza East for
a purchase price of $28,000,000 through 1996, increasing by $1,000,000 annually
thereafter until expiration on June 30, 1998. The CCC has required that Plaza
Associates exercise the Trump Plaza East Purchase Option or its right of first
refusal no later than July 1, 1996.
If Plaza Associates defaults in making payments due under the Trump Plaza
East Purchase Option, Plaza Associates would be liable to the lender for the
sum of (a) the present value of all remaining payments to be made by Plaza
Associates pursuant to the Trump Plaza East Purchase Option during the term
thereof and (b) the cost of demolition of all improvements then located on
Trump Plaza East.
Plaza Associates has commenced construction at Trump Plaza East pursuant to
rights granted to Plaza Associates by its lessor. Plaza Associates has received
approximately $1,519,000 in CRDA credit as of
F-17
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND TRUMP PLAZA ASSOCIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
December 31, 1995. As of December 31, 1995, Plaza Associates had capitalized
approximately $35,700,000 in construction costs related to Trump Plaza East
including a $1,000,000 consulting fee paid to Trump (See Note 8). Plaza
Associates' ability to acquire Trump Plaza East pursuant to the Trump Plaza
East Purchase Option is dependent upon its ability to obtain financing to
acquire the property. The ability to incur such indebtedness is restricted by
the Plaza Note Indenture. Plaza Associates' ability to purchase Trump Plaza
East is dependent upon its ability to use existing cash on hand and generate
cash flow from operations sufficient to fund development costs. No assurance
can be given that such cash on hand will be available to Plaza Associates for
such purposes or that it will be able to generate sufficient cash flow from
operations. In connection with the Merger Transaction (as defined) (See Note
12), Plaza Associates expects to exercise the Trump Plaza East Purchase Option.
The accompanying consolidated financial statements do not include any
adjustments that may be necessary should Plaza Associates be unable to exercise
the Trump Plaza East Purchase Option.
(7) EMPLOYEE BENEFIT PLANS
Plaza Associates has a retirement savings plan (the "Plan") for its nonunion
employees under Section 401(k) of the Internal Revenue Code. Employees are
eligible to contribute up to 15% of their earnings to the Plan and Plaza
Associates will match 50% of an eligible employee's contributions up to a
maximum of 4% of the employee's earnings. Plaza Associates recorded charges of
$765,000, $848,000 and $886,000 for matching contributions for the years ended
December 31, 1993, 1994 and 1995, respectively.
Plaza Associates provides no other material post-retirement or post-
employment benefits.
(8) TRANSACTIONS WITH AFFILIATES
Due to/from Affiliates
Plaza Associates leases warehouse facility space to Trump's Castle
Associates. Lease payments of $15,000, $6,000 and $6,000 were received from
Trump's Castle Associates in 1993, 1994 and 1995, respectively.
Plaza Associates leased office space from Trump Taj Mahal Associates ("Taj
Associates") the owner and operator of the Trump Taj Mahal Casino Resort (the
"Taj Mahal"), which terminated on March 19, 1993. Lease payments of $30,000
were paid to Taj Associates in 1993.
Plaza Associates leases two parcels of land under long-term ground leases
from Seashore Four Associates and Trump Seashore Associates. In 1993, 1994 and
1995, Plaza Associates paid $900,000, $900,000 and $950,000, respectively, to
Seashore Four Associates, and paid $1,000,000, $1,000,000 and $1,195,000 in
1993, 1994 and 1995, respectively, to Trump Seashore Associates.
Services Agreement
Pursuant to the terms of a services agreement with Trump Plaza Management
Corp. ("TPM"), a corporation beneficially owned by Trump, in consideration for
services provided, Plaza Associates pays TPM each year an annual fee of
$1,000,000 in equal monthly installments, and reimburses TPM on a monthly basis
for all reasonable out-of-pocket expenses incurred by TPM in performing its
obligations under such services agreement, up to certain amounts. Under such
services agreement, approximately $1,300,000 was charged to expense for the
years ended December 31, 1994, and 1995.
F-18
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND TRUMP PLAZA ASSOCIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Trump World's Fair
Under an Option Agreement with Chemical Bank ("Chemical"), Trump had an
option to purchase (i) Trump World's Fair (including the land, improvements and
personal property used in the operation of the hotel) and (ii) certain
promissory notes made by Trump and/or certain of his affiliates and payable to
Chemical (the "Chemical Notes") which are secured by certain real estate assets
located in New York, unrelated to Plaza Associates. In connection with such
Option Agreement, Trump assigned his rights to Plaza Associates.
On June 12, 1995, the option to purchase the Trump World's Fair was
exercised. The option price of $60,000,000 was funded with $58,150,000 from the
capital contributed by Trump Holdings (See Note 1), and $1,850,000 of option
payments made by Plaza Associates.
Other Payments to Donald J. Trump
During 1994, Plaza Associates paid to Trump $1,000,000 under a Construction
Management Service Agreement. The payment was made for construction management
services rendered by Trump with respect to Trump Plaza East. This payment was
approved prior to disbursement by the CCC and has been classified in
construction in process in the accompanying consolidated balance sheet as of
December 31, 1994 and 1995.
During 1994, Plaza Associates also paid Trump a commission of approximately
$572,000 for securing a retail lease at Trump Plaza. The commission has been
capitalized and is being amortized to expense over the 10-year term of the
lease.
(9) FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of the following financial instruments approximates fair
value, as follows: (a) cash and cash equivalents, accrued interest receivables
and payables are based on the short term nature of these financial instruments
and (b) CRDA bonds and deposits are based on the allowances to give effect to
the below market interest rates.
The estimated fair values of other financial instruments are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1995
----------------------------
CARRYING AMOUNT FAIR VALUE
--------------- ------------
<S> <C> <C>
10 7/8% Mortgage Notes........................ $326,652,000 $341,550,000
</TABLE>
The fair values of the PIK Notes and Plaza Notes are based on quoted market
prices obtained by Plaza Associates from its investment advisor.
There are no quoted market prices for other notes payable and a reasonable
estimate could not be made without incurring excessive costs.
(10) SUBSEQUENT EVENT
On January 8, 1996, THCR, Taj Mahal Holding Corp. ("Taj Holding") and THCR
Merger Corp. ("Merger Sub") entered into the Agreement and Plan of Merger, as
amended by Amendment to Agreement and Plan of Merger, dated as of January 31,
1996 (the "Merger Agreement"), pursuant to which Merger Sub will merge with and
into Taj Holding (the "Merger"). The Merger Agreement provides that each
outstanding share of Class A Common Stock of Taj Holding ("Taj Holding Class A
Common Stock") will be converted into the right to receive, at each holder's
election, either (a) $30.00 in cash or (b) that number of shares of
F-19
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND TRUMP PLAZA ASSOCIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Common Stock of THCR (the "THCR Common Stock") as shall have a market value
equal to $30.00. No fractional shares of THCR Common Stock will be issued in
the Merger. The Merger Agreement also contemplates the following transactions
occurring in connection with the Merger:
(a) the consummation of the offering by THCR of up to 12,500,000 shares of
THCR Common Stock (and an amount to be issued pursuant to the underwriters'
over-allotment option) (the "THCR Stock Offering") and the consummation of
the offering by Trump AC and its wholly owned finance subsidiary Trump AC
Funding, Inc. of up to $1,200,000,000 aggregate principal amount of first
mortgage notes, although it is currently contemplated to aggregate
$1,100,000,000, the aggregate proceeds of which will be used, together with
available cash, to (i) pay cash to those holders of Taj Holding Class A
Common Stock electing to receive cash in the Merger, (ii) redeem the
outstanding 11.35% Mortgage Bonds, Series A due 1999 (the "Taj Bonds"), of
Trump Taj Mahal Funding, Inc. ("Taj Funding") (iii) redeem the outstanding
shares of Class B Common Stock of Taj Holding as required in connection with
the redemption of the Taj Bonds, (iv) retire the outstanding Plaza Notes,
(v) satisfy the indebtedness of Taj Associates under its loan agreement with
National Westminster Bank USA, (vi) purchase certain real property used in
the operation of the Taj Mahal that is currently leased from a corporation
wholly owned by Trump, (vii) purchase certain real property used in the
operation of Trump Plaza that is currently leased from an unaffiliated third
party, (viii) make a payment to Bankers Trust Company ("Bankers Trust") to
obtain releases of liens and guarantees that Bankers Trust has in connection
with certain outstanding indebtedness owed by Trump to Bankers Trust, and
(ix) pay related fees and expenses and provide working capital;
(b) the contribution by Trump to Trump AC (on behalf, and at the
direction, of THCR Holdings) of all of his direct and indirect ownership
interests in Taj Associates; and
(c) the contribution by THCR to Trump AC (on behalf, and at the direction,
of THCR Holdings) of all of its indirect ownership interests in Taj
Associates acquired in the Merger.
To the extent that holders of Taj Holding Class A Common Stock elect to
receive shares of THCR Common Stock in the Merger, THCR may reduce the size of
the THCR Stock Offering. In addition to the shares of THCR Common Stock that
may be issued in the THCR Stock Offering, THCR may issue, as part of the THCR
Stock Offering, up to an additional 20% of such number of shares, to fund
working capital and other general corporate purposes.
The prospective transaction is subject to a number of conditions, including
stockholder approval. In addition, there are a number of risks that should be
considered, including: (i) the high leverage and fixed charges of THCR; (ii)
the risk in refinancing and repayment of indebtedness and the need for
additional financing; (iii) the restrictions imposed on certain activities by
certain debt instruments; (iv) the recent results of Trump Plaza and the Taj
Mahal; and (v) risks associated with the expansions at Trump Plaza and the Taj
Mahal. There can be no assurance that the expansions at Trump Plaza or the Taj
Mahal will be completed or that any other gaming venture will open or that any
of THCR's or the Taj Mahal's operations will be successful. See "Risk Factors"
included elsewhere in this Prospectus for a discussion of these and other
factors.
F-20
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Trump Taj Mahal Associates and Subsidiary:
We have audited the accompanying consolidated balance sheets of Trump Taj
Mahal Associates (a New Jersey general partnership) and Subsidiary as of
December 31, 1994 and 1995, and the related consolidated statements of
operations, capital (deficit) and cash flows for each of the three years in the
period ended December 31, 1995. These consolidated financial statements are the
responsibility of Trump Taj Mahal Associates management. Our responsibility is
to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Trump Taj Mahal Associates and
Subsidiary as of December 31, 1994 and 1995 and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1995, in conformity with generally accepted accounting principles.
Roseland, New Arthur Andersen LLP
Jersey
February 16, 1996
F-21
<PAGE>
TRUMP TAJ MAHAL ASSOCIATES AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1995
--------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash investments.............................. $ 61,196 $ 88,941
Receivables, net of allowance of $4,059 and $5,042 for
doubtful accounts (Note 1)............................ 15,443 17,215
Inventory.............................................. 6,431 7,161
Prepaid expenses and other current assets.............. 7,806 3,864
--------- ---------
Total Current Assets................................. 90,876 117,181
--------- ---------
PROPERTY AND EQUIPMENT (Notes 1, 2, and 5):
Land................................................... 37,843 37,843
Building............................................... 656,702 665,161
Furniture, fixtures and equipment...................... 160,372 174,693
Leasehold improvements................................. 31,243 31,253
--------- ---------
886,160 908,950
Less: Accumulated depreciation and amortization...... (179,375) (217,963)
--------- ---------
706,785 690,987
--------- ---------
OTHER ASSETS............................................. 9,951 13,625
--------- ---------
Total Assets......................................... $ 807,612 $ 821,793
========= =========
LIABILITIES AND CAPITAL
CURRENT LIABILITIES:
Long-term debt due currently (Note 2).................. $ 743 $ 920
Accounts payable....................................... 3,256 8,335
Accrued interest payable............................... 8,977 9,154
Due to affiliates, net (Note 3)........................ 152 974
Other current liabilities (Note 4)..................... 37,059 35,210
--------- ---------
Total Current Liabilities............................ 50,187 54,593
--------- ---------
OTHER LIABILITIES (Notes 2 and 3)........................ 32,912 33,373
--------- ---------
LONG-TERM DEBT NET OF UNAMORTIZED DISCOUNT OF $153,597
AND $131,103 (Notes 2 and 9)............................ 656,701 694,192
--------- ---------
COMMITMENTS AND CONTINGENCIES (Note 5)
CAPITAL (Notes 6 and 9):
Contributed capital.................................... 123,765 123,765
Accumulated deficit.................................... (55,953) (84,130)
--------- ---------
Total Capital........................................ 67,812 39,635
--------- ---------
Total Liabilities and Capital........................ $ 807,612 $ 821,793
========= =========
</TABLE>
The accompanying notes to financial statements are an integralpart of these
consolidated financial statements.
F-22
<PAGE>
TRUMP TAJ MAHAL ASSOCIATES AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1993 1994 1995
--------- --------- ---------
<S> <C> <C> <C>
REVENUES (Note 1):
Gaming...................................... $ 442,064 $ 461,622 $ 501,378
Rooms....................................... 40,682 41,815 43,309
Food and beverage........................... 55,953 58,029 57,195
Other....................................... 16,656 17,894 15,864
--------- --------- ---------
Gross revenues............................ 555,355 579,360 617,746
Less--Promotional allowances (Note 1)....... 56,444 62,178 63,998
--------- --------- ---------
Net revenues.............................. 498,911 517,182 553,748
--------- --------- ---------
COST AND EXPENSES:
Gaming...................................... 237,566 260,472 283,786
Rooms....................................... 15,525 15,662 15,230
Food and beverage........................... 25,080 25,035 24,612
General and administrative.................. 99,424 99,629 96,843
Depreciation and amortization............... 36,858 39,750 43,387
--------- --------- ---------
414,453 440,548 463,858
--------- --------- ---------
Income from operations........................ 84,458 76,634 89,890
Interest income............................... 1,382 2,019 3,922
Interest expense.............................. (108,379) (115,311) (120,435)
--------- --------- ---------
Net loss...................................... $ (22,539) $ (36,658) $ (26,623)
========= ========= =========
</TABLE>
The accompanying notes to financial statements are an integralpart of these
consolidated financial statements.
F-23
<PAGE>
TRUMP TAJ MAHAL ASSOCIATES AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CAPITAL (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ACCUMULATED TOTAL
CONTRIBUTED SURPLUS CAPITAL
CAPITAL (DEFICIT) (DEFICIT)
----------- ----------- ---------
<S> <C> <C> <C>
Balance, January 1, 1993..................... $123,765 $ 7,148 $130,913
Net loss..................................... -- (22,539) (22,539)
Partnership distribution (Note 6)............ -- (1,733) (1,733)
-------- -------- --------
Balance, December 31, 1993................... 123,765 (17,124) 106,641
Net loss..................................... -- (36,658) (36,658)
Partnership distribution (Note 6)............ -- (2,171) (2,171)
-------- -------- --------
Balance, December 31, 1994................... 123,765 (55,953) 67,812
Net loss..................................... -- (26,623) (26,623)
Partnership distribution (Note 6)............ -- (1,554) (1,554)
-------- -------- --------
Balance, December 31, 1995................... $123,765 $(84,130) $ 39,635
======== ======== ========
</TABLE>
The accompanying notes to financial statements are an integralpart of these
consolidated financial statements.
F-24
<PAGE>
TRUMP TAJ MAHAL ASSOCIATES AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1993 1994 1995
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss........................................ $(22,539) $(36,658) $(26,623)
Adjustments to reconcile net loss to net cash
flows provided by
operating activities--
Depreciation and amortization.................. 36,858 39,750 43,387
Charges related to lease guarantee............. 1,763 2,047 2,375
Accretion of discount on Bond indebtedness..... 15,745 18,820 22,494
Other adjustments to reduce the carrying value
of non-current
assets........................................ 2,764 2,134 3,090
Utilization of CRDA credits.................... -- 1,500 --
Provision for doubtful accounts................ 3,472 2,974 4,508
-------- -------- --------
38,063 30,567 49,231
Changes in operating assets and liabilities:
Receivables, net............................... (2,281) (5,383) (6,280)
Inventory...................................... (1,612) (1,746) (730)
Other current assets........................... (39) (3,552) 3,603
Other assets................................... (766) (392) (584)
Due to affiliates, net......................... 98 (381) 822
Accounts payable............................... (2,225) (678) 5,079
Accrued interest payable....................... 14,900 12,537 16,175
Other liabilities.............................. 2,496 2,450 (4,417)
-------- -------- --------
Net cash flows provided by operating
activities................................... 48,634 33,422 62,899
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment.............. (16,752) (23,030) (26,498)
Investment in CRDA obligations.................. (5,408) (4,201) (6,073)
-------- -------- --------
Net cash flows used in investing activities... (22,160) (27,231) (32,571)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of borrowings........................ (759) (868) (1,029)
Partnership distribution........................ (1,733) (2,171) (1,554)
-------- -------- --------
Net cash flows used in financing activities... (2,492) (3,039) (2,583)
-------- -------- --------
NET INCREASE IN CASH AND CASH INVESTMENTS........ 23,982 3,152 27,745
CASH AND CASH INVESTMENTS BEGINNING OF YEAR...... 34,062 58,044 61,196
-------- -------- --------
CASH AND CASH INVESTMENTS END OF YEAR............ $ 58,044 $ 61,196 $ 88,941
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the year for interest.......... $ 75,972 $ 79,121 $ 79,389
======== ======== ========
SUPPLEMENTAL SCHEDULE OF NON-CASH TRANSACTIONS:
Issuance of PIK bonds in lieu of cash interest.. $ 14,579 $ 12,249 $ 15,112
======== ======== ========
</TABLE>
The accompanying notes to financial statements are an integralpart of these
consolidated financial statements.
F-25
<PAGE>
TRUMP TAJ MAHAL ASSOCIATES AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND OPERATIONS
The accompanying consolidated financial statements include those of Trump Taj
Mahal Associates ("Taj Associates"), and its wholly owned subsidiary, Trump Taj
Mahal Funding, Inc. ("Taj Funding"). All significant intercompany balances and
transactions have been eliminated in the consolidated financial statements.
Taj Associates was formed on June 23, 1988 as a New Jersey limited
partnership. Taj Associates was converted to a general partnership in December
1990. The current partners and their respective ownership interests are Trump
Taj Mahal, Inc. ("TTMI"), 49.995%, The Trump Taj Mahal Corporation ("TTMC"),
.01%, and TM/GP Corporation ("TM/GP"), the managing general partner, and a
wholly owned subsidiary of Taj Mahal Holding Corp. ("Taj Holding"), 49.995%.
Taj Associates was formed for the purpose of acquiring, constructing and
operating the Trump Taj Mahal Casino Resort (the "Taj Mahal"), an Atlantic City
hotel, casino and convention center complex. On April 2, 1990, Taj Associates
opened the Taj Mahal to the public. The industry in which the Taj Mahal
operates is subject to intense competition and regulatory review (See Note 5).
Taj Funding was incorporated on June 3, 1988 for the purpose of raising funds
through the issuance of its 14% First Mortgage Bonds, Series A, due 1998 (the
"Old Bonds"), the proceeds of which were loaned to Taj Associates for
construction of the Taj Mahal. During 1991, as a result of a plan of
reorganization (the "1991 Taj Restructuring"), these were subsequently
exchanged for Taj Funding's 11.35% Mortgage Bonds, Series A, due 1999 (the "Taj
Bonds"). Since Taj Funding has no business operations, its ability to repay the
principal and interest on the Taj Bonds is completely dependent on the
operations of Taj Associates.
Donald J. Trump ("Trump") beneficially owns 50% of Taj Associates and has
pledged his total ownership interest as collateral under various debt
agreements.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
REVENUE RECOGNITION
Casino revenues consist of the net win from gaming activities, which is the
difference between gaming wins and losses. Revenues from hotel and other
services are recognized at the time the related service is performed.
Taj Associates provides an allowance for doubtful accounts arising from
casino, hotel and other services. The allowance is based upon a specific review
of outstanding receivables as well as historical collection information. In
providing this allowance, management is required to make certain estimates and
assumptions regarding the timing and amount of account collections. Actual
results could differ from those estimates.
PROMOTIONAL ALLOWANCES
Gross revenues includes the retail value of complimentary rooms, food,
beverages, and other services furnished to patrons. The retail value of these
promotional allowances is deducted from gross revenues to arrive at net
revenues. The cost of promotional allowances is charged to operations.
F-26
<PAGE>
TRUMP TAJ MAHAL ASSOCIATES AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The cost of promotional allowances consisted of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1993 1994 1995
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Rooms................................................ $ 8,733 $ 9,921 $ 9,913
Food and Beverage.................................... 28,973 29,653 30,458
Other................................................ 4,678 6,735 6,994
------- ------- -------
$42,384 $46,309 $47,365
======= ======= =======
</TABLE>
INCOME TAXES
The accompanying financial statements do not include a provision for Federal
income taxes of Taj Associates, since any income or losses allocated to the
partners are reportable for Federal income tax purposes by the partners.
Under the New Jersey Casino Control Commission (the "CCC") regulations, Taj
Associates is required to file a New Jersey corporation business tax return. As
of December 31, 1995, Taj Associates had a net operating loss carry-forward of
approximately $150,000,000 for New Jersey State Income Tax purposes. No tax
benefit will be reflected in the accompanying financial statements for those
losses until such time that they are actually realized.
INVENTORIES
Inventories are carried at cost on a weighted average basis.
PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost and is depreciated on the
straight-line method over the estimated useful lives of assets. Estimated
useful lives range from three to seven years for furniture, fixtures and
equipment and 40 years for buildings and building improvements. Leasehold
improvements are amortized over the term of the related lease commencing in the
period these assets are placed in service.
The interest expense associated with borrowings used to fund the purchase and
construction of the Taj Mahal has been capitalized and is being amortized over
the estimated useful life of the facility.
LONG LIVED ASSETS
During 1995, Taj Associates adopted the provisions of Statement of Financial
Accounting Standard No. 121, "Accounting for the Impairment of Long-Lived
Assets" ("SFAS No. 121"). SFAS No. 121 requires, among other things, that an
entity review its long-lived assets and certain related intangibles for
impairment whenever changes in circumstance indicate that the carrying amount
of an asset may not be fully recoverable. Impairment of long-lived assets
exists, if, at a minimum, the future expected cash flows (undiscounted and
without interest charges), from an entity's operations are less than the
carrying value of these assets. As a result of its review, Taj Associates does
not believe that any impairment exists in the recoverability of its long-lived
assets as of December 31, 1995.
CASH AND CASH INVESTMENTS
Cash and cash investments include hotel and casino funds, funds on deposit
with banks and temporary investments having a maturity of three months or less.
F-27
<PAGE>
TRUMP TAJ MAHAL ASSOCIATES AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(2) LONG-TERM DEBT
Long-term debt consisted of the following at December 31:
<TABLE>
<CAPTION>
1994 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
First Mortgage Bonds (a)............................... $ 765,130 $ 780,242
Unamortized discount................................... (153,597) (131,103)
--------- ---------
Net.................................................... 611,533 649,139
Bank term loan (b)..................................... 45,138 44,944
Other.................................................. 773 1,029
--------- ---------
Total................................................ 657,444 695,112
Less: Current portion................................ (743) (920)
--------- ---------
$ 656,701 $ 694,192
========= =========
</TABLE>
- ---------------------
(a) Taj Bonds bear interest of 11.35% and are due November 15, 1999. Each Taj
Bond, together with one share of Taj Holding's Class B redeemable common
stock, trade together as a unit ("Units"), and may not be transferred
separately. Interest on the Taj Bonds is due semi-annually on each
November 15 and May 15. Interest on the Taj Bonds must be paid in cash on
each interest payment date at the rate of 9.375% per annum (the "Mandatory
Cash Interest Amount"). In addition to the Mandatory Cash Interest Amount,
effective May 15, 1992 and annually thereafter, an additional amount of
interest (the "Additional Amount") in cash or additional Taj Bonds or a
combination thereof, is payable equal to the difference between 11.35% of
the outstanding principal amount of the Taj Bonds and the Mandatory Cash
Interest Amount previously paid. To the extent that there is excess
available cash flow ("EACF") of Taj Associates, as defined in the related
indenture, for the immediately preceding calendar year, Taj Funding will
pay the Additional Amount in cash up to 10.28% and the balance thereof may
be paid at the option of Taj Funding in cash or additional Units, provided
that an equivalent amount of cash is used to purchase or redeem Units.
Additional Taj Bonds issued on October 4, 1991 amounted to approximately
$7,208,000. For the period from the issuance of the Taj Bonds, October 4,
1991, through December 31, 1992, there was no EACF. Accordingly, Taj
Funding paid the Additional Amounts on May 15, 1993 and May 15, 1992
through the issuance of approximately $14,579,000 and $8,844,000,
respectively, in additional Taj Bonds. Of the $14,870,000 Additional
Amount due May 15, 1994, $2,621,000 was paid in cash and the $12,249,000
balance in Taj Bonds. Of the $15,112,000 Additional Amount due May 15,
1995, Taj Associates satisfied the entire obligation through the issuance
of Taj Bonds.
Since Taj Funding has no business operations, its ability to repay the
principal and interest on the Bonds is completely dependent on the
operations of Taj Associates. The Taj Bonds are guaranteed as to payment of
principal and interest by Taj Associates and are collateralized by
substantially all Taj Associates' property.
In accordance with AICPA Statement of Position 90-7, "Financial Reporting
By Entities in Reorganization Under the Bankruptcy Code," the Taj Bonds
when issued were stated at the present value of amounts to be paid,
determined at current interest rates (effective rate of approximately 18%).
The effective interest rate of the Taj Bonds was determined based on the
trading price of the Taj Bonds for a specific period. Stating the debt at
its approximate present value resulted in a reduction of approximately
$204,276,000 in the carrying amount of the Taj Bonds. This gain is being
offset by increased interest costs over the period of the Taj Bonds to
accrete such bonds to their face value at maturity. At December 31, 1995,
the unaccreted balance of this discount approximated $131,103,000. The
current interest rates of other borrowings approximated their stated
interest rates as of the effective date. The accretion amounted to
approximately $15,745,000 in 1993, $18,820,000 in 1994 and $22,494,000 in
1995, and is included in interest expense.
F-28
<PAGE>
TRUMP TAJ MAHAL ASSOCIATES AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(b) On November 3, 1989, Taj Associates entered into a loan agreement with
National Westminster Bank USA (the "NatWest Loan") which provided financing
up to $50,000,000 for certain items of furniture, fixtures and equipment
installed in the Taj Mahal. The terms of the NatWest Loan were modified in
1991 as part of the 1991 Taj Restructuring. The restructured NatWest Loan
bears interest at 9 3/8% per annum. Principal and interest is payable
monthly in the fixed amount of $373,000 to be applied first to accrued
interest and the balance to the extent available, to principal, through
maturity, November 15, 1999. Additionally, on May 15 of each year (May 15,
1992 through May 15, 1999), to the extent principal is still outstanding,
NatWest will receive 16.5% of the EACF of the preceding calendar year in
excess of the Additional Amount, to be applied first to accrued but unpaid
interest, and then to principal.
The NatWest Loan is secured by a first priority lien on the furniture,
fixtures and equipment acquired with the proceeds of the NatWest Loan plus
any after acquired furniture, fixtures and equipment that replaces such
property, or of the same type, provided, however, that the NatWest Loan may
be subordinated to a lien to secure purchase money financing of such after
acquired property up to 50% of the value of such after acquired property.
In November 1991, Taj Associates obtained a working capital line of credit
in the amount of $25,000,000 with a maturity of five years. In September
1994, Taj Associates extended the maturity to November 1999, in
consideration of modifications of the terms of the facility. Interest on
advances under the line are at prime plus 3% with a minimum of 0.666% per
month. The Agreement provides for a 3/4% annual fee and a 1/2% unused line
fee and contains various covenants. During 1993 and 1994, no amounts were
outstanding under the line. During 1994 and 1995, no amounts were
outstanding under the line.
Aggregate annual maturities of long-term debt at accreted value are as
follows:
<TABLE>
<S> <C>
1996............................. $ 920,000
1997............................. 529,000
1998............................. 268,000
1999............................. 824,498,000
2000............................. 0
Thereafter....................... 0
</TABLE>
The above maturity schedule does not reflect the proposed recapitalization
described in Note 9.
The ability of Taj Associates and Taj Funding to repay their long-term debt
when due will depend on their ability to either generate cash from operations
sufficient for such purposes or to refinance such indebtedness. Management does
not currently anticipate that cash will be sufficient and that repayment will
likely depend upon the ability to refinance such indebtedness. The future
operating performance and ability to refinance such indebtedness 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 Taj Associates and Taj Funding. There can be no assurances that
the future operating performance of Taj Associates 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 or other
attempts to raise capital.
F-29
<PAGE>
TRUMP TAJ MAHAL ASSOCIATES AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(3) TRANSACTIONS WITH AFFILIATES
Taj Associates has engaged in certain transactions with Trump and entities
that are wholly or partially owned by Trump. Amounts owed to (receivable from)
at December 31 are as follows:
<TABLE>
<CAPTION>
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Donald J. Trump (a)......................................... $ 253 $ 643
Trump Taj Mahal Realty Corp. ("Realty Corp.") (b)........... -- --
Trump's Castle Associates (c)............................... 30 164
Trump Plaza Associates (c).................................. (131) 167
------- ------
$ 152 $ 974
======= ======
</TABLE>
- ---------------------
(a) Taj Associates has entered into a Services Agreement (the "Services
Agreement"), which provides that Trump will render to Taj Associates
marketing, advertising, promotional and related services with respect to
the business operations of Taj Associates. In consideration for the
services to be rendered, Taj Associates will pay an annual fee equal to
1.5% of Taj Associates earnings before interest, taxes and depreciation, as
defined, less capital expenditures and partnership distributions for such
year, with a minimum base fee of $500,000. The services fee is payable
monthly through November 15, 1999, although the agreement provides for
earlier termination under certain events. Portions of the fee have been
assigned to First Fidelity Bank ("First Fidelity") in connection with the
First Fidelity Loan (as defined) to Realty Corp. which has been guaranteed
by Trump. For the years ended December 31, 1993, 1994 and 1995, Taj
Associates incurred $1,566,000, $1,353,000 and $1,743,000, respectively,
under the Services Agreement. In addition, during 1993, 1994 and 1995, Taj
Associates reimbursed Mr. Trump $232,000, $224,000 and $261,000,
respectively, for expenses pursuant to the Services Agreement, of which
$127,000, $149,000 and $164,000, respectively, was incurred to an affiliate
for air transportation.
(b) The term of the lease between Taj Associates and Realty Corp. is through
2023 and provides for base rentals payable by Taj Associates, prior to the
time that the NatWest Loan is paid in full, of $2,725,000 per year, plus 3
1/2% of the EACF in excess of the Additional Amount and, upon payment in
full of the NatWest Loan, increasing to include the payments to which
NatWest is otherwise entitled under the amended NatWest Agreement (see Note
2). The amended lease was assigned by Realty to First Fidelity. The first
$3,300,000 received by First Fidelity each year will be applied to the
interest due on the Realty Corp. loan (the "First Fidelity Loan"). Any
additional sums paid will also reduce Taj Associates guarantee (see below)
and the principal amount of the First Fidelity Loan. The First Fidelity
Loan is secured by a first mortgage lien on the underlying parcels owned by
Realty Corp.
Pursuant to a limited subordinated guarantee Taj Associates will, under
certain circumstances, reimburse First Fidelity for any deficiency in the
amount owed to First Fidelity upon maturity of the First Fidelity Loan, up
to a maximum of $30,000,000, provided that First Fidelity first pursues its
first mortgage lien on the parcels, and provided further that the Taj Bonds
have been paid in full. Inasmuch as Taj Associates' lease payments are
Realty Corp's sole source of funds to satisfy the First Fidelity Loan and
the amount of the First Fidelity Loan exceeds the estimated fair market
value of the land by more than $30,000,000, Taj Associates recorded the
present value of the maximum guarantee amount as of October 4, 1991.
Discounted at 15%, a reasonable incremental cost of capital, the obligation
amounted to approximately $9,103,000. This obligation is being accreted as
interest expense over the life of the Taj Bonds and is included in Other
Liabilities in the accompanying consolidated balance sheets. The accretion
amounted to approximately $1,763,000, $2,047,000 and $2,375,000 for the
years ended December 31, 1993, 1994 and 1995, respectively.
(c) Taj Associates engages in various transactions with the two other Atlantic
City hotel/casinos owned by Trump. These transactions are charged at cost
or normal selling price in the case of retail items and
F-30
<PAGE>
TRUMP TAJ MAHAL ASSOCIATES AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
include the utilization of fleet maintenance and limousine services, certain
shared professional fees and payroll costs as well as complimentary services
offered to customers. During 1993, Taj Associates incurred approximately
$1,100,000 and $83,000 of costs for these services from Trump's Castle
Casino Resort ("Trump's Castle") and Trump Plaza, respectively. In addition,
Taj Associates charged $256,000 and $255,000 to Trump's Castle and Trump
Plaza, respectively, for similar services. During 1994, Taj Associates
incurred approximately $1,167,000 and $149,000 of costs for these services
from Trump's Castle and Trump Plaza, respectively. In addition, Taj
Associates charged $235,000 and $361,000 to Trump's Castle and Trump Plaza,
respectively, for similar services. During 1995, Taj Associates incurred
approximately $1,072,000 and $445,000 of costs for these services from
Trump's Castle and Trump Plaza, respectively. In addition, Taj Associates
charged $113,000 and $188,000 to Trump's Castle and Trump Plaza,
respectively, for similar services.
(4) OTHER CURRENT LIABILITIES
The components of other current liabilities at December 31 consisted of the
following:
<TABLE>
<CAPTION>
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Payroll and related costs.................................... $12,632 $13,533
Self-insurance reserves...................................... 6,800 5,697
Advertising/Marketing costs.................................. 3,242 1,621
Advance deposits............................................. 3,022 1,236
Unredeemed chip liability.................................... 2,725 3,148
Other........................................................ 8,638 9,975
------- -------
$37,059 $35,210
======= =======
</TABLE>
Self insurance reserves represent the estimated amounts of uninsured claims
settlements related to employee health medical costs, workmen's compensation
and other legal proceedings in the normal course of business. These reserves
are established by management based upon a specific review of open claims as of
the balance sheet date as well as historical claims settlement experience.
Actual results may differ from those reserve amounts.
(5) COMMITMENTS AND CONTINGENCIES
LEASES AND EMPLOYMENT AGREEMENTS
Taj Associates has entered into employment agreements with certain key
employees and lease agreements for land, office and warehouse space under
noncancelable operating leases expiring at various dates through 2023. At
December 31, 1995, minimum commitments under these arrangements are as follows:
<TABLE>
<S> <C>
1996............................................................. $ 8,639,000
1997............................................................. $ 5,867,000
1998............................................................. $ 3,534,000
1999............................................................. $ 2,865,000
2000............................................................. $ 2,725,000
Thereafter....................................................... $62,675,000
</TABLE>
Rent expense was approximately $4,520,000, $5,027,000 and $4,546,000 for the
years ended December 31, 1993, 1994 and 1995, respectively.
F-31
<PAGE>
TRUMP TAJ MAHAL ASSOCIATES AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Taj Associates leases the pier extending from the Taj Mahal 1,000 feet into
the Atlantic Ocean (the "Steel Pier") from Realty Corp. A condition imposed on
Taj Associates' Coastal Area Facilities Review Act ("CAFRA") permit (which, in
turn, is a condition of Taj Associates' casino license) initially required that
Taj Associates begin construction of certain improvements on the Steel Pier by
October 1992, which improvements were to be completed within 18 months of
commencement. Taj Associates initially proposed a concept to improve the Steel
Pier, the estimated cost of which was $30,000,000. Such concept was approved by
the New Jersey Department of Environmental Protection, the agency which
administers CAFRA. In March 1993, Taj Associates obtained a modification of its
CAFRA permit providing for the extension of the required commencement and
completion dates of the improvements to the Steel Pier for one year based upon
an interim use of the Steel Pier for an amusement park. Taj Associates has
received additional one-year extensions (most recently through March 1997) of
the required commencement and completion dates of the improvements of the Steel
Pier based upon the same interim use of the Steel Pier as an amusement park.
EMPLOYEE BENEFIT PLAN
Effective January 1, 1989, Taj Associates established the Taj Mahal
Retirement Savings Plan ("the Benefit Plan") for its employees over 21 years of
age who are not covered by a collective bargaining agreement. The Benefit Plan
is structured to qualify for favorable tax treatment under Section 401(k) of
the Internal Revenue Code and allows eligible participants to contribute up to
15% of their salary (certain limits apply, as defined) to the Benefit Plan with
a matching Partnership contribution of 50% of the first 4% of such employee
salary contribution. The funds are invested by a Benefit Plan trustee. Taj
Associates' contributions for the years ended December 31, 1993, 1994 and 1995
were $870,000, $938,000 and $1,069,000, respectively.
CASINO LICENSE RENEWAL
Taj Funding and Taj Associates are subject to regulation and licensing by the
CCC. Taj Associates' casino license must be renewed periodically, is not
transferable, is dependent upon the financial stability of Taj Associates and
can be revoked at anytime. Upon revocation, suspension for more than 120 days,
or failure to renew the casino license due to Taj Associates' financial
condition or for any other reason, the New Jersey Casino Control Act (the
"Casino Control Act") provides that the CCC may appoint a conservator to take
possession of and title to the hotel and casino's business and property,
subject to all valid liens, claims and encumbrances. On June 22, 1995, the CCC
extended Taj Associates' casino license for four years through March 31, 1999.
LEGAL PROCEEDINGS
Taj Associates, its partners, certain of its employees and Taj Funding are
involved in various legal proceedings incurred in the normal course of
business. In the opinion of management of Taj Associates, the expected
disposition of these proceedings would not have a material adverse effect on
Taj Associates or Taj Funding's financial condition or results of operations.
FEDERAL INCOME TAX EXAMINATIONS
Taj Associates is currently involved in an examination with the Internal
Revenue Service (the "IRS") concerning Taj Associates' federal partnership
income tax returns for the tax years 1989 through 1991. While any adjustment
which results from this examination could affect Taj Associates' state income
tax return, Taj Associates does not believe the resolution of the matter will
have a material adverse effect on its financial condition or results of
operations.
F-32
<PAGE>
TRUMP TAJ MAHAL ASSOCIATES AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
INVESTMENT OBLIGATION
The Casino Control Act requires Taj Associates to make qualified investments,
as defined, in New Jersey, or pay an investment alternative tax to the New
Jersey Casino Reinvestment Development Authority ("CRDA"). Commencing in 1991,
and for a period of thirty years thereafter, Taj Associates must either obtain
investment tax credits, as defined, in an amount equivalent to 1.25% of its
gross casino revenues or pay an alternative tax of 2.5% of its gross casino
revenues, as defined. Investment tax credits may be obtained by making
qualified investments, by depositing funds which may be converted to bonds by
the CRDA or by donating previously deposited funds in exchange for future
credits against tax liability. Taj Associates intends to satisfy its investment
obligation primarily by depositing funds and donations of funds deposited.
During 1994, Taj Associates contributed $9,500,000 of previous CRDA deposits,
the carrying value of which was $4,750,000. Of the carrying value, $3,250,000
were allocated to leasehold improvements upon completion of the improvements
during 1995, and $1,500,000 was a donation of previously deposited funds, which
became a credit utilized in 1994 as a reduction of current year obligations.
The deposits and bonds traditionally bear interest at below-market interest
rates; accordingly, Taj Associates has reduced its carrying value of the
deposits by 50% and charged operations approximately $2,764,000, $2,134,000 and
$3,090,000 in 1993, 1994 and 1995, respectively. Taj Associates is required to
satisfy its obligations to the CRDA through deposits on a quarterly basis. Taj
Associates periodically reviews the carrying value of these deposits and
investments in accordance with its policies for all long-lived assets as
described in Note 1.
(6) TAJ ASSOCIATES DISTRIBUTION
Taj Associates is obligated to reimburse Taj Holding for its operating
expenses which consist of directors and officers liability insurance, board of
director fees and expenses, and administrative expenses. Total expenses for the
years ended December 31, 1993, 1994 and 1995 approximated $1,733,000,
$2,171,000 and $1,554,000, respectively.
(7) FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of the following financial instruments of Taj Funding and
Taj Associates approximates fair value, as follows: (a) cash and cash
equivalents and accrued interest payable are based on the short-term nature of
the financial instruments; and (b) CRDA deposits are based on the valuation
allowances to give effect to the below market interest rates (See Note 5).
The estimated fair values of the other financial instruments are as follows
(Note 2):
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1994 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
11.35% Mortgage Bonds (a)
Carrying Amount......................................... $611,533 $649,139
Fair Value.............................................. 512,638 750,983
</TABLE>
- ---------------------
(a) The fair value of the Taj Bonds is based on quoted market prices as of
December 31, 1994 and 1995.
There are no quoted market prices for the NatWest Loan and other debt and a
reasonable estimate of their value could not be made without incurring
excessive costs.
See Note 9 regarding the proposed redemption of these borrowings.
F-33
<PAGE>
TRUMP TAJ MAHAL ASSOCIATES AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(8) FINANCIAL INFORMATION--TAJ FUNDING
Financial information relating to Taj Funding as of and for the years ended
December 31, 1994 and 1995 is as follows (in thousands):
<TABLE>
<CAPTION>
1994 1995
-------- --------
<S> <C> <C>
Total Assets (including First Mortgage Note Receivable of
$765,130 and $780,242 and related interest receivable)...... $783,562 $799,037
======== ========
Total Liabilities and Capital (including Taj Bonds payable of
$765,130 and $780,242 and related interest payable)......... $783,562 $799,037
======== ========
Interest Income.............................................. $ 86,322 $ 87,914
======== ========
Interest Expense............................................. $ 86,322 $ 87,914
======== ========
Net Income................................................... $ -- $ --
======== ========
</TABLE>
(9) PROPOSED RECAPITALIZATION
On January 8, 1996, Trump Hotels & Casino Resorts, Inc. ("THCR"), Taj Holding
and THCR Merger Corp. ("Merger Sub") entered into the Agreement and Plan of
Merger, as amended by Amendment to Agreement and Plan of Merger, dated as of
January 31, 1996 (the "Merger Agreement"), pursuant to which Merger Sub will
merge with and into Taj Holding (the "Merger"). The Merger Agreement provides
that each outstanding share of Class A Common Stock of Taj Holding (the "Taj
Holding Class A Common Stock") (other than Dissenting Shares (as defined in the
Prospectus)) will be converted into the right to receive, at each election,
either (a) $30.00 in cash or (b) that number of shares of Common Stock of THCR
(the "THCR Common Stock") as shall have a market value equal to $30.00. No
fractional shares of THCR Common Stock will be issued in the Merger. The Merger
Agreement also contemplates the following transactions occurring in connection
with the Merger:
(a) the consummation of the offering by THCR of up to 12,500,000 shares of
THCR Common Stock (and an amount to be issued pursuant to the underwriters'
over-allotment option) (the "THCR Stock Offering") and the consummation of the
offering by Trump Atlantic City Associates ("Trump AC") and its wholly owned
finance subsidiary Trump Atlantic City Funding, Inc. of up to $1,200,000,000
aggregate principal amount of mortgage notes, although it is currently
contemplated to aggregate $1,100,000,000, the aggregate proceeds of which will
be used, together with available cash, to (i) pay cash to those holders of Taj
Holding Class A Common Stock electing to receive cash in the Merger, (ii)
redeem the Taj Bonds, (iii) redeem the outstanding shares of Class B Common
Stock of Taj Holding as required in connection with the redemption of the Taj
Bonds, (iv) retire the outstanding 10 7/8% Mortgage Notes due 2001 of Trump
Plaza Funding, Inc., (v) satisfy the indebtedness of Taj Associates under the
NatWest Loan, (vi) purchase certain real property used in the operation of the
Taj Mahal that is currently leased from a corporation wholly owned by Trump,
(vii) purchase certain real property used in the operation of Trump Plaza Hotel
and Casino ("Trump Plaza") that is currently leased from an unaffiliated third
party, (viii) make a payment to Bankers Trust Company ("Bankers Trust") to
obtain releases of liens and guarantees,that Bankers Trust has in connection
with certain outstanding indebtedness owed by Trump to Bankers Trust and (ix)
pay related fees and expenses and provide working capital;
(b) the contribution by Trump to Trump AC of all of his direct and indirect
ownership interests in Taj Associates; and
(c) the contribution by THCR to Trump AC of all its indirect ownership
interests in Taj Associates acquired in the Merger.
F-34
<PAGE>
TRUMP TAJ MAHAL ASSOCIATES AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
To the extent that holders of Taj Holding Class A Common Stock elect to
receive shares of THCR Common Stock in the Merger, THCR may reduce the size of
the THCR Stock Offering. In addition to the shares of THCR Common Stock that
may be issued in the THCR Stock Offering, THCR may issue, as part of the THCR
Stock Offering, up to an additional 20% of such number of shares, to fund
working capital and other general corporate purposes.
The prospective transaction is subject to a number of conditions, including
stockholder approval. In addition, there are a number of risks that should be
considered, including, (i) the high leverage and fixed charges of THCR; (ii)
the risk to refinancing and repayment of indebtedness and the need for
additional financing; (iii) the restrictions imposed on certain activities by
certain debt instruments; (iv) the recent results of Trump Plaza and the Taj
Mahal; and (v) risks associated with and the expansions at Trump Plaza and the
Taj Mahal. There can be no assurance that the expansions at Trump Plaza or the
Taj Mahal will be completed or that any other gaming venture will open or that
any of THCR or the Taj Mahal's operations will be successful. See "Risk
Factors" included elsewhere in this Prospectus for a discussion of these and
other factors.
(10) SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
1993
- ----
Net Revenues............................. $110,382 $126,364 $141,597 $120,568
Income from Operations................... 13,014 23,181 30,812 17,451
Net Income (Loss)........................ (13,003) (3,192) 4,212 (10,556)
1994
- ----
Net Revenues............................. $111,297 $127,254 $147,987 $130,644
Income from Operations................... 7,902 14,980 31,308 22,444
Net Income (Loss)........................ (20,761) (13,847) 3,286 (5,336)
1995
- ----
Net Revenues............................. $117,595 $141,893 $157,808 $136,452
Income from Operations................... 10,298 26,986 35,120 17,486
Net Income (Loss)........................ (18,511) (1,642) 6,445 (12,915)
</TABLE>
F-35
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
INDEX TO FORECASTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Introduction............................................................ P-2
Statement of Operations
Trump Taj Mahal Associates............................................ P-4
Trump Plaza Associates................................................ P-9
Trump Atlantic City Associates and Subsidiaries....................... P-14
</TABLE>
P-1
<PAGE>
FORECASTED FINANCIAL INFORMATION
INTRODUCTION
General
The "Financial Forecast" represents, to the best of management's knowledge
and belief, the expected results of operations for Plaza Associates, Taj
Associates and Trump Atlantic City for the fiscal years ending December 31,
1996 and December 31, 1997. The Financial Forecast, which consists of forward-
looking statements, was prepared by management of Trump Atlantic City and is
qualified by, and subject to, the assumptions set forth below and the other
information contained in this Prospectus. These assumptions are inherently
uncertain and, though considered reasonable by Trump Atlantic City, are
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 Trump Atlantic City.
Accordingly, there can be no assurance that the Financial Forecast will be
realized or that actual results will not be significantly higher or lower.
Trump Atlantic City was the sole preparer of the Financial Forecast, which was
prepared in accordance with standards established by the American Institute of
Certified Public Accountants, except that it omits the effects of non-
operating items, income taxes, extraordinary items and the calculation of net
income. The Financial Forecast has not been audited by, examined by, compiled
by or subjected to agreed-upon procedures by independent accountants, and no
third-party (including the Underwriters) has independently verified or
reviewed the Financial Forecast. Prospective investors in the First Mortgage
Notes should consider this fact in evaluating the Financial Forecast and
information contained in this Prospectus.
The assumptions disclosed herein are those that Trump Atlantic City believes
are significant to the Financial Forecast and reflects management's subjective
judgment as of the date hereof (which is subject to change). However, not all
assumptions used in the preparation of the Financial Forecast have been set
forth. There will be differences between the values used by management in
deriving the key assumptions and the actual results, causing differences
between forecasted and actual results. Events and circumstances usually do not
occur as expected, and the differences between actual and expected results may
be material. In addition, as disclosed elsewhere in this Prospectus under
"Risk Factors," the business and operations of Trump Atlantic City are subject
to substantial risks which increase the uncertainty inherent in the Financial
Forecast. Many of the factors disclosed under "Risk Factors" in this
Prospectus could cause actual results to differ materially from those
expressed in the Financial Forecast. Trump Atlantic City does not intend to
update or otherwise revise the Financial Forecast to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events. The inclusion of the Financial Forecast herein should
not be regarded as a representation by Trump Atlantic City or any other person
(including the Underwriters) that the Financial Forecast will be achieved. In
light of the foregoing, prospective investors in the First Mortgage Notes are
cautioned not to place undue reliance on the Financial Forecast.
The following Financial Forecast presents the stand-alone projections for
the 1996 and 1997 fiscal years for each of Taj Associates and Plaza Associates
without giving effect to the Merger Transaction. For comparative purposes,
historical results of operations for Taj Associates and Plaza Associates have
also been included. In addition, the Financial Forecast also presents
forecasts for the 1996 and 1997 fiscal years for Trump Atlantic City, which
combines the forecasted results of operations for Taj Associates and Plaza
Associates and gives effect to the Merger Transaction.
Assumptions Regarding the Atlantic City Market
The Financial Forecast assumes that the Atlantic City market will continue
to experience increased gaming revenues and visitor volume. Through 1995,
total Atlantic City gaming revenues have grown at a ten-year compound annual
growth rate of 5.7%. Moreover, total slot win and table game drop increased
12.0% and 4.1%, respectively, in 1995 versus 1994. In addition, occupancy
rates have increased from 83% in 1989 to over 90% in recent years.
P-2
<PAGE>
The Financial Forecast assumes that total Atlantic City slot win and table
drop will increase annually at 6.0% and 2.0%, respectively, during the
forecasted period. Management believes that these assumptions are reasonable
in light of, among other things, (i) the historic growth in the Atlantic City
market, (ii) infrastructure improvements being undertaken in Atlantic City
including the new Atlantic City Convention Center, tourist corridor and
airport expansion and (iii) increased gaming space and hotel rooms on account
of the Trump Plaza Expansion, Taj Mahal Expansion and additions by other
casino/hotel operators. These proposed improvement and expansion plans are,
however, subject to significant risks and uncertainties many of which are
beyond management's control. In the case of the Taj Mahal Expansion, which is
expected to be funded principally out of cash from operations, any shortfall
in operating cash flow during an early portion of the forecasted period may
result in a delayed completion date or in revised expansion plans, which would
adversely affect operating results in later portions of the forecasted period
and beyond. See "Risk Factors." The Financial Forecast also assumes that
overall economic conditions in the United States in general and the Northeast
in particular will not decline. Economic conditions and weather conditions
have in the past affected the operating results of Taj Associates and Plaza
Associates. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations." Moreover, forecasting the number of gaming
customers and their gaming propensity, with respect to the Atlantic City
market in general and to the Taj Mahal and Trump Plaza in particular, is
inherently difficult, as is the ability to forecast amounts to be wagered and
won. These and other factors and conditions will likely affect Taj Associates
and Plaza Associates operating results for the periods covered by the
Financial Forecast in ways that management cannot predict.
P-3
<PAGE>
TRUMP TAJ MAHAL ASSOCIATES
FORECASTED STATEMENT OF OPERATIONS DATA
<TABLE>
<CAPTION>
COMPARATIVE HISTORICAL YEAR FORECASTED YEAR
ENDED DECEMBER 31, ENDED DECEMBER 31,
----------------------------- -------------------
1993 1994 1995 1996 1997
--------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Gaming..................... $ 442,064 $ 461,622 $ 501,378 $ 523,018 $ 598,000
Rooms...................... 40,682 41,815 43,309 44,733 48,100
Food and beverage.......... 55,953 58,029 57,195 58,289 68,200
Other...................... 16,656 17,894 15,864 18,209 22,000
--------- --------- --------- --------- ---------
Gross revenues........... 555,355 579,360 617,746 644,249 736,300
Less: Promotional
allowances................ 56,444 62,178 63,998 62,635 71,700
--------- --------- --------- --------- ---------
Net revenues............... 498,911 517,182 553,748 581,614 664,600
Costs and Expenses:
Gaming..................... 237,566 260,472 283,786 287,700 316,687
Rooms...................... 15,525 15,662 15,230 15,472 17,031
Food and beverage.......... 25,080 25,035 24,612 25,090 27,618
General and administra-
tive...................... 99,424 99,629 96,843 97,136 106,390
Pre-opening expense........ 0 0 0 0 0
Depreciation and amortiza-
tion...................... 36,858 39,750 43,387 48,400 41,300
Other...................... 0 0 0 0 0
--------- --------- --------- --------- ---------
414,453 440,548 463,858 473,798 509,026
--------- --------- --------- --------- ---------
Income from operations..... $ 84,458 $ 76,634 $ 89,890 $ 107,816 $ 155,574
========= ========= ========= ========= =========
OTHER DATA:
EBITDA(a).................... $ 128,371 $ 127,796 $ 140,835 $ 163,446 $ 204,299
Capital expenditures
Maintenance(b)............. 16,752 23,030 26,498 28,600 25,000
Expansion.................. 0 0 0 57,400 122,200
</TABLE>
- ---------------------
(a) EBITDA represents income from operations before depreciation,
amortization, restructuring costs, the non-cash write-down of CRDA
investments and a non-recurring cost of a litigation settlement in 1994,
lease payments on the Specified Parcels and payments under the Taj
Services Agreement.
(b) Represents maintenance capital expenditures of a routine or ongoing nature
as well as improvements to existing facilities.
See accompanying Summary of Significant Forecast Assumptions and Accounting
Policies.
P-4
<PAGE>
TRUMP TAJ MAHAL ASSOCIATES
SUMMARY OF SIGNIFICANT FORECAST
ASSUMPTIONS AND ACCOUNTING POLICIES
YEARS ENDING DECEMBER 31, 1996 AND 1997
The Financial Forecast presents, to the best of management's knowledge and
belief, Taj Associates expected statement of operations data for the forecast
period. Accordingly, the forecast reflects management's judgment as of the
date of this Prospectus of the expected conditions and its expected course of
action. The assumptions disclosed herein are those that management believes
are significant to the forecast. There will usually be differences between
forecasted and actual results, because events and circumstances frequently do
not occur as expected, and these differences may be material. The comparative
historical information for 1993, 1994 and 1995 is extracted from Taj
Associates' financial statements for those years. Those financial statements,
the information disclosed under "Risk Factors" and the balance of this
Prospectus should be read carefully in their entirety for additional
information.
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
See Note (1) to Taj Associates' audited financial statements.
(2) GAMING REVENUES
Gaming revenues (other than poker/keno/simulcast revenues) for the Taj Mahal
are forecasted based on estimated Market Share, which is defined as the table
drop or slot win, as applicable, for the Taj Mahal divided by the
corresponding estimated total table drop or slot win, as applicable, for the
Atlantic City market generally. Poker/keno/simulcast revenues are forecasted
based on an assumed annual growth rate over the prior year's revenues.
In addition, gaming revenues in 1997 for the Taj Mahal assume the opening of
a new 60,000 square foot casino in connection with the Taj Mahal Expansion.
For purposes of the Financial Forecast, the new casino is assumed to have
approximately 2,500 slot machines and is assumed to open at the beginning of
the third quarter of 1997.
P-5
<PAGE>
The table below presents historical and forecasted slot machine and table
game statistics for the Atlantic City market and the Taj Mahal:
<TABLE>
<CAPTION>
HISTORICAL FORECASTED
----------------------------------- ----------------------
1993 1994 1995 1996 1997
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
TABLE GAMES: (DOLLARS IN THOUSANDS)
Atlantic City table
games drop(a)........ $6,835,572 $6,832,517 $7,110,612 $7,252,824 $7,397,881
Atlantic City table
games drop growth %.. (3.1)% 0.0% 4.1% 2.0% 2.0%
Taj Mahal table games
drop(a).............. $1,062,042 $1,125,029 $1,192,200 $1,211,976 $1,234,887
Taj Mahal table games
market share %(b).... 15.5% 16.5% 16.8% 16.7% 16.7%
Taj Mahal table games
win.................. $ 173,432 $ 184,774 $ 201,817 $ 202,439 $ 206,226
Taj Mahal table
units................ 163 159 150 169 169
Taj mahal table games
fair share %(c)...... 14.5% 14.2% 13.3% 14.2% 14.0%
Taj Mahal table games
efficiency %(d)...... 106.9% 116.2% 126.3% 118.0% 118.8%
Taj Mahal table reve-
nue per unit per day
(actual dollars)..... $ 2,915 $ 3,184 $ 3,686 $ 3,281 $ 3,343
SLOT MACHINES:
Atlantic City slot
win(e)............... $2,214,638 $2,297,280 $2,572,219 $2,727,081 $2,890,706
Atlantic City slot win
growth %............. 4.8% 3.7% 12.0% 6.0% 6.0%
Taj Mahal slot
win(e)............... $ 264,504 $ 259,114 $ 285,248 $ 303,200 $ 373,925
Taj Mahal slot market
share %(f)........... 11.9% 11.3% 11.1% 11.1% 12.9%
Taj Mahal slot units.. 3,146 3,342 3,514 3,650 5,050
Taj Mahal slot fair
share %(c)........... 13.1% 12.6% 12.3% 11.4% 14.5%
Taj Mahal slot effi-
ciency %(d).......... 90.8% 89.7% 90.2% 97.6% 89.1%
Taj Mahal slot win per
unit per day (actual
dollars)(e).......... $ 230 $ 213 $ 222 $ 228 $ 203
</TABLE>
- ---------------------
(a) Table drop represents the total dollar value of chips purchased for table
games for the period indicated.
(b) Represents the Taj Mahal's table game drop expressed as a percentage of
total Atlantic City table drop.
(c) Represents the percentage of the total number of table games or slot
machines, as applicable, at the Taj Mahal to the total number of table
games or slot machines, as applicable, in the total Atlantic City market.
(d) Represents the ratio of the Taj Mahal's market share to its fair share.
(e) Slot revenue is on the cash basis and excludes amounts reserved for
progressive jackpot accruals.
(f) Represents the Taj Mahal's slot win expressed as a percentage of total
Atlantic City slot win.
Table Games. The Taj Mahal's table games Efficiency has historically been
above 100%, which management believes to be due primarily to the Taj Mahal's
reputation for glamour and excitement, its first-class facilities, the breadth
and variety of its table games and its success in attracting international
high-end table game players. In December 1995, the Taj Mahal opened an Asian-
themed table game room with 16 table games including pai-gow tiles, pai-gow
poker and mini baccarat, games which typically have a higher hold percentage
than average.
The Financial Forecast assumes that the Taj Mahal's table games Market Share
will remain essentially flat in 1996 and 1997 (as compared to 1995) despite
the addition of the new Asian-themed table game area. These Market Share
assumptions result in a forecasted decrease in table games Efficiency from
126.3% in 1995 to 118.0% in 1996 and 118.8% in 1997.
Slot Machines. The Taj Mahal's slot machine Efficiency has historically been
approximately 90%. Recently, Management has started to place greater emphasis
on its slot business by implementing a number of new initiatives designed to
increase the Taj Mahal's slot machine Market Share and Efficiency. Management
has recently expanded the Taj Mahal's slot marketing program, including its
busing program and direct marketing program for high-end slot players. In an
effort to attract high-end slot players, the Taj Mahal is developing the
Sultan's Palace, a separate 5,900 square foot high-end slot lounge and private
club to be completed by the middle of 1996. In addition, the Taj Mahal is in
the process of completing a program designed to modernize its slot machine
inventory and signage. By April 1996, all of the Taj Mahal's slot inventory
will consist of new machines (i.e., machines replaced within the last 2 years)
all of which will have bill acceptors. Finally, it is assumed that in
connection with the Taj Mahal Expansion, a 60,000 square foot circus-themed
"slots only" casino will open in the third-quarter of 1997 with 2,500 slot
machines. Management believes that the circus theme will help draw additional
traffic to the new casino.
P-6
<PAGE>
The Financial Forecast assumes that slot win in the Atlantic City Market
grows at 6% per year. The Financial Forecast assumes that the Taj Mahal's
Market Share will remain constant in 1996 (as compared to 1995) at 11.1% and
increase to 12.9% in 1997 due to the increased number of slot machines added
when the circus casino opens early in the third quarter of 1997. These
assumptions translate into an increase in slot machine Efficiency from 90.2%
in 1995 to 97.6% in 1996, due to the effect of the Taj Mahal's slot machine
programs and the addition of new slot machines with bill acceptors. In 1997,
the Financial Forecast assumes that slot machine Efficiency will be reduced to
89.1% because of the added slot machine capacity from the circus casino. In
deriving this Efficiency, Management has assumed a win/unit/day figure of $100
in 1997 (as compared to its 1995 win/unit/day of $222 for all Taj Mahal slot
machines) for the new slot machines in the circus casino. The table below
compares this win/unit/day assumption with historical and forecasted figures
for the Taj Mahal and the Atlantic City market generally:
<TABLE>
<CAPTION>
HISTORICAL FORECASTED
-------------- -----------
1993 1994 1995 1996 1997
---- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C>
Taj Mahal existing casino slot win/unit/day......... $230 $212 $222 $ 228 $ 237
Circus Casino assumed slot win/unit/day............. -- -- -- -- 100
Atlantic City average slot win/unit/day............. 253 243 247 233 228
</TABLE>
Poker/Keno/Simulcast. The Taj Mahal had poker/keno/simulcast gross revenues
of $20.4 million in 1995. The Financial Forecast assumes that
poker/keno/simulcast revenues will grow approximately 5% annually during the
forecasted period.
(3) OTHER REVENUES
Rooms. In 1995, the Taj Mahal's occupancy rate was 91.2% and the average
daily room rate was approximately $104. The Financial Forecast assumes that
occupancy rates will be approximately 92% and 93.5% in 1996 and 1997,
respectively, and the average daily room rate will increase by 2.0-4.5%
annually. However, no assurance may be made that such rate increases will be
achieved.
Food and Beverage. Food and beverage revenues represented 11.4% of gross
gaming revenues in 1995. The Financial Forecast assumes that food and beverage
revenues will remain essentially the same percentage of gross gaming revenues
for the forecasted period.
Other. Other revenues consist primarily of revenues from entertainment
attractions, parking, retail shops, rentals and restaurant rents. In 1995,
other revenues were approximately $15.9 million and are projected to grow to
$18.2 million in 1996 and $22.0 million in 1997. These assumed increases are
due primarily to rental revenues from new tenants, including the addition of
three nationally recognized restaurants:--Rainforest Cafe, All Star Cafe and
Hard Rock Cafe--and improved merchandising at certain of the Taj Mahal
operated gift and other retail shops.
Promotional Allowances. In 1995, promotional allowances represented
approximately 12.8% of gross gaming revenues. The Financial Forecast assumes
that promotional allowances will decrease to 12.0% of gross gaming revenues in
1996 and 1997 due primarily to (i) an increasing slot machine mix which
management assumes to cause a reduction in promotional allowances per dollar
of gaming revenue and (ii) a decrease in the mix of projected Taj Mahal-
sponsored (versus outside promoter-sponsored) entertainment events.
(4) OPERATING COSTS AND EXPENSES
Management forecasted departmental operating expenses, including those
allocated to casino, hotel and food and beverage operations, primarily based
on the historical operating expenses of the Taj Mahal as well as estimated
incremental increases in operating expenses due to the Taj Mahal Expansion.
From 1993 to 1995, the Taj Mahal had EBITDA margins (i.e., EBITDA as a
percentage of net revenues) of between 24.7-25.7%. The
P-7
<PAGE>
Financial Forecast assumes that EBITDA margins will improve during the
forecasted period for a number of reasons, including the following:
. Improvements and/or reductions in certain coin and table game coupon
programs that have been analyzed by management and found to be
unprofitable. Management believes that certain of these programs could
be reduced without materially affecting the Taj Mahal's revenues,
thereby increasing EBITDA margins in the forecasted period;
. The number of slot machines is assumed to increase as a result of the
circus casino and the addition of the Sultan's Palace, which is assumed
to make slot machine revenues a bigger proportion of gross gaming
revenues than in the historical periods. Slot machines generate higher
contribution margins than table games due to the lower level of labor
required to operate slot machines as well as lower promotional expenses;
. Based upon management's experience in staffing and planning the opening
phases of the Trump Plaza Expansion, management has assumed that it will
achieve certain efficiencies by not having to replicate certain
management and administrative functions and departments (such as
surveillance, security, accounting, reservations and marketing) at the
hotel and gaming facilities comprising the Taj Mahal Expansion.
Management believes that it will be able to leverage off of the existing
management and administrative infrastructure at the Taj Mahal; and
. Beginning in 1997, the Taj Mahal is assumed to receive certain rental
revenues (without any associated operating expenses) from the addition
of the Hard Rock Cafe, All Star Cafe and Rainforest Cafe, thereby
increasing EBITDA margins.
(5) DEPRECIATION AND AMORTIZATION
Depreciation and amortization is expected to increase from $43.4 million in
1995 to $48.4 million in 1996 due to increased capital expenditures on
replacement furniture, fixtures and equipment and the shorter lives associated
therewith. Depreciation and amortization is expected to decrease to $41.3
million in 1997 due to the expiration of the useful life of the original
furniture, fixtures and equipment purchased for the Taj Mahal in 1990 which
utilized an estimated useful life of seven years.
(6) CAPITAL EXPENDITURES
Management anticipates that routine maintenance and improvement capital
expenditures will be $28.6 million in 1996 and $25.0 million in 1997.
Maintenance capital expenditures are anticipated to be larger in 1996
primarily because of the Taj Mahal's program to update its hotel rooms and
slot machines and reconfigure its casino floor to accommodate the addition of
Sultan's Palace. Capital expenditures for the Taj Mahal Expansion, including
for the circus casino and approximately 800 room hotel tower, are expected to
be $57.4 million and $122.2 million in 1996 and 1997, respectively.
P-8
<PAGE>
TRUMP PLAZA ASSOCIATES
FORECASTED STATEMENT OF OPERATIONS DATA
<TABLE>
<CAPTION>
COMPARATIVE HISTORICAL YEAR FORECASTED YEAR
ENDED DECEMBER 31, ENDED DECEMBER 31,
----------------------------- -------------------
1993 1994 1995 1996 1997
--------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Gaming................... $ 264,081 $ 261,451 $ 298,073 $ 408,209 $ 442,681
Rooms.................... 18,324 18,312 19,986 40,105 44,338
Food and beverage........ 41,941 40,149 44,602 69,726 76,668
Other.................... 8,938 8,408 9,594 12,737 13,751
--------- --------- --------- --------- ---------
Gross revenues......... 333,284 328,320 372,255 530,777 577,438
Less: Promotional allow-
ances................... 32,793 33,257 38,934 54,546 65,823
--------- --------- --------- --------- ---------
Net revenues........... 300,491 295,063 333,321 476,231 511,615
Costs and Expenses:
Gaming................... 136,895 139,540 164,839 229,997 243,475
Rooms.................... 2,831 2,715 2,263 6,226 6,651
Food and beverage........ 18,093 17,050 18,306 29,668 32,201
General and administra-
tive.................... 71,624 73,075 68,550 96,667 104,282
Pre-opening expense...... 0 0 0 5,200 0
Depreciation and amorti-
zation.................. 17,554 15,653 16,213 23,018 24,970
Other.................... 3,854 3,615 3,363 5,029 5,280
--------- --------- --------- --------- ---------
250,851 251,648 273,534 395,805 416,858
--------- --------- --------- --------- ---------
Income from operations..... $ 49,640 $ 43,415 $ 59,787 $ 80,426 $ 94,757
========= ========= ========= ========= =========
OTHER DATA:
EBITDA(a).................. $ 68,241 $ 60,524 $ 75,290 $ 109,934 $ 121,569
Capital expenditures
Maintenance(b)........... 7,303 11,746 11,207 20,000 20,000
Expansion(c)............. $ 2,749 $ 8,743 $ 98,549 $ 46,084 $ 0
</TABLE>
- ---------------------
(a) EBITDA represents income from operations before interest expense, taxes,
depreciation, amortization, restructuring costs, the non-cash writedown of
CRDA investments and preopening expenses.
(b) Represents maintenance capital expenditures of a routine or ongoing nature
as well as improvements to existing facilities.
(c) The 1996 figure excludes $28.0 million associated with the exercise of the
Trump Plaza East Purchase Option which will be funded out of the proceeds
of the Offerings.
See accompanying Summary of Significant Forecast Assumptions and Accounting
Policies.
P-9
<PAGE>
TRUMP PLAZA ASSOCIATES
SUMMARY OF SIGNIFICANT FORECAST ASSUMPTIONS AND ACCOUNTING POLICIES
YEARS ENDING DECEMBER 31, 1996 AND 1997
The Financial Forecast presents, to the best of management's knowledge and
belief, Trump Plaza Associates' expected statement of operations data for the
forecast period. Accordingly, the forecast reflects management's judgment as
of the date of this Prospectus of the expected conditions and its expected
course of action. The assumptions disclosed herein are those that management
believes are significant to the forecast. There will usually be differences
between forecasted and actual results, because events and circumstances
frequently do not occur as expected, and these differences may be material.
The comparative historical information for 1993, 1994 and 1995 is extracted
from Trump Plaza Associates' financial statements for those years. Those
financial statements, the information disclosed under "Risk Factors" and the
balance of this Prospectus should be read carefully in their entirety for
additional information.
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
See Note (2) to THCR Atlantic City's audited financial statements.
(2) GAMING REVENUES
Gaming revenues for Trump Plaza are forecasted based on an estimated Market
Share, which is defined as the table drop or slot win, as applicable, for
Trump Plaza divided by the corresponding estimated total table drop or slot
win, as applicable, for the Atlantic City market generally.
Gaming revenues for Trump Plaza in 1996 and 1997 assume the opening of Trump
World's Fair in April 1996 and reflect the opening of the casino at Trump
Plaza East in the middle of the first quarter of 1996.
P-10
<PAGE>
The table below presents historical and forecasted slot machine and table
game statistics for the Atlantic City market and Trump Plaza:
<TABLE>
<CAPTION>
HISTORICAL FORECASTED
----------------------------------- ----------------------
1993 1994 1995 1996 1997
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
TABLE GAMES:
Atlantic City table
games drop(a)......... $6,835,572 $6,832,517 $7,110,612 $7,252,824 $7,397,881
Atlantic City table
drop games growth %... (3.1)% 0.0% 4.1% 2.0% 2.0%
Plaza table games
drop(a)............... $ 626,621 $ 599,881 $ 626,832 $ 798,854 $ 853,897
Plaza table games mar-
ket share %(b)........ 9.2% 8.8% 8.8% 11.0% 11.5%
Plaza table games win.. $ 93,392 $ 92,770 $ 96,518 $ 123,822 $ 132,354
Plaza table units...... 87 89 97 132 141
Plaza table games fair
share %(c)............ 7.8% 8.0% 8.6% 11.1% 11.7%
Plaza table games effi-
ciency %(d)........... 118.0% 110.6% 102.5% 99.5% 98.5%
Plaza table revenue per
unit per day (actual
dollars).............. $ 2,940 $ 2,855 $ 2,726 $ 2,570 $ 2,572
SLOT MACHINES:
Atlantic City slot
win(a)................ $2,214,638 $2,297,280 $2,572,219 $2,727,081 $2,890,706
Atlantic City slot win
growth %.............. -- 3.7% 12.0% 6.0% 6.0%
Plaza slot win(e)...... $ 173,215 $ 170,316 $ 204,230 $ 289,265 $ 314,112
Plaza slot market share
%..................... 7.8% 7.4% 7.9% 10.6% 10.9%
Plaza slot units....... 1,812 2,076 2,339 3,876 4,308
Plaza slot fair share
%(c).................. 7.6% 8.0% 8.2% 12.1% 12.4%
Plaza slot efficiency
%(d).................. 103.1% 92.5% 96.7% 87.7% 87.8%
Plaza slot win per unit
per day (actual
dollars)(e)........... $ 262 $ 225 $ 239 $ 204 $ 200
</TABLE>
- ---------------------
(a) Table drop represents the total dollar value of chips purchased for table
games for the period indicated.
(b) Represents Trump Plaza's table game drop expressed as a percentage of
total Atlantic City table drop.
(c) Represents the percentage of the total number of table games or slot
machines, as applicable, at Trump Plaza to the total number of table games
or slot machines, as applicable, in the total Atlantic City market.
(d) Represents the ratio of Trump Plaza's market share to its fair share.
(e) Slot revenue is on the cash basis and excludes amounts reserved for
progressive jackpot accruals.
(f) Represents Trump Plaza's slot win expressed as a percentage of total
Atlantic City slot win.
Table Games. Trump Plaza's table game efficiency has historically been well
over 100% which management believes to be due primarily to its success in
attracting high-end table game players. In 1995, Trump Plaza's table game
efficiency was 102.5%, which was lower than in previous years because of a
continued deemphasis on "high roller" patrons from South America and the Far
East.
The Financial Forecast assumes that Trump Plaza's market share will grow
from 8.8% in 1995 (and 1994) to 11.0% in 1996 and 11.5% in 1997. These Market
Share assumptions result in a table game efficiency of 99.5% in 1996 and 98.5%
in 1997. Management believes that these market share and efficiency forecasts
are reasonable in light of historical results and the assumption that the new
casino area at Trump Plaza East and Trump World's Fair will increase Trump
Plaza's table game positions by approximately 45%. In addition, Trump Plaza
East and Trump World's Fair will increase Trump Plaza's hotel room inventory
by over 150% (849 additional rooms). Management believes that these additional
hotel rooms will serve as an important factor for increasing Trump Plaza's
casino revenues, as management assumes these additional rooms will enable
Trump Plaza to attract profitable weekend drive-in patrons as well as to host
additional and larger conventions. As an illustration of the importance of
additional hotel rooms, Trump Plaza was the only casino in Atlantic City to
post a revenue increase for the month of January 1996 versus January 1995
despite severe weather conditions, which was due in part to the addition of
177 new rooms at Trump Plaza East that opened in late 1995.
Slot Machines. Trump Plaza's slot machine efficiency grew from 92.5% in 1994
to 96.7% in 1995. Management has attributed this improved slot machine
efficiency primarily to new marketing initiatives designed to attract high-end
slot players and the introduction of newer more efficient slot machines and
bill acceptors on slot machines.
P-11
<PAGE>
The Financial Forecast assumes that Trump Plaza's slot machine market share
will increase from 7.9% in 1995 to 10.6% in 1996 and 10.9% in 1997. The
Financial Forecast assumes that slot win in the Atlantic City Market grows at
6% per year. These market share assumptions result in a slot machine
efficiency of 87.7% in 1996 and 87.8% in 1997, substantially lower than Trump
Plaza's historical slot machine efficiency, due to the assumed increased
number of slot machines as a result of the aforementioned openings of the new
casino space at Trump Plaza East and Trump World's Fair.
(3) OTHER REVENUES
Rooms. In 1995, Trump Plaza's occupancy rate was 89.2% and the average daily
room rate was approximately $104. The Financial Forecast assumes that the
occupancy rate for both years of the forecasted period will be 89.9% and the
average daily room rate will be approximately $97. Management believes that
the projected occupancy rates are reasonable despite the substantial increase
in Trump Plaza's room base because of the high and increasing historical
occupancy rates in Atlantic City generally and at Trump Plaza specifically. In
addition, management believes that the additional room base will enable Trump
Plaza to better attract convention and tour business which, it is anticipated,
will increase occupancy rates during non-peak times. Management believes that
the average daily room rates, however, will decline somewhat primarily because
Trump World's Fair will be targeted to the middle market gaming patron and
contains proportionately fewer suites than the existing Trump Plaza facility.
Although the occupancy rate and average daily room rate assumptions are
identical for 1996 and 1997, overall room revenues are projected to increase
in 1997 due to an increase in available room days because of the assumed full
year of operations at Trump Plaza East and Trump World's Fair.
Food and Beverage. Food and beverage revenues represented 15.0% of gross
gaming revenues in 1995. The Financial Forecast assumes that food and beverage
revenues will represent approximately 17.1-17.3% of gross gaming revenues in
the forecasted period. The resulting increase reflects management's
assumptions regarding its planned marketing strategy at Trump World's Fair
which will focus on providing complimentary food and beverage to attract
middle market patrons.
Other. Other revenues consists primarily of revenues from entertainment
attractions, parking, retail shops and rentals. In 1995, other revenues were
approximately $9.6 million and are projected to grow approximately 33% in 1996
and 8% in 1997 primarily due to increased entertainment attractions and retail
shops at Trump World's Fair.
Promotional Allowances. Promotional allowances represented 13.1% of gross
gaming revenues in 1995. Historically, management has been constrained in its
ability to provide complimentary hotel rooms to weekend drive-in patrons at
Trump Plaza because of a lack of available hotel rooms. The Financial Forecast
assumes that promotional allowances will increase to 13.4% and 14.9% of gross
gaming revenues in 1996 and 1997, respectively. This expected increase is
mostly attributable to the large increase in Trump Plaza's hotel room
inventory which will enable Trump Plaza to attract more weekend drive-in
customers by offering complimentary hotel rooms to casino patrons.
(4) OTHER COSTS AND EXPENSES
Management forecasted departmental operating expenses, including those
allocated to casino, hotel and food and beverage operations, primarily based
on the historical departmental operating expenses of Trump Plaza as well as
estimated increases in operating expenses due to Trump Plaza East and Trump
World's Fair. From 1993 to 1995, Trump Plaza had EBITDA margins (i.e., EBITDA
as a percentage of net revenues) of between 20.5-22.7%. The Financial Forecast
assumes that Trump Plaza's EBITDA margin will improve during the forecasted
period. This forecasted margin improvement is attributable mostly to operating
efficiencies expected to be achieved by not duplicating certain management and
administrative functions and departments (such as surveillance, security,
accounting, reservations and marketing) at Trump Plaza East and Trump World's
Fair
P-12
<PAGE>
because of the existing management and administrative infrastructure at Trump
Plaza. For instance, Trump Plaza currently has 3,700 employees and management
intends to hire only 1,500 additional employees for the Trump's World's Fair,
whereas the Trump's World's Fair represents a 150% increase in Trump Plaza's
hotel room inventory and 85% increase in casino square footage. In addition,
the gaming mix at Trump World's Fair will have a higher proportion of slot
machines than Trump Plaza historically, thereby increasing overall margins
since slot machines typically operate at a higher contribution margin than
table games.
Management anticipates incurring approximately $5.2 million in one-time pre-
opening expenses in 1996 as a result of the opening of Trump World's Fair and
Trump Plaza East.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expense is expected to increase from $16.2
million in 1995 to $23.0 million and $25.0 million in 1996 and 1997,
respectively. This increased depreciation and amortization is due to the
capital expenditures associated with the Trump Plaza Expansion.
CAPITAL EXPENDITURES
Management anticipates that maintenance capital expenditures will be
approximately $20 million in 1996 and $20 million in 1997. Maintenance capital
expenditures in 1996 include approximately $10 million room and other
improvements at Trump World's Fair. In addition, expansion capital
expenditures are assumed to be $46.1 million in 1996, representing the
remaining cost of Trump Plaza East and Trump World's Fair.
P-13
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONSOLIDATED FORECASTED STATEMENT OF OPERATIONS DATA
<TABLE>
<CAPTION>
FORECASTED
YEAR ENDED DECEMBER 31,
------------------------
1996 1997
----------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Gaming............................................ $ 931,227 $ 1,040,681
Rooms............................................. 84,838 92,438
Food and beverage................................. 128,015 144,868
Other............................................. 30,946 35,751
----------- ------------
Gross revenues.................................. 1,175,026 1,313,738
Less: Promotional allowances........................ 117,181 137,523
----------- ------------
Net revenues.................................... 1,057,845 1,176,215
Costs and Expenses:
Gaming............................................ 517,697 560,162
Rooms............................................. 21,698 23,682
Food and beverage................................. 54,758 59,819
General and administrative........................ 177,508 185,527
Pre-opening expense............................... 5,200 0
Depreciation and amortization..................... 75,927 70,779
Other............................................. 5,029 5,280
----------- ------------
857,817 905,248
----------- ------------
Income From Operations.............................. $ 199,830 $ 270,769
=========== ============
OTHER DATA:
EBITDA(a)........................................... $ 285,650 $ 347,288
Capital expenditures
Maintenance(b).................................... 48,600 45,000
Expansion(c)...................................... 103,484 122,200
</TABLE>
- ---------------------
(a) EBITDA represents income from operations before interest expense, taxes,
depreciation, amortization, restructuring costs, the non-cash writedown of
CRDA investments and preopening expenses.
(b) Represents maintenance capital expenditures of a routine or ongoing nature
as well as improvements to existing facilities.
(c) The 1996 figure excludes $28.0 million associated with the exercise of the
Trump Plaza East Purchase Option which will be funded out of the proceeds
of the Offerings.
See accompanying Summary of Significant Forecast Assumptions and Accounting
Policies.
P-14
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
SUMMARY OF SIGNIFICANT FORECAST
ASSUMPTIONS AND ACCOUNTING POLICIES
YEARS ENDING DECEMBER 31, 1996 AND 1997
The Forecasted Statement of Operations Data of Trump AC consolidates the
separate projected Statement of Operations Data of Trump Plaza with that of
the Taj Mahal and gives effect to the Merger Transaction as outlined below.
The separate stand-alone Statements of Operations of Trump Plaza and the Taj
Mahal do not reflect any adjustments related to or any effects resulting from
the Merger Transaction.
The adjustments to reflect the Merger Transaction are as follows:
Cost Savings. Management anticipates that Trump AC will achieve $18.3
million in annual cost savings from combining certain operations of Trump
Plaza and the Taj Mahal. Because of the timing of the Merger Transaction,
Management anticipates that approximately one-half of these cost savings can
be achieved in 1996, with the full amount being realized in 1997. Therefore
the consolidated forecasted statements of operations for Trump AC reflect a
decrease in general and administrative costs of $9.15 million and $18.3
million in 1996 and 1997, respectively.
For an additional description of the anticipated cost savings, see
"Business--General."
Specified Parcels Lease. In connection with the Merger Transaction, Taj
Associates will purchase the Specified Parcels from Realty Corp., thereby
eliminating approximately $3.3 million in annual lease payments that have been
included in the historical and forecasted periods as general and
administrative expense on Taj Associates statement of operations (although
such amounts were excluded for purposes of determining Taj Associates stand-
alone EBITDA). Therefore, the consolidated forecasted statements of operations
for Trump AC reflect the elimination of this lease expense for the forecasted
periods.
Taj Services Agreement. In connection with the Merger Transaction, the Taj
Services Agreement will be terminated. Taj Associates' forecasted statements
of operation include amounts that would have been paid pursuant to the Taj
Services Agreement (although such amounts were excluded for purposes of
determining Taj Associates stand-alone EBITDA) which are forecasted to have
been $1.3 million in 1996 and $1.0 million in 1997 (less $575,000 which was
paid annually by Trump to First Fidelity to reduce the amount owed by Taj
Associates under the lease for the Specified Parcels). The consolidated
forecasted statements of operations for Trump Atlantic City reflect the
elimination of this expense for the forecasted periods.
Trump Plaza East Lease. In connection with the Merger Transaction, Trump
Plaza Associates will purchase Trump Plaza East for $28 million, thereby
eliminating approximately $3.1 million in lease expense that has been
classified as general and administrative expense on Trump Plaza Associates'
forecasted statements of operations. Therefore, the consolidated forecasted
statements of operations for Trump AC reflect the elimination of this lease
expense for the forecasted period.
Purchase Price Allocation. The Merger Transaction is accounted for as a
purchase transaction. THCR will push down the excess of the cost of acquiring
all of the direct and indirect equity interests in Taj Associates to Trump AC.
Trump AC has allocated these amounts based upon the fair value of the assets
acquired: $8.6 million to land and $164.7 million to building. The amounts
allocated to building are forecasted to be depreciated over the remaining life
of the building (35 years). The resulting additional depreciation of $5.1
million annually has been included in the forecasted consolidated statements
of operations data.
P-15
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE ISSUERS, THE GUARANTORS, OR ANY OF THE
UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY THE FIRST MORTGAGE NOTES BY ANYONE IN ANY JU-
RISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH
THE PERSON MAKING THE OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
-----------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 3
Risk Factors............................................................. 23
Use of Proceeds.......................................................... 35
Capitalization........................................................... 36
Selected Historical Consolidated Financial Information................... 37
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 39
Unaudited Pro Forma Financial Information................................ 48
Business................................................................. 53
Regulatory Matters....................................................... 80
Management............................................................... 89
Certain Transactions..................................................... 107
Description of the First Mortgage Notes.................................. 109
Security Ownership of Certain Beneficial Owners and Management........... 139
Description of the Trump AC Partnership Agreement........................ 140
Certain Federal Income Tax Considerations................................ 141
Underwriting............................................................. 143
Legal Matters............................................................ 144
Experts.................................................................. 144
Available Information.................................................... 144
Index to Financial Statements............................................ F-1
Index to Forecasted Financial Information................................ P-1
</TABLE>
---------------
UNTIL JULY , 1996 (90 DAYS AFTER THE DATE HEREOF), ALL DEALERS EFFECTING
TRANSACTIONS IN THE FIRST MORTGAGE NOTES, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$1,100,000,000
TRUMP ATLANTIC CITY ASSOCIATES
TRUMP ATLANTIC CITY FUNDING, INC.
% FIRST MORTGAGE NOTES DUE 2006
---------------
PROSPECTUS
---------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
SALOMON BROTHERS INC
BT SECURITIES CORPORATION
APRIL , 1996
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, to be paid in connection with the sale
of the First Mortgage Notes being registered, all of which will be paid by
Trump Atlantic City. All amounts are estimates except the registration fee and
the NASD filing fee.
<TABLE>
<S> <C>
Registration Fee................................................. $ 406,897
NASD Filing Fee.................................................. 30,500
Blue Sky Fees and Expenses....................................... 54,500
Accounting Fees and Expenses..................................... 400,000
Legal Fees and Expenses.......................................... 1,900,000
Printing and Engraving Fees and Expense.......................... 266,000
Miscellaneous.................................................... 150,000
----------
Total.......................................................... $3,207,897
==========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware provides
that a corporation may indemnify directors and officers against liabilities
and expenses they may incur in such capacities provided certain standards are
met, including good faith and the belief that the particular action is in or
not opposed to the best interests of the corporation.
TRUMP ATLANTIC CITY
Article IX of the Certificate of Incorporation of Plaza Holding Inc., the
managing general partner of Trump Atlantic City, provides that Plaza Holding
Inc. may indemnify any director, officer, employee or agent of Plaza Holding
Inc., or other person, to the fullest extent permitted by Section 145 of the
Delaware General Corporation Law.
Article IX of the By-Laws of Plaza Holding Inc. provides that Plaza Holding
Inc. shall indemnify to the fullest extent permitted under and in accordance
with the laws of the State of Delaware any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of Plaza Holding Inc.) by reason of
the fact that he is or was a director, officer, incorporator, employee or
agent of Plaza Holding Inc., or is or was serving at the request of Plaza
Holding Inc. as a director, officer, trustee, employee or agent of or in any
other similar capacity with another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of Plaza Holding Inc., and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. Expenses (including attorneys' fees) incurred in defending a civil
or criminal action, suit or proceeding shall (in the case of any action, suit
or proceeding against a director of Plaza Holding Inc.) or may (in the case of
any action, suit or proceeding against an officer, trustee, employee or agent)
be paid by Plaza Holding Inc. in advance of the final disposition of such
action, suit or proceeding as authorized by the Board of Directors upon
receipt of an undertaking by or on behalf of the indemnified person to repay
such amount if it shall ultimately be determined that he is not entitled to be
indemnified by Plaza Holding Inc. as authorized in Article IX of the By-Laws
of Plaza Holding Inc.
Article IX of the By-Laws of Plaza Holding Inc. further provides that no
director shall be personally liable to Plaza Holding Inc. or any stockholder
for monetary damages for breach of fiduciary duty as a director, except for
any matter in respect of which such director (A) shall be liable under Section
174 of the General Corporation
II-1
<PAGE>
Law of the State of Delaware or any amendment thereto or successor provision
thereto, or (B) shall be liable by reason that, in addition to any and all
other requirements for liability, he:
(i) shall have breached his duty of loyalty to Plaza Holding Inc. or its
stockholders;
(ii) shall not have acted in good faith or, in failing to act, shall not
have acted in good faith;
(iii) shall have acted in a manner involving intentional misconduct or a
knowing violation of law or, in failing to act, shall have acted in a
manner involving intentional misconduct or a knowing violation of law; or
(iv) shall have derived an improper personal benefit.
If the General Corporation Law of the State of Delaware is amended after the
date hereof to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of Plaza
Holding Inc. shall be eliminated or limited to the fullest extent permitted by
the General Corporation Law of the State of Delaware, as so amended.
TRUMP AC FUNDING
Article IX of the Trump AC Funding Certificate of Incorporation provides
that Trump AC Funding shall indemnify to the fullest extent permitted under
and in accordance with the laws of the State of Delaware any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of Trump AC Funding)
by reason of the fact that he is or was a director, officer, incorporator,
employee or agent of Trump AC Funding, or is or was serving at the request of
Trump AC Funding as a director, officer, trustee, employee or agent of or in
any other similar capacity with another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of Trump AC Funding, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in, or
not opposed to, the best interests of Trump AC Funding, and, with respect to
any criminal action or proceeding, shall not, of itself, create a presumption
that the person had reasonable cause to believe that his conduct was unlawful.
Article IX of the Trump AC Funding Certificate of Incorporation further
provides that Trump AC Funding shall indemnify to the fullest extent permitted
under and in accordance with the laws of the State of Delaware any person who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit, by or in the right of Trump AC Funding to
procure a judgment in its favor by reason of the fact that such person is or
was a director, officer, employee or agent of Trump AC Funding, or is or was
serving at the request of Trump AC Funding as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of Trump AC
Funding and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to Trump AC Funding unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of
all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper. Expenses (including attorneys' fees) incurred
in defending any civil, criminal, administrative or investigative action, suit
or proceeding shall (in the case of any action, suit or proceeding against a
director of Trump AC Funding) or may (in the case of any action, suit or
proceeding against an officer, trustee, employee or agent) be paid by Trump AC
Funding in advance of the final disposition of such action, suit or proceeding
as authorized by the Board of Directors upon receipt of an undertaking by or
on behalf of the indemnified person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by Trump AC
Funding as authorized in Article IX.
II-2
<PAGE>
No director or officer shall be personally liable to Trump AC Funding or any
stockholder for monetary damages for breach of fiduciary duty as a director or
officer, except for any matter in respect of which such director or officer
(A) shall be liable under Section 174 of the General Corporation Law of the
State of Delaware or any amendment thereto or successor provision thereto, or
(B) shall be liable by reason that, in addition to any and all other
requirements for liability, he:
(i) shall have breached his duty of loyalty to Trump AC Funding or its
stockholders;
(ii) shall not have acted in good faith or, in failing to act, shall not
have acted in good faith;
(iii) shall have acted in a manner involving intentional misconduct or a
knowing violation of law or, in failing to act, shall have acted in a
manner involving intentional misconduct or a knowing violation of law; or
(iv) shall have derived an improper personal benefit.
If the General Corporation Law of the State of Delaware is amended after the
date hereof to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of Trump AC
Funding shall be eliminated or limited to the fullest extent permitted by the
General Corporation Law of the State of Delaware, as so amended.
TRUMP AC
Section 14.13 of Plaza Associates' Amended and Restated Partnership
Agreement provides that Trump AC shall indemnify and hold harmless each
Partner, its Affiliates and all officers, directors, employees and agents
(individually, an "Agent") of such Partner, and its affiliates (individually,
an "Indemnitee") from and against any and all losses, claims, demands, costs,
damages, liabilities, joint and several, expenses of any nature (including
reasonable 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, brought or
threatened 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 Trump AC or their status as an Agent including, without
limitation, liabilities under the federal and state securities laws,
regardless of whether the Indemnitee continues to be a Partner, an Affiliate
of a Partner, or an Agent of a Partner or of an Affiliate of a Partner at the
time any such liability or expense is paid or incurred, so long as such
indemnified person acted in good faith on behalf of Plaza Holdings, Inc., THCR
Holdings or Trump AC and in a manner reasonably believed by such person to be
in or not opposed to the best interests of Plaza Holdings, Inc., THCR Holdings
or Trump AC but only if such course of conduct does not constitute gross
negligence or willful misconduct; provided that such indemnification or
agreement to hold harmless shall be recoverable only out of assets of Trump AC
and not from the Partners and; provided, further that no indemnification shall
be made to or on behalf of an Indemnitee if a judgment or other final
adjudication adverse to the Indemnitee establishes that his or its acts or
omissions (i) in the case of an Indemnitee who is or was a director of
Holdings, Inc. or the THCR Holdings managing general partner, were in breach
of his duty of loyalty to Holdings, Inc. or the THCR Holdings managing general
partner, as the case may be, or were not in good faith or involved a knowing
violation of law, or resulted in receipt by the Indemnitee of an improper
personal benefit or (ii) in the case of all other Indemnitees, constituted
gross negligence or willful misconduct.
Termination of any proceeding by judgment, order, settlement, conviction or
upon a plea of nolo contendere or its equivalent shall not itself create a
presumption that such Indemnitee did not meet the applicable standard of
conduct for indemnification. Indemnity shall be paid in advance of the final
disposition of the proceeding to an Indemnitee provided that the Indemnitee
undertakes to repay Plaza Associates if it shall ultimately be determined that
he or it is not entitled to indemnification as provided by Section 14.13. The
indemnification provided by Section 14.13 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, or as an officer, director, employee
or agent of a Partner or Affiliate of a Partner 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
II-3
<PAGE>
Indemnitee shall be denied indemnification in whole or in part under Section
14.13 by reason of the fact that the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if such interest
was fully disclosed and the transaction was approved by Plaza Holding Inc.
PLAZA ASSOCIATES
Section 14.13 of Plaza Associates' Third Amended and Restated Partnership
Agreement provides that Plaza Associates shall indemnify and hold harmless
each Partner, its Affiliates and all officers, directors, employees and agents
(individually, an "Agent") of such Partner, and its affiliates (individually,
an "Indemnitee") from and against any and all losses, claims, demands, costs,
damages, liabilities, joint and several, expenses of any nature (including
reasonable 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, brought or
threatened 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 Plaza Associates or their status as an Agent including, without
limitation, liabilities under the federal and state securities laws,
regardless of whether the Indemnitee continues to be a Partner, an Affiliate
of a Partner, or an Agent of a Partner or of an Affiliate of a Partner at the
time any such liability or expense is paid or incurred, so long as such
indemnified person acted in good faith on behalf of Plaza Associates, TTMC or
Trump AC and in a manner reasonably believed by such person to be in or not
opposed to the best interests of Plaza Associates, TTMC or Trump AC but only
if such course of conduct does not constitute gross negligence or willful
misconduct; provided that such indemnification or agreement to hold harmless
shall be recoverable only out of assets of Plaza Associates and not from the
Partners and; provided, further that no indemnification shall be made to or on
behalf of an Indemnitee if a judgment or other final adjudication adverse to
the Indemnitee establishes that his or its acts or omissions (i) in the case
of an Indemnitee who is or was a director of TTMC or the Trump AC managing
general partner, were in breach of his duty of loyalty to TTMC or the Trump AC
managing general partner, as the case may be, or were not in good faith or
involved a knowing violation of law, or resulted in receipt by the Indemnitee
of an improper personal benefit or (ii) in the case of all other Indemnitees,
constituted gross negligence or willful misconduct.
Termination of any proceeding by judgment, order, settlement, conviction or
upon a plea of nolo contendere or its equivalent shall not itself create a
presumption that such Indemnitee did not meet the applicable standard of
conduct for indemnification. Indemnity shall be paid in advance of the final
disposition of the proceeding to an Indemnitee provided that the Indemnitee
undertakes to repay Plaza Associates if it shall ultimately be determined that
he or it is not entitled to indemnification as provided by Section 14.13. The
indemnification provided by Section 14.13 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, or as an officer, director, employee
or agent of a Partner or Affiliate of a Partner 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 Section 14.13 by reason of
the fact that the Indemnitee had an interest in the transaction with respect
to which the indemnification applies if such interest was fully disclosed and
the transaction was approved by Plaza Funding.
THCR
Trump AC, Trump AC Funding and Plaza Associates are currently subsidiaries
of THCR. Article IX of the THCR Certificate of Incorporation provides that
THCR shall indemnify to the fullest extent permitted under and in accordance
with the laws of the State of Delaware any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of THCR) by reason of the fact that
he is or was a director, officer, incorporator, employee or agent of THCR, or
is or was serving at the request of THCR as a director, officer, trustee,
employee or agent of or in any other similar capacity with another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or
II-4
<PAGE>
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of THCR, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in, or
not opposed to, the best interests of THCR, and, with respect to any criminal
action or proceeding, shall not, of itself, create a presumption that the
person had reasonable cause to believe that his conduct was unlawful. Expenses
(including attorneys' fees) incurred in defending any civil, criminal,
administrative or investigative action, suit or proceeding shall (in the case
of any action, suit or proceeding against a director of THCR) or may (in the
case of any action, suit or proceeding against an officer, trustee, employee
or agent) be paid by THCR in advance of the final disposition of such action,
suit or proceeding as authorized by the Board of Directors upon receipt of an
undertaking by or on behalf of the indemnified person to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
THCR as authorized in Article IX.
No director or officer shall be personally liable to THCR or any stockholder
for monetary damages for breach of fiduciary duty as a director or officer,
except for any matter in respect of which such director or officer (A) shall
be liable under Section 174 of the General Corporation Law of the State of
Delaware or any amendment thereto or successor provision thereto, or (B) shall
be liable by reason that, in addition to any and all other requirements for
liability, he:
(i) shall have breached his duty of loyalty to THCR or its stockholders;
(ii) shall not have acted in good faith or, in failing to act, shall not
have acted in good faith;
(iii) shall have acted in a manner involving intentional misconduct or a
knowing violation of law or, in failing to act, shall have acted in a
manner involving intentional misconduct or a knowing violation of law; or
(iv) shall have derived an improper personal benefit.
If the General Corporation Law of the State of Delaware is amended after the
date hereof to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of THCR
shall be eliminated or limited to the fullest extent permitted by the General
Corporation Law of the State of Delaware, as so amended.
Each of the Executive Agreement between Trump and THCR and the Ribis Revised
Plaza Agreement among Mr. Ribis, THCR and THCR Holdings, provides for the
indemnification of such respective executive officer in connection with any
claims made against the executive officer involving the performance of his
duties, unless the claim is result of the gross negligence, willful conduct or
bad faith of the executive officer.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
There have been no recent sales of unregistered securities of the registrants
other than in connection with the formation and capitalization of Trump AC
Funding, which sale was exempt from registration pursuant to Section 4(2) of
the Securities Act of 1933, as amended. In that regard, on January 30, 1996,
Trump AC Funding sold to Trump AC 100 shares of its Common Stock for $100.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
(A) EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
<C> <S>
1.1 Form of Underwriting Agreement among Trump Atlantic City
Associates, Trump Atlantic City Funding, Inc., Trump Plaza
Associates, Donaldson, Lufkin & Jenrette Securities Corporation,
BT Securities Corporation and Salomon Brothers Inc.
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
<C> <S>
2.1(13) Agreement and Plan of Merger, dated January 8, 1996, between
Trump Hotels & Casino Resorts, Inc., Taj Mahal Holding Corp. and
THCR Merger Corp.
2.1.1(15) Amendment to Agreement and Plan of Merger, dated January 31,
1996, by and among Trump Hotels & Casino Resorts, Inc., Taj
Mahal Holding Corp. and THCR Merger Corp.
3.1* Certificate of Incorporation of Trump Atlantic City Funding,
Inc. (formerly THCR Atlantic City Funding, Inc.).
3.1.1 Certificate of Amendment of Certificate of Incorporation of
Trump Atlantic City Funding, Inc. (formerly THCR Atlantic City
Funding, Inc.).
3.2* By-Laws of Trump Atlantic City Funding, Inc. (formerly THCR
Atlantic City Funding, Inc.).
3.3-3.6 Intentionally omitted.
3.7 Form of Third Amended and Restated Partnership Agreement of
Trump Plaza Associates.
3.8(7) Partnership Agreement of Trump Atlantic City Associates
(formerly Trump Plaza Holding Associates).
3.8.1(7) Amendment No. 1 to the Partnership Agreement of Trump Atlantic
City Associates (formerly Trump Plaza Holding Associates.)
3.8.2(14) Amendment No. 2 to the Partnership Agreement of Trump Atlantic
City Associates (formerly Trump Plaza Holding Associates.)
3.8.3 Form of Amended and Restated Partnership Agreement of Trump
Atlantic City Associates (formerly Trump Plaza Holding
Associates.)
3.9 Form of Second Amended and Restated Agreement of Limited
Partnership of Trump Hotels & Casino Resorts Holdings, L.P.
4.1(7) Mortgage Note Indenture, among Trump Plaza Funding, Inc., as
issuer, Trump Plaza Associates, as guarantor, and First Bank
National Association, as trustee.
4.2(7) Indenture of Mortgage, between Trump Plaza Associates, as
mortgagor, and Trump Plaza Funding, Inc., as mortgagee.
4.3(7) Assignment Agreement between Trump Plaza Funding, Inc., and
First Bank National Association, as trustee.
4.4(7) Assignment of Operating Assets from Trump Plaza Associates to
Trump Plaza Funding, Inc.
4.5(7) Assignment of Leases and Rents from Trump Plaza Associates to
Trump Plaza Funding, Inc.
4.6(7) Indenture of Mortgage between Trump Plaza Associates and First
Bank National Association, as trustee.
4.7(7) Assignment of Leases and Rents from Trump Plaza Associates to
First Bank National Association, as trustee.
4.8(7) Assignment of Operating Assets from Trump Plaza Associates to
First Bank National Association, as trustee.
4.9(7) Trump Plaza Associates Note to Trump Plaza Funding, Inc.
4.10(7) Mortgage Note Certificate (included in Exhibit 4.1).
4.11(7) Pledge Agreement of Trump Plaza Funding, Inc., in favor and for
the benefit of First Bank National Association, as trustee.
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
<C> <S>
4.12-4.25 Intentionally omitted.
4.26 Form of Indenture among Trump Atlantic City Associates and Trump
Atlantic City Funding, Inc., as issuers, Trump Plaza Associates,
Trump Taj Mahal Associates and The Trump Taj Mahal Corporation,
as guarantors, Trump Taj Mahal Funding, Inc., and First Bank
National Association, as trustee.
4.27 Form of First Mortgage Note Certificate (included in exhibit
4.26).
4.28 Form of Indenture of Mortgage and Security Agreement among Trump
Atlantic City Associates, Trump Atlantic City Funding, Inc.,
Trump Plaza Associates, Trump Taj Mahal Associates and The Trump
Taj Mahal Corporation, and First Bank National Association, as
trustee.
4.29 Form of Assignment of Leases and Rents among Trump Atlantic City
Funding, Inc., Trump Atlantic City Associates, Trump Plaza
Associates, Trump Taj Mahal Associates and The Trump Taj Mahal
Corporation, and First Bank National Association, as collateral
agent.
4.30 Form of Collateral Agency Agreement among First Bank National
Association, as collateral agent; First Bank National
Association, as trustee; Trump Atlantic City Associates; Trump
Atlantic City Funding, Inc.; the other secured parties signatory
thereto; and the guarantors under the First Mortgage Note
Indenture.
5.1* Opinion of Willkie Farr & Gallagher.
10.1-10.6 Intentionally omitted.
10.7(9) Employment Agreement between Trump Plaza Associates and Barry
Cregan.
10.8-10.9 Intentionally omitted.
10.10(3) Agreement of Lease, dated as of July 1, 1980, by and between SSG
Enterprises, as lessor and Atlantic City Seashore 2, Inc., as
lessee, as SSG Enterprises' interest has been assigned to
Seashore Four Associates, and as Atlantic City Seashore 2,
Inc.'s interest has been, through various assignments, assigned
to Trump Plaza Associates (with schedules).
10.11(3) Agreement of Lease, dated July 11, 1980, by and between Plaza
Hotel Management Company, as lessor, and Atlantic City Seashore
3, Inc., as lessee, as Atlantic City Seashore 3, Inc.'s interest
has been, through various assignments, assigned to Trump Plaza
Associates (with schedules).
10.12(3) Agreement of Lease, dated as of July 1, 1980, by and between
Magnum Associates and Magnum Associates II, as lessor and
Atlantic City Seashore 1, Inc., as lessee, as Atlantic City
Seashore 1, Inc.'s interest has been, through various
assignments, assigned to Trump Plaza Associates (with
schedules).
10.13-10.15 Intentionally omitted.
10.16(1) Trump Plaza Hotel and Casino Retirement Savings Plan effective
as of November 1, 1986.
10.17-10.20 Intentionally omitted.
10.21(4) Assignment of Lease, dated as of July 28, 1988, by and between
Magnum Associates and Magnum Associates II, as assignor, Trump
Seashore Associates, as assignee, and Trump Plaza Associates, as
lessee.
10.22-10.27 Intentionally omitted.
10.28(2) Option Agreement, dated as of February 2, 1993, between Donald
J. Trump and Trump Plaza Associates.
10.29 Intentionally omitted.
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
<C> <S>
10.30(5) Amended and Restated Services Agreement between Trump Plaza
Associates and Trump Plaza Management Corp.
10.31-10.32 Intentionally omitted.
10.33(6) Mortgage from Donald J. Trump, as nominee, to Albert Rothenberg
and Robert Rothenberg, dated October 3, 1983.
10.34(6) Intentionally omitted.
10.35(6) Mortgage from Trump Plaza Associates to The Mutual Benefit Life
Insurance Company, dated October 5, 1990.
10.35.1(6) Collateral Assignment of Leases from Trump Plaza Associates to
The Mutual Benefit Life Insurance Company, dated October 5,
1990.
10.36-10.37 Intentionally omitted.
10.38(8) Employment Agreement between Trump Plaza Associates and Nicholas
L. Ribis.
10.38.1(12) Employment Agreement between Trump Hotels & Casino Resorts
Holdings, L.P. and Nicholas L. Ribis (with exhibits).
10.39(8) Severance Agreement between Trump Plaza Associates and Robert M.
Pickus.
10.39.1(16) Employment Agreement between Robert M. Pickus and Trump Hotels
and Casino Resorts, Inc.
10.40(10) Employment Contract, dated as of February 7, 1995, between Trump
Plaza Associates and Kevin S. Smith.
10.41(10) Employment Agreement between Trump Plaza Associates and James A.
Rigot.
10.42(10) Option and Right of First Offer Agreement between Trump Plaza
Associates and Missouri Boardwalk Inc., dated June 24, 1993.
10.43(10) Lease between Donald J. Trump and Missouri Boardwalk Inc., dated
June 24, 1993.
10.44(10) Sublease between Donald J. Trump and Missouri Boardwalk Inc.,
dated June 24, 1993.
10.45 Intentionally omitted.
10.46(12) Executive Agreement among Donald J. Trump, Trump Hotels & Casino
Resorts, Inc. and Trump Hotels & Casino Resorts Holdings, L.P.
10.47(12) 1995 Stock Incentive Plan of Trump Hotels & Casino Resorts, Inc.
10.48-10.49 Intentionally omitted.
10.50(11) Acquisition Agreement, dated April 27, 1995, between Trump
Oceanview, Inc. and The New Jersey Sports and Exposition
Authority.
10.51-10.55 Intentionally omitted.
10.54(12) Trademark License Agreement, dated June 12, 1995, between Donald
J. Trump and Trump Hotels & Casino Resorts, Inc.
10.55(12) Trademark Security Agreement, dated June 12, 1995, between Trump
Hotels & Casino Resorts, Inc. and Donald J. Trump.
10.56(11) Agreement of Sublease between Donald J. Trump and Time Warner
Entertainment Company, L.P., as amended.
10.57-10.62 Intentionally omitted.
10.63(18) Employment Agreement, dated as of August 18, 1995, between Trump
Plaza Associates and Patrick J. O'Malley.
12 Statement of Computation of Ratio of Earnings to Fixed Charges.
</TABLE>
II-8
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
<C> <S>
21 List of Subsidiaries of Trump Atlantic City Associates.
23.1 Consent of Arthur Andersen LLP.
23.2 Intentionally omitted.
23.3* Consent of Willkie Farr & Gallagher.
23.4* Consent of Sterns & Weinroth.
24.1* Power of Attorney (included on signature page).
25 Statement of Eligibility Under the Trust Indenture Act of 1939
of First Bank National Association, the First Mortgage Note
Trustee.
27.1* Financial Data Schedule of Trump Atlantic City Funding, Inc.
(formerly THCR Atlantic City Funding, Inc.).
27.2* Financial Data Schedule of Trump Atlantic City Associates.
27.3* Financial Data Schedule of Trump Plaza Associates.
</TABLE>
- ---------------------
* Previously filed.
(1) Incorporated herein by reference to the identically numbered Exhibit in
the Annual Report on Form 10-K of Trump Plaza Funding, Inc. for the year
ended December 31, 1986.
(2) Incorporated herein by reference to the identically numbered Exhibit in
the Annual Report on Form 10-K of Trump Plaza Funding, Inc. for the year
ended December 31, 1992.
(3) Incorporated herein by reference to the identically numbered Exhibit in
the Registration Statement on Form S-1, Registration No. 33-4604, of Trump
Plaza Funding, Inc.
(4) Incorporated herein by reference to the identically numbered Exhibit in
the Annual Report on Form 10-K of Trump Plaza Funding, Inc. for the fiscal
year ended December 31, 1990.
(5) Previously filed in the Registration Statement on Form S-1, Registration
No. 33-58608, of Trump Atlantic City Associates (formerly Trump Plaza
Holding Associates).
(6) Incorporated herein by reference to the identically numbered Exhibit in
the Registration Statement on Form S-1, Registration No. 33-58602, of
Trump Plaza Funding, Inc. and Trump Plaza Associates.
(7) Incorporated herein by reference to the identically numbered Exhibit in
the Registration Statement on Form S-1, Registration No. 33-58608, of
Trump Atlantic City Associates (formerly Trump Plaza Holding Associates).
(8) Incorporated herein by reference to the identically numbered Exhibit in
the Annual Report on Form 10-K of Trump Plaza Funding, Inc. and Trump
Atlantic City Associates (formerly Trump Plaza Holding Associates) for the
year ended December 31, 1993.
(9) Incorporated herein by reference to the identically numbered Exhibit in
the Quarterly Report on Form 1O-Q of Trump Plaza Funding, Inc. for the
quarter ended September 30, 1994.
(10) Incorporated herein by reference to the identically numbered Exhibit in
the Annual Report on Form 10-K of Trump Plaza Funding, Inc. and Trump
Atlantic City Associates (formerly Trump Plaza Holding Associates) for
the year ended December 31, 1994.
(11) Incorporated herein by reference to the identically numbered Exhibit to
the Registration Statement on Form S-1, Registration No. 33-90784, of
Trump Hotels & Casino Resorts, Inc.
(12) Incorporated herein by reference to the identically numbered Exhibit in
the Quarterly Report on Form 10-Q of Trump Hotels & Casino Resorts, Inc.,
Trump Hotels & Casino Resorts Holdings, L.P. and Trump Hotels & Casino
Resorts Funding, Inc. for the quarter ended June 30, 1995.
(13) Incorporated herein by reference to the identically numbered Exhibit on
the Current Report on Form 8-K of Trump Hotels & Casino Resorts, Inc.,
dated January 10, 1996.
(14) Incorporated herein by reference to the identically numbered Exhibit to
the Quarterly Report on Form 10-Q of Trump Plaza Funding, Inc., Trump
Plaza Associates and Trump Atlantic City Associates (formerly Trump Plaza
Holding Associates) for the quarter ended June 30, 1995.
II-9
<PAGE>
(15) Incorporated herein by reference to the identically numbered Exhibit on
the Current Report on Form 8-K of Trump Hotels & Casino Resorts, Inc.,
dated February 1, 1996.
(16) Incorporated herein by reference to the identically numbered Exhibit to
the Registration Statement on Form S-4, Registration No. 333-153, of
Trump Hotels & Casino Resorts, Inc.
(17) Contained on the signature page of this Registration Statement.
(18) Incorporated herein by reference to the identically numbered Exhibit in
the Annual Report on Form 10-K of Trump Plaza Funding, Inc. and Trump
Plaza Associates for the year ended December 31, 1995.
(B) FINANCIAL STATEMENT SCHEDULES
SCHEDULE II--Valuation and Qualifying Accounts of Trump Atlantic City
Associates and Trump Plaza Associates for the years ended
December 31, 1993, 1994 and 1995.
SCHEDULE II--Valuation and Qualifying Accounts of Trump Taj Mahal
Associates and Trump Taj Mahal Funding, Inc. for the years
ended December 31, 1993, 1994 and 1995.
ITEM 17. UNDERTAKINGS
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes as follows:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Amendment No. 3 to Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York, New York, on April 9, 1996.
TRUMP ATLANTIC CITY ASSOCIATES
By: Trump Plaza Holding, Inc.,
its Managing General Partner
/s/ Nicholas L. Ribis
By: _________________________________
Name:Nicholas L. Ribis
Title:Vice President
TRUMP ATLANTIC CITY FUNDING, INC.
/s/ Nicholas L. Ribis
By: _________________________________
Name:Nicholas L. Ribis
Title:President, Chief Executive
Officer, Chief Financial Officer
and Director
TRUMP PLAZA ASSOCIATES
By: Trump Plaza Funding, Inc.,
its Managing General Partner
/s/ Nicholas L. Ribis
By: _________________________________
Name:Nicholas L. Ribis
Title:Vice President
II-11
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
TRUMP ATLANTIC CITY ASSOCIATES
By: Trump Plaza Holding, Inc.
its Managing General Partner
SIGNATURES TITLE DATE
* President and
- ------------------------------------- Chairman of the April 9, 1996
DONALD J. TRUMP Board of Directors
(principal
executive officer)
* Chief Financial
- ------------------------------------- Officer (principal April 9, 1996
FRANCIS X. MCCARTHY, JR. financial and
accounting officer)
/s/ Nicholas L. Ribis Director
- ------------------------------------- April 9, 1996
NICHOLAS L. RIBIS
* Director
- ------------------------------------- April 9, 1996
WALLACE B. ASKINS
* Director
- ------------------------------------- April 9, 1996
DON M. THOMAS
/s/ Nicholas L. Ribis
*By: ________________________________
NICHOLAS L. RIBIS
ATTORNEY-IN-FACT
II-12
<PAGE>
TRUMP ATLANTIC CITY FUNDING, INC.
SIGNATURES TITLE DATE
* Chairman of the
- ------------------------------------- Board of Directors April 9, 1996
DONALD J. TRUMP
/s/ Nicholas L. Ribis President, Chief
- ------------------------------------- Executive Officer, April 9, 1996
NICHOLAS L. RIBIS Chief Financial
Officer and
Director (principal
executive and
financial officer)
* Director
- ------------------------------------- April 9, 1996
ROBERT M. PICKUS
* Corporate Treasurer
- ------------------------------------- (principal April 9, 1996
JOHN P. BURKE accounting officer)
/s/ Nicholas L. Ribis
*By: ________________________________
NICHOLAS L. RIBIS
ATTORNEY-IN-FACT
II-13
<PAGE>
TRUMP PLAZA ASSOCIATES
By: Trump Plaza Funding, Inc.
its Managing General Partner
SIGNATURES TITLE DATE
* President and
- ------------------------------------- Chairman of the April 9, 1996
DONALD J. TRUMP Board of Directors
(principal
executive officer)
* Chief Financial
- ------------------------------------- Officer (principal April 9, 1996
FRANCIS X. MCCARTHY, JR. financial and
accounting officer)
/s/ Nicholas L. Ribis Director
- ------------------------------------- April 9, 1996
NICHOLAS L. RIBIS
* Director
- ------------------------------------- April 9, 1996
WALLACE B. ASKINS
* Director
- ------------------------------------- April 9, 1996
DON M. THOMAS
/s/ Nicholas L. Ribis
*By: ________________________________
NICHOLAS L. RIBIS
ATTORNEY-IN-FACT
II-14
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Trump Atlantic City Associates and Trump Plaza Associates:
We have audited in accordance with generally accepted auditing standards,
the financial statements of Trump Atlantic City Associates and Trump Plaza
Associates (Partnerships) included in this registration statement and have
issued our report thereon dated February 21, 1996. Our audit was made for the
purposes of forming an opinion on the basic financial statements taken as a
whole. The accompanying schedule is the responsibility of the Partnerships'
management and is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic financial statements.
This schedule has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, fairly states in
all material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Roseland, New Jersey
February 21, 1996
S-1
<PAGE>
SCHEDULE II
TRUMP ATLANTIC CITY ASSOCIATES AND TRUMP PLAZA ASSOCIATES VALUATION AND
QUALIFYING ACCOUNTS FOR THE YEARS ENDED DECEMBER 31, 1993 1994 AND 1995
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO OTHER BALANCE AT
BEGINNING COSTS AND CHANGES END OF
OF PERIOD EXPENSES (DEDUCTIONS) PERIOD
----------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1993
Allowances for doubtful
accounts................. $14,402,000 $ 90,000 $(3,876,000)(A) $10,616,000
=========== ========== =========== ===========
Valuation allowance for
interest differential on
CRDA bonds............... $ 1,934,000 $1,047,000 -- $ 2,981,000
=========== ========== =========== ===========
YEAR ENDED DECEMBER 31, 1994
Allowances for doubtful
accounts................. $10,616,000 $ 323,000 $(2,446,000)(A) $ 8,493,000
=========== ========== =========== ===========
Valuation allowance for
interest differential on
CRDA bonds............... $ 2,981,000 $ 838,000 $(1,645,000)(B) $ 2,174,000
=========== ========== =========== ===========
YEAR ENDED DECEMBER 31, 1995
Allowances for doubtful
accounts................. $ 8,493,000 $1,057,000 $(1,473,000)(A) $ 8,077,000
=========== ========== =========== ===========
Valuation allowance for
interest differential on
CRDA bonds............... $ 2,174,000 $1,141,000 $(2,238,000)(B) $ 1,077,000
=========== ========== =========== ===========
</TABLE>
- ---------------------
(A) Write-off of uncollectible accounts.
(B) Write-off of allowance applicable to contribution of CRDA deposits.
S-2
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Trump Taj Mahal Associates and Subsidiary:
We have audited in accordance with generally accepted auditing standards,
the financial statements of Trump Taj Mahal Associates (Partnership) and
Subsidiary included in this registration statement and have issued our report
thereon dated February 16, 1996. Our audit was made for the purpose of forming
an opinion on the basic financial statements taken as a whole. The
accompanying schedule is the responsibility of the Partnership's management
and is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Roseland, New Jersey
February 16, 1996
S-3
<PAGE>
TRUMP TAJ MAHAL ASSOCIATES AND TRUMP TAJ MAHAL FUNDING, INC.
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO CHARGED DEDUCTIONS BALANCE
BEGINNING COSTS AND TO OTHER FROM AT END
OF PERIOD EXPENSES ACCOUNTS RESERVES OF PERIOD
---------- ---------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C>
December 31, 1993:
Allowance for doubtful
receivables............ $ 5,275 $3,472 $-- $4,401(B) $ 4,346
Valuation allowance for
CRDA investments (A)... 4,369 2,764 -- -- 7,133
------- ------ ---- ------ -------
$ 9,644 $6,236 $-- $4,401 $11,479
======= ====== ==== ====== =======
December 31, 1994:
Allowance for doubtful
receivables............ $ 4,346 $2,974 $-- $3,261(B) $ 4,059
Valuation allowance for
CRDA investments (A)... 7,133 2,134 -- 4,753 4,514
------- ------ ---- ------ -------
$11,479 $5,108 $-- $8,014 $ 8,573
======= ====== ==== ====== =======
December 31, 1995:
Allowance for doubtful
receivables............ $ 4,059 $4,508 $-- $3,525(B) $ 5,042
Valuation allowance for
CRDA investments (A)... 4,514 3,090 -- -- 7,604
------- ------ ---- ------ -------
$ 8,573 $7,598 $-- $3,525 $12,646
======= ====== ==== ====== =======
</TABLE>
- ---------------------
(A) See Note 5 to financial statements.
(B) Uncollectible accounts written off, net of recoveries.
S-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
----------- ----------------------
<C> <S>
1.1 Form of Underwriting Agreement among Trump Atlantic City
Associates, Trump Atlantic City Funding, Inc., Trump Plaza
Associates, Donaldson, Lufkin & Jenrette Securities Corporation,
BT Securities Corporation and Salomon Brothers Inc.
3.1.1 Certificate of Amendment of Certificate of Incorporation of
Trump Atlantic City Funding, Inc.
3.7 Form of Third Amended and Restated Partnership Agreement of
Plaza Associates.
3.8.3 Form of Amended and Restated Partnership Agreement of Trump
Atlantic City Associates.
3.9 Form of Second Amended and Restated Agreement of Limited
Partnership of Trump Hotels & Casino Resorts Holdings, L.P.
4.26 Form of Indenture among Trump Atlantic City Associates and Trump
Atlantic City Funding, Inc., as issuers, Trump Plaza Associates,
Trump Taj Mahal Associates and The Trump Taj Mahal Corporation,
as guarantors, Trump Taj Mahal Funding, Inc., and First Bank
National Association as trustee.
4.27 Form of First Mortgage Note Certificate (included in Exhibit
4.26).
4.28 Form of Indenture of Mortgage and Security Agreement among Trump
Atlantic City Associates, Trump Atlantic City Funding, Inc.,
Trump Plaza Associates, Trump Taj Mahal Associates and The Trump
Taj Mahal Corporation, and First Bank National Association, as
trustee.
4.29 Form of Assignment of Leases and Rents among Trump Atlantic City
Funding, Inc., Trump Atlantic City Associates, Trump Plaza
Associates, Trump Taj Mahal Associates and The Trump Taj Mahal
Corporation, and First Bank National Association, as trustee.
4.30 Form of Collateral Agency Agreement among First Bank National
Association, as collateral agent; First Bank National
Association, as trustee; Trump Atlantic City Associates; Trump
Atlantic City Funding, Inc., the other secured parties signatory
thereto; and the guarantors under the First Mortgage Notes
Indenture.
12 Statement of Computation of Ratio of Earnings to Fixed Charges.
21 List of Subsidiaries of Trump Atlantic City Associates.
23.1 Consent of Arthur Andersen LLP.
25 Statement of Eligibility Under the Trust Indenture Act of 1939
of First Bank National Association, the First Mortgage Note
Trustee.
</TABLE>
<PAGE>
Exhibit 1.1
Trump Atlantic City Associates
Trump Atlantic City Funding, Inc.
___% First Mortgage Notes due 2006
UNDERWRITING AGREEMENT
----------------------
April __, 1996
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
SALOMON BROTHERS INC
BT SECURITIES CORPORATION
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
Subject to the terms and conditions herein contained, Trump
Atlantic City Associates, a New Jersey general partnership (the "Company"), and
Trump Atlantic City Funding, Inc., a Delaware corporation ("Funding"), and
Trump Plaza Associates, a New Jersey general partnership ("Plaza Associates"),
The Trump Taj Mahal Corporation, a Delaware corporation ("TTMC"), and Trump Taj
Mahal Associates, a New Jersey general partnership ("Taj Associates," and
together with Plaza Associates and TTMC, the "Guarantors," and, together with
the Company and Funding, the "Issuers"), jointly and severally propose to issue
and, as applicable, to sell to Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ"), Salomon Brothers Inc and BT Securities Corporation
(collectively, the "Underwriters") an aggregate of $1,100,000,000 principal
amount of ___% First Mortgage Notes due 2006 (the "Notes"), which will be the
joint and several obligations of the Issuers, and the related guarantees (the
"Guarantees") by the Guarantors (collectively, the "Securities"). The
Securities are to be issued pursuant to the provisions of an Indenture (the
"Indenture") to be dated as of April __, 1996, by and among the Issuers and
First Bank National Association, a national banking association, as Trustee
(the "Trustee").
<PAGE>
Capitalized terms used herein without definition shall have the
meanings ascribed thereto in the Prospectus (as hereinafter defined). Unless
the context otherwise requires, all references herein to "the Company" shall be
deemed to give effect to the acquisition by the Company or its subsidiaries
other than Funding (collectively, the "Subsidiaries" or "the Subsidiaries"), as
applicable, of all of the direct and indirect equity interests in Trump Taj
Mahal Associates ("Taj Associates") pursuant to the Merger Agreement and the
Contribution Agreement dated April [11], 1996 between Trump, TTMI, TM/GP and
THCR Holdings (the "1996 Contribution Agreement"), at or prior to consummation
of the issuance of the Securities. All references herein to "the Subsidiaries"
or "the Guarantors" shall be deemed to include Taj Associates, Taj Funding and
TTMC, unless the context otherwise requires; provided, that no such entity
--------
shall be required to be a signatory hereto until the Closing Date (as
hereinafter defined), on which date each such entity shall become a party to
this Agreement. Concurrently with the issuance of the Securities, Trump Hotels
& Casino Resorts, Inc., a Delaware corporation ("THCR"), the sole general
partner of Trump Hotels & Casinos Resorts Holdings, L.P., a Delaware limited
partnership ("THCR Holdings"), a 99% general partner of the Company, is
proposing to issue and sell to certain underwriters, including you, 12,500,000
shares (and an additional 1,875,000 shares subject to an over-allotment option)
of its common stock, $.01 par value, pursuant to an underwriting agreement, to
be dated as of the date hereof, by and among THCR, the Underwriters and Sands
Brothers & Co., Ltd., as Representatives of the underwriters named in Schedule
I thereto.
1. Registration Statement and Prospectus. The Company,
-------------------------------------
Funding and Plaza Associates have prepared and filed with the Securities and
Exchange Commission (the "Commission"), in accordance with the provisions of
the Securities Act of 1933, as amended, and the rules and regulations of the
Commission promulgated pursuant thereto (collectively, the "Act"), a
registration statement on Form S-1 (No. 333-643) with respect to the
Securities, including a preliminary prospectus, subject to completion, relating
to the Securities. The registration statement, as amended at the time it
becomes effective (including a registration statement (if any) filed pursuant
to Rule 462(b) under the Act, all financial statements and exhibits and the
information, if any, contained in a prospectus that is deemed to be a part of
the registration statement at the time of its effectiveness pursuant to Rule
430A or Rule 434 under the Act), is hereinafter referred to as the
"Registration Statement", and the prospectus constituting a part of the
Registration Statement, in the form first furnished to the Underwriters and
used to confirm sales of the Securities and including all documents
incorporated or deemed to be incorporated by reference therein, if any, is
hereinafter referred to as the "Prospectus."
2. Agreements to Sell and Purchase. On the basis of the
-------------------------------
representations and warranties contained in this Agreement, and subject to the
terms
2
<PAGE>
and conditions contained in this Agreement, the Issuers jointly and severally
agree to issue and sell to the Underwriters, and each Underwriter agrees,
severally and not jointly, to purchase from the Issuers, Securities in the
respective principal amount set forth opposite the name of such Underwriter in
Schedule I hereto, plus such amount, if any, as they may individually become
obligated to purchase pursuant to Section 9 hereof, at a purchase price per
Security equal to the percentage of the principal amount thereof set forth in
the table on the cover page of the Prospectus under the heading "Proceeds to
the Issuers" (the "Purchase Price").
3. Delivery and Payment. Delivery to you of and payment for
--------------------
the Securities shall be made at 10:00 A.M., New York City time, on the third or
fourth business day, unless otherwise permitted by the Commission pursuant to
Rule 15c6-1 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), (such time and date being referred to as the "Closing Date"), following
the date of the initial public offering of the Securities as advised by DLJ to
the Issuers, at the offices of Willkie Farr & Gallagher, 153 East 53rd Street,
New York, New York, 10022, or such other place as you shall reasonably
designate. The Closing Date and the location of delivery of and the form of
payment for the Securities may be varied by agreement among DLJ and the
Issuers.
The Securities in definitive form shall be registered in such names
and issued in such denominations as you shall request in writing not later than
two full business days prior to the Closing Date, and shall be made available
to you at the offices of DLJ (or at such other place as shall be acceptable to
you) for inspection not later than 10:00 A.M., New York City time, no later
than the business day next preceding the Closing Date. Definitive Securities
shall be delivered to you on the Closing Date, with any transfer taxes payable
upon initial issuance thereof duly paid by the Issuers, for your respective
accounts against payment of the Purchase Price by wire or similar transfer of
same-day funds to the order of the Company.
4. Agreements of the Issuers. Each of the Issuers jointly
-------------------------
and severally agrees with each of you that:
(a) It will, if the Registration Statement has not heretofore
become effective under the Act, and, if necessary or required by law,
file an amendment to the Registration Statement or, if necessary pursuant
to Rule 430A under the Act, a post-effective amendment to the
Registration Statement, in each case as soon as practicable after the
execution and delivery of this Agreement, and will use its best efforts
to cause the Registration Statement or such post-effective amendment to
become effective at the earliest possible time. If the Registration
Statement has become effective and the Issuers, omitting from the
Prospectus certain information in reliance upon Rule 430A of the Act,
elect not to file a post-effective amendment pursuant to Rule
3
<PAGE>
430A of the Act, it will file the form of Prospectus required by Rule
424(b) of the Act within the time period specified by Rule 430A and Rule
424(b) of the Act. The Issuers will otherwise comply fully and in a
timely manner with the applicable provisions of Rule 424 and Rule 430A
under the Act.
(b) It will advise you promptly and, if requested by any of you,
confirm such advice in writing, (i) when the Registration Statement has
become effective, if and when the Prospectus is sent for filing pursuant
to Rule 424 under the Act and when any post-effective amendment to the
Registration Statement becomes effective, (ii) of the receipt of any
comments from the Commission or any state securities commission or any
other regulatory authority that relate to the Registration Statement or
requests by the Commission or any state securities commission or any
other regulatory authority for any amendment or supplements to the
Registration Statement or any amendment or supplement to the Prospectus
or for additional information, (iii) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement, or of the suspension of qualification of the Securities for
offering or sale in any jurisdiction, or the initiation of any proceeding
for such purpose by the Commission or any state securities commission or
other regulatory authority, and (iv) of the happening of any event during
the period referred to in paragraph (d) below which makes any statement
of a material fact made in the Registration Statement (as amended or
supplemented from time to time) untrue or which requires the making of
any additions to or changes in the Registration Statement (as amended or
supplemented from time to time) in order to make the statements therein
not misleading or that makes any statement of a material fact made in the
Prospectus (as amended or supplemented from time to time) untrue or which
requires the making of any addition to or change in the Prospectus (as
amended or supplemented from time to time) in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The Issuers shall use their best efforts to
prevent the issuance of any stop order or order suspending the
qualification or exemption of the Securities under any Federal or state
securities or Blue Sky laws, and, if at any time the Commission shall
issue any stop order suspending the effectiveness of the Registration
Statement, or any state securities commission or other regulatory
authority shall issue an order suspending the qualification or exemption
of the Securities under any state securities or Blue Sky laws, the
Issuers shall use every reasonable effort to obtain the withdrawal or
lifting of such order at the earliest possible time.
(c) Promptly after the Registration Statement becomes effective,
and from time to time thereafter for such period in your reasonable
judgment as a prospectus is required by the Act, the Exchange Act or any
state
4
<PAGE>
securities laws to be delivered in connection with sales of the
Securities by an Underwriter or a dealer, it will furnish to each
Underwriter and each dealer, without charge, as many copies of the
Prospectus (and of any amendment or supplement to the Prospectus) as such
Underwriter or dealer may reasonably request; provided, that the
--------
expense of any such delivery more than one year after the effective date
of the Registration Statement shall be borne by the Underwriter
requesting to make such delivery.
(d) If during the period during which in your reasonable judgment
you are required to deliver a prospectus in connection with offers or
sales of Securities by you, any event shall occur as a result of which it
becomes necessary to amend or supplement the Prospectus in order to make
the statements therein, in the light of the circumstances existing as of
the date the Prospectus is delivered to an offeree or a purchaser, not
misleading, or if it is necessary to amend or supplement the Prospectus
to comply with applicable law, it will promptly prepare and file with the
Commission an appropriate amendment or supplement to the Prospectus so
that the statements in the Prospectus, as so amended or supplemented,
will not, in the light of the circumstances existing as of the date the
Prospectus is so delivered, be misleading, and will comply with
applicable law and will promptly notify you of such event and amendment
or supplement and furnish to you without charge such number of copies
thereof as you may reasonably request.
(e) It will mail and make generally available to its security
holders as soon as practicable and as specified by Rule 158 under the
Act, a consolidated earning statement which shall satisfy the provisions
of Section 11(a) of the Act and Rule 158 thereunder and advise you in
writing when such statement has been made available.
(f) It will furnish to each of the Underwriters, without charge,
two (2) signed copies (plus one additional signed copy to your legal
counsel) of the Registration Statement, as first filed with the
Commission, and of each amendment or supplement to it, including each
post-effective amendment and all exhibits filed therewith or incorporated
by reference therein, and will furnish to each of the Underwriters, such
number of conformed copies of the Registration Statement as so filed and
of each amendment to it, including each post-effective amendment, but
without exhibits, as you may reasonably request.
(g) It will not file any amendment or supplement to the
Registration Statement, whether before or after the time when it becomes
effective, or make any amendment or supplement to the Prospectus, of
which you shall not previously have been advised and provided a copy of
within two business
5
<PAGE>
days prior to the filing thereof or to which you shall reasonably object;
and it will prepare and file with the Commission, promptly upon your
reasonable request, any amendment or supplement to the Registration
Statement or amendment or supplement to the Prospectus which in your sole
judgment may be necessary in connection with the distribution of the
Securities by you, and will use its best efforts to cause the same to
become effective as promptly as possible.
(h) Prior to any public offering of the Securities, it will
cooperate with you and your counsel in connection with the registration
or qualification of the Securities for offer and sale by the Underwriters
under the state securities or Blue Sky laws of such jurisdictions as you
may request. The Issuers will continue such qualification in effect so
long as required by law for distribution of the Securities and will file
such consents to service of process or other documents as may be
necessary in order to effect such registration or qualification
(provided, that none of the Issuers shall be obligated to qualify as
--------
a foreign corporation or general partnership, as the case may be, in any
jurisdiction in which it is not so qualified or to take any action that
would subject it to general consent to service of process in any
jurisdiction in which it is not now so subject).
(i) It will timely complete all required filings and otherwise
comply fully in a timely manner with all provisions of the Exchange Act,
and will file all reports and any definitive proxy or information
statements required to be filed by the Issuers with the Commission
pursuant to Sections 13(a), 13(c), 14(a) or 15(d) of the Exchange Act
subsequent to the date of the Prospectus and for so long as the delivery
of a prospectus is required in connection with the offer or sale of the
Securities.
(j) So long as any of the Securities are outstanding, it will
furnish to you, without charge, a copy of each report or other publicly
available information of the Issuers furnished to holders of the
Securities or filed with the Commission, whether or not required by law
or pursuant to the Indenture, and such other publicly available
information concerning the Issuers or the Subsidiaries as you may
reasonably request, at the same time as such reports or other information
are furnished to such holders.
(k) During the period beginning on the date of this Agreement and
continuing to and including the Closing Date, except as described in the
Prospectus with respect to the Merger Transaction, there will be no
transactions entered into by the Issuers or any of the Subsidiaries,
which are material with respect to the Company, Funding or any of the
Subsidiaries, taken individually or as a whole, and there will be no
dividend or distribution
6
<PAGE>
of any kind declared, paid or made by the any of the Issuers on any class
of their respective capital stock or other equity interests.
(l) It will not voluntarily claim, and will resist any attempts
to claim, the benefits of any usury laws against the holders of the
Securities.
(m) It will use the proceeds from the sale of the Securities in
the manner described in the Prospectus under the caption "Use of
Proceeds" and will make any filing required by Rule 463 of the Act.
(n) During the period referred to in paragraph (k), it will not
offer, sell, contract to sell or otherwise dispose of any debt securities
or warrants, rights or options to purchase debt securities (other than
the Securities), without the prior written consent of DLJ.
(o) It will use its best efforts to do and perform all things
required to be done and performed under this Agreement by it prior to or
after the Closing Date and to satisfy all conditions precedent to the
delivery of the Securities.
5. Payment of Expenses. Each of the Issuers jointly and
-------------------
severally agrees with you that, whether or not the transactions contemplated
hereby are consummated or this Agreement is terminated, it will pay and be
responsible for all costs, charges, liabilities, expenses, fees and taxes
incurred in connection with or incident to (i) the preparation, printing
(including word processing), filing, distribution and delivery under the Act of
the Registration Statement (including financial statements and exhibits), each
preliminary prospectus, the Prospectus and all amendments and supplements
thereto, (ii) the registration with the Commission and the issuance and
delivery of the Securities, (iii) the preparation, printing (including word
processing), execution, distribution and delivery of the documents listed on
Schedule II hereto (the "Mortgage Documents"), this Agreement, the Indenture,
the Securities, the [Amended License Agreement], the [Amended Trademark
Security Agreement], the 1996 Contribution Agreement, the [Amended Trump
Executive Agreement,] the Amended and Restated Partnership Agreements of each
of Plaza Associates, Taj Associates and the Company, the Merger Agreement, the
First and the Second Supplemental Indentures to the Plaza Note Indenture, the
First Supplemental Indenture to the Senior Note Indenture,the agreement
providing for satisfaction of the NatWest Loan, the agreement providing for
discharge of the First Fidelity Loan, the agreement providing for the exercise
of the Plaza East Purchase Option, the redemption notice for the Taj Bonds, the
letter agreements dated January 8, 1996 between Trump and Taj Associates and
THCR, respectively, the underwriting agreement for the Equity Offering, the
letter agreement dated October 6, 1995 by and among Taj Associates, Taj Funding
and Taj Holdings and certain holders of Taj
7
<PAGE>
Holding Class A Common Stock (collectively, the "Operative Documents"), the
Preliminary and Final Blue Sky Memoranda, and all other agreements, memoranda,
reports, correspondence and other documents printed, distributed and delivered
in connection with the offering of the Securities, (iv) the registration or
qualification of the Securities for offer and sale under the securities or Blue
Sky laws of the jurisdictions referred to in paragraph 4(h) above (including,
in each case, the fees and disbursements of counsel for the Underwriters
relating to such registration or qualification and any memoranda relating
thereto and any filing fees in connection therewith), (v) subject to paragraph
4(c) above, furnishing such copies of the Registration Statement (including
exhibits), Prospectus and preliminary prospectus, and all amendments and
supplements to any of them, including any document incorporated by reference
therein, as may be reasonably requested by the Underwriters or by dealers, (vi)
the filing, registration and clearance with the National Association of
Securities Dealers, Inc. (the "NASD") of the Underwriters' compensation in
connection with the offering of the Securities (including, without limitation,
any filing fees in connection therewith), (vii) the fees charged by securities
rating services for rating of the Securities, (viii) the costs of distributing
the terms of agreement relating to the organization of the selling group to the
members thereof by mail, telex or other means of communication, (ix) any
"qualified independent underwriter" as required by Schedule E to the Bylaws of
the NASD (including fees and disbursements of counsel for such qualified
independent underwriter) and (x) the performance by each of the Issuers and
each of the Subsidiaries of its other obligations under this Agreement and
under each of other the Operative Documents to which it is a party, including
(without limitation) the fees and expenses of the Trustee, the costs of their
personnel and other internal costs, the cost of printing and engraving the
certificates representing the Securities, and all expenses and taxes incident
to the sale and delivery of the Securities to you, and creating and perfecting
security interests in the Collateral, including, without limitation, filing and
recording fees and expenses and fees and expenses of counsel for the Issuers
for providing such opinions as you may reasonably request. Subject to Section
9 below, the Underwriters will otherwise pay their own out-of-pocket expenses,
including the fees and disbursements of counsel (other than under clauses (iv),
(vi) and (ix) above and as may have been provided otherwise in separate
agreements with you).
6. Representations and Warranties. Each of the Issuers
------------------------------
jointly and severally represents and warrants to each Underwriter that:
(a) When the Registration Statement became or becomes effective,
including on the date of any post-effective amendment, at the date of the
Prospectus (if different) and at the Closing Date, the Registration
Statement will comply in all material respects with the provisions of the
Act and the Trust Indenture Act of 1939, as amended, and the rules and
regulations thereunder (collectively, the "TIA"), and will not contain
any untrue state-
8
<PAGE>
ment of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading;
the Prospectus and each supplement or amendment thereto will not, at the
date of the Prospectus, at the date of any such supplement or amendment
and at the Closing Date, contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, except that the representations and warranties
contained in this paragraph (a) shall not apply to statements in or
omissions from the Registration Statement or the Prospectus (or any
supplement or amendment to them) made in reliance upon and in conformity
with information relating to any Underwriter furnished to the Issuers in
writing by or on behalf of such Underwriter through DLJ expressly for use
therein. Each of the Issuers acknowledges for all purposes under this
Agreement (including this paragraph and Section 7 hereof) that the
statements set forth in the last paragraph of the cover page of the
Prospectus and the first (including the table therein) and the third
paragraphs, the third sentence of the fourth paragraph and the fourth and
sixth sentences of the sixth paragraph of the section entitled
"Underwriting" in the Prospectus constitute the only written information
furnished to any of the Issuers by or on behalf of any Underwriter through
DLJ expressly for use in the Registration Statement, the preliminary
prospectus or the Prospectus (or any amendment or supplement to any of
them) and that the Underwriters shall not be deemed to have provided any
information (and therefore are not responsible for any statements or
omissions) pertaining to any arrangement or agreement with respect to any
party other than the Underwriters. When the Registration Statement became
or becomes effective, including at the time of any post-effective
amendment, at the date of the Prospectus and any amendment or supplement
thereto (if different) and at the Closing Date, the Indenture will have
been qualified under and will conform in all material respects to the
requirements of the TIA. No contract or document of a character required
to be described in the Registration Statement or the Prospectus or to be
filed as an exhibit to the Registration Statement has not been described
and filed as required.
(b) Each preliminary prospectus and the Prospectus, filed as part
of the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 or 430A under the Act,
and each Registration Statement filed pursuant to Rule 462(b) under the
Act, if any, complied when so filed in all material respects with the
Act.
(c) No action has been taken and no statute, rule, regulation or
order has been enacted, adopted or issued by any governmental body,
agency or official which prevents the issuance of the Securities,
suspends the effec-
9
<PAGE>
tiveness of the Registration Statement, prevents or suspends the use of
any preliminary prospectus or suspends the sale of the Securities in any
jurisdiction referred to in Section 4(h) hereof; no injunction,
restraining order or order of any nature by any Federal or state court of
competent jurisdiction has been issued with respect to the Issuers or any
of the Subsidiaries which would prevent or suspend the issuance or sale of
the Securities, the effectiveness of the Registration Statement, or the
use of any preliminary prospectus or Prospectus or in any jurisdiction
referred to in Section 4(h) hereof; no action, suit or proceeding before
any court or arbitrator or any governmental body, agency or official,
domestic or foreign, is pending against or, to the best knowledge of the
Issuers, after due inquiry, threatened against, the Issuers or any of the
Subsidiaries which, if adversely determined, could interfere with or
adversely affect the issuance of the Securities or in any manner draw into
question the validity of this Agreement or any of the other Operative
Documents; and the Issuers have complied with every request of the
Commission, or any securities authority or agency of any jurisdiction for
additional information (to be included in the Registration Statement or
the Prospectus or otherwise).
(d) The Indenture has been duly authorized by each of the Issuers
and, when duly executed and delivered by each of the Issuers in
accordance with its terms, will be a legal, valid and binding agreement
of each of the Issuers, enforceable against each of the Issuers in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws
affecting creditors' rights and remedies generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity) and except to the extent that a waiver of
rights under any usury laws may be unenforceable. No Federal or state
taxes are required to be paid by any purchasers of the Securities with
respect to the execution of the Indenture by each of the Issuers or with
respect to the issuance of the Securities.
(e) The Notes have been duly authorized by each of the Company and
Funding and, on the Closing Date, will have been duly executed by each of
the Company and Funding and will, when issued, executed, authenticated
and delivered in accordance with the Indenture and paid for in accordance
with the terms of this Agreement, constitute legal, valid and binding
obligations of each of the Company and Funding, enforceable against each
of the Company and Funding in accordance with their terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws affecting creditors' rights and remedies
generally and to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity) and, except to
the extent that a waiver of
10
<PAGE>
rights under any usury laws may be unenforceable, will be entitled to the
benefits of the Indenture and will conform in all material respects to
the descriptions thereof in the Prospectus. The Notes rank and will rank
on a parity with all unsubordinated indebtedness of the Company and
Funding that is outstanding on the date hereof or that may be incurred
hereafter, and senior to all other indebtedness of the Company and
Funding that is outstanding on the date hereof or that may be incurred
hereafter.
(f) The Guarantees have been duly authorized by each of the
Guarantors and, on the Closing Date, will have been duly executed by each
of the Guarantors and will, when issued, executed, authenticated and
delivered in accordance with the Indenture, constitute legal, valid and
binding obligations of each of the Guarantors, enforceable against each
of the Guarantors in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws affecting creditors' rights and remedies
generally and to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity) and, except
to the extent that a waiver of rights under any usury laws may be
unenforceable, will be entitled to the benefits of the Indenture and will
conform in all material respects to the descriptions thereof in the
Prospectus. The Guarantees rank and will rank on a parity with all
unsubordinated indebtedness of the applicable Guarantor that is
outstanding on the date hereof or that may be incurred hereafter and
senior to all other indebtedness of the applicable Guarantor that is
outstanding on the date hereof and that may be incurred hereafter, other
than as disclosed in the Prospectus.
(g) This Agreement has been duly authorized and validly executed
and delivered by each of the Issuers and constitutes a valid and legally
binding agreement of each of the Issuers, enforceable against each of the
Issuers in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar
laws affecting creditors' rights and remedies generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity) and except to the extent that
indemnification from liability in connection with the Federal securities
laws may be unenforceable.
(h) Each of the other Operative Documents (including, in the case
of an Operative Document which is being amended in connection with the
Merger Transaction (as defined below), the amendment thereto) has been or
on the Closing Date will have been duly and validly authorized by each of
the Issuers and the Subsidiaries, as applicable, and on the Closing Date,
will have been duly executed and delivered by each of the Issuers and the
11
<PAGE>
Subsidiaries, as applicable, in accordance with its respective terms and
each will be a legal, valid and binding agreement of each of the Issuers
and each of the Subsidiaries, as applicable, enforceable against each of
the Issuers and each of the Subsidiaries, as applicable, in accordance
with its respective terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws
affecting creditors' rights and remedies generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
(i) Each of the Operative Documents and each of the elements of
the Merger Transaction described in the Prospectus conforms in all
material respects to the description thereof contained in the Prospectus.
(j) Each of the Issuers and each of the Subsidiaries has all the
requisite corporate or partnership power, as the case may be, to execute,
deliver and perform its obligations under each of the Operative Documents
to which it is a party, and to authorize, issue and sell the Securities.
The execution and delivery by each of the Issuers and each of the
Subsidiaries of the Operative Documents to which it is a party, the
issuance and sale of the Securities, the performance of the Operative
Documents and the consummation of the transactions contemplated hereby
and thereby will not conflict with or result in a breach or violation of
(i) any of the respective charters, bylaws or partnership agreements, as
the case may be, of the Issuers, any of the Subsidiaries or any of the
entities through which ownership interests in Trump's Castle Associates
are directly or indirectly held (the "Castle Entities"), (ii) any of the
terms or provisions of, or constitute a default or cause an acceleration
of any obligation under, or result in the imposition or creation of (or
the obligation to create or impose), any security interest, mortgage,
pledge, claim, lien, encumbrance or adverse interest of any nature (each,
a "Lien"), other than Liens permitted under the Indenture, with respect
to any obligation, bond, agreement, note, debenture or other evidence of
indebtedness or any indenture, mortgage, deed of trust or other
agreement, lease or instrument to which the Issuers, any of the
Subsidiaries or any of the Castle Entities is a party or by which they or
any of them are bound, or to which any of the properties or assets of the
Issuers, any of the Subsidiaries or any of the Castle Entities is or may
be subject, or (iii) any Federal, state or local law, rule,
administrative regulation or ordinance or order of any court or
governmental agency, body or official having jurisdiction over the
Issuers or any of the Subsidiaries or any of their properties, except, in
the case of clause (ii) or (iii), for such conflicts, breaches,
violations, defaults or Liens that could not have a material adverse
effect on the properties, plans, business, results of operations, general
affairs, management, condition (financial or otherwise), prospects, or
business affairs
12
<PAGE>
of the Issuers or the Subsidiaries, singly or in the aggregate (a
"Material Adverse Effect").
(k) No authorization, approval, consent or order of, or filing
with, any court or governmental body, agency or official, including the
New Jersey Casino Control Commission (the "CCC"), the New Jersey
Department of Environmental Protection (the "NJDEP"), is necessary in
connection with the issuance of the Securities and the other transactions
contemplated by this Agreement and the other Operative Documents and the
Merger Transaction except such as may be required by the NASD or have
been obtained and made under the Casino Control Act (the "Gaming Act"),
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), the Act, the TIA or state securities or Blue Sky laws or
regulations. Neither of the Issuers nor any of their affiliates is
presently doing business with the government of Cuba or with any person
or affiliate located in Cuba.
(l) Each of the Issuers and the Subsidiaries has been duly
incorporated or organized, as the case may be, and each of the Issuers
and each of the Subsidiaries is validly existing as a corporation or
general partnership, as the case may be, under the laws of its
jurisdiction of incorporation or organization, as the case may be, and
has the requisite power and authority to carry on its business as it is
currently being conducted or is proposed to be conducted (as discussed in
the Prospectus) and to own, lease and operate its properties, as
applicable, and each is duly qualified as a foreign corporation or
foreign general partnership, as the case may be, authorized to do
business in each jurisdiction (each, a "Foreign Jurisdiction") where the
operation, ownership or leasing of property or the conduct of its
business requires such qualification, except where the failure to be so
qualified could not have a Material Adverse Effect.
(m) The consolidated capitalization of each of the Company and Taj
Associates is as set forth in the Prospectus under the caption
"Capitalization" in the respective columns "Trump AC" and "Taj
Associates," and, after consummation of the Offerings, the consolidated
capitalization of the Company will be as set forth in the column "Pro
Forma." All of the issued and outstanding shares of capital stock of
Funding, Plaza Funding and TTMC have been duly authorized and validly
issued and are fully paid and nonassessable. On the Closing Date, the
Company will own, either directly or indirectly, all of the outstanding
equity interests in Plaza Associates and Taj Associates and all of the
outstanding capital stock of TTMC, Plaza Funding and Funding, free and
clear of any Liens, restrictions on transfer, agreements, voting trusts
or other defects of title whatsoever, other than (x) Liens or other
restrictions on transfer permitted under the Indenture, (y) transfer
13
<PAGE>
restrictions which may be imposed under the Gaming Act and (z) Liens in
favor of the trustee under the Senior Note Indenture. There are no
outstanding subscriptions, rights, warrants, options, calls, convertible
or exchangeable securities or commitments of sale related to or entitling
any person to purchase or otherwise to acquire any shares of the capital
stock of, or other ownership interests in, any Subsidiary.
(n) Funding has not conducted any business other than in
connection with the proposed issuance and sale of the Notes. Neither the
Issuers nor any of the Subsidiaries is (i) in violation of its respective
charter, bylaws or partnership agreements or (ii) in default in the
performance of any obligation, bond, agreement, debenture, note or any
other evidence of indebtedness or any indenture, mortgage, deed of trust
or other contract, lease or other instrument to which the Issuers or any
of the Subsidiaries is a party or by which any of them is bound, or to
which any of the property or assets of the Issuers or any of the
Subsidiaries is subject, except, in the case of clause (ii), for such
defaults that could not have a Material Adverse Effect.
(o) There is no action, suit or proceeding before or by any court
or governmental agency or body, domestic or foreign, pending against or
affecting the Issuers or any of the Subsidiaries or any of their
respective assets or properties, which is required to be disclosed in the
Registration Statement or the Prospectus (except as disclosed therein),
or which could have a Material Adverse Effect, or which could materially
and adversely affect the performance by any of the Issuers of its
obligations pursuant to this Agreement and the Operative Documents or the
transactions contemplated hereby or thereby and, to the best knowledge of
the Issuers, after due inquiry, no such action, suit or proceeding is
contemplated or threatened.
(p) (i) Neither the Issuers nor any of the Subsidiaries is in
violation of any Federal, state or local laws and regulations relating to
pollution or protection of human health or the environment (including,
without limitation, ambient air, surface water, ground water, land
surface or subsurface strata), including, without limitation, laws and
regulations relating to emissions, discharges, releases or threatened
releases of toxic or hazardous substances, materials or wastes, or
petroleum and petroleum products ("Materials of Environmental Concern"),
or otherwise relating to the protection of human health and safety, or
the storage, disposal, transport or handling of Materials of
Environmental Concern (collectively, "Environmental Laws"), which
violation includes, but is not limited to, noncompliance with any permits
or other governmental authorizations, except to the extent that any such
violation could not have a Material Adverse Effect or otherwise require
disclosure in the Prospectus; and (ii) to the best knowledge of the
Issuers,
14
<PAGE>
after due inquiry, (A) neither the Issuers nor any of the Subsidiaries
has received any communication (written or oral), whether from a
governmental authority or otherwise, alleging any such violation or
noncompliance, and there are no circumstances, either past, present or
that are reasonably foreseeable, that may lead to such violation in the
future, (B) there is no pending or threatened claim, action,
investigation or notice (written or oral) by any person or entity
alleging potential liability for investigatory, cleanup, or governmental
responses costs, or natural resources or property damages, or personal
injuries, attorney's fees or penalties relating to (x) the presence, or
release into the environment, of any Material of Environmental Concern at
any location owned or operated by the Issuers or any Subsidiary, now or
in the past, or (y) circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law (collectively, "Environmental
Claims") that could have a Material Adverse Effect or otherwise require
disclosure in the Prospectus, and (C) there are no past or present
actions, activities, circumstances, conditions, events or incidents, that
could form the basis of any Environmental Claim against the Issuers or
any Subsidiary or against any person or entity whose liability for any
Environmental Claim the Issuers or any Subsidiary has retained or assumed
either contractually or by operation of law.
(q) Neither the Issuers nor any of the Subsidiaries is in
violation of any Federal, state or local law relating to discrimination
in the hiring, promotion or pay of employees nor any applicable wage or
hour laws, except as could not have a Material Adverse Effect. There is
(A) no significant unfair labor practice complaint pending against the
Issuers or any Subsidiary or, to the best knowledge of the Issuers, after
due inquiry, threatened against any of them, before the National Labor
Relations Board or any state or local labor relations board, and no
material grievance or material arbitration proceeding arising out of or
under any collective bargaining agreement is so pending against the
Issuers or any Subsidiary or, to the best knowledge of the Issuers, after
due inquiry, threatened against any of them, and (B) no labor dispute in
which the Issuers or any Subsidiary is involved nor, to the best
knowledge of the Issuers, after due inquiry, is any labor dispute
imminent, other than routine disciplinary and grievance matters. The
Issuers and the Subsidiaries are in compliance in all material respects
with all applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended, and the regulations and published
interpretations thereunder ("ERISA"); and no "reportable event" (as
defined in ERISA) has occurred with respect to any "pension plan" (as
defined in ERISA) established or maintained by the Issuers or any of the
Subsidiaries or with respect to which the Issuers or the Subsidiaries are
obligated to make contributions. The Issuers and the Subsidiaries have
not incurred and do not expect to incur
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liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "employee benefit plan" as such term is defined in
Section 3(3) of ERISA or (ii) Sections 4971, 4975, or 4980B of the
Internal Revenue Code of 1986, as amended (the "Code"). Each "employee
benefit plan" established or maintained by the Issuers and the
Subsidiaries that is intended to be qualified under Section 401(a) of the
Code is so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which would cause the loss of
such qualification.
(r) Except as could not have a Material Adverse Effect, each of
the Issuers and each of the Subsidiaries has good and marketable title,
free and clear of all Liens (except for (x) Liens created by the Mortgage
Documents and (y) Permitted Liens (as defined in the Indenture)), to all
property and assets described in the Registration Statement as being
owned by it and such properties and assets are in the condition and
suitable for use as so described. All leases to which any of the Issuers
or the Subsidiaries is a party are valid and binding and no default has
occurred and is continuing thereunder (in the case of defaults by persons
other than the Issuers and the Subsidiaries, to the best knowledge of the
Issuers and the Subsidiaries, after due inquiry), which could result in a
Material Adverse Effect, and the Issuers and the Subsidiaries enjoy
peaceful and undisturbed possession under all such leases to which any of
them is a party as lessee with such exceptions as do not interfere with
the use made or proposed to be made by the Issuers or such Subsidiary.
(s) The Issuers and the Subsidiaries maintain insurance at least
in such amounts and covering at least such risks as is adequate for the
conduct of their respective businesses and the value of their respective
properties and as is customary for companies engaged in similar
businesses in similar industries.
(t) Arthur Andersen LLP, the firm of accountants that has
certified or shall certify the applicable historical financial statement
of Funding and the applicable historical consolidated financial
statements and supporting schedules of the Company and Taj Associates,
filed or to be filed with the Commission as part of the Registration
Statement and the Prospectus, are independent public accountants with
respect to the Issuers and the Subsidiaries, as required by the Act. The
historical financial statement and the historical consolidated financial
statements, together with related schedules and notes, set forth in the
Prospectus and the Registration Statement, comply as to form in all
material respects with the requirements of the Act and fairly present the
financial position of Funding and the consolidated financial position of
the Company and Taj Associates at the respective dates indicated and
16
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the consolidated results of their operations and their consolidated cash
flows, as applicable, for the respective periods indicated, in accordance
with generally accepted accounting principles in the United States of
America ("GAAP") consistently applied throughout such periods. The
pro forma financial statements contained in the Registration
--- -----
Statement have been prepared on a basis consistent with such historical
statements and give effect to assumptions made on a reasonable basis and
fairly present the historical and proposed transactions contemplated to
be addressed by the preliminary prospectuses, the Prospectus, the
Operative Documents and this Agreement. The historical ratios of
earnings to fixed charges of the Company, Plaza Associates and Taj
Associates and the pro forma ratios of earnings to fixed charges
--- -----
of the Company included in the Prospectus under the caption "Prospectus
Summary-Summary Financial Information" have been calculated in compliance
with Item 503(d) of Regulation S-K promulgated by the Commission. The
other financial and statistical information and data included in the
Prospectus and in the Registration Statement, historical and pro
---
forma, are accurately presented and prepared on a basis consistent
-----
with such financial statements and the books and records of Taj
Associates, Taj Funding, the Company, Funding, Plaza Funding and Plaza
Associates, as applicable.
(u) The forecasted financial statement information included in the
Registration Statement (i) are within the coverage of Rule 175(b) of the
Act, (ii) were made by the Issuers with a reasonable basis and in good
faith, (iii) have been prepared in accordance with Item 10 of Regulation
S-K of the Act and (iv) have been properly compiled on the bases
described therein. The assumptions used in the preparation of such
forecasted consolidated financial statement information (i) are all those
the Issuers believe are significant in forecasting the financial results
of Plaza Associates, Taj Associates and the Company and (ii) reflect, for
the relevant periods, a reasonable estimate of the events, contingencies
and circumstances described therein. Such forecasted consolidated
financial statement information presents each of the Issuers' reasonable
estimate of the expected consolidated results of operations, except for
the omission of non-operating items, income taxes, extraordinary items
and the calculation of net income, of each of Plaza Associates, Taj
Associates and the Company for the forecasted periods.
(v) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus and up to the
Closing Date, (i) neither the Issuers nor any of the Subsidiaries has
incurred any liabilities or obligations, direct or contingent, which are
material to the Issuers or the Subsidiaries, singly or in the aggregate,
nor entered into any transaction not in the ordinary course of business,
except as described in the
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Prospectus with respect to the Merger Transaction, (ii) there has been no
decision or judgment in the nature of litigation, administrative or
regulatory proceedings or arbitration that could have a Material Adverse
Effect and (iii) there has not been any material adverse change or any
development which could involve, singly or in the aggregate, a material
adverse change, in the properties, plans, business, results of
operations, general affairs, management, condition (financial or
otherwise), prospects or business affairs of the Issuers or the
Subsidiaries, singly or in the aggregate (any of the items set forth in
clauses (i),(ii) or (iii) of this paragraph (t), a "Material Adverse
Change").
(w) All material Tax (as defined below) returns required to be
filed by the Issuers and the Subsidiaries have been filed and all such
returns are true, complete, and correct in all material respects. All
material Taxes that are due or claimed to be due from the Issuers and the
Subsidiaries have been paid other than those (i) currently payable
without penalty or interest or (ii) being contested in good faith and by
appropriate proceedings and, in either case, for which adequate reserves
have been established on the books and records of the Issuers and the
Subsidiaries in accordance with GAAP. The Issuers and the Subsidiaries
are not parties to any pending action, proceeding, inquiry, or
investigation by any government authority for the assessment or
collection of Taxes, nor do the Issuers have any knowledge, after due
inquiry, of any such proposed or threatened action, proceeding, inquiry,
or investigation. For purposes of this agreement, the terms "Tax" and
"Taxes" shall mean all Federal, state, local and foreign taxes, and other
assessments of a similar nature (whether imposed directly or through
withholding), including any interest, additions to tax, or penalties
applicable thereto.
(x) (i) Each of the Issuers, each of the Subsidiaries and each of
the persons listed under the caption "Management" in the Registration
Statement has all certificates, consents, exemptions, orders, permits,
licenses, authorizations or other approvals or rights (each, an
"Authorization") of and from, and has made all declarations and filings
with, all Federal, state, local and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals,
including, without limitation, all such Authorizations with respect to
engaging in gaming operations in the State of New Jersey or required to
own, lease, license and use its properties and assets and to conduct its
current business in the manner described in or contemplated by the
Prospectus; (ii) all such Authorizations are valid and in full force and
effect; (iii) each of the Issuers and each of the Subsidiaries and, to
the best of the Issuers' knowledge, after due inquiry, each of the
persons listed under the caption "Management" in the Registration
Statement is in compliance in all material respects with the terms and
conditions of all such Authorizations
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and with the rules and regulations of the regulatory authorities and
governing bodies having jurisdiction with respect thereto and (iv) none
of the Issuers nor any Subsidiary nor, to the best of the Issuers'
knowledge, after due inquiry, each of the persons listed under the
caption "Management" in the Registration Statement has received any
notice of proceedings relating to the revocation or modification of any
such Authorization and no such Authorization contains any restrictions
that are materially burdensome to any of them. None of the Issuers nor
any of the Subsidiaries has any reason to believe that the CCC is
considering modifying, limiting, conditioning, suspending, revoking or
not renewing any such Authorizations of the Issuers, any of the
Subsidiaries or any of the persons listed under the caption "Management"
in the Registration Statement or that either the CCC or any other
governmental agencies are investigating the Issuers or any of the
Subsidiaries or related parties (other than normal overseeing reviews of
the CCC incident to the gaming, riverboat or casino activities, as the
case may be, of the Issuers and the Subsidiaries). None of the Issuers
nor any of the Subsidiaries has any reason to believe that there is an
existing basis for the CCC to deny the renewal of the current casino and
gaming licenses held by Plaza Associates and Taj Associates,
respectively. The Issuers and the Subsidiaries possess, or will promptly
acquire on reasonable terms, the licenses, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names, including a grant to the
Company (subject to the preexisting license to Trump's Castle
Associates, as described in the Prospectus) of an exclusive royalty-free
right and license to use worldwide, the names and marks "TRUMP," "DONALD
J. TRUMP," "DONALD TRUMP," "D.J. TRUMP," and "D. TRUMP" (the "Trump
Names") (including combinations thereof, and the U.S. Registrations
"Oysters Trump" and "Trump Plaza") in connection with Casino Services and
Products (as defined in the [Amended License Agreement]) (collectively,
the "Licensed Marks"), and the right to use Trump's personal name
(i.e., "Trump," "Donald Trump" or "Donald J. Trump") and his
----
likeness, in connection with Casino Services and Products presently or
proposed to be employed by them in connection with their businesses as
currently being conducted or as proposed to be conducted (as discussed in
the Prospectus). The Trump Names with respect to Casino Services and
Products, together with each of the marks, registrations and applications
listed on Schedule A of the [Amended License Agreement], shall be
referred to hereinafter, collectively, as the "Marks"). The Licensed
Marks are free of any Liens (other than the license granted by Trump to
Trump Plaza Hotel and Casino pursuant to the Amended and Restated
Services Agreement by and among Plaza Associates, Trump Plaza Management
Corp. and Trump, dated June 24, 1993, and the security interest in the
registration "Trump Plaza" as of
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October 3, 1990 in favor of Bankers Trust Company). To the best
knowledge of each of the Issuers and the Subsidiaries, after due inquiry,
there is no material claim, suit, action or proceeding pending and served
or threatened in the United States with respect to the validity of any of
the Marks, Trump's ownership of any of the Marks, the infringement of any
of the Marks by any third party or the infringement of the rights of any
third party arising out of the use of any of the Marks. To the best
knowledge, of each of the Issuers and each of the Subsidiaries, after due
inquiry, the use of the Marks, as provided in the [Amended License
Agreement], does not infringe on the rights of any person.
(y) The Issuers and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability; (iii) access to assets is permitted only
in accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(z) The CCC has issued declaratory rulings determining that the
initial holders of the Securities need not be qualified under the Casino
Control Act, that the Company is a qualified holding company, financial
source and entity qualifier of each of Plaza Associates and Taj
Associates and that each of Plaza Associates and Taj Associates continues
to be a qualified casino licensee under the Casino Control Act. The
Trustee is a "financial source" under the Casino Control Act and the CCC
has issued a ruling that it continues to be qualified as such. Such
rulings have not been revoked, modified or rescinded. Each of this
Agreement and the other Operative Documents has been presented to the CCC
to the extent required by law, and such documents and the transactions
contemplated hereby or thereby have been approved by or on behalf of the
CCC to the extent required by law and such approvals have not been
revoked, modified or rescinded.
(aa) None of the Issuers nor any agent acting on their behalf has
taken or will take any action that is reasonably likely to cause the
issuance or sale of the Securities to violate Regulation G, T, U, or X of
the Board of Governors of the Federal Reserve System, in each case as in
effect on the Closing Date.
(ab) None of the Issuers nor any of the Subsidiaries is (i) an
"investment company" or a company "controlled" by an investment company
20
<PAGE>
within the meaning of the Investment Company Act of 1940, as amended, or
(ii) a "holding company" or a "subsidiary company" of a holding company,
or an "affiliate" thereof within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
(ac) Except as disclosed in the Prospectus, there are no business
relationships or related party transactions required to be disclosed
therein by Item 404 of Regulation S-K of the Commission.
(ad) Each certificate signed by any officer of any of the Issuers
or a general partner thereof and delivered to the Underwriters or counsel
for the Underwriters in connection therewith shall be deemed to be a
representation and warranty by such Issuer to each Underwriter as to the
matters covered thereby.
7. Indemnification.
---------------
(a) The Issuers and each of the Subsidiaries, jointly and
severally, agree to indemnify and hold harmless, (i) each of the
Underwriters, (ii) each person, if any, who controls (within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act) any of the
Underwriters (any of the persons referred to in this clause (ii) being
hereinafter referred to as a "controlling person") and (iii) the
respective officers, directors, partners, employees, representatives and
agents of any of the Underwriters or any controlling person (any person
referred to in clause (i), (ii) or (iii) may hereinafter be referred to
as an "Indemnified Person") to the fullest extent lawful, from and
against any and all losses, claims, damages, judgments, actions, costs,
assessments, expenses and other liabilities (collectively,
"Liabilities"), including without limitation and as incurred,
reimbursement of all reasonable costs of investigating, preparing,
pursuing, or defending any claim or action, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
including the reasonable fees and expenses of counsel to any Indemnified
Person directly or indirectly caused by, related to, based upon, arising
out of or in connection with any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or
any amendment or supplement thereto) or the Prospectus (or any amendment
or supplement thereto) or any preliminary prospectus, or any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein (in the case of the
Prospectus, in light of the circumstances under which they were made) not
misleading, except insofar as such Liabilities are caused by an untrue
statement or omission or alleged untrue statement or omission that is
made in reliance upon and in conformity with information relating to any
Under-
21
<PAGE>
writer furnished in writing to the Issuers by or on behalf of any
such Underwriter through DLJ expressly for use in the Registration
Statement (or any amendment or supplement thereto) or the Prospectus (or
any amendment or supplement thereto) or any preliminary prospectus. The
Issuers shall notify you promptly of the institution, threat or assertion
of any claim, proceeding (including any governmental investigation) or
litigation in connection with the matters addressed by this Agreement
which involves the Issuers or an Indemnified Person.
(b) In case any action or proceeding (for all purposes of this
Section 7, including any governmental investigation) shall be brought or
asserted against any of the Indemnified Persons with respect to which
indemnity may be sought against the Company, Funding or any Subsidiary,
such Underwriter (or the Underwriter controlled by such controlling
person) shall promptly notify the Company in writing; provided, that
--------
the failure to give such notice shall not relieve the Issuers or any of
the Subsidiaries of their obligations pursuant to this Agreement. Upon
receiving such notice, the Company shall be entitled to participate in
any such action or proceeding and to assume, at its sole expense, the
defense thereof, with counsel reasonably satisfactory to such Indemnified
Person and, after receipt of written notice from the Company to such
Indemnified Person of its election so to assume the defense thereof made
within ten business days after receipt of the notice from the Indemnified
Person of such action or proceeding, the Issuers and the Subsidiaries
shall not be liable to such Indemnified Person hereunder for legal
expenses of other counsel subsequently incurred by such Indemnified
Person in connection with the defense thereof, other than costs of
investigation, unless (i) the Company, Funding or such Subsidiary, as the
case may be, agrees to pay such fees and expenses, or (ii) the Company
fails promptly to assume such defense or fails to employ counsel
reasonably satisfactory to such Indemnified Person or (iii) the named
parties to any such action or proceeding (including any impleaded
parties) include both such Indemnified Person and any of the Issuers or
an affiliate of the Issuers, and either (x) there may be one or more
legal defenses available to such Indemnified Person that are different
from or additional to those available to any of the Issuers or such
affiliate or (y) a conflict may exist between such Indemnified Person and
any of the Issuers or such affiliate. In the event of any of clause (i),
(ii) and (iii) of the immediately preceding sentence, if such Indemnified
Person notifies the Company in writing, the Company shall not have the
right to assume the defense thereof and such Indemnified Person shall
have the right to employ its own counsel in any such action and the
reasonable fees and expenses of such counsel shall be paid, as incurred,
by the Issuers and the Subsidiaries, regardless of whether it is
ultimately determined that an Indemnified Person is not entitled to
indemnification hereunder, it being
22
<PAGE>
understood, however, that the Issuers and the Subsidiaries shall not, in
connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings arising out of
the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (in addition to any
local counsel) at any time for each such Indemnified Person. Each of the
Issuers and each of the Subsidiaries agrees to be liable for any
settlement of such action or proceeding effected with the Company's prior
written consent, which consent will not be unreasonably withheld, and the
Issuers and each of the Subsidiaries agree to indemnify and hold harmless
any Indemnified Person from and against any liabilities by reason of any
settlement of any action effected with the written consent of the
Company. Each of the Issuers and each of the Subsidiaries agrees to be
liable for any settlement of any proceeding effected without its written
consent if (i) such settlement is entered into more than 20 business days
after receipt by the Company of the aforesaid request for payment in
respect of an indemnification obligation pursuant hereto and (ii) the
Indemnified Person shall not have been reimbursed in accordance with such
request prior to the date of such settlement. Neither of the Issuers nor
any of the Subsidiaries shall, without the prior written consent of each
Indemnified Person, settle or compromise or consent to the entry of any
judgment in or otherwise seek to terminate any pending or threatened
action, claim, litigation or proceeding in respect of which
indemnification or contribution may be sought pursuant hereto (whether or
not any Indemnified Person is a party thereto), unless such settlement,
compromise, consent or termination includes an unconditional release of
each Indemnified Person from all liability arising out of such action,
claim, litigation or proceeding.
(c) Each of the Underwriters agrees, severally and not jointly,
to indemnify and hold harmless the Issuers, their directors, their
officers who sign the Registration Statement and any person controlling
(within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) the Issuers, to the same extent as the foregoing indemnity
from the Issuers and the Subsidiaries to each of the Indemnified Persons,
but only with respect to claims and actions based on information relating
to such Underwriter and conforming to information furnished in writing by
or on behalf of such Underwriter through DLJ expressly for use in the
Registration Statement, Prospectus or any preliminary prospectus, as
applicable. In case any action or proceeding (including any governmental
investigation) shall be brought or asserted against the Issuers, any of
their directors, any such officer, or any such controlling person based
on the Registration Statement, the Prospectus or any preliminary
prospectus in respect of which indemnity is sought against any
Underwriter pursuant to the foregoing sentence, the Underwriter shall
have the rights and duties given to the Issuers (except that if the
Company
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<PAGE>
shall have assumed the defense thereof, such Underwriter shall not be
required to do so, but may employ separate counsel therein and
participate in the defense thereof but the fees and expenses of such
counsel shall be at the expense of such Underwriter), and the Issuers,
their directors, any such officers and each such controlling person shall
have the rights and duties given to the Indemnified Person by Section
7(b) above.
(d) If the indemnification provided for in this Section 7 is
finally determined by a court of competent jurisdiction to be unavailable
to an indemnified party in respect of any Liabilities referred to herein,
then each indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified
party as a result of such Liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Issuers and
the Subsidiaries, on the one hand, and the Underwriter, on the other
hand, from the offering of the Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above, but also the relative fault of the
indemnifying parties and the indemnified party, as well as any other
relevant equitable considerations. The relative benefits received by the
Issuers and the Subsidiaries, on the one hand, and any of the
Underwriters (and its related Indemnified Persons), on the other hand,
shall be deemed to be in the same proportion as the total proceeds from
the Securities (net of underwriting discounts and commissions but before
deducting expenses) received by the Issuers bears to the total
underwriting discounts and commissions received by such Underwriter, in
each case as set forth in the Prospectus. The relative fault of the
Issuers and the Subsidiaries, on the one hand, and the Underwriters, on
the other hand, shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact related to
information supplied by the Issuers and the Subsidiaries, on the one
hand, or by the Underwriters, on the other, and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The indemnity and contribution
obligations of the Issuers and the Subsidiaries set forth herein shall be
in addition to any liability or obligation the Issuers and the
Subsidiaries may otherwise have to any Indemnified Person.
The Issuers, the Subsidiaries and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section
7(d) were determined by pro rata allocation (even if the
----
Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable
considerations referred to in the immediately
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preceding paragraph. The amount paid or payable by an indemnified party
as a result of the losses, claims, damages, judgments, liabilities or
expenses referred to in the immediately preceding paragraph shall be
deemed to include, subject to the limitations set forth above, any legal
or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, none of the
Underwriters (and its related Indemnified Persons) shall be required to
contribute, in the aggregate, any amount in excess of the amount by which
the total underwriting discount applicable to the Securities purchased by
such Underwriter exceeds the amount of any damages and related expenses
which such of the Underwriters (and its related Indemnified Persons) has
otherwise been required to pay or incur by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute pursuant to this Section 7(d) are several in
proportion to the respective aggregate principal amount of Securities
purchased by each of the Underwriters hereunder and not joint.
8. Conditions to Underwriters' Obligations. The respective
---------------------------------------
obligations of the several Underwriters to purchase any Securities under this
Agreement are subject to the satisfaction of each of the following conditions
on the Closing Date:
(a) All the representations and warranties of the Issuers
contained in this Agreement shall be true and correct on the Closing Date
with the same force and effect as if made on and as of the Closing Date.
All of the representations and warranties of each of Issuers, as
applicable, made in the other Operative Documents (i) on the date made to
the extent previously made and (ii) on the Closing Date, to the extent
such document contains a representation or warranty made on the Closing
Date, was and shall be true and correct on such date. The Issuers and
the Subsidiaries shall have performed or complied with all of their
obligations and agreements herein and therein contained and required to
be performed or complied with by them at or prior to the Closing Date.
(b) (i) The Registration Statement (including a registration
statement (if any) filed pursuant to Rule 462(b) under the Act) shall
have become effective (or, if a post-effective amendment is required to
be filed pursuant to Rule 430A under the Act, such post-effective
amendment shall have become effective (or, if any Securities are sold in
reliance upon Rule 430A of the Act and no post-effective amendment is so
required to be filed,
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the Prospectus shall have been timely filed with the Commission in
accordance with Section 4(a) hereof) not later than 5:30 p.m., New York
City time, on the date of this Agreement or at such later date and time
as you may approve in writing, (ii) at the Closing Date, no stop order
suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been commenced
or shall be pending before or, to the best knowledge of the Issuers,
after due inquiry, threatened by the Commission and every request for
additional information on the part of the Commission shall have been
complied with in all respects, and (iii) no stop order suspending the
sale of the Securities in any jurisdiction referred to in Section 4(h)
shall have been issued and no proceeding for that purpose shall have been
commenced or shall be pending or, to the best knowledge of the Issuers,
after due inquiry, threatened.
(c) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency, body or official (including, without limitation, the
CCC), which would, as of the Closing Date, prevent the issuance of the
Securities or have a Material Adverse Effect; and no injunction,
restraining order or order of any nature by any Federal or state court
shall have been issued as of the Closing Date which would prevent the
issuance of the Securities or have a Material Adverse Effect. Subsequent
to the execution and delivery of this Agreement and prior to the Closing
Date, there shall not have been any downgrading or indication that such
securities have been placed on any "watch list" for possible downgrading,
nor shall any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded any of THCR
Holdings', the Issuers' or any Subsidiary's securities by any nationally
recognized statistical rating organization, as such term is defined for
purposes of Rule 436(g)(2) of the Act.
(d) (i) Since the earlier of the date hereof or the dates of
which information is given in the Registration Statement and the
Prospectus, there shall not have been any Material Adverse Change, (ii)
since the date of the latest balance sheet included in the Registration
Statement and the Prospectus, there shall not have been any material
adverse change, or any development involving a prospective material
adverse change, in the capital stock or debt, of any of the Issuers or
any of the Subsidiaries and (iii) each of the Issuers and each of the
Subsidiaries shall have no liability or obligation, direct or contingent,
that is material to the Issuers and the Subsidiaries, taken as a whole,
and which is not disclosed in the Registration Statement and the
Prospectus.
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(e) You shall have received a certificate of each of the Issuers,
dated the Closing Date, in each case executed on behalf of the Issuers by
THCR Holdings, the other general partner of the Company, and the Chief
Executive Officer and the Chief Financial Officer of Funding, in their
respective capacities as sole general partner and officers of the THCR
and Funding, as applicable, confirming the matters set forth in
paragraphs (a), (b), (c) and (d) of this Section 8.
(f) You shall have received an opinion (satisfactory to you and
your counsel), dated the Closing Date, of Willkie Farr & Gallagher,
counsel for the Issuers, to the effect that:
(i) the Registration Statement was declared effective in
compliance with the Act; any required filing of the Prospectus, and any
amendments or supplements thereto, pursuant to Rule 424(b), have been
made in the manner and within the time period required by Rule 424(b); to
the best of such counsel's knowledge, after due inquiry, no stop order
suspending the effectiveness of the Registration Statement or any part
thereof has been issued and no proceedings therefor have been instituted
or to the best of such counsel's knowledge, after due inquiry, are
pending or contemplated under the Act; and the Indenture has been duly
qualified under the TIA;
(ii) at the time it became effective and on the Closing
Date, the Registration Statement, including all documents incorporated by
reference therein (except for financial statements, the notes thereto and
related schedules and other financial, numerical data, statistical data
and financial forecasts included therein or incorporated by reference
therein and the Form T-1, as to which no opinion need be expressed)
complied as to form in all material respects with the applicable
requirements of the Act and the TIA;
(iii) each of the Issuers and each of the Subsidiaries,
other than Taj Associates, the Company and Plaza Associates
(collectively, the "New Jersey Subsidiaries"), has the requisite
corporate or partnership power and authority to execute, deliver and
perform all of its obligations pursuant to this Agreement and each of the
other Operative Documents to which it is a party and, in the case of the
Issuers, to authorize, issue and sell the Securities as contemplated by
this Agreement; each of this Agreement and the other Operative Documents
has been duly authorized, executed and delivered by each of the Issuers
and each of the Subsidiaries, as applicable, and constitutes a valid and
legally binding obligation of each of the Issuers and each of the
Subsidiaries, as applicable, enforceable against each of the Issuers and
each of the Subsidiaries, as applicable, in accordance with its terms,
subject to
27
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applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and similar laws and to general principles of equity
(regardless of whether enforcement is sought in a proceeding of law or in
equity);
(iv) the Notes have been duly authorized by all requisite
corporate or partnership action and when authenticated in accordance with
the terms of the Indenture and delivered to and paid for by the
Underwriters in accordance with the terms of this Agreement, the Notes
will constitute valid and legally binding obligations of each of the
Company and Funding, enforceable against each of the Company and Funding
in accordance with their terms and entitled to the benefits of the
Indenture, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws then or
thereafter in effect relating to or affecting rights and remedies of
creditors, and to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity), and except to
the extent that a waiver of rights under any usury laws may be
unenforceable;
(v) the Guarantees have been duly authorized by all
requisite corporate or partnership action and when executed and
authenticated in accordance with the provisions of the Indenture and
delivered in accordance with the terms of this Agreement, the Guarantees
will constitute valid and binding obligations of each of the Guarantors,
enforceable against each of the Guarantors in accordance with their
respective terms and entitled to the benefits of the Indenture, subject
to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights
and remedies generally and to general principles of equity (regardless of
whether enforcement is sought in a proceeding at law or in equity) and
except to the extent that a waiver of rights or defenses under any usury
laws may be unenforceable.
(vi) the Indenture has been duly authorized, executed and
delivered and constitutes a valid and legally binding agreement of each
of the Issuers, enforceable against each of the Issuers in accordance
with its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws then or
thereafter in effect relating to or affecting rights and remedies of
creditors, and to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity) and except to
the extent that a waiver of rights under any usury laws may be
unenforceable;
(vii) this Agreement and each of the other Operative
Documents which is described in the Registration Statement and the
Prospectus
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conforms in all material respects to the descriptions thereof contained
in the Registration Statement and the Prospectus; the descriptions in the
Registration Statement and the Prospectus of statutes, regulations, legal
and governmental proceedings and contracts to which any of the Issuers or
the Subsidiaries is a party have been reviewed by such counsel and are
accurate summaries thereof in all material respects (except for financial
data included therein or omitted therefrom, as to which counsel need
express no opinion); the material Federal income and estate tax
consequences to a holder of the Securities will generally be as is
described in the Registration Statement under the caption "Certain
Federal Income Tax Considerations";
(viii) each of TTMC and Funding is duly organized and each
of TTMC and Funding is a validly existing corporation, under the laws of
the State of Delaware, and has the requisite corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and Prospectus; each
of the Company, Taj Associates and Plaza Associates has been classified
for treatment as a partnership since its inception and will be classified
as a partnership for Federal income tax purposes on the Closing Date;
each of the Issuers and the Subsidiaries is duly qualified as a foreign
corporation or foreign general partnership, as the case may be, in each
Foreign Jurisdiction, except where the failure to be so qualified could
not have a material adverse effect on the properties, plans, business,
results of operation, general affairs, management, condition (financial
or otherwise) or business affairs of the Issuers and the Subsidiaries, in
the aggregate; each of the Issuers and each of the Subsidiaries which is
not a general partnership is in good standing under the laws of its
jurisdiction of incorporation or organization, as the case may be, and in
each Foreign Jurisdiction, as applicable;
(ix) none of the Issuers nor any of the Subsidiaries is (a)
an "investment company" or a company "controlled" by an investment
company within the meaning of the Investment Company Act of 1940, as
amended, or (b) a "holding company" or a "subsidiary company" of a
holding company, or an "affiliate" thereof within the meaning of the
Public Utility Holding Company Act of 1935, as amended;
(x) to the best of such counsel's knowledge after due
inquiry, there are no legal or governmental proceedings required to be
described in the Registration Statement or Prospectus which are not
described as required, or any contracts or agreements to which any of the
Issuers or any of the Subsidiaries is a party or by which any of them may
be bound that are required to be described in the Registration Statement
or the Prospectus or to be filed as exhibits to the Registration
Statement other than those described
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therein or filed or incorporated by reference as exhibits thereto; to the
best of such counsel's knowledge, after due inquiry, there is no current,
pending or threatened action, suit or proceeding before any court or
governmental agency, authority or body or any arbitrator involving any of
the Issuers or any of the Subsidiaries or to which any of their
respective properties are subject of a character required to be disclosed
in the Registration Statement which is not adequately disclosed in the
Prospectus;
(xi) to the best of such counsel's knowledge, after due
inquiry, no authorization, approval, consent or order of any court or
governmental body, agency or official, is necessary in connection with
the issuance of the Securities or the other transactions contemplated by
this Agreement or the other Operative Documents, except such as may be
required by the NASD or have been obtained and made under the HSR Act,
the Gaming Act, the Act, the TIA, or state securities or Blue Sky laws or
regulations;
(xii) the execution and delivery of this Agreement and the
other Operative Documents by the Issuers, as applicable, the issuance and
sale of the Securities, the performance of the Issuers' obligations
pursuant to the Operative Documents, as applicable, and the consummation
of the transactions contemplated hereby and thereby will not conflict
with or result in a breach or violation of or constitute a default or
cause an acceleration of any obligation under, or result in the
imposition or creation of (or the obligation to create or impose) any
Lien (other than under the Mortgage Documents and the lien in favor of
the trustee under the Senior Note Indenture) with respect to (A) any of
the respective charters, by-laws and partnership agreements, as the case
may be, of any of the Issuers or the Subsidiaries, other than the New
Jersey Subsidiaries (B) any agreement or instrument filed as an Exhibit
to the Registration Statement, (C) any applicable statute, rule or
regulation under New York law, United States Federal law or the
Corporation Law of the State of Delaware other than the securities or
Blue Sky laws of the various states, as to which such counsel need
express no opinion, or (D) any order of any court or governmental agency,
body or official having jurisdiction over any of the Issuers or any of
the Subsidiaries or any of their properties, except, in the case of
clauses (B), (C) or (D), for such conflicts, breaches, violations or
defaults that could not have a material adverse effect on the properties,
plans, business, results of operation, general affairs, management,
condition (financial or otherwise) or business affairs of the Issuers and
the Subsidiaries, in the aggregate;
(xiii) to the best of such counsel's knowledge, after due
inquiry, no default exists in the due performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
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indenture, mortgage, loan agreement, note, lease or other instrument
described in or filed as an Exhibit to the Registration Statement, except
for defaults which could not have a material adverse effect on the
properties, plans, business, results of operation, general affairs,
management, condition (financial or otherwise) or business affairs of the
Issuers and the Subsidiaries, in the aggregate;
(xiv) to the best of such counsel's knowledge, after due
inquiry, each of the Issuers and each of the Subsidiaries has the right
to use the Licensed Marks presently or proposed to be employed by it in
connection with its businesses as currently being conducted or as
proposed to be conducted (as discussed in the Prospectus), and, to the
best of such counsel's knowledge, after due inquiry, the Licensed Marks
are free and clear of Liens (other than the license granted by Trump to
Trump Plaza Hotel and Casino pursuant to the Amended and Restated
Services Agreement by and among Plaza Associates, Trump Plaza Management
Corp. and Trump dated June 24, 1993, and the security interest in the
registration "Trump Plaza" as of October 3, 1990 in favor of Bankers
Trust Company) and any other rights of third parties and none of the
Issuers or any of the Subsidiaries has received any notice, or has any
knowledge, of infringement or of conflict with asserted rights of others
with respect to any of the Licensed Marks;
(xv) neither the consummation of the transactions
contemplated by this Agreement nor the sale, issuance, execution or
delivery of the Securities will violate Regulation G, T, U or X of the
Board of Governors of the Federal Reserve System;
(xvi) all of the issued and outstanding shares of capital
stock of Funding and TTMC have been duly authorized and validly issued,
and are fully paid and nonassessable, the shares of capital stock of, or
other ownership interests in, each Subsidiary are owned, either directly
or indirectly, by the Company, free and clear of any Liens (other than
Liens in favor of the Trustee under the Senior Note Indenture);
(xvii) the Merger has become effective under Delaware law;
(xviii) all of the equity interests held directly or
indirectly by Trump in Taj Associates have been contributed to THCR or
its subsidiaries and are owned free and clear of any Lien (other than
Liens in favor of the Trustee under the Senior Note Indenture);
(xix) the Taj Bonds have been redeemed in accordance with the
terms of the indenture under which the Taj Bonds were issued, and the
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lien on the collateral securing the Taj Bonds in favor of the trustee
under the indenture under which the Taj Bonds were issued has been
released;
(xx) the Offer to Purchase and Consent Solicitation conform
with Regulation 14E under the Exchange Act, and all outstanding Plaza
Notes not purchased pursuant to the Offer to Purchase and Consent
Solicitation have been defeased in accordance with Section 403 of the
Plaza Note Indenture and the lien of the trustee under the Plaza Note
Indenture on the collateral securing the Plaza Notes has been released;
and
(xxi) the Senior Note Indenture has been amended as provided
for in the Senior Note Indenture and in the Senior Note Consent
Solicitation.
(xxii) each of the Mortgage Documents is in a form which may
be used in the State of New York so as to accomplish its intended purpose
and has been duly authorized, executed and delivered by each of the
Issuers except the New Jersey Subsidiaries, as applicable, and, assuming
the due authorization, execution and delivery thereof by the New Jersey
Subsidiaries, constitutes a valid and legally binding obligation of each
of the Issuers, as applicable, enforceable against each of the Issuers,
as applicable, in accordance with its terms, except that enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and similar laws and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding of law or in equity), but such limitations on enforceability
will not in such counsel's opinion render the Mortgage Documents invalid
as a whole or substantially interfere with the practical realization of
the material benefits and/or the security intended to be afforded
thereby.
(xxiii) the Issuers' security agreement is sufficient under
the laws of the State of New York to create a valid security interest in
all of the Issuers' respective rights in the personal property described
in the Issuers' respective Security Agreement, whether now existing or
hereafter acquired (the "Issuer Collateral"), in favor of the Trustee to
secure all obligations of each such Issuer as identified in Issuers'
Security Agreement (including each Issuers' payment obligations under the
Indenture). The filings and recordings (including, without limitation,
UCC financing statements) identified on schedule A to the Issuers'
security agreement are in appropriate form for filing in the filing
offices identified on such schedule A thereto and such filings and
recordings in such filing offices are the only filings and recordings
necessary to perfect the security interest of the Trustee in the Issuer
Collateral. The security interest of the Trustee is a perfected, first
priority security interest in the Issuer Collateral under the laws of New
York.
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In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of
the Issuers and the Subsidiaries, representatives of Arthur Andersen LLP,
independent public accountants for the Issuers and the Subsidiaries, your
representatives and your counsel in connection with the preparation of
the Registration Statement and Prospectus and has considered the matters
required to be stated therein and the statements contained therein, and
such counsel shall advise you that, although (without limiting the
opinions provided) such counsel has not independently verified the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and Prospectus, on the basis of the foregoing, no
facts came to such counsel's attention that caused such counsel to
believe that the Registration Statement (including any Registration
Statement filed under Rule 462(b) of the Act (if any)), as amended or
supplemented, at the time such Registration Statement or any
post-effective amendment became effective and as of the date of such
opinion, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading (other than information omitted
therefrom in reliance on Rule 430A under the Act), or the Prospectus, as
amended or supplemented, as of its date and the Closing Date, contained
an untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Without limiting the foregoing, such counsel may further state that
it assumes no responsibility for, and has not independently verified, the
accuracy, completeness or fairness of the financial statements, notes and
schedules, financial forecasts and other financial and statistical data
included in the Registration Statement. Such counsel may also state that
it has assumed in its examination of all relevant documents the
genuineness of all signatures, has relied, in part, as to factual matters
upon the statements of officers and other representatives of the Issuers
and as to matters relating to the laws of other jurisdictions, on the
opinions of local counsel for the Issuers in such jurisdictions, as to
which laws such counsel needs express no opinion. In addition such
counsel may state that its opinion is limited by the fact that the (i)
enforceability of the Operative Documents and (ii) the rights of the
Trustee to the Collateral may be limited by the Gaming Act, as to which
such counsel needs express no opinion.
(g) You shall have received a signed opinion of Graham, Curtin &
Sheridan, New Jersey counsel for the Issuers, dated as of the Closing
Date, in form and substance satisfactory to counsel for the Underwriters,
to the effect that:
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(i) Plaza Funding has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
New Jersey and each of Plaza Associates, Taj Associates and the Company
is validly existing as a general partnership under the laws of the State
of New Jersey; each of Plaza Associates, Taj Associates, Taj Funding and
the Company has the requisite corporate or partnership power and
authority, as the case may be, to own, lease and operate its properties
and to conduct its business as described in the Registration Statement
and Prospectus;
(ii) all of the issued and outstanding capital stock of
Plaza Funding has been duly authorized and validly issued and is fully
paid and nonassessable, and the shares of capital stock and the
partnership interests, as the case may be, of Taj Associates, Plaza
Funding and Plaza Associates are owned, either directly or indirectly, by
the Company;
(iii) to the best knowledge of such counsel, no
authorization, approval, consent or order of the NJDEP or any other
governmental body, agency or official of the State of New Jersey ("New
Jersey Authorities") is necessary in connection with the issuance of the
Securities and the other transactions contemplated by this Agreement and
the other Operative Documents or any other transactions described in the
Registration Statement to be entered into prior to or contemporaneously
with such agreements, except as disclosed in the Registration Statement
or such authorizations, approvals, consents or licenses of the NJDEP and
such other New Jersey Authorities that have been obtained; such counsel
need express no opinion regarding authorizations, approvals, consents or
orders of the CCC;
(iv) to the best knowledge of such counsel, each of the
Issuers and each of the Subsidiaries is in possession of all
Authorizations of and from all New Jersey Authorities which are material
and required to be held by any of them in connection with the present
operation of its business, all of which are valid and in full force and
effect;
(v) the 1% equity interest held by Plaza Funding in Plaza
Associates has been contributed to TTMC;
(vi) the separate corporate existence of Taj Funding has been
dissolved upon the filing of the certificate of dissolution with the
Secretary of State of the State of New Jersey; and
(vii) each of the Mortgage Documents is in a form which may
be used in the State of New Jersey so as to accomplish its intended
purpose and has been duly authorized, executed and delivered by each of
the Issuers
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except TTMC and Funding, as applicable, and, assuming the due
authorization, execution and delivery thereof by TTMC and Funding,
constitutes a valid and legally binding obligation of each of the
Issuers, as applicable, enforceable against each of the Issuers, as
applicable, in accordance with its terms, except that enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and similar laws and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding of law or in equity), but such limitations on enforceability
will not in such counsel's opinion render the Mortgage Documents invalid
as a whole or substantially interfere with the practical realization of
the material benefits and/or the security intended to be afforded
thereby.
(viii) the Issuers' security agreement is sufficient under
the laws of the State of New Jersey to create a valid security interest
in all of the Issuers' respective rights in the personal property
described in the Issuers' respective Security Agreement, whether now
existing or hereafter acquired (the "Issuer Collateral"), in favor of the
Trustee to secure all obligations of each such Issuer as identified in
Issuers' Security Agreement (including each Issuers' payment obligations
under the Indenture). The filings and recordings (including, without
limitation, UCC financing statements) identified on schedule A to the
Issuers' security agreement are in appropriate form for filing in the
filing offices identified on such schedule A thereto and such filings and
recordings in such filing offices are the only filings and recordings
necessary to perfect the security interest of the Trustee in the Issuer
Collateral. The security interest of the Trustee is a perfected, first
priority security interest in the Issuer Collateral under the laws of New
Jersey.
(ix) each of the Mortgage Documents is in proper form so as
to comply with the recording requirements of the State of New Jersey, and
upon recordation of the Mortgage Documents in the office of the County
Clerk of Atlantic County, New Jersey (the "Recording Office"), and when
appropriate UCC financing statements are filed in the Office of the
Secretary of State of the State of New Jersey and filed and properly
indexed in the Office of the Clerk of Atlantic County, New Jersey, will
create a valid lien and perfected first priority security interest in
favor of the Trustee in such of the collateral described therein which
constitutes (x) real property (including fixtures), and (y) personal
property in which, in the case of this clause (y), a security interest
can be perfected by the recording of a mortgage or the filing of a
financing statement under the UCC, and no further action will be required
to perfect such liens.
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With respect to opinions expressed in paragraphs (iii) and
(iv), such counsel need express no opinion regarding authorizations of,
or declarations or filings with, the CCC or with respect to state
securities or Blue Sky laws. In addition, such counsel may state that it
has relied, as to factual matters, upon the statements of officers and
other representatives of the Issuers. Such opinion shall be to such
further effect with respect to other legal matters relating to this
Agreement as counsel for the Underwriters may reasonably request.
(h) You shall have received an opinion of Sterns & Weinroth, New
Jersey regulatory counsel for the Issuers, dated as of the Closing Date,
in form and substance satisfactory to counsel for the Underwriters, to
the effect that:
(i) (a) the statements in the Prospectus under the captions
"Risk Factors--Control Involvement of Trump," "Risk Factors--Atlantic
City Properties Expansion," "Risk Factors--Strict Regulation by CCC,
"Management's Discussion and Analysis of Financial Condition and Results
of Operations--Liquidity and Capital Resources--Trump Associates" (fifth
and sixth paragraph and second and third sentences of eighth paragraphs
thereunder), "Regulatory Matters--New Jersey Gaming Regulations", and
"Description of the First Mortgage Notes--Gaming Laws" (first and third
sentences of first paragraph) and "Description of the Mortgage
Notes--Gaming Laws" insofar as such statements constitute a summary of
New Jersey gaming laws ("New Jersey Gaming Laws") and proceedings
thereunder, fairly present the information with respect to such New
Jersey Gaming Laws and proceedings thereunder; and (b) no facts have come
to the attention of such counsel that would lead such counsel to believe
that the statements listed in clause (a) of this paragraph (i) contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make such statements,
in light of the circumstances under which they are made, not misleading,
or that the statements listed in clause (a) of this paragraph (i), as
contained in the Prospectus at the time of filing thereof or on the date
of such counsel's opinion, contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make such statements, in light of the circumstances
under which they were made, not misleading;
(ii) no authorization, approval, consent or order of the CCC
is necessary in connection with the issuance of the Securities and the
due and valid execution, delivery and performance by any of the Issuers
or the Subsidiaries, as the case may be, of this Agreement or the other
Operative Documents, as applicable, or any other transactions described
in the
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statements listed in clause (a) of paragraph (i) above to be entered into
prior to or contemporaneously with such agreements, except (a) as
disclosed in the Registration Statement; (b) such approvals, consents or
orders, or conditional approvals, consents or orders of the CCC that have
been obtained prior to the date of such opinion; (c) such additional
approvals, consents or orders of the CCC that may be deemed necessary
under existing orders, consents or conditional approvals and (d) the
periodic and other filings and reporting requirements to which any of the
Issuers and the Subsidiaries are subject generally. Each of the
Operative Documents has been presented to the CCC to the extent required
by New Jersey Gaming Laws, and such documents and the transactions
described therein have been approved by the CCC to the extent required by
New Jersey Gaming Laws. Such counsel has received no notice that such
approvals have been revoked, modified or rescinded as of the date of such
opinion;
(iii) the CCC has issued declaratory rulings determining
that the initial holders of the Securities are waivable qualifiers under
the New Jersey Gaming Laws and that the Company is a qualified holding
company, financial source and entity qualifier of Plaza Associates and
Taj Associates, subject to the filing of the applicable business entity
disclosure forms by the Issuers and the Subsidiaries by ________, 1996
and that each of Plaza Associates and Taj Associates continues to be a
qualified casino licensee under the New Jersey Gaming Laws, subject to
the filing of business entity disclosure forms as set forth above. Such
counsel has received no notice that such rulings and the casino licensure
of each of Plaza Associates and Taj Associates have been revoked,
modified or rescinded as of the date of such opinion;
(iv) except as disclosed in the Registration Statement, (a)
to the best knowledge of such counsel, each of the Issuers and each of
the Subsidiaries has made all declarations and filings with the CCC
necessary to use its properties and assets and to conduct its business
pursuant to New Jersey Gaming Laws, as of the date of such opinion; (b)
no facts have come to the attention of such counsel that would lead such
counsel to believe that all authorizations of and from the CCC are not
valid and in full force and effect as of the date of such opinion; (c) no
facts have come to the attention of such counsel that would lead such
counsel to believe that each of the Issuers and each of the Subsidiaries
is not in compliance in all material respects with the terms and
conditions of all authorizations of and from CCC and with the New Jersey
Gaming Laws, as of the date of such opinion; and (d) as of the date of
such opinion, such counsel has received no notice of any proceedings
relating to the revocation or modification of any authority granted by
the CCC to the Issuers and the Subsidiaries, and such counsel is
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aware of no restrictions imposed by the CCC which would have a material
adverse effect on the properties, plans, results of operations,
management, condition (financial or otherwise) or business affairs of the
Issuers or the Subsidiaries, in the aggregate; no facts have come to the
attention of such counsel that would lead such counsel to believe that
the CCC is considering modifying, limiting, conditioning, suspending,
revoking or not renewing the licenses, permits, certificates, consents,
orders, approvals and other authorizations from the CCC ("Gaming
Licenses") of any of the Issuers or the Subsidiaries, except where such
modification, revocation, suspension, limitation or condition would not
have a material adverse effect on the properties, plans, results of
operations, management, condition (financial or otherwise) or business
affairs of the Issuers or the Subsidiaries, in the aggregate; such
counsel is aware of no notice given to the Issuers or any of the
Subsidiaries that New Jersey gaming authorities are investigating any of
the Issuers or the Subsidiaries (other than normal overseeing reviews
incident to the gaming activities of the Issuers and the Subsidiaries);
and such counsel has received no notice that any of the Issuers, the
Subsidiaries or Trump has any reason to believe there is an existing
basis for the CCC to deny the renewal of the Gaming Licenses held by
Plaza Associates and Taj Associates; and
(v) each of the persons listed under the caption "Management"
in the Prospectus has been or will be qualified or licensed by the CCC,
as required by the Gaming Act.
Such counsel may rely on the resolutions of the CCC in giving its
opinions in paragraphs (ii) and (v) above.
(i) You shall have received on the Closing Date an opinion, dated
the Closing Date, of Skadden, Arps, Slate, Meagher & Flom ("Skadden
Arps"), counsel for the Underwriters in form and substance reasonably
satisfactory to you.
(j) You shall have received letters on and as of the date hereof
as well as on and as of the Closing Date (in the latter case constituting
an affirmation of the statements set forth in the former, based on
limited procedures), in form and substance satisfactory to you, from
Arthur Andersen LLP, independent public accountants for the Issuers and
the Subsidiaries, with respect to the financial statement of Funding, the
consolidated financial statements of each of the Company and Taj
Associates and certain other financial information contained in the
Registration Statement and the Prospectus including, without limitation,
the financial forecasts.
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(k) You shall have received a certificate of a financial officer
of the Company as to certain agreed upon accounting matters, in
substantially the form previously delivered to you.
(l) Prior to the Closing Date, the Issuers shall have furnished
to you or caused to be furnished to you such further information,
certificates and documents as you may reasonably request including,
without limitation, (i) satisfactory evidence from the trustee for the
Taj Bonds that the indenture governing the Taj Bonds has been fully
satisfied and discharged and (ii) from the trustee under the Plaza Note
Indenture that such notes and the indenture governing such note have been
defeased in accordance with Section 403 thereof, (iii) the NatWest Loan
has been satisfied and (iv) the First Fidelity Loan has been satisfied.
(m) The Issuers and the Subsidiaries shall not have failed at or
prior to the Closing Date to perform or comply with any of the agreements
herein contained and required to be performed or complied with by the
Issuers or the Subsidiaries at or prior to the Closing Date.
(n) The Merger shall have become effective under the Delaware
General Corporation Law.
(o) The Equity Offering shall have been consummated.
(p) The Taj Holdings Class B Common Stock shall have been
redeemed in accordance with the Taj Holding Certificate of Incorporation.
(q) The Taj Bonds shall have been redeemed.
(r) At least 90% of the outstanding Plaza Mortgage Notes shall
have been purchased by Plaza Funding and Plaza Associates and thereafter
shall be cancelled in accordance with the Plaza Note Indenture and all
remaining Plaza Notes shall have been defeased as described in Plaza
Funding and Plaza Associates Offer to Purchase and Solicitation of
Consents dated March 13, 1996, as supplemented to date.
(s) All of Taj Associates indebtedness to National Westminster
Bank USA shall have been satisfied and the liens securing such
indebtedness shall have been released.
(t) Taj Associates shall have acquired the Specified Parcels free
and clear of all liens and encumbrances, all indebtedness of Taj
Associates
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to First Fidelity shall have been satisfied and the liens securing such
indebtedness shall have been released.
(u) Trump Plaza Associates shall have exercised the Trump Plaza
East Option and shall have acquired Trump Plaza East free and clear of
all liens and encumbrances.
(v) Bankers Trust shall have released all liens and other
security interests on Trump's interest in Taj Associates.
(w) THCR shall have acquired all of Trump's direct and indirect
ownership interests in Taj Associates free and clear of any liens or
adverse interests.
(x) The Senior Note Indenture shall have been amended in
accordance with the Senior Note Consent Solicitation; the transactions
described in clauses (n) through (x), inclusive, shall constitute the
"Merger Transaction" for the purpose of this Agreement.
(y) All legal opinions and accountants "comfort letters" received
in connection with any aspect of the Merger Transaction, whose form and
substance shall have been determined by THCR and its subsidiaries, shall
be addressed to or reliance certificates issued to and shall be delivered
to the Underwriters.
9. Effective Date of Agreement, Defaults and Termination.
-----------------------------------------------------
This Agreement shall become effective upon the later of (i) the execution and
delivery of this Agreement by the parties hereto, (ii) unless the Issuers
intend to rely on Rule 430A of the Act, the effectiveness of the Registration
Statement (including, if applicable, the registration statement filed pursuant
to Rule 462(b) under the Act), and (iii) if the Issuers intend to rely on Rule
430A of the Act, the earlier of the effectiveness of a post-effective amendment
filed in compliance with Rule 430A of the Act or the filing of a final
prospectus pursuant to Rule 424(b) of the Act. Notwithstanding the foregoing,
this Agreement shall not become effective prior to the effectiveness of the
Equity Underwriting Agreement.
This Agreement may be terminated at any time on or prior to the
Closing Date by DLJ by notice to the Company if any of the following has
occurred: (i) subsequent to the date the Registration Statement is declared
effective or the date of this Agreement, any Material Adverse Change which, in
the judgment of DLJ, impairs the investment quality of the Securities, (ii) any
outbreak or escalation of hostilities or other national or international
calamity or crisis or material adverse change in the financial markets of the
United States or elsewhere or any other
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substantial national or international calamity or emergency if the effect of
such outbreak, escalation, calamity, crisis or emergency would, in DLJ's
judgment, make it impracticable or inadvisable to market the Securities or to
enforce contracts for the sale of the Securities, (iii) any suspension or
limitation of trading generally in securities on the New York, American or
Pacific Stock Exchanges or the National Association of Securities Dealers
Automated Quotation National Market, or the over-the-counter markets or any
setting of minimum prices for trading on such exchanges or markets, (iv) any
declaration of a general banking moratorium by either Federal or New York state
authorities, (v) the taking of any action by any Federal, state or local
government or agency in respect of its monetary or fiscal affairs that in DLJ's
judgment has a material adverse effect on the financial markets in the United
States, and would, in DLJ's judgment, make it impracticable or inadvisable to
market the Securities or to enforce contracts for the sale of the Securities,
(vi) any securities of the Issuers, their parent or any of the Subsidiaries
shall have been downgraded or placed on any "watch list" for possible
downgrading or reviewed for a possible change that does not indicate the
direction of the possible change by any "nationally recognized statistical
rating organization," as such term is defined for purposes of Rule 436(g)(2) of
the Act, (vii) the enactment, publication, decree or other promulgation of any
Federal, state or local statute, regulation, rule or order of any court or
other governmental authority which in the judgment of DLJ could have a Material
Adverse Effect or make it inadvisable or impractical to market the Securities
or (viii) the occurrence, scheduling of or the announcement of, or published
discussion regarding any proposed, pending, threatened or contemplated
investigation or inquest by a court or other governmental authority in respect
of the Company, its parent, the Subsidiary or any person required to be
licensed therewith.
If this Agreement shall be terminated by the Underwriters pursuant
to clause (i), (vi), (vii) or (viii) of the second paragraph of this Section 9
or because of the failure or refusal on the part of the Issuers or the
Subsidiaries to comply with the terms or to fulfill any of the conditions of
this Agreement, the Issuers and the Subsidiaries jointly and severally agree to
reimburse you for all reasonable out-of-pocket expenses (including the
reasonable fees and disbursements of counsel) incurred by the Underwriters, and
(without duplication) to fulfill the obligations of that certain engagement
letter, dated January 3, 1996, as amended and supplemented through the date
hereof, among THCR, its existing and future subsidiaries and DLJ.
Notwithstanding any termination of this Agreement, the Issuers and the
Subsidiaries shall be liable, jointly and severally, for all expenses which
they agree to pay pursuant to Section 5 hereof. If this Agreement is
terminated pursuant to this Section 9, such termination shall be without
liability of any Underwriter to the Issuers or any of the Subsidiaries.
If on the Closing Date any of the Underwriters shall fail or refuse
to purchase the Securities which it has agreed to purchase hereunder on such
date, and
41
<PAGE>
the aggregate principal amount of such Securities that such defaulting
Underwriter or Underwriters, as the case may be, agreed but failed or refused
to purchase does not exceed 10% of the total principal amount of such
Securities to be purchased on such date by all Underwriters, each
non-defaulting Underwriter shall be obligated to purchase the Securities that
such defaulting Underwriter agreed but failed or refused to purchase on such
date; provided that in no event shall the aggregate principal amount of
--------
Securities that any Underwriter has agreed to purchase pursuant to Section 2
hereof be increased pursuant to this Section 9 by an amount in excess of
one-ninth of such principal amount of Securities without the written consent of
such Underwriter. If, on the Closing Date, any of the Underwriters shall fail
or refuse to purchase the Securities and the total principal amount of
Securities with respect to which such default occurs exceeds 10% of the total
amount of Securities to be purchased on such date by all Underwriters and
arrangements satisfactory to you and the Issuers for the purchase of such
Securities are not made within 48 hours after such default, this Agreement
shall terminate without liability on the part of the non-defaulting Underwriter
and the Issuers, except as otherwise provided in this Section 9. In any such
case that does not result in termination of this Agreement, either you or the
Issuers may postpone the Closing Date for not longer than seven (7) days, in
order that the required changes, if any, in the Registration Statement and the
Prospectus or any other documents or arrangements may be effected. Any action
taken under this paragraph shall not relieve a defaulting Underwriter from
liability in respect of any default of any such Underwriter under this
Agreement.
10. Notices. Notices given pursuant to any provision of this
-------
Agreement shall be addressed as follows: (a) if to any of the Issuers, to it
at Mississippi Avenue and The Boardwalk, Atlantic City, New Jersey 08401,
Attention: Robert M. Pickus, Esq., with a copy to Willkie Farr & Gallagher at
153 East 53rd Street, New York, New York 10022, Attention: Daniel D. Rubino,
Esq. (b) if to any Underwriter, to Donaldson, Lufkin & Jenrette Securities
Corporation, 277 Park Avenue, New York, New York 10172, Attention: Syndicate
Department, with a copy to Skadden, Arps, Slate, Meagher & Flom at 300 South
Grand Avenue, Suite 3400, Los Angeles, California 90071, Attention: Nicholas
P. Saggese, Esq. or (c) in any case to such other address as the person to be
notified may have requested in writing.
11. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK AS
APPLIED TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY, ON BEHALF OF
ITSELF AND ITS SUBSIDIARIES HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE FEDERAL AND NEW YORK STATE COURTS LOCATED IN THE
42
<PAGE>
CITY OF NEW YORK IN CONNECTION WITH ANY SUIT, ACTION OR PROCEEDING RELATED TO
THIS AGREEMENT OR ANY OF THE MATTERS CONTEMPLATED HEREBY, IRREVOCABLY WAIVES
ANY DEFENSE OF LACK OF PERSONAL JURISDICTION AND IRREVOCABLY AGREES THAT ALL
CLAIMS IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN ANY SUCH COURT. THE COMPANY, ON BEHALF OF ITSELF AND THE SUBSIDIARIES
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT THEY MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, ANY OBJECTION WHICH IT OR ITS SUBSIDIARIES MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF 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 AN INCONVENIENT FORUM.
12. Severability. Any determination that any provision of
------------
this Agreement may be, or is, unenforceable shall not affect the enforceability
of the remainder of this Agreement.
13. Successors. Except as otherwise provided, this Agreement
----------
has been and is made solely for the benefit of and shall be binding upon the
Issuers, the Subsidiaries, the Underwriters, any Indemnified Person referred to
herein and their respective successors and assigns, all as and to the extent
provided in this Agreement, and no other person shall acquire or have any right
under or by virtue of this Agreement. The terms "successors and assigns" shall
not include a purchaser of any of the Securities from any of the several
Underwriters merely because of such purchase.
14. Certain Definitions. For purposes of this Agreement, (a)
-------------------
"business day" means any day on which the New York Stock Exchange, Inc. is open
for trading and (b) "subsidiary" has the meaning set forth in Rule 405 of the
Securities Act.
15. Counterparts. This Agreement may be executed in one or
------------
more counterparts and, if executed in one or more counterparts, the executed
counterparts shall each be deemed to be an original, and all such counterparts
shall together constitute one and the same instrument.
16. Headings. The headings herein are inserted for
--------
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.
43
<PAGE>
17. Survival. The indemnity and contribution provisions and
--------
the other agreements, representations and warranties of the Issuers, their
partners, officers and directors and of the Underwriters set forth in or made
pursuant to this Agreement shall remain operative and in full force and effect,
and will survive delivery of and payment for the Securities, regardless of (i)
any investigation, or statement as to the results thereof, made by or on behalf
of any of the Underwriters or by or on behalf of the Issuers or the partners,
officers or directors of the Issuers or any controlling person of the Issuers,
(ii) acceptance of the Securities and payment for them hereunder and (iii)
termination of this Agreement.
44
<PAGE>
Please confirm that the foregoing correctly sets forth the
agreement among the Issuers and you.
Very truly yours,
TRUMP ATLANTIC ASSOCIATES
BY: TRUMP HOTELS & CASINO RESORTS HOLDINGS,
L.P., its general partner
By: TRUMP HOTELS & CASINO RESORTS,
INC., its general partner
By:
----------------------------------
Name:
Title:
TRUMP ATLANTIC CITY FUNDING, INC.
By:
-------------------------------------
Name:
Title:
TRUMP PLAZA ASSOCIATES
BY: TRUMP ATLANTIC CITY ASSOCIATES, its
general partner
By: TRUMP HOTELS & CASINO RESORTS
HOLDINGS, L.P., its general partner
By: TRUMP HOTELS & CASINO RESORTS,
INC., its general partner
By:
-------------------------------------
Name:
Title:
TRUMP PLAZA FUNDING, INC.
By:
-------------------------------------
Name:
Title:
45
<PAGE>
TRUMP TAJ MAHAL ASSOCIATES
By: TRUMP ATLANTIC CITY
ASSOCIATES, its general partner
By: TRUMP HOTELS & CASINO
RESORTS HOLDINGS, L.P.,
its general partner
By: TRUMP HOTELS & CASINO
RESORTS, INC., its general partner
By:
-------------------------------------
Name:
Title:
TRUMP TAJ MAHAL CORPORATION
By:
-------------------------------------
Name:
Title:
46
<PAGE>
The foregoing Underwriting Agreement
is hereby confirmed and accepted
as of the date first above written.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
SALOMON BROTHERS INC
BT SECURITIES CORPORATION
By: DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
-----------------------
Name:
Title:
47
<PAGE>
SCHEDULE I
Principal Amount
----------------
Donaldson, Lufkin & Jenrette Securities Corporation $
Salomon Brothers Inc
BT Securities Corporation
--------------
Total $1,100,000,000
--------------
<PAGE>
SCHEDULE II
Mortgage Documents
[Mortgage dated April [17], 1996 by Trump Plaza Associates, Trump Taj Mahal
Associates, Trump Atlantic City Associates, Trump Atlantic City Funding, Inc.
and The Trump Taj Mahal Corporation to First Bank National Association, as
Collateral Agent.
Assignment of Leases and Rents dated April [17], 1996 from Trump Plaza
Associates, Trump Taj Mahal Associates, Trump Atlantic City Associates, Trump
Atlantic City Funding, Inc. and The Trump Taj Mahal Corporation to First Bank
National Association, as Collateral Agent.
Security Agreement dated April [17], 1996 by and between Trump Plaza
Associates, Trump Taj Mahal Associates, Trump Atlantic City Associates, Trump
Atlantic City Funding, Inc. and The Trump Taj Mahal Corporation and First Bank
National Association, as collateral agent.
Collateral Agency Agreement dated April 17, 1996 by and among Trump Plaza
Associates, Trump Taj Mahal Associates, Trump Atlantic City Associates, Trump
Atlantic City Funding, Inc. and The Trump Taj Mahal Corporation, First Bank
National Association, as collateral agency and the other parties who become
signatory thereto.
Pledge Agreement dated April [17], 1996 from Trump Atlantic City Associates to
First Bank National Association, as Trustee.]
<PAGE>
EXHIBIT 3.1.1
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
THCR ATLANTIC CITY FUNDING, INC.
UNDER SECTION 242 OF THE DELAWARE GENERAL CORPORATION LAW
THE UNDERSIGNED, being the duly appointed and acting President of THCR
ATLANTIC CITY FUNDING, INC., a corporation organized under the laws of the State
of Delaware, for the purpose of amending a certificate of incorporation filed
pursuant to Section 102 of the General Corporation Law of the State of Delaware,
hereby certifies, pursuant to Sections 242 and 103 of the General Corporation
law, as follows:
FIRST: The name of the corporation is THCR ATLANTIC CITY FUNDING,
INC.
SECOND: The Certificate of Incorporation of the Company was filed
with the Secretary of State on January 30, 1996.
THIRD: The amendment affected hereby was duly authorized by the
Company's board of directors and stockholders, and all specifically affected
classes or series of classes of stockholders, in accordance with the provisions
of Section 242 of the General Corporation Law.
FOURTH: The Certificate of Incorporation of the Company is hereby
amended by changing the Article thereof numbered "ARTICLE I" to read as follows:
<PAGE>
The name of the corporation (the "Corporation") is:
TRUMP ATLANTIC CITY FUNDING, INC.
IN WITNESS WHEREOF, I have made and signed this certificate this 4th
day of March, 1996 and affirm the statements contained herein as true under
penalties of perjury.
/s/ Nicholas L. Ribis
-------------------------------
Name: Nicholas L. Ribis
Title: President
----------------
ATTEST:
/s/ Robert M. Pickus____
------------------------
Name: Robert M. Pickus
Title: Secretary
-2-
<PAGE>
EXHIBIT 3.7
THIRD AMENDED AND RESTATED PARTNERSHIP
AGREEMENT OF TRUMP PLAZA ASSOCIATES
THIRD AMENDED AND RESTATED PARTNERSHIP AGREEMENT made this ___ day of
April, 1996 by and between TRUMP PLAZA FUNDING, INC., a New Jersey corporation
("Funding"), as withdrawing partner, TRUMP ATLANTIC CITY ASSOCIATES, a New
Jersey general partnership having an address at Mississippi Avenue and The
Boardwalk, Atlantic City, New Jersey 08401 ("Trump AC"), and THE TRUMP TAJ MAHAL
CORPORATION, a corporation organized under the laws of the State of Delaware
having an address at 1000 The Boardwalk, Atlantic City, New Jersey 08401
("TTMC"). Trump AC and TTMC are sometimes hereinafter individually referred to
as a "Partner" and collectively as "Partners."
WITNESSETH:
WHEREAS, Donald J. Trump ("Trump") and another entity, as general
partners, formed Trump Plaza Associates (the "Partnership") by entering into the
Amended and Restated Partnership Agreement of the Partnership under the laws of
the State of New Jersey on May 16, 1986, and amended such agreement on December
14, 1988, March 31, 1989 and August 8, 1990 (such Amended and Restated
Partnership Agreement, as so amended, is referred to herein as the "Original
Agreement"); and
WHEREAS, pursuant to a plan of reorganization, the Partnership
admitted Funding as a Partner (in substitution of other partners) and TP/GP
Corp., a New Jersey corporation ("TP/GP"), as a general partner and TP/GP, Trump
and Funding amended and restated in its entirety the Original Agreement in an
Amended and Restated Partnership Agreement dated as of May 29, 1992, which set
forth their respective rights and obligations in connection with the Partnership
(the "Prior Agreement"); and
WHEREAS, in connection with a refinancing, TP/GP was merged with and
into Funding and Trump contributed and assigned his entire right, title and
interest in the Partnership to Trump AC and Funding and Trump AC amended and
restated in its entirety the Prior Agreement in a Second and Amended Restated
partnership Agreement dated as of June 24, 1993, which set forth their
respective rights and obligations in connection with the Partnership (the
"Current Agreement"); and
WHEREAS, Funding has contributed and assigned its entire right, title
and interest in the Partnership to TTMC and TTMC desires to be substituted as a
general partner of the Partnership in lieu of Funding to the full extent of the
interest so assigned; and
WHEREAS, TTMC and Trump AC desire to set forth their respective rights
and obligations as Partners of the Partnership;
<PAGE>
NOW, THEREFORE, TTMC and Trump AC agree that the Current Agreement is
hereby amended and restated in its entirety effective as of the date hereof and
that the Partnership is hereby continued as a general partnership on the terms
and conditions set forth herein, and further agree as follows:
1. DEFINITIONS.
-----------
1.1 CERTAIN DEFINITIONS.
-------------------
In addition to the other terms defined elsewhere herein, the following
terms shall have the respective meanings set forth below:
"Accountants" means the national firm or firms of independent
certified public accountants selected by the Managing General Partner on behalf
of the Partnership to audit the books and records of the Partnership and to
prepare statements and reports in connection therewith, which initially shall be
Arthur Andersen LLP.
"Affiliate" means, with respect to any Person, any Person that
directly or indirectly through one or more intermediaries controls or is
controlled by or under common control with the specified Person.
"Bankruptcy" means, with respect to any Person, (i) the commencement
by such Person of any petition, case or proceeding seeking relief under any
provision or chapter of the federal bankruptcy code or any other federal or
state law relating to insolvency, bankruptcy or reorganization, (ii) an
adjudication that such Person is insolvent or bankrupt, (iii) the entry of an
order for relief under the federal bankruptcy code with respect to such Person,
(iv) the filing of any such petition or the commencement of any such case or
proceeding against such Person, unless such petition and the case or proceeding
initiated thereby are dismissed within ninety (90) days from the date of such
filing or (v) the filing of an answer by such Person admitting the allegations
of any such petition.
"Business Day" means a day other than a Saturday or Sunday or other
day on which banks are authorized or required by law to close in the City of New
York.
"Capital Account" means, with respect to any Partner, the separate
"book" account which the Partnership shall establish and maintain for such
Partner in accordance with Section 704 (b) of the Code and the Regulations
promulgated thereunder. In the event that a Partnership Interest is transferred
in accordance with the terms of this Agreement, the Capital Account, at the time
of the transfer, of the transferor attributable to the transferred interest
shall carry over to the transferee.
-2-
<PAGE>
"Capital Contribution" means, with respect to any Partner, the amount
of money and the initial Gross Asset Value of any Contributed Property (net of
liabilities to which such property is subject) set forth in Section 8, as such
Capital Account will be amended from time to time to reflect the amount of money
and the Gross Asset Value of any Contributed Property received by the
Partnership pursuant to any additional Capital Contribution.
"Casino Control Act" means the New Jersey Casino Control Act and the
regulations thereunder.
"Commission" means the New Jersey Casino Control Commission.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provision of future
law.
"Depreciation" means, with respect to any asset of the Partnership for
any fiscal year or other period, the depreciation or amortization, as the case
may be, allowed or allowable for federal income tax purposes in respect of such
asset for such fiscal year or other period; provided, however, that if there is
-------- -------
a difference between the Gross Asset Value and the adjusted tax basis of such
asset, Depreciation shall mean "book depreciation, depletion or amortization" as
determined under Section 1.704-1(b)(2)(iv)(g)(3) of the Regulations.
"Fair Market Value" means (i) in the case of any security, its current
market price and (ii) in the case of any property or Indebtedness that is not a
security, the fair market value of such property or Indebtedness as determined
in good faith by the Managing General Partner.
"Gross Asset Value" means, with respect to any asset of the
Partnership, such asset's adjusted basis for federal income tax purposes, except
as follows:
(a) the initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be (i) in the case of any asset described on
attached Schedule I, the gross fair market value ascribed thereto on such
Schedule and (ii) in the case of any other asset hereafter contributed by a
Partner, the gross Fair Market Value of such asset at the time of its
contribution.
(b) the Gross Asset Values of all Partnership assets shall be adjusted
to equal their respective gross Fair Market Values:
-3-
<PAGE>
(i) immediately prior to a Capital Contribution (other than a de
--
minimis Capital Contribution) to the Partnership by a new or existing Partner as
- -------
consideration for a Partnership Interest;
(ii) immediately prior to the distribution by the Partnership to a
Partner of more than a de minimis amount of Partnership property as
-- -------
consideration for the redemption of a Partnership Interest;
(iii) immediately prior to the liquidation of the Partnership to a
Partner of more than a de minimis amount of Partnership property as
-- -------
consideration for the redemption of a Partnership Interest; and
(iv) upon any other event as to which the Managing General Partner
reasonably determines that an adjustment is necessary or appropriate to reflect
the relative economic interests of the Partners;
(c) the Gross Asset Values of Partnership assets distributed to any
Partner shall be the gross Fair Market Values of such assets as of the date of
distribution; and
(d) the Gross Asset Values of Partnership assets shall be increased
(or decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Sections 734(b) or 743(b) of the Code, but only to the extent that
such adjustments are taken into account in determining Capital Accounts pursuant
to Section 1.704-1(b)(2)(iv)(m) of the Regulations; provided, however, that
-------- -------
Gross Asset Values shall not be adjusted pursuant to this paragraph to the
extent that the Managing Partner reasonably determines that an adjustment
pursuant to paragraph (b) above is necessary or appropriate in connection with a
transaction that would otherwise result in an adjustment pursuant to this
paragraph (d).
At all times, Gross Asset Values shall be adjusted by any Depreciation taken
into account with respect to the Partnership's assets for purposes of computing
Net Income and Net Loss. Any adjustment to the Gross Asset Values of
Partnership property shall require an adjustment to the Partners' Capital
Accounts; as for the manner in which such adjustments are allocated to the
Capital Accounts, see clause (c) of the definition of Net Income and Net Loss in
the case of adjustment by Depreciation, and clause (d) of said definition in all
other cases.
"Indebtedness" means any obligation, whether or not contingent, (i) in
respect of borrowed money or evidenced by bonds, notes, debentures or similar
instruments, (ii) representing the balance deferred and unpaid of the purchase
price of any property
-4-
<PAGE>
(including pursuant to capital leases), except any such balance that constitutes
an accrued expense or a trade payable, if and to the extent any of the foregoing
indebtedness would appear as a liability upon a balance sheet prepared on a
consolidated basis in accordance with GAAP, (iii) to the extent not otherwise
included, obligations under interest rate exchange, currency exchange, swaps,
futures or similar agreements, and (iv) guaranties (other than endorsements for
collection or deposit in the ordinary course of business), direct or indirect,
in any manner (including, without limitation, reimbursement agreements in
respect of letters of credit), of all or any part of any Indebtedness of any
third party.
"Net Income" or "Net Loss" means, for each fiscal year or other
applicable period, an amount equal to the Partnership's net income or loss for
such year or period as determined for federal income tax purposes by the
Accountants, determined in accordance with Section 703(a) of the Code (for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Section 703(a) of the Code shall be included in taxable
income or loss), with the following adjustments: (a) by including as an item of
gross income any tax-exempt income received by the Partnership; (b) by treating
as a deductible expense any expenditure of the Partnership described in Section
705(a)(2)(B) of the Code (including amounts paid or incurred to organize the
Partnership (unless an election is made pursuant to Code Section 709(b)) or to
promote the sale of interests in the Partnership and by treating deductions for
any losses incurred in connection with the sale or exchange of Partnership
property disallowed pursuant to Section 267(a)(1) or Section 707(b) of the Code
as expenditures described in Section 705(a)(2)(B) of the Code); (c) in lieu of
depreciation, depletion, amortization and other cost recovery deductions taken
into account in computing total income or loss, there shall be taken into
account Depreciation; (d) gain or loss resulting from any disposition of
Partnership property with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to the Gross Asset
Value of such property rather than its adjusted tax basis; (e) in the event of
an adjustment of the Gross Asset Value of any Partnership asset which requires
that the Capital Accounts of the Partnership be adjusted pursuant to Regulation
Section 1.704-1(b)(2)(iv)(e), (f) and (m), the amount of such adjustment is to
be taken into account as additional Net Income or Net Loss pursuant to Section
5.1; and (f) excluding any items specially allocated pursuant to Section 5.2.
Once an item of income, gain, loss or deduction has been included in the initial
computation of Net Income or Net Loss and is subjected to the special allocation
rules in Section 5.2, Net Income and Net Loss shall be computed without regard
to such item.
"Nonrecourse Deductions" shall have the meaning set forth in Sections
1.704-2(b)(1) and (c) of the Regulations.
-5-
<PAGE>
"Nonrecourse Liabilities" shall have the meaning set forth in Section
1.704-2(b)(3) of the Regulations.
"Partner" means each of TTMC or Trump AC or any Transferee thereof
that becomes substituted as a Partner in accordance herewith.
"Partner Nonrecourse Debt" shall have the meaning set forth in Section
1.704-2(b)(4) of the Regulations.
"Partner Nonrecourse Deductions" shall have the meaning set forth in
Section 1.704-2(i)(2) of the Regulations.
"Partnership Interest" means any interest of TTMC or Trump AC or any
Transferee in the Partnership, including the right of such Partner to benefits
to which it may be entitled under, and the obligations of such Partner to comply
with, all the terms and provisions of this Agreement.
"Partnership Minimum Gain" shall have the meaning set forth in Section
1.704-2(b)(2) of the Regulations.
"Percentage Interest" means, with respect to any Partner, the
percentage ownership interest of such Partner in such items of the Partnership
as to which the term "Percentage Interests" is applied in this Agreement,
initially 1% for TTMC and 99% for Trump AC, subject to appropriate adjustment in
accordance with the provisions hereof.
"Person" means any natural person or Entity.
"Pledge Agreement" means the pledge agreement dated June 12, 1995 from
the Partnership, as pledgor, to First Bank National Association, as collateral
agent, securing the Senior Secured Notes due 2005 of Trump AC and Trump Hotels &
Casino Resorts Funding, Inc., as joint obligors.
"Profits" and "Losses" means, for each fiscal year or other period, an
amount for such year or period determined in the manner prescribed in Code
Section 703(a) (including separately state items), (i) using the tax accounting
methods used for Federal income tax purposes, (ii) adding any tax-exempt income
and subtracting any deductions or expenditures described in or treated as
expenditures under Code Section 705(a)(2) not taken into account, (iii)
reflecting the book adjustment of the Capital Accounts as initially reflected in
Article 8 hereof and as prescribed in Regulations under Code Section 704(b) and
(c), and (iv) taking into account any amounts or items of income or expense
specially allocated pursuant to Sections 9.1, 9.2 and 9.3.
-6-
<PAGE>
"Regulations" shall mean the income tax regulations promulgated under
the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Tax Amounts" with respect to any year shall not exceed an amount
equal to (a) the higher of (i) the product of (A) the taxable income of the
Partnership for such year as determined in good faith by the Managing Partner
and (B) the Tax Percentage and (ii) the product of (A) the alternative minimum
taxable income attributable to the Partnership for such year as determined in
good faith by the Managing Partner and (B) the Tax Percentage, reduced by (b) to
the extent not previously taken into account, any income tax benefit
attributable to the Partnership which could be realized (without regard to the
actual realization) by its Partners in the current or any prior taxable year, or
portion thereof, commencing on the date of this Partnership Agreement (including
any tax losses or tax credits), computed at the applicable Tax Percentage for
the year that such benefit is taken into account for purposes of this
computation. Any part of the Tax Amount not distributed in respect of a tax
period for which it is calculated shall be available for distribution in
subsequent tax periods.
"Tax Distribution" shall mean distributions by the Partnership
pursuant to Section 6.2 hereof.
"Tax Items" shall have the meaning set forth in Section 9.3(a).
"Tax Payment Loan" shall have the meaning set forth in Section 10.4(a)
hereof.
"Tax Percentage" shall mean the highest, aggregate effective marginal
rate of Federal, state and local income tax or, when applicable, alternative
minimum tax, to which any Partner would be subject in the relevant year of
determination (as certified to the Managing Partner by the Accountants);
provided, however, that in no event shall the Tax Percentage be greater than the
- -------- -------
sum of (x) the highest, aggregate effective marginal rate of Federal, state, and
local income tax, or when applicable, alternative minimum tax, to which the
Partnership would have been subject if it were a C corporation for Federal
income tax purposes, and (y) 5 percentage points. If any Partner is an S
corporation, partnership, or similar pass-through entity for Federal income tax
purposes, the Tax Percentage shall be computed based upon the tax rates
applicable to the shareholder or partner of such Partner, as the case may be.
"Transferee" means each Person who pursuant to Article 11 hereof or
otherwise acquires a Partnership Interest from a Partner or a Transferee
thereof.
-7-
<PAGE>
"Withholding Tax Act" shall have the meaning set forth in Section
10.4(a) hereof.
1.2 ACCOUNTING TERMS AND DETERMINATIONS. All references in this
-----------------------------------
Agreement to "generally accepted accounting principles" or "GAAP" shall mean
generally accepted accounting principles in effect in the United States of
America at the time of application thereof. Unless otherwise specified herein,
all accounting terms used herein shall be interpreted, all determinations with
respect to accounting matters hereunder shall be made, and all financial
statements and certificates and reports as to financial matters required to be
furnished hereunder shall be prepared, in accordance with generally accepted
accounting principles, applied on a consistent basis.
2. NAME. The name of the Partnership is Trump Plaza Associates.
----
3. PURPOSE. The character of the Partnership's business is (i) to own
-------
and operate Trump Plaza Hotel and Casino in Atlantic City, New Jersey and
conduct casino gaming, and (ii) to do all things necessary, incidental,
desirable or appropriate in connection with the foregoing.
4. PLACE OF BUSINESS. The principal place of business of the
-----------------
Partnership in the State of New Jersey shall be Mississippi Avenue and The
Boardwalk, Atlantic City, New Jersey 08401.
5. PARTNERS.
--------
(a) The names and addresses of the Partners in the Partnership prior
to giving effect to the amendments and restatement contained herein were:
Trump Plaza Funding, Inc.
Mississippi Avenue and The Boardwalk
Atlantic City, New Jersey 08401
Trump Atlantic City Associates
Mississippi Avenue and The Boardwalk
Atlantic City, New Jersey 08401
(b) The names and addresses of the Partners in the Partnership after
giving effect to the amendments and restatement contained herein will be:
Trump Atlantic City Associates The Trump Taj Mahal Corporation
Mississippi Avenue and 1000 The Boardwalk
The Boardwalk Atlantic City, N.J. 08401
Atlantic City, N.J. 08401
-8-
<PAGE>
6. MANAGING PARTNER. All decisions affecting the business and affairs
----------------
of the Partnership, including, but not limited to the financing, refinancing,
sale, management or leasing of any Partnership property, or any part thereof,
the acquisition, development, financing, sale or leasing of other property and
all matters arising under this Agreement shall be decided by Trump AC, which
shall act as the Managing Partner of the Partnership.
7. TERM. The term for which the Partnership is to exist is to the
----
close of business on the 31st day of December, 2030, unless sooner terminated
pursuant to Section 13.1 hereof.
8. CAPITAL ACCOUNTS. The capital account as of the date of this
----------------
Agreement of each Partner is as follows:
Trump AC $____________
TTMC $____________
No interest shall be paid by the Partnership on balances in Capital Accounts nor
shall any other funds be distributed or distributable, except as provided in
this Agreement.
9. ALLOCATIONS AND OTHER TAX AND ACCOUNTING MATTERS.
------------------------------------------------
The Net Income, Net Loss and/or other Partnership items shall be
allocated as follows:
9.1 ALLOCATIONS OF NET INCOME AND NET LOSS.
--------------------------------------
(a) NET INCOME. Except as otherwise provided herein, Net Income for
----------
any fiscal year or other applicable period shall be allocated in the following
order and priority:
(i) First, to the Partners, until the cumulative Net Income allocated
pursuant to this subparagraph (a)(i) for the current and all prior periods
equals the cumulative Net Loss allocated pursuant to subparagraph (b) (ii)
hereof for all prior periods, among the Partners in the reverse order that such
Net Loss was allocated to the Permitted Partners pursuant to subparagraph
(b)(ii) hereof.
(ii) Thereafter, the balance of the Net Income, if any, shall be
allocated to the Partners in accordance with their respective Percentage
Interests.
(b) NET LOSS. Except as otherwise provided herein, Net Loss of the
--------
Partnership for each fiscal year or other applicable period shall be allocated
to the Partners in accordance with their respective Percentage Interests.
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<PAGE>
9.2 SPECIAL ALLOCATIONS. Notwithstanding any provisions of Section
-------------------
9.1, the following special allocations shall be made, to the least extent
necessary to satisfy section 704(b) of the Code and the Regulations promulgated
thereunder, in the following order:
(a) MINIMUM GAIN CHARGEBACK (NONRECOURSE LIABILITIES). If there is a
-------------------------------------------------
net decrease in Partnership Minimum Gain for any Partnership fiscal year (except
as a result of conversion or refinancing of Partnership indebtedness, certain
capital contributions or revaluation of the Partnership property as further
outlined in 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 Regulation Section 1.704-2(f)(6). This
paragraph (a) is intended to comply with the minimum gain chargeback requirement
in said section of the Regulations and shall be interpreted consistently
therewith. Allocations pursuant to those paragraph (a) shall be made in
proportion to the respective amounts required to be allocated to each partner
pursuant hereto.
(b) MINIMUM GAIN ATTRIBUTABLE TO PARTNER NONRECOURSE DEBT. If there
-----------------------------------------------------
is a net decrease in Minimum Gain Attributable to Partner Nonrecourse Debt
during any fiscal year (other than due to the conversion, refinancing or other
change in the debt instrument causing it to become partially or wholly
nonrecourse, certain capital contributions, or certain revaluations of
Partnership property (as further outlined in Regulation Section 1.704-2(i)(4)),
each Partner shall be specially allocated items of Partnership in come and gain
for such year (and, if necessary, subsequent years) in an amount equal to the
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 Regulation Section 1.704-2(i)(4) and (j)(2). This paragraph (b)
is intended to comply with the minimum gain chargeback requirement with respect
to Partner Nonrecourse Debt contained in said section of the Regulations and
shall be interpreted consistently therewith. Allocations pursuant to this
paragraph (b) shall be made in proportion to the respective amounts required to
be allocated to each Partner pursuant hereto.
(c) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any fiscal
----------------------
year or other applicable period shall be allocated to the Partners in accordance
with their respective Percentage Interests. For purposes of Regulation Section
1.752-3(a)(3), "excess nonrecourse liabilities" shall be allocated among the
Partners in proportion to their respective Percentage Interests.
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<PAGE>
(d) PARTNER NONRECOURSE DEDUCTIONS. Partner Nonrecourse Deductions
------------------------------
for any fiscal year or other applicable period shall be specially allocated to
the Partner that bears the economic risk of loss for the debt (i.e., the Partner
Nonrecourse Debt) in respect of which such Partner Nonrecourse Deductions are
attributable (as determined under Regulation Section 1.704-2(b)(4) and (i)(1)).
(e) ADDITIONAL ALLOCATIONS. Notwithstanding the foregoing, if, upon
----------------------
final dissolution and termination of the Partnership and after taking into
account all allocations of Net Income and Net Loss (and other Tax Items) under
this Section 9, the distributions to be made in accordance with the positive
Capital Account balances would result in a distribution that would be different
from a distribution under Section 10.3 hereof, then gross items of income and
gain (and other Tax Items) for the taxable year of the final dissolution and
termination (and, to the extent permitted under Section 761(c) of the Code,
gross items of income and gain (and other Tax Items) for the immediately
preceding taxable year) shall be allocated to the Partners to increase or
decrease their Capital Account balances, as the case may be, so that the final
distribution will occur in the same manner as a distribution under Section 10.3
hereof.
9.3 TAX ALLOCATIONS.
---------------
(a) GENERALLY. Subject to paragraphs (b) and (c) hereof, items of
---------
income, gain, loss, deduction and credit to be allocated for income tax purposes
(collectively, "Tax Items") shall be allocated among the Partners on the same
---------
basis as their respective book items.
(b) SECTIONS 1245/1250 RECAPTURE. If any portion of gain from the
----------------------------
sale of property is treated as gain which is ordinary income by virtue of the
application of Code Sections 1245 or 1250 ("Affected Gain"), except to the
-------------
extent that the tax treatment of such sale is governed by Section 704(c) of the
Code as provided under Section 9.3(c) hereof, then (i) such Affected Gain, to
the extent attributable to depreciation or amortization allowed or allowable for
any taxable period subsequent to the date hereof, shall be allocated among the
Partners in the same proportion that the depreciation and amortization
deductions giving rise to the Affected Gain were allocated and (ii) other Tax
Items of gain of the same character that would have been recognized, but for the
application of Code Sections 1245 and/or 1250, shall be allocated away from
those Partners who are allocated Affected Gain pursuant to clause (i) so that,
to the extent possible, the other Partners are allocated the same amount, and
type, of capital gain that would have been allocated to them had Code Sections
1245 and/or 1250 not applied. For purposes hereof, in order to determine the
proportionate allocations of depreciation and amortization
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<PAGE>
deductions for each fiscal year or other applicable period, such deductions
shall be deemed allocated on the same basis as Net Income or Net Loss for such
respective period.
(c) ALLOCATIONS RESPECTING SECTION 704(C). Property contributed to
-------------------------------------
the Partnership shall be subject to Section 704(c) of the Code and Regulation
Section 1.704-3 so that notwithstanding Section 9.2 hereof, taxable gain and
loss from disposition of such property contributed to the Partnership that is
subject to Section 704(c) of the Code shall be allocated on a property by
property basis in accordance with the Regulations promulgated thereunder. For
---
the purpose of allocating Tax Items, the Partnership shall apply the "ceiling
- -----------------------------------------------------------------------------
rule" set forth in Regulation Section 1.704-3, the effect of which will not be
- ------------------------------------------------------------------------------
subject to cure by special allocation. The Partnership shall allocate items of
- -------------------------------------
income, gain, loss and deduction allocated to it by a partnership to the Partner
or Partners contributing the interest or interests in such partnership, so that,
to the greatest extent possible and consistent with the foregoing, such
contributing Partner or Partners are allocated the same amount and character of
items of income, gain, loss and deduction with respect to such partnership that
they would have been allocated had they contributed undivided interests in the
assets owned by such partnership to the Partnership in lieu of contributing the
interest or interest in the partnership to the Partnership.
9.4 BOOKS OF ACCOUNT. At all times during the continuance of the
----------------
Partnership, the Managing General Partner shall maintain or cause to be
maintained full, true, complete and correct books of account in accordance with
GAAP, using the calendar year as the fiscal and taxable year of the Partnership.
In addition, the Partnership shall keep all records required to be kept pursuant
to the Act.
9.5 TAX CERTIFICATIONS.
------------------
(a) The Partnership shall deliver to each Partner, from time to time
as necessary to implement timely the provisions of this Agreement, certificates
executed by its chief financial officer and the Accountants indicating the
respective calculations with respect to, and the amounts of, a Partner's share
of Tax Distributions and the amount of any repayments to the Partnership called
for thereunder, together with supporting schedules in reasonable detail all as
of each pertinent date and delivered at least 15 business days prior to the date
payment is due.
(b) The certificates delivered pursuant to paragraph (a) thereof shall
be deemed approved by all parties and the Partnership shall act upon such
certificate as provided in this Agreement unless within five business days of
delivery of such
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<PAGE>
certificate a Partner objects to the contents of any certificate by written
notice in detail sufficient to state the basis for the objection. The Partners
shall negotiate in good faith to resolve such objection.
10. DISTRIBUTIONS.
-------------
10.1 GENERAL. Distributions of cash or property may be made in
-------
accordance herewith at such times as the Managing Partner deems appropriate in
the order provided in this Section 10, subject to the limitations, if any, set
forth in the agreements governing the Partnership's Indebtedness, including the
indenture governing the Partnership's and Trump Atlantic City Funding, Inc.'s
First Mortgage Notes due 2006 and ancillary documents relating thereto.
10.2 DISTRIBUTIONS FOR TAXES.
-----------------------
(a) The Partnership shall distribute to each Partner in one or more
payments, including payments described in paragraph (b) from time to time during
each year, but in no event later than March 1 of the year immediately following
such year, an aggregate cash sum equal to the product of (i) Tax Amounts in
respect of the taxable year, or portion thereof, for which such distribution is
being made and (ii) the Partner's Percentage Interest. In addition, the
Partnership shall make additional pro rata distributions as are necessary to
reflect adjustments, as determined in good faith by the board of directors of
the General Partner, to any item affecting Tax Amounts, as reflected on the
Partnership's tax return, as it may be amended from time to time, or as a result
of a concluded tax audit.
(b) In addition to the certificates required by Section 9.5, the
Partnership shall furnish the Partners with such information as they shall
reasonably request from time to time respecting estimates of the Partnership's
taxable income or loss (and items thereof) for any fiscal year or portion
thereof. If, in any year, any Partner shall be required to make federal, state
or local estimated income tax payments under applicable law and regulations,
then, at least thirty (30) days prior to the date (the "Estimated Payment Date")
upon which any such payments are due, the Partnership shall deliver to each
Partner the certificates required by Section 9.6, indicating the amount (the
"Estimated Payment") of the tax in respect of the respective Tax Amounts due on
the Estimated Payment Date, and not later than fifteen (15) days prior to such
Estimated Payment Date, the Partnership shall pay to such Partner an amount
equal to such Estimated Payment. The amount of each Estimated Payment received
by such Partner shall be treated as a non-interest bearing advance against the
amounts distributable in respect of such Partner's pro rata share of Tax Amounts
to such Partner for such year. If the aggregate amount of the Estimated
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<PAGE>
Payments received by a Partner for any year shall exceed the distribution to
which such Partner actually is entitled under paragraph (a) above, such Partner
shall forthwith repay such excess to the Partnership on or before the date set
forth in paragraph (a) above, unless such excess shall have been paid to taxing
authorities in which event such excess shall be applied to reduce the amount
otherwise distributable pursuant to this Section 10.2 in respect of the
Partnership's next succeeding fiscal year or years. Each Partner shall seek, to
the extent entitled thereto, and contribute to the Partnership any refund of
taxes paid by such Partner out of amounts distributed pursuant to this Section
10.2 promptly after receipt of such refund.
10.3 OTHER DISTRIBUTIONS. After payments and distributions, if any,
-------------------
of the amounts set forth in Section 10.2 above, the Partnership may distribute,
in the discretion of the Managing Partner, cash or other property, valued at its
Fair Market Value, to the Partners. Any such distributions shall be made (i)
first in proportion to, and to the extent of their then positive Capital Account
balances and (ii) then in accordance with their Percentage Interests.
10.4 WITHHOLDING PAYMENTS REQUIRED BY LAW.
------------------------------------
(a) Unless treated as a Tax Payment Loan (as hereinafter defined), any
amount paid by the Partnership for or with respect to any Partner on account of
any withholding tax or other tax payable with respect to the income, profits or
distributions of the Partnership to the Code, the Regulations, or any state or
local statute, regulation or ordinance requiring such payment (a "Withholding
Tax Act") shall be treated as a distribution to such Partner for all purposes of
this Agreement, consistent with the character or source of the income, profits
or cash which gave rise to the payment or withholding obligation. To the
extent that the amount required to be remitted by the Partnership under the
Withholding Tax Act exceeds the amount then otherwise distributable to such
Partner, unless and to the extent that funds shall have been provided by such
Partner pursuant to the last sentence of this Section 10.4(a), the excess shall
constitute a loan from the Partnership to such Partner (a "Tax Payment Loan")
which shall be payable upon demand and shall bear interest, from the date that
the Partnership makes the payment to the relevant taxing authority, at the rate
announced from time to time by Citibank, N.A. (or any successor thereto) as its
"prime rate", compounded monthly (but in no event higher that the highest
interest rate permitted by applicable law). So long as any Tax Payment Loan to
any Partner or the interest thereon remains unpaid, the Partnership shall make
future distributions due to such Partner under this Agreement by applying the
amount of any such distributions first to the payment of any unpaid interest on
such Tax Payment Loan and then to the repayment of the principal
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<PAGE>
thereof, and no such future distributions shall be paid to such Partner until
all of such principal and interest has been paid in full. If the amount required
to be remitted by the Partnership under the Withholding Tax Act exceeds the
amount then otherwise distributable to a Partner, the Partnership shall notify
such Partner at least five (5) Business Days in advance of the date upon which
the Partnership would be required to make a Tax Payment Loan under this Section
10.4(a) (the "Tax Payment Loan Date") and provide such Partner the opportunity
to pay to the Partnership, on or before the Tax Payment Loan Date, all or a
portion of such deficit.
(b) The General Partner shall have the authority to take all actions
necessary to enable the Partnership to comply with the provision of any
Withholding Tax Act applicable to the Partnership and to carry out the
provisions of this Section 10.4. Nothing in this Section 10.4 shall create any
obligation on the General Partner to advance funds to the Partnership or to
borrow funds from third parties in order to make any payments on account of any
liability of the Partnership under a Withholding Tax Act.
(c) In the event that a Tax Payment Loan is not paid by a Limited
Partner within thirty (30) days after written demand therefor is made by the
General Partner, the General Partner may cause all distributions that would
otherwise be made to such Limited Partner to be retained by the Partnership, up
to the amount necessary to repay such Tax Payment Loan, including all accrued
and unpaid interest thereon, and such retained distributions shall be applied
against, first, the accrued interest on and, second, the principal of, such Tax
----- ------
Payment Loan.
10.5 NON-RECOURSE. Notwithstanding any other provisions of this
------------
Agreement, the obligations to make distributions contemplated hereby shall be
limited to the assets of the Partnership and shall be non-recourse with respect
to the Partners and any of their assets.
11. TRANSFERS AND WITHDRAWAL.
------------------------
11.1 SALE AND TRANSFER OF PARTNERSHIP INTERESTS. No Partnership
------------------------------------------
Interest or any portion thereof may be sold or otherwise transferred, whether by
gift, pledge, by operation of law or otherwise, including any transfer upon
liquidation and dissolution (but excluding all transfers upon or by reason of
death), unless (x) the transfer and the Transferee are approved in advance by
all the Partners, except with respect to any transfer resulting from exercise of
any rights under the Pledge Agreement, (y) the transfer and the Transferee are
approved by the Commission and (z) the Transferee becomes a party to this
Agreement and assumes all of the obligations hereunder of its transferor and
-15-
<PAGE>
agrees to be bound by the terms and conditions hereof in the same manner as its
transferor in each case to the extent of the Partnership Interest transferred.
Each Transferee shall have all rights hereunder as given to the original party
hereto or subsequent transferee thereof. The foregoing notwithstanding, no
transfer of a Partnership Interest (other than a transfer upon the exercise of
any rights under the Pledge Agreements) shall be effective if, in the opinion of
counsel to the Partnership, such transfer, when added to the total of all other
Partnership Interests transferred within the period of 12 consecutive months
prior to the proposed date of transfer, would result in a termination of the
Partnership under Section 708 of the Code or that would cause the Partnership to
be treated as a "publicly-traded partnership" under the Code.
12. BOOKS AND RECORDS.
-----------------
12.1 COMPLETE BOOKS. At all times during the continuance of the
--------------
Partnership, the Partnership shall keep or cause to be kept full and complete
books of account in which shall be entered fully and accurately each transaction
of the Partnership, including the Capital Accounts of the Partners.
12.2 METHOD OF RECORDKEEPING. All of the Partnership's books of
-----------------------
account shall at all times be maintained 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 an annual
accounting period ending December 31, except for the final 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.
12.3 TAX INFORMATION. The Partnership shall be treated as a
---------------
Partnership for federal and state income tax and franchise tax purposes;
accordingly, the Partnership shall cause to be prepared and filed on or before
the due date annually a United States Partnership Return of Income and any
necessary state income and franchise tax returns on a partnership basis. Such
returns shall be submitted to the Partners for review no later than the tenth
Business Day prior to the date on which such return is due, as such date may be
extended as the result of any extension obtained. Each Partner shall notify the
other Partners upon receipt of any notice of any tax examination by any federal,
state or local authority pertaining to the Partnership or the other Partners.
No settlement of any tax issue concerning or having an effect upon the
Partnership shall be made by any Partner except upon the approval of the tax
matters partner, designated pursuant to Section 14.12.
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<PAGE>
12.4 INDEPENDENT ACCOUNTANTS. The accountants for the Partnership
-----------------------
shall be Arthur Andersen LLP or such other nationally recognized firm of
certified public accountants as determined by the Managing Partner.
13. DISSOLUTION, LIQUIDATION AND WINDING-UP.
---------------------------------------
13.1 ACCOUNTING. In the event of the dissolution, liquidation and
----------
winding-up of the Partnership, a proper accounting shall be made of the Capital
Account of each Partner and of the Net Income or Net Loss of the Partnership
from the date of the last previous accounting to the date of dissolution.
13.2 DISTRIBUTION ON DISSOLUTION. In the event of the dissolution
---------------------------
and liquidation of the Partnership for any reason, the assets of the Partnership
shall be liquidated for distribution in the following rank and order:
(a) Payment of creditors of the Partnership, other than
creditors who are Partners;
(b) Payment of creditors of the Partnership who are
Partners;
(c) Establishment of reserves to provide for contingent
liabilities, if any; and
(d) To the Partners in accordance with the positive
balances in their Capital Accounts after giving effect to all contributions,
distributions and allocations for all periods.
13.3 TIMING REQUIREMENTS.
-------------------
(a) In the event that the Partnership is "liquidated" within the
meaning of Section 1.704-1(b)(2)(ii)(g) of the Regulations, any and all
distributions to the Partners pursuant to Section 13.2(d) hereof shall be made
no later than the later to occur of (i) the last day of the taxable year of the
Partnership in which such liquidation occurs or (ii) ninety (90) days after the
date of such liquidation.
(b) Notwithstanding the provisions of Section 13.2 hereof which
require liquidation of the assets of the Partnership, but subject to the order
of priorities set forth therein, if prior to or upon dissolution of the
Partnership the Partners determine that an immediate sale of part or all of the
Partnership's assets would be impractical or would cause undue loss to the
Partners, the Partners may defer for a reasonable time the liquidation of any
assets except those necessary to satisfy liabilities of the Partnership.
-17-
<PAGE>
13.4 DISSOLUTION. The Partnership shall be dissolved upon the
-----------
occurrence of any of the following events:
(a) the dissolution, liquidation, termination, withdrawal, death,
insanity, retirement or Bankruptcy of a Partner or other event causing
dissolution under the New Jersey Uniform Partnership Law;
(b) the election to dissolve the Partnership made in writing by the
Partners;
(c) the sale or other disposition of all or substantially all of the
assets of the Partnership unless the Partners elect to continue the Partnership
business for the purpose of the receipt and the collection of indebtedness or
the collection of any other consideration to be received in exchange for the
assets of the Partnership (which activities shall be deemed to be part of the
winding-up of the affairs of the Partnership); or
(d) the entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the New Jersey Uniform Partnership Law, which
decree is final and not subject to appeal.
Following an event causing a dissolution of the Partnership, the
Partnership shall be wound-up and terminated unless the business of the
Partnership is continued by the Partnership in reconstituted form pursuant to
Section 13.5.
13.5 CONTINUATION OF THE PARTNERSHIP. Upon the Bankruptcy,
-------------------------------
dissolution, liquidation, withdrawal, death, retirement or insanity of any
Partner, or any other event of dissolution under the New Jersey Uniform
Partnership Law, within 90 days thereafter, all of the remaining Partners may
elect to reconstitute the Partnership and continue its business.
14. MISCELLANEOUS.
-------------
14.1 AMENDMENTS. This Agreement may be amended, modified or cancelled,
----------
and the terms and conditions hereof may be waived, only by a written instrument
signed by each of its Partners.
14.2 COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed as original, but all of which
together shall constitute one and the same instrument.
14.3 FURTHER ASSURANCES. Each of the Partners hereby agrees to
------------------
execute and deliver all such other and additional
-18-
<PAGE>
instruments and documents and to do such other acts and things as may be
necessary to more fully effectuate this Partnership, carry on the Partnership's
business and effectuate this Agreement.
14.4 VARIATIONS OF PRONOUNS. All pronouns and all variations thereof
----------------------
shall be deemed to refer to the masculine, feminine or neuter, singular or
plural, as the identity of the Person may require.
14.5 NON-WAIVER. No delay on the part of any party in exercising any
----------
right hereunder shall operate as a waiver thereof, nor shall any waiver, express
or implied, 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 or a similar or dissimilar nature thereof.
14.6 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.
14.7 SEVERABILITY. Any provision of this Agreement that is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provisions in any other jurisdiction.
14.8 GOVERNING LAW. 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 under applicable principles of conflict of laws
thereof.
14.9 CASINO CONTROL COMMISSION REGULATION. Notwithstanding anything to
------------------------------------
the contrary contained herein:
(i) this Agreement will be deemed to include all provisions required
by the Casino Control Act and to the extent that anything contained herein is
inconsistent therewith, 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) All securities (as such term is defined in the Casino Control
Act) of the Partnership are held subject to the condition that, as of the date
the Commission serves notice of its determination of disqualification of a
holder
-19-
<PAGE>
thereof, such holder shall (a) not receive any dividends or interest upon
any such securities; (b) not exercise, directly or through any trustee or
nominee, any voting right conferred by such securities; and (c) not receive any
remuneration in any form from the Partnership for services rendered or
otherwise.
(iii) 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
arrangement as may be required by the Commission under the circumstances. It is
the intent of this Section 13.9 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.
(iv)(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.
(v) 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.
(vi) Each Partner shall have the right to offer to acquire any
Partnership Interest required to be disposed of pursuant to this Section 13.9 on
the same basis as other potential purchasers, subject to the Casino Control Act.
14.10 CERTIFICATE OF INTEREST. Notwithstanding anything to the
-----------------------
contrary contained in this Agreement:
(i) The interest of each Partner in the Partnership shall be evidenced
by a Certificate of Interest. The Certificates of Interest in the Partnership,
together with a Certificate Transfer Ledger, shall be maintained at the
principal office of the Partnership. Each such Certificate shall be serially
numbered and shall be issued by, or at the written direction of, each of the
General Partners to the lawful holder of an interest in the Partnership, upon
payment by the issuee of the full amount of the capital contributions then due
with respect to its interest in the Partnership represented by such Certificate.
All Certificates
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<PAGE>
shall be executed in the name of the Partnership by each of the General Partners
or their designee(s). Each Certificate shall state on its face the name of the
registered holder thereof and the then interest in the Partnership held by the
issuee; and shall bear, on both sides thereof, a statement of the restrictions
imposed by Section 105 of the Casino Control Act.
(ii) Certificates of Interest in the Partnership may be transferred by
the lawful holders thereof only in connection with the 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
fully recorded on the Certificate Transfer Ledger. No effect shall be given to
any purported assignment of a Certificate, or transfer of the interest in the
Partnership evidenced 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.
(iii) In the event that a Certificate of Interest shall be lost,
stolen, destroyed or mutilated, the Partnership may cause a replacement
Certificate to be issued upon such terms and conditions as shall be fixed by the
Partners, including, without limitation, provision for indemnity and the posting
of a bond or other adequate security as security therefor. No replacement
Certificate shall be issued to any person unless such person has surrendered the
Certificate to be replaced, or has complied with the terms of this subsection.
(iv) 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
Ledger shall, in addition, be available for inspection by the 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.
14.11 HEADINGS. The descriptive headings contained in this Agreement
--------
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
14.12 TAX MATTERS PARTNER. Trump AC shall be the "tax matters
-------------------
partner" under the Code and all applicable tax laws and shall, in its sole
discretion, make or revoke all tax elections, resolve allocations issues and
handle all tax audits, controversies and proceedings. TTMC and Trump AC agree
that Trump AC, acting through the Partnership, shall have the authority to
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handle and resolve all tax controversies involving Trump AC, TTMC and/or the
Partnership in such manner as Trump AC in its sole discretion determines,
provided that the Partnership shall bear all accounting and legal expenses
incurred in connection therewith.
14.13 INDEMNIFICATION. The Partnership shall indemnify and hold
---------------
harmless each Partner, its Affiliates, and all officers, directors, employees
and agents (individually, an "Agent") of such Partner, and its affiliates
(individually, an "Indemnitee") from and against any and all losses, claims,
demands, costs, damages, liabilities, joint and several, expenses of any nature
(including reasonable 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, brought or threatened 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 or their status as an Agent including without
limitation liabilities under the Federal and state securities laws, regardless
of whether the Indemnitee continues to be a Partner, an Affiliate of a Partner,
or an Agent of a Partner or of an Affiliate of a Partner at the time any such
liability or expense is paid or incurred, so long as such indemnified person
acted in good faith on behalf of the Partnership, TTMC or Trump AC and in a
manner reasonably believed by such person to be in or not opposed to the best
interests of the Partnership, TTMC or Trump AC but only if such course of
conduct does not constitute gross negligence or willful misconduct; provided
that such indemnification or agreement to hold harmless shall be recoverable
only out of assets of the Partnership and not from the Partners and; provided,
further that no indemnification shall be made to or on behalf of an Indemnitee
if a judgment or other final adjudication adverse to the Indemnitee establishes
that his or its acts or omissions (i) in the case of an Indemnitee who is or was
a director of TTMC or the Trump AC managing general partner, were in breach of
his duty of loyalty to TTMC or the Trump AC managing general partner, as the
case may be, or were not in good faith or involved a knowing violation of law,
or resulted in receipt by the Indemnitee of an improper personal benefit or (ii)
in the case of all other Indemnitees, constituted gross negligence or willful
misconduct. Termination of any proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendre or its equivalent shall not itself
create a presumption that such Indemnitee did not meet the applicable standard
of conduct for indemnification. Indemnity shall be paid in advance of the final
disposition of the proceeding to an Indemnitee provided that the Indemnitee
undertakes to repay the Partnership if it shall ultimately be determined that he
or it is not entitled to indemnification as provided by this Section 14.13. The
indemnification provided by this Section 14.13 shall be in addition to any other
rights to which an Indemnitee may be entitled under
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<PAGE>
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, or as an
officer, director, employee or agent of a Partner or Affiliate of a Partner 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 14.13 by
reason of the fact that the Indemnitee had an interest in the transaction with
respect to which the indemnification applies if such interest was fully
disclosed and the transaction was approved by Funding.
Any indemnification or advance under this Section 14.13 to an
Indemnitee shall be made promptly and in any event within thirty (30) days upon
the written request of the individual seeking indemnification. The right to
indemnification or advances as granted under this Section 14.13 shall be
enforceable by any such individual seeking indemnification in any court of
competent jurisdiction, if the Partnership denies such request, in whole or in
part, or if no disposition thereof is made within thirty (30) days. Such
person's costs and expenses incurred in connection with successfully
establishing his right to indemnification or advances, in whole or in part, in
any such action shall also be indemnified by the Partnership. It shall be a
defense to any such action that there has been a judgment or other final
adjudication adverse to the claimant which established that his acts or
omissions did not meet the standard of conduct required by the first paragraph
of this Section 14.13, but the burden of proving such defense shall be on the
Partnership. Neither the failure of the Partnership to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he has met the applicable
standard of conduct, nor the fact that there has been an actual determination by
the Partnership that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
The partnership shall have the power to purchase and maintain
insurance, and to furnish similar protection (including but not limited to
providing a trust fund, letter of credit, self-insurance or indemnification
contract), on behalf of any individual to whom indemnification or advances may
be paid hereunder, against any expenses, fees or liabilities for which
indemnification or advances may be paid hereunder.
14.14 SUCCESSORS AND ASSIGNS. 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,
including any pledgee upon the foreclosure
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of any pledge of a Partner's Partnership Interest in the Partnership.
Partners:
TRUMP ATLANTIC CITY ASSOCIATES
By: TRUMP HOTELS & CASINO RESORTS
HOLDINGS, L.P., General Partner
By: TRUMP HOTELS & CASINO RESORTS,
INC., general partner
By:___________________________
Nicholas L. Ribis
President
THE TRUMP TAJ MAHAL CORPORATION
By:____________________________
Withdrawing Partner
TRUMP PLAZA FUNDING, INC.
By:_____________________________
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<PAGE>
EXHIBIT 3.8.3
AMENDED AND RESTATED PARTNERSHIP AGREEMENT
OF TRUMP ATLANTIC CITY ASSOCIATES
AMENDED AND RESTATED PARTNERSHIP AGREEMENT made this ___ day of April,
1996 by and between TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P., a Delaware
limited partnership having an address at Mississippi Avenue and The Boardwalk,
Atlantic City, New Jersey 08401 ("Holdings"), and TRUMP PLAZA HOLDING, INC., a
corporation organized under the laws of the State of Delaware having an address
at Mississippi Avenue and the Boardwalk, Atlantic City, New Jersey 08401
("TPHI"). Holdings and TPHI are sometimes hereinafter individually referred to
as a "Partner" and collectively as "Partners."
WITNESSETH:
WHEREAS, Donald J. Trump ("Trump") and TPHI, as general partners,
formed Trump Plaza Holding Associates (the "Partnership") by entering into the
Partnership Agreement of the Partnership under the laws of the State of New
Jersey on February 17, 1993, and amended such agreement on June 3, 1993 (said
Partnership Agreement, as so amended, is referred to herein as the "Original
Agreement"); and
WHEREAS, on June 12, 1995, Trump contributed
his 99% general partnership interest in the Partnership to Holdings; and
WHEREAS, Trump, TPHI and Holdings entered into Amendment No. 2 to
Partnership Agreement of Trump Plaza Holding Associates ("Amendment No. 2") on
June 12, 1995 to provide for Trump's withdrawal as a general partner of the
Partnership and Holdings' admission as a 99% general partner in the Partnership;
and
WHEREAS, TPHI and Holdings entered into Amendment No. 3 to Partnership
Agreement of Trump Plaza Holding Associates ("Amendment No. 3"; the Original
Agreement as amended by Amendment No. 2 and as further amended by Amendment No.
3 is referred to herein as the "Prior Agreement") to provide for the change of
the Partnership's name to Trump Atlantic City Associates; and
WHEREAS, TPHI and Holdings desire to amend and restate in its entirety
the Prior Agreement and to set forth their respective rights and obligations as
Partners of the Partnership;
NOW, THEREFORE, TPHI and Holdings agree that the Prior Agreement is
hereby amended and restated in its entirety effective as of the date hereof and
that the Partnership is hereby continued as a general partnership on the terms
and conditions set forth herein, and further agree as follows:
<PAGE>
1. DEFINITIONS.
-----------
1.1 CERTAIN DEFINITIONS. In addition to the other terms defined
elsewhere herein, the following terms shall have the respective meanings set
forth below:
"Accountants" means the national firm or firms of independent
certified public accountants selected by the Managing Partner on behalf of the
Partnership to audit the books and records of the Partnership and to prepare
statements and reports in connection therewith, which initially shall be Arthur
Andersen LLP.
"Additional Distributions" means distributions by the Partnership
pursuant to Section 10.3 hereof.
"Affiliate" means, with respect to any Person, any Person that
directly or indirectly through one or more intermediaries controls or is
controlled by or under common control with the specified Person.
"Bankruptcy" means, with respect to any Person, (i) the commencement
by such Person of any petition, case or proceeding seeking relief under any
provision or chapter of the federal bankruptcy code or any other federal or
state law relating to insolvency, bankruptcy or reorganization, (ii) an
adjudication that such Person is insolvent or bankrupt, (iii) the entry of an
order for relief under the federal bankruptcy code with respect to such Person,
(iv) the filing of any such petition or the commencement of any such case or
proceeding against such Person, unless such petition and the case or proceeding
initiated thereby are dismissed within ninety (90) days from the date of such
filing or (v) the filing of an answer by such Person admitting the allegations
of any such petition.
"Business Day" means a day other than a Saturday or Sunday or other
day on which banks are authorized or required by law to close in the City of New
York.
"Capital Account" means, with respect to any Partner, the separate
"book" account which the Partnership shall establish and maintain for such
Partner in accordance with Section 704 (b) of the Code and the Regulations
promulgated thereunder. In the event that a Partnership Interest is transferred
in accordance with the terms of this Agreement, the Capital Account, at the time
of the transfer, of the transferor attributable to the transferred interest
shall carry over to the transferee.
"Capital Contribution" means, with respect to any Partner, the initial
Gross Asset Value of any Contributed Property (net of liabilities to which such
property is subject) set forth in Section 8, as such Capital Account will be
amended from time to
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<PAGE>
time to reflect the amount of money and the Gross Asset Value of any Contributed
Property received by the Partnership pursuant to any additional Capital
Contribution.
"Casino Control Act" means the New Jersey Casino Control Act and the
regulations thereunder.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provision of future
law.
"Commission" means the New Jersey Casino Control Commission.
"Depreciation" means, with respect to any asset of the Partnership for
any fiscal year or other period, the depreciation or amortization, as the case
may be, allowed or allowable for federal income tax purposes in respect of such
asset for such fiscal year or other period; provided, however, that if there is
-------- -------
a difference between the Gross Asset Value and the adjusted tax basis of such
asset, Depreciation shall mean "book depreciation, depletion or amortization" as
determined under Section 1.704-1(b)(2)(iv)(g)(3) of the Regulations.
"Entity" means any general partnership, limited partnership, limited
liability company, corporation, joint venture, trust, business trust, real
estate investment trust, association or other entity.
"Gross Asset Value" means, with respect to any asset of the
Partnership, such asset's adjusted basis for federal income tax purposes, except
as follows:
(a) the initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be (i) in the case of any asset described
on attached Schedule I, the gross fair market value ascribed thereto on
such Schedule and (ii) in the case of any other asset hereafter contributed
by a Partner, the gross Fair Market Value of such asset at the time of its
contribution.
(b) the Gross Asset Values of all Partnership assets shall be
adjusted to equal their respective gross Fair Market Values:
(i) immediately prior to a Capital Contribution (other than a de
--
minimis Capital Contribution) to the Partnership by a new or existing
-------
Partner as consideration for a Partnership Interest;
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<PAGE>
(ii) immediately prior to the distribution by the Partnership to
a Partner of more than a de minimis amount of Partnership property as
-- -------
consideration for the redemption of a Partnership Interest;
(iii) immediately prior to the liquidation of the Partnership to
a Partner of more than a de minimis amount of Partnership property as
-- -------
consideration for the redemption of a Partnership Interest; and
(iv) upon any other event as to which the Managing Partner
reasonably determines that an adjustment is necessary or appropriate to
reflect the relative economic interests of the Partners;
(c) the Gross Asset Values of Partnership assets distributed to
any Partner shall be the gross Fair Market Values of such assets as of the
date of distribution; and
(d) the Gross Asset Values of Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted basis
of such assets pursuant to Sections 734(b) or 743(b) of the Code, but only
to the extent that such adjustments are taken into account in determining
Capital Accounts pursuant to Section 1.704-1(b)(2)(iv)(m) of the
Regulations; provided, however, that Gross Asset Values shall not be
-------- -------
adjusted pursuant to this paragraph to the extent that the Managing Partner
reasonably determines that an adjustment pursuant to paragraph (b) above is
necessary or appropriate in connection with a transaction that would
otherwise result in an adjustment pursuant to this paragraph (d).
At all times, Gross Asset Values shall be adjusted by any Depreciation taken
into account with respect to the Partnership's assets for purposes of computing
Net Income and Net Loss. Any adjustment to the Gross Asset Values of
Partnership property shall require an adjustment to the Partners' Capital
Accounts; as for the manner in which such adjustments are allocated to the
Capital Accounts, see clause (c) of the definition of Net Income and Net Loss in
the case of adjustment by Depreciation, and clause (d) of said definition in all
other cases.
"Indebtedness" means any obligation, whether or not contingent, (i) in
respect of borrowed money or evidenced by bonds, notes, debentures or similar
instruments, (ii) representing the balance deferred and unpaid of the purchase
price of any property (including pursuant to capital leases), except any such
balance that constitutes an accrued expense or a trade payable, if and to the
extent any of the foregoing indebtedness would appear as a
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<PAGE>
liability upon a balance sheet prepared on a consolidated basis in accordance
with GAAP, (iii) to the extent not otherwise included, obligations under
interest rate exchange, currency exchange, swaps, futures or similar agreements,
and (iv) guaranties (other than endorsements for collection or deposit in the
ordinary course of business), direct or indirect, in any manner (including,
without limitation, reimbursement agreements in respect of letters of credit),
of all or any part of any Indebtedness of any third party.
"Managing Partner" means Holdings.
"Net Income" or "Net Loss" means, for each fiscal year or other
applicable period, an amount equal to the Partnership's net income or loss for
such year or period as determined for federal income tax purposes by the
Accountants, determined in accordance with Section 703(a) of the Code (for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Section 703(a) of the Code shall be included in taxable
income or loss), with the following adjustments: (a) by including as an item of
gross income any tax-exempt income received by the Partnership; (b) by treating
as a deductible expense any expenditure of the Partnership described in Section
705(a)(2)(B) of the Code (including amounts paid or incurred to organize the
Partnership (unless an election is made pursuant to Code Section 709(b)) or to
promote the sale of interests in the Partnership and by treating deductions for
any losses incurred in connection with the sale or exchange of Partnership
property disallowed pursuant to Section 267(a)(1) or Section 707(b) of the Code
as expenditures described in Section 705(a)(2)(B) of the Code); (c) in lieu of
depreciation, depletion, amortization and other cost recovery deductions taken
into account in computing total income or loss, there shall be taken into
account Depreciation; (d) gain or loss resulting from any disposition of
Partnership property with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to the Gross Asset
Value of such property rather than its adjusted tax basis; (e) in the event of
an adjustment of the Gross Asset Value of any Partnership asset which requires
that the Capital Accounts of the Partnership be adjusted pursuant to Regulation
Section 1.704-1(b)(2)(iv)(e), (f) and (m), the amount of such adjustment is to
be taken into account as additional Net Income or Net Loss pursuant to Section
5.1; and (f) excluding any items specially allocated pursuant to Section 5.2.
Once an item of income, gain, loss or deduction has been included in the initial
computation of Net Income or Net Loss and is subjected to the special allocation
rules in Section 5.2, Net Income and Net Loss shall be computed without regard
to such item.
"Nonrecourse Deductions" shall have the meaning set forth in
Sections 1.704-2(b)(1) and (c) of the Regulations.
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<PAGE>
"Nonrecourse Liabilities" shall have the meaning set forth in Section
1.704-2(b)(3) of the Regulations.
"Partner" means each of TPHI or Holdings, their duly admitted
successors and assigns or any Person who is a partner of the Partnership at the
time of reference thereto.
"Partner Nonrecourse Debt" shall have the meaning set forth in Section
1.704-2(b)(4) of the Regulations.
"Partner Nonrecourse Deductions" shall have the meaning set forth in
Section 1.704-2(i)(2) of the Regulations.
"Partnership Interest" means any interest of TPHI or Holdings or any
Transferee in the Partnership, including the right of such Partner to benefits
to which it may be entitled under, and the obligations of such Partner to comply
with, all the terms and provisions of this Agreement.
"Partnership Minimum Gain" shall have the meaning set forth in Section
1.704-2(b)(2) of the Regulations.
"Percentage Interest" means, with respect to any Partner, the
percentage ownership interest of such Partner in such items of the Partnership
as to which the term "Percentage Interests" is applied in this Agreement,
initially 1% for TPHI and 99% for Holdings, subject to appropriate adjustment in
accordance with the provisions hereof.
"Person" means any natural person or Entity.
"Pledge Agreement" means the pledge agreement dated June 12, 1995 from
the Partnership, as pledgor, to First Bank National Association, as collateral
agent, securing the Senior Secured Notes due 2005 of Holdings and Trump Hotels &
Casino Resorts Funding, Inc., as joint obligors.
"Profits" and "Losses" means, for each fiscal year or other period, an
amount for such year or period determined in the manner prescribed in Code
Section 703(a) (including separately state items), (i) using the tax accounting
methods used for Federal income tax purposes, (ii) adding any tax-exempt income
and subtracting any deductions or expenditures described in or treated as
expenditures under Code Section 705(a)(2) not otherwise taken into account,
(iii) reflecting the book adjustment of the Capital Accounts as initially
reflected in Article 8 hereof and as prescribed in Regulations under Code
Section 704(b) and (c), and (iv) taking into account any amounts or items of
income or expense specially allocated pursuant to Section 9.
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<PAGE>
"Regulations" means the income tax regulations promulgated under the
Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Tax Amounts" with respect to any year shall not exceed an amount
equal to (a) the higher of (i) the product of (A) the taxable income of the
Partnership for such year as determined in good faith by the Managing Partner
and (B) the Tax Percentage and (ii) the product of (A) the alternative minimum
taxable income attributable to the Partnership for such year as determined in
good faith by the Managing Partner and (B) the Tax Percentage, reduced by (b) to
the extent not previously taken into account, any income tax benefit
attributable to the Partnership which could be realized (without regard to the
actual realization) by its Partners in the current or any prior taxable year, or
portion thereof, commencing on the date of this Partnership Agreement (including
any tax losses or tax credits), computed at the applicable Tax Percentage for
the year that such benefit is taken into account for purposes of this
computation. Any part of the Tax Amount not distributed in respect of a tax
period for which it is calculated shall be available for distribution in
subsequent tax periods.
"Tax Distribution" means distributions by the Partnership pursuant to
Section 10.2 hereof.
"Tax Items" shall have the meaning set forth in Section 9.3(a).
"Tax Payment Loan" shall have the meaning set forth in Section 10.4(a)
hereof.
"Tax Percentage" means the highest, aggregate effective marginal rate
of Federal, state and local income tax or, when applicable, alternative minimum
tax, to which any Partner would be subject in the relevant year of determination
(as certified to the Managing Partner by the Accountants); provided, however,
-------- -------
that in no event shall the Tax Percentage be greater than the sum of (x) the
highest, aggregate effective marginal rate of Federal, state, and local income
tax, or when applicable, alternative minimum tax, to which the Partnership would
have been subject if it were a C corporation for Federal income tax purposes,
and (y) 5 percentage points. If any Partner is an S corporation, partnership,
or similar pass-through entity for Federal income tax purposes, the Tax
Percentage shall be computed based upon the tax rates applicable to the
shareholder or partner of such Partner, as the case may be.
"Transferee" means each Person who pursuant to Article 11 hereof or
otherwise acquires a Partnership Interest from a Partner or a Transferee
thereof.
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<PAGE>
"Withholding Tax Act" shall have the meaning set forth in Section
10.4(a) hereof.
1.2 ACCOUNTING TERMS AND DETERMINATIONS. All references in this
-----------------------------------
Agreement to "generally accepted accounting principles" or "GAAP" shall mean
generally accepted accounting principles in effect in the United States of
America at the time of application thereof. Unless otherwise specified herein,
all accounting terms used herein shall be interpreted, all determinations with
respect to accounting matters hereunder shall be made, and all financial
statements and certificates and reports as to financial matters required to be
furnished hereunder shall be prepared, in accordance with generally accepted
accounting principles, applied on a consistent basis.
2. NAME. The name of the Partnership is Trump Atlantic City
----
Associates (the "Partnership").
3. PURPOSE. The character of the Partnership's business is (i) to
-------
own and operate Trump Plaza Hotel and Casino in Atlantic City, New Jersey and
conduct casino gaming, (ii) to own and operate the Trump Taj Mahal Casino Resort
in Atlantic City, New Jersey and conduct casino gaming, (iii) to own and operate
such other gaming properties and facilities as the Partnership may acquire, and
(iv) to do all things necessary, incidental, desirable or appropriate in
connection with the foregoing.
4. PLACE OF BUSINESS. The principal place of business of the
-----------------
Partnership in the State of New Jersey shall be Mississippi Avenue and The
Boardwalk, Atlantic City, New Jersey 08401.
5. PARTNERS. The name and place of residence of the General
--------
Partners interested in the Partnership is as follows:
Trump Hotels & Casino Resorts Trump Plaza Holding, Inc.
Holdings, L.P. Mississippi Avenue and
Mississippi Avenue and The Boardwalk
The Boardwalk Atlantic City, N.J. 08401
Atlantic City, N.J. 08401
6. MANAGING PARTNER. All decisions affecting the business and
----------------
affairs of the Partnership, including, but not limited to the financing,
refinancing, sale, management or leasing of any Partnership property, or any
part thereof, the acquisition, development, financing, sale or leasing of other
property and all matters arising under this Agreement shall be decided by
Holdings, which shall act as the Managing Partner of the Partnership.
7. TERM. The term for which the Partnership is to exist is to the
----
close of business on the 31st day of December, 2030, unless sooner terminated
pursuant to Section 13.1 hereof.
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<PAGE>
8. CAPITAL ACCOUNTS. The capital account as of the date of this
----------------
Agreement of each Partner is as follows:
Holdings $____________
TPHI $____________
No interest shall be paid by the Partnership on balances in Capital Accounts nor
shall any other funds be distributed or distributable, except as provided in
this Agreement.
9. ALLOCATIONS AND OTHER TAX AND ACCOUNTING MATTERS.
------------------------------------------------
The Net Income, Net Loss and/or other Partnership items shall be
allocated as follows:
9.1 ALLOCATIONS OF NET INCOME AND NET LOSS.
--------------------------------------
(a) NET INCOME. Except as otherwise provided herein, Net Income for
----------
any fiscal year or other applicable period shall be allocated in the following
order and priority:
(i) First, to the Partners, until the cumulative Net Income allocated
pursuant to this subparagraph (a)(i) for the current and all prior periods
equals the cumulative Net Loss allocated pursuant to subparagraph (b) (ii)
hereof for all prior periods, among the Partners in the reverse order that such
Net Loss was allocated to the Permitted Partners pursuant to subparagraph
(b)(ii) hereof.
(ii) Thereafter, the balance of the Net Income, if any, shall be
allocated to the Partners in accordance with their respective Percentage
Interests.
(b) NET LOSS. Except as otherwise provided herein, Net Loss of the
--------
Partnership for each fiscal year or other applicable period shall be allocated
to the Partners in accordance with their respective Percentage Interests.
9.2 SPECIAL ALLOCATIONS. Notwithstanding any provisions of
-------------------
Section 9.1, the following special allocations shall be made, to the least
extent necessary to satisfy section 704(b) of the Code and the Regulations
promulgated thereunder, in the following order:
(a) MINIMUM GAIN CHARGEBACK (NONRECOURSE LIABILITIES). If there is a
-------------------------------------------------
net decrease in Partnership Minimum Gain for any Partnership fiscal year (except
as a result of conversion or refinancing of Partnership indebtedness, certain
capital contributions or revaluation of the Partnership property as further
outlined in Regulation Sections 1.704-2(d)(4), (f)(2) or
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<PAGE>
(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 Regulation
Section 1.704-2(f)(6). This paragraph (a) is intended to comply with the
minimum gain chargeback requirement in said section of the Regulations and shall
be interpreted consistently therewith. Allocations pursuant to those paragraph
(a) shall be made in proportion to the respective amounts required to be
allocated to each partner pursuant hereto.
(b) MINIMUM GAIN ATTRIBUTABLE TO PARTNER NONRECOURSE DEBT. If there
-----------------------------------------------------
is a net decrease in Minimum Gain Attributable to Partner Nonrecourse Debt
during any fiscal year (other than due to the conversion, refinancing or other
change in the debt instrument causing it to become partially or wholly
nonrecourse, certain capital contributions, or certain revaluations of
Partnership property (as further outlined in Regulation Section 1.704-2(i)(4)),
each Partner shall be specially allocated items of Partnership in come and gain
for such year (and, if necessary, subsequent years) in an amount equal to the
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 Regulation Section 1.704-2(i)(4) and (j)(2). This paragraph (b)
is intended to comply with the minimum gain chargeback requirement with respect
to Partner Nonrecourse Debt contained in said section of the Regulations and
shall be interpreted consistently therewith. Allocations pursuant to this
paragraph (b) shall be made in proportion to the respective amounts required to
be allocated to each Partner pursuant hereto.
(c) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any fiscal
----------------------
year or other applicable period shall be allocated to the Partners in accordance
with their respective Percentage Interests. For purposes of Regulation Section
1.752-3(a)(3), "excess nonrecourse liabilities" shall be allocated among the
Partners in proportion to their respective Percentage Interests.
(d) PARTNER NONRECOURSE DEDUCTIONS. Partner Nonrecourse Deductions
------------------------------
for any fiscal year or other applicable period shall be specially allocated to
the Partner that bears the economic risk of loss for the debt (i.e., the Partner
Nonrecourse Debt) in respect of which such Partner Nonrecourse Deductions are
attributable (as determined under Regulation Section 1.704-2(b)(4) and (i)(1)).
(e) ADDITIONAL ALLOCATIONS. Notwithstanding the foregoing, if, upon
----------------------
final dissolution and termination of the Partnership and after taking into
account all allocations of Net
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Income and Net Loss (and other Tax Items) under this Section 9, the
distributions to be made in accordance with the positive Capital Account
balances would result in a distribution that would be different from a
distribution under Section 10.3 hereof, then gross items of income and gain (and
other Tax Items) for the taxable year of the final dissolution and termination
(and, to the extent permitted under Section 761(c) of the Code, gross items of
income and gain (and other Tax Items) for the immediately preceding taxable
year) shall be allocated to the Partners to increase or decrease their Capital
Account balances, as the case may be, so that the final distribution will occur
in the same manner as a distribution under Section 10.3 hereof.
9.3 TAX ALLOCATIONS.
---------------
(a) GENERALLY. Subject to paragraphs (b) and (c) hereof, items of
---------
income, gain, loss, deduction and credit to be allocated for income tax purposes
(collectively, "Tax Items") shall be allocated among the Partners on the same
---------
basis as their respective book items.
(b) SECTIONS 1245/1250 RECAPTURE. If any portion of gain from the
----------------------------
sale of property is treated as gain which is ordinary income by virtue of the
application of Code Sections 1245 or 1250 ("Affected Gain"), except to the
-------------
extent that the tax treatment of such sale is governed by Section 704(c) of the
Code as provided under Section 9.3(c) hereof, then (i) such Affected Gain, to
the extent attributable to depreciation or amortization allowed or allowable for
any taxable period subsequent to the date hereof, shall be allocated among the
Partners in the same proportion that the depreciation and amortization
deductions giving rise to the Affected Gain were allocated and (ii) other Tax
Items of gain of the same character that would have been recognized, but for the
application of Code Sections 1245 and/or 1250, shall be allocated away from
those Partners who are allocated Affected Gain pursuant to clause (i) so that,
to the extent possible, the other Partners are allocated the same amount, and
type, of capital gain that would have been allocated to them had Code Sections
1245 and/or 1250 not applied. For purposes hereof, in order to determine the
proportionate allocations of depreciation and amortization deductions for each
fiscal year or other applicable period, such deductions shall be deemed
allocated on the same basis as Net Income or Net Loss for such respective
period.
(c) ALLOCATIONS RESPECTING SECTION 704(C). Property contributed to
-------------------------------------
the Partnership shall be subject to Section 704(c) of the Code and Regulation
Section 1.704-3 so that notwithstanding Section 9.2 hereof, taxable gain and
loss from disposition of such property contributed to the Partnership that is
subject to Section 704(c) of the Code shall be allocated on a property by
property basis in accordance with the Regulations
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<PAGE>
promulgated thereunder. For the purpose of allocating Tax Items, the
--------------------------------------------
Partnership shall apply the "ceiling rule" set forth in Regulation Section
- --------------------------------------------------------------------------
1.704-3, the effect of which will not be subject to cure by special allocation.
- ------------------------------------------------------------------------------
The Partnership shall allocate items of income, gain, loss and deduction
allocated to it by a partnership to the Partner or Partners contributing the
interest or interests in such partnership, so that, to the greatest extent
possible and consistent with the foregoing, such contributing Partner or
Partners are allocated the same amount and character of items of income, gain,
loss and deduction with respect to such partnership that they would have been
allocated had they contributed undivided interests in the assets owned by such
partnership to the Partnership in lieu of contributing the interest or interest
in the partnership to the Partnership.
9.4 BOOKS OF ACCOUNT. At all times during the continuance of
----------------
the Partnership, the Managing Partner shall maintain or cause to be maintained
full, true, complete and correct books of account in accordance with GAAP, using
the calendar year as the fiscal and taxable year of the Partnership. In
addition, the Partnership shall keep all records required to be kept pursuant to
the Act.
9.5 TAX CERTIFICATIONS.
------------------
(a) The Partnership shall deliver to each Partner, from time to time
as necessary to implement timely the provisions of this Agreement, certificates
executed by its chief financial officers and the Accountants indicating the
respective calculations with respect to, and the amounts of, a Partner's share
of Tax Distributions and the amount of any repayments to the Partnership called
for thereunder, together with supporting schedules in reasonable detail all as
of each pertinent date and delivered at least 15 business days prior to the date
payment is due.
(b) The certificates delivered pursuant to paragraph (a) thereof shall
be deemed approved by all parties and the Partnership shall act upon such
certificate as provided in this Agreement unless within five business days of
delivery of such certificate a Partner objects to the contents of any
certificate by written notice in detail sufficient to state the basis for the
objection. The Partners shall negotiate in good faith to resolve such
objection.
10. DISTRIBUTIONS.
-------------
10.1 GENERAL. Distributions of cash or property may be made in
-------
accordance herewith at such times as the Managing Partner deems appropriate in
the order provided in this Section 10, subject to the limitations, if any, set
forth in the agreements
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<PAGE>
governing the Partnership's Indebtedness, including the indenture governing the
Partnership's and Trump Atlantic City Funding, Inc.'s First Mortgage Notes due
2006 and ancillary documents relating thereto.
10.2 DISTRIBUTIONS FOR TAXES.
-----------------------
(a) The Partnership shall distribute to each Partner in one or more
payments, including payments described in paragraph (b) from time to time during
each year, but in no event later than March 1 of the year immediately following
such year, an aggregate cash sum equal to the product of (i) Tax Amounts in
respect of the taxable year, or portion thereof, for which such distribution is
being made and (ii) the Partner's Percentage Interest. In addition, the
Partnership shall make additional pro rata distributions as are necessary to
reflect adjustments, as determined in good faith by the board of directors of
the General Partner, to any item affecting Tax Amounts, as reflected on the
Partnership's tax return, as it may be amended from time to time, or as a result
of a concluded tax audit.
(b) In addition to the certificates required by Section 9.5, the
Partnership shall furnish the Partners with such information as they shall
reasonably request from time to time respecting estimates of the Partnership's
taxable income or loss (and items thereof) for any fiscal year or portion
thereof. If, in any year, any Partner shall be required to make federal, state
or local estimated income tax payments under applicable law and regulations,
then, at least thirty (30) days prior to the date (the "Estimated Payment Date")
upon which any such payments are due, the Partnership shall deliver to each
Partner the certificates required by Section 9.6, indicating the amount (the
"Estimated Payment") of the tax in respect of the respective Tax Amounts due on
the Estimated Payment Date, and not later than fifteen (15) days prior to such
Estimated Payment Date, the Partnership shall pay to such Partner an amount
equal to such Estimated Payment. The amount of each Estimated Payment received
by such Partner shall be treated as a non-interest bearing advance against the
amounts distributable in respect of such Partner's pro rata share of Tax Amounts
to such Partner for such year. If the aggregate amount of the Estimated
Payments received by a Partner for any year shall exceed the distribution to
which such Partner actually is entitled under paragraph (a) above, such Partner
shall forthwith repay such excess to the Partnership on or before the date set
forth in paragraph (a) above, unless such excess shall have been paid to taxing
authorities in which event such excess shall be applied to reduce the amount
otherwise distributable pursuant to this Section 10.2 in respect of the
Partnership's next succeeding fiscal year or years. Each Partner shall seek, to
the extent entitled thereto, and contribute to the Partnership any refund of
taxes paid by such
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<PAGE>
Partner out of amounts distributed pursuant to this Section 10.2 promptly after
receipt of such refund.
10.3 OTHER DISTRIBUTIONS. After payments and distributions, if
-------------------
any, of the amounts set forth in Section 10.2 above, the Partnership may
distribute, in the discretion of the Managing Partner, cash or other property,
valued at its Fair Market Value, to the Partners. Any such distributions shall
be made (i) first in proportion to, and to the extent of their then positive
Capital Account balances and (ii) then in accordance with their Percentage
Interests.
10.4 WITHHOLDING PAYMENTS REQUIRED BY LAW.
------------------------------------
(a) Unless treated as a Tax Payment Loan (as hereinafter defined), any
amount paid by the Partnership for or with respect to any Partner on account of
any withholding tax or other tax payable with respect to the income, profits or
distributions of the Partnership to the Code, the Regulations, or any state or
local statute, regulation or ordinance requiring such payment (a "Withholding
Tax Act") shall be treated as a distribution to such Partner for all purposes of
this Agreement, consistent with the character or source of the income, profits
or cash which gave rise to the payment or withholding obligation. To the
extent that the amount required to be remitted by the Partnership under the
Withholding Tax Act exceeds the amount then otherwise distributable to such
Partner, unless and to the extent that funds shall have been provided by such
Partner pursuant to the last sentence of this Section 10.4(a), the excess shall
constitute a loan from the Partnership to such Partner (a "Tax Payment Loan")
which shall be payable upon demand and shall bear interest, from the date that
the Partnership makes the payment to the relevant taxing authority, at the rate
announced from time to time by Citibank, N.A. (or any successor thereto) as its
"prime rate", compounded monthly (but in no event higher that the highest
interest rate permitted by applicable law). So long as any Tax Payment Loan to
any Partner or the interest thereon remains unpaid, the Partnership shall make
future distributions due to such Partner under this Agreement by applying the
amount of any such distributions first to the payment of any unpaid interest on
such Tax Payment Loan and then to the repayment of the principal thereof, and no
such future distributions shall be paid to such Partner until all of such
principal and interest has been paid in full. If the amount required to be
remitted by the Partnership under the Withholding Tax Act exceeds the amount
then otherwise distributable to a Partner, the Partnership shall notify such
Partner at least five (5) Business Days in advance of the date upon which the
Partnership would be required to make a Tax Payment Loan under this Section
10.4(a) (the "Tax Payment Loan Date") and provide such Partner the opportunity
to pay to the Partnership, on
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<PAGE>
or before the Tax Payment Loan Date, all or a portion of such deficit.
(b) The General Partner shall have the authority to take all actions
necessary to enable the Partnership to comply with the provision of any
Withholding Tax Act applicable to the Partnership and to carry out the
provisions of this Section 10.4. Nothing in this Section 10.4 shall create any
obligation on the General Partner to advance funds to the Partnership or to
borrow funds from third parties in order to make any payments on account of any
liability of the Partnership under a Withholding Tax Act.
(c) In the event that a Tax Payment Loan is not paid by a Limited
Partner within thirty (30) days after written demand therefor is made by the
General Partner, the General Partner may cause all distributions that would
otherwise be made to such Limited Partner to be retained by the Partnership, up
to the amount necessary to repay such Tax Payment Loan, including all accrued
and unpaid interest thereon, and such retained distributions shall be applied
against, first, the accrued interest on and, second, the principal of, such Tax
----- ------
Payment Loan.
10.5 NON-RECOURSE. Notwithstanding any other provisions of this
------------
Agreement, the obligations to make distributions contemplated hereby shall be
limited to the assets of the Partnership and shall be non-recourse with respect
to the Partners and any of their assets.
11. TRANSFERS AND WITHDRAWAL.
------------------------
11.1 SALE AND TRANSFER OF PARTNERSHIP INTERESTS. No Partnership
------------------------------------------
Interest or any portion thereof may be sold or otherwise transferred, whether by
gift, pledge, by operation of law or otherwise, including any transfer upon
liquidation and dissolution (but excluding all transfers upon or by reason of
death), unless (x) the transfer and the Transferee are approved in advance by
all the Partners, except with respect to any transfer resulting from exercise of
any rights under the Pledge Agreement, (y) the transfer and the Transferee are
approved by the Commission and (z) the Transferee becomes a party to this
Agreement and assumes all of the obligations hereunder of its transferor and
agrees to be bound by the terms and conditions hereof in the same manner as its
transferor in each case to the extent of the Partnership Interest transferred.
Each Transferee shall have all rights hereunder as given to the original party
hereto or subsequent transferee thereof. The foregoing notwithstanding, no
transfer of a Partnership Interest (other than a transfer upon the exercise of
any rights under the Pledge Agreements) shall be effective if, in the opinion of
counsel to the Partnership, such transfer, when added to the total of all other
Partnership
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<PAGE>
Interests transferred within the period of 12 consecutive months prior to the
proposed date of transfer, would result in a termination of the Partnership
under Section 708 of the Code or that would cause the Partnership to be treated
as a "publicly-traded partnership" under the Code.
12. BOOKS AND RECORDS.
-----------------
12.1 COMPLETE BOOKS. At all times during the continuance of the
--------------
Partnership, the Partnership shall keep or cause to be kept full and complete
books of account in which shall be entered fully and accurately each transaction
of the Partnership, including the Capital Accounts of the Partners.
12.2 METHOD OF RECORDKEEPING. All of the Partnership's books of
-----------------------
account shall at all times be maintained 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 an annual
accounting period ending December 31, except for the final 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.
12.3 TAX INFORMATION. The Partnership shall be treated as a
---------------
Partnership for federal and state income tax and franchise tax purposes;
accordingly, the Partnership shall cause to be prepared and filed on or before
the due date annually a United States Partnership Return of Income and any
necessary state income and franchise tax returns on a partnership basis. Such
returns shall be submitted to the Partners for review no later than the tenth
Business Day prior to the date on which such return is due, as such date may be
extended as the result of any extension obtained. Each Partner shall notify the
other Partners upon receipt of any notice of any tax examination by any federal,
state or local authority pertaining to the Partnership or the other Partners.
No settlement of any tax issue concerning or having an effect upon the
Partnership shall be made by any Partner except upon the approval of the tax
matters partner, designated pursuant to Section 14.12.
12.4 INDEPENDENT ACCOUNTANTS. The accountants for the
-----------------------
Partnership shall be Arthur Andersen LLP or such other nationally recognized
firm of certified public accountants as determined by the Managing Partner.
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<PAGE>
13. DISSOLUTION, LIQUIDATION AND WINDING-UP.
---------------------------------------
13.1 ACCOUNTING. In the event of the dissolution, liquidation
----------
and winding-up of the Partnership, a proper accounting shall be made of the
Capital Account of each Partner and of the Net Income or Net Loss of the
Partnership from the date of the last previous accounting to the date of
dissolution.
13.2 DISTRIBUTION ON DISSOLUTION. In the event of the
---------------------------
dissolution and liquidation of the Partnership for any reason, the assets of the
Partnership shall be liquidated for distribution in the following rank and
order:
(a) Payment of creditors of the Partnership, other than
creditors who are Partners;
(b) Payment of creditors of the Partnership who are
Partners;
(c) Establishment of reserves to provide for contingent
liabilities, if any; and
(d) To the Partners in accordance with the positive balances
in their Capital Accounts after giving effect to all contributions,
distributions and allocations for all periods.
13.3 TIMING REQUIREMENTS.
-------------------
(a) In the event that the Partnership is "liquidated" within the
meaning of Section 1.704-1(b)(2)(ii)(g) of the Regulations, any and all
distributions to the Partners pursuant to Section 13.2(d) hereof shall be made
no later than the later to occur of (i) the last day of the taxable year of the
Partnership in which such liquidation occurs or (ii) ninety (90) days after the
date of such liquidation.
(b) Notwithstanding the provisions of Section 13.2 hereof which
require liquidation of the assets of the Partnership, but subject to the order
of priorities set forth therein, if prior to or upon dissolution of the
Partnership the Partners determine that an immediate sale of part or all of the
Partnership's assets would be impractical or would cause undue loss to the
Partners, the Partners may defer for a reasonable time the liquidation of any
assets except those necessary to satisfy liabilities of the Partnership.
13.4 DISSOLUTION. The Partnership shall be dissolved upon the
-----------
occurrence of any of the following events:
(a) the dissolution, liquidation, termination, withdrawal, death,
insanity, retirement or Bankruptcy of a Partner
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<PAGE>
or other event causing dissolution under the New Jersey Uniform Partnership Law;
(b) the election to dissolve the Partnership made in writing by the
Partners;
(c) the sale or other disposition of all or substantially all of the
assets of the Partnership unless the Partners elect to continue the Partnership
business for the purpose of the receipt and the collection of indebtedness or
the collection of any other consideration to be received in exchange for the
assets of the Partnership (which activities shall be deemed to be part of the
winding-up of the affairs of the Partnership); or
(d) the entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the New Jersey Uniform Partnership Law, which
decree is final and not subject to appeal.
Following an event causing a dissolution of the Partnership, the
Partnership shall be wound-up and terminated unless the business of the
Partnership is continued by the Partnership in reconstituted form pursuant to
Section 13.5.
13.5 CONTINUATION OF THE PARTNERSHIP. Upon the Bankruptcy,
-------------------------------
dissolution, liquidation, withdrawal, death, retirement or insanity of any
Partner, or any other event of dissolution under the New Jersey Uniform
Partnership Law, within 90 days thereafter, all of the remaining Partners may
elect to reconstitute the Partnership and continue its business.
14. MISCELLANEOUS.
-------------
14.1 AMENDMENTS. This Agreement may be amended, modified or
----------
cancelled, and the terms and conditions hereof may be waived, only by a written
instrument signed by each of its Partners.
14.2 COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed as original, but all of which
together shall constitute one and the same instrument.
14.3 FURTHER ASSURANCES. Each of the Partners hereby agrees to
------------------
execute and deliver all such other and additional instruments and documents and
to do such other acts and things as may be necessary to more fully effectuate
this Partnership, carry on the Partnership's business and effectuate this
Agreement.
14.4 VARIATIONS OF PRONOUNS. All pronouns and all variations
----------------------
thereof shall be deemed to refer to the masculine,
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<PAGE>
feminine or neuter, singular or plural, as the identity of the Person may
require.
14.5 NON-WAIVER. No delay on the part of any party in exercising
----------
any right hereunder shall operate as a waiver thereof, nor shall any waiver,
express or implied, 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 or a similar or dissimilar nature
thereof.
14.6 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.
14.7 SEVERABILITY. Any provision of this Agreement that is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provisions in any other jurisdiction.
14.8 GOVERNING LAW. 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 under applicable principles of conflict of laws
thereof.
14.9 CASINO CONTROL COMMISSION REGULATION. Notwithstanding
------------------------------------
anything to the contrary contained herein, this Agreement will be deemed to
include all provisions required by the Casino Control Act and to the extent that
anything contained herein is inconsistent therewith, 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 herein.
All securities (as such term is defined in the Casino Control Act) of
the Partnership are held subject to the condition that, as of the date the New
Jersey Casino Control Commission (the "Commission") serves notice of its
determination of disqualification of a holder thereof, such holder shall (a) not
receive any dividends or interest upon any such securities; (b) not exercise,
directly or through any trustee or nominee, any voting right conferred by such
securities; and (c) not receive any remuneration in any form from Trump Plaza
Associates, a New Jersey general partnership ("TPA"), in which the Partnership
holds a partnership interest, or Trump Taj Mahal Associates, a New Jersey
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<PAGE>
general partnership ("TTMA"), in which the Partnership holds a partnership
interest for services rendered or otherwise.
All transfers (as defined by the Casino Control Act) of non-publicly
traded 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. 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.
Any publicly traded securities of the Partnership are held subject to
the condition that, if a holder thereof is found to be disqualified by the
Commission, such holder shall dispose of its, his or her interest in the
Partnership. If any unsuitable or disqualified holder fails to dispose of its,
his or her Securities, within 180 days following each disqualification:
(i) such publicly traded securities shall be subject to redemption by
the Partnership, if in the judgment of the Managing Partner such action should
be taken, to the extent necessary to prevent the loss or secure the
reinstatement of any government-issued license or franchise held by TPA, TTMA,
the Partnership or any subsidiary thereof, to conduct any portion of the
business of TPA, TTMA, the Partnership or such subsidiary, which license or
franchise is conditioned upon some or all of the holders of the Partnership's
securities possessing prescribed qualifications, and
(ii) such unsuitable or disqualified holder shall indemnify the
Partnership for any and all direct or indirect costs, including attorneys' fees,
incurred by the Partnership as a result of such holder's continuing ownership or
failure to divest promptly.
The redemption price for all publicly traded securities, including the
Securities, to be redeemed by the Partnership pursuant to this Section 14.9
shall be equal to:
(a) the mean of the average closing sales prices for the thirty
trading days immediately prior to the date of determination of such value on the
largest national securities exchange on which such securities shall have traded
on such trading days,
(b) if no such sales of such securities occurred during such thirty-
day period or if the securities are not so listed but are traded in the over-
the-counter market the quotations available in the National Association of
Securities
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<PAGE>
Dealers Automated Quotation System ("NASDAQ"), the mean between the "bid" and
"asked" prices on such national securities exchange or as quoted in NASDAQ, as
the case may be, during such thirty-day period, or
(c) if (a) or (b) above do not apply, at a redemption price equal to
the fair value of such securities as determined by the Managing Partner (such
determinations to be conclusive and binding on all parties).
Notwithstanding the preceding paragraph, with respect to such publicly
traded securities, including the Securities, held in an interim casino
authorization trust which the Commission has ordered to become operative:
(a) during the time such trust is operative, the holder may not
participate in the earnings of the casino hotel or receive any return on its
investment or debt security holdings; and
(b) after disposition of the securities by the trustee of the interim
casino authorization trust, proceeds distributed to an unqualified former holder
of same may not exceed the lower of their actual cost to the unqualified holder
or their value calculated as if the investment had been made on the date the
trust became operative.
14.10 CERTIFICATE OF INTEREST. Notwithstanding anything to the contrary
-----------------------
contained in this Agreement:
(i) The interest of each Partner in the Partnership shall be evidenced
by a Certificate of Interest. The Certificates of Interest in the Partnership,
together with a Certificate Transfer Ledger, shall be maintained at the
principal office of the Partnership. Each such Certificate shall be serially
numbered and shall be issued by, or at the written direction of, each of the
General Partners to the lawful holder of an interest in the Partnership, upon
payment by the issuee of the full amount of the capital contributions then due
with respect to its interest in the Partnership represented by such Certificate.
All Certificates shall be executed in the name of the Partnership by each of the
General Partners or their designee(s). Each Certificate shall state on its face
the name of the registered holder thereof and the then interest in the
Partnership held by the issuee; and shall bear, on both sides thereof, a
statement of the restrictions imposed by Section 105 of the Casino Control Act.
(ii) Certificates of Interest in the Partnership may be transferred by
the lawful holders thereof only in connection with the transfer of all or part
of the interest of such holder in the Partnership, and only in accordance with
the
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<PAGE>
provisions of this Agreement. All such transfers shall be effected by duly
executed and acknowledged instruments of assignment, each of which shall be
fully recorded on the Certificate Transfer Ledger. No effect shall be given to
any purported assignment of a Certificate, or transfer of the interest in the
Partnership evidenced 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.
(iii) In the event that a Certificate of Interest shall be lost,
stolen, destroyed or mutilated, the Partnership may cause a replacement
Certificate to be issued upon such terms and conditions as shall be fixed by the
Partners, including, without limitation, provision for indemnity and the posting
of a bond or other adequate security as security therefor. No replacement
Certificate shall be issued to any person unless such person has surrendered the
Certificate to be replaced, or has complied with the terms of this subsection.
(iv) 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
Ledger shall, in addition, be available for inspection by the 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.
14.11 HEADINGS. The descriptive headings contained in this Agreement
--------
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
14.12 TAX MATTERS PARTNER. Holdings shall be the "tax matters
-------------------
partner" under the Code and all applicable tax laws and shall, in its sole
discretion, make or revoke all tax elections, resolve allocations issues and
handle all tax audits, controversies and proceedings. TPHI and Holdings agree
that Holdings, acting through the Partnership, shall have the authority to
handle and resolve all tax controversies involving Holdings, TPHI and/or the
Partnership in such manner as Holdings in its sole discretion determines,
provided that the Partnership shall bear all accounting and legal expenses
incurred in connection therewith. Notwithstanding the foregoing, Trump shall
have the right to control the resolution of tax matters affecting or relating to
TTMA in respect to periods ending on or prior to the date hereof, including
requiring the Partnership and TTMA to adjust the tax basis of assets held by
TTMA in connection with the resolution of such tax matters to the extent such
basis adjustments shall not reduce Trump Hotels & Casino Resorts, Inc.'s share
of federal
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<PAGE>
income tax depreciation and cost recovery deductions in respect of assets held
by TTMA as of the date hereof and contributions of the interest in TTMA to the
Partnership.
14.13 INDEMNIFICATION. The Partnership shall indemnify and hold
---------------
harmless each Partner, its Affiliates, and all officers, directors, employees
and agents (individually, an "Agent") of such Partner, and its affiliates
(individually, an "Indemnitee") from and against any and all losses, claims,
demands, costs, damages, liabilities, joint and several, expenses of any nature
(including reasonable 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, brought or threatened 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 or their status as an Agent including without
limitation liabilities under the Federal and state securities laws, regardless
of whether the Indemnitee continues to be a Partner, an Affiliate of a Partner,
or an Agent of a Partner or of an Affiliate of a Partner at the time any such
liability or expense is paid or incurred, so long as such indemnified person
acted in good faith on behalf of the Partnership, TPHI or Holdings and in a
manner reasonably believed by such person to be in or not opposed to the best
interests of the Partnership, TPHI or Holdings but only if such course of
conduct does not constitute gross negligence or willful misconduct; provided
that such indemnification or agreement to hold harmless shall be recoverable
only out of assets of the Partnership and not from the Partners and; provided,
further that no indemnification shall be made to or on behalf of an Indemnitee
if a judgment or other final adjudication adverse to the Indemnitee establishes
that his or its acts or omissions (i) in the case of an Indemnitee who is or was
a director of TPHI or the Holdings managing general partner, were in breach of
his duty of loyalty to TPHI or the Holdings managing general partner, as the
case may be, or were not in good faith or involved a knowing violation of law,
or resulted in receipt by the Indemnitee of an improper personal benefit or (ii)
in the case of all other Indemnitees, constituted gross negligence or willful
misconduct. Termination of any proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendre or its equivalent shall not itself
create a presumption that such Indemnitee did not meet the applicable standard
of conduct for indemnification. Indemnity shall be paid in advance of the final
disposition of the proceeding to an Indemnitee provided that the Indemnitee
undertakes to repay the Partnership if it shall ultimately be determined that he
or it is not entitled to indemnification as provided by this Section 14.13. The
indemnification provided by this Section 14.13 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
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<PAGE>
to action in the Indemnitee's capacity as a Partner, an Affiliate of a Partner,
or as an officer, director, employee or agent of a Partner or Affiliate of a
Partner 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 14.13 by reason of the fact that the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if such interest
was fully disclosed and the transaction was approved by Funding.
Any indemnification or advance under this Section 14.13 to an
Indemnitee shall be made promptly and in any event within thirty (30) days upon
the written request of the individual seeking indemnification. The right to
indemnification or advances as granted under this Section 14.13 shall be
enforceable by any such individual seeking indemnification in any court of
competent jurisdiction, if the Partnership denies such request, in whole or in
part, or if no disposition thereof is made within thirty (30) days. Such
person's costs and expenses incurred in connection with successfully
establishing his right to indemnification or advances, in whole or in part, in
any such action shall also be indemnified by the Partnership. It shall be a
defense to any such action that there has been a judgment or other final
adjudication adverse to the claimant which established that his acts or
omissions did not meet the standard of conduct required by the first paragraph
of this Section 14.13, but the burden of proving such defense shall be on the
Partnership. Neither the failure of the Partnership to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he has met the applicable
standard of conduct, nor the fact that there has been an actual determination by
the Partnership that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
The partnership shall have the power to purchase and maintain
insurance, and to furnish similar protection (including but not limited to
providing a trust fund, letter of credit, self-insurance or indemnification
contract), on behalf of any individual to whom indemnification or advances may
be paid hereunder, against any expenses, fees or liabilities for which
indemnification or advances may be paid hereunder.
14.14 SUCCESSORS AND ASSIGNS. 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,
including any pledgee upon the foreclosure
-24-
<PAGE>
of any pledge of a Partner's Partnership Interest in the Partnership.
Partners:
TRUMP HOTELS & CASINO RESORTS
HOLDINGS, L.P.
By: TRUMP HOTELS & CASINO RESORTS,
INC., general partner
By:___________________________
Nicholas L. Ribis
President
TRUMP PLAZA HOLDING, INC.
By:____________________________
Donald J. Trump
President
-25-
<PAGE>
EXHIBIT 3.9
- --------------------------------------------------------------------------------
SECOND AMENDED AND RESTATED
------
AGREEMENT OF LIMITED PARTNERSHIP
OF
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
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Page
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<S> <C>
ARTICLE I. DEFINITIONS................................................................................... 2
Section 1.1. Definitions............................................................................ 2
Section 1.2. Accounting Terms and Determinations.................................................... 16
ARTICLE II. CONTINUATION OF PARTNERSHIP; BUSINESS OF PARTNERSHIP......................................... 17
Section 2.1. Continuation........................................................................... 17
Section 2.2. Name................................................................................... 17
Section 2.3. Character of the Business.............................................................. 17
Section 2.4. Location of Principal Place of Business................................................ 17
Section 2.5. Registered Agent and Registered Office................................................. 18
ARTICLE III. TERM........................................................................................ 18
Section 3.1. Commencement........................................................................... 18
Section 3.2. Termination............................................................................ 18
ARTICLE IV. CAPITAL CONTRIBUTIONS........................................................................ 18
Section 4.1. Capital Contributions; Partnership Interests and Percentage Interests of the Partners.. 18
Section 4.2. Issuance of Additional Partnership Interests and Shares................................ 20
Section 4.3. Adjustment of Partnership Interests.................................................... 21
Section 4.4. No Interest on or Return of Capital Contribution....................................... 22
ARTICLE V. ALLOCATIONS AND OTHER TAX AND ACCOUNTING MATTERS.............................................. 22
Section 5.1. Allocations of Net Income and Net Loss................................................. 22
Section 5.2. Special Allocations.................................................................... 23
Section 5.3. Tax Allocations........................................................................ 25
Section 5.4. Books of Account....................................................................... 26
Section 5.5. Tax Matters Partner.................................................................... 26
Section 5.6. Tax Elections and Returns.............................................................. 27
Section 5.7. Tax Certifications..................................................................... 28
ARTICLE VI. DISTRIBUTIONS................................................................................ 29
Section 6.1. General................................................................................ 29
Section 6.2. Distributions for Taxes................................................................ 29
Section 6.3. Other Distributions.................................................................... 30
Section 6.4. Withholding Payments Required By Law................................................... 30
Section 6.5. Non-Recourse........................................................................... 31
ARTICLE VII. RIGHTS, DUTIES AND RESTRICTIONS OF THE GENERAL PARTNER...................................... 32
Section 7.1. Powers and Duties of General Partner................................................... 32
Section 7.2. Major Decisions........................................................................ 35
Section 7.3. Reimbursement of the General Partner................................................... 36
Section 7.4. Outside Activities of the General Partner.............................................. 36
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Section 7.5. Contracts with Affiliates.............................................................. 36
Section 7.6. Title to Partnership Assets............................................................ 37
Section 7.7. Reliance by Third Parties.............................................................. 37
Section 7.8. Liability of the General Partner....................................................... 38
Section 7.9. Officers of the Partnership............................................................ 38
Section 7.10. Covenants of THCR Regarding the Issuance of New Securities............................ 39
Section 7.11. Other Matters Concerning the General Partner.......................................... 39
ARTICLE VIII. DISSOLUTION, LIQUIDATION AND WINDING-UP.................................................... 40
Section 8.1. Accounting............................................................................. 40
Section 8.2. Distribution on Dissolution............................................................ 40
Section 8.3. Timing Requirements.................................................................... 40
Section 8.4. Documentation of Liquidation........................................................... 41
Section 8.5. Dissolution............................................................................ 41
Section 8.6. Continuation of the Partnership........................................................ 42
ARTICLE IX. TRANSFER AND REDEMPTION OF PARTNERSHIP INTERESTS; CERTAIN CONSENT RIGHTS..................... 42
Section 9.1. General Partner Transfer............................................................... 43
Section 9.2. Transfers by Limited Partners.......................................................... 44
Section 9.3. Certain Additional Restrictions on Transfer............................................ 46
Section 9.4. Effective Dates of Transfers........................................................... 47
Section 9.5. Transfer............................................................................... 48
Section 9.6. Redemption of Partnership Interest..................................................... 48
Section 9.7. Certain Consent Rights................................................................. 49
ARTICLE X. RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS................................................ 49
Section 10.1. No Participation in Management........................................................ 49
Section 10.2. Bankruptcy of a Limited Partner....................................................... 49
Section 10.3. No Withdrawal......................................................................... 49
Section 10.4. Conflicts............................................................................. 50
Section 10.5. Provision of Information.............................................................. 50
Section 10.6. Limited Partner Representative........................................................ 52
Section 10.7. Power of Attorney..................................................................... 52
ARTICLE XI. INDEMNIFICATION; EXCULPATION................................................................. 54
Section 11.1. Indemnification....................................................................... 54
Section 11.2. Indemnification Procedures............................................................ 55
Section 11.3. Exculpation........................................................................... 56
Section 11.4. No Liability of Directors and Others.................................................. 56
ARTICLE XII. RIGHTS UNDER THE EXCHANGE RIGHTS AGREEMENT.................................................. 57
Section 12.1. Transfer Pursuant to Exchange Rights Agreement........................................ 57
Section 12.2. Subject to the Exchange Rights Agreement.............................................. 57
ARTICLE XIII. AMENDMENT OF PARTNERSHIP AGREEMENT, MEETINGS............................................... 57
Section 13.1. Amendments............................................................................ 57
Section 13.2. Meetings of the Partners; Notices to Partners......................................... 59
</TABLE>
(ii)
<PAGE>
<TABLE>
<S> <C>
ARTICLE XIV. CERTIFICATE OF INTEREST..................................................................... 61
Section 14.1. Form of Certificate of Interest....................................................... 61
Section 14.2. Transfers of Certificates of Interest................................................. 61
Section 14.3. Lost, Stolen, Destroyed or Mutilated Certificates of Interest......................... 61
Section 14.4. Inspection of Certificate Transfer Ledger............................................. 62
ARTICLE XV. REGULATORY REQUIREMENTS...................................................................... 62
Section 15.1. Applicable Regulatory Authority and CCC Regulation.................................... 62
Section 15.2. Additional Applicable Regulatory Authority Regulation................................. 63
Section 15.3. Disqualified Holders.................................................................. 63
ARTICLE XVI. GENERAL PROVISIONS.......................................................................... 64
Section 16.1. Notices............................................................................... 64
Section 16.2. Controlling Law....................................................................... 65
Section 16.3. No Third Party Beneficiaries.......................................................... 65
Section 16.4. Execution in Counterparts............................................................. 65
Section 16.5. Provisions Separable.................................................................. 65
Section 16.6. Entire Agreement...................................................................... 65
Section 16.7. Paragraph Headings.................................................................... 66
Section 16.8. Gender, Etc........................................................................... 66
Section 16.9. Number of Days........................................................................ 66
Section 16.10. Partners Not Agents.................................................................. 66
Section 16.11. Assurances........................................................................... 66
Section 16.12. Successors and Assigns............................................................... 66
Section 16.13. Waiver............................................................................... 66
</TABLE>
Schedules
---------
SCHEDULE I -- Aggregate Capital Contributions
SCHEDULE II -- Capital Contributions Prior to April 16, 1996
SCHEDULE III -- Capital Contributions in connection with the Merger Transaction
Exhibits
--------
EXHIBIT A -- Form of Amended and Restated Exchange and Registration Rights
Agreement
(iii)
<PAGE>
THE LIMITED PARTNERSHIP INTERESTS REFERRED TO IN THIS AGREEMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS. REFERENCE IS MADE TO ARTICLE IX OF THIS AGREEMENT FOR PROVISIONS RELATING
TO VARIOUS RESTRICTIONS ON THE SALE OR OTHER TRANSFER OF THESE INTERESTS.
SECOND AMENDED AND RESTATED
------
AGREEMENT OF LIMITED PARTNERSHIP
OF
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP is
made and entered into this __ day of April 1996, by and among Trump Hotels &
Casino Resorts, Inc., a Delaware corporation ("THCR"), Donald J. Trump ("Trump"
---- -----
or the "Initial Limited Partner"), TM/GP Corporation, a New Jersey corporation
-----------------------
("TM/GP"), Trump Taj Mahal, Inc., a New Jersey corporation ("TTMI"), and the
Persons who may become party hereto from time to time pursuant to the terms of
this Agreement.
W I T N E S S E T H:
WHEREAS, THCR and Trump formed the Partnership on March 28, 1995 by
the filing of a Certificate of Limited Partnership with the Secretary of State
of the State of Delaware; and
WHEREAS, effective on the date hereof, THCR Merger Corp., a wholly
owned subsidiary of THCR, will merge (the "Merger") with and into Taj Mahal
Holding Corp. ("Taj Holding"), the owner of a 50% equity interest in Trump Taj
Mahal Associates ("Taj Associates"); and
WHEREAS, THCR desires to contribute its 50% equity ownership interest
in Taj Associates acquired in the Merger, which is held through THCR's wholly
owned subsidiaries Taj Holding and TM/GP, to Trump Atlantic City Associates
("Trump AC"), a wholly owned subsidiary of the Partnership (on behalf, and at
the direction, of the Partnership); and
WHEREAS, Trump desires to contribute his 50% equity ownership interest
in Taj Associates, including his interest in Taj Associates held through TTMI, a
corporation wholly owned by Trump, to Trump AC (on behalf, and at the direction,
of the Partnership); and
<PAGE>
WHEREAS, effective on the date hereof, TM/GP and TTMI are being
admitted to the Partnership as Limited Partners; and
WHEREAS, the parties hereto desire to continue the Partnership as a
limited partnership under the Delaware Revised Uniform Limited Partnership Act
in accordance with the provisions of this Agreement;
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:
ARTICLE I
---------
DEFINITIONS
-----------
Section 1.1. Definitions. Except as otherwise herein expressly
-----------
provided, the following terms and phrases shall have the meanings as set forth
below:
"Accountants" shall mean the national firm or firms of independent
-----------
certified public accountants selected by the General Partner on behalf of the
Partnership to audit the books and records of the Partnership and to prepare
statements and reports in connection therewith, which initially shall be Arthur
Andersen LLP.
"Act" shall mean the Delaware Revised Uniform Limited Partnership Act,
---
as the same may hereafter be amended from time to time.
"Action" shall mean any and all claims, demands, actions, suits or
------
proceedings, civil, criminal, administrative or investigative, that give rise to
a claim for indemnification pursuant to Article XI hereof.
"Additional Distributions" shall mean distributions by the
------------------------
Partnership pursuant to Section 6.3 hereof.
"Additional Partnership Interests" shall have the meaning set
--------------------------------
forth in Section 4.2(a).
"Adjusted Capital Account Deficit" shall mean, with respect to any
--------------------------------
Limited Partner, the deficit balance, if any, in such Partner's Capital Account
as of the end of any relevant fiscal year and after giving effect to the
following adjustments:
(a) credit to such Capital Account any amounts which such Partner is
obligated or treated as obligated to restore with respect to any deficit balance
in such Capital Account pursuant to Section 1.704-1(b)(2)(ii)(c) of the
-2-
<PAGE>
Regulations, or is deemed to be obligated to restore with respect to any deficit
balance pursuant to the penultimate sentences of Sections 1.704-2(g)(1) and
1.704-2(i)(5) of the Regulations; and
(b) debit to such Capital Account the items described in Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the requirements of the alternate test for economic effect contained
in Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted
consistently therewith.
"Adjustment Date" shall have the meaning set forth in Section 4.3
---------------
hereof.
"Affiliate" shall mean, with respect to any specified Person, any
---------
other Person directly or indirectly controlling, controlled by, or under common
control with, such specified Person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by agreement or otherwise.
"Agreement" shall mean this Second Amended and Restated Agreement of
---------
Limited Partnership, as originally executed and as amended, modified,
supplemented or restated from time to time, as the context requires.
"Applicable Regulatory Authority" shall mean any governmental or
-------------------------------
quasi-governmental authority with applicable jurisdiction over the business,
affairs, securities, or properties of the Partnership or any of its
Subsidiaries, including, without limitation, the CCC, the IGC, and the MGC.
"Audited Financial Statements" shall mean financial statements
----------------------------
(balance sheet, statement of income, statement of partners' equity and statement
of cash flows) prepared in accordance with GAAP and accompanied by an
independent auditor's report containing an opinion thereon.
"Bankruptcy" shall mean, with respect to any Person, (i) the
----------
commencement by such Person of any petition, case or proceeding seeking relief
under any provision or chapter of the federal bankruptcy code or any other
federal or state law relating to insolvency, bankruptcy or reorganization, (ii)
an adjudication that such Person is insolvent or bankrupt, (iii) the entry of an
order for relief under the federal bankruptcy code with respect to such Person,
(iv) the filing of any such petition or the commencement of any such case or
proceeding against such Person, unless such petition and the case or proceeding
initiated
-3-
<PAGE>
thereby are dismissed within ninety (90) days from the date of such filing or
(v) the filing of an answer by such Person admitting the allegations of any such
petition.
"Beneficial Owner" shall mean any Person who, singly or together with
----------------
any of such Person's Affiliates, directly or indirectly, has "beneficial
ownership" of Partnership Interests (as determined pursuant to Rule 13d-3 of the
Securities Exchange Act of 1934, as amended).
"Business Day" shall mean any day that is not a Saturday, Sunday or a
------------
day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
"Capital Account" shall mean, with respect to any Partner, the
---------------
separate "book" account which the Partnership shall establish and maintain for
such Partner in accordance with Section 704(b) of the Code and the Treasury
Regulations promulgated thereunder. In the event that a Partnership Interest is
transferred in accordance with the terms of this Agreement, the Capital Account,
at the time of the transfer, of the transferor attributable to the transferred
interest shall carry over to the transferee.
"Capital Contribution" shall mean, with respect to any Partner, the
--------------------
amount of money and the initial Gross Asset Value of any Contributed Property
(net of liabilities to which such property is subject) set forth on Schedule I,
as such exhibit will be amended by the General Partner from time to time to
reflect the amount of money and the Gross Asset Value of any Contributed
Property received by the Partnership pursuant to any additional Capital
Contribution or deemed contributed pursuant to Sections 4.2 or 7.10.
"Casino Control Act" shall mean the New Jersey Casino Control
------------------
Act, N.J.S.A. 5:12-1 et seq.
-------
"CCC" shall mean the New Jersey Casino Control Commission and any
---
successor agency.
"Certificate" shall mean the Certificate of Limited Partnership
-----------
establishing the Partnership, as filed with the office of the Delaware Secretary
of State on March 28, 1995, as it may be amended from time to time in accordance
with the terms of this Agreement and the Act.
"Class B Stock" shall mean Class B Common Stock, par value $.01 per
-------------
share, of THCR, and any class of securities into which the Class B Stock has
been converted, other than Common Stock.
"Code" shall mean the Internal Revenue Code of 1986, as amended and in
----
effect from time to time, as interpreted
-4-
<PAGE>
by the applicable regulations thereunder. Any reference herein to a specific
section or sections of the Code shall be deemed to include a reference to any
corresponding provision of future law.
"Common Stock" shall mean the common stock, par value $.01 per share,
------------
of THCR, other than the Class B Stock.
"Consent of the Limited Partners" shall mean the written consent of a
-------------------------------
Majority-In-Interest of the Limited Partners given in accordance with Section
13.2 hereof, which consent shall be obtained prior to the taking of any action
for which it is required by this Agreement and may be given or withheld by a
Majority-In-Interest of the Limited Partners, unless otherwise expressly
provided herein, in their sole and absolute discretion.
"Contributed Property" shall mean any property or asset, in such form
--------------------
as may be permitted by the Act, but excluding cash, contributed or deemed
contributed to the Partnership with respect to the Partnership Interest held by
each Partner.
"Current Market Price" shall mean, with respect to any security on any
--------------------
Valuation Date specified herein, the arithmetic mean over a period of twenty
consecutive trading days ending the second trading day prior to such date (a) if
the security is listed or admitted to trading on any national securities
exchange, of the high and low sale price of the security or if no such sale
takes place on such date, the average of the highest closing bid and lowest
closing asked prices thereof on such date, in each case as officially reported
on all national securities exchanges on which the security is then listed or
admitted to trading, (b) if the security is not then listed or admitted to
trading on any national securities exchange, the highest closing price thereof
on such date in the over-the-counter market as shown by the NASDAQ National
Market System, or (c) if the security is not then quoted in such system, as
published by the National Quotation Bureau, Incorporated or any similar
successor organization, and in any case as reported by any member firm of the
New York Stock Exchange selected by the General Partner. If the security is not
then listed or admitted to trading on any national securities exchange and if no
closing bid and ask prices therefor are then quoted or published in the over-
the-counter market, "Current Market Price" shall mean the value of the security
as of a date which is 15 days preceding the date as of which the determination
is to be made, as determined in good faith by an investment banking firm of
national reputation (which firm may have provided other services to the General
Partner or the Partnership) selected by the Board of Directors of the General
Partner, and, in connection with a Capital Contribution by the Initial Limited
Partner or his Permitted Holders, which selection shall be approved by a
majority of the Special Committee.
"Damages" shall have the meaning set forth in Section 11.1(a).
-------
-5-
<PAGE>
"Deemed Partnership Interest Value" as of any date, shall mean with
---------------------------------
respect to a Partner, the Deemed Value of the Partnership (as of the day
preceding such date) multiplied by such Partner's Percentage Interest (expressed
as a decimal carried to four places, e.g., .1234 or 12.34%).
"Deemed Value of the Partnership" shall mean, as of the Valuation
-------------------------------
Date, (a) the sum of (i) the product of (A) the Current Market Price per share
of Common Stock, (B) the number of shares of outstanding Common Stock, and (C) a
fraction, the numerator of which is one, and the denominator of which is the
Percentage Interest (expressed as a decimal) of the General Partner, (ii) the
aggregate Fair Market Value of the outstanding capital stock of THCR, other than
the Common Stock or the Class B Stock, and (iii) the Fair Market Value of the
outstanding Indebtedness of THCR appearing on the balance sheet of THCR,
prepared in accordance with GAAP, as of the Valuation Date, which Indebtedness
(the "Included Indebtedness") shall exclude (A) the Indebtedness of the
Partnership and its consolidated and combined Subsidiaries, appearing on the
balance sheet of the Partnership and its consolidated and combined Subsidiaries,
prepared in accordance with GAAP as of the Valuation Date, and (B) any other
Indebtedness appearing on the balance sheet of THCR, prepared in accordance with
GAAP, as of the Valuation Date, the proceeds of which were not used to purchase
additional Partnership Interests, reduced by (b) the amount, if any, by which
the consolidated net worth of the General Partner exceeds its pro rata share of
the consolidated net worth of the Partnership; provided, however, that if the
General Partner shall have material amounts of liabilities (other than Included
Indebtedness) or material assets other than cash and Partnership Interests, the
General Partner may seek the advice of an investment banking firm of national
reputation as to the appropriate modification of the Deemed Value of the
Partnership formula set forth herein to take into account such liabilities or
assets.
"Depreciation" shall mean, with respect to any asset of the
------------
Partnership for any fiscal year or other period, the depreciation or
amortization, as the case may be, allowed or allowable for federal income tax
purposes in respect of such asset for such fiscal year or other period;
provided, however, that if there is a difference between the Gross Asset Value
- -------- -------
and the adjusted tax basis of such asset, Depreciation shall mean "book
depreciation, depletion or amortization" as determined under Section 1.704-
1(b)(2)(iv)(g)(3) of the Regulations.
"Disabling Event" shall have the meaning set forth in Section
---------------
8.6.
"Disqualified Holder" shall mean any Beneficial Owner of Partnership
-------------------
Interests or Equity Interests of the General Partner, the Partnership or any of
its Subsidiaries (a) who is found to be disqualified by any Applicable
Regulatory Authority,
-6-
<PAGE>
or (b) whose holding of such Partnership Interests or Equity Interests may
result or, when taken together with the holding of such Partnership Interests or
Equity Interests by any other Beneficial Owner, may result, in the judgment of
the General Partner, in the inability to obtain, loss or non-reinstatement of
any license or franchise from any Applicable Regulatory Authority sought or held
by the Partnership or any Subsidiary to conduct any portion of the business of
the Partnership or any Subsidiary, which license or franchise is conditioned
upon some or all of the holders of Partnership Interests and such Equity
Interests meeting certain criteria.
"Entity" shall mean any general partnership, limited partnership,
------
limited liability company, corporation, joint venture, trust, business trust,
real estate investment trust, association or other entity.
"Equity Interest" of any Person shall mean any shares, interests,
---------------
participations or other equivalents (however designated) of such Person in
equity.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended from time to time (or any corresponding provisions of
succeeding laws).
"Exchange Rights Agreement" shall mean the Amended and Restated
-------------------------
Exchange and Registration Rights Agreement, substantially in the form of Exhibit
A hereto, to be entered into by and among Trump, TTMI and THCR, providing
certain rights to exchange Limited Partnership Interests for Common Stock on the
terms and conditions set forth therein, as the same may be amended from time to
time in accordance with the terms thereof.
"Executive Agreement" shall mean the Trump Executive Agreement, by and
-------------------
between Trump and the Partnership, as the same may be amended from time to time
in accordance with the terms thereof.
"Fair Market Value" shall mean (i) in the case of any security, its
-----------------
Current Market Price and (ii) in the case of any property or Indebtedness that
is not a security, the fair market value of such property or Indebtedness as
determined in good faith by a majority of the Board of Directors of the General
Partner and, in connection with a Capital Contribution by the Initial Limited
Partner or his Permitted Holders, by a majority of the Special Committee.
"Foreclosure Sale" shall mean any judicial sale or any sale of
----------------
collateral conducted by a pledgee in exercising its rights under the Uniform
Commercial Code.
"Gary Riverboat" shall mean a riverboat or dockside gaming facility
--------------
and the ancillary structures and other
-7-
<PAGE>
facilities used in connection with the operation thereof located in Gary,
Indiana.
"General Partner" shall mean THCR, its duly admitted successors and
---------------
assigns and any other Person who is a general partner of the Partnership at the
time of reference thereto.
"General Partner Expenses" shall mean all organization, formation,
------------------------
administrative and operating costs and expenses of the General Partner [(and,
for purposes of this definition, of Taj Holding and TM/GP)], including, but not
limited to, (a) salaries paid to officers of the General Partner, and insurance,
accounting, legal, and other professional fees and expenses incurred by the
General Partner, (b) costs and expenses relating to the organization, formation
and continuity of existence of the Partnership and the General Partner,
including franchise taxes, fees and assessments associated therewith, any and
all costs, expenses or fees payable or reimbursable to, or in respect of, any
director or officer of the General Partner, (c) costs and expenses relating to
any offer or registration of securities by the General Partner or the
Partnership and all statements, reports, fees and expenses incidental thereto,
including Issuance Costs applicable to any such offer of securities, (d) costs
and expenses associated with compliance by the General Partner with laws, rules
and regulations promulgated by any Applicable Regulatory Authority, including
the SEC, and (e) any costs and expenses incurred in connection with any matter
for which the General Partner may seek indemnification from the Partnership
pursuant to the provisions of this Agreement; provided, however, that "General
Partner Expenses" shall not include, (i) any taxes taken into account in
calculating Tax Amounts, and (ii) any administrative and operating costs and
expenses of the General Partner to the extent arising out of any Outside
Business Activities.
"Gross Asset Value" shall mean, with respect to any asset of the
-----------------
Partnership, such asset's adjusted basis for federal income tax purposes, except
as follows:
(a) the initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be (i) in the case of any asset described
on attached Schedule I, the gross fair market value ascribed thereto on
such Schedule and (ii) in the case of any other asset hereafter contributed
by a Partner, the gross Fair Market Value of such asset at the time of its
contribution, which determination, in the case of the Initial Limited
Partner and his Permitted Holders, shall be made by a majority of the
Special Committee;
(b) the Gross Asset Values of all Partnership assets shall be
adjusted to equal their respective gross Fair Market Values:
-8-
<PAGE>
(i) immediately prior to a Capital Contribution (other than a de
--
minimis Capital Contribution) to the Partnership by a new or existing
-------
Partner as consideration for a Partnership Interest;
(ii) immediately prior to the distribution by the Partnership to
a Partner of more than a de minimis amount of Partnership property as
-- -------
consideration for the redemption of a Partnership Interest;
(iii) immediately prior to the liquidation of the Partnership
within the meaning of Section 1.704-1(b)(2)(ii)(g) of the Regulations;
and
(iv) upon any other event as to which the General Partner
reasonably determines that an adjustment is necessary or appropriate
to reflect the relative economic interests of the Partners;
(c) the Gross Asset Values of Partnership assets distributed to
any Partner shall be the gross Fair Market Values of such assets as of the
date of distribution; and
(d) the Gross Asset Values of Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted basis
of such assets pursuant to Sections 734(b) or 743(b) of the Code, but only
to the extent that such adjustments are taken into account in determining
Capital Accounts pursuant to Section 1.704-1(b)(2)(iv)(m) of the
Regulations; provided, however, that Gross Asset Values shall not be
-------- -------
adjusted pursuant to this paragraph to the extent that the General Partner
reasonably determines that an adjustment pursuant to paragraph (b) above is
necessary or appropriate in connection with a transaction that would
otherwise result in an adjustment pursuant to this paragraph (d).
At all times, Gross Asset Values shall be adjusted by any Depreciation taken
into account with respect to the Partnership's assets for purposes of computing
Net Income and Net Loss. Any adjustment to the Gross Asset Values of
Partnership property shall require an adjustment to the Partners' Capital
Accounts; as for the manner in which such adjustments are allocated to the
Capital Accounts, see clause (c) of the definition of Net Income and Net Loss in
the case of adjustment by Depreciation, and clause (d) of said definition in all
other cases.
"IGC" shall mean the Indiana Gaming Commission and any successor
---
agency.
-9-
<PAGE>
"Indebtedness" shall mean any obligation, whether or not contingent,
------------
(i) in respect of borrowed money or evidenced by bonds, notes, debentures or
similar instruments, (ii) representing the balance deferred and unpaid of the
purchase price of any property (including pursuant to capital leases), except
any such balance that constitutes an accrued expense or a trade payable, if and
to the extent any of the foregoing indebtedness would appear as a liability upon
a balance sheet prepared on a consolidated basis in accordance with GAAP, (iii)
to the extent not otherwise included, obligations under interest rate exchange,
currency exchange, swaps, futures or similar agreements, and (iv) guaranties
(other than endorsements for collection or deposit in the ordinary course of
business), direct or indirect, in any manner (including, without limitation,
reimbursement agreements in respect of letters of credit), of all or any part of
any Indebtedness of any third party.
"Indemnitee" shall mean any Person made or threatened to be made a
----------
party to a proceeding by reason of its status as a Partner or a trustee,
director, officer, employee, agent, stockholder or Liquidating Trustee of the
Partnership, a Partner or an Affiliate of a Partner.
"Indiana Riverboat Act" shall mean the Indiana Riverboat Gambling
---------------------
Act, Ind. Code (S) 4-33-1-1 et seq.
-- ----
"Initial Limited Partner" shall have the meaning set forth in the
-----------------------
Introduction to this Agreement.
"Issuance Costs" shall mean the underwriter's discount, placement
--------------
fees, commissions or other expenses relating to the issuance of New Securities
by the General Partner.
"Lien" shall mean any liens, security interests, mortgages, deeds of
----
trust, pledges, options, escrows, collateral assignments, rights of first offer
or first refusal, preemptive rights and any other similar encumbrances of any
nature whatsoever.
"Limited Partner Representative" shall have the meaning set forth
------------------------------
in Section 10.6 hereof.
"Limited Partners" shall mean the Initial Limited Partner, those
----------------
Persons listed under the heading "Limited Partners" on the signature page hereto
in their respective capacities as limited partners of the Partnership, their
permitted successors or assigns as limited partners hereof, and any Person who,
at the time of reference thereto, is a limited partner of the Partnership.
"Liquidating Trustee" shall mean such individual or Entity which is
-------------------
selected as the Liquidating Trustee hereunder by the General Partner, which
individual or Entity may include the General Partner or an Affiliate of the
General Partner,
-10-
<PAGE>
provided that such Liquidating Trustee agrees in writing to be bound by the
terms of this Agreement. The Liquidating Trustee shall be empowered to give and
receive notices, reports and payments in connection with the dissolution,
liquidation and/or winding up of the Partnership and shall hold and exercise
such other rights and powers granted to the General Partner herein or under the
Act as are necessary or required to conduct the winding-up and liquidation of
the Partnership's affairs and to authorize all parties to deal with the
Liquidating Trustee in connection with the dissolution, liquidation and/or
winding-up of the Partnership.
"Major Decisions" shall have the meaning set forth in Section 7.2
---------------
hereof.
"Majority-In-Interest of the Limited Partners" shall mean Limited
--------------------------------------------
Partner(s) (excluding the General Partner to the extent it Beneficially Owns any
limited Partnership Interest) who hold in the aggregate more than fifty (50)
percent of the Percentage Interests then allocable to and held by the Limited
Partners (excluding the General Partner to the extent it Beneficially Owns any
limited Partnership Interest), as a class.
"Merger" shall have the meaning set forth in the Introduction to
------
this Agreement.
"MGC" shall mean the Mississippi Gaming Commission and any
---
successor agency.
"Minimum Gain Attributable to Partner Nonrecourse Debt" shall mean
-----------------------------------------------------
"partner nonrecourse debt minimum gain" as determined in accordance with
Regulation Section 1.704-2(i)(3).
"Mississippi Gaming Control Act" shall mean the Gaming Control Act of
------------------------------
Mississippi, Miss. Code (S) 75-76-1 et seq.
-- ----
"Net Income" or "Net Loss" shall mean, for each fiscal year or other
---------- --------
applicable period, an amount equal to the Partnership's net income or loss for
such year or period as determined for federal income tax purposes by the
Accountants, determined in accordance with Section 703(a) of the Code (for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Section 703(a) of the Code shall be included in taxable
income or loss), with the following adjustments: (a) by including as an item of
gross income any tax-exempt income received by the Partnership; (b) by treating
as a deductible expense any expenditure of the Partnership described in Section
705(a)(2)(B) of the Code (including amounts paid or incurred to organize the
Partnership (unless an election is made pursuant to Code Section 709(b)) or to
promote the sale of interests in the Partnership and by treating deductions for
any losses incurred in connection with the sale or exchange of Partnership
property disallowed pursuant to Section 267(a)(1) or Section 707(b) of the Code
as
-11-
<PAGE>
expenditures described in Section 705(a)(2)(B) of the Code); (c) in lieu of
depreciation, depletion, amortization and other cost recovery deductions taken
into account in computing total income or loss, there shall be taken into
account Depreciation; (d) gain or loss resulting from any disposition of
Partnership property with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to the Gross Asset
Value of such property rather than its adjusted tax basis; (e) in the event of
an adjustment of the Gross Asset Value of any Partnership asset which requires
that the Capital Accounts of the Partnership be adjusted pursuant to Regulation
Section 1.704-1(b)(2)(iv)(e), (f) and (m), the amount of such adjustment is to
be taken into account as additional Net Income or Net Loss pursuant to Section
5.1; and (f) excluding any items specially allocated pursuant to Section
5.2.
Once an item of income, gain, loss or deduction has been included in the initial
computation of Net Income or Net Loss and is subjected to the special allocation
rules in Section 5.2, Net Income and Net Loss shall be computed without regard
to such item.
"New Securities" means Indebtedness or Equity Interests of the General
--------------
Partner and any of its Subsidiaries other than the Partnership and its
Subsidiaries; provided, however, that New Securities shall not include Class B
Stock and Common Stock issued by THCR prior to the date of this Agreement, the
Common Stock issued by THCR on or prior to the date of this Agreement
(Registration No. 333-639) or a Registration Statement on Form S-4 (Registration
No. 333-153), or the Mortgage Notes to be issued by Trump AC and Trump Atlantic
City Funding, Inc. and guaranteed by Plaza Associates, Taj Associates and The
Trump Taj Mahal Corporation pursuant to a Registration Statement on Form S-1
(Registration No. 333-643).
"Nonrecourse Deductions" shall have the meaning set forth in
----------------------
Sections 1.704-2(b)(1) and (c) of the Regulations.
"Nonrecourse Liabilities" shall have the meaning set forth in
-----------------------
Section 1.704-2(b)(3) of the Regulations.
"Outside Business Activity" shall mean any business other than (i) the
-------------------------
ownership, acquisition and disposition of Partnership Interests as a General
Partner or Limited Partner and (ii) the management of the business of the
Partnership, and such activities as are incidental thereto, including, without
limitation, the issuance of New Securities and the application of the proceeds
thereof in compliance with the provisions of Section 7.10 of this Agreement.
"Partner Nonrecourse Debt" shall have the meaning set forth in
------------------------
Section 1.704-2(b)(4) of the Regulations.
"Partner Nonrecourse Deductions" shall have the meaning set forth
------------------------------
in Section 1.704-2(i)(2) of the Regulations.
-12-
<PAGE>
"Partners" shall mean the General Partner 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.
"Partnership" shall mean the limited partnership formed under the Act
-----------
pursuant to this Agreement, and any successor thereto.
"Partnership Interest" shall mean the ownership interest of a Partner
--------------------
in the Partnership from time to time, including each Partner's Percentage
Interest and such Partner's Capital Account. Wherever in this Agreement
reference is made to a particular Partner's Partnership Interest it shall be
deemed to refer to such Partner's Percentage Interest and shall include the
proportionate amount of such Partner's other interests in the Partnership which
are attributable to or based upon the Partner's Partnership Interest.
"Partnership Minimum Gain" shall have the meaning set forth in
------------------------
Section 1.704-2(b)(2) of the Regulations.
"Percentage Interest" shall mean, with respect to any Partner, the
-------------------
percentage ownership interest of such Partner in such items of the Partnership
as to which the term "Percentage Interests" is applied in this Agreement, as
specified in Schedule I hereto, as such Schedule may be amended from time to
time.
"Permitted Holder" with respect to any Partner shall mean (i) such
----------------
Partner and (ii) if a natural person, the spouse and descendants of such Partner
(including any related trusts controlled by, and established and maintained for
the sole benefit of, such Partner or such spouse or descendants) and the estate
of any of the foregoing. In addition, TTMI shall be deemed to be a Permitted
Holder of Trump.
"Permitted Limited Partnership Interest Lien" shall mean any Lien to
-------------------------------------------
which the limited Partnership Interest of a Limited Partner is subject; provided
that the terms of such Lien (other than a Lien on the proceeds (as defined in
Section 9-306 of the Uniform Commercial Code) of, or right to receive
distributions or payments with respect to, a limited Partnership Interest) must
expressly acknowledge that the rights of the holder of such Lien, upon
foreclosure, will be subject to the terms of the Exchange Rights Agreement.
"Permitted Partners" shall have the meaning set forth in Section
------------------
5.1(b)(ii).
"Person" shall mean any natural person or Entity.
------
"Redemption Date" shall mean the date fixed by the General Partner for
---------------
the redemption of any Partnership Interests pursuant to Article XV.
-13-
<PAGE>
"Redemption Securities" shall mean any debt or equity securities of
---------------------
the Partnership, any Subsidiary or any other corporation, or any combination
thereof, having such terms and conditions as shall be approved by the General
Partner and which, together with any cash to be paid as part of the redemption
price, in the opinion of any nationally recognized investment banking firm
selected by the General Partner (which may be a firm which provides other
investment banking, brokerage or other services to the Partnership), has a
value, at the time notice of redemption is given pursuant to Section 15.3, at
least equal to the Fair Market Value of the Partnership Interests to be redeemed
pursuant to Article XV (assuming, in the case of Redemption Securities to be
publicly traded, such Redemption Securities were fully distributed and subject
only to normal trading activity).
"Regulations" shall mean the income tax regulations promulgated under
-----------
the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Restricted Partner" shall have the meaning set forth in Section
------------------
5.1(b)(ii).
"Rights" shall mean the exchange rights as provided in the
------
Exchange Rights Agreement.
"SEC" shall mean the United States Securities and Exchange
---
Commission.
"Special Committee" shall mean a committee of at least two (2) of the
-----------------
members of the board of directors of the General Partner, composed solely of
directors who are not officers or employees of the General Partner and who are
not Affiliates of Trump or any of his Affiliates; provided that a director shall
not be deemed to be an Affiliate of either Trump or his Affiliates solely by
reason of his or her being a member of the board of directors of the General
Partner or its Subsidiaries.
"Stock Incentive Plan" shall mean the General Partner's 1995 Stock
--------------------
Option Plan and such successor or additional plan as the General Partner may
adopt.
"Stock Option" shall mean an option to purchase Shares granted
------------
under the Stock Incentive Plan.
"Subsidiary" with respect to any Person shall mean a "subsidiary" as
----------
defined in Section 1-02 of Regulation S-X promulgated under the Securities Act
of 1933, as amended.
"Taj Associates" shall mean Trump Taj Mahal Associates, a New Jersey
--------------
general partnership.
-14-
<PAGE>
"Taj Holding" shall mean Taj Mahal Holding Corp., a Delaware
-----------
corporation.
"Taj Mahal" shall mean the Trump Taj Mahal Casino Resort and the
---------
ancillary structures and other facilities used in connection with the operation
thereof located in Atlantic City, New Jersey.
"Tax Amounts" with respect to any year shall not exceed an amount
-----------
equal to (a) the higher of (i) the product of (A) the taxable income of the
Partnership for such year as determined in good faith by the board of directors
of the General Partner and (B) the Tax Percentage and (ii) the product of (A)
the alternative minimum taxable income attributable to the Partnership for such
year as determined in good faith by the board of directors of the General
Partner and (B) the Tax Percentage, reduced by (b) to the extent not previously
taken into account, any income tax benefit attributable to the Partnership which
could be realized (without regard to the actual realization) by its Partners in
the current or any prior taxable year, or portion thereof, commencing on the
date of this Partnership Agreement (including any tax losses or tax credits),
computed at the applicable Tax Percentage for the year that such benefit is
taken into account for purposes of this computation. Any part of the Tax Amount
not distributed in respect of a tax period for which it is calculated shall be
available for distribution in subsequent tax periods.
"Tax Distribution" shall mean distributions by the Partnership
----------------
pursuant to Section 6.2 hereof.
"Tax Items" shall have the meaning set forth in Section 5.3(a).
---------
"Tax Payment Loan" shall have the meaning set forth in Section
----------------
6.4(a) hereof.
"Tax Percentage" shall mean the highest, aggregate effective marginal
--------------
rate of Federal, state and local income tax or, when applicable, alternative
minimum tax, to which any Partner would be subject in the relevant year of
determination (as certified to the General Partner by the Accountants);
provided, however, that in no event shall the Tax Percentage be greater than the
- -------- -------
sum of (x) the highest, aggregate effective marginal rate of Federal, state, and
local income tax, or when applicable, alternative minimum tax, to which the
Partnership would have been subject if it were a C corporation for Federal
income tax purposes, and (y) 5 percentage points. If any Partner is an S
corporation, partnership, or similar pass-through entity for Federal income tax
purposes, the Tax Percentage shall be computed based upon the tax rates
applicable to the shareholder or partner of such Partner, as the case may be.
-15-
<PAGE>
"THCR" shall mean Trump Hotels & Casino Resorts, Inc., a Delaware
----
corporation.
"TM/GP" shall mean TM/GP Corporation, a New Jersey corporation.
-----
"Trading Day" shall mean a day on which the principal national
-----------
securities exchange on which the Common Stock is listed or admitted to trading
is open for the transaction of business or, if the Common Stock is are not
listed or admitted to trading on any national securities exchange, shall mean a
Business Day.
"Transfer" shall have the meaning set forth in Section 9.5.
--------
"Transfer Determination" shall have the meaning set forth in
----------------------
Section 9.2(c).
"Trump" shall have the meaning set forth in the Introduction to
-----
this Agreement.
"Trump AC" shall mean Trump Atlantic City Associates, a New
--------
Jersey general partnership.
"Trump Plaza" shall mean the Trump Plaza Hotel and Casino and the
-----------
ancillary structures and other facilities used in connection with the operation
thereof located in Atlantic City, New Jersey.
"TTMI" shall mean Trump Taj Mahal, Inc., a New Jersey corporation.
----
"Valuation Date" shall mean any date as of which the value of New
--------------
Securities, the Partnership, or any other property is to be determined for
purposes of this Agreement.
"Withholding Tax Act" shall have the meaning set forth in Section
-------------------
6.6(a) hereof.
Section 1.2. Accounting Terms and Determinations. All references in
-----------------------------------
this Agreement to "generally accepted accounting principles" or "GAAP" shall
mean generally accepted accounting principles in effect in the United States of
America at the time of application thereof. Unless otherwise specified herein,
all accounting terms used herein shall be interpreted, all determinations with
respect to accounting matters hereunder shall be made, and all financial
statements and certificates and reports as to financial matters required to be
furnished hereunder shall be prepared, in accordance with generally accepted
accounting principles, applied on a consistent basis.
-16-
<PAGE>
ARTICLE II.
-----------
CONTINUATION OF PARTNERSHIP; BUSINESS OF PARTNERSHIP
----------------------------------------------------
Section 2.1. Continuation. The parties hereto do hereby agree to
------------
continue the Partnership as a limited partnership pursuant to the provisions of
the Act, for the purposes and upon the terms and conditions hereinafter set
forth. The Partners agree that the rights and liabilities of the Partners shall
be as provided in the Act, except as otherwise herein expressly provided.
Section 2.2. Name.
----
Subject to the provisions of paragraph (b) below, the name of the
Partnership shall be Trump Hotels & Casino Resorts Holdings, L.P. or such
other name as shall be chosen from time to time by the General Partner in
its sole and absolute discretion. The inclusion of Trump's name in the
name of the Partnership shall not be deemed to be evidence that Trump
participates in the control of the business within the meaning of Section
17-303 of the Act or any comparable provision.
The Partnership shall conduct business and qualify as a foreign
limited partnership under an assumed name, which shall not include the name
of any Limited Partner, in any jurisdiction where the inclusion of a
Limited Partner's name in the name of the Partnership would subject such
Limited Partner to general liability for the Partnership's debts.
Section 2.3. Character of the Business. The purpose and business of
-------------------------
the Partnership is through its Affiliates and Subsidiaries (a) to conduct casino
gaming and to own and/or operate (i) Trump Plaza, (ii) the Taj Mahal, (iii) the
Gary Riverboat, and (iv) such other gaming properties and facilities as the
Partnership may acquire in the future; (b) to do all things necessary,
incidental, desirable or appropriate in connection with the foregoing; and (c)
to otherwise engage in any enterprise or business in which a limited partnership
may engage or conduct under the Act.
Section 2.4. Location of Principal Place of Business. The location
---------------------------------------
of the principal place of business of the Partnership shall be at Mississippi
Avenue and The Boardwalk, Atlantic City, New Jersey 08401, or such other
location as shall be selected from time to time by the General Partner in its
sole and absolute discretion.
Section 2.5. Registered Agent and Registered Office. The registered
--------------------------------------
agent of the Partnership shall be The Corporation Trust Company, or such other
Person as the General Partner may select in its sole and absolute discretion.
The registered
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<PAGE>
office of the Partnership in the State of Delaware shall be 1209 Orange Street,
Wilmington, Delaware or such other location as the General Partner may from time
to time select in its sole discretion.
ARTICLE III
-----------
TERM
----
Section 8. Commencement. The Partnership's term commenced upon the
------------
filing of the Certificate with the Secretary of State of Delaware on March 28,
1995.
Section 9. Termination. The Partnership shall terminate on the close
-----------
of business on the 31st day of December 2035, unless sooner terminated pursuant
to Article VIII hereof.
ARTICLE
--------
CAPITAL CONTRIBUTIONS
---------------------
Section 10. Capital Contributions; Partnership Interests and
------------------------------------------------
Percentage Interests of the Partners.
- ------------------------------------
(a) Prior to the date hereof, the General Partner and the Initial
Limited Partner made or caused to be made the Capital Contributions set
forth opposite their respective names on Schedule II hereto. Effective as
of the date hereof, the General Partner and the Limited Partners (including
TM/GP and TTMI) shall make or cause to be made the Capital Contributions
set forth opposite their respective names on Schedule III hereto, and TM/GP
and TTMI shall become Limited Partners of the Partnership. The General
Partner and the Initial Limited Partner hereby consent, notwithstanding any
provision in the Agreement to the contrary, to the admission of TM/GP and
TTMI as Limited Partners. Reflective of the Capital Contributions set
forth in Schedules II and III, the Partners shall have made or caused to be
made as of the date hereof the Capital Contributions, and shall have the
Percentage Interests in the Partnership, as set forth in Schedule I hereto,
which Percentage Interests shall be adjusted as provided in Schedule I as
amended by the General Partner from time to time after the date hereof to
the extent necessary to reflect properly redemptions or conversions of
Partnership Interests, Capital Contributions, the issuance of Additional
Partnership Interests or any other event having an effect on a Partner's
Percentage Interest, in each case to the extent permitted by and in
accordance with this Agreement. Except to the extent specifically set
forth in this Agreement with respect to the General Partner, the Partners
shall have no obligation to make any additional Capital Contributions or
-18-
<PAGE>
loans to the Partnership, even if the failure to do so could result in the
Bankruptcy or insolvency of the Partnership or any other adverse
consequence to the Partnership. All surtax, documentary stamp tax or other
transfer tax that may be imposed as a result of the foregoing Capital
Contributions shall be paid by the Partnership.
(b) Except as provided by law, (i) no Limited Partner shall be
liable for any deficit in its Capital Account or (ii) except as provided in
Section 6.2(b), be obligated to return any distributions of any kind
received from the Partnership.
(c) So long as the Initial Limited Partner and his Permitted
Holders beneficially own more than 10% of the issued and outstanding
Partnership Interests, the General Partner shall notify such Partners no
less than 60 days prior to any reduction of nonrecourse indebtedness or
other indebtedness which such Partner may include in the basis of its
interest in the Partnership (other than scheduled repayments of principal)
in an amount greater than $10 million during any fiscal year. Upon receipt
of such notice, such Partners shall be permitted, at their own expense, to
undertake any action they desire to increase the "economic risk of loss,"
within the meaning of Regulation section 1.752-2, that the Initial Limited
Partner and his Permitted Holders have with respect to the liabilities of
the Partnership; provided, however, that the Initial Limited Partner and
-------- -------
his Permitted Holders may not undertake any action that would have, in the
reasonable judgment of a majority of the Special Committee, a material
adverse tax impact on the Partnership, the General Partner or other Limited
Partners. If the Initial Limited Partner or his Permitted Holders wish to
undertake any action permitted pursuant to this section 4.1(c), the General
Partner shall endeavor to cooperate with such Partners, provided that such
Partners shall promptly reimburse the General Partner for any reasonable
costs incurred in providing such cooperation.
Section 4.2. Issuance of Additional Partnership Interests and Shares.
-------------------------------------------------------
(a) The General Partner is authorized to cause the Partnership
from time to time to issue to the General Partner, TM/GP, the Initial
Limited Partner and his Permitted Holders, and TTMI, Partnership Interests
("Additional Partnership Interests") in one or more classes, or one or more
----------------------------------
series of any of such classes, with such designations, preferences and
participating, optional or other special rights, powers and duties,
including rights, powers and duties which may be senior to interests in the
Partnership theretofore issued, for consideration not less than the Fair
Market Value thereof, and on such terms and conditions as shall be
determined by the General Partner
-19-
<PAGE>
and, which special rights, powers and duties, without limitation, may
relate to (i) the allocations of items of Partnership income, gain, loss,
deduction and credit to each such class or series of Partnership Interests;
(ii) the right of each such class or series of Partnership Interests to
share in Partnership distributions; and (iii) the rights of each such class
or series of Partnership Interests upon dissolution and liquidation of the
Partnership.
(b) No Additional Partnership Interests shall be issued to the
General Partner or any Subsidiary or nominee of the General Partner, unless
(i) the Additional Partnership Interests are issued in
connection with an issuance of New Securities, the General Partner
complies with all of the provisions of this Agreement, including,
without limitation, Section 7.10(b) and (A) if such New Securities are
Common Stock, such Additional Partnership Interests have terms
equivalent to the Partnership Interest originally issued to the
General Partner hereunder; provided, however, in the case of the
issuance of Common Stock as compensation for services rendered, the
General Partner shall be deemed to have contributed to the Partnership
as a Capital Contribution pursuant to Section 4.3 hereof an amount
equal to the product of (x) the Fair Market Value of the Common Stock
(as of the Trading Day immediately preceding the date of issue of the
deferred stock to such recipient), times (y) the number of shares of
deferred Common Stock issued by the General Partner to such recipient;
(B) if such New Securities are Stock Options, no Additional
Partnership Interests shall be issued at the time of the issuance of
such Stock Options; provided, that upon the exercise of such Stock
Options, the General Partner shall contribute to the capital of the
Partnership an amount equal to the exercise price of such Stock
Options and shall be deemed to have contributed to the Partnership as
a Capital Contribution pursuant to Section 4.3 hereof an amount equal
to the product of (x) the Fair Market Value of the Common Stock (as of
the Valuation Day immediately preceding the date on which the Stock
Options are exercised), and (y) the number of shares of Common Stock
issued upon the exercise of such Stock Options, and (C) if such New
Securities are other than Common Stock or Stock Options, such
Additional Partnership Interests have conversion, subscription,
purchase and other terms equivalent to the terms of such New
Securities;
(ii) the Additional Partnership Interests are issued to all
Partners in proportion to their respective Percentage Interests;
-20-
<PAGE>
(iii) Additional Partnership Interests are issued in
connection with any other contribution of value made by the General
Partner to the Partnership not otherwise described in clauses (i) and
(ii) of this Section 4.2(b); or
(iv) the Additional Partnership Interests are issued with the
written consent of all of the Limited Partners given in accordance
with Section 13.2 hereof.
(c) No Person shall have any preemptive, preferential or other
similar right with respect to (i) additional Capital Contributions or loans
to the Partnership; or (ii) issuance or sale of any Partnership Interests.
(d) The General Partner is hereby authorized on behalf of each of
the Partners to amend this Agreement solely to reflect any increase in the
Percentage Interests of any Partner and the corresponding reduction of the
Percentage Interests of the other Partners in accordance with the
provisions of this Section 4.2, and the General Partner shall promptly send
a copy of such amendment to each Limited Partner.
Section 4.3. Adjustment of Partnership Interests. Except with
-----------------------------------
respect to a Capital Contribution described in Section 4.2(b)(i)(C), effective
on each date on which a Partner has made a Capital Contribution to the
Partnership (each an "Adjustment Date"), the Percentage Interest of each Partner
shall be adjusted, which adjustment in the case of a Capital Contribution by the
Initial Limited Partner or his Permitted Holders shall be subject to the
approval of a majority of the Special Committee, such that the Percentage
Interest of the Partner shall be equal to a fraction, (a) the numerator of which
is equal to the sum of (i) the Deemed Partnership Interest Value of such Partner
(computed as of the Trading Day immediately preceding the Adjustment Date) and
(ii) the amount of the Capital Contribution contributed by such Partner on such
Adjustment Date, and (b) the denominator of which is equal to the sum of (i) the
Deemed Value of the Partnership (computed as of the Trading Day immediately
preceding the Adjustment Date) and (ii) the amount of the Capital Contribution
contributed by all Partners on such Adjustment Date. The General Partner shall
promptly give each Limited Partner written notice of its Percentage Interest, as
adjusted, and the Gross Asset Value shall be adjusted.
Section 4.4. No Interest on or Return of Capital Contribution. No
------------------------------------------------
Partner shall be entitled to interest on its Capital Contribution or Capital
Account. Except as provided herein or by law, no Partner shall have any right
to demand or receive the return of its Capital Contribution.
-21-
<PAGE>
ARTICLE V
---------
ALLOCATIONS AND OTHER TAX AND ACCOUNTING MATTERS
------------------------------------------------
The Net Income, Net Loss and/or other Partnership items shall be
allocated as follows:
Section 5.1. Allocations of Net Income and Net Loss.
--------------------------------------
(a) Net Income. Except as otherwise provided herein, Net Income
----------
for any fiscal year or other applicable period shall be allocated in the
following order and priority:
(i) First, to the Partners, until the cumulative Net Income
allocated pursuant to this subparagraph (a)(i) for the current and all
prior periods equals the cumulative Net Loss allocated pursuant to
subparagraph (b)(ii) hereof for all prior periods, among the Partners
in the reverse order that such Net Loss was allocated to the Permitted
Partners pursuant to subparagraph (b)(ii) hereof.
(ii) Thereafter, the balance of the Net Income, if any, shall
be allocated to the Partners in accordance with their respective
Percentage Interests.
(b) Net Loss. Except as otherwise provided herein, Net Loss of
--------
the Partnership for each fiscal year or other applicable period shall be
allocated as follows:
(i) To the Partners in accordance with their respective
Percentage Interests.
(ii) Notwithstanding subparagraph (b)(i) hereof, to the
extent any Net Loss allocated to a Partner under subparagraph (b)(i)
hereof or this subparagraph (b)(ii) would cause such Partner (a
"Restricted Partner") to have an Adjusted Capital Account Deficit as
---------- -------
of the end of the fiscal year to which such Net Loss relates, such Net
Loss shall not be allocated to such Restricted Partner and instead
shall be allocated to the other Partner(s) (the "Permitted Partners")
------------------
pro rata in accordance with their relative Percentage Interests.
Section 5.2. Special Allocations. Notwithstanding any provisions of
-------------------
Section 5.1, the following special allocations shall be made, to the least
extent necessary to satisfy section 704(b) of the Code and the Regulations
promulgated thereunder, in the following order:
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<PAGE>
(a) Minimum Gain Chargeback (Nonrecourse Liabilities). If there is a
-------------------------------------------------
net decrease in Partnership Minimum Gain for any Partnership fiscal year
(except as a result of conversion or refinancing of Partnership
indebtedness, certain capital contributions or revaluation of the
Partnership property as further outlined in 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 Regulation Section 1.704-2(f)(6). This paragraph (a) is
intended to comply with the minimum gain chargeback requirement in said
section of the Regulations and shall be interpreted consistently therewith.
Allocations pursuant to this paragraph (a) shall be made in proportion to
the respective amounts required to be allocated to each Partner pursuant
hereto.
(b) Minimum Gain Attributable to Partner Nonrecourse Debt. If there
-----------------------------------------------------
is a net decrease in Minimum Gain Attributable to Partner Nonrecourse Debt
during any fiscal year (other than due to the conversion, refinancing or
other change in the debt instrument causing it to become partially or
wholly nonrecourse, certain capital contributions, or certain revaluations
of Partnership property (as further outlined in Regulation Section 1.704-
2(i)(4))), 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 the 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 Regulation Section 1.704-2(i)(4) and
(j)(2). This paragraph (b) is intended to comply with the minimum gain
chargeback requirement with respect to Partner Nonrecourse Debt contained
in said section of the Regulations and shall be interpreted consistently
therewith. Allocations pursuant to this paragraph (b) shall be made in
proportion to the respective amounts required to be allocated to each
Partner pursuant hereto.
(c) Qualified Income Offset. In the event a Limited Partner
-----------------------
unexpectedly receives any adjustments, allocations or distributions
described in Regulation Section 1.704-1(b)(2)(ii) (d)(4), (5), or (6), and
such Limited Partner has an Adjusted Capital Account Deficit, items of
Partnership income and gain shall be specially allocated to such Partner in
an amount and manner sufficient to eliminate the Adjusted Capital Account
Deficit as quickly as possible. This paragraph (c) is intended to
constitute a "qualified income offset" under Regulation Section 1.704-
1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
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<PAGE>
(d) Nonrecourse Deductions. Nonrecourse Deductions for any fiscal
----------------------
year or other applicable period shall be allocated to the Partners in
accordance with their respective Percentage Interests. [For purposes of
Regulation Section 1.752-3(a)(3), "excess nonrecourse liabilities" shall be
allocated among the Partners in proportion to their respective Percentage
Interests.]
(e) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions
------------------------------
for any fiscal year or other applicable period shall be specially allocated
to the Partner that bears the economic risk of loss for the debt (i.e., the
Partner Nonrecourse Debt) in respect of which such Partner Nonrecourse
Deductions are attributable (as determined under Regulation Section 1.704-
2(b) (4) and (i) (1)).
(f) Additional Allocations. Notwithstanding the foregoing, if, upon
----------------------
final dissolution and termination of the Partnership and after taking into
account all allocations of Net Income and Net Loss (and other Tax Items)
under this Article V, the distributions to be made in accordance with the
positive Capital Account balances would result in a distribution that would
be different from a distribution under Section 6.3 hereof, then gross items
of income and gain (and other Tax Items) for the taxable year of the final
dissolution and termination (and, to the extent permitted under section
761(c) of the Code, gross items of income and gain (and other Tax Items)
for the immediately preceding taxable year) shall be allocated to the
Partners to increase or decrease their Capital Account balances, as the
case may be, so that the final distribution will occur in the same manner
as a distribution under Section 6.3 hereof.
Section 5.3. Tax Allocations.
---------------
(a) Generally. Subject to paragraphs (b) and (c) hereof, items of
---------
income, gain, loss, deduction and credit to be allocated for income tax
purposes (collectively, "Tax Items") shall be allocated among the Partners
---------
on the same basis as their respective book items.
(b) Sections 1245/1250 Recapture. If any portion of gain from the
----------------------------
sale of property is treated as gain which is ordinary income by virtue of
the application of Code Sections 1245 or 1250 ("Affected Gain"), except to
-------------
the extent that the tax treatment of such sale is governed by section
704(c) of the Code as provided under Section 5.3(c) hereof, then (i) such
Affected Gain, to the extent attributable to depreciation or amortization
allowed or allowable for any taxable period subsequent to the date hereof,
shall be allocated among the Partners in the same proportion that the
depreciation and amortization deductions
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<PAGE>
giving rise to the Affected Gain were allocated and (ii) other Tax Items of
gain of the same character that would have been recognized, but for the
application of Code Sections 1245 and/or 1250, shall be allocated away from
those Partners who are allocated Affected Gain pursuant to clause (i) so
that, to the extent possible, the other Partners are allocated the same
amount, and type, of capital gain that would have been allocated to them
had Code Sections 1245 and/or 1250 not applied. For purposes hereof, in
order to determine the proportionate allocations of depreciation and
amortization deductions for each fiscal year or other applicable period,
such deductions shall be deemed allocated on the same basis as Net Income
or Net Loss for such respective period.
(c) Allocations Respecting Section 704(c). Property contributed to
-------------------------------------
the Partnership shall be subject to Section 704(c) of the Code and
Regulation Section 1.704-3 so that notwithstanding Section 5.2 hereof,
taxable gain and loss from disposition of such property contributed to the
Partnership that is subject to section 704(c) of the Code shall be
allocated on a property by property basis in accordance with the
Regulations promulgated thereunder. For the purpose of allocating Tax
Items, the Partnership shall apply the "ceiling rule" set forth in
Regulation Section 1.704-3, the effect of which will not be subject to cure
by special allocation except as specifically provided in the next sentence
of this Section 5.3(c). Notwithstanding the foregoing, tax depreciation
and amortization with respect to Partnership property contributed by the
Initial Limited Partner pursuant to the Contribution Agreement between the
Partnership and the Initial Limited Partner, dated as of June 12, 1995,
shall be allocated on an aggregate basis for purposes of complying with the
requirements of Section 704(c) of the Code, taking into account, for any
particular taxable year for which such allocation is made, the aggregate
amount of depreciation and amortization allowable with respect to the
aggregate basis of all such Partnership properties determined as of June
12, 1995 (and not taking into account (i) any increase in the basis of such
properties resulting from improvements thereon made by the Partnership
subsequent to June 12, 1995 or (ii) any additional basis resulting from any
new property purchased by the Partnership in a taxable transaction
subsequent to June 12, 1995); provided, however, that the General Partner
shall not specially allocate any Tax Items related to the Partnership
properties described in this sentence, other than the items of depreciation
and amortization referred to in this sentence, to cure for the effect of
the ceiling rule set forth in Regulation Section 1.704-3(b). The
Partnership shall allocate items of income, gain, loss and deduction
allocated to it by a partnership to the Partner or Partners contributing
the interest or interests in such partnership, so that, to the greatest
extent possible and
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<PAGE>
consistent with the foregoing, such contributing Partner or Partners are
allocated the same amount and character of items of income, gain, loss and
deduction with respect to such partnership that they would have been
allocated had they contributed undivided interests in the assets owned by
such partnership to the Partnership in lieu of contributing the interest or
interests in the partnership to the Partnership.
Section 5.4. Books of Account. At all times during the continuance
----------------
of the Partnership, the General Partner shall maintain or cause to be maintained
full, true, complete and correct books of account in accordance with GAAP, using
the calendar year as the fiscal and taxable year of the Partnership. In
addition, the Partnership shall keep all records required to be kept pursuant to
the Act.
Section 5.5. Tax Matters Partner. The General Partner is hereby
-------------------
designated as the Tax Matters Partner within the meaning of Section 6231(a)(7)
of the Code for the Partnership; provided, however, that (i) in exercising its
-------- -------
authority as Tax Matters Partner, the General Partner shall be limited by the
provisions of this Agreement affecting tax aspects of the Partnership; (ii) the
General Partner shall consult in good faith with the Limited Partner
Representative regarding the filing of a Code Section 6227(b) administrative
adjustment request with respect to the Partnership or a Contributed Property
before filing such request, it being understood, however, that the provisions
hereof shall not be construed to limit the ability of any Partner, including the
General Partner, to file an administrative adjustment request on its own behalf
pursuant to Section 6227(a) of the Code; (iii) the General Partner shall consult
in good faith with the Limited Partner Representative regarding the filing of a
petition for judicial review of an administrative adjustment request under
Section 6228 of the Code, or a petition for judicial review of a final
partnership administrative judgment under Section 6226 of the Code relating to
the Partnership before filing such petition; (iv) the General Partner shall give
prompt notice to the Limited Partner Representative and any notice partners
under Section 6231 of the Code of the receipt of any written notice that the
Internal Revenue Service or any state or local taxing authority intends to
examine or audit Partnership income tax returns for any year, receipt of written
notice of the beginning of an administrative proceeding at the Partnership level
relating to the Partnership under Section 6223 of the Code, receipt of written
notice of the final Partnership administrative adjustment relating to the
Partnership pursuant to Section 6223 of the Code, and receipt of any request
from the Internal Revenue Service for waiver of any applicable statute of
limitations with respect to the filing of any tax return by the Partnership and
(v) the General Partner shall promptly notify the Limited Partner Representative
if the General Partner does not intend to file for judicial review with respect
to the Partnership.
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<PAGE>
Section 5.6. Tax Elections and Returns. 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 and absolute discretion, except that
the General Partner shall, if requested by a Limited Partner or a transferee,
file an election on behalf of the Partnership pursuant to Section 754 of the
Code to adjust the basis of the Partnership property in the case of a transfer
of a Partnership Interest or distribution from the Partnership, including
transfers made in connection with the exercise of the Rights, made in accordance
with the provisions of this Agreement. The General Partner shall cause the
Accountants to prepare and submit to the Limited Partner Representative on or
before March 31st of each year for review drafts of all federal and state income
tax returns of the Partnership. If the Limited Partner Representative
determines that any modifications to the tax returns of the Partnership should
be considered, the Limited Partner Representative shall, within fifteen (15)
days following receipt of such tax returns from the Accountants or the General
Partner, indicate to the Accountants or to the General Partner the suggested
revisions to the tax returns, which returns shall be resubmitted to the Limited
Partner Representative for its review and approval. The Limited Partner
Representative shall complete its review of the resubmitted returns within ten
(10) days after receipt thereof from the Accountants or the General Partner.
The General Partner shall consult in good faith with the Limited Partner
Representative regarding any proposed modifications to the tax returns of the
Partnership, provided that (i) a majority of the Special Committee shall make
the final decision, in light of the best interest of all Partners, of whether to
accept or reject any such proposed modifications, which decision shall be
binding upon the Partnership and all of the Partners and (ii) no Partner shall,
unless otherwise required by applicable law, take any position for income tax
purposes or otherwise that is inconsistent with such final decision of the
majority of the Special Committee. A statement of the allocation of Net Income
or Net Loss of the Partnership shown on the annual income tax returns prepared
by the Accountants shall be transmitted and delivered to the Limited Partner
Representative within ten (10) days of the receipt thereof by the Partnership.
The General Partner shall be responsible for preparing and filing all federal
and state tax returns for the Partnership and furnishing copies thereof to the
Partners, together with required Partnership schedules showing allocations of
tax items, all within the period of time prescribed by law. The General Partner
shall use reasonable efforts to make available to the Limited Partners final
Forms K-1 not later than March 31 of each year. Notwithstanding the foregoing,
Trump shall have the right to control the resolution of tax matters affecting or
relating to Taj Associates in respect of periods ending on or prior to the date
hereof, including requiring the Partnership, Trump AC and Taj Associates to
adjust the tax basis of assets held by Taj Associates in connection with the
resolution of such tax matters to the extent such basis adjustments shall not
reduce THCR's
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<PAGE>
share of federal income tax depreciation and cost recovery deductions in respect
of assets held by Taj Associates as of the date hereof and contributions of the
interests in Taj Associates to Trump AC.
Section 5.7. Tax Certifications.
------------------
(a) The Partnership shall deliver to each partner in the manner
provided in Section 16.1, from time to time as necessary to implement
timely the provisions of this Agreement, certificates executed by its chief
financial officers and the Accountants indicating the respective
calculations with respect to, and the amounts of, a Partner's share of Tax
Distributions and the amount of any repayments to the Partnership called
for thereunder, together with supporting schedules in reasonable detail all
as of each pertinent date and delivered at least 15 business days prior to
the date payment is due.
(b) The certificates delivered pursuant to paragraph (a) hereof shall
be deemed approved by all parties and the Partnership shall act upon such
certificates as provided in this Agreement unless within five business days
of delivery of such certificate a Partner objects to the contents of any
certificate by written notice in detail sufficient to state the basis for
the objection. The Partners shall negotiate in good faith to resolve such
objection.
ARTICLE VI
----------
DISTRIBUTIONS
-------------
Section 21. General. Distributions of cash or property may be made
-------
in accordance herewith at such times as the General Partner deems appropriate in
the order provided in this Article VI, subject to the limitations, if any, set
forth in the agreements governing the Partnership's Indebtedness.
Section 6.1. Distributions for Taxes.
-----------------------
(a) The Partnership shall distribute to each Partner in one or more
payments, including payments described in paragraph (b) from time to time
during each year, but in no event later than March 1 of the year
immediately following such year, an aggregate cash sum equal to the product
of (i) Tax Amounts in respect of the taxable year, or portion thereof, for
which such distribution is being made and (ii) the Partner's Percentage
Interest. In addition, the Partnership shall make additional pro rata
distributions as are necessary to reflect adjustments, as determined in
good faith by the board of directors of the General Partner, to any item
affecting Tax Amounts, as
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<PAGE>
reflected on the Partnership's tax return, as it may be amended from time
to time, or as a result of a concluded tax audit.
(b) In addition to the certificates required by Section 5.7, the
Partnership shall furnish the Partners with such information as they shall
reasonably request from time to time respecting estimates of the
Partnership's taxable income or loss (and items thereof) for any fiscal
year or portion thereof. If, in any year, any Partner shall be required to
make federal, state or local estimated income tax payments under applicable
law and regulations, then, at least thirty (30) days prior to the date (the
"Estimated Payment Date") upon which any such payments are due, the
Partnership shall deliver to each Partner the certificates required by
Section 5.7, indicating the amount (the "Estimated Payment") of the tax in
respect of the respective Tax Amounts due on the Estimated Payment Date,
and not later than fifteen (15) days prior to such Estimated Payment Date,
the Partnership shall pay to such Partner an amount equal to such Estimated
Payment. The amount of each Estimated Payment received by such Partner
shall be treated as a non-interest bearing advance against the amounts
distributable in respect of such Partner's pro rata share of Tax Amounts to
such Partner for such year. If the aggregate amount of the Estimated
Payments received by a Partner for any year shall exceed the distribution
to which such Partner actually is entitled under paragraph (a) above, such
Partner shall forthwith repay such excess to the Partnership on or before
the date set forth in paragraph (a) above, unless such excess shall have
been paid to taxing authorities in which event such excess shall be applied
to reduce the amount otherwise distributable pursuant to this Section 6.2
in respect of the Partnership's next succeeding fiscal year or years. Each
Partner shall seek, to the extent entitled thereto, and contribute to the
Partnership any refund of taxes paid by such Partner out of amounts
distributed pursuant to this Section 6.2 promptly after receipt of such
refund.
Section 6.3. Other Distributions. After payments and distributions,
-------------------
if any, of the amounts set forth in Section 6.2 above, the Partnership may
distribute, in the discretion of a majority of the board of directors of the
General Partner, cash or other property, valued at its Fair Market Value, to the
Partners. Any such distributions shall be made pro rata in accordance with
their Percentage Interests.
Section 6.4. Withholding Payments Required By Law.
------------------------------------
Unless treated as a Tax Payment Loan (as hereinafter defined),
any amount paid by the Partnership for or with respect to any Partner on
account of any withholding tax or other tax payable with respect to the
income, profits
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<PAGE>
or distributions of the Partnership pursuant to the Code, the Regulations,
or any state or local statute, regulation or ordinance requiring such
payment (a "Withholding Tax Act") shall be treated as a distribution to
-------------------
such Partner for all purposes of this Agreement, consistent with the
character or source of the income, profits or cash which gave rise to the
payment or withholding obligation. To the extent that the amount required
to be remitted by the Partnership under the Withholding Tax Act exceeds the
amount then otherwise distributable to such Partner, unless and to the
extent that funds shall have been provided by such Partner pursuant to the
last sentence of this Section 6.4(a), the excess shall constitute a loan
from the Partnership to such Partner (a "Tax Payment Loan") which shall be
----------------
payable upon demand and shall bear interest, from the date that the
Partnership makes the payment to the relevant taxing authority, at the rate
announced from time to time by Citibank, N.A. (or any successor thereto) as
its "prime rate", compounded monthly (but in no event higher than the
highest interest rate permitted by applicable law). So long as any Tax
Payment Loan to any Partner or the interest thereon remains unpaid, the
Partnership shall make future distributions due to such Partner under this
Agreement by applying the amount of any such distributions first to the
payment of any unpaid interest on such Tax Payment Loan and then to the
repayment of the principal thereof, and no such future distributions shall
be paid to such Partner until all of such principal and interest has been
paid in full. If the amount required to be remitted by the Partnership
under the Withholding Tax Act exceeds the amount then otherwise
distributable to a Partner, the Partnership shall notify such Partner at
least five (5) Business Days in advance of the date upon which the
Partnership would be required to make a Tax Payment Loan under this Section
6.4(a) (the "Tax Payment Loan Date") and provide such Partner the
---------------------
opportunity to pay to the Partnership, on or before the Tax Payment Loan
Date, all or a portion of such deficit.
(b) The General Partner shall have the authority to take all actions
necessary to enable the Partnership to comply with the provisions of any
Withholding Tax Act applicable to the Partnership and to carry out the
provisions of this Section 6.4. Nothing in this Section 6.4 shall create
any obligation on the General Partner to advance funds to the Partnership
or to borrow funds from third parties in order to make any payments on
account of any liability of the Partnership under a Withholding Tax Act.
(c) In the event that a Tax Payment Loan is not paid by a Limited
Partner within thirty (30) days after written demand therefor is made by
the General Partner, the General Partner may cause all distributions that
would
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<PAGE>
otherwise be made to such Limited Partner to be retained by the
Partnership, up to the amount necessary to repay such Tax Payment Loan,
including all accrued and unpaid interest thereon, and such retained
distributions shall be applied against, first, the accrued interest on and,
-----
second, the principal of, such Tax Payment Loan.
------
Section 6.5. Non-Recourse. Notwithstanding any other provisions of
------------
this Agreement, the obligations to make distributions contemplated hereby shall
be limited to the assets of the Partnership and shall be non-recourse with
respect to the Partners and any of their assets.
ARTICLE VII
-----------
RIGHTS, DUTIES AND RESTRICTIONS OF THE GENERAL PARTNER
------------------------------------------------------
Section 7.1. Powers and Duties of General Partner.
------------------------------------
(a) The General Partner shall be responsible for the management of
the Partnership's business and affairs. Except as otherwise expressly
provided in this Agreement, and subject to the limitations contained in
Section 7.2 hereof with respect to Major Decisions, the General Partner
shall have, and is hereby granted, full and complete power, authority and
discretion to take such action for and on behalf of the Partnership and in
its name as the General Partner shall, in its sole and absolute discretion,
deem necessary or appropriate to carry out the Partnership's business and
the purposes for which the Partnership was organized. Except as otherwise
expressly provided herein, and subject to Section 7.2 hereof, the General
Partner shall, on behalf of, and at the expense of, the Partnership, have
the right, power and authority:
(i) to manage, control, invest, reinvest, acquire by purchase,
lease or otherwise, sell, contract to purchase or sell, grant, obtain,
or exercise options to purchase, options to sell or conversion rights,
assign, transfer, convey, deliver, endorse, exchange, pledge,
mortgage, abandon, improve, repair, maintain, insure, lease for any
term and otherwise deal with any and all property of whatsoever kind
and nature, and wheresoever situated, in furtherance of the business
or purposes of the Partnership;
(ii) to acquire, directly or indirectly, interests in gaming
ventures of any kind and of any type, and any and all kinds of
interests therein (including, without limitation, Entities investing
therein), and to determine the manner in which title thereto is to be
held; to manage (directly or through management agreements), insure
against loss, protect
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<PAGE>
and subdivide any of such gaming ventures, interests therein or parts
thereof; and to participate in the ownership, management and operation
of any gaming venture;
(iii) to employ, engage, indemnify or contract with or dismiss
from employment or engagement Persons to the extent deemed necessary
or appropriate by the General Partner for the operation and management
of the Partnership's business, including but not limited to
contractors, subcontractors, engineers, architects, surveyors,
mechanics, consultants, accountants, attorneys, insurance brokers and
others;
(iv) to enter into contracts on behalf of the Partnership, and to
cause all General Partner Expenses to be paid;
(v) to borrow or loan money, obtain or make loans and advances
from and to any Person for Partnership purposes and to apply for and
secure from or accept and grant to any Person credit or
accommodations; to contract liabilities and obligations (including
interest rate swaps, caps and hedges) of every kind and nature with or
without security; and to repay, collect, discharge, settle, adjust,
compromise or liquidate any such loan, advance, obligation or
liability;
(vi) to grant security interests, mortgage, assign, deposit,
deliver, enter into sale and leaseback arrangements or otherwise give
as security or as additional or substitute security or for sale or
other disposition any and all Partnership property, tangible or
intangible, including, but not limited to, personal property and real
estate and interests in land trusts, and to make substitutions
thereof, and to receive any proceeds thereof upon the release or
surrender thereof; to sign, execute and deliver any and all
assignments, deeds, bills of sale and contracts and instruments in
writing; to authorize, give, make, procure, accept and receive moneys,
payments, property notices, demands, protests and authorize and
execute waivers of every kind and nature; to enter into, make,
execute, deliver and receive agreements, undertakings and instruments
of every kind and nature; and generally to do any and all other acts
and things incidental to any of the foregoing or with reference to any
dealings or transactions which the General Partner may deem necessary,
proper or advisable to effect or accomplish any of the foregoing or to
carry out the business and purposes of the Partnership;
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<PAGE>
(vii) to acquire and enter into any contract of insurance
(including, without limitation, general partner liability and
partnership reimbursement insurance policies) which the General
Partner may deem necessary or appropriate;
(viii) to conduct any and all banking transactions on behalf of the
Partnership; to adjust and settle checking, savings and other accounts
with such institutions as the General Partner shall deem appropriate;
to draw, sign, execute, accept, endorse, guarantee, deliver, receive
and pay any checks, drafts, bills of exchange, acceptances, notes,
obligations, undertakings and other instruments for or relating to the
payment of money in, into or from any account in the Partnership's
name; to make deposits into and withdrawals from the Partnership's
bank accounts and to negotiate or discount commercial paper,
acceptances, negotiable instruments, bills of exchange and dollar
drafts;
(ix) to demand, sue for, receive and otherwise take steps to
collect or recover all debts, rents, proceeds, interests, dividends,
goods, chattels, income from property, damages and all other property,
to which the Partnership may be entitled or which are or may become
due the Partnership from any Person; to commence, prosecute or
enforce, or to defend, answer or oppose, contest and abandon all legal
proceedings in which the Partnership is or may hereafter be
interested; and to settle, compromise or submit to arbitration any
accounts, debts, claims, disputes and matters which may arise between
the Partnership and any other Person and to grant an extension of time
for the payment or satisfaction thereof on any terms, with or without
security;
(x) to acquire interests in and contribute money or property to
any limited or general partnerships, joint ventures, Subsidiaries or
other Entities as the General Partner deems desirable and to conduct
the Partnership's business through such Entities;
(xi) to maintain or cause to be maintained the Partnership's
books and records;
(xii) to prepare and deliver, or cause to be prepared and
delivered, all financial and other reports with respect to the
operations of the Partnership, and preparation and filing of all tax
returns and reports;
(xiii) to do all things which are necessary or advisable for the
protection and preservation of the
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<PAGE>
Partnership's business and assets, and to execute and deliver such
further instruments and undertake such further acts as may be
necessary or desirable to carry out the intent and purposes of this
Agreement and as are not inconsistent with the terms hereof; and
(xiv) in general, to exercise all of the general rights,
privileges and powers permitted to be had and exercised under the Act.
(b) Except as otherwise provided in this Agreement, to the extent the
duties of the General Partner require expenditures of funds to be paid to
third parties, the General Partner shall not have any obligations hereunder
except to the extent that Partnership funds are reasonably available to it
for the performance of such duties, and nothing herein contained shall be
deemed to require the General Partner, in its capacity as such, to expend
its individual funds for payment to third parties or to undertake any
specific liability or litigation on behalf of the Partnership.
(c) Notwithstanding the provisions of Section 7.1(a), the Partnership
shall not commingle its funds with those of any Affiliate or other Entity;
funds and other assets of the Partnership shall be separately identified
and segregated; all of the Partnership's assets shall at all times be held
by or on behalf of the Partnership, and, if held on behalf of the
Partnership by another Entity, shall at all times be kept identifiable (in
accordance with customary usages) as assets owned by the Partnership; and
the Partnership shall maintain its own separate bank accounts, payroll and
books of account.
(d) Notwithstanding the provisions of Section 7.1(a), the Partnership
shall pay from its own assets all obligations of any kind incurred by the
Partnership.
Section 7.2. Major Decisions. The General Partner shall not, without
---------------
the prior Consent of the Limited Partners undertake, on behalf of the
Partnership, any of the following actions at any time that the Limited Partners
(not including the General Partner) own in the aggregate more than ten percent
(10%) of the issued and outstanding Partnership Interests (the "Major
-----
Decisions"):
(a) make a general assignment for the benefit of creditors or appoint
or acquiesce in the appointment of a custodian, receiver or trustee for all
or any part of the assets of the Partnership;
(b) institute any proceedings for Bankruptcy on behalf of the
Partnership; or
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<PAGE>
(c) dissolve the Partnership.
Without the consent of all the Limited Partners, the General Partner
shall have no power to do any act in contravention of this Agreement or possess
any Partnership property for other than a Partnership purpose. In addition, the
General Partner shall have no power to do any act in contravention of applicable
law.
Section 7.3. Reimbursement of the General Partner.
------------------------------------
Except as provided in this Section 7.3 and elsewhere in this
Agreement (including the provisions of Articles VI and VIII), the General
Partner shall not receive payments from, or be compensated for its services
as general partner of, the Partnership.
The General Partner shall be reimbursed on a monthly basis, or
such other basis as the General Partner may determine in its sole and
absolute discretion, for all General Partner Expenses. The Partners agree
that the General Partner Expenses shall be deemed to be incurred on behalf
of the Partnership. The General Partner represents that, except as
permitted by Section 7.4, its sole business is the ownership of direct and
indirect interests in and operation of the Partnership and as such all of
the General Partner Expenses will be incurred for the benefit of the
Partnership.
Section 7.4. Outside Activities of the General Partner. Without the
-----------------------------------------
Consent of the Limited Partners, the General Partner shall not directly or
indirectly enter into or conduct any Outside Business Activity.
Section 7.5. Contracts with Affiliates.
-------------------------
(a) The Partnership may engage in transactions and enter into
contracts with Affiliates which are on terms that are no less favorable to
the Partnership than would be available at the time of such transaction or
transactions in a comparable transaction in arm's-length dealings with an
unaffiliated third party; provided, however, that the foregoing shall not
limit any of the transactions relating to the "Merger Transaction," as such
term is defined in the final prospectus dated Aptil __, 1996 included in
the Registration Statement on Form S-1 (Registration No. 333-639) relating
to the equity offering of the General Partner.
(b) Notwithstanding the foregoing:
(i) No compensation shall be paid directly or indirectly to the
Initial Limited Partner by the Partnership or any of its Subsidiaries,
except (A) as
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set forth in the Executive Agreement, as in effect on the date of this
Partnership Agreement, (B) the Services Agreement between Trump Plaza
Associates and the Initial Limited Partner as in effect on the date of
this Partnership Agreement, or (C) with the approval of the
Compensation Committee of the board of directors of the General
Partner; and
(ii) The Partnership and its Subsidiaries shall not enter into
any management, services, consulting or similar agreements with the
Initial Limited Partner or any of his Affiliates, except (A) the
Executive Agreement, as in effect on date of this Partnership
Agreement, (B) the Services Agreement between Trump Plaza Associates
and the Initial Limited Partner as in effect on date of this
Partnership Agreement, or (C) employment agreements in the ordinary
course of business, consistent with industry practice, which are
approved by the Compensation Committee of the board of directors of
the General Partner.
Section 7.6. Title to Partnership Assets. Title to Partnership
---------------------------
assets, whether real, personal or mixed and whether tangible or intangible,
shall be deemed to be owned by the Partnership as an Entity, and no Partner,
individually or collectively, shall have any ownership interest in such
Partnership assets or any portion thereof. Title to any or all of the
Partnership assets may be held in the name of the Partnership, the General
Partner or one or more nominees, as the General Partner may determine, including
Affiliates of the General Partner. The General Partner hereby acknowledges and
confirms that any Partnership assets for which legal title is held in the name
of the General Partner or any nominee or Affiliate of the General Partner shall
be held by the General Partner for the use and benefit of the Partnership in
accordance with the provisions of this Agreement; provided, however, that the
-------- -------
General Partner shall use its best efforts to cause beneficial and record title
to such assets to be vested in the Partnership as soon as reasonably
practicable. All Partnership assets shall be recorded as the property of the
Partnership in its books and records, irrespective of the name in which legal
title to such Partnership assets is held.
Section 7.7. Reliance by Third Parties. Notwithstanding anything to
-------------------------
the contrary in this Agreement, any Person dealing with the Partnership shall be
entitled to assume that the General Partner has full power and authority to
encumber, sell or otherwise use in any manner any and all assets of the
Partnership and to enter into any contracts on behalf of the Partnership, and
such Person shall be entitled to deal with the General Partner as if it were the
Partnership's sole party in interest, both legally and beneficially. In no
event shall any Person dealing with the General Partner or its representatives
be obligated to ascertain that the terms of this Agreement have been
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complied with or to inquire into the necessity or expedience of any act or
action of the General Partner or its representatives. Each and every
certificate, document or other instrument executed on behalf of the Partnership
by the General Partner shall be conclusive evidence in favor of any and every
Person relying thereon or claiming thereunder that (i) at the time of the
execution and delivery of such certificate, document or instrument, this
Agreement was in full force and effect, (ii) the Person executing and delivering
such certificate, document or instrument was duly authorized and empowered to do
so for and on behalf of the Partnership and (iii) such certificate, document or
instrument was duly executed and delivered in accordance with the terms and
provisions of this Agreement and is binding upon the Partnership.
Section 7.8. Liability of the General Partner.
--------------------------------
(a) Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner shall not be liable for monetary or other
damages to the Partnership, any of the Partners or any assignee of any
interest of any Partner for losses sustained or liabilities incurred as a
result of errors in judgment or of any act or omission if the General
Partner acted in good faith without fraud, gross negligence, willful
misconduct or a breach of the General Partner's fiduciary duties to the
Limited Partners. The General Partner shall not be obligated to make any
additional payments from its own funds or Capital Contributions for the
purpose of returning any capital of the Limited Partners.
(b) Subject to its obligations and duties as General Partner set
forth in Section 7.1 hereof, the General Partner may exercise any of the
powers granted to it by this Agreement and perform any of the duties
imposed upon it hereunder either directly or by or through its agents. The
General Partner shall not be responsible for any act of any such agent
appointed by it in good faith and without gross negligence including,
without limitation, any willful misconduct or gross negligence on the part
of any such agent.
Section 7.9. Officers of the Partnership. The Partnership shall have
---------------------------
such officers, if any, as the General Partner from time to time may in its
discretion elect or appoint. The Partnership may also have such agents, if any,
as the General Partner from time to time may in its discretion choose. Each
officer shall have such duties and powers as are commonly incident to his or her
office and such additional duties and powers as the General Partner may from
time to time designate. Each officer and agent shall retain his or her
authority at the pleasure of the General Partner.
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Section 7.10. Covenants of THCR Regarding the Issuance of New
-----------------------------------------------
Securities. THCR hereby covenants and agrees that so long as it is a General
- ----------
Partner:
(a) THCR shall not issue any additional shares of Class B Stock,
except to the Initial Limited Partner and his Permitted Holders.
(b) THCR shall not issue any additional New Securities, other than
pro rata to all holders of Common Stock unless (x) the General Partner
shall cause the Partnership to issue to THCR (or, in the absence of such
issuance, there shall be deemed to have been issued to THCR) Additional
Partnership Interests, as provided in Section 4.2(b)(i) and (y) THCR
contributes the gross proceeds (net of any Issuance Costs not paid by the
Partnership, which Issuance Costs shall be deemed to have been contributed
to the Partnership as a Capital Contribution for purposes of Section 4.3),
if any, from the issuance of such New Securities and from the exercise of
rights contained in such New Securities to the Partnership.
(c) In connection with any issuance of New Securities pursuant to
paragraph (b) of this Section 7.10, THCR shall make a Capital Contribution
to the Partnership of the gross proceeds (net of any Issuance Costs not
paid by the Partnership) raised in connection with such issuance (and any
proceeds paid upon conversion or exchange of the New Securities) and the
Partnership shall, as agent for THCR, simultaneously pay the Issuance Costs
to the extent included in General Partner Expenses, and credit such
contribution to the capital account of THCR.
Section 7.11. Other Matters Concerning the General Partner.
--------------------------------------------
(a) The General Partner may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, or other document reasonably believed by it to
be genuine and to have been signed or presented by the proper party or
parties.
(b) The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers and other
consultants and advisers selected by it, and any act taken or omitted to be
taken in reliance upon the advice or opinion of such Persons as to matters
which the General Partner reasonably believes to be within such Person's
professional or expert competence and in accordance with such advice or
opinion shall be prima facie evidence that such actions have been done or
omitted in good faith.
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<PAGE>
(c) The General Partner shall have the right, in respect of any of
its powers or obligations hereunder, to act through any of its duly
authorized officers and any attorney or attorneys-in-fact duly appointed by
the General Partner. Each such attorney shall, to the extent provided by
the General Partner in the power of attorney, have full power and authority
to do and perform all and every act and duty which is permitted or required
to be done by the General Partner hereunder.
ARTICLE VIII
------------
DISSOLUTION, LIQUIDATION AND WINDING-UP
---------------------------------------
Section 8.1. Accounting. In the event of the dissolution, liquidation
----------
and winding-up of the Partnership, a proper accounting shall be made of the
Capital Account of each Partner and of the Net Income or Net Loss of the
Partnership from the date of the last previous accounting to the date of
dissolution.
Section 8.2. Distribution on Dissolution. In the event of the
---------------------------
dissolution and liquidation of the Partnership for any reason, the assets of the
Partnership shall be liquidated for distribution in the following rank and
order:
(a) Payment of creditors of the Partnership, including creditors who
are Partners or former Partners;
(b) Establishment of reserves as provided by the Liquidating Trustee
to provide for contingent liabilities, if any; and
(c) To the Partners in accordance with the positive balances in their
Capital Accounts after giving effect to all contributions, distributions
and allocations for all periods.
Whenever the Liquidating Trustee reasonably determines that any reserves
established pursuant to paragraph (b) above are in excess of the reasonable
requirements of the Partnership, the amount determined to be excess shall be
distributed to the Partners in accordance with the provisions of this Section
8.2.
Section 8.3. Timing Requirements.
-------------------
In the event that the Partnership is "liquidated" within the
meaning of Section 1.704-1(b)(2)(ii)(g) of the Regulations, any and all
distributions to the Partners pursuant to Section 8.2(c) hereof shall be
made no later than the later to occur of (i) the last day of the taxable
year of the Partnership in which such
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<PAGE>
liquidation occurs or (ii) ninety (90) days after the date of such
liquidation.
(b) Notwithstanding the provisions of Section 8.2 hereof which
require liquidation of the assets of the Partnership, but subject to the
order of priorities set forth therein, if prior to or upon dissolution of
the Partnership the Liquidating Trustee determines that an immediate sale
of part or all of the Partnership's assets would be impractical or would
cause undue loss to the Partners, the Liquidating Trustee may, in its sole
and absolute discretion, defer for a reasonable time the liquidation of any
assets except those necessary to satisfy liabilities of the Partnership
(including to those Partners which are creditors of the Partnership)
and/or, with the Consent of the Limited Partners, distribute to the
Partners, in lieu of cash, as tenants in common and in accordance with the
provisions of Section 8.2 hereof, undivided interests in such Partnership
assets as the Liquidating Trustee deems not suitable for liquidation. Any
such distributions in kind shall be made only if, in the good faith
judgment of the Liquidating Trustee, such distributions in kind are in the
best interest of the Partners, and shall be subject to such conditions
relating to the disposition and management of such properties as the
Liquidating Trustee deems reasonable and equitable and to any agreements
governing the operation of such properties at such time. The Liquidating
Trustee shall determine the fair market value of any property distributed
in kind using such reasonable method of valuation as it may adopt.
Section 8.4. Documentation of Liquidation. Upon the completion of the
----------------------------
dissolution and liquidation of the Partnership, the Partnership shall terminate
and the Liquidating Trustee shall have the authority to execute and record any
and all documents or instruments required to effect the dissolution, liquidation
and termination of the Partnership.
Section 8.5. Dissolution. The Partnership shall be dissolved upon the
-----------
occurrence of any of the following events:
(a) the dissolution, liquidation, termination, withdrawal, death,
insanity, retirement or Bankruptcy of the last remaining General Partner or
other event causing dissolution under the Act;
(b) the election to dissolve the Partnership made in writing by the
General Partner with the Consent of the Limited Partners;
(c) the sale or other disposition of all or substantially all of the
assets of the Partnership unless the General Partner elects to continue the
Partnership business for the purpose of the receipt and the collection
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<PAGE>
of indebtedness or the collection of any other consideration to be received
in exchange for the assets of the Partnership (which activities shall be
deemed to be part of the winding up of the affairs of the Partnership); or
(d) the entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Act, which decree is final and not
subject to appeal.
Following an event causing a dissolution of the Partnership, the
Partnership shall be wound-up and terminated unless the business of the
Partnership is continued by the Partnership in reconstituted form pursuant to
Section 8.6.
Section 8.6. Continuation of the Partnership. The Partners hereby
-------------------------------
waive their right of partition and agree, that except as provided in Section
9.7, they shall not do anything that would terminate the Partnership prior to
the expiration of its term without the prior Consent of the Limited Partners.
Upon the bankruptcy, dissolution, liquidation, withdrawal, death, retirement or
insanity of any General Partner (a "Disabling Event"), or any other event of
dissolution under the Act, within 90 days thereafter, all of the remaining
Partners (or, to the extent permitted under the Act, such lesser number or
percentage of the Partners, but in no event less than a majority-in-interest of
the remaining Partners) may (a) elect to reconstitute the Partnership and
continue its business, and (b) in the case of an event as a result of which
there is no longer a party serving as general partner of the Partnership, select
a substitute General Partner, which substitute General Partner accepts such
election and agrees to serve as General Partner. Such successor General Partner
shall thereupon succeed to the rights and obligations of the General Partner as
provided in Section 9.1. A General Partner which has suffered a Disabling Event
shall automatically be converted to a Limited Partner having none of the voting
rights or privileges provided hereunder for the election to reconstitute the
Partnership as provided above.
ARTICLE IX
----------
TRANSFER AND REDEMPTION OF PARTNERSHIP INTERESTS;
-------------------------------------------------
CERTAIN CONSENT RIGHTS
----------------------
Section 9.1. General Partner Transfer.
------------------------
(a) Except as set forth in Section 9.7, during such time as the
Limited Partners (not including the General Partner) own in the aggregate
more than ten percent (10%) of the issued and outstanding Partnership
Interests, the General Partner shall not withdraw from the Partnership and
shall not Transfer all or any portion of its interest in the Partnership
without the Consent of the Limited Partners.
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<PAGE>
(b) Upon any Transfer of a Partnership Interest by the General
Partner in accordance with the provisions of this Section 9.1 (other than
in connection with the granting of a Lien), the transferee General Partner
shall become vested with the powers and rights of the transferor General
Partner, and shall be liable for all obligations and responsible for all
duties of the General Partner, once such transferee has executed such
instruments as may be necessary to effectuate such admission and to confirm
the agreement of such transferee to be bound by all the terms and
provisions of this Agreement with respect to the Partnership Interest so
acquired. It shall be a further condition to any Transfer otherwise
permitted hereunder (other than in connection with the granting of a Lien)
that the transferee assumes by express agreement (or pursuant to a
statutory merger or consolidation wherein all obligations and liabilities
of the General Partner are assumed by a successor corporation by operation
of law) all of the obligations of the transferor General Partner under this
Agreement with respect to such transferred Partnership Interest and no such
Transfer (other than pursuant to a statutory merger or consolidation
wherein all obligations and liabilities of the transferor General Partner
are assumed by a successor corporation by operation of law) shall relieve
the transferor General Partner of its obligations under this Agreement
without the Consent of the Limited Partners. In connection with any such
permitted Transfer (other than in connection with the granting of a Lien),
the successor General Partner shall be deemed admitted as such immediately
prior to the effective time of the Transfer from the transferor General
Partner and shall continue the business of the Partnership without
dissolution.
(c) If the General Partner withdraws or retires from the Partnership,
in violation of this Agreement, (i) any remaining general partner may
continue the Partnership business or (ii) within 90 days thereafter, all of
the remaining Partners (or, to the extent permitted under the Act, such
lesser number or percentage of the Partners, but in no event less than a
majority-in-interest of the remaining Partners) may elect to continue the
Partnership business pursuant to Section 8.6.
Section 9.2. Transfers by Limited Partners.
-----------------------------
(a) No Limited Partner shall have the right, directly or indirectly,
to Transfer all or any part of its Partnership Interest to any Person
without the prior written consent of the General Partner, including a
majority of the Special Committee, which consent shall not be unreasonably
withheld or delayed; provided, however, that no such consent shall be
required for (i) a Transfer of Partnership Interests pursuant to Article
XII hereof, (ii) a Transfer of
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Partnership Interests to a Permitted Holder, (iii) the subjecting of a
Limited Partnership Interest to a Permitted Limited Partnership Interest
Lien or (iv) the subsequent foreclosure on such a Permitted Limited
Partnership Interest Lien.
(b) It shall be a further condition to any Transfer (other than the
granting of a Permitted Limited Partnership Interest Lien) otherwise
permitted hereunder (including upon the foreclosure of any Lien) that the
transferee assume by operation of law or express agreement all of the
obligations of the transferor Limited Partner under this Agreement
(including, without limitation, under Article IX) with respect to such
transferred Partnership Interest and no such Transfer (other than pursuant
to a statutory merger or consolidation wherein all obligations and
liabilities of the transferor Partner are assumed by a successor
corporation by operation of law) shall relieve the transferor Partner of
its obligations under this Agreement without the approval of the General
Partner, in its reasonable discretion (it being understood that, without
limiting the generality of Section 9.5, a transferor Partner shall be
deemed relieved from such obligations, without the necessity of any such
approval, in respect of Partnership Interests transferred to the General
Partner pursuant to Article XII hereof). Upon such Transfer, the
transferee shall, subject to Section 9.2(d), be admitted as a substituted
Limited Partner and shall succeed to all of the rights, including rights
with respect to Article XII hereof, of the transferor Limited Partner under
this Agreement in the place and stead of such transferor Limited Partner
(which succession, in the event of a pledge, may be entered into and become
effective at the time of foreclosure or other realization of such pledge).
Any transferee, whether or not admitted as a substituted Limited Partner,
shall succeed to the obligations of the transferor hereunder (unless such
transfer is a pledge, encumbrance, hypothecation or mortgage or except as
otherwise provided herein). Unless admitted as a Limited Partner pursuant
to, and in accordance with, the terms hereof, no transferee, whether by a
voluntary Transfer, by operation of law or otherwise, shall have rights
hereunder, other than (i) to receive such portion of the distributions made
by the Partnership as are allocable to the Percentage Interest transferred
and (ii) under Article XII hereof.
(c) In addition to any other restrictions on transfer provided
herein, no Partnership Interest of a Limited Partner shall be transferable
unless the General Partner has determined by written notification (a
"Transfer Determination") to the transferring Limited Partner, which
-----------------------
Transfer Determination shall not be unreasonably withheld and shall be
deemed given if not refused within ten Business Days of the notice to the
Partnership of a proposed
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<PAGE>
transfer, provided that the proposed transferor and transferee have
promptly responded in writing to the reasonable requests, if any, of the
General Partner for additional information sufficient for the General
Partner to determine the matters set forth in this Section 9.2(c), that
either (i) such transfer will not cause (x) any lender to the Partnership
to hold in excess of ten (10) percent of the aggregate Partnership
Interests or any other percentage of the Partnership Interest that would,
pursuant to the Regulations under Section 752 of the Code or any successor
provision, cause a loan by such lender to constitute Partner Nonrecourse
Debt, [(y) a transfer of a Partnership Interest the value of which would
have been less than $20,000 when issued,] or (z) a prohibited transaction
(as defined in section 4975(c) of the Code or Section 406 of ERISA) to
occur, or the Partnership to become, with respect to any employee benefit
plan subject to Title 1 of ERISA, a "party in interest" (as defined in
Section 3(14) of ERISA) or a "disqualified person" (as defined in Section
4975(e)(2) of the Code), or the Partnership to be deemed to hold "plan
assets" (as defined in regulations promulgated by the Department of Labor)
of any employee benefit plan subject to Title I of ERISA, or (ii) the
General Partner has determined to waive one or more of such requirements as
of the date of this Agreement, and may, after the date of this Agreement,
waive one or more of such requirements in its reasonable discretion after
having determined that the transfer will not materially adversely affect
the Partnership, its assets or any Partner, or constitute a violation of
law.
(d) Any transferee of the interest of a Limited Partner pursuant to
this Section 9.2 shall, upon the written request of such transferee and the
transferring Limited Partner and the consent of the General Partner,
including a majority of the Special Committee, which consent shall not be
unreasonably withheld or delayed, be admitted as a Limited Partner under
this Article IX, and the transferring Limited Partner shall, if all of its
Partnership Interests have been Transferred, withdraw from the Partnership.
The Partnership shall not be required in any way to determine the validity
of any written instrument referred to in the immediately preceding
sentence, and shall be authorized to rely upon any such written instrument
signed by the necessary parties.
(e) Any permitted transferee under Section 9.2 who is not admitted as
a substituted Limited Partner in accordance with this Article IX
(including, without limitation, Sections 9.2(b) and 9.2(d)) shall be
considered an assignee for purposes of this Agreement. An assignee shall
be deemed to have had assigned to it, and shall be entitled to receive,
distributions from the Partnership and the share of Net Income, Net Losses,
and any other items of income, gain, loss, deduction and credit of the
Partnership
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<PAGE>
and rights attributable to the Partnership Interests assigned to such
transferee, and shall have the rights of the transferor under Article XII
hereof, but shall not be deemed to be a holder of Partnership Interests for
any other purpose under this Agreement, and shall not be entitled to vote
such Partnership Interests in any matter presented to the Limited Partners
for a vote or consent. In the event any such transferee desires to make a
further assignment of any such Partnership Interests, such transferee shall
be subject to all the provisions of this Article IX to the same extent and
in the same manner as any Limited Partner desiring to make an assignment of
Partnership Interests.
(f) The Limited Partners acknowledge that the Partnership Interests
have not been registered under any federal or state securities laws and, as
a result thereof, they may not be sold or otherwise transferred, except in
compliance with such laws. Notwithstanding anything to the contrary
contained in this Agreement, no Partnership Interest may be sold or
otherwise transferred unless such transfer is exempt from registration
under any applicable securities laws or such transfer is registered under
such laws, it being acknowledged that the Partnership has no obligation to
take any action which would cause any such Partnership Interests to be
registered.
(g) Any transferee of ownership of the Partnership Interests
originally held by the Initial Limited Partner shall have the right to
purchase from the transferor of such Partnership Interests a pro rata
portion of the Class B Stock held by such transferor at a purchase price
equal to its par value.
Section 9.3. Certain Additional Restrictions on Transfer. In addition
-------------------------------------------
to any other restrictions on Transfer herein contained, in no event may any
Transfer of a Partnership Interest by any Partner be made (i) to any person or
Entity that lacks the legal right, power or capacity to own a Partnership
Interest; (ii) if such Transfer would cause a termination of the Partnership for
federal income tax purposes, except with the Consent of the Limited Partners,
subject to the provisions of Section 9.7; (iii) if such Transfer would, in the
opinion of counsel to the Partnership, cause the Partnership to cease to be
classified as a partnership for Federal income tax purposes; (iv) if such
Transfer is effectuated through an "established securities market" or a
"secondary market (or the substantial equivalent thereof)" within the meaning of
Section 7704(b) of the Code; (v) if such Transfer would cause the Partnership to
become, with respect to any employee benefit plan subject to Title 1 of ERISA, a
"party-in-interest" (as defined in Section 3(14) of ERISA) or a "disqualified
person" (as defined in Section 4975(e)(2) of the Code); (vi) in violation of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976; or (vii) if such transfer
would, in the opinion of counsel to the Partnership,
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<PAGE>
cause any portion of the assets of the Partnership to constitute assets of any
employee benefit plan pursuant to Department of Labor Regulations Section
2510.3-101.
Section 9.4. Effective Dates of Transfers.
----------------------------
(a) Transfers pursuant to this Article IX may be made on any day, but
for purposes of this Agreement, the effective date of any such Transfer
shall be (i) the first day of the month in which such Transfer occurred if
such Transfer occurred on or prior to the fifteenth calendar day of a
month, or (ii) the first day of the month immediately following the month
in which such transfer occurred, if such Transfer occurred after the
fifteenth calendar day of a month, or such other date determined by the
General Partner pursuant to such convention as may be administratively
feasible and consistent with applicable law.
(b) If any Partnership Interest is Transferred (other than the
granting of a Permitted Limited Partnership Interest Lien) in compliance
with the provisions of this Article IX, on any day other than the first day
of a calendar year, then Net Income, Net Loss, each item thereof and all
other items attributable to such Partnership Interest for such year shall
be allocated to the transferor Partner, or the redeemed or selling
Partners, as the case may be, and, in the case of a Transfer other than a
redemption or the granting of a Permitted Limited Partnership Interest
Lien, to the transferee Partner, by taking into account their varying
interests during such year in accordance with Section 706(d) of the Code,
using the interim closing of the books method. Solely for purposes of
making such allocations, each of such items for the calendar month in which
the effective date of a Transfer (other than the granting of a Lien) occurs
shall be allocated to the transferor or transferee Partner as provided in
Section 9.4(a), and for purposes of Section 9.4(a), the transferee shall be
the owner of the Partnership Interest at the close of business on any day
on which a Transfer takes place.
Section 9.5. Transfer.
--------
(a) The term "Transfer," when used in this Article IX with respect to
a Partnership Interest, shall be deemed to refer to a transaction by which
a Partner purports to assign its Partnership Interest or any portion
thereof to another Person, and includes a sale, assignment, gift, pledge,
encumbrance, hypothecation, mortgage, exchange, granting of a Lien or any
other disposition by law or otherwise; provided, however, that the term
-------- -------
"Transfer", when used in this Article IX (except when such term is used in
---------
Section 9.4) does not include any acquisition of Partnership
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<PAGE>
Interests from a Limited Partner by the General Partner or the Partnership
pursuant to Article XII.
(b) The Limited Partner has consented, in Section 4.1, to certain
issuances of Partnership Interests, and the foregoing provisions of this
Article IX, to the extent that they would, but for such Section or this
subsection (b), be applicable to such Transfers, are hereby deemed
satisfied or waived.
(c) The General Partner is hereby authorized on behalf of each of the
Partners to amend this Agreement (including the schedules hereto) to
reflect the admission of any transferee of a Partnership Interest as a
substituted Limited Partner in accordance with the provisions of this
Article IX.
(d) No Partnership Interest shall be Transferred, in whole or in
part, except in accordance with the terms and conditions set forth in this
Article IX. Any Transfer or purported Transfer of a Partnership Interest
not made in accordance with this Article IX shall be null and void.
Section 9.6. Redemption of Partnership Interest. The Partnership
----------------------------------
shall not redeem, repurchase, or otherwise acquire Partnership Interests from
the Partners, except (i) for redemptions of Partnership Interests pro rata based
on the Partners' Percentage Interests, (ii) for redemptions of Partnership
Interests as provided in Article XV, and (iii) with the Consent of the Limited
Partners.
Section 9.7. Certain Consent Rights. Notwithstanding any other
----------------------
provision of this Agreement to the contrary, (A) the General Partner shall have
the right to enter into, effect, and/or consummate, and, (B) the Limited
Partners, as such, shall not have the right to approve, consent, or vote with
respect to: (x) any merger, consolidation, combination, sale of all or
substantially all of the assets or stock of the General Partner, the sale of all
of the General Partner's interest in the Partnership, or any similar
transaction, which, in the case of this clause (x), if and only to the extent
required by applicable law, has been approved by the stockholders of the General
Partner, or (y) any merger, consolidation, combination, sale of all or
substantially all of the assets of the Partnership, or any similar transaction,
which in the case of this clause (y) has been approved by the stockholders of
the General Partner; provided, however, that if any transaction is determined to
be described in both clauses (x) and (y) immediately above, the imposition of
any requirement that the stockholders of the General Partnership approve such
transaction shall be governed solely by clause (x) and not by clause (y).
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<PAGE>
ARTICLE X.
----------
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS
----------------------------------------------
Section 10.1. No Participation in Management. No Limited Partner, in
------------------------------
its capacity as such, shall take part in the management of the Partnership's
business, transact any business in the Partnership's name or have the power to
sign documents for or otherwise bind the Partnership. Any rights expressly
granted to the Limited Partners in this Agreement shall not be deemed to be
rights relating to the management of the Partnership's business.
Section 10.2. Bankruptcy of a Limited Partner. The Bankruptcy of any
-------------------------------
Limited Partner shall not cause a dissolution of the Partnership, but the rights
of such Limited Partner to share in the Net Profits or Net Losses of the
Partnership and to receive distributions of Partnership funds shall, on the
happening of such event, devolve on its successors or assigns, subject to the
terms and conditions of this Agreement, and the Partnership shall continue as a
limited partnership. In no event, however, shall such assignee(s) become a
substituted Limited Partner except in accordance with Article IX hereof.
Section 10.3. No Withdrawal. No Limited Partner may withdraw from
-------------
the Partnership without the prior written consent of the General Partner, other
than as provided in Article IX of this Agreement, and provided that the
foregoing provisions of this Section 10.3 shall not apply to a withdrawal from
the Partnership upon a Transfer pursuant to Article XII hereof, such withdrawal
to be effective immediately without any requirement for consent thereto by the
General Partner.
Section 10.4. Conflicts. The Partners recognize that the Limited
---------
Partners and their Affiliates have or may have other business interests,
activities and investments, some of which may be in conflict or competition with
the business of the Partnership, and that such Persons are entitled to carry on
such other business interests, activities and investments. Without limiting the
foregoing in deciding whether to take any actions in such capacity, such Limited
Partners and their Affiliates shall be under no obligation to consider the
separate interests of the Partnership and shall have no fiduciary obligations to
the Partnership and shall not be liable for monetary damages for losses
sustained, liabilities incurred or benefits not derived by the other Partners in
connection with such actions. The Limited Partners and their Affiliates may
engage in or possess an interest in any other business or venture of any kind,
independently or with others, on their own behalf or on behalf of other entities
with which they are affiliated or associated, and such persons may engage in any
activities, whether or not competitive with the Partnership, without any
obligation to offer any interest in such activities to the Partnership or to any
Partner. Neither the Partnership nor any Partner shall have any
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right, by virtue of this Agreement, in or to such activities, or the income or
profits derived therefrom, and the pursuit of such activities, even if
competitive with the business of the Partnership, shall not be deemed wrongful
or improper. Notwithstanding the foregoing, (i) the provisions of this Section
10.4 shall not negate or impair any other agreement between one or more of the
Limited Partners and the General Partner, the Partnership, or any of their
respective Subsidiaries, and (ii) in conducting an Outside Business Activity, a
Limited Partner will to the best of its ability and consistent with its
fiduciary duty to such Outside Business Activity, conduct such Outside Business
Activity in a commercially reasonable manner so that on an annual overall basis
the Partnership is not discriminated against.
Section 10.5. Provision of Information.
------------------------
(a) Annual and Periodic Reports.
---------------------------
(i) Annual Statement. The General Partner shall, as soon as
----------------
practicable, but in no event later than 105 days after the close of
each fiscal year, cause to be furnished to each Partner Audited
Financial Statements for the Partnership, or of the General Partner if
such statements are prepared solely on a consolidated basis with the
General Partner, for the immediately preceding fiscal year of the
Partnership.
(ii) 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's fiscal year,
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 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 GAAP 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. In lieu of the foregoing, the General
Partner may furnish to each Partner a copy of the Partnership's
quarterly report on Form 10-Q, if the Partnership is then obligated to
file such report with the SEC pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended.
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(b) In addition to other rights provided by this Agreement or by the
Act, each Limited Partner shall have the right, for a purpose reasonably
related to such Limited Partner's interest as a limited partner in the
Partnership (the interests of a lender to such Limited Partner having a
Permitted Limited Partnership Interest Lien on its Partnership Interests
being so related), upon written demand with a statement of the purpose of
such demand:
(i) to obtain a copy of the most recent annual and quarterly
reports and current reports on Form 8-K filed with the SEC by the
General Partner pursuant to the Securities Exchange Act of 1934, as
amended;
(ii) to obtain a copy of the Partnership's federal, state and
local income tax returns for each fiscal year of the Partnership;
(iii) to obtain a current list of the name and last known
business, residence or mailing address of each Partner;
(iv) to obtain a copy of this Agreement and the Certificate and
all amendments thereto, together with executed copies of all powers of
attorney pursuant to which this Agreement, the Certificate and all
amendments thereto have been executed; and
(v) such other information regarding the business, affairs and
condition, financial or otherwise, of the Partnership and its
Subsidiaries as such Partner may reasonably request.
(c) Notwithstanding any other provision of this Section 10.5, the
General Partner may keep confidential from the Limited Partners, for such
period of time as the General Partner determines in its sole and absolute
discretion to be reasonable, any information that the Partnership is
required by law or by agreements with an unaffiliated third party to keep
confidential.
Section 10.6. Limited Partner Representative. The Initial Limited
------------------------------
Partner is hereby appointed as the Limited Partner Representative. A Majority-
in-Interest of the Limited Partners shall have the right, at any time, within
their sole discretion, to replace the Limited Partner Representative, or to
appoint a temporary substitute to act for a Limited Partner Representative
unable to act. Any appointment of a Limited Partner Representative made
hereunder shall remain effective until rescinded in a writing delivered to the
General Partner via certified mail, registered overnight express mail or
telecopy, and the General Partner shall have the right and authority to rely
(and shall be fully protected in so doing) on the actions
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taken and directions given by such Limited Partner Representative, without any
further evidence of their authority or further action by the Limited Partners.
The General Partner shall send copies of all notices received by it pursuant to
Section 5.6 to each Limited Partner requesting the same.
Section 10.7. Power of Attorney.
-----------------
(a) Each Limited Partner constitutes and appoints the General
Partner, any Liquidating Trustee and authorized officers and attorneys-in-
fact of each, and each of those acting singly, in each case with full power
of substitution, as its true and lawful agent and attorney-in-fact, with
full power and authority in its name, place and stead to: execute, swear
to, acknowledge, deliver, file and record in the appropriate public offices
(i) all certificates, documents and other instruments (including, without
limitation, this Agreement and the Certificate and all amendments or
restatements thereof) that the General Partner or the Liquidating Trustee
deems appropriate or necessary to form, qualify or continue the existence
or qualification of the Partnership as a limited partnership (or a
partnership in which the limited partners have limited liability) in the
State of Delaware and in all other jurisdictions in which the Partnership
may conduct business or own property; (ii) all instruments that the General
Partner deems appropriate or necessary to reflect any amendment, change,
modification or restatement of this Agreement in accordance with its terms;
(iii) all conveyances and other instruments or documents that the General
Partner deems appropriate or necessary to reflect the dissolution and
liquidation of the Partnership pursuant to the terms of this Agreement,
including, without limitation, a certificate of cancellation; and (iv) all
instruments relating to the admission, withdrawal, removal or substitution
of any Partner pursuant to the provisions of this Agreement or the Capital
Contribution of any Partner.
(b) The foregoing power of attorney is irrevocable and a power
coupled with an interest, in recognition of the fact that each of the
Partners will be relying upon the power of the General Partner to act as
contemplated by this Agreement in any filing or other action by it on
behalf of the Partnership, and it shall survive the death or incompetency
of a Limited Partner to the effect and extent permitted by law, subsequent
incapacity of any Limited Partner and the transfer of all or any portion of
such Limited Partner's Partnership Interests and shall extend to such
Limited Partner's heirs, successors, assigns and personal representatives.
(c) Nothing contained in this Section 10.7 shall be construed as
authorizing the General Partner to amend
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this Agreement except in accordance with Article XIII hereof.
ARTICLE XI
----------
INDEMNIFICATION; EXCULPATION
----------------------------
Section 57. Indemnification.
---------------
(a) To the fullest extent permitted by law, the Partnership shall and
does hereby indemnify an Indemnitee from and against any and all losses,
claims, damages, liabilities, joint or several, expenses (including
reasonable legal fees and expenses), judgments, fines, settlements, and
other amounts (collectively "Damages") arising from any and all claims,
demands, actions, suits or proceedings, civil, criminal, administrative or
investigative, that relate to the operations of the Partnership as set
forth in this Agreement in which any Indemnitee may be involved, or is
threatened to be involved, as a party or otherwise, unless it is
established that: (i) the act or omission of the Indemnitee was material
to the matter giving rise to the proceeding and was committed with fraud,
gross negligence, willful misconduct or in breach of the General Partner's
fiduciary duties to the Limited Partners; (ii) the Indemnitee actually
received an improper personal benefit in money, property or services; or
(iii) in the case of any criminal proceeding, the Indemnitee had reasonable
cause to believe that the act or omission was unlawful. The termination of
any proceeding by judgment, order or settlement shall not create a
presumption that the Indemnitee did not meet the requisite standard of
conduct set forth in this Section 11.1(a). Any indemnification pursuant to
this Section 11.1 shall be made only out of the assets of the Partnership
and no Partner shall have any personal liability therefor.
(b) Reasonable expenses incurred by an Indemnitee may be paid or
reimbursed by the Partnership in advance of the final disposition of the
proceeding upon receipt by the Partnership of (i) a written affirmation by
the Indemnitee of the Indemnitee's good faith belief that the standard of
conduct necessary for indemnification by the Partnership, as authorized in
this Section 11.1, has been met, and (ii) a written undertaking by or on
behalf of the Indemnitee to repay the amount paid or reimbursed if it shall
ultimately be determined that such standard of conduct has not been met.
(c) The indemnification provided by this Section 11.1 shall be in
addition to any other rights to which an Indemnitee may be entitled under
any agreement, as a matter
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of law or otherwise, and shall continue as to an Indemnitee who has ceased
to serve in such capacity.
(d) The Partnership may purchase and maintain insurance, on behalf of
the Indemnitees, against any liability that may be asserted against or
expenses that may be incurred by such Person in connection with the
Partnership's activities, regardless of whether the Partnership would have
the power to indemnify such Person against such liability under the
provisions of this Agreement.
(e) For purposes of this Section 11.1, the Partnership shall be
deemed to have requested an Indemnitee to serve as fiduciary of an employee
benefit plan whenever the performance by it of its duties to the
Partnership also imposes duties on, or otherwise involves services by, it
to the plan or participants or beneficiaries of the plan; excise taxes
assessed on an Indemnitee with respect to an employee benefit plan pursuant
to applicable law shall constitute fines within the meaning of this Section
11.1; and actions taken or omitted by the Indemnitee with respect to an
employee benefit plan in the performance of its duties for a purpose
reasonably believed by it to be in the interest of the participants and
beneficiaries of the plan shall be deemed to be for a purpose which is not
opposed to the best interests of the Partnership.
(f) An Indemnitee shall not be denied indemnification in whole or in
part under this Section 11.1 solely because the Indemnitee had an interest
in the transaction with respect to which the indemnification applies.
(g) The provisions of this Section 11.1 are for the benefit of the
Indemnitees, their heirs, successors, assigns personal representatives and
administrators, and shall not be deemed to create any rights for the
benefit of any other Persons.
Section 11.2. Indemnification Procedures.
--------------------------
(a) If a claim for indemnification is asserted against the
Partnership under Article XI, the Partnership shall have the right, at its
own expense, (i) subject to the Partnership's obligations to pay all
amounts under Section 11.1(a) to participate in the defense of any Action
which resulted in the claim for indemnification or (ii) to assume at any
time the defense of any Action which resulted in the claim for
indemnification. Such assumption of the defense by the Partnership shall
be an admission that the Action is a proper subject of indemnification
pursuant to this Article XI. The Indemnitee at any time may elect to
participate in (but not conduct or control) such defense at its expense,
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and the Partnership shall not be responsible for the Indemnitee's costs of
participation (including attorneys, accountants, and in-house counsel
fees). In either event, the parties shall cooperate in the defense of such
Action. The Partnership in the defense of any Action shall not, except
with the consent of the Indemnitee claiming indemnification under Article
XI, cause to be entered any judgment or enter into any settlement which
provides for the release of the Partnership or any other Partner but does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnitee of a release equivalent to that provided to
the Partnership or any other Partner.
(b) The Indemnitee claiming indemnification under Article XI may, at
any time upon written notice to the Partnership, elect to conduct or
control its own defense in such Action (as opposed to merely participating
in the defense with counsel for the Partnership), but in such event,
provided that the Partnership has theretofore undertaken the defense of the
Indemnitee pursuant to Section 11.2(a) and subject to Section 11.2(c), such
Indemnitee shall cease to have the indemnification rights under Article XI,
and the Partnership shall no longer be obligated to continue the defense of
the Limited Partner, with respect to such Action.
(c) If the Partnership has assumed the defense of any Action under
clause (ii) of the first sentence of Section 11.2(a), and if at any time
there exists a conflict of interest in defending both the Partnership and
the Indemnitee, as determined in the reasonable judgment of counsel to the
Indemnitee, the Indemnitee shall so notify the Partnership and the
Indemnitee may, upon written notice to the Partnership delivered promptly
thereafter, elect to defend itself in such Action with counsel selected by
the Indemnitee, but reasonably acceptable to the Partnership, at the
expense of the Partnership. Following the assumption of defense by an
Indemnitee under this Section 11.2(c), an Indemnitee may not enter into any
settlement without the prior written consent of the Partnership, which
consent shall not be unreasonably withheld.
Section 11.3. Exculpation. No officer, employee or agent shall have
-----------
any liability to the Partnership or any Partner for monetary damages for any
action taken, or any failure to take any action, in such capacity, except
liability for (a) any improper financial benefit received by such Person; (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.
Section 11.4. No Liability of Directors and Others. Notwithstanding
------------------------------------
anything to the contrary contained herein, no
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recourse shall be had by the Partnership or any Partner against any director,
shareholder, officer, employee, agent or attorney of the General Partner for any
act or omission of the General Partner or any obligation or liability of the
General Partner under this Agreement, and none of the foregoing shall have any
personal liability for or with respect to any of the foregoing; provided that
--------
the foregoing shall not relieve any officer or director of the General Partner
of any liability in his capacity as such.
ARTICLE XII
-----------
RIGHTS UNDER THE EXCHANGE RIGHTS AGREEMENT
------------------------------------------
THCR, the Initial Limited Partner and TTMI have entered into the
Exchange Rights Agreement, substantially in the form of Exhibit A to this
Agreement.
Section 12.1. Transfer Pursuant to Exchange Rights Agreement.
----------------------------------------------
Notwithstanding anything to the contrary contained in this Agreement, the
Partners hereby consent to the Transfer of Partnership Interests pursuant to the
terms of such Exchange Rights Agreement, without compliance with any of the
other provisions of this Agreement.
Section 12.2. Subject to the Exchange Rights Agreement. The Initial
----------------------------------------
Limited Partner, TTMI and all their respective subsequent transferees shall be
entitled to the benefits of, and subject to the burdens of, the Exchange Rights
Agreement, including, but not limited to, the "Conversion Right" of the Company
to require any such transferee (other than the Initial Limited Partner and his
Permitted Holders) to exchange its Partnership Interests for shares of Common
Stock on the terms and subject to the conditions set forth therein.
ARTICLE XIII
------------
AMENDMENT OF PARTNERSHIP AGREEMENT, MEETINGS
--------------------------------------------
Section 13.1. Amendments.
----------
(a) This Agreement may not be amended unless such amendment is
approved by the General Partner, with the consent of a majority of the
Special Committee, and by the Consent of the Limited Partners, except as
provided below in this Section 13.1.
(b) Notwithstanding Section 13.1(a), the General Partner, with the
consent of a majority of the Special Committee, shall have the power,
without the Consent of the Limited Partners but after five Business Days
notice to the
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<PAGE>
Limited Partners, to amend this Agreement as may be required
to facilitate or implement any of the following purposes:
(i) to add to the obligations of the General Partner or
surrender any right or power granted to the General Partner for the
benefit of the Limited Partners;
(ii) to reflect the admission, substitution, termination, or
withdrawal of Partners after the date hereof in accordance with
Article IX or XII of this Agreement, provided that the General Partner
shall not be required to give the notice referred to in the first
paragraph of this subsection (b) in respect of a transfer of
Partnership Interests pursuant to Article XII hereof;
(iii) to reflect a change that is of an inconsequential nature and
does not adversely affect the Limited Partners, or to cure any
ambiguity, correct or supplement any provision in this Agreement not
inconsistent with law or with other provisions, or make other changes
with respect to matters arising under this Agreement that will not be
inconsistent with law or with the provisions of this Agreement; and
(iv) to satisfy any requirements, conditions, or guidelines
contained in any order, directive, opinion, ruling or regulation of a
federal or state agency or contained in federal or state law.
The General Partner will provide notice to the Limited Partners
promptly after any action under this Section 13.1(b) is taken.
(c) Notwithstanding Sections 13.1(a) and (b) hereof, this Agreement
shall not be amended without the prior written consent of each Partner
adversely affected if such amendment would (i) convert a Limited Partner's
interest in the Partnership into a general partner's interest, (ii) modify
the limited liability of a Limited Partner, (iii) alter rights of the
Partners to receive allocations and distributions pursuant to Articles V
and VI hereof, (iv) alter or modify the Rights set forth in Article XII
except in compliance therewith, (v) amend this Section 13.1(c), (vi) alter
such Partner's rights to transfer its Partnership Interests, or (vii) amend
Section 4.1(c), 7.8, 10.8, Article XI or 13.2(d). Further, no amendment
may alter the restrictions on the General Partner's authority set forth in
Section 7.2 without the Consent specified in that section.
(d) Notwithstanding Section 13.1(a) hereof, no amendment of Section
7.4 shall be effective unless
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<PAGE>
appropriate corresponding modifications are made to Article XII and the
Registration Rights Agreement to preserve the financial terms of the
Limited Partners' rights thereunder.
(e) Any amendment, modification or repeal of Section 7.8 or Article
XI or any provision thereof shall be prospective only and shall not in any
way affect the rights to indemnification and limitations on the General
Partner's liability to the Partnership and the Limited Partners as in
effect immediately prior to such amendment, modification or repeal with
respect to claims arising from or relating to matters occurring, in whole
or in part, prior to such amendment, modification or repeal, regardless of
when such claims may arise or be asserted.
Section 13.2. Meetings of the Partners; Notices to Partners.
---------------------------------------------
(a) Meetings of the Partners may be called by the General Partner or
by any Limited Partner to act on any matter specified herein or in the Act
to be voted on or consented to by the Partners. The call shall state the
nature of the business to be transacted. Notice of any such meeting shall
be given to all Partners not less than seven (7) Business Days prior to the
date of such meeting. Partners may vote in person or by proxy at such
meeting. Whenever the vote or Consent of the Limited Partners is permitted
or required under this Agreement, such vote or Consent may be given at a
meeting of Partners or may be given in accordance with the procedure
prescribed in Section 13.2(b) hereof. Except as otherwise expressly
provided in this Agreement, the consent of holders of a majority of the
Partnership Interests shall control.
(b) Any action required or permitted to be taken at a meeting of the
Partners may be taken without a meeting if a written consent setting forth
the action so taken is (i) signed by Partners holding a majority of the
Partnership Interests of the Partners (or such other percentage as is
expressly required by this Agreement) and (ii) in the case of any matter
that would otherwise require the approval of a majority of the Special
Committee, such consent is approved by a majority of the Special Committee.
Such consent may be in one instrument or in several instruments, and shall
have the same force and effect as a vote of a majority of the Partnership
Interests of the Partners (or such other percentage as is expressly
required by this Agreement). Such consent shall be filed with the General
Partner and copies thereof delivered to all Partners. An action so taken
shall be deemed to have been taken at a meeting held on the effective date
so certified.
(c) Each Limited Partner may authorize any Person or Persons to act
for him by proxy on all matters in which a
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Limited Partner is entitled to participate, including waiving notice of any
meeting, or voting or participating at a meeting. Every proxy must be
signed by the Limited Partner or his attorney-in-fact. No proxy shall be
valid after the expiration of 11 months from the date thereof unless
otherwise provided in the proxy. Every proxy shall be revocable at the
pleasure of the Limited Partner executing it. No such proxy and no such
revocation shall be effective unless a copy thereof has been delivered to
the General Partner.
(d) Whenever the Consent of the Limited Partners is required
hereunder, the General Partner shall provide a notice to each Partner who
is a Limited Partner on the date the notice is given setting forth the
matter(s) as to which it proposes to seek such Consent at least five (5)
Business Days in advance of the date upon which such Consent is sought.
ARTICLE XIV
-----------
CERTIFICATE OF INTEREST
-----------------------
Section 14.1. Form of Certificate of Interest. The interest of each
-------------------------------
Partner in the Partnership shall be evidenced by a Certificate of Interest (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 the General Partner to the lawful holder of an interest in
the Partnership, upon payment of the full amount of the Capital Contributions
then due with respect to the Partnership Interest represented by such
Certificate of Interest. All Certificates of Interest shall be executed in the
name of the Partnership by the General Partner. 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 holder thereof; and shall bear, on both
sides thereof, a statement of the restrictions imposed by Section 105 of the
Casino Control Act. Effective on the date hereof, the General Partner and the
Initial Limited Partner shall exchange their respective Certificates of Interest
(which shall be canceled) for new Certificates of Interest reflective of their
respective interests in the Partnership as set forth on Schedule I hereto.
Section 14.2. 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
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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 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.
Section 14.3. 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 14.3.
Section 14.4. 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 and the Division of Gaming Enforcement of the State of New Jersey and
each of their respective authorized agents at all reasonable times without
notice.
ARTICLE XV
----------
REGULATORY REQUIREMENTS
-----------------------
Section 15.1. Applicable Regulatory Authority and CCC Regulation.
--------------------------------------------------
Notwithstanding anything to the contrary in this Agreement:
(a) This Agreement will be deemed to include all provisions required
by the Casino Control Act, the Indiana Riverboat Act, and the Mississippi
Gaming Control Act and to the extent that anything contained in this
Agreement is inconsistent with such acts, the provisions of such acts shall
govern. All provisions of the Casino Control Act, the Indiana Riverboat
Act, and the Mississippi Gaming 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.
(b) If the continued holding of a Partnership Interest by any Partner
will disqualify the Partnership to
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<PAGE>
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 arrangement as may be required by
the Commission under the circumstances. It is the intent of this Section
15.1 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.
(c) All transfers (as defined by the Casino Control Act and the
governing laws, statutes rules and regulations of any Applicable Regulatory
Authority) of securities (as defined by the Casino Control Act and the
governing laws, statutes rules and regulations of any Applicable Regulatory
Authority), shares and other interests in the Partnership shall be subject
to the right of prior approval by the Applicable Regulatory Authority; and
(b) the Partnership shall have the absolute right to repurchase in
accordance with Section 15.3, any security, share or other interest in the
Partnership in the event that the Applicable Regulatory Authority
disapproves a transfer in accordance with the provisions of the Casino
Control Act.
(d) Each Partner hereby agrees to cooperate reasonably and promptly
with the others in obtaining any and all licenses, permits or approvals
required by any Applicable Regulatory Authority or deemed expedient by the
Partners.
Section 15.2. Additional Applicable Regulatory Authority Regulation.
-----------------------------------------------------
No Person may become the Beneficial Owner of five percent (5%) or more of any
class or series of Partnership Interests unless such Person agrees in writing
to: (i) provide to the Applicable Regulatory Authorities information regarding
such Person, including without limitation thereto, information regarding other
gaming-related activities of such Person and financial statements, in such form,
and with such updates, as may be required by the Applicable Regulatory
Authorities; (ii) respond to written or oral questions that may be propounded by
the Applicable Regulatory Authorities and (iii) consent to the performance of
any background investigation that may be required by the IGC, including without
limitation thereto, an investigation of any criminal record of such Person.
Section 15.3. Disqualified Holders. Notwithstanding any other
--------------------
provision of this Agreement, Partnership Interests held by a Disqualified Holder
(or in the case of a Disqualified Holder of securities of the General Partner,
the corresponding Partnership Interest of the General Partner) shall be subject
to redemption at any time by the Partnership by action of the General Partner,
pursuant to this Section 15.3 as follows:
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(a) the redemption price of the Partnership Interest to be redeemed
pursuant to this Section 15.3 shall be equal to the Fair Market Value of
such Partnership Interest or such other redemption price as required by
pertinent state or federal law pursuant to which the redemption is
required;
(b) the redemption price of such shares may be paid in cash,
Redemption Securities or any combination thereof; provided, however, in the
case of a redemption mandated by the CCC, the redemption price shall be
paid in cash;
(c) if less than all the Partnership Interest held by Disqualified
Holders are to be redeemed, the Partnership Interest to be redeemed shall
be selected in such manner as shall be determined by the General Partner,
which may include selection first of the most recently purchased portion
thereof, selection by lot, or selection in any other manner determined by
the General Partner;
(d) at least thirty (30) days' written notice of the Redemption Date
shall be given to the record holders of the Partnership Interest selected
to be redeemed (unless waived in writing by any such holder); provided,
however, that the Redemption Date shall be deemed to be the date on which
written notice shall be given to record holders if the cash or Redemption
Securities necessary to effect the redemption shall have been deposited in
trust for the benefit of such record holders and subject to immediate
withdrawal by them upon surrender of the Certificates of Interests for
their Partnership Interests to be redeemed;
(e) from and after the Redemption Date or such earlier date as
mandated by pertinent state or federal law, any and all rights of whatever
nature, which may be held by the Beneficial Owners of Partnership Interests
selected for redemption (including without limitation any rights to vote or
participate in distribution) shall cease and terminate and they shall
thenceforth be entitled only to receive the cash or Redemption Securities
payable upon redemption; and
(f) such other terms and conditions as the General Partner shall
determine.
ARTICLE XVI.
------------
GENERAL PROVISIONS
------------------
Section 16.1. Notices. All notices, offers or other communications
-------
required or permitted to be given pursuant to this Agreement shall be in writing
and may be personally served or sent by United States mail and shall be deemed
to have been given
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when delivered in person or three business days after deposit in United States
mail, registered or certified, postage prepaid, and properly addressed, by or to
the appropriate party. For purposes of this Section 16.1, the addresses of the
parties hereto shall be as set forth below their name on the signature page
hereof. The address of any party hereto may be changed by a notice in writing
given in accordance with the provisions hereof.
Section 16.2. Controlling Law. This Agreement and all questions
---------------
relating to its validity, interpretation, performance and enforcement
(including, without limitation, provisions concerning limitations of actions),
shall be governed by and construed in accordance with the laws of the State of
Delaware, notwithstanding any conflict-of-laws doctrines of such state or other
jurisdiction to the contrary.
Section 16.3. No Third Party Beneficiaries. No creditor or other
----------------------------
third party shall have the right to enforce any right or obligation of any
Partner to make Capital Contributions or to pursue any other right or remedy
hereunder or at law or in equity, it being understood and agreed that the
provisions of this Agreement shall be solely for the benefit of, and may be
enforced solely by, the parties hereto and their respective successors and
assigns. None of the rights or obligations of the Partners herein set forth to
make Capital Contributions to the Partnership shall be deemed an asset of the
Partnership for any purpose by any creditor or other third party, nor may such
rights or obligations be sold, transferred or assigned by the Partnership or
pledged or encumbered by the Partnership to secure any debt or other obligation
of the Partnership or of any of the Partners.
Section 16.4. Execution in Counterparts. This Agreement may be
-------------------------
executed in any number of counterparts, each of which 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. This Agreement shall
become binding when one or more counterparts hereof, individually or taken
together, shall bear the signatures of all of the parties reflected hereon as
the signatories.
Section 16.5. Provisions Separable. The provisions of this Agreement
--------------------
are independent of and separable from each other, and no provision shall be
affected or rendered invalid or unenforceable by virtue of the fact that for any
reason any other or others of them may be invalid or unenforceable in whole or
in part.
Section 16.6. Entire Agreement. This Agreement (together with the
----------------
Exhibit and Schedules hereto) contains the entire understanding among the
parties hereto with respect to the subject matter hereof, and supersedes all
prior and contemporaneous agreements and understandings, inducements or
conditions, express or implied, oral or written, except as herein
-62-
<PAGE>
contained. The express terms hereof control and supersede any course of
performance and/or usage of the trade inconsistent with any of the terms hereof.
This Agreement may not be modified or amended other than by an agreement in
writing.
Section 16.7. Paragraph Headings. The paragraph headings in this
------------------
Agreement are for convenience only; they form no part of this Agreement and
shall not affect its interpretation.
Section 16.8. Gender, Etc. Words used herein, regardless of the
------------
number and gender specifically used, shall be deemed and construed to include
any other number, singular or plural, and any other gender, masculine, feminine
or neuter, as the context indicates is appropriate.
Section 16.9. Number of Days. In computing the number of days (other
--------------
than Business Days) for purposes of this Agreement, all days shall be counted,
including Saturdays, Sundays and holidays; provided, however, that if the final
-------- -------
day of any time period falls on a date which is not a Business Day, then the
final day shall be deemed to be the next Business Day.
Section 16.10. Partners Not Agents. Nothing contained herein shall
-------------------
be construed to constitute any Partner the agent of another Partner, except as
specifically provided herein, or in any manner to limit the Limited Partners in
the carrying on of their own respective businesses or activities.
Section 16.11. Assurances. Each of the Partners shall hereafter
----------
execute and deliver such further instruments and do such further acts and things
as may be reasonably required or useful to carry out the intent and purpose of
this Agreement and as are not inconsistent with the terms hereof.
Section 16.12. Successors and Assigns. 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,
including any pledgee upon the foreclosure of any pledge of a Partner's
Partnership Interest in the Partnership.
Section 16.13. 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.
-63-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused
this Agreement to be executed on their behalf as of the date first above
written.
GENERAL PARTNER:
---------------
TRUMP HOTELS & CASINO RESORTS, INC.
By: _________________________________
Name:
Title:
Address: Mississippi Avenue and
The Boardwalk
Atlantic City,
New Jersey 08401
LIMITED PARTNERS: (Addresses
----------------
are as set forth on Schedule I):
DONALD J. TRUMP
By: ________________________________
Donald J. Trump
TRUMP TAJ MAHAL, INC.
By: ________________________________
Donald J. Trump
President
TM/GP Corporation
By: ________________________________
Name: Nicholas F. Moles
Title: Secretary
-64-
<PAGE>
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on April __, 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.
________________________________
Notary Public
<PAGE>
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on April __, 1996, before me, the subscriber,
personally appeared _______________, the _____________ of Trump Hotels & Casino
Resorts, 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.
________________________________
Notary Public
<PAGE>
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on April __, 1996, before me, the subscriber,
personally appeared Donald J. Trump, the President of Trump Taj Mahal, 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.
________________________________
Notary Public
<PAGE>
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on April __, 1996, before me, the subscriber,
personally appeared Nicholas F. Moles, the Secretary of TM/GP Corporation, 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.
________________________________
Notary Public
<PAGE>
SCHEDULE I
----------
AGGREGATE CAPITAL CONTRIBUTIONS
<TABLE>
<CAPTION>
Partner Contribution Percentage Interest
- ------------------------------------- ---------------- -------------------
<S> <C> <C>
Trump Hotels & Casino Resorts, Inc. $ ______________ __% general partner
Donald J. Trump $ ______________ __% limited partner
725 Fifth Avenue
New York, N.Y. 10022
Trump Taj Mahal, Inc. $ ______________ __% limited partner
1000 The Boardwalk
Atlantic City, N.J. 08401
TM/GP Corporation $ ______________ __% limited partner
1000 The Boardwalk
Atlantic City, N.J. 08401
</TABLE>
<PAGE>
SCHEDULE II
-----------
CAPITAL CONTRIBUTIONS PRIOR TO APRIL 16, 1996
<TABLE>
<CAPTION>
Partner Contribution
- -------------------------------------- ------------
<S> <C>
Trump Hotels & Casino Resorts, Inc. $__________
Donald J. Trump $__________
</TABLE>
<PAGE>
SCHEDULE III
------------
CAPITAL CONTRIBUTIONS IN CONNECTION
WITH THE MERGER TRANSACTIONS
<TABLE>
<CAPTION>
Partner Contribution
- ------------------------------------- ----------------
<S> <C>
Trump Hotels & Casino Resorts, Inc. $0
Donald J. Trump $ ______________
Trump Taj Mahal, Inc. $ ______________
TM/GP Corporation $ ______________
</TABLE>
<PAGE>
EXHIBIT 4.26
======================================================================
TRUMP ATLANTIC CITY ASSOCIATES
TRUMP ATLANTIC CITY FUNDING, INC.
ISSUERS
TRUMP PLAZA ASSOCIATES
TRUMP TAJ MAHAL ASSOCIATES
THE TRUMP TAJ MAHAL CORPORATION
GUARANTORS
TRUMP TAJ MAHAL FUNDING, INC.
AND
FIRST BANK NATIONAL ASSOCIATION
TRUSTEE
________________
INDENTURE
Dated as of April __, 1996
________________
$1,100,000,000 ____% First Mortgage Notes due 2006
======================================================================
<PAGE>
CROSS-REFERENCE TABLE
TIA INDENTURE
SECTION SECTION
- ------- ---------
310(a)(1)....................................................... 8.10
(a)(2)....................................................... 8.10
(a)(3)....................................................... N.A.
(a)(4)....................................................... N.A.
(a)(5)....................................................... 8.10
(b) ....................................................... 8.8;
8.10;
12.2
(c) ....................................................... N.A.
311(a) ....................................................... 8.11
(b) ....................................................... 8.11
(c) ....................................................... N.A.
312(a) ....................................................... 2.5
(b) ....................................................... 12.3
(c) ....................................................... 12.3
313(a) ....................................................... 8.6
(b) ......................................................... 8.6.
(c) ....................................................... 8.6;
12.2
(d) ....................................................... 8.6
314(a) ....................................................... 5.7;
5.8;
12.2
(b) ........................................................ 4.2
(c)(1)....................................................... 2.2;
8.2;
12.4;
12.5
(c)(2)....................................................... 8.2;
12.4;
12.5
(c)(3)....................................................... 4.1(c)
4.2
(d) ........................................................ 4.1(c)
4.4
(e) ........................................................ 12.5
(f) ....................................................... N.A.
i
<PAGE>
315(a) ....................................................... 8.1(b)
(b) ....................................................... 8.5
(c) ....................................................... 8.1(a)
(d) ....................................................... 2.9;
7.11;
8.1(c)
(e) ....................................................... 7.13
316(a)(last sentence)........................................... 2.9
(a)(1)(A) ................................................. 7.11
(a)(1)(B) ................................................... 7.12
(a)(2)....................................................... N.A.
(b) ....................................................... 7.7;
7.12;
10.2
317(a)(1)....................................................... 7.3
(a)(2)....................................................... 7.4
(b) ........................................................ 2.4
318(a) ....................................................... 12.1
__________
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
ii
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions...........................................
-----------
SECTION 1.2 Incorporation by Reference of TIA.......................
---------------------------------
SECTION 1.3 Rules of Construction..................................
---------------------
ARTICLE II
THE SECURITIES
SECTION 2.1 Form and Dating........................................
---------------
SECTION 2.2 Execution and Authentication...........................
----------------------------
SECTION 2.3 Registrar and Paying Agent.............................
--------------------------
SECTION 2.4 Paying Agent to Hold Assets in Trust...................
------------------------------------
SECTION 2.5 Securityholder Lists...................................
--------------------
SECTION 2.6 Transfer and Exchange..................................
---------------------
SECTION 2.7 Replacement Securities.................................
----------------------
SECTION 2.8 Outstanding Securities.................................
----------------------
SECTION 2.9 Treasury Securities....................................
-------------------
SECTION 2.10 Temporary Securities...................................
--------------------
SECTION 2.11 Cancellation...........................................
------------
SECTION 2.12 Defaulted Interest.....................................
------------------
ARTICLE III
REDEMPTION
SECTION 3.1 Right of Redemption....................................
-------------------
SECTION 3.2 Redemption Pursuant to Applicable Laws.............
----
SECTION 3.3 Notices to Trustee.....................................
------------------
SECTION 3.4 Selection of Securities to Be Redeemed.................
--------------------------------------
SECTION 3.5 Notice of Redemption...................................
--------------------
SECTION 3.6 Effect of Notice of Redemption.........................
------------------------------
SECTION 3.7 Deposit of Redemption Price............................
---------------------------
SECTION 3.8 Securities Redeemed in Part............................
---------------------------
iii
<PAGE>
PAGE
----
ARTICLE IV
SECURITY
SECTION 4.1 Security Interest......................................
-----------------
SECTION 4.2 Recording; Opinions of Counsel.........................
------------------------------
SECTION 4.3 Disposition of Certain Collateral......................
---------------------------------
SECTION 4.4 Certain Releases of Collateral.........................
------------------------------
SECTION 4.5 Payment of Expenses....................................
-------------------
SECTION 4.6 Suits to Protect the Collateral........................
-------------------------------
SECTION 4.7 Trustee's Duties.......................................
----------------
SECTION 4.8 Restricted Funds Account................................
------------------------
ARTICLE V
COVENANTS
SECTION 5.1 Payment of Securities..................................
---------------------
SECTION 5.2 Maintenance of Office or Agency........................
-------------------------------
SECTION 5.3 Limitation on Restricted Payments......................
---------------------------------
SECTION 5.4 Corporate and Partnership Existence....................
-----------------------------------
SECTION 5.5 Payment of Taxes and Other Claims......................
---------------------------------
SECTION 5.6 Maintenance of Insurance...............................
------------------------
SECTION 5.7 Compliance Certificate; Notice of Default..............
-----------------------------------------
SECTION 5.8 Provision of Financial Statements......................
---------------------------------
SECTION 5.9 Waiver of Stay, Extension or Usury Laws................
---------------------------------------
SECTION 5.10 Limitation on Transactions with Affiliates.............
------------------------------------------
SECTION 5.11 Limitation on Incurrence of Additional Indebtedness....
---------------------------------------------------
SECTION 5.12 Restriction on Sale and Issuance of Subsidiary Stock....
----------------------------------------------------
SECTION 5.13 Limitation on Dividends and Other Payment Restrictions
-------------------------------------------------------
Affecting Subsidiaries..................................
----------------------
SECTION 5.14 Limitation on Liens....................................
-------------------
SECTION 5.15 Limitation on Sales of Assets and Subsidiary
--------------------------------------------
Stock; Event of Loss....................................
------------------------------------
SECTION 5.16 Future Subsidiary Guarantors...........................
----------------------------
SECTION 5.17 Limitation on Activities of Funding....................
-----------------------------------
SECTION 5.18 Limitation on Lines of Business........................
-------------------------------
SECTION 5.19 Restriction on Certain Agreements.......................
---------------------------------
iv
<PAGE>
PAGE
----
SECTION 5.20 Limitation on Leases....................................
--------------------
SECTION 5.21 Limitation on Status as Investment Company..............
------------------------------------------
SECTION 5.22 Future Collateral Agreements............................
----------------------------
ARTICLE VI
SUCCESSORS
SECTION 6.1 Limitation on Merger, Sale or Consolidation............
-------------------------------------------
SECTION 6.2 Successor Substituted..................................
---------------------
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.1 Events of Default......................................
-----------------
SECTION 7.2 Acceleration of Maturity Date; Rescission and Annulment
-------------------------------------------------------
SECTION 7.3 Collection of Indebtedness and Suits for Enforcement
----------------------------------------------------
by Trustee...............................................
----------
SECTION 7.4 Trustee May File Proofs of Claim.......................
--------------------------------
SECTION 7.5 Trustee May Enforce Claims Without Possession of
-------------------------------------------------
Securities...............................................
----------
SECTION 7.6 Priorities.............................................
----------
SECTION 7.7 Limitation on Suits....................................
-------------------
SECTION 7.8 Unconditional Right of Holders to Receive Principal,
----------------------------------------------------
Premium and Interest.....................................
--------------------
SECTION 7.9 Rights and Remedies Cumulative.........................
------------------------------
SECTION 7.10 Delay or Omission Not Waiver...........................
----------------------------
SECTION 7.11 Control by Holders.....................................
------------------
SECTION 7.12 Waiver of Past Default.................................
----------------------
SECTION 7.13 Undertaking for Costs..................................
---------------------
SECTION 7.14 Restoration of Rights and Remedies.....................
----------------------------------
ARTICLE VIII
TRUSTEE
SECTION 8.1 Duties of Trustee......................................
-----------------
SECTION 8.2 Rights of Trustee......................................
-----------------
SECTION 8.3 Individual Rights of Trustee...........................
----------------------------
SECTION 8.4 Trustee's Disclaimer...................................
--------------------
SECTION 8.5 Notice of Default......................................
-----------------
v
<PAGE>
PAGE
----
SECTION 8.6 Reports by Trustee to Holders..........................
-----------------------------
SECTION 8.7 Compensation and Indemnity.............................
--------------------------
SECTION 8.8 Replacement of Trustee.................................
----------------------
SECTION 8.9 Successor Trustee by Merger, Etc.......................
---------------------------------
SECTION 8.10 Eligibility; Disqualification..........................
-----------------------------
SECTION 8.11 Preferential Collection of Claims against Issuers......
-------------------------------------------------
ARTICLE IX
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 9.1 Option to Effect Legal Defeasance or Covenant
---------------------------------------------
Defeasance...............................................
----------
SECTION 9.2 Legal Defeasance and Discharge.........................
------------------------------
SECTION 9.3 Covenant Defeasance....................................
-------------------
SECTION 9.4 Conditions to Legal or Covenant Defeasance.............
------------------------------------------
SECTION 9.5 Deposited U.S. Legal Tender and U.S. Government
-----------------------------------------------
Obligations to Be Held in Trust;
--------------------------------
Other Miscellaneous Provisions...........................
------------------------------
SECTION 9.6 Repayment to Issuers...................................
--------------------
SECTION 9.7 Reinstatement..........................................
-------------
ARTICLE X
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 10.1 Supplemental Indentures Without Consent of Holders.....
--------------------------------------------------
SECTION 10.2 Amendments, Supplemental Indentures and Waivers
-----------------------------------------------
with Consent of Holders..................................
-----------------------
SECTION 10.3 Compliance with TIA....................................
-------------------
SECTION 10.4 Revocation and Effect of Consents......................
---------------------------------
SECTION 10.5 Notation on or Exchange of Securities..................
-------------------------------------
SECTION 10.6 Trustee to Sign Amendments, Etc........................
--------------------------------
ARTICLE XI
RIGHT TO REQUIRE REPURCHASE
SECTION 11.1 Repurchase of Securities at Option of the Holder
------------------------------------------------
Upon Change of Control...................................
----------------------
vi
<PAGE>
PAGE
----
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 TIA Controls...........................................
------------
SECTION 12.2 Notices................................................
-------
SECTION 12.3 Communications by Holders with Other Holders...........
--------------------------------------------
SECTION 12.4 Certificate and Opinion as to Conditions Precedent.....
--------------------------------------------------
SECTION 12.5 Statements Required in Certificate or Opinion...........
---------------------------------------------
SECTION 12.6 Rules by Trustee, Paying Agent, Registrar..............
-----------------------------------------
SECTION 12.7 Legal Holidays.........................................
--------------
SECTION 12.8 Governing Law..........................................
-------------
SECTION 12.9 No Interpretation of Other Agreements..................
-------------------------------------
SECTION 12.10 No Recourse against Others.............................
--------------------------
SECTION 12.11 Successors.............................................
----------
SECTION 12.12 Duplicate Originals....................................
-------------------
SECTION 12.13 Severability...........................................
------------
SECTION 12.14 Table of Contents, Headings, Etc.......................
---------------------------------
SECTION 12.15 Gaming Laws............................................
-----------
ARTICLE XIII
GUARANTY
SECTION 13.1 Guaranty................................................
--------
SECTION 13.2 Executive and Delivery of Guaranty..................
----------------------------------
SECTION 13.3 Certain Bankruptcy Events...............................
-------------------------
SECTION 13.4 Rights Under the Guaranty...............................
-------------------------
SECTION 13.5 Severability............................................
------------
SECTION 13.6 Merger or Consolidation of Guarantors...................
-------------------------------------
vii
<PAGE>
PAGE
----
EXHIBITS
Exhibit A Form of First Mortgage Note due 2006.........A-1
Exhibit B Form of Guaranty.............................B-1
Exhibit C Form of Assignment of Leases and Rents.......C-1
Exhibit D Form of Mortgage and Security Agreement......D-1
Exhibit E Form of Intercompany Note....................E-1
Exhibit F Form of Pledge and Security Agreement........F-1
Exhibit G Form of Pledge Agreement.....................G-1
Exhibit H Form of Collateral Agency Agreement..........H-1
Exhibit I Schedule of Existing Indebtedness............I-1
Exhibit J Schedule of Existing Investments.............J-1
Exhibit K Schedule of Existing Liens...................K-1
viii
<PAGE>
INDENTURE, dated as of April __, 1996, between Trump Atlantic
City Associates, a New Jersey partnership (the "Company"), Trump Atlantic City
Funding, Inc., a Delaware corporation and a wholly owned subsidiary of the
Company ("Funding" and, together with the Company, the "Issuers"), as joint and
several obligors; Trump Plaza Associates, a New Jersey partnership ("Plaza
Associates"), and Trump Taj Mahal Associates, a New Jersey partnership ("Taj
Associates"), and The Trump Taj Mahal Corporation, a Delaware corporation
("TTMC" and, together with Taj Associates and Plaza Associates and such other
persons as may be required from time to time to execute a Guaranty hereunder,
the "Guarantors"); Trump Taj Mahal Funding, Inc., a Delaware corporation ("Taj
Funding") and First Bank National Association, a national banking association,
as Trustee.
Each party hereto agrees as follows for the benefit of each other
party and for the equal and ratable benefit of the Holders of the ____% First
Mortgage Notes due 2006 being issued by the Issuers and guaranteed by the
Guarantors.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions.
-----------
"Acceleration Notice" shall have the meaning specified in Section
7.2.
"Acceptance Amount" shall have the meaning specified in Section
5.15.
"Acquired Indebtedness" means Indebtedness or Disqualified Capital
Stock of any Person (a) existing at the time such Person becomes a Subsidiary
of the Company, including by designation, or is merged or consolidated into or
with the Company or one of its Subsidiaries or (b) assumed in connection with
the Acquisition of assets from such Person, in each case, other than
Indebtedness incurred in connection with, or in contemplation of, such Person
becoming a Subsidiary or such acquisition, consolidation or merger.
Indebtedness shall be deemed to be incurred on the date of the related
acquisition of assets from any Person or the date the acquired Person becomes a
Subsidiary, including by designation, or the date of such merger or
consolidation, as applicable.
"Acquisition" means the purchase or other acquisition of any Person
or substantially all the assets of any Person by any other Person, whether by
purchase, merger, consolidation, or other transfer, and whether or not for
consideration.
"Affiliate" means, with respect to any specified Person, (a) any
other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person or (b) any other
Person that owns, directly or indirectly, 5% or more of such Person's Equity
Interests or any officer or director of any such Person or other person or with
respect to any natural Person, any person having a relationship with such
1
<PAGE>
Person by blood, marriage or adoption not more remote than first cousin. For
the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person directly or indirectly, whether through ownership of voting securities,
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Affiliated Ground Leases" means the TSA Lease and SFA Lease.
"After Acquired Property" shall have the meaning specified in
Section 5.22.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Approvals" means all approvals, licenses (including Gaming
Licenses), permits, authorizations, findings and other filings necessary under
applicable gaming laws.
"Asset Sale" shall have the meaning specified in Section 5.15.
"Asset Sale Offer" shall have the meaning specified in Section
5.15.
"Asset Sale Offer Amount" shall have the meaning specified in
Section 5.15.
"Asset Sale Offer Period" shall have the meaning specified in
Section 5.15.
"Asset Sale Offer Price" shall have the meaning specified in
Section 5.15.
"Asset Sale Purchase Date" shall have the meaning specified in
Section 5.15.
"Asset Sale Put Date" shall have the meaning specified in Section
5.15.
"Assignment of Leases and Rents" means that certain Assignment of
Leases and Rents made by Taj Associates and Plaza Associates to the Trustee,
dated April __, 1996, as the same may be amended from time to time.
"Authorized Representative" of any person shall mean (i) in the
case of the Company, (x) any person or persons that has or have been designated
by the Board of Directors of Plaza Holding, as general partner of the Company,
to be an "Authorized Representative" under this Indenture or (y) any member of
the Board of Directors of Plaza Holding; (ii) in the case of Funding, any
Authorized Representative of the Company (with Funding, by its execution and
delivery of this Indenture, irrevocably appointing the Authorized
Representatives from time to time of the Company as its Authorized
Representatives hereunder); and (iii) in the case of any Guarantor or other
obligor, any Officer of such party or, if such person has no Officers, any
person or persons that have been designated by the Board of Directors of Plaza
Holding to be an "Authorized Representative" of such person under this
Indenture.
2
<PAGE>
"Average Life" means, as of the date of determination, with respect
to any security or instrument, the quotient obtained by dividing (i) the sum of
(a) the product of the number of years from the date of determination to the
date or dates of each successive scheduled principal (or redemption) payment of
such security or instrument and (b) the amount of each such respective
principal (or redemption) payment by (ii) the sum of all such principal (or
redemption) payments.
"Bankruptcy Law" means Title 11, United States Code, as amended, or
any similar United States federal or state law relating to bankruptcy,
insolvency, receivership, winding-up, liquidation, reorganization or relief of
debtors or any amendment to, succession to or change in any such law.
"Beneficial Owner" or "beneficial owner" for purposes of the
definition of Change of Control has the meaning attributed to it in Rules 13d-3
and 13d-5 under the Exchange Act (as in effect on the Issue Date), whether or
not applicable, except that a "person" shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time.
"Board of Directors" means, with respect to any Person, the Board
of Directors of such person or any committee of the Board of Directors of such
Person authorized, with respect to any particular matter, to exercise the power
of the Board of Directors of such Person.
"Board Resolution" means, with respect to any Person, a duly
adopted resolution of the Board of Directors of such Person.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York, New York
are authorized or obligated by law or executive order to close.
"Capital Contribution" shall mean, with respect to any Person, that
amount of money or the Fair Market Value of any Property (net of liabilities to
which such Property is subject) irrevocably and unconditionally contributed to
such Person in exchange for Qualified Equity Interests of such Person;
provided, however, that such term shall not include any contribution of
-------
funds obtained from the proceeds of the equity offering by THCR prior to or
substantially concurrent with the issuance of the Securities (including
proceeds from any exercise of the underwriters overallotment option) except for
funds in excess of $__ million [to be calculated as the amount necessary to
fund the Company's and its Subsidiaries' specified proceeds uses described in
the Prospectus, plus $71 million].
"Capitalized Lease Obligation" of any Person means any obligation
of such Person or its Subsidiaries on a Consolidated basis under a lease that
is required to be capitalized for financial reporting purposes in accordance
with GAAP, and the amount of Indebted-
3
<PAGE>
ness represented by such obligation shall be the capitalized amount of such
obligations, as determined in accordance with GAAP.
"Capital Stock" means, with respect to any corporation, any and all
shares, interests, rights to purchase (other than convertible or exchangeable
Indebtedness), warrants, options, participations or other equivalents of or
interests (however designated) in stock issued by that corporation.
"Cash Collateral" means Collateral in the form of U.S. Legal Tender
to be deposited in the Restricted Funds Account.
"Cash Equivalent" means (a) any evidence of Indebtedness, maturing
not more than one year after the date of acquisition, issued by the United
States of America, or an instrumentality or agency thereof and guaranteed fully
as to principal, premium, if any, and interest by the United States of America,
(b) any certificate of deposit, maturing not more than one year after the date
of acquisition, issued by, or time deposit of, a commercial banking institution
that is a member of the Federal Reserve System and that has combined capital
and surplus and undivided profits of not less than $300.0 million and whose
debt has a rating, at the time as of which any investment therein is made, of
"P-1" (or higher) according to Moody's Investors Service, Inc. or any successor
rating agency, or "A-1" (or higher) according to Standard & Poor's Ratings
Service, a division of McGraw-Hill, Inc., or any successor rating agency, (c)
commercial paper, maturing not more than one year after the date of
acquisition, issued by a corporation (other than an Affiliate or Subsidiary of
the Company) organized and existing under the laws of the United States of
America with a rating, at the time as of which any investment therein is made,
of "P-1" (or higher) according to Moody's Investors Service, Inc. or any
successor rating agency, or "A-1" (or higher) according to Standard & Poor's
Ratings Service, a division of McGraw-Hill, Inc., or any successor rating
agency and (d) any money market deposit accounts issued or offered by a
domestic commercial bank having capital and surplus in excess of $300.0
million.
"Casino Control Act" shall mean the New Jersey Casino Control Act.
"Casino Hotels" means collectively (i) the casino and hotel complex
currently known as the "Trump Plaza Hotel and Casino" in Atlantic City, New
Jersey and ancillary structures and facilities located on the premises and all
furniture, fixtures and equipment at any time contained therein in each case
owned by or leased to Plaza Associates and covered by the Lien of the Mortgage
Documents and (ii) the casino and hotel complex currently known as the "Trump
Taj Mahal Casino Resort" in Atlantic City, New Jersey and ancillary structures
and facilities located on the premises and all furniture, fixtures and
equipment at any time contained therein in each case owned by or leased to Taj
Associates and covered by the Lien of the Mortgage Documents.
"Casino Sale" shall have the meaning specified in Section 5.15
hereof.
"Change of Control" means any of the following events:
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(i) THCR Holdings ceases to be the "beneficial owner," directly or
indirectly, of 100% of the Equity Interests of the Company;
(ii) any sale, transfer or other conveyance, whether direct or
indirect, of all or substantially all of the assets of THCR Holdings or
THCR, on a Consolidated basis, in one transaction or a series of related
transactions, if, immediately after giving effect to such transaction,
(A) any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable),
other than the Permitted Holder, or if applicable in the case of THCR
Holdings, THCR, becomes the "beneficial owner" (as defined), directly or
indirectly, of more than 35% of the total voting power of the Voting
Stock of the transferee unless the Permitted Holder "beneficially owns"
(as so defined), directly or indirectly, in the aggregate a greater
percentage of the total voting power of the Voting Stock of the
transferee than such other person or group and still has the right or
ability by voting power, contract or otherwise to elect or designate a
majority of the Board of Directors of THCR;
(iii) any "person" or "group" (as such terms are used for purposes
of Sections 13(d) and 14(d) of the Exchange Act, whether or not
applicable), other than the Permitted Holder, is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act), directly or indirectly, of more than 35% of the total
voting power of the Voting Stock of THCR, or any successor thereto by
merger, consolidation or otherwise, unless the Permitted Holder
"beneficially owns" (as so defined), directly or indirectly, in the
aggregate a greater percentage of the total voting power of the Voting
Stock of THCR than such other person or group and has the right or
ability by voting power, contract or otherwise to elect or designate for
election a majority of the Board of Directors of THCR (for purposes of
this definition, such other person shall be deemed to beneficially own
any Voting Stock of a specified corporation held by a parent corporation,
if such other person "beneficially owns" (as so defined), directly or
indirectly, more than 35% of the voting power of the Voting Stock of such
parent corporation and the Permitted Holder "beneficially owns" (as so
defined), directly or indirectly, in the aggregate, a lesser percentage
of the voting power of the Voting Stock of such parent corporation and
does not have the right or ability by voting power, contract or otherwise
to elect or designate for election a majority of the Board of Directors
of such parent corporation); or
(iv) during any period of two consecutive years, individuals who
at the beginning of such period constituted the Board of Directors of
THCR or Funding (together with any new directors whose election by such
Board of Directors or whose nomination for election by the stockholders
of THCR or Funding, as applicable, is approved by the Permitted Holder or
by a vote of the 66 2/3% of the directors of THCR or Funding, as
applicable, then still in office who are either directors at the beginning
of such period or whose election or nomination for election was previously
so approved) have ceased for any reason to constitute a majority of the
Board of Directors of THCR or Funding, as applicable, then in office.
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"Change of Control Date" shall have the meaning specified in
Section 11.1.
"Change of Control Offer" shall have the meaning specified in
Section 11.1.
"Change of Control Offer Period" shall have the meaning specified
in Section 11.1.
"Change of Control Purchase Date" shall have the meaning specified
in Section 11.1.
"Change of Control Purchase Price" shall have the meaning specified
in Section 11.1.
"Change of Control Put Date" shall have the meaning specified in
Section 11.1.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means the Property and assets of the Issuers or the
Guarantors which, at the time in question, is subject to the Liens created by
the Mortgage Documents, this Indenture or the Guaranty.
"Collateral Agent" shall mean First Bank National Association, as
collateral agent under the Collateral Agency Agreement.
"Collateral Agency Agreement" means that agreement dated the date
hereof by and among the Collateral Agent and the Trustee as well as such other
persons as may be permitted to become parties thereunder as a result of their
status as lenders of Indebtedness permitted to be incurred pursuant to Section
5.11(c) (including Refinancing Indebtedness in respect thereof) or (e) hereof,
in substantially the form set forth in Exhibit H hereto.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means such
successor.
"Company Request" means a written request of the Issuers in the
form of an Officers' Certificate.
"Consolidated Coverage Ratio" of any person on any date of
determination (the "Transaction Date") means the ratio, on a pro forma basis,
of (a) the aggregate amount of Consolidated EBITDA of such person attributable
to continuing operations and businesses (exclusive of amounts attributable to
operations and businesses permanently discontinued or disposed of) for the
Reference Period to (b) the aggregate Consolidated Fixed Charges of such person
(exclusive of amounts attributable to operations and businesses permanently
discontinued or disposed of, but only to the extent that the obligations giving
rise to such Consolidated Fixed Charges would no longer be obligations
contributing to such person's
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Consolidated Fixed Charges subsequent to the Transaction Date) during the
Reference Period; provided, that for purposes of such calculation, (i)
Acquisitions which occurred during the Reference Period or subsequent to the
Reference Period and on or prior to the Transaction Date shall be assumed to
have occurred on the first day of the Reference Period, (ii) transactions
giving rise to the need to calculate the Consolidated Coverage Ratio shall be
assumed to have occurred on the first day of the Reference Period, (iii) the
incurrence of any Indebtedness or issuance of any Disqualified Capital Stock
during the Reference Period or subsequent to the Reference Period and on or
prior to the Transaction Date (and the application of the proceeds therefrom to
the extent used to refinance or retire other Indebtedness) shall be assumed to
have occurred on the first day of such Reference Period, and (iv) the
Consolidated Fixed Charges of such person attributable to interest on any
Indebtedness or dividends on any Disqualified Capital Stock bearing a floating
interest (or dividend) rate shall be computed on a pro forma basis as if the
average rate in effect from the beginning of the Reference Period to the
Transaction Date had been the applicable rate for the entire period, unless
such Person or any of its Subsidiaries is a party to an Interest Swap and
Hedging Obligation (which shall remain in effect for the 12-month period
immediately following the Transaction Date) that has the effect of fixing the
interest rate on the date of computation, in which case such rate (whether
higher or lower) shall be used.
"Consolidated EBITDA" means, with respect to any person, for any
period, the Consolidated Net Income of such person for such period (determined,
for purposes of this definition only, without taking into effect clause (x) of
the last sentence of the definition thereof) adjusted to add thereto (to the
extent deducted from net revenues in determining Consolidated Net Income),
without duplication, the sum of (i) Consolidated income tax expense, (ii)
Consolidated depreciation and amortization expense, provided, that consolidated
depreciation and amortization of a Subsidiary that is a less than Wholly-owned
Subsidiary shall only be added to the extent of the equity interest of such
person in such Subsidiary and (iii) Consolidated Fixed Charges, less the amount
of all cash payments made by such person or any of its Subsidiaries during such
period to the extent such payments relate to non-cash charges that were added
back in determining Consolidated EBITDA for such period or any prior period.
"Consolidated Fixed Charges" of any person means, for any period,
the aggregate amount (without duplication and determined in each case in
accordance with GAAP) of (a) interest expensed or capitalized, paid, accrued,
or scheduled to be paid or accrued (including, in accordance with the following
sentence, interest attributable to Capitalized Lease Obligations) of such
person and its Consolidated Subsidiaries during such period, including (i)
original issue discount and non-cash interest payments or accruals on any
Indebtedness, (ii) the interest portion of all deferred payment obligations and
(iii) all commissions, discounts and other fees and charges owed with respect
to bankers' acceptances and letters of credit financings and currency and
Interest Swap and Hedging Obligations, in each case to the extent attributable
to such period, (b) one-third of Consolidated Rental Payments for such period
attributable to operating leases of such person and its Consolidated
Subsidiaries, and (c) the amount of dividends accrued or payable by such person
or any of its Consolidated Subsidiaries in respect of Preferred Stock (other
than by Subsidiaries of such
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<PAGE>
person to such person or such person's Wholly-owned Subsidiaries). For
purposes of this definition, (x) interest on a Capitalized Lease Obligation
shall be deemed to accrue at an interest rate reasonably determined by the
Issuers to be the rate of interest implicit in such Capitalized Lease
Obligation in accordance with GAAP and (y) interest expense attributable to any
Indebtedness represented by the guarantee by such person or a Subsidiary of
such person of an obligation of another person shall be deemed to be the
interest expense attributable to the Indebtedness guaranteed.
"Consolidated Net Income" means, with respect to any person for any
period, the net income (or loss) of such person and its Consolidated
Subsidiaries (determined on a consolidated basis in accordance with GAAP) for
such period, adjusted to exclude (only to the extent included in computing such
net income (or loss) and without duplication): (a) all gains (but not losses)
which are either extraordinary (as determined in accordance with GAAP) or are
either unusual or nonrecurring (including any gain from the sale or other
disposition of assets outside the ordinary course of business or from the
issuance or sale of any capital stock), less all fees and expenses relating
thereto, (b) the net income, if positive, of any person, other than a
Consolidated Wholly-owned Subsidiary, in which such person or any of its
Consolidated Subsidiaries has an interest, except to the extent of the amount
of any dividends or distributions actually paid in cash to such person or a
Consolidated Wholly-owned Subsidiary of such person during such period, but in
any case not in excess of such person's pro rata share of such person's net
income for such period, (c) the net income or loss of any person acquired in a
pooling of interests transaction for any period prior to the date of such
acquisition, and (d) the net income, if positive, of any of such person's
Consolidated Subsidiaries to the extent that the declaration or payment of
dividends or similar distributions is not at the time permitted by operation of
the terms of its charter or bylaws or any other agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
such Consolidated Subsidiary. To the extent not already reduced thereby,
Consolidated Net Income of the Company for any period shall be reduced by the
aggregate amount of (x) all Permitted Tax Distributions made during, or
distributable in respect of, such period and (y) all payments made during such
period pursuant to the TPM Services Agreement.
"Consolidated Net Worth" of any person at any date means, in the
case of a partnership, such person's partners' capital and, in the case of a
corporation, the aggregate Consolidated stockholders' equity of such person
(plus amounts attributable to preferred stock) and its Consolidated
Subsidiaries, as would be shown on the consolidated balance sheet of such
person prepared in accordance with GAAP, adjusted to exclude (to the extent
included in calculating such equity), (a) the amount of any such stockholders'
equity attributable to Disqualified Capital Stock or treasury stock of such
person and its Consolidated Subsidiaries, (b) all upward revaluations and other
write-ups in the book value of any asset of such person or a Consolidated
Subsidiary of such person subsequent to the Issue Date, and (c) all investments
in Subsidiaries that are not Consolidated Subsidiaries and in persons that are
not Subsidiaries.
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<PAGE>
"Consolidated Rental Payments" of any Person means the aggregate
rental obligations of such Person and its Consolidated Subsidiaries (not
including taxes, insurance, maintenance and similar expenses that the lessee is
obligated to pay under the terms of the relevant leases), determined on a
Consolidated basis in conformity with GAAP, payable in respect of such period
under leases of real or personal property (net of income from subleases
thereof, not including taxes, insurance, maintenance and similar expenses that
the sublessee is obligated to pay under the terms of such sublease), whether or
not such obligations are reflected as liabilities or commitments on a
Consolidated balance sheet of such Person and its Subsidiaries or in the notes
thereto, excluding, however, in any event, that portion of Consolidated Fixed
Charges of such Person representing payments by such Person or any of its
Consolidated Subsidiaries in respect of Capitalized Lease Obligations.
"Consolidated Subsidiary" means, for any person, each Subsidiary of
such person (whether now existing or hereafter created or acquired), the
financial statements of which are consolidated for financial statement
reporting purposes with the financial statements of such person in accordance
with GAAP.
"Consolidation" means, with respect to any Person, the
consolidation of the accounts of such Person and each of its Subsidiaries if
and to the extent the accounts of such Person and each of its Subsidiaries
would normally be consolidated with those of such Person, all in accordance
with GAAP consistently applied. The term "Consolidated" shall have a similar
meaning.
"CRDA" means the New Jersey Casino Reinvestment Development
Authority or any successor entity thereto.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Defaulted Interest" shall have the meaning specified in Section
2.12.
"Disqualified Capital Stock" means, with respect to any person, an
Equity Interest of such person that, by its terms or by the terms of any
security into which it is convertible, exercisable or exchangeable, is, or upon
the happening of an event (other than the disqualification of the holder
thereof by a Gaming Authority) or the passage of time would be, required to be
redeemed or repurchased (including at the option of the holder thereof) in
whole or in part, on or prior to the final Stated Maturity of the Securities.
"Egg Harbor Mortgage" shall have the meaning given to it in the
Mortgage.
"Egg Harbor Parcel" means that warehouse and office facility owned
by Plaza Associates and located on the premises known as Block 404 Lots 13 and
14 of the official tax
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map of Egg Harbor Township, New Jersey, containing approximately 64,000 square
feet of space.
"Equity Interest" of any Person means any shares, interests,
participations or other equivalents (however designated) in such Person's
equity, and shall in any event include any Capital Stock issued by, or
partnership interests in, such Person.
"Event of Default" shall have the meaning specified in Section 7.1.
"Event of Loss" means, with respect to any property or asset, any
(i) loss, destruction or damage of such property or asset, or (ii) any
condemnation, seizure or taking, by exercise of the power of eminent domain or
otherwise, of such property or asset, or confiscation or requisition of the use
of such property or asset.
"Excepted Property" shall have the meaning given to it in the
Mortgage.
"Excess Proceeds" shall have the meaning specified in Section 5.15.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Expansion Site Lease" shall have the meaning given to it in the
Mortgage.
"Expansion Site Option" shall have the meaning given to it in the
Mortgage.
"F, F&E Financing Agreement" means an agreement which creates a
Lien upon any after-acquired tangible personal property and/or other items
constituting operating assets, which are financed, purchased or leased for the
purpose of engaging in or developing a Related Business.
"Facility Lease" shall have the meaning given to it in the
Mortgage.
"Fair Market Value" means, with respect to any asset or property,
the sale value that would be obtained in an arm's-length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy and, with respect to any redemption of
Securities pursuant to the Gaming Laws means (a) the last sales price regular
way on the last trading day prior to the date of determination of such value on
the largest national securities exchange (or, if said security is not listed on
a national securities exchange, on the National Market System of the National
Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ"))
on which such Securities shall have traded on such trading day, or (b) if no
such sales of such Securities occurred on such trading day, the mean between
the "bid" and "asked" prices on such national securities exchange or as quoted
on the National Market System of NASDAQ, as the case may be, on such last
trading day, or (c) if the Securities are not listed or quoted on any national
securities exchange or the Nasdaq National Market, the average of the closing
bid and asked prices on such day in the over-the-counter market as reported by
NASDAQ or, if
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bid and asked prices for the Securities have not been reported through NASDAQ,
the average of the bid and asked prices on such day as furnished by any New
York Stock Exchange member firm regularly making a market in the Securities,
selected for such purpose by Funding, or (d) if none of clauses (a) through (c)
are applicable, the fair market value of such Securities as of the date of
determination as determined in such manner as shall be satisfactory to Funding,
which shall be entitled to rely for such purpose on the advice of any firm of
investment bankers or securities dealers having familiarity with the
Securities.
"First Mortgage Notes" means the __% First Mortgage Notes due 2006
issued by Funding and the Company, which, together with the Guaranty, form the
Securities.
"First Mortgage Note Register" means the list of names and
addresses of Holders held by the Registrar of the Securities.
"Funding" means Trump Atlantic City Funding, Inc. until a successor
replaces it as an Issuer pursuant to this Indenture, and thereafter means such
successor.
"Gaming Authority" means the New Jersey Casino Control Commission,
the New Jersey Division of Gaming Enforcement or any other governmental agency
which regulates gaming in a jurisdiction in which the Company or any of the
Subsidiaries conducts gaming activities.
"Gaming Law" means any law, rule, regulation or ordinance governing
gaming activities and any administrative rules or regulations promulgated
thereunder, and any other corresponding statutes, rules and regulations.
"Gaming Licenses" means every material license, material franchise,
or other material authorization required to own, lease, operate or otherwise
conduct or manage gaming in any state or jurisdiction where the Company or its
Subsidiaries conduct business, and any applicable liquor licenses.
"Generally Accepted Accounting Principles" or "GAAP" means United
States generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
approved by a significant segment of the accounting profession as in effect on
the Issue Date.
"Governmental Authority" means any agency, authority, board,
bureau, commission, department, office or instrumentality of any nature
whatsoever of the United States or foreign government, any state, province or
any city or other political subdivision and whether now or hereafter in
existence, or any officer or official thereof, and any maritime authority.
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"Ground Leases" means the ground leases, as amended or supplemented
in accordance with the Mortgage Documents, each of which expires on December
31, 2078, pursuant to which Plaza Associates is the current lessee, and each of
Trump Seashore Associates (the "TSA Lease"), Seashore Four Associates (the "SFA
Lease") and Plaza Hotel Management Company (the "PHMC Lease") are the current
respective lessors.
"Guaranteed Debt" of any Person means, without duplication, all
indebtedness of any other Person referred to in the definition of Indebtedness
contained in this section guaranteed directly or indirectly in any manner by
such Person, or in effect guaranteed directly or indirectly by such Person
through an agreement (a) to pay or purchase such Indebtedness or to advance or
supply funds for the payment or purchase of such Indebtedness, (b) to purchase,
sell or lease (as lessee or lessor) property, or to purchase or sell services,
primarily for the purpose of enabling the debtor to make payment of such
Indebtedness or to assure the holder of such Indebtedness against loss, (c) to
supply funds to, or in any other manner invest in, the debtor (including any
agreement to pay for property or services without requiring that such property
be received or such services be rendered), (d) to maintain working capital or
equity capital of the debtor, or otherwise to maintain the net worth, solvency
or other financial condition of the debtor or (e) otherwise to assure a
creditor against loss; provided that the term "guarantee" shall not include
endorsements for collection or deposit, in either case in the ordinary course
of business; provided, further, that the obligations of Plaza Associates
pursuant to the TPM Services Agreement or the Ground Leases, in each case in
effect on the Issue Date or as amended pursuant to terms substantially similar
to the terms in effect on the Issue Date, shall not be deemed to be Guaranteed
Debt of Plaza Associates.
"Guarantors" means Plaza Associates, Taj Associates, TTMC and each
existing or future Subsidiary of Funding or the Company.
"Guaranty" shall have the meaning provided in Section 13.1.
"Holder" or "Securityholder" means the person in whose name a
Security is registered on the Registrar's books.
"Improvements" shall mean, with respect to any gaming or other
facility, all improvements thereto, including any alteration thereof and the
acquisition, construction of any additions related thereto (including adjacent
property) or renovations thereof, including without limitation the construction
or renovation of additional gaming space or facilities, hotel and restaurant
facilities and parking facilities, with all landscaping and other off- and
on-site work related thereto.
"incurrence" shall have the meaning specified in Section 5.11.
"Incurrence Date" shall have the meaning specified in Section 5.11.
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"Indebtedness" means, with respect to any Person, without
duplication, (a) all liabilities and obligations, contingent and otherwise, of
such Person for borrowed money or representing the balance deferred and unpaid
of the purchase price of property or services, excluding any trade payables and
other accrued current liabilities arising in the ordinary course of business,
but including, without limitation, all obligations, contingent or otherwise, of
such Person in connection with any letters of credit issued under letter of
credit facilities, acceptance facilities or other similar facilities or in
connection with any agreement to purchase, redeem, exchange, convert or
otherwise acquire for value any Equity Interest of such Person, or any
warrants, rights or options to acquire such Equity Interest, now or hereafter
outstanding, (b) all obligations of such Person evidenced by bonds, notes,
debentures or other similar instruments, (c) every obligation of such Person
issued as payment in consideration of the purchase by such Person or an
Affiliate of such Person of the Equity Interest or all or substantially all of
the assets of another Person or in consideration for the merger or
consolidation with respect to which such Person or an Affiliate of such Person
was a party, (d) all indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property acquired by such
Person (even if the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), but excluding trade payables and other accrued current liabilities
arising in the ordinary course of business, (e) all obligations under Interest
Swap and Hedging Obligations of such Person, (f) all Capitalized Lease
Obligations of such Person, (g) all Indebtedness referred to in clauses (a)
through (f) above of other Persons and all dividends of other Persons, the
payment of which are secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien,
upon or in property (including, without limitation, accounts and contract
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness, (h) all Guaranteed Debt of such
Person and (i) all Disqualified Capital Stock of such Person (valued at the
greater of its voluntary or involuntary maximum fixed repurchase price plus
accrued and unpaid dividends). For purposes hereof, the "maximum fixed
repurchase price" of any Disqualified Capital Stock which does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Disqualified Capital Stock as if such Disqualified Capital Stock were purchased
on any date on which Indebtedness shall be required to be determined pursuant
to this Indenture, and if such price is based upon, or measured by, the Fair
Market Value of such Disqualified Capital Stock, such Fair Market Value to be
determined in good faith by the Board of Directors of the issuer (or managing
general partner of the issuer) of such Disqualified Capital Stock.
"Indenture" means this Indenture, as amended or supplemented from
time to time in accordance with the terms hereof.
"Indenture Obligations" means the obligations of the Issuers and
the Guarantors pursuant to this Indenture and the Securities (and any other
obligor hereunder or under the Securities) now or hereafter existing, to pay
principal of and interest on the Securities when due and payable, whether on
Maturity or an Interest Payment Date, by acceleration, call for redemption,
acceptance of any Asset Sale Offer, Change of Control Offer, or otherwise, and
interest on the overdue principal of, and (to the extent lawful) interest, if
any,
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on, the Securities and all other amounts due or to become due in connection
with this Indenture, the Securities and the Mortgage Documents, including any
and all extensions, renewals or other modifications thereof, in whole or in
part, and the performance of all other obligations of the Issuers and the
Guarantors (and any other obligor hereunder or under the Securities), including
all costs and expenses incurred by the Trustee or the Holders in the collection
or enforcement of any such obligations or realization upon the Mortgage or the
security of any Mortgage Documents.
"Independent Directors" shall mean directors who are not officers
or employees of THCR or any of its Subsidiaries and who are not Affiliates of
Trump or any of his Affiliates.
"Intercompany Notes" means collectively the several promissory
notes between the Company, as obligee, and each of the Guarantors, as obligors,
substantially in the form attached hereto as Exhibit E.
"Interest Payment Date" means the stated due date of an installment
of interest on the Securities.
"Interest Swap and Hedging Obligation" means any obligation of any
person pursuant to any interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate exchange agreement,
currency exchange agreement or any other agreement or arrangement designed to
protect against fluctuations in interest rates or currency values, including,
without limitation, any arrangement whereby, directly or indirectly, such
person is entitled to receive from time to time periodic payments calculated by
applying either a fixed or floating rate of interest on a stated notional
amount in exchange for periodic payments made by such person calculated by
applying a fixed or floating rate of interest on the same notional amount.
"Investment" means, with respect to any Person, directly or
indirectly, (a) any advance, loan or other extension of credit or capital
contribution to any other Person (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others), (b) any purchase or other acquisition by such Person of any
Equity Interest, bonds, notes, debentures or other securities issued or owned
by, any other Person or (c) other than guarantees of Indebtedness of the
Issuers or any Subsidiary to the extent permitted by Section 5.11, the entering
into by such Person of any guarantee of, or other credit support or contingent
obligation with respect to, Indebtedness or other liability of such other
Person.
"Issue Date" means the date of first issuance of the Securities
under this Indenture.
"Issuers" shall mean, collectively, the Company and Funding.
"Leased Land" shall have the meaning given to it in the Mortgage.
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"Leases" shall have the meaning given to it in the Mortgage.
"Legal Requirements" means all applicable laws, statutes, codes,
acts, ordinances, orders, judgments, decrees, injunctions, rules, regulations,
permits, licenses, authorizations, directions and requirements of all
governments, departments, commissions, boards, courts, authorities, agencies,
officials and officers, of governments, federal, state and municipal.
"Legal Holiday" shall have the meaning provided in Section 12.7.
"Lien" means any mortgage, charge, pledge, lien (statutory or
otherwise), privilege, security interest, hypothecation or other encumbrance
upon or with respect to any property of any kind, real or personal, movable or
immovable, now owned or hereafter acquired.
"Maturity" when used with respect to any Security means the date on
which the principal of such Security becomes due and payable as therein
provided or as provided in this Indenture, whether at final Stated Maturity,
Change of Control Purchase Date, Asset Sale Offer Purchase Date or the
redemption date and whether by declaration of acceleration, call for redemption
or otherwise.
"Mortgage" means that certain Indenture of Mortgage and Security
Agreement made by the Mortgagor and the Mortgagee, dated April __, 1996, as the
same may be amended from time to time in accordance with its terms and the
terms of this Indenture.
"Mortgage Documents" means the Mortgage, the Assignment of Leases
and Rents, the Pledge Agreements and any other agreement purporting to convey
to the Trustee for the benefit of the Holders, a security interest in Property
pursuant to the requirements of this Indenture, including, without limitation,
Section 5.22, executed by any Issuer or any of the Guarantors, as the same may
be amended from time to time, including any UCC-1 financing statements which
may be filed in connection therewith.
"Mortgagee" shall have the meaning given to it in the Mortgage.
"Mortgagor" shall have the meaning given to it in the Mortgage.
"Net Cash Proceeds" (x) of an issuance of Indebtedness or Equity
Interests means the cash proceeds of such issuance, net of attorneys' fees,
accountants' fees, brokerage, consultant, underwriting and other fees and
expenses actually incurred in connection with such issuance, sale, conversion
or exchange and net of any taxes paid or payable as a result thereof by the
entity making such sale and (y) of an Asset Sale (including an Event of Loss)
means the aggregate amount of cash and Cash Equivalents received by the Company
and its Subsidiaries in respect of such Asset Sale less the sum of all fees,
commissions and other expenses incurred in connection with such Asset Sale
less, in the case of an Asset Sale only, the amount (estimated reasonably and
in good faith by the Company) of income, fran
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chise, sales and other applicable taxes required to be paid by the Company or
any of its Subsidiaries or distributable by the Company as a Permitted Tax
Distribution, in each case, within 12 months of consummating the Asset Sale, in
connection with such Asset Sale.
"Net Proceeds" means the aggregate Net Cash Proceeds and fair
market value of property and assets (valued at the fair market value thereof at
the time of receipt in good faith by the Company).
"Obligation" means any principal, premium or interest payment, or
monetary penalty, or damages, due by the Issuers or the Guarantors under the
terms of the Securities or this Indenture.
"Offer to Purchase" means any Change of Control Offer or Asset Sale
Offer.
"Offer to Purchase Price" means any Change of Control Offer Price
or Asset Sale Offer Price.
"Officer" means, with respect to any Person, the Chairman of the
Board, the President, any Vice President, the Chief Financial Officer, the
Treasurer or Assistant Treasurer, the Controller, or the Secretary or Assistant
Secretary of such Person.
"Officers' Certificate" means, with respect to the Issuers or any
Guarantor, a certificate signed by two Authorized Representatives of the
Issuers or such Guarantor and otherwise complying with the requirements of
Sections 12.4(1) and 12.5.
"Operating Assets" shall have the meaning given to it in the
Mortgage.
"Opinion of Counsel" means a written opinion from legal counsel to
the Issuers or the Guarantors reasonably acceptable to the Trustee and which
complies with the requirements of Sections 12.4 and 12.5. Unless otherwise
required by this Indenture, the counsel may be in-house counsel to the Issuers
or the Guarantors.
"Original Policy" shall have the meaning given to it in the
Mortgage.
"Outstanding Amount" of any Indebtedness at any time means the
principal amount outstanding of such Indebtedness at such time, unless such
Indebtedness was issued at a discount, in which case the "Outstanding Amount"
of such Indebtedness means the original issue price of such Indebtedness plus
the accretion to such time of the original issue discount, determined in
accordance with Generally Accepted Accounting Principles.
"Partners" means each of THCR Holdings and Plaza Holding or any
additional or substitute partners admitted under the Partnership Agreement so
long as (i) each is a partner under the Partnership Agreement, unless removed
as a partner in accordance with the Partnership Agreement and (ii) no Default
or Event of Default occurs as a result thereof.
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"Partnership Agreement" means the Amended and Restated Agreement of
Partnership of the Company, dated as of the Issue Date, as amended from time to
time in accordance with its terms.
"Paying Agent" shall have the meaning specified in Section 2.3.
"Permit" means any license (including, without limitation, all
Gaming Licenses), franchise, authorization, statement of compliance,
certificate of operation, certificate of occupancy and permit required for the
lawful ownership, occupancy, operation and use of all or a material portion of
either of the Casino Hotels, whether held by Plaza Associates, Taj Associates
or any other Person (which may be temporary or permanent) (including, without
limitation, those required for the use of either of the Casino Hotels as a
licensed casino facility), in accordance with all applicable Legal
Requirements.
"Permitted Holder" means Trump and the spouse and descendants of
Trump (including any related grantor trusts controlled by, and established and
maintained for the sole benefit of, Trump or such spouse or descendants), and
the estate of any of the foregoing, but no other Person.
"Permitted Indebtedness" means the following:
(a) the Company may incur Indebtedness to any Wholly-owned
Subsidiary Guarantor, and any Wholly-owned Subsidiary Guarantor may incur
Indebtedness to any other Wholly-owned Subsidiary Guarantor or to the Company,
provided, that, in the case of Indebtedness of the Company such obligations
shall be unsecured and expressly subordinated in right of payment to the
Company's Obligations pursuant to the Securities, and that the date of any
event that causes such Subsidiary Guarantor to no longer be a Wholly-owned
Subsidiary Guarantor shall be an Incurrence Date;
(b) the Super Puma Helicopter Lease, but only to the extent no
Services Fees are thereafter paid under the TPM Services Agreement; and
(c) Indebtedness listed on Exhibit I hereto and existing on the
Issue Date, after giving effect to the transactions contemplated by the "Merger
Transaction" as such term is defined in the Prospectus.
"Permitted Investment" means (a) Investments in any of the
Securities; (b) Cash Equivalents; (c) intercompany notes to the extent
permitted under clause (a) of the definition of "Permitted Indebtedness"; (d)
loans, advances or investments listed on Exhibit J hereto and existing on the
Issue Date; (e) any Investment in any Wholly-owned Subsidiary of the Company;
and (f) any Investment consisting of the extension of gaming credit to
customers consistent with industry practice in the ordinary course of business.
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"Permitted Leases" means the following:
(a) any Capitalized Lease Obligation of the Company or any of its
Subsidiaries incurred in accordance with Section 5.11;
(b) any lease of Plaza Associates or Taj Associates, as tenant or
subtenant, existing on the date of this Indenture and listed on a schedule
hereto, including any modifications, amendments, renewals or supplements
thereof, provided that the aggregate annual rent and other costs thereunder are
not increased thereby, except as such rent or costs may be increased during any
renewed lease term pursuant to the terms of such leases as they exist on the
date of this Indenture; and
(c) any operating leases of the Company or any of its Subsidiaries
other than the leases set forth above, provided that the aggregate average
annual rent and other payments required thereunder over the terms of such
leases shall not exceed $10.0 million.
"Permitted Liens" means:
(a) Liens listed on Exhibit K hereto and existing on the Issue
Date after giving effect to the "Merger Transaction" as such term is defined in
the Prospectus, and Liens securing Refinancing Indebtedness in respect of
secured Indebtedness existing on the Issue Date;
(b) the Lien of the Trustee as provided for in this Indenture and
in the Mortgage Documents;
(c) Indebtedness incurred in accordance with clause (d) of Section
5.11 may be secured by the assets acquired pursuant to the respective capital
lease (in the case of Capitalized Lease Obligations) or with the proceeds of
the respective F, F&E Financing Agreements, so long as such Liens do not extend
to any other assets;
(d) Indebtedness of the Company and the Guarantors incurred
pursuant to clause (e) of Section 5.11 (and refinancings thereof pursuant to
clause (e) of Section 5.11) may be secured by the assets of the Company and the
Guarantors, as applicable, provided, that the Securities are secured by the
assets securing such Indebtedness on a senior or an equal and ratable basis
pursuant to the terms of the Collateral Agency Agreement;
(e) Indebtedness of the Company, Plaza Associates and Taj
Associates incurred pursuant to clause (c) of Section 5.11 (and refinancings
thereof pursuant to clause (f) of Section 5.11) may be secured by the assets of
the Company, Plaza Associates or Taj Associates, as applicable, provided, that
the Securities are secured by the assets securing such Indebtedness on a senior
or an equal and ratable basis pursuant to the terms of the Collateral Agency
Agreement;
(f) any Lien arising by reason of (i) any judgment, decree or
order of any court, so long as such Lien is adequately bonded and any
appropriate legal proceedings which may have been duly initiated for the review
of such judgment, decree or order shall not have been
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finally terminated or the period within which such proceedings may be initiated
shall not have expired; (ii) security for payment of workmen's compensation or
other insurance; (iii) good faith deposits in connection with tenders, leases
and contracts (other than contracts for the payment of money); and (iv)
deposits to secure public or statutory obligations, or in lieu of surety or
appeal bonds;
(g) Liens for taxes, assessments or other governmental charges not
yet due or which are being contested in good faith and by appropriate
proceedings by the Company or any of its Subsidiaries if adequate reserves with
respect thereto are maintained on the books of the Company or any of its
Subsidiaries, as the case may be, in accordance with GAAP;
(h) statutory Liens of carriers, warehousemen, mechanics,
landlords, laborers, materialmen, repairmen or other like Liens arising by
operation of law in the ordinary course of business and consistent with
industry practices and Liens on deposits made to obtain the release of such
Liens if (i) the underlying obligations are not overdue for a period of more
than 60 days or (ii) such Liens are being contested in good faith and by
appropriate proceedings by the Company or any of its Subsidiaries and adequate
reserves with respect thereto are maintained on the books of the Company or any
of its Subsidiaries, as the case may be, in accordance with GAAP;
(i) easements, rights-of-way, zoning and similar restrictions and
other similar encumbrances or title defects, which, if they are incurred by the
Company or any of its Subsidiaries after it acquires the property subject
thereto, are incurred in the ordinary course of business and consistent with
industry practices which, in the aggregate, are not substantial in amount, and
which do not in any case materially detract from the value of the property
subject thereto (as such property is used or proposed to be used by the Company
or any of its Subsidiaries) or interfere with the ordinary conduct of the
business of the Company or any of its Subsidiaries, provided, that any such
Liens are not incurred in connection with any borrowing of money or any
commitment to loan any money or to extend any credit;
(j) Liens that secure Acquired Indebtedness (and refinancings
pursuant to clause (f) of Section 5.11), provided, in each case, that such
Liens do not secure any property or assets other than the property or asset so
acquired and were not put in place in connection with or in anticipation of
such acquisition, merger or consolidation;
(k) leases or subleases granted to other persons in the ordinary
course of business not materially interfering with the conduct of the business
of the Company or any of its Subsidiaries or materially detracting from the
value of the relative assets of the Company or such Subsidiary;
(l) Liens arising from precautionary Uniform Commercial Code
financing statement filings regarding operating leases entered into by the
Company or any of its Subsidiaries in the ordinary course of business; and
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(m) Liens on the Equity Interests of the Company or any of its
Subsidiaries to the extent required to be pledged for the benefit of holders of
the Senior Notes or of any Refinancing Indebtedness in respect thereof.
"Permitted Tax Distributions" means for each tax year that the
Company qualifies as a partnership or substantially similar pass-through entity
under the Code or any similar provision of state or local law, distributions of
Tax Amounts in respect of the jurisdictions in which the Company so qualifies
as a partnership or substantially similar pass-through entity; provided, that
(A) prior to any Permitted Tax Distribution a knowledgeable and duly authorized
officer of Funding shall certify, and counsel reasonably acceptable to the
Trustee shall opine, that the Company qualifies as a partnership or
substantially similar pass-through entity for federal income tax purposes and
under similar laws of the states in respect of which such distributions are
being made and (B) at the time of such distributions, the most recent audited
financial statements of the Company provide that the Company was treated as a
partnership for federal income tax purposes for the period of such financial
statements. Distributions of Tax Amounts may be made between the tenth and
twentieth day of each January (provided that payments in respect of estimated
state or local taxes due in January may instead, at the option of the Company,
be paid during the last five days of the immediately preceding December),
April, June and September, based upon the minimum estimated tax payments in
respect of Tax Amounts which would then be due and payable, and during the
tenth through twentieth day of April or within ten days of the reconciliation
described in the immediately succeeding sentence, with respect to any
additional tax payments owing in respect of the prior fiscal year. Within
sixty days of the Company's filing of the Internal Revenue Service Form 1065
for the applicable tax year, a reconciliation shall be made of the Permitted
Tax Distributions actually paid versus the amount permitted to be paid as
Permitted Tax Distributions based upon the final results of the applicable tax
year. In addition, prior to any Permitted Tax Distributions, each Partner
shall have entered into a binding agreement promptly to reimburse the Company
for any positive difference between the distributed amount and the Tax Amount
as finally determined; provided, however, that, if the Partners of the Company
do not promptly reimburse the Company for any positive difference between the
distributed amount and the Tax Amount, then the Permitted Tax Distributions
during the year in which such reimbursement should have been made shall be
reduced by the unreimbursed amount until the Permitted Tax Distributions for
such year are zero and, thereafter, Permitted Tax Distributions shall be
reduced in the succeeding years until the unreimbursed amount not used to
reduce Permitted Tax Distributions is zero.
"Person" or "person" means any individual, corporation, limited or
general partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Plaza Associates" shall mean Trump Plaza Associates, a
Wholly-owned Subsidiary of the Company.
"Plaza Holding" shall mean Trump Plaza Holding, Inc., a Delaware
corporation.
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"Pleasantville Warehouse" means that warehouse and office facility
owned by Taj associates and located on the premises known as Lot 15 Block 190
on the official tax maps of Pleasantville, New Jersey and Lot 9 Block 801 of
the official tax maps of the Township of Egg Harbor, New Jersey, containing
approximately 23,000 square feet of space.
"Pledge Agreements" means collectively the several pledge
agreements in favor of the Collateral Agent and the Company or any of its
Subsidiaries as the case may be which are required to be executed and delivered
under Section 5.22, substantially in the form of Exhibits F and G hereto, as
they may be amended or supplemented from time to time in accordance with the
terms thereof. Such pledge agreements shall be dated as of the Issue Date or
such subsequent date as such new pledge agreement may be entered into as
required from time to time in accordance with Section 5.22 of this Indenture,
and shall be executed in favor of the Collateral Agent.
"Principal" or "principal" of any Indebtedness (including the
Securities) means the principal of such Indebtedness plus any applicable
premium, if any, on such Indebtedness.
"Property" or "property" means any right or interest in or to
property or assets of any kind whatsoever, whether real, personal or mixed and
whether tangible, intangible, contingent, indirect or direct.
"Prospectus" shall refer to the prospectus, dated April ___, 1996,
in connection with the offering of the Securities, as the same may be amended
or supplemented prior to the Issue Date.
"Purchase Price" means any Change of Control Purchase Price or
Asset Sale Offer Price.
"Qualified Capital Stock" means any Equity Interest of the Company
that is not Disqualified Capital Stock.
"Qualified Exchange" means (a) any repurchase, redemption or other
acquisition or retirement of any shares of any class of Equity Interests of the
Company on or after the Issue Date in exchange for (including any such exchange
pursuant to the exercise of a conversion right or privilege in connection with
which cash is paid in lieu of the issuance of fractional shares, interests or
scrip), or out of the Net Cash Proceeds of a substantially concurrent issuance
and sale (other than to a Subsidiary of the Company) of, Qualified Capital
Stock of the Company; or (b) the redemption, repayment, defeasance, repurchase
or other acquisition or retirement for value of any Indebtedness of, or
guaranteed by, the Company on or after the Issue Date in exchange for, or out
of the Net Cash Proceeds of a substantially concurrent issuance and sale of,
Qualified Equity Interests of the Company.
"Realty Warehouse" means that warehouse facility owned by Taj
Associates located on the premises known as Lots 6, 22, 39, 58, 68, 85 in
Block 119 and Lots 23, 33, 44,
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58, 65 and 66 in Block 120, on the official tax maps of Atlantic City, New
Jersey, containing approximately 34,500 square feet of space.
"Record Date" means a Record Date specified in the Securities
whether or not such Record Date is a Business Day.
"Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to Article III of
this Indenture and Paragraph 5 in the applicable form of Security.
"Redemption Price," when used with respect to any Security to be
redeemed, means the redemption price for such redemption set forth in Paragraph
5 in the applicable form of Security.
"Reference Period" with regard to any person means the four full
fiscal quarters (or such lesser period during which such person has been in
existence) ended immediately preceding any date upon which any determination is
to be made pursuant to the terms of the Securities or this Indenture.
"Refinancing Indebtedness" means the Indebtedness or Disqualified
Capital Stock issued in exchange for, or the proceeds from the issuance and
sale of which are used substantially concurrently to repay, redeem, defease,
refund, refinance, discharge or otherwise retire for value, in whole or in
part, or constituting an amendment, modification or supplement to, or a
deferral or renewal of (collectively, a "Refinancing"), any Indebtedness or
Disqualified Capital Stock in a principal amount or, in the case of
Disqualified Capital Stock, liquidation preference, not to exceed (after
deduction of reasonable and customary fees and expenses incurred in connection
with the Refinancing) the lesser of (i) the principal amount or, in the case of
Disqualified Capital Stock, liquidation preference, of the Indebtedness or
Disqualified Capital Stock so Refinanced and (ii) if such Indebtedness being
Refinanced was issued with an original issue discount, the accreted value
thereof (as determined in accordance with GAAP) at the time of such
Refinancing; provided, that (A) such Refinancing Indebtedness of any Subsidiary
shall only be used to Refinance outstanding Indebtedness or Disqualified
Capital Stock of such Subsidiary, (B) Refinancing Indebtedness shall (x) not
have an Average Life shorter than the Indebtedness or Disqualified Capital
Stock to be so refinanced at the time of such Refinancing and (y) in all
respects, be no less subordinated or junior, if applicable, to the rights of
Holders than was the Indebtedness or Disqualified Capital Stock to be so
refinanced, (C) such Refinancing Indebtedness shall be secured only by the
assets (if any) securing the Indebtedness to be so refinanced and (D) such
Refinancing Indebtedness shall have no installment of principal (or redemption
payment) scheduled to come due earlier than the scheduled maturity of the
corresponding installment of principal of the Indebtedness or Disqualified
Capital Stock to be so refinanced which was scheduled to come due prior to the
Stated Maturity.
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"Refinancing Lien" shall have the meaning given to it in the
Mortgage.
"Registrar" shall have the meaning specified in Section 2.3.
"Related Business" means the business conducted (or proposed to be
conducted) by Plaza Associates or Taj Associates as of the Issue Date and any
and all businesses that in good faith judgment of the Board of Directors of
Funding are related businesses in Atlantic County, New Jersey or are related to
the Casino Hotels.
"Required Regulatory Redemption" means a redemption by the Issuers
of any Holder's Securities pursuant to, and in accordance with, any order of
any Governmental Authority with appropriate jurisdiction and authority relating
to a Gaming License, or to the extent necessary in the reasonable, good faith
judgment of the Issuers to prevent the loss, failure to obtain or material
impairment or to secure the reinstatement of, any material Gaming License,
where such redemption or acquisition is required because the Holder or
beneficial owner of such Security is required to be found suitable or to
otherwise qualify under any gaming laws and is not found suitable or so
qualified within a reasonable period of time.
"Restricted Funds Account" means a segregated bank account of the
Company or any of its Subsidiaries subject to the Lien of the Collateral Agent
under the Collateral Agency Agreement, the proceeds of which are invested in
cash or Cash Equivalents pending any use permitted by Section 5.15.
"Restricted Investment" means, in one or a series of related
transactions, any Investment, other than investments in Cash Equivalents.
"Restricted Payment" means, with respect to any person, (a) the
declaration or payment of any dividend or other distribution in respect of
Equity Interests of such person or any Subsidiary or parent of such person, (b)
any payment on account of the purchase, redemption or other acquisition or
retirement for value of Equity Interests of such person or any Subsidiary or
parent of such person, (c) any purchase, redemption, or other acquisition or
retirement for value of, any payment in respect of any amendment of the terms
of or any defeasance of, any Indebtedness of, or guaranteed by, such Person,
any parent of such Person or any Subsidiary prior to the scheduled maturity,
any scheduled repayment of principal, or scheduled sinking fund payment, as the
case may be, of such Indebtedness (including any payment in respect of any
amendment of the terms of any such Indebtedness, which amendment is sought in
connection with any such acquisition of such Indebtedness or seeks to shorten
any such due date), (d) in connection with the designation of a Person as an
Unrestricted Subsidiary, a Restricted Payment shall be deemed to exist in the
amount provided in the definition of Unrestricted Subsidiary contained herein
and (e) any Restricted Investment by such person; provided, that the term
"Restricted Payment" does not include (i) any dividend, distribution or other
payment on or with respect to Equity Interests of an issuer to the extent
payable solely in shares of Qualified Capital Stock of such issuer, or (ii) any
dividend, distribution or other payment to the Company or to any of its
Wholly-owned Subsidiaries or any Guarantor.
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"SEC" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or if at any time after the
execution of this Indenture such SEC is not existing and performing the duties
now assigned to it under the Trust Indenture Act, then the body performing such
duties at such time.
"Securities" means the First Mortgage Notes due 2006, together with
the Guaranties thereof, as amended or modified from time to time in accordance
with the terms hereof, issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Securityholder." See "Holder."
"Senior Notes" means the 15 1/2% Senior Secured Notes due 2005 of
THCR Holdings and Trump Hotels & Casino Resorts Funding, Inc.
"Services Fee" means, for any period, the amount of the fee payable
by Plaza Associates under the TPM Services Agreement for such period.
"Significant Subsidiary" shall have the meaning provided under
Regulation S-X of the Securities Act, as in effect on the Issue Date.
"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 2.12.
"Stated Maturity" when used with respect to any Security means
April __, 2006 and when used with respect to any other Indebtedness means the
dates specified in such other Indebtedness as the fixed date on which the
principal of such Indebtedness is due and payable.
"Subsidiary" of any Person means (i) a corporation a majority of
whose Voting Stock is at the time, directly or indirectly, owned by such
Person, by such Person and one or more Subsidiaries of such Person or by one or
more Subsidiaries of such Person, (ii) any other Person (other than a
corporation) in which such Person, one or more Subsidiaries of such Person, or
such Person and one or more Subsidiaries of such Person, directly or
indirectly, at the date of determination thereof has a majority ownership
interest, or (iii) a partnership in which such Person or a Subsidiary of such
Person is, at the time, a general partner and has a majority ownership
interest. Notwithstanding the foregoing, no Unrestricted Subsidiary shall be
considered a Subsidiary of the Company or any of its other Subsidiaries for
purposes of the Securities and this Indenture. Unless the context otherwise
requires, all references herein to "Subsidiaries" shall be to the direct and
indirect to Subsidiaries of the Company for purposes of the Securities and this
Indenture.
"Super Puma Helicopter Lease" means that certain Aircraft Lease
Agreement, dated as of March 9, 1992, between The CIT/Group Equipment
Financing, Inc., as Lessor, and Trump Plaza Management Corp., as Lessee, as it
may be amended to modify the expiration date
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to the end of the last renewal period currently contained therein, together
with all the obligations of the parties thereunder and related thereto.
"Superior Mortgages" shall have the meaning given to it in the
Mortgage.
"Taj Associates" means Trump Taj Mahal Associates, a Wholly-owned
Subsidiary of the Company.
"Tax Funding" means Trump Taj Mahal Funding, Inc., a Delaware
corporation.
"Tangible Personal Property" shall have the meaning given to it in
the Mortgage.
"Tax Amounts" with respect to any year means an amount no greater
than (a) the higher of (i) the product of (A) the taxable income of the Company
for such year as determined in good faith by the Board of Directors of Funding
and (B) the Tax Percentage and (ii) the product of (A) the alternative minimum
taxable income attributable to the Company for such year as determined in good
faith by the Board of Directors of Funding and (B) the Tax Percentage, reduced
by (b) to the extent not previously taken into account, any income tax benefit
attributable to the Company which could be realized (without regard to the
actual realization) by its Partners in the current or any prior taxable year,
or portion thereof, commencing on or after the Issue Date (including any tax
losses or tax credits), computed at the applicable Tax Percentage for the year
that such benefit is taken into account for purposes of this computation. Any
part of the Tax Amount not distributed in respect of a tax period for which it
is calculated shall be available for distribution in subsequent tax periods.
"Tax Percentage" means the highest, aggregate effective marginal
rate of federal, state and local income tax or, when applicable, alternative
minimum tax, to which any Partner of the Company would be subject in the
relevant year of determination (as certified to the Trustee by a nationally
recognized tax accounting firm); provided, however, that in no event shall the
Tax Percentage be greater than the sum of (x) the highest, aggregate effective
marginal rate of federal, state, and local income tax or, when applicable,
alternative minimum tax, to which the Company would have been subject if it
were a C corporation, for federal income tax purposes, and (y) 5 percentage
points. If any Partner or Upper Tier Owner of the Company is an S corporation,
partnership or similar pass-through entity for federal income tax purposes, the
Tax Percentage shall be computed based upon the tax rates applicable to the
shareholder or partner of such Partner or Upper Tier Owner, as the case may be.
"THCR" means Trump Hotels & Casino Resorts, Inc., a Delaware
corporation.
"THCR Holdings" means Trump Hotels & Casino Resorts Holdings, L.P.,
a Delaware limited partnership.
"TPM Services Agreement" means the Amended and Restated Services
Agreement, dated June 24, 1993, between Plaza Associates and Trump Plaza
Management Corp.
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"Trump" means Donald J. Trump.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of
1939, as amended.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"Trust Officer" means any officer within the corporate trust
department (or any successor group) of the Trustee including any vice
president, assistant vice president, secretary, assistant secretary or any
other officer or assistant officer of the Trustee customarily performing
functions similar to those performed by the persons who at that time shall be
such officers, and also means, with respect to a particular corporate trust
matter, any other officer of the corporate trust department (or any successor
group) of the Trustee to whom such trust matter is referred because of his
knowledge of and familiarity with the particular subject.
"TTMC" means The Trump Taj Mahal Corporation, a Wholly-owned
Subsidiary of the Company.
"Unrestricted Subsidiary" means any Subsidiary of the Company that,
at the time of determination, shall be an Unrestricted Subsidiary (as
designated by the Company, as provided below) provided that such Subsidiary
does not and shall not engage, to any substantial extent, in any line or lines
of business activity other than a Related Business. The Company may designate
any Person (other than Plaza Associates, Taj Associates, TTMC, Funding and any
direct or indirect holder of Equity Interest therein) to be an Unrestricted
Subsidiary if (a) no Default or Event of Default is existing or will occur as a
consequence thereof, (b) either (x) such Subsidiary, at the time of designation
thereof, has no assets, (y) such Subsidiary is designated an "Unrestricted
Subsidiary" at the time of Acquisition by the Company, in the case of
Subsidiaries acquired after the Issue Date or (z) immediately after giving
effect to such designation, on a pro forma basis, the Company could incur at
least $1.00 of additional Indebtedness pursuant to the Debt Incurrence Ratio in
paragraph (a) of Section 5.11, and (c) such Subsidiary does not own any Equity
Interests in, or own or hold any Lien on any property of, the Company or any
other Subsidiary (excluding other Unrestricted Subsidiaries). Any such
designation also constitutes a Restricted Payment in an amount equal to the sum
of (x) net assets of such Subsidiary at the time of the designation, unless in
the case of this clause (x) the designation is made pursuant to clause (b)(y)
of the first sentence of this definition, in which case the amount of
consideration paid by the Company and its Subsidiaries to effect such
Acquisition (excluding Qualified Equity Interests of THCR issued in connection
therewith) shall be the amount for purpose of this clause (x), and (y) the
maximum amount of Guaranteed Debt of the Company and its Subsidiaries in
respect of the designated Subsidiary which is to be outstanding immediately
after such designation, in each case for purposes of Section 5.3. Subject to
the foregoing, the Company may designate any Unrestricted Subsidiary to be a
Subsidiary, provided, that (i) no Default or Event of Default is existing or
will occur as a consequence thereof and (ii) immediately after giving effect to
such designation, on a pro forma basis, the Company could incur at least $1.00
of Indebtedness
26
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pursuant to the Debt Incurrence Ratio test in paragraph (a) of Section 5.11.
Each such designation shall be evidenced by filing with the Trustee a certified
copy of the resolution giving effect to such designation and an officers'
certificate certifying that such designation complied with the foregoing
conditions.
"Upper Tier Owner" means (i) if a Partner is an S corporation,
partnership or similar pass-through entity for federal income tax purposes, any
shareholder or partner of such Partner and (ii) if any such shareholder or
partner referred to in (i) above is an S corporation, partnership or similar
pass-though entity for federal income tax purposes, any shareholder or partner
of such person.
"U.S. Government Obligations" means direct non-callable obligations
of, or noncallable obligations guaranteed by, the United States of America for
the payment of which obligation or guarantee the full faith and credit of the
United States of America is pledged.
"U.S. Legal Tender" means such coin or currency of the United
States of America as at the time of payment is legal tender for the payment of
public and private debts.
"Voting Stock" with respect to any Person means all classes of
Equity Interests of such Person then outstanding and normally entitled to vote
in elections of directors of such Person.
"Wholly-owned Subsidiary" means a Subsidiary all the Equity
Interests of which are owned by the Company or another Wholly-owned Subsidiary
of the Company.
"Working Capital Facility" shall mean any credit facility available
to the Company or any of its Subsidiaries the proceeds of which are used for
working capital or other general corporate purposes.
SECTION 1.2 Incorporation by Reference of TIA.
---------------------------------
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture securityholder" means a Holder or a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
27
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"obligor" on the indenture securities means the Issuers, each
Guarantor and any other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein, have the meanings assigned to them thereby.
SECTION 1.3 Rules of Construction.
---------------------
Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and words in
the plural include the singular;
(v) provisions apply to successive events and transactions;
(vi) "herein," "hereof" and other words of similar import
refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision; and
(vii) references to Sections or Articles means reference to
such Section or Article in this Indenture, unless stated otherwise.
ARTICLE II
THE SECURITIES
SECTION 2.1 Form and Dating.
---------------
The Securities and the Trustee's certificate of authentication, in
respect thereof, shall be substantially in the form of Exhibit A hereto,
---------
and each First Mortgage Note shall be endorsed with the Guaranty substantially
in the form of Exhibit B hereto, each of which Exhibits is incorporated
---------
into and made a part of this Indenture. The Securities may have notations,
legends or endorsements required by law, stock exchange rule or usage. The
Issuers shall approve the form of the Securities and any notation, legend or
endorsement on them. Any such notations, legends or endorsements not contained
in the form of First Mortgage Note attached as
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Exhibit A hereto or the form of Guaranty attached as Exhibit B hereto
---------
shall be delivered in writing to the Trustee. Each Security shall be dated the
date of its authentication.
The terms and provisions contained in the form of Securities shall
constitute, and are hereby expressly made, a part of this Indenture and, to the
extent applicable, the Issuers, the Guarantors and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
SECTION 2.2 Execution and Authentication.
----------------------------
Two Authorized Representatives shall sign, or one Authorized
Representative shall sign and one Authorized Representative shall attest to,
the Securities for the Issuers by manual or facsimile signature. The Issuers'
seals shall be impressed, affixed, imprinted, or reproduced on the Securities
and may be in facsimile form.
If an Authorized Representative whose signature is on a Security
was an Authorized Representative at the time of such execution but no longer
holds that office at the time the Trustee authenticates the Security, the
Security shall be valid nevertheless and the Issuers shall nevertheless be
bound by the terms of the Securities and this Indenture.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security, but
such signature shall be conclusive evidence that the Security has been
authenticated pursuant to the terms of this Indenture.
The Trustee shall authenticate Securities for original issue in the
aggregate principal amount of up to $1,100,000,000 upon a written order of the
Issuers in the form of an Officers' Certificate. The Officers' Certificate
shall specify the amount of Securities to be authenticated and the date on
which the Securities are to be authenticated. The aggregate principal amount
of Securities outstanding at any time may not exceed $1,100,000,000, except as
provided in Section 2.7. Upon the written order of the Issuers in the form of
an Officers' Certificate, the Trustee shall authenticate Securities in
substitution of Securities originally issued to reflect any name change of the
Issuers.
The Trustee may appoint an authenticating agent acceptable to the
Issuers to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Issuers, any Affiliate of the Issuers
or any of their respective Subsidiaries.
Securities shall be issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof.
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SECTION 2.3 Registrar and Paying Agent.
--------------------------
The Issuers shall maintain an office or agency in the Borough of
Manhattan, The City of New York, where Securities may be presented for
registration of transfer or for exchange ("Registrar") and an office or agency
in the Borough of Manhattan, The City of New York where Securities may be
presented for payment ("Paying Agent") and an office or agency where notices
and demands to or upon the Issuers in respect of the Securities may be served.
Unless a Default or Event of Default has occurred and is continuing, the
Issuers or any of their Subsidiaries may act as Registrar or Paying Agent,
except that, for the purposes of Articles III, IX, XI and Section 5.15 and as
otherwise specified in this Indenture, neither the Issuers, any Guarantor nor
any other obligor on the Securities nor any Affiliate of the Issuers, any
Guarantor or such other obligor shall act as Paying Agent. The Registrar shall
keep a register of the Securities and of their transfer and exchange. The
Issuers may have one or more co-Registrars and one or more additional Paying
Agents. The term "Paying Agent" includes any additional Paying Agent. The
Issuers hereby initially appoint the Trustee as Registrar and Paying Agent, and
the Trustee hereby initially agrees so to act until such time as the Trustee
has resigned or a successor has been appointed. The Company may change any
Registrar, Paying Agent or co-Registrar without notice to any Holder.
The Issuers shall enter into an appropriate written agency
agreement with any Agent not a party to this Indenture, which agreement shall
implement the provisions of this Indenture that relate to such Agent. The
Issuers shall promptly notify the Trustee in writing of the name and address of
any such Agent. If the Issuers fail to maintain a Registrar or Paying Agent,
the Trustee shall act as such.
SECTION 2.4 Paying Agent to Hold Assets in Trust.
------------------------------------
The Issuers shall require each Paying Agent other than the Trustee
to agree in writing that each Paying Agent shall hold in trust for the benefit
of Holders or the Trustee all assets held by the Paying Agent for the payment
of principal of, premium, if any, or interest on, the Securities (whether such
assets have been distributed to it by the Issuers, a Guarantor or any other
obligor on the Securities), and shall notify the Trustee in writing of any
Default by the Issuers, a Guarantor or any other obligor on the Securities in
making any such payment. If the Issuers, a Guarantor, any other obligor on the
Securities or a Subsidiary of the Issuers acts as Paying Agent, it shall
segregate such assets and hold them as a separate trust fund for the benefit of
the Holders or the Trustee. The Issuers at any time may require a Paying Agent
to distribute all assets held by it to the Trustee and account for any assets
disbursed and the Trustee may at any time during the continuance of any payment
Default, upon written request to a Paying Agent, require such Paying Agent to
distribute all assets held by it to the Trustee and to account for any assets
distributed. Upon distribution to the Trustee of all assets that shall have
been delivered by the Issuers or any Guarantor to the Paying Agent, the Paying
Agent (if other than the Issuers, a Guarantor or any other obligor on the
Securities) shall have no further liability for such assets.
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SECTION 2.5 Securityholder Lists.
--------------------
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Registrar, the Issuers shall furnish to the
Trustee on or before the third Business Day preceding each Interest Payment
Date and at such other times as the Trustee may request in writing a list in
such form and as of such date as the Trustee reasonably may require of the
names and addresses of Holders. The Trustee, the Registrar and the Issuers
shall provide a current securityholder list to any Gaming Authority upon
demand.
SECTION 2.6 Transfer and Exchange.
---------------------
When Securities are presented to the Registrar or a co-Registrar
with a request to register the transfer of such Securities or to exchange such
Securities for an equal principal amount of Securities of other authorized
denominations, the Registrar or co-Registrar shall register the transfer or
make the exchange as requested if its reasonable requirements for such
transaction are met; provided, however, that the Securities surrendered for
transfer or exchange shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Issuers and the
Registrar or co-Registrar, duly executed by the Holder thereof or his attorney
duly authorized in writing. To permit registrations of transfers and
exchanges, the Issuers and the Guarantors shall execute and the Trustee shall
authenticate Securities at the Registrar's or co-Registrar's request. No
service charge shall be made for any registration of transfer or exchange, but
the Issuers may require payment of a sum sufficient to cover any transfer tax,
assessments, or similar governmental charge payable in connection therewith
(other than any such transfer taxes, assessments, or similar governmental
charge payable upon exchanges or transfers pursuant to Section 2.2, 2.10, 3.5,
5.15, 10.5, or 11.1). Except for a Required Regulatory Redemption pursuant to
Section 3.2 or an order of any Gaming Authority, the Registrar or co-Registrar
shall not be required to register the transfer of or exchange of (a) any
Security selected for redemption in whole or in part pursuant to Article Three,
except the unredeemed portion of any Security being redeemed in part, or (b)
any Security for a period beginning 15 Business Days before the mailing of a
notice of an offer to repurchase pursuant to Sections 5.15 or of a notice to
redeem Securities pursuant to Article III and ending at the close of business
on the day of such mailing.
SECTION 2.7 Replacement Securities.
----------------------
If a mutilated Security is surrendered to the Trustee or if the
Holder of a Security claims and submits an affidavit or other evidence,
satisfactory to the Trustee, to the Trustee to the effect that the Security has
been lost, destroyed or wrongfully taken, the Issuers shall issue, the
Guarantors shall endorse, and the Trustee shall authenticate a replacement
Security if the Trustee's requirements are met. If required by the Trustee or
the Issuers, such Holder must provide an indemnity bond or other indemnity,
sufficient in the judgment of both the Issuers and the Trustee, to protect the
Issuers, the Guarantors, the Trustee or any Agent from any loss which any of
them may suffer if a Security is replaced. The Issuers may charge such Holder
for its reasonable, out-of-pocket expenses in replacing a Security.
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Every replacement Security is an additional obligation of the
Issuers, and, to the extent of the Guaranty, the Guarantors.
SECTION 2.8 Outstanding Securities.
----------------------
Securities outstanding at any time are all the Securities that have
been authenticated by the Trustee except those cancelled by it, those delivered
to it for cancellation and those described in this Section 2.8 as not
outstanding. A Security does not cease to be outstanding because an obligor or
an Affiliate of the Issuers holds the Security, except as provided in Section
2.9.
If a Security is replaced pursuant to Section 2.7 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser. A mutilated Security ceases to be
outstanding upon surrender of such Security and replacement thereof pursuant to
Section 2.7.
If on a Redemption Date or the Maturity Date the Paying Agent
(other than the Issuers, the Guarantors (or any other obligor on the
Securities) or an Affiliate of the Issuers or any Guarantor (or such other
obligor)) holds U.S. Legal Tender or U.S. Government Obligations sufficient to
pay all of the principal and interest due on the Securities payable on that
date and payment of the Securities called for redemption is not otherwise
prohibited, then on and after that date such Securities cease to be outstanding
and interest on them ceases to accrue unless any such obligor defaults in its
obligations with respect thereto.
SECTION 2.9 Treasury Securities.
-------------------
In determining whether the Holders of the required principal amount
of Securities have concurred in any direction, amendment, supplement, waiver or
consent, Securities owned by the Issuers, any Guarantor or any other obligor on
the Securities and Affiliates of the Issuers, shall be disregarded, except
that, for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, amendment, supplement, waiver or consent, only
Securities that the Trustee knows or has reason to know are so owned shall be
disregarded.
SECTION 2.10 Temporary Securities.
--------------------
Until definitive Securities are ready for delivery, the Issuers may
prepare, the Guarantors shall endorse and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form
of definitive Securities but may have variations that the Issuers reasonably
and in good faith consider appropriate for temporary Securities. Without
unreasonable delay, the Issuers shall prepare, the Guarantors shall endorse and
the Trustee shall authenticate definitive Securities in exchange for temporary
Securities. Until so exchanged, the temporary Securities shall in all respects
be entitled to the same benefits under this Indenture as permanent Securities
authenticated and delivered hereunder.
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SECTION 2.11 Cancellation.
------------
The Issuers at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent
(other than the Issuers or any Guarantor (or any other obligor on the
Securities) or an Affiliate of the Issuers or any Guarantor (or such other
obligor)), and no one else, shall cancel and, at the written direction of the
Issuers, shall dispose of all Securities surrendered for transfer, exchange,
payment or cancellation. Subject to Section 2.7, the Issuers may not issue new
Securities to replace Securities they have paid or delivered to the Trustee for
cancellation. No Securities shall be authenticated in lieu of or in exchange
for any Securities cancelled as provided in this Section 2.11, except as
expressly permitted in the form of Securities and as permitted by this
Indenture.
SECTION 2.12 Defaulted Interest.
------------------
If the Issuers default in a payment of interest on the Securities,
they shall pay the defaulted interest, plus (to the extent lawful) interest on
the defaulted interest, to the persons who are Holders on a Record Date (or at
the Issuers' option a subsequent special record date) which date shall be the
fifteenth day next preceding the date fixed by the Issuers for the payment of
defaulted interest, whether or not such day is a Business Day, unless the
Trustee fixes another record date. At least 15 days before the subsequent
special record date, the Issuers shall mail to each Holder with a copy to the
Trustee a notice that states the subsequent special record date, the payment
date and the amount of defaulted interest, and interest payable on such
defaulted interest, if any, to be paid.
ARTICLE III
REDEMPTION
SECTION 3.1 Right of Redemption.
-------------------
Redemption of Securities shall be made only in accordance with this
Article III. At their election, the Issuers may redeem the Securities in whole
or in part, at any time on or after April __, 2001, at the Redemption Prices
specified under the caption "Redemption" in the Form of Security attached as
Exhibit A hereto, plus accrued and unpaid interest to the applicable
- ---------
Redemption Date. Except as provided in this paragraph, Section 3.2 and
paragraph 5 of the Securities, the Securities may not otherwise be redeemed at
the option of the Issuers.
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SECTION 3.2 Redemption Pursuant to Applicable Laws.
----
Notwithstanding the provisions of this Indenture, if the CCC does
not waive the qualification requirements as to any Securityholder (whether the
record owner or beneficial owner) and requires that such Securityholder be
qualified under the Casino Control Act, then, in such event, such
Securityholder must qualify under the Casino Control Act. If a Securityholder
does not so qualify, the Securityholder must dispose of its interest in the
Securities, within 30 days after the Issuers' receipt of notice of such finding
(or within such earlier date as the CCC may require), or the Issuers may redeem
such Securities in whole or in part, pursuant to, and in accordance with, a
Required Regulatory Redemption. Notwithstanding any other provision of this
Indenture, the Securities shall also be redeemable at any time pursuant to, and
in accordance with, a Required Regulatory Redemption. If the Issuers require
the redemption of any Security pursuant to this Section 3.2, then the
Redemption Price shall be the principal amount thereof, plus accrued and unpaid
interest to the Redemption Date (or such lesser amount as may be required by
applicable law or by order of any Gaming Authority). The Issuers shall tender
the Redemption Price, plus accrued and unpaid interest to the Redemption Date,
to the Trustee no less than 30 and no more than 60 days after the Issuers give
the Securityholder or owner of a beneficial or voting interest written notice
of redemption or such earlier date as may be required by applicable law. The
Issuers shall notify the Trustee of any disposition or redemption required
under this Section 3.2, and upon receipt of such notice, the Trustee shall not
accord any rights or privileges under this Indenture or any Security to any
Securityholder or owner of a beneficial or voting interest who is required to
dispose of any Security or tender it for redemption, except to pay the
Redemption Price, plus accrued and unpaid interest to the Redemption Date, upon
tender of such Security.
SECTION 3.3 Notices to Trustee.
------------------
If the Issuers elect to redeem Securities pursuant to Article III
(including, without limitation, Section 3.2), they shall notify the Trustee in
writing of the date on which the applicable Securities are to be redeemed
("Redemption Date") and the principal amount thereof to be redeemed and whether
they want the Trustee to give notice of redemption to the Holders.
The Company shall give each notice to the Trustee provided for in
this Section 3.3 at least 30 days before the Redemption Date (unless a shorter
notice shall be required by applicable law or by order of any Gaming
Authority). Any such notice may be cancelled at any time prior to notice of
such redemption being mailed to any Securityholder and shall thereby be void
and of no effect.
SECTION 3.4 Selection of Securities to Be Redeemed.
--------------------------------------
If less than all of the Securities are to be redeemed pursuant to
the first paragraph of Paragraph 5 thereof, the Trustee shall, if applicable,
select from among such Securities to be redeemed pro rata or by lot or by such
other method as the Trustee shall determine to be fair and appropriate and in
such manner as complies with any applicable legal and stock exchange
requirements.
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The Trustee shall make the selection from the Securities
outstanding and not previously called for redemption and shall promptly notify
the Issuers in writing of the Securities selected for redemption and, in the
case of any Security selected for partial redemption, the principal amount
thereof to be redeemed. Securities in denominations of $1,000 may be redeemed
only in whole. The Trustee may select for redemption portions (equal to $1,000
or any integral multiple thereof) of the principal of Securities that have
denominations larger than $1,000. Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called
for redemption.
SECTION 3.5 Notice of Redemption.
--------------------
At least 30 days but not more than 60 days before each Redemption
Date (unless another notice period shall be required by applicable laws or by
order of any Gaming Authority), the Issuers shall mail a notice of redemption
by first class mail, postage prepaid, to each Holder whose Securities are to be
redeemed (unless a shorter notice period shall be required by applicable law)
to such Holder's last address as then shown upon the First Mortgage Note
Register. At the Issuers' request, the Trustee shall give the notice of
redemption in the Issuers' name and at the Issuers' expense. Each notice for
redemption shall identify the Securities to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price, plus the amount of accrued and unpaid
interest to be paid upon such redemption;
(3) the name, address and telephone number of the Paying Agent;
(4) that Securities called for redemption must be surrendered to
the Paying Agent at the address specified in such notice to collect the
Redemption Price;
(5) that, unless (a) the Issuers default in their obligation to
deposit U.S. Legal Tender with the Paying Agent in accordance with Section 3.7
or (b) such redemption payment is prevented for any reason, interest on
Securities called for redemption ceases to accrue on and after the Redemption
Date and the only remaining right of the Holders of such Securities is to
receive payment of the Redemption Price, plus accrued and unpaid interest to
the Redemption Date, upon surrender to the Paying Agent of the Securities
called for redemption and to be redeemed;
(6) if any Security is being redeemed in part, the portion of the
principal amount, equal to $1,000 or any integral multiple thereof, of such
Security to be redeemed and that, after the Redemption Date, and upon surrender
of such Security, a new Security or Securities in aggregate principal amount
equal to the unredeemed portion thereof will be issued;
35
<PAGE>
(7) if less than all the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount of such Securities to be
redeemed;
(8) the CUSIP number of the Securities to be redeemed;
(9) in the case of a Required Regulatory Redemption, the
circumstances pursuant to which such Required Regulatory Redemption is being
effected; and
(10) that the notice is being sent pursuant to this Section 3.5
and pursuant to the redemption provisions of Paragraph 5 of the Securities.
SECTION 3.6 Effect of Notice of Redemption.
------------------------------
Once notice of redemption is mailed in accordance with Section 3.5,
Securities called for redemption become due and payable on the Redemption Date
and at the Redemption Price, plus accrued and unpaid interest to the Redemption
Date. Upon surrender to the Trustee or Paying Agent, such Securities called
for redemption shall be paid at the Redemption Price, plus accrued and unpaid
interest to the Redemption Date; provided that if the Redemption Date is after
a regular Record Date and on or prior to the corresponding Interest Payment
Date, the accrued interest constituting part of the Redemption Price shall be
payable to the Holder of the redeemed Securities registered on the relevant
Record Date; and provided, further, that if a Redemption Date is a Legal
Holiday, payment shall be made on the next succeeding Business Day and no
interest shall accrue for the period from such Redemption Date to such
succeeding Business Day.
SECTION 3.7 Deposit of Redemption Price.
---------------------------
On or before the Redemption Date, the Issuers shall deposit with
the Paying Agent (other than the Issuers, any of the Guarantors (or any other
obligor on the Securities) or an Affiliate of the Issuers, or any of the
Guarantors or any other obligor on the Securities) U.S. Legal Tender sufficient
to pay the Redemption Price, plus accrued and unpaid interest to the Redemption
Date, of all Securities to be redeemed on such Redemption Date (other than
Securities or portions thereof called for redemption on that date that have
been delivered by the Company to the Trustee for cancellation). The Paying
Agent shall promptly return to the Issuers any U.S. Legal Tender so deposited
which is not required for that purpose upon the written request of the Issuers.
If the Issuers comply with the preceding paragraph and the other
provisions of this Article III and payment of the Securities called for
redemption is not prevented for any reason, interest on the Securities to be
redeemed will cease to accrue on the applicable Redemption Date, whether or not
such Securities are presented for payment. Notwithstanding anything herein to
the contrary, if any Security surrendered for redemption in the manner provided
in the Securities shall not be so paid upon surrender for redemption because of
the failure of the Issuers to comply with the preceding paragraph and the other
provisions of this Article III, interest shall
36
<PAGE>
continue to accrue and be paid from and including the Redemption Date until
such payment is made on the unpaid principal, and, to the extent lawful, on any
interest not paid on such unpaid principal, in each case at the rate and in the
manner provided in Section 5.1 hereof and the Securities.
SECTION 3.8 Securities Redeemed in Part.
---------------------------
Upon surrender of a Security that is to be redeemed in part, the
Issuers shall execute and the Trustee shall authenticate and deliver to the
Holder, without service charge, a new Security or Securities equal in principal
amount to the unredeemed portion of the Security surrendered.
37
<PAGE>
ARTICLE IV
SECURITY
SECTION 4.1 Security Interest.
-----------------
(a) In order to secure the prompt and complete payment and
performance in full of the Indenture Obligations, the Issuers, the Guarantors,
the Trustee and the Collateral Agent have entered into this Indenture and the
Mortgage Documents, as applicable, required to be entered into on the Issue
Date. Each Holder, by accepting a Security, agrees to all of the terms and
provisions of this Indenture and the Mortgage Documents, and the Trustee and
the Collateral Agent agree to all of the terms and provisions of this Indenture
and the Mortgage Documents, as applicable, as this Indenture and the Mortgage
Documents may be amended from time to time pursuant to the provisions thereof
and hereof.
(b) Subject to the terms of the Collateral Agency
Agreement, the Collateral as now or hereafter constituted shall be held for the
equal and ratable benefit of the Holders without preference, priority or
distinction of any thereof over any other by reason of difference in time of
issuance, sale or otherwise, as the only security for the Indenture Obligations
and other obligors secured thereby pursuant to the Collateral Agency Agreement.
The Collateral is to be held by the Collateral Agent for the equal and ratable
benefit of the Holders, subject to the terms of the Collateral Agency Agreement.
(c) The provisions of TIA Section 314(d), and the provisions
of TIA Section 314(c)(3) to the extent applicable by specific reference in this
Article IV, are hereby incorporated by reference herein as if set forth in their
entirety, except that, as set forth in Section 4.4, TIA Section 314(d) need not
be complied with in certain respects.
SECTION 4.2 Recording; Opinions of Counsel.
------------------------------
(a) Each of the Issuers warrants and represents that it has
caused to be executed and delivered, filed and recorded and covenants that it
will promptly cause to be executed and delivered, filed and recorded, all
instruments and documents, and has done and will do or will cause to be done
all such acts and other things, at the Issuers' expense, as are necessary to
effect and maintain valid and perfected security interests in the Collateral.
Each of the Issuers shall, as promptly as practicable, cause to be executed and
delivered, filed and recorded all instruments and do all acts and other things
as may be required by law to perfect, maintain and protect the Liens under the
Mortgage Documents, the Collateral Agency Agreement and herein. Each of the
Guarantors warrants and represents that it has caused to be executed and
delivered, filed and recorded and covenants that it will promptly cause to be
executed and delivered, filed and recorded, all instruments and documents, and
has done and will do or will cause to be done all such acts and other things,
at such Guarantor's expense, as are necessary to effect and maintain valid and
perfected Liens in the Collateral. Each of the Guarantors shall, as promptly
as practicable, cause to be executed and delivered, filed and recorded all
instruments
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and do all acts and other things as may be required by law to perfect, maintain
and protect the security interests under the Mortgage Documents and herein.
(b) The Issuers shall furnish to the Trustee and the
Collateral Agent, concurrently with the execution and delivery of this
Indenture and the Mortgage Documents and promptly after the execution and
delivery of any amendment thereto or any other instrument of further assurance,
an Opinion(s) of Counsel stating that, in the opinion of such counsel, subject
to customary exclusions and exceptions reasonably acceptable to the Trustee and
the Collateral Agent, either (i) this Indenture, the Mortgage Documents, any
such amendment and all other instruments of further assurance have been
properly recorded, registered and filed and all such other action has been
taken to the extent necessary to make effective such valid Liens and to perfect
such Liens intended to be created by this Indenture, the Mortgage Documents and
the Collateral Agency Agreement, and reciting the details of such action, or
(ii) no such action is necessary to effect and maintain in full force and
effect the validity and perfection of the Liens under the Mortgage Documents,
the Collateral Agency Agreement and hereunder.
(c) The Issuers shall furnish to the Trustee, on or prior
to April __, of each year commencing in 1997, an Opinion(s) of Counsel, dated
as of such date, stating that, in the opinion of such counsel, subject to
customary exclusions and exceptions reasonably acceptable to the Trustee,
either (A) all such action has been taken with respect to the recording,
registering, filing, rerecording and refiling of the Mortgage Documents,
financing statements, continuation statements and all other instruments of
further assurance as is necessary to maintain the validity and perfection of
Liens under the Mortgage Documents, the Collateral Agency Agreement and
hereunder in full force and effect and reciting the details of such action, and
stating that all financing statements and continuation statements have been
executed and filed and such other actions taken that are necessary fully to
preserve and protect the rights of the Holders and the Trustee hereunder and
under the Mortgage Documents and the Collateral Agency Agreement, or (B) no
such action is necessary to maintain in full force and effect the validity and
perfection of the Liens under the Mortgage Documents and hereunder.
SECTION 4.3 Disposition of Certain Collateral.
---------------------------------
(a) Unless an Event of Default shall have occurred, the
Company and its Subsidiaries may, without requesting the release or consent of
the Trustee and the Collateral Agent, but otherwise subject to the requirements
of this Indenture and the Mortgage Documents:
(i) in the ordinary course of business for the casino industry,
convey, sell, lease, transfer, assign, or otherwise dispose of, free from the
Liens under the Mortgage Documents and hereunder, assets acquired and held for
resale in the ordinary course of business;
(ii) other than a Casino Sale, convey, sell, lease, transfer or
otherwise dispose of, free from the Liens under the Mortgage Documents and
hereunder, assets pursuant to and in accordance with Section 6.1 of this
Indenture;
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(iii) convey, sell, lease, transfer, assign or otherwise dispose
of, free from the Liens under the Mortgage Documents and hereunder, three
warehouses and related facilities (the Egg Harbor Parcel, the Pleasantville
Warehouse and the Realty Warehouse) in exchange for any type of consideration
so long as the Company determines in good faith that the Company or such
Subsidiary, as applicable, receives fair market value;
(iv) convey, sell, transfer, assign or otherwise dispose of assets
to the Company or any Wholly-owned Subsidiaries of the Company so long as they
continue to be subject to a Lien under the Mortgage Documents; and
(v) subject to the provisions of the Mortgage Documents pertaining
to disposal of real property, sell, assign, transfer, license or otherwise
dispose of, free from the Liens under the Mortgage Documents and hereunder, any
assets or property in accordance with Section 5.15 (including, without
limitation, pursuant to Section 5.15(a)); provided that the proceeds
--------
of such sale, assignment, transfer, license or other disposition are applied in
the manner set forth in Section 5.15.
(vi) sell or dispose of, free from the Liens under the Mortgage
Documents, any Tangible Personal Property which, in the Company's reasonable
opinion, may have become obsolete or unfit for use or which is no longer
necessary in the conduct of its businesses, and no purchaser of any such
property shall be bound to inquire into any question affecting the Company's or
any of its Subsidiaries' rights to sell or otherwise dispose of the same free
from the Liens under the Mortgage Documents;
(vii) alter, repair, replace, change shall the location or
position of and add to any Tangible Personal Property; provided,
--------
however, that no change shall be made in the location of any such property
- -------
subject to the Liens under the Mortgage Documents which would in any respect
impair the security of the Liens under the Mortgage Documents upon such
property; or
(viii) renew, extend, surrender, terminate, modify or amend any
leases of Tangible Personal Property, when, in the Company's or any of its
Subsidiaries' reasonable opinion, it is prudent to do so.
Notwithstanding the provisions of subsection (a) above, the Net
Cash Proceeds from any disposition described in clauses (i) through (viii)
above shall be held in a Restricted Funds Account, pending application in
accordance with Section 5.15.
(b) Notwithstanding the provisions of subsection (a) above,
the Issuers shall not dispose of or transfer (by lease, assignment, license,
sale or otherwise) or pledge, mortgage or otherwise encumber Collateral
pursuant to the provisions of Section 4.3(a) with a fair value of 10% or more
of the aggregate fair value of all Collateral then existing in any calendar
year.
(c) In the event that the Issuers or any Guarantor have
sold, exchanged, or otherwise disposed of or propose to sell, exchange or
otherwise dispose of any
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portion of the Collateral which under the provisions of this Section 4.3 may be
sold, exchanged or otherwise disposed of by the Issuers or any Guarantor
without consent of the Trustee and the Collateral Agent, and the Issuers
request the Trustee and the Collateral Agent to furnish a written disclaimer,
release or quitclaim of any interest in such property under the Mortgage
Documents, the Trustee and the Collateral Agent shall execute such an
instrument prepared by the Issuers or a Guarantor, upon delivery to the Trustee
and the Collateral Agent of an Officers' Certificate by the Issuers reciting
the sale, exchange or other disposition made or proposed to be made and
describing in reasonable detail the property affected thereby, and certifying
that such property is property which by the provisions of this Section 4.3 may
be sold, exchanged or otherwise disposed of or dealt with by the Issuers or the
Guarantors without any release or consent of the Trustee and the Collateral
Agent or the Holders; provided, that the Trustee and the Collateral Agent
--------
shall have no liability thereunder (except for its gross negligence or willful
misconduct) and all costs and expenses (including, without limitation,
reasonable attorneys' fees and disbursements) shall be paid by the Company.
The Trustee and the Collateral Agent shall be authorized to conclusively rely
on such certification.
(d) Any disposition of Collateral made in compliance with
the provisions of this Section 4.3 shall be deemed not to impair the Liens
under the Mortgage Documents and hereunder in contravention of the provisions
of this Indenture.
SECTION 4.4 Certain Releases of Collateral.
------------------------------
Subject to applicable law, the release of any Collateral from Liens
created by the Mortgage Documents or the release of, in whole or in part, the
Liens created by the Mortgage Documents, will not be deemed to impair the
Mortgage Documents in contravention of the provisions of this Indenture if and
to the extent the Collateral or Liens are released pursuant to, and in
accordance with, the applicable Mortgage Documents and pursuant to, and in
accordance with, the terms hereof. To the extent applicable, without
limitation, the Issuers, each Guarantor and each other obligor, if any, on the
Securities shall cause TIA Section 314(d), relating to the release of property
or securities from the Liens of the Mortgage Documents, to be complied with. Any
certificate or opinion required by TIA Section 314(d) may be made by two
Authorized Representatives, except in cases in which TIA Section 314(d) requires
that such certificate or opinion be made by an independent person. The Issuers
shall not be required under this Indenture to deliver to the Trustee any
certificates or opinions required to be delivered pursuant to Section 314(d) of
the TIA in connection with releases of Collateral in accordance with Section
4.3(a) (ii) hereunder, unless TIA Section 314(d) would require such certificate
or opinion to be made by an independent person.
SECTION 4.5 Payment of Expenses.
-------------------
On demand of the Trustee, the Issuers forthwith shall pay or
satisfactorily provide for all reasonable expenditures incurred by the Trustee
under this Article IV, including the reasonable fees and expenses of counsel
and all such sums shall be a Lien upon the Collateral and shall be secured
thereby.
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SECTION 4.6 Suits to Protect the Collateral.
-------------------------------
Subject to Section 4.1 of this Indenture and to the provisions of
the Mortgage Documents, the Trustee or the Collateral Agent shall have power to
institute and to maintain such suits and proceedings as it may deem expedient
to prevent any impairment of the Collateral by any acts which may be unlawful
or in violation of the Mortgage Documents or this Indenture, including the
power to institute and maintain suits or proceedings to restrain the
enforcement of or compliance with any legislative or other governmental
enactment, rule or order that may be unconstitutional or otherwise invalid or
if the enforcement of, or compliance with, such enactment, rule or order would
impair the security interests in contravention of this Indenture or be
prejudicial to the interests of the Holders, the Trustee or the Collateral
Agent. The Trustee shall give notice to the Issuers promptly following the
institution of any such suit or proceeding.
SECTION 4.7 Trustee's Duties.
----------------
The powers and duties conferred upon the Trustee by this Article IV
are solely to protect the Liens and shall not impose any duty upon the Trustee
to exercise any such powers and duties, except as expressly provided in this
Indenture, the Mortgage Documents or the TIA. The Trustee shall not be under
any duty to the Issuers or any Guarantor whatsoever to make or give any
presentment, demand for performance, notice of nonperformance, protest, notice
of protest, notice of dishonor, or other notice or demand in connection with
any Collateral, or to take any steps necessary to preserve any rights against
prior parties except as expressly provided in this Indenture or the Mortgage
Documents. The Trustee shall not be liable to the Issuers or any Guarantor for
failure to collect or realize upon any or all of the Collateral, or for any
delay in so doing, nor shall the Trustee be under any duty to the Issuers or
any Guarantor to take any action whatsoever with regard thereto. The Trustee
shall have no duty to the Issuers or any Guarantor to comply with any
recording, filing, or other legal requirements necessary to establish or
maintain the validity, priority or enforceability of the security interests in,
or the Trustee's rights in or to, any of the Collateral.
SECTION 4.9 Restricted Funds Account.
------------------------
(a) The Company or any of its Subsidiaries shall maintain
and establish a Restricted Funds Account, which, subject to the terms of the
Collateral Agency Agreement, shall hold Cash Collateral for the equal and
ratable benefit of the Holders without preference, priority or distinction of
any thereof over any other by reason of difference in time of issuance, sale or
otherwise, as security for the Indenture Obligations and other obligors secured
thereby pursuant to the Collateral Agency Agreement. Upon delivery of an
Officers' Certificate from the Company or any of its Subsidiaries notifying the
Trustee and the Collateral Agent of the release of funds from the Restricted
Funds Account and certifying that such funds will be used in compliance with
Section 5.15 within the time provided by Section 5.15, but not later than 5
Business Days after the transfer of such funds, the Company or its Subsidiary,
as the case may be, may transfer such funds from the Restricted Funds Account.
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(b) The Issuers and the Guarantors hereby grant a first
priority security interest to the Collateral Agent in all of its right, title
and interest in the Restricted Funds Account and all sums of money, from any
source whatsoever, now or hereafter transferred to and comprising the
Restricted Funds Account, including, without limitation, all proceeds of the
Collateral paid into the Restricted Funds Account, and any and all interest and
dividends or other income derived from any such moneys, and all statements,
certificates and instruments in or representing the Restricted Funds Account.
(c) The Issuers or any Guarantor may invest Cash Collateral
in the Restricted Funds Account only in Cash Equivalents. Interest and other
amounts earned on such Cash Collateral shall be held by the Collateral Agent in
the Restricted Funds Account as additional Collateral.
ARTICLE V
COVENANTS
SECTION 5.1 Payment of Securities.
---------------------
The Issuers shall pay the principal of and interest on the
Securities on the dates and in the manner provided in the Securities and this
Indenture. An installment of principal of or interest on the Securities shall
be considered paid on the date it is due if the Trustee or Paying Agent (other
than the Issuers, any of the Guarantors (or any other obligor on the
Securities) or an Affiliate of either of the Issuers or any of the Guarantors
(or such other obligor)) holds for the benefit of the Holders, on or before
10:00 a.m. New York City time on that date, U.S. Legal Tender deposited and
designated for and sufficient to pay the installment.
The Issuers shall pay interest on overdue principal and on overdue
installments of interest at the rate specified in the Securities compounded
semi-annually, to the extent lawful.
SECTION 5.2 Maintenance of Office or Agency.
-------------------------------
The Issuers shall maintain in the Borough of Manhattan, The City of
New York, an office or agency where Securities may be presented or surrendered
for payment, where Securities may be surrendered for registration of transfer
or exchange and where notices and demands to or upon the Issuers in respect of
the Securities and this Indenture may be served. No service charge will be
made for any registration of transfer, exchange or redemption of Securities,
but the Issuers may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith. The Issuers shall
give prompt written notice to the Trustee of the location, and any change in
the location, of such office or agency. If at any time the Issuers shall fail
to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the address of the Trustee set forth in
Section 12.2.
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The Issuers may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Issuers of their obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York, for such purposes. The Issuers
shall give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or
agency. The Issuers hereby initially designate the Corporate Trust Office of
the Trustee as such office.
SECTION 5.3 Limitation on Restricted Payments.
---------------------------------
The Company will not, and will not permit any of its Subsidiaries
to, directly or indirectly, make any Restricted Payment if, after giving effect
to such Restricted Payment on a pro forma basis, (1) a Default or an Event of
Default shall have occurred and be continuing, (2) the Company is not permitted
to incur at least $1.00 of additional Indebtedness pursuant to the Debt
Incurrence Ratio in paragraph (a) of Section 5.11, or (3) the aggregate amount
of all Restricted Payments made by the Company and its Subsidiaries, including
after giving effect to such proposed Restricted Payment, from and after the
Issue Date, would exceed the sum of (a) 50% of the aggregate Consolidated Net
Income of the Company and its Consolidated Subsidiaries for the period (taken
as one accounting period) commencing on the first day of the first fiscal
quarter commencing prior to the Issue Date, to and including the last day of
the fiscal quarter ended immediately prior to the date of each such calculation
(or, in the event Consolidated Net Income for such period is a deficit, then
minus 100% of such deficit), plus (b) the aggregate Net Cash Proceeds received
by the Company after the Issue Date and on or prior to the date of such
proposed Restricted Payment from (i) the sale of its Qualified Equity Interests
(other than (x) to a Subsidiary of the Company, (y) to the extent applied in
connection with a Qualified Exchange and (z) in connection with the equity
offering by THCR concurrent with the issuance of the Securities, including any
exercise of the underwriters' overallotment option, except for funds in excess
of $ million [to be calculated as the amount necessary to fund the
------
Company's and its Subsidiaries' proceeds uses described in the Prospectus plus
$71 million] or (ii) other Capital Contributions.
The foregoing clauses (2) and (3) of the immediately preceding
paragraph, however, will not prohibit (v) (I) distributions by the Company
pursuant to the terms of the Partnership Agreement as in effect on the Issue
Date to THCR Holdings to the extent promptly distributed to and/or applied by
THCR Holdings or THCR (A) to pay reasonable general and administrative expenses
of such persons, including directors' fees and premiums for directors' and
officers' liability insurance, which distributions shall not exceed $10.0
million in any consecutive four-quarter period, (B) to make indemnification
payments as required by the Certificate of Incorporation of THCR as in effect
on the Issue Date or (C) to effect redemption of any Equity Interest of THCR if
(x) counsel to THCR delivers an opinion that failure to so redeem would subject
THCR to an adverse action by a Gaming Authority (or, if applicable, a failure
to act by a Gaming Authority that is adverse to THCR) and (y) THCR determines
(as evidenced by a resolution of its Board of Directors delivered to the
Trustee) that such adverse action (or, if applicable, such failure to act)
would be likely to have a material adverse effect on
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THCR, and (II) distributions by the Company to THCR Holdings to the extent
promptly distributed to and applied by THCR to pay any tax liability resulting
from the distributions provided for in (I) above, as required by the
Partnership Agreement, (w) distributions by the Company to THCR Holdings in an
amount not to exceed $50.0 million in the aggregate to the extent applied by
THCR Holdings, within 20 Business Days of receiving such distribution, to the
next scheduled interest payment on the Senior Notes or any Refinancing
Indebtedness with respect thereto (provided, that solely in the case of this
clause (w), clause (1) of the immediately preceding paragraph will not prohibit
a distribution hereunder except in the case of an Event of Default under clause
(a) or (b) of Section 7.1 hereof), (x) a Qualified Exchange, (y) for so long as
the Company is a partnership or substantially similar pass-through entity for
Federal income tax purposes, cash distributions made by the Company to its
Partners from time to time in amounts not to exceed the Permitted Tax
Distributions, so long as the payments are made at the time permitted by the
second sentence of the definition of Permitted Tax Distributions contained
herein, or (z) the payment of any dividend within 60 days after the date of its
declaration if such dividend could have been made on the date of such
declaration in compliance with the foregoing provisions. In addition, the
immediately preceding paragraph will not prohibit the purchase by the Company
of Indebtedness incurred pursuant to clause (c) of Section 5.11 substantially
concurrently with a purchase by the Company of Securities pursuant to a Change
of Control Offer or an Asset Sale Offer, provided, that (i) in the case of a
purchase pursuant to an Asset Sale Offer, such purchase of Securities
represents a pro rata application of the Asset Sale Offer Amount to the
Securities and such other Indebtedness, based upon the aggregate principal
amount then outstanding, and (ii) the terms of such other Indebtedness do not
restrict such purchase of the Securities pursuant to a Change of Control Offer
or an Asset Sale Offer. The full amount of any Restricted Payment made
pursuant to the foregoing clauses (v), (w), (y) and (z) of the second preceding
sentence (but not pursuant to the immediately preceding sentence or to clause
(x) of the second preceding sentence), however, will be deducted in the
calculation of the aggregate amount of Restricted Payments available to be made
referred to in clause (3) of the immediately preceding paragraph.
SECTION 5.4 Corporate and Partnership Existence.
-----------------------------------
Subject to Article VI, each of the Issuers shall do or cause to be
done all things necessary to preserve and keep in full force and effect their
corporate or partnership existence, as the case may be, and the corporate or
other existence of each of their Subsidiaries in accordance with the respective
organizational documents of each of them and the rights (charter and statutory)
and corporate or partnership franchises of the Issuers and each of their
Subsidiaries; provided, however, that neither of the Issuers shall be required
to preserve, with respect to itself or any of its Subsidiaries, any right or
franchise if (a) the Board of Directors of Funding shall determine reasonably
and in good faith that the preservation thereof is no longer desirable in the
conduct of the business of the Issuers and (b) the loss thereof is not
disadvantageous in any material respect to the Holders; and provided further,
that the Company may change from a partnership to a corporation, in which case
it must thereafter maintain its corporate existence in accordance with this
Section 5.4; and provided further, that Trump Taj Mahal Funding, Inc. shall
conduct no business, receive no Investment from the Issuers or any of their
Subsidiaries and be
45
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dissolved pursuant to [New Jersey Certificate of Dissolution/expand] within
_____ days of the Issue Date or shall immediately thereafter become a
Guarantor.
SECTION 5.5 Payment of Taxes and Other Claims.
---------------------------------
Each of the Issuers shall, and shall cause each of their
Subsidiaries to, pay or discharge or cause to be paid or discharged, before the
same shall become delinquent, (i) all taxes, assessments and governmental
charges (including withholding taxes and any penalties, interest and additions
to taxes) levied or imposed upon either of the Issuers or any of their
Subsidiaries or properties and assets of the Issuers or any of their
Subsidiaries and (ii) all lawful claims, whether for labor, materials,
supplies, services or anything else, which have become due and payable and
which by law have or may become a Lien upon the property and assets of either
of the Issuers or any of their Subsidiaries; provided, however, that the
Issuers or their subsidiaries shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings and for which disputed amounts adequate reserves have
been established in accordance with GAAP.
SECTION 5.6 Maintenance of Insurance.
------------------------
The Company will, and will cause its Subsidiaries to, (a) obtain,
prior to the Issue Date, mortgagee title insurance policies insuring a first
mortgage lien on the real estate portion of the Collateral, as constituted on
the Issue Date, subject to certain exceptions, in an amount not less than
[$1,225,000,000] and (b) from and at all times after the Issue Date until the
Securities have been paid in full, have and maintain in effect insurance with
responsible carriers against such risks and in such amounts as is customarily
carried by similar businesses with such deductibles, retentions, self insured
amounts and coinsurance provisions as are customarily carried by similar
businesses of similar size, including, without limitation, property and
casualty, and, with respect to insurance on the Collateral, shall have provided
insurance certificates evidencing such insurance to the Collateral Agent prior
to the Issue Date and shall thereafter provide such certificates prior to the
anniversary or renewal date of each such policy referred to in this clause (b),
which certificate shall expressly state the expiration date for each policy
listed. All insurance with respect to the Collateral required under the
Indenture (except worker's compensation) shall name the Issuers, Taj
Associates, Plaza Associates and the Collateral Agent as additional insureds or
loss payees, as the case may be, with losses in excess of $10.0 million payable
jointly to the Issuers, Taj Associates, Plaza Associates and the Collateral
Agent (unless a Default or Event of Default has occurred and is then
continuing, in which case all losses are payable solely to the Collateral
Agent), with no recourse against the Collateral Agent for the payment of
premiums, deductibles, commissions or club calls, and for at least 30 days
notice of cancellation. All such insurance policies will be issued by carriers
having an A.M. Best & Company, Inc. rating of A- or higher and a financial size
category of not less than X, or if such carrier is not rated by A.M. Best &
Company, Inc., having the financial stability and size deemed appropriate by an
opinion from a reputable insurance broker.
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SECTION 5.7 Compliance Certificate; Notice of Default.
-----------------------------------------
(a) The Issuers shall deliver to the Trustee, within 120
days after the end of each of their fiscal years, an Officers' Certificate
complying (whether or not required) with Section 314(a)(4) of the TIA and
stating that a review of their activities and the activities of their
Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Authorized Representatives with a view to
determining whether each of the Issuers has kept, observed, performed and
fulfilled its obligations under this Indenture and the Mortgage Documents and
further stating, as to each such Authorized Representative signing such
certificate, whether or not the signer knows of any failure by either of the
Issuers or any Subsidiary of either of the Issuers to comply with any
conditions or covenants in this Indenture and, if such signer does know of such
a failure to comply, the certificate shall describe such failure with
particularity. The Officers' Certificate shall also notify the Trustee should
the relevant fiscal year end on any date other than the current fiscal year end
date.
(b) So long as not contrary to the then current
recommendation of the American Institute of Certified Public Accountants, the
Issuers shall deliver to the Trustee within 120 days after the end of each of
their fiscal years a written report of a firm of independent certified public
accountants with an established national reputation stating that in conducting
their audit for such fiscal year, nothing has come to their attention that
caused them to believe that either of the Issuers or any Subsidiary of either
of the Issuers was not in compliance with the provisions set forth in Section
5.3, 5.11, 5.15, 5.19, or 5.20 of this Indenture or any of the provisions of
the Mortgage Documents.
(c) Each of the Issuers shall, so long as any of the
Securities are outstanding, deliver to the Trustee, immediately upon becoming
aware of any Default or Event of Default under this Indenture, an Officers'
Certificate specifying such Default or Event of Default and what action the
Issuers are taking or propose to take with respect thereto. The Trustee shall
not be deemed to have knowledge of a Default or an Event of Default unless one
of its trust officers receives notice of the Default or Event of Default giving
rise thereto from either of the Issuers or any of the Holders.
SECTION 5.8 Provision of Financial Statements.
---------------------------------
Whether or not either of the Issuers is subject to Section 13(a) or
15(d) of the Exchange Act, each such Person will file with the SEC the annual
reports, quarterly reports and other documents which each such Person would
have been required to file with the SEC (to the extent permitted by applicable
law) pursuant to such Section 13(a) or 15(d) if such Person were so subject,
such documents to be filed with the SEC on or prior to the respective dates
(the "Required Filing Dates") by which such Person would have been required so
to file such documents if such Person were so subject. Each such Person will
also in any event within 15 days of each Required Filing Date (i) transmit by
mail to all Holders, as their names and addresses appear in the First Mortgage
Note Register, without cost to such Holders and (ii) file with the Trustee
copies of the annual reports, quarterly reports and other documents which each
such Person would have been required to file with the SEC pursuant to Section
13(a) or 15(d) of
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the Exchange Act if such Person were subject to such Sections, together with
supplemental information in respect of summary financial data for each of the
Casino Hotels at the Issuers' cost. Notwithstanding anything contrary herein
the Trustee shall have no duty to review such documents for purposes of
determining compliance with any provisions of this Indenture.
SECTION 5.9 Waiver of Stay, Extension or Usury Laws.
---------------------------------------
Each of the Issuers and each of the Guarantors covenant (to the
extent that it may lawfully do so) that it will not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law or any usury law or other law wherever enacted which
would prohibit or forgive either of the Issuers or any Guarantor from paying
all or any portion of the principal of or interest on the Securities as
contemplated herein, wherever enacted, now or at any time hereafter in force,
or which may affect the covenants or the performance of this Indenture; and (to
the extent that they may lawfully do so) each of the Issuers or any Guarantor
hereby expressly waives all benefit or advantage of any such law insofar as
such law applies to the Securities, and covenants that it shall not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
SECTION 5.10 Limitation on Transactions with Affiliates.
------------------------------------------
The Company will not, nor will any of the Subsidiaries be permitted
to, directly or indirectly, enter into or suffer to exist any contract,
arrangement, understanding or transaction or series of related transactions
(including, without limitation, the sale, purchase, exchange or lease of
assets, property or services) with any Affiliate of the Company (other than a
Wholly-owned Subsidiary) unless (a) such transaction or series of related
transactions is on terms that are no less favorable to the Company or such
Subsidiary, as the case may be, than would be available at the time of such
transaction or transactions in a comparable transaction in arm's-length
dealings with an unaffiliated third party and, with respect to a transaction or
series of related transactions involving aggregate payments equal to or greater
than (x) $2.0 million, such transaction or series of related transactions is
approved by a majority of the Independent Directors of the Board of Directors
of Funding, or (y) $10.0 million, prior to the consummation of such transaction
or series of related transactions, the Company also obtains a written favorable
opinion as to the fairness thereof to the Company from a financial point of
view from an independent investment banking firm of national reputation, and
(b) the Company delivers an Officers' Certificate to the Trustee certifying
that such transaction or transactions comply with clause (a) above. The
foregoing restriction will not apply to (1) pro rata dividends or distributions
paid in cash of any class of Equity Interests and not prohibited under Section
5.3, (2) the Partnership Agreement as in effect on the Issue Date, (3) the
Affiliated Ground Leases as in effect on the Issue Date or the exercise of the
option pursuant to the TSA Lease, or (4) the following existing arrangements as
in effect on the Issue Date: (i) the assumption by the Company or one of its
Subsidiaries of the Super Puma Helicopter Lease in connection with the transfer
of the stock of Trump Plaza Management to THCR Holdings, (ii) the TPM Services
Agreement, (iii) the provision of legal services by John Barry of Barry &
McMoran to the Company or its Subsidiaries, (iv) a lease between Taj Associates
and The Trump Equitable Fifth
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Avenue Company dated as of renewed for a period of five years on September 1,
1995 for the lease of office space in the Trump Tower in New York City, (v)
employment agreements between Nicholas Ribis and each of Taj Associates and
Plaza Associates dated September 25, 1993 and June 12, 1995, respectively, (vi)
the purchase of joint property insurance coverage with Trump Castle Associates
upon reasonable market terms consistent with past practices, (vii) the lease
dated , by Plaza Associates of portions of its warehouse facility
----------
located in Egg Harbor Township, New Jersey, to Trump Castle Associates, (viii)
certain indemnification arrangements with certain former an current directors
of Plaza Funding and Trump Plaza GP, (ix) the indemnification provisions
contained in the Agreement and Plan of Merger dated January 8, 1996 between Taj
Associates, Taj Mahal Holding Corp., THCR and THCR Merger Corp. and (x) the
lease of up to 500 parking spaces from Trump Castle Associates upon reasonable
market terms consistent with past practices.
Funding will maintain at least two Independent Directors on its
Board of Directors.
SECTION 5.11 Limitation on Incurrence of Additional
---------------------------------------
Indebtedness.
- ------------
Except as set forth below in this Section 5.11, the Company will
not, nor will any of its Subsidiaries be permitted to, directly or indirectly,
create, issue, assume, guaranty, incur, become directly or indirectly liable
with respect to (including as a result of an Acquisition), or otherwise become
responsible for, contingently or otherwise (individually and collectively, to
"incur" or, as appropriate, an "incurrence"), any Indebtedness or any
Disqualified Capital Stock (including Acquired Indebtedness). Notwithstanding
the foregoing:
(a) if (i) no Default or Event of Default shall have
occurred and be continuing at the time of, or would occur after giving effect
on a pro forma basis to, such incurrence of Indebtedness or Disqualified
Capital Stock and (ii) on the date of such incurrence (the "Incurrence Date"),
the Consolidated Coverage Ratio of the Company for the Reference Period
immediately preceding the Incurrence Date, after giving effect on a pro forma
basis to such incurrence of such Indebtedness or Disqualified Capital Stock
and, to the extent set forth in the definition of Consolidated Coverage Ratio,
the use of proceeds thereof, would be at least 2.0 to 1 for incurrences on or
prior to October __, 1998 and at least 2.25 to 1 for incurrences thereafter
(the "Debt Incurrence Ratio"), then the Company may incur such Indebtedness or
Disqualified Capital Stock, provided, that except in the case of Acquired
Indebtedness, such Indebtedness incurred pursuant to this clause (a) has an
Average Life to Stated Maturity that exceeds the remaining Average Life to
Stated Maturity of the Securities and has a Stated Maturity for its final
scheduled principal or (in the case of Disqualified Capital Stock) redemption
payment, as applicable, later than the Stated Maturity for the final scheduled
principal payment of the Securities;
(b) the Company and the Guarantors may incur Indebtedness
evidenced by the Securities and represented by this Indenture;
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(c) the Company may incur Indebtedness not to exceed $75.0
million in aggregate principal amount outstanding at any time pursuant to this
clause (c) the proceeds of which are used for further acquisitions, renovations
or constructions of Improvements with respect to, or related to (including
related demolitions), the Casino Hotels or the financing of equipment to be
used therein, provided, that no Indebtedness shall be incurred pursuant to this
clause (c) in an aggregate principal amount which exceeds 75% of the cost of
the assets or Improvements, as the case may be, financed thereby, and provided
further, that except in the case of Acquired Indebtedness, such Indebtedness
incurred pursuant to this clause (c) has an average life to Stated Maturity
that equals or exceeds the remaining Average Life to Stated Maturity of the
Securities and has a Stated Maturity for its final scheduled principal or (in
the case of Disqualified Capital Stock) redemption payment, as applicable, on
or later than the Stated Maturity for the final scheduled principal payment of
the Securities;
(d) Plaza Associates and Taj Associates may incur
Indebtedness represented by F, F&E Financing Agreements and/or Capitalized
Lease Obligations relating to after-acquired gaming or related equipment (or
other after-acquired equipment necessary to conduct a Related Business and
consistent in amount and nature with industry practices) of (or, in the case of
Capitalized Lease Obligations, leased by) Plaza Associates or Taj Associates,
as applicable, not to exceed (for Plaza Associates and Taj Associates,
collectively) $50.0 million in aggregate principal amount outstanding at any
time pursuant to this clause (d) (including any Indebtedness issued to
refinance, refund or replace such Indebtedness);
(e) the Company may incur Indebtedness pursuant to the
Working Capital Facility up to an aggregate amount outstanding (including any
Indebtedness issued to refinance, refund or replace such Indebtedness) at any
time of $25.0 million;
(f) the Company, Plaza Associates and Taj Associates, as
applicable, may incur Refinancing Indebtedness with respect to any Indebtedness
or Disqualified Capital Stock, as applicable, described in clauses (a), (b) and
(c) of this Section or which is outstanding on the Issue Date so long a such
Refinancing Indebtedness is secured only by the assets (if any) that secured
the Indebtedness so refinanced;
(g) the Company, Plaza Associates, Taj Associates and their
Subsidiaries may incur Permitted Indebtedness; and
(h) the Company may incur Indebtedness in an aggregate
amount outstanding at any time pursuant to this clause (h) (including any
Indebtedness issued to refinance, replace, or refund such Indebtedness) of up
to $30.0 million.
Indebtedness of any Person which is outstanding at the time such
Person becomes a Subsidiary of the Company, including by designation, or is
merged with or into or consolidated with the Company or a Subsidiary of the
Company shall be deemed to have been incurred at the time such Person becomes
such a Subsidiary of the Company or is merged with or into or consolidated with
the Company or a Subsidiary of the Company, as applicable. Except to the
extent provided otherwise in the definition of Permitted Indebtedness, any
Guarantor may
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guarantee Indebtedness of the Company or another Guarantor to the extent and at
the time the Company or such other Guarantor incurs such Indebtedness in
compliance with this Section 5.11.
SECTION 5.12 Restriction on Sale and Issuance of Subsidiary
-----------------------------------------------
Stock.
- -----
The Company will not sell, and will not permit any of its
Subsidiaries to issue or sell, any shares of Equity Interests of any Subsidiary
of the Company to any Person other than the Company or a Wholly-owned
Subsidiary of the Company, except that all of the Equity Interests of a
Subsidiary may be sold if such Asset Sale complies with the other provisions of
this Indenture, including Sections 5.15 and 6.1.
SECTION 5.13 Limitation on Dividends and Other Payment
------------------------------------------
Restrictions Affecting Subsidiaries.
- -----------------------------------
The Company will not, nor will any of its Subsidiaries be permitted
to, directly or indirectly, create, assume or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any Subsidiary of the Company to pay dividends or make any
other distributions to or on behalf of, or to pay any obligation to or on
behalf of, or otherwise to transfer assets or property to or on behalf of, or
make or pay loans or advances to or on behalf of, the Company or any Subsidiary
of the Company, except (a) any restrictions, with respect to a Subsidiary that
is not a Subsidiary on the date of this Indenture, in existence at the time
such Person becomes a Subsidiary of the Company (but not created in connection
with or contemplation of such Person becoming a Subsidiary and not applicable
to any Person, or property, asset or business, than the Person, or property,
asset or business so acquired), (b) any restrictions with respect to a
Subsidiary imposed pursuant to an agreement which has been entered into for the
sale or disposition of all or substantially all of the Equity Interests or
assets of such Subsidiary (which restrictions shall be for the benefit of the
purchaser thereof and no other Person and apply only to the assets of the
Subsidiary to be sold), (c) restrictions imposed by a Permitted Lien on the
transfer of the respective assets subject thereto, (d) restrictions contained
in this Indenture and the Mortgage Documents, as the same may be amended from
time to time in accordance with the terms thereof, (e) restrictions imposed by
Gaming Authorities on the payment of dividends by entities holding Gaming
Licenses, and (f) any restrictions existing under any agreement which
refinances or replaces the agreements containing the restrictions in clause
(a), provided that the terms and conditions of any such agreement are not more
restrictive than those under or pursuant to the agreement evidencing the
Indebtedness refinanced.
SECTION 5.14 Limitation on Liens.
-------------------
The Company will not, nor will any of its Subsidiaries be permitted
to, directly or indirectly, create, incur, assume or suffer to exist any Lien
of any kind, other than Permitted Liens, upon any of their respective assets
now owned or acquired after the date of this Indenture or upon any income or
profits therefrom.
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SECTION 5.15 Limitation on Sales of Assets and Subsidiary Stock;
----------------------------------------------------
Event of Loss.
- -------------
Neither the Company nor any of its Subsidiaries will, in one or a
series of related transactions, convey, sell, transfer, assign or otherwise
dispose of, directly or indirectly, any of its property, business or assets,
including, without limitation, upon any sale or other transfer or issuance of
any Equity Interests of any Subsidiary or any sale and leaseback transaction,
whether by the Company or a Subsidiary of the Company or through the issuance,
sale or transfer of Equity Interests by a Subsidiary of the Company (an "Asset
Sale"), unless:
(1) (a) within 210 days after the date of such Asset Sale,
the Net Cash Proceeds therefrom (the "Asset Sale Offer Amount") are applied to
the optional redemption of the Securities in accordance with the terms of this
Indenture or to the repurchase of the Securities pursuant to an irrevocable,
unconditional cash offer by the Company (the "Asset Sale Offer") to repurchase
the Securities at a purchase price (the "Asset Sale Offer Price") of 100% of
principal amount, plus accrued interest to the date of payment, made within 180
days of such Asset Sale and/or (b) within 180 days following such Asset Sale,
the Asset Sale Offer Amount (less that portion of the Asset Sale Offer Amount
applied as provided in clause (a) above) is reinvested by the Company or its
Subsidiaries to make replacements, improvements or additions to existing
properties or new properties directly related to a Related Business and such
reinvestment is made or committed to be made (such commitment to be established
by (A) the purchase of a new property, the ground-breaking or the commencement
of construction, in each case within 180 days of such Asset Sale or (B)
promptly placing the Net Cash Proceeds in a Restricted Funds Account, provided,
that such Net Cash Proceeds are invested as aforesaid in existing properties or
new properties within 365 days of being placed in such Restricted Funds
Account) and provided further, that in the case of any Asset Sale involving all
or substantially all of (x) the Capital Stock of a Subsidiary, the assets of
which constitute all or substantially all of either Casino Hotel (or both) or
(y) the assets of either Casino Hotel (or both) (a "Casino Sale"), such Net
Cash Proceeds must be used to make an Asset Sale Offer in accordance with
clause 1(a), and not reinvested under clause 1(b),
(2) with respect to any Asset Sale or related series of
Asset Sales involving securities, property or assets with an aggregate fair
market value in excess of $5.0 million, at least 75% (or 90%, in the case of a
Casino Sale) of the consideration for such Asset Sale or series of related
Asset Sales consists of cash or Cash Equivalents (treating for this purpose as
cash or Cash Equivalents (A) property that promptly after such Asset Sale is
converted into cash or Cash Equivalents and (B) except in the case of a Casino
Sale, any senior Indebtedness that secured the subject assets that are assumed
by the transferee in such Asset Sale,
(3) no Default or Event of Default shall have occurred and
be continuing at the time of, or would occur after giving effect, on a pro
forma basis, to, such Asset Sale, and
(4) the Company determines in good faith that the Company or
such Subsidiary, as applicable, receives fair market value for such Asset Sale.
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For purposes of this Section 5.15 with respect to the application
of the Net Cash Proceeds thereof, the receipt by the Company or any of its
Subsidiaries of proceeds due to an Event of Loss shall constitute an Asset
Sale. All Net Cash Proceeds from an Event of Loss shall be reinvested or used
to repurchase the Securities, all within the period and as otherwise provided
above in clause (1)(a) of the first paragraph of this Section 5.15.
An Asset Sale Offer need not be made until the accumulated Net Cash
Proceeds from Asset Sales not applied in accordance with (1) above (the "Excess
Proceeds") exceeds $15.0 million. Each Asset Sale Offer shall remain open for
20 Business Days following its commencement and no longer, except to the extent
that a longer period is required by applicable law (the "Asset Sale Offer
Period"). Upon expiration of the Asset Sale Offer Period, the Company shall
apply the Excess Proceeds, plus an amount equal to accrued interest, to the
purchase of all Securities tendered (on a pro rata basis if the Excess Proceeds
is insufficient to purchase all such Securities so tendered) at the Asset Sale
Offer Price (together with accrued interest).
Notwithstanding the foregoing, if an Asset Sale Offer is commenced
and securities of the Company ranking pari passu in right of payment with the
Securities and incurred pursuant to clause (c) of Section 5.11 are outstanding
at the date of commencement thereof, the terms of which provide that a
substantially similar offer must be made with respect thereto, then the Asset
Sale Offer shall be made concurrently with such other offer, and securities of
each issue which the Holders of securities of such issue elect to have
purchased will be accepted pro rata in proportion to the aggregate principal
amount thereof; provided, that in so repurchasing such other securities the
Company is in compliance with the provisions of Section 5.3.
Subject to Article IV hereof, notwithstanding the foregoing
provisions of the prior paragraphs:
(i) the Company and its Subsidiaries may, without
complying with the foregoing, in the ordinary course of business
for the casino industry, convey, sell, lease, transfer, assign, or
otherwise dispose of assets acquired and held for resale in the
ordinary course of business;
(ii) other than a Casino Sale, the Company and its
Subsidiaries may, without complying with the foregoing, convey,
sell, lease, transfer or otherwise dispose of, free from the Liens
under the Mortgage Documents, assets pursuant to and in accordance
with Section 6.1 of this Indenture;
(iii) the Company and its Subsidiaries may, without
complying with the foregoing, convey, sell, lease, transfer, assign
or otherwise dispose of three warehouses and related facilities
(the Egg Harbor Parcel, the Pleasantville Warehouse and the Realty
Warehouse) in exchange for any type of consideration so long as
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the Company determines in good faith that the Company or such
Subsidiary, as applicable, receives fair market value;
(iv) the Company and its Subsidiaries may, without
complying with the foregoing, convey, sell, transfer, assign or
otherwise dispose of assets to the Company or any Wholly-owned
Subsidiaries of the Company, so long as they continue to be subject
to a Lien under the Mortgage Documents;
(v) sell or dispose of, free from the Liens under the
Mortgage Documents, any Tangible Personal Property which, in the
Company's reasonable opinion, may have become obsolete or unfit for
use or which is no longer necessary in the conduct of its
businesses, and no purchaser of any such property shall be bound to
inquire into any question affecting the Company's or any of its
Subsidiaries' rights to sell or otherwise dispose of the same free
from the Liens under the Mortgage Documents;
(vi) alter, repair, replace, change shall the location
or position of and add to any Tangible Personal Property;
provided, however, that no change shall be made in the
-------
location of any such property subject to the Liens under the
Mortgage Documents which would in any respect impair the security
of Liens under the Mortgage Documents upon such property; or
(vii) renew, extend, surrender, terminate, modify or
amend any leases of Tangible Personal Property, when, in the
Company's or any of its Subsidiaries' reasonable opinion, it is
prudent to do so.
Notwithstanding the foregoing, the Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly make any Asset Sale of any of the
Equity Interests of such Subsidiary except pursuant to an Asset Sale of all the
Equity Interests of such Subsidiary.
In addition, if the amount required to acquire all Securities
tendered by Holders pursuant to the Asset Sale Offer (the "Acceptance Amount")
is less than the Asset Sale Offer Amount, the excess of the Asset Sale Offer
Amount over the Acceptance Amount may be used by the Company and its
Subsidiaries for general corporate or partnership purposes without restriction,
other than dividends, repurchases or other distributions in respect of Equity
Interests, and unless otherwise restricted by the other provisions of the
Indenture. Upon consummation of any Asset Sale Offer, the Asset Sale Offer
Amount will be reduced to zero.
Notice of an Asset Sale Offer shall be sent, not later than 20
Business Days prior to the close of business on the Asset Sale Put Date (as
defined below), by first-class mail, by the Issuers to each Holder at its
registered address, with a copy to the Trustee. The notice to the
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Holders shall contain all information, instructions and materials required by
applicable law or otherwise material to such Holders' decision to tender
Securities pursuant to the Asset Sale Offer. The notice, which (to the extent
consistent with this Indenture) shall govern the terms of the Asset Sale Offer,
shall state:
(l) that the Asset Sale Offer is being made pursuant
to such notice and this Section 5.15;
(2) the Asset Sale Offer Amount, the Accumulated
Amount, the Asset Sale Offer Price (including the amount of accrued and unpaid
interest), the Asset Sale Put Date, and the "Asset Sale Purchase Date," which
Asset Sale Purchase Date shall be on or prior to 30 Business Days (or later, if
required by law) following the date the Accumulated Amount was greater than
$5.0 million;
(3) that any Security or portion thereof not tendered
or accepted for payment will continue to accrue interest if interest is then
accruing;
(4) that, unless the Issuers default in depositing
U.S. Legal Tender with the Paying Agent (which may not for purposes of this
Section 5.15, notwithstanding anything in this Indenture to the contrary, be
the Issuers or any Affiliate of the Issuers) in accordance with the last
paragraph of this clause (b), any Security, or portion thereof, accepted for
payment pursuant to the Asset Sale Offer shall cease to accrue interest after
the Asset Sale Purchase Date;
(5) that Holders electing to have a Security, or
portion thereof, purchased pursuant to an Asset Sale Offer will be required to
surrender their Security, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Security completed, to the Paying Agent (which
may not for purposes of this Section 5.15, notwithstanding any other provision
of this Indenture, be the Issuers or any Affiliate of the Issuers) at the
address specified in the notice prior to the close of business on the third
Business Day prior to the Asset Sale Purchase Date (the "Asset Sale Put Date");
(6) that Holders will be entitled to withdraw their
elections, in whole or in part, if the Paying Agent (which may not for purposes
of this Section 5.15, notwithstanding any other provision of this Indenture, be
the Issuers or any Affiliate of the Issuers) receives, up to the close of
business on the Asset Sale Put Date, a telegram, telex, facsimile transmission
or letter setting forth the name of the Holder, the principal amount of the
Securities the Holder is withdrawing and a statement that such Holder is
withdrawing his election to have such principal amount of Securities purchased;
(7) that if Securities in a principal amount in
excess of the principal amount of Securities to be acquired pursuant to the
Asset Sale Offer are tendered and not withdrawn, the Issuers shall purchase
Securities on a pro rata basis (with such adjustments as may be deemed
appropriate by the Issuers so that only Securities in denominations of $1,000
or integral multiples of $1,000 shall be acquired);
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(8) that Holders whose Securities were purchased only
in part will be issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered; and
(9) the circumstances and relevant facts regarding
such Asset Sales.
No later than 12:00 noon New York City time on an Asset Sale
Purchase Date, the Issuers shall (i) accept for payment Securities or portions
thereof properly tendered pursuant to the Asset Sale Offer (on a pro rata basis
if required pursuant to paragraph (7) above), (ii) deposit with the Paying
Agent U.S. Legal Tender sufficient to pay the Asset Sale Offer Price (plus
accrued interest) for all Securities or portions thereof so accepted and (iii)
deliver to the Trustee Securities so accepted together with an Officers'
Certificate setting forth the Securities or portions thereof being purchased by
the Issuers. The Paying Agent shall promptly mail or deliver to Holders of
Securities so accepted payment in an amount equal to the Asset Sale Offer Price
for such Securities, and the Trustee shall promptly authenticate and mail or
deliver to such Holders a new Security equal in principal amount to any
unpurchased portion of the Security surrendered. Any Securities not so
accepted shall be promptly mailed or delivered by the Issuers to the Holder
thereof.
SECTION 5.16 Future Subsidiary Guarantors.
----------------------------
The Company and the Guarantors covenant and agree that they shall
cause each person that is or becomes a Subsidiary of the Company (other than
Funding) to execute a Guaranty in the form of Exhibit B hereto and will
---------
cause such Subsidiary to enter into a supplemental indenture for the purpose of
jointly and severally guaranteeing, on a senior secured basis, the Indenture
Obligations. Taj Funding shall not be required to become a Guarantor, provided
that it conducts no business, receives no Investment from the Issuers or any of
their Subsidiaries and is dissolved pursuant to [NJ equivalent of certificate
of dissolution] within days of the Issue Date.
---
SECTION 5.17 Limitation on Activities of Funding.
-----------------------------------
Funding will not conduct any business (including having any
Subsidiary) whatsoever, other than to comply with its obligations under this
Indenture and the Securities. Funding will not incur or otherwise become liable
for any Indebtedness (other than the Securities and any renewal, extension,
substitution, refunding, refinancing or replacement thereof in accordance with
this Indenture) or make any Restricted Payments.
SECTION 5.18 Limitation on Lines of Business.
-------------------------------
Neither the Company nor any of the Subsidiaries will directly or
indirectly engage to any substantial extent in any line or lines of business
activity other than which, in the reasonable good faith judgment of the
Independent Directors of Funding is a Related Business.
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SECTION 5.19 Restriction on Certain Agreements.
-----------
Other than employment agreements in the ordinary course of business
consistent with industry practice and approved by the compensation committee of
Funding, the Company will not, and will not permit any of its Subsidiaries to,
enter into any management, services or consulting agreement with Trump or any
Affiliate of Trump, other than the TPM Services Agreement; provided that no
Services Fee thereunder shall be paid (i) to any person other than the Company
or a Subsidiary of the Company if the TPM Services Agreement is assigned or
transferred by Trump Plaza Management Corp. and (ii) to Trump Plaza Management
Corp. after expiration of the Super Puma Helicopter Lease. The Company will
not, and will not permit the Subsidiaries to, pay any Services Fee under the
TPM Services Agreement to Trump Plaza Management Corp. or pay or reimburse any
expenses relating thereto if a Default or Event of Default has occurred and is
continuing. The terms of the TPM Services Agreement shall not be amended to
increase the amounts to be paid thereunder in the aggregate or on any
particular date, or in any other manner which would be adverse to the Company
or its Subsidiaries.
SECTION 5.20 Limitation on Leases.
--------------------
The Company will not, nor will any of its Subsidiaries, be
permitted to, lease as tenant or subtenant real or personal property (except
Permitted Leases), unless the Company's Consolidated Coverage Ratio for the
four full fiscal quarters immediately preceding such event, taken as one period
(and after also giving pro forma effect to any such lease as if such lease was
entered into at the beginning of such four-quarter period), would have been at
least equal to the ratios set forth below for the applicable period during
which such determination is being made:
PERIOD RATIO
- ------ -----
First 24 months from and including the Issue Date.........2.00 to 1
Thereafter................................................2.25 to 1
In giving effect to the lease as of such four full fiscal quarters, it will be
assumed that the rent for such prior four fiscal quarters was the greater of
the (i) average annualized rent over the term of such lease and (ii) rent
payable for the first four fiscal quarters of such lease.
SECTION 5.21 Limitation on Status as Investment Company.
------------------------------------------
None of the Company, Funding, any Unrestricted Subsidiary or any of
their respective Subsidiaries shall become required to register as an
"investment company" (as that term is defined in the Investment Company Act of
1940, as amended), or otherwise become subject to regulation under the
Investment Company Act.
SECTION 5.22 Future Collateral Agreements.
----------------------------
All property, real, personal or mixed or any interest therein
(other than Excepted Property), of every kind and description and wheresoever
situate, which may be hereafter acquired by the Company, any of its
Subsidiaries or any Guarantor (including, without limitation,
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fee title to any Leased Land) shall immediately upon the acquisition thereof by
the Company, any of its Subsidiaries or any Guarantor, and without any further
mortgage, conveyance or assignment, become subject to the Liens under the
Mortgage Documents as fully as though now owned by the Company, any of its
Subsidiaries or any Guarantor. Nevertheless, the Company, any of its
Subsidiaries or any Guarantor shall do, execute, acknowledge and deliver all
and every such further acts, conveyances, mortgages, financing statements and
assurances as the Collateral Agent shall require for accomplishing the express
purposes of the Indenture and the Mortgage Documents, including execution and
delivery of appropriate Pledge Agreements.
ARTICLE VI
SUCCESSORS
SECTION 6.1 Limitation on Merger, Sale or Consolidation.
-------------------------------------------
Neither of the Issuers may consolidate with, merge with or into any
other Person or sell, assign, convey, transfer, lease or otherwise dispose of
all or substantially all of its properties and assets (as an entirety or
substantially as an entirety in one transaction or series of related
transactions) to any Person or group of affiliated Persons or permit any of the
Company's Subsidiaries to enter into any such transaction or transactions if
such transaction or transactions, in the aggregate, would result in a transfer
of all or substantially all of the assets of the Company and the Subsidiaries
on a Consolidated basis or Funding, as applicable, to any other Person, unless:
(a) such Issuer shall be the continuing Person, or the
Person (if other than such Issuer) formed by such consolidation or into
which such Issuer is merged or to which the properties and assets of such
Issuer are transferred (the "Surviving Entity") shall be a partnership or
corporation, in the case of the Company, and a corporation, in the case
of Funding, duly organized and validly existing under the laws of the
United States or any state thereof or the District of Columbia and shall
expressly assume, by a supplemental indenture, all of the obligations of
such Issuer under the Securities and this Indenture, and this Indenture
shall remain in full force and effect;
(b) immediately before and immediately after giving
effect to such transaction on a pro forma basis, no Event of Default or
Default shall have occurred and be continuing;
(c) immediately after giving effect to such
transaction on a pro forma basis, the Consolidated Net Worth of the
Company or the Surviving Entity, as applicable, is at least equal to the
Consolidated Net Worth of the Company immediately prior to such
transaction or series of transactions;
(d) immediately before and after giving effect to such
transaction on a pro forma basis, the Company or the Surviving Entity, as
applicable, could incur at
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least $1.00 of additional Indebtedness pursuant to the Debt Incurrence
Ratio set forth in paragraph (a) of Section 5.11; and
(e) immediately after such transaction, such Issuer or
the Surviving Entity, as applicable, holds all Permits required for
operation of the business of, and such entity is controlled by a Person
or entity (or has retained a Person or entity which is) experienced in,
operating casino hotels or otherwise holds all Permits (including those
required from Gaming Authorities) to operate its business.
The Company shall also deliver to the Trustee an officers'
certificate and an opinion of counsel, each stating that (a) such
consolidation, merger, sale, assignment, conveyance, transfer, lease or
disposition and such supplemental indenture comply with this Indenture and (b)
this transaction shall not impair the rights and powers of the Trustee and
Holders of the Securities thereunder.
For purposes of the first sentence of this Section 6.1, the sale,
lease, conveyance or transfer of all or substantially all of the properties and
assets of one or more Subsidiaries of the Issuers, which properties and assets,
if held by the Issuers instead of such Subsidiaries, would constitute all or
substantially all of the properties and assets of the Issuers on a consolidated
basis, shall be deemed to be the transfer of all or substantially all of the
properties and assets of the Issuers.
SECTION 6.2 Successor Substituted.
---------------------
In the event of any transaction (other than a lease) described in
and complying with the conditions listed in Section 6.1 in which the Company or
Funding, as applicable, is not the continuing Person, the successor Person
formed or remaining shall succeed to, and be substituted for, and may exercise
every right and power of, provisions of the Company or Funding, as applicable,
and the Company or Funding shall in such case be discharged from all
obligations and covenants under this Indenture, the Securities and the Mortgage
Documents.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.1 Events of Default.
-----------------
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be caused voluntarily or involuntarily or effected, without limitation,
by operation of law or pursuant to any judgment, decree or order of any court
or any order, rule or regulation of any administrative or governmental body):
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(a) the failure by the Issuers to pay any installment of
interest (including any defaulted interest) on the Securities as and when the
same becomes due and payable and the continuance of any such failure for 30
days;
(b) the failure by the Issuers to pay all or any part of the
principal, or premium, if any, on the Securities when and as the same becomes
due and payable at maturity, at redemption, by acceleration or otherwise,
including, without limitation, payment of the Change of Control Purchase Price
or the Asset Sale Offer Price, or otherwise;
(c)(i) the failure by the Company or any of its Subsidiaries
to observe or perform any other covenant or agreement contained in the
Securities or this Indenture and (other than a default in the performance, or
breach of a covenant that is specifically dealt with elsewhere in this section)
the continuance of such failure for a period of 30 days after written notice is
given to the Issuers by the Trustee or to the Issuers and the Trustee by the
Holders of at least 25% in aggregate principal amount of the Securities
outstanding, specifying such default and requiring that it be remedied; (ii)
default in the performance or breach of the provisions of Article VI; (iii)
Funding or the Company shall have failed to make or consummate a Change of
Control Offer in accordance with provisions of Section 11.1; and (iv) Funding
or the Company shall have failed to make or consummate an Asset Sale Offer in
accordance with the provisions of Section 5.15;
(d) a default in Indebtedness of either of the Issuers or any
of the Subsidiaries with an aggregate outstanding principal amount in excess of
$20.0 million;
(e) one or more judgments, orders or decrees for the payment
of money in excess of $20.0 million, either individually or in the aggregate,
shall be rendered against either of the Issuers or any of the Subsidiaries or
any of their respective properties and shall not be discharged and either (i)
an enforcement proceeding shall have been commenced by any creditor upon such
judgment, order or decree or (ii) there shall be any period of 60 days during
which a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect;
(f) there shall have been the entry by a court having
jurisdiction in the premises of (i) a decree or order for relief in respect of
either of the Issuers or any of the Significant Subsidiaries in an involuntary
case or proceeding under any applicable Bankruptcy Law or (ii) a decree or
order adjudging either of the Issuers or any of the Significant Subsidiaries
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment or
composition of or in respect of either of the Issuers or any of the Significant
Subsidiaries under any applicable federal or state law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of either of the Issuers or any of the Significant
Subsidiaries or of any substantial part of their property, or ordering the
winding-up or liquidation of their affairs, and the continuance of any such
decree or order for relief or any such other decree or order unstayed and in
effect for a period of 60 consecutive days;
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(g)(i) either of the Issuers or any of the Significant
Subsidiaries commences a voluntary case or proceeding under any applicable
Bankruptcy Law or any other case or proceeding to be adjudicated bankrupt or
insolvent, or (ii) either of the Issuers or any of the Significant Subsidiaries
consents to the entry of a decree or order for relief in respect of either of
the Issuers or such Significant Subsidiary in an involuntary case or proceeding
under any applicable Bankruptcy Law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or (iii) either of the Issuers or any
of the Significant Subsidiaries files a petition or answer or consent seeking
reorganization or relief under any applicable federal or state law, or either
of the Issuers or any of the Significant Subsidiaries consents to (1) the
filing of such petition or the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee, sequestrator or similar
official of either of the Issuers or such Significant Subsidiary or of any
substantial part of its property, (2) the making by it of an assignment for the
benefit of creditors or (3) the admission by it in writing of its inability to
pay its debts generally as they become due, or (iv) the taking of corporate or
partnership action by either of the Issuers or any of the Significant
Subsidiaries in furtherance of any such action in this paragraph (g);
(h) the revocation, suspension or involuntary loss of any
Permit which results in the cessation of all or a substantial portion of the
operations of either Casino Hotel for a period of more than 90 consecutive
days;
(i) except as permitted by this Indenture and the
Securities, the cessation of effectiveness of any Guaranty of the Obligations
in any material respect or the finding by any judicial proceeding that any such
Guaranty is unenforceable or invalid in any material respect or the denial or
disaffirmation by any Guarantor in writing of its obligations under its
Guaranty; or
(j) default in the payment of any other sum due under the
Mortgage, and the continuance of such default for a period of 30 days after
there has been given to the Issuers a notice specifying such default and
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder; or
(k) default in the performance, or breach, of any covenant
of Mortgagor in the Mortgage (other than a covenant, a default in the
performance or breach of which is elsewhere in the Mortgage specifically dealt
with), and continuance of such default or breach for a period of 30 days after
there has been given to Mortgagor a notice specifying such default or breach
and requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder, unless (i) the default or breach is of such a nature that
is curable but not susceptible of being cured with due diligence within such
30-day period (for reasons other than the lack of funds), (ii) Mortgagor
delivers an Officers' Certificate to Mortgagee within such 30-day period
stating (A) the applicability of the provisions of clause (i) to such default
or breach, (B) Mortgagor's intention to remedy such default or breach with
reasonable diligence and (C) the steps which Mortgagor has undertaken or
intends to undertake to remedy such default or breach and (iii) Mortgagor
delivers to Mortgagee additional Officers' Certificates every 30 days
thereafter updating the information contained in the certificate described in
clause (ii), in which case such 30-day period shall be extended for such
further period of time (but in no event more than 60 days after the last day of
such 30-day period) as may reasonably be required to cure the
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same, provided that Mortgagor is then proceeding and thereafter continues to
proceed to cure the same with reasonable diligence; or
(l) default by Mortgagor under any of the terms of any
Facility Lease which shall not be fully cured or waived prior to the expiration
of any grace period (as such grace period may be extended) contained in such
Facility Lease; or
(m) default by Mortgagor under any of the terms of the Egg
Harbor Mortgage (i) at the Stated Maturity of the Indebtedness secured by such
mortgage or (ii) which default results in the acceleration of the Stated
Maturity of the Indebtedness secured by such mortgage and, in the case of (i)
or (ii), which default shall not be fully cured, waived or rescinded, as the
case may be, prior to the expiration of any grace period (as such grace period
may be extended) contained in such mortgage; or
(n) default by Mortgagor under any of the terms of any
Superior Mortgage (other than the Egg Harbor Mortgage) with respect to which
there is no grace period and no notice is required to be given, or, if a grace
period is provided in such Superior Mortgage (other than the Egg Harbor
Mortgage), which shall not be fully cured or waived within five days prior to
the expiration of such grace period (as such grace period may be extended); or
(o) default in the performance, or breach, of any of the
provisions of Article Four of the Mortgagee; or
(p) if any representation or warranty of Mortgagor set forth
in this Mortgage or in any notice, certificate, demand or request delivered to
Mortgage pursuant to this Mortgage shall prove to be incorrect in any material
respect as of the time when made; or
(q) default by Mortgagor under any of the terms of any
Refinancing Lien which shall not be fully cured or waived prior to the
expiration of any grace period contained therein (as such grace period may be
extended) and there has been given to Mortgagor a notice specifying such
default and stating that such notice is a "Notice of Default" hereunder; or
(r) the declaration or payment of any dividend or other
distribution in respect of Equity Interests of any Guarantor in the event of
failure by any Guarantor to pay any installment of interest or all or any part
of the principal, or premium, if any, on the Intercompany Notes when and as the
same become due and payable; or
(s) an event of default under any of the Mortgage Documents.
An Event of Default shall not be deemed to exist by reason of any
event which Mortgagor is contesting in compliance with the provisions of
Section 5.09 of the Mortgage.
Notwithstanding the 30-day period and notice requirement contained
in Section 7.1(c) above, (i) with respect to a default under Article XI, the
30-day period referred to in Section 7.1(c) shall be deemed to have begun as of
the date the Change of Control notice is
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required to be sent in the event that the Company has not complied with the
provisions of Section 11.1, and the Trustee or Holders of at least 25% in
principal amount of the outstanding Securities thereafter give the notice of
default referred to in Section 7.1(c) to the Company and, if applicable, the
Trustee; provided, however, that if the breach or default is a result of a
default in the payment when due of the Change of Control Purchase Price, such
default shall be deemed, for purposes of this Section 7.1, to arise no later
than on such due date; and (ii) with respect to a default under Section 5.15,
the 30-day period referred to in Section 7.1(c) shall be deemed to have begun
as of the date the notice of an Offer to Purchase is required to be sent in the
event that the Company has not complied with the provisions of Section 5.15
requiring the giving of such notice, and the Trustee or Holders of at least 25%
in principal amount of the outstanding Securities thereafter give the notice of
default referred to in Section 7.1(c) to the Company and, if applicable, the
Trustee; provided, however, that if the breach or default is a result of a
default in the payment when due of the Offer to Purchase Price, such default
shall be deemed, for purposes of this Section 7.1, to arise no later than on
such due date.
SECTION 7.2 Acceleration of Maturity Date; Rescission and
----------------------------------------------
Annulment.
- ---------
If an Event of Default (other than as specified in clauses (f) and
(g) of Section 7.1) occurs and is continuing, then in every such case, unless
the principal of all the Securities shall have already become due and payable,
either the Trustee or the Holders of at least 25% of the principal amount of
the Securities then outstanding, by written notice to the Issuers (and to the
Trustee if such notice is given by such Holders) (an "Acceleration Notice"),
may, and the Trustee at the request of such Holders shall, declare all unpaid
principal of, premium, if any, and accrued interest on all Securities to be due
and payable and thereupon the Trustee may, at its discretion, proceed to
protect and enforce the rights of the Holders of the Securities by appropriate
judicial proceeding. If an Event of Default specified in clause (f) or (g)
occurs and is continuing, then the principal of all Securities shall ipso facto
become and be immediately due and payable without any declaration or other act
of the Trustee or any Holder.
After a declaration of acceleration, but before a judgment or
decree for payment of the money due has been obtained by the Trustee, the
Holders of a majority in aggregate principal amount of Securities outstanding,
by written notice to the Issuers and the Trustee, may annul such declaration
if:
(a) the Issuers have paid or deposited with the Trustee a
sum sufficient to pay:
(i) all sums paid or advanced by the Trustee under
this Indenture and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel,
(ii) all overdue interest on all Securities,
(iii) the principal of and premium, if any, on any
Securities which have become due otherwise than by such declaration
of acceleration and interest thereon at the rate borne by the
Securities, and
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(iv) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate borne by the
Securities; and
(b) all Events of Default, other than the non-payment of
principal of the Securities which have become due solely by such
declaration of acceleration, have been cured or waived.
Notwithstanding the previous sentence of this Section 7.2, no
annulment of a declaration of acceleration shall be effective for any Event of
Default with respect to any covenant or provision which cannot be modified or
amended without the consent of the Holder of greater than a simple majority of
the outstanding principal amount of the Securities, unless such specified
percentage of affected Holders agree, in writing, to annul such declaration of
acceleration. No such annulment shall cure or waive any subsequent default or
impair any right consequent thereon.
SECTION 7.3 Collection of Indebtedness and Suits for Enforcement
-----------------------------------------------------
by Trustee.
- ----------
The Issuers covenant that if an Event of Default in payment of
principal, premium, or interest specified in Section 7.1(a) and (b) occurs and
is continuing, the Issuers shall, upon demand of the Trustee, pay to it, for
the benefit of the Holders of such Securities, the whole amount then due and
payable on such Securities for principal, premium (if any) and interest, and,
to the extent that payment of such interest shall be legally enforceable,
interest on any overdue principal (premium, if any) and on any overdue
interest, at the rate borne by the Securities, and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including compensation to, and expenses, disbursements and advances
of the Trustee, its agents and counsel.
If the Issuers fail to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust in favor of the
Holders, may institute a judicial proceeding for the collection of the sums so
due and unpaid, may prosecute such proceeding to judgment or final decree and
may enforce the same against the Issuers or any other obligor upon the
Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Issuers or any other obligor
upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 7.4 Trustee May File Proofs of Claim.
--------------------------------
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition
or other judicial proceeding relative to the
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Issuers or any other obligor upon the Securities or the property of the Issuers
or of such other obligor or their creditors, the Trustee (irrespective of
whether the principal of the Securities shall then be due and payable as
therein expressed or by declaration or otherwise and irrespective of whether
the Trustee shall have made any demand on the Issuers for the payment of
overdue principal or interest) shall be entitled and empowered, by intervention
in such proceeding or otherwise to take any and all actions under the TIA,
including
(i) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid in
respect of the Securities and to file such other papers or
documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee,
its agent and counsel) and of the Holders allowed in such judicial
proceeding, and
(ii) to collect and receive any moneys or other
property payable or deliverable on any such claims and to
distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders,
to pay to the Trustee any amount due it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel,
and any other amounts due the Trustee under Section 8.7.
Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment, or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
SECTION 7.5 Trustee May Enforce Claims Without Possession of
-------------------------------------------------
Securities.
- ----------
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust in favor of the Holders, and any
recovery of judgment shall, after provision for the payment of compensation to,
and expenses, disbursements and advances of the Trustee, its agents and
counsel, be for the ratable benefit of the Holders of the Securities in respect
of which such judgment has been recovered.
SECTION 7.6 Priorities.
----------
Any money collected by the Trustee pursuant to this Article VII
shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of principal,
premium (if any) or interest, upon presentation of the
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Securities and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
FIRST: To the Trustee in payment of all amounts due pursuant
to Section 8.7;
SECOND: To the Holders in payment of the amounts then due
and unpaid for principal of, premium (if any) and interest on, the
Securities in respect of which or for the benefit of which such money has
been collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for
principal, premium (if any) and interest, respectively; and
THIRD: To whomsoever may be lawfully entitled thereto, the
remainder, if any.
The Trustee may, but shall not be obligated to, fix a record date
and payment date for any payment to the Holders under this Section 7.6.
SECTION 7.7 Limitation on Suits.
-------------------
No Holder of any Security shall have any right to order or direct
the Trustee to institute any proceeding, judicial or otherwise, with respect to
this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless
(A) such Holder has previously given written notice
to the Trustee of a continuing Event of Default;
(B) the Holders of not less than 25% in principal
amount of then outstanding Securities shall have made written
request to the Trustee to institute proceedings in respect of such
Event of Default in its own name as Trustee hereunder;
(C) such Holder or Holders have offered to the
Trustee reasonable security or indemnity against the costs,
expenses and liabilities to be incurred or reasonably probable to
be incurred in compliance with such request;
(D) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute any
such proceeding; and
(E) no direction inconsistent with such written
request has been given to the Trustee during such 60-day period by
the Holders of a majority in principal amount of the outstanding
Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or
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prejudice the rights of any other Holders, or to obtain or to seek to obtain
priority or preference over any other Holders or to enforce any right under
this Indenture, except in the manner herein provided and for the equal and
ratable benefit of all the Holders.
SECTION 7.8 Unconditional Right of Holders to Receive Principal,
-----------------------------------------------------
Premium and Interest.
- --------------------
Notwithstanding any other provision of this Indenture, the Holder
of any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of, and interest on, such Security on the
Maturity dates of such payments as expressed in such Security (in the case of
redemption, the Redemption Price on the applicable Redemption Date, in the case
of a Change of Control, the Change of Control Purchase Price on the applicable
Change of Control Purchase Date, and, in the case of an Asset Sale, the Asset
Sale Offer Price on the Asset Sale Purchase Date) and to institute suit for the
enforcement of any such payment, and such rights shall not be impaired without
the consent of such Holder.
SECTION 7.9 Rights and Remedies Cumulative.
------------------------------
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in Section 2.7, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 7.10 Delay or Omission Not Waiver.
----------------------------
No delay or omission by the Trustee or by any Holder of any
Security to exercise any right or remedy arising upon any Event of Default
shall impair the exercise of any such right or remedy or constitute a waiver of
any such Event of Default. Every right and remedy given by this Article VII or
by law to the Trustee or to the Holders may be exercised from time to time, and
as often as may be deemed expedient, by the Trustee or by the Holders, as the
case may be.
SECTION 7.11 Control by Holders.
------------------
The Holder or Holders of a majority in aggregate principal amount
of then outstanding Securities shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred upon the Trustee, provided, that
--------
(1) such direction shall not be in conflict with any
rule of law or with this Indenture,
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(2) the Trustee shall not determine that the action so
directed would be unjustly prejudicial to the Holders not taking part in
such direction, and
(3) the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction.
SECTION 7.12 Waiver of Past Default.
----------------------
Subject to Section 7.8, the Holder or Holders of not less than a
majority in aggregate principal amount of the outstanding Securities may, by
written notice to the Trustee on behalf of all Holders, prior to the
declaration of acceleration of the maturity of the Securities, waive any past
default hereunder and its consequences, except a default
(A) in the payment of the principal of,
premium, if any, or interest on, any Security as specified in
clauses (a) and (b) of Section 7.1, or
(B) in respect of a covenant or provision
hereof which, under Article X, cannot be modified or amended
without the consent of the Holder of each outstanding Security
affected or Holders of more than a simple majority in principal
amount of the Securities, as applicable; provided, however, that
such a default may be waived upon the affirmative vote of the
requisite principal amount of the Securities.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair the exercise of any right arising
therefrom.
SECTION 7.13 Undertaking for Costs.
---------------------
All parties to this Indenture agree, and each Holder of any
Security by its acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for
any action taken, suffered or omitted to be taken by it as Trustee, the filing
by any party litigant in such suit of an undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made
by such party litigant; but the provisions of this Section 7.13 shall not apply
to any suit instituted by the Issuers, to any suit instituted by the Trustee,
to any suit instituted by any Holder, or group of Holders, holding in the
aggregate more than 10% in aggregate principal amount of the outstanding
Securities, or to any suit instituted by any Holder for enforcement of the
payment of principal of, or premium (if any) or interest on, any Security on or
after the Maturity of such Security.
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SECTION 7.14 Restoration of Rights and Remedies.
----------------------------------
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every case, subject to any
determination in such proceeding, the Issuers, the Trustee and the Holders
shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and the Holders
shall continue as though no such proceeding had been instituted.
ARTICLE VIII
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this
Indenture and covenants and agrees to perform the same, as herein expressed.
SECTION 8.1 Duties of Trustee.
-----------------
(a) If a Default or an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture and use the same degree of care and skill in their
exercise as a prudent person would exercise or use under the circumstances in
the conduct of his own affairs.
(b) Except during the continuance of a Default or an Event
of Default:
(1) The Trustee need perform only those duties as are
specifically set forth in this Indenture and no others, and no covenants
or obligations shall be implied in or read into this Indenture which are
adverse to the Trustee.
(2) In the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements of
this Indenture.
(c) The Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of
paragraph (b) of this Section 8.1.
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(2) The Trustee shall comply with any order or
directive of a Gaming Authority that the Trustee submit an application
for any license, finding of suitability or other approval pursuant to any
Gaming Law and will cooperate fully and completely in any proceeding
related to such application.
(3) The Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer, unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts.
(4) The Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 7.11.
(d) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or to take or omit to take any
action under this Indenture or at the request, order or direction of the
Holders or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
(e) Every provision of this Indenture that in any way
relates to the Trustee is subject to paragraphs (a), (b), (c), (d) and (f) of
this Section 8.1.
(f) The Trustee shall not be liable for interest on any
assets received by it except as the Trustee may agree in writing with the
Issuers. Assets held in trust by the Trustee need not be segregated from other
assets except to the extent required by law.
SECTION 8.2 Rights of Trustee.
-----------------
Subject to Section 8.1:
(a) The Trustee may rely on any document believed by it to
be genuine and to have been signed or presented by the proper person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
consult with counsel and may require an Officers' Certificate or an Opinion of
Counsel, which shall conform to Sections 12.4 and 12.5. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such certificate or opinion.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent
appointed with due care.
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(d) The Trustee shall not be liable for any action it takes
or omits to take in good faith which it believes to be authorized or within its
rights or powers conferred upon it by this Indenture or the TIA.
(e) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond,
debenture, or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters as it may
see fit.
(f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders, pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby.
(g) Except with respect to Section 5.1, the Trustee shall
have no duty to inquire as to the performance of the Issuers' covenants in
Article V. In addition, the Trustee shall not be deemed to have knowledge of
any Default or Event of Default except (i) any Event of Default occurring
pursuant to Sections 7.1(a), 7.1(b) and 5.1, or (ii) any Default or Event of
Default of which the Trustee shall have received written notification or
obtained actual knowledge.
SECTION 8.3 Individual Rights of Trustee.
----------------------------
The Trustee in its individual or any other capacity may become the
owner or pledgee of any of the Securities, may make loans to, accept deposits
from, and perform services for the Issuers or their Affiliates, and may
otherwise deal with the Issuers, any of their respective Subsidiaries, or their
respective Affiliates with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee
must comply with Sections 8.10 and 8.11.
SECTION 8.4 Trustee's Disclaimer.
--------------------
The Trustee makes no representation as to the validity or adequacy
of this Indenture or the Securities and it shall not be responsible for any
statement in the Securities, other than the Trustee's certificate of
authentication, or the use or application of any funds received by a Paying
Agent other than the Trustee.
SECTION 8.5 Notice of Default.
-----------------
If a Default or an Event of Default occurs and is continuing and if
it is known to the Trustee, the Trustee shall mail to each Securityholder
notice of the uncured Default or Event of Default within 90 days after such
Default or Event of Default occurs. Except in the case of a Default or an
Event of Default in payment of principal (or premium, if any) of, or interest
on,
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any Security (including the payment of the Change of Control Purchase Price on
the Change of Control Purchase Date, the Redemption Price on the Redemption
Date and the Asset Sale Offer Amount on the Asset Sale Purchase Date, as the
case may be), the Trustee may withhold the notice if and so long as a Trust
Officer in good faith determines that withholding the notice is in the interest
of the Securityholders.
SECTION 8.6 Reports by Trustee to Holders.
-----------------------------
(a) Securities Law Requirements. If required by law,
---------------------------
within 60 days after each May 15, beginning with the May 15 following the date
of this Indenture, the Trustee shall mail to each Securityholder a brief report
dated as of such May 15 that complies with TIA Section 313(a). If required by
law, the Trustee also shall comply with TIA Section Section 313(b) and 313(c).
The Issuers shall promptly notify the Trustee in writing if the
Securities become listed on any stock exchange or automatic quotation system.
A copy of each report at the time of its mailing to Securityholders
shall be mailed to the Issuers and filed with the SEC and each stock exchange,
if any, on which the Securities are listed.
(b) Gaming License Requirements. The Trustee will
---------------------------
provide any applicable Gaming Authority with:
(1) copies of all notices, reports and other written
communications which the Trustee gives to Holders;
(2) a list of Holders promptly after the original
issuance of the Securities and a list of Holders eight months and two months
prior to the expiration date of each then-current Gaming License held by the
Company or its Subsidiaries;
(3) notice of any Event of Default under this
Indenture or of any Default, any acceleration of the Indebtedness evidenced or
secured hereby, the institution of any legal actions or proceedings before any
court or governmental authority in respect of this Indenture or the Collateral
Documents, the entering into or taking possession of any property constituting
the Collateral and any rescission, annulment or waiver in respect of an Event
of Default;
(4) notice of the removal or resignation of the
Trustee within five Business Days thereof;
(5) notice of any transfer or assignment of rights
under this Indenture (but no transfers or assignments of the Securities) or the
Collateral Documents within five Business Days thereof; and
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(6) a copy of any amendment to the Securities, this
Indenture or the Collateral Documents within five Business Days of the
effectiveness thereof.
The notice specified in clause (3) above shall be in writing and, except as set
forth below, shall be given within five Business Days after the Trustee has
transmitted the notice required by Section 8.5. In the case of any notice in
respect of any Event of Default, such notice shall be accompanied by a copy of
any notice from the Holders, or a representative thereof or the Trustee, to the
defaulting Person and, if accompanied by any such notice to the defaulting
Person, shall be given simultaneously with the giving of any such notice to the
defaulting Person. In the case of any legal actions or proceedings, such
notice shall be accompanied by a copy of the complaint or other initial
pleading or document.
The Trustee shall in accordance with the limitations set forth
herein cooperate with any applicable Gaming Authority in order to provide such
Gaming Authority with information and documentation relevant to compliance with
clause (3) above and as otherwise required by any applicable gaming law.
The Issuers will advise the Trustee of the expiration date of any
then-current Gaming License held by the Partnership at least nine months prior
to the expiration thereof and the Trustee until so advised may assume that such
Gaming License has not expired.
SECTION 8.7 Compensation and Indemnity.
--------------------------
Each of the Issuers shall pay to the Trustee from time to time
reasonable compensation for its services. The Trustee's compensation shall not
be limited by any law on compensation of a trustee of an express trust. Each
of the Issuers shall reimburse the Trustee upon request for all reasonable
disbursements, expenses and advances incurred or made by it. Such expenses
shall include the reasonable compensation, disbursements and expenses of the
Trustee's agents, accountants, experts and counsel.
Each of the Issuers shall indemnify the Trustee (in its capacity as
Trustee) and each of its officers, directors, attorneys-in-fact and agents for,
and hold it harmless against, any claim, demand, expense (including but not
limited to reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel), loss or liability incurred by them without negligence, bad
faith or willful misconduct on its part, arising out of or in connection with
the administration of this trust and their rights or duties hereunder including
the reasonable costs and expenses of defending themselves against any claim or
liability in connection with the exercise or performance of any of its powers
or duties hereunder. The Trustee shall notify the Issuers promptly of any
claim asserted against the Trustee for which it may seek indemnity. The
Issuers shall defend the claim and the Trustee shall provide reasonable
cooperation at the Issuers's expense in the defense. The Trustee may have
separate counsel and the Issuers shall pay the reasonable fees and expenses of
such counsel; provided, that the Issuers will not be required to pay such
--------
fees and expenses if it assumes the Trustee's defense and there is no conflict
of interest between the Issuers and the Trustee in connection with such
defense. The Issuers need not pay for any settlement made without its written
consent. The Issuers need not reimburse any expense
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or indemnify against any loss or liability to the extent incurred by the
Trustee through its negligence, bad faith or willful misconduct.
To secure the Issuers' payment obligations in this Section 8.7, the
Trustee shall have a lien prior to the Securities on all assets held or
collected by the Trustee, in its capacity as Trustee, except assets held in
trust to pay principal of or interest on particular Securities.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 7.1 (f) or (g) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The Issuers' obligations under this Section 8.7 and any lien
arising hereunder shall survive the resignation or removal of the Trustee, the
discharge of the Issuers' obligations pursuant to Article IX and any rejection
or termination of this Indenture under any Bankruptcy Law.
SECTION 8.8 Replacement of Trustee.
----------------------
The Trustee may resign by so notifying the Issuers in writing. The
Holder or Holders of a majority in principal amount of the outstanding
Securities may remove the Trustee by so notifying the Issuers and the Trustee
in writing and may appoint a successor trustee with the Issuers' consent. The
Issuers may remove the Trustee if:
(1) the Trustee fails to comply with Section 8.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver, Custodian, or other public officer takes
charge of the Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Issuers shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holder or Holders of a majority in principal amount of the Securities may
appoint a successor Trustee to replace the successor Trustee appointed by the
Issuers.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuers. Immediately after that
and provided that all sums owing to the Trustee provided for in Section 8.7
have been paid, the retiring Trustee shall transfer all property held by it as
Trustee to the successor Trustee, subject to the lien provided in Section 8.7,
the resignation or removal of the retiring Trustee shall become effective, and
the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. A successor Trustee shall mail notice of its
succession to each Holder.
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If a successor Trustee does not take office within 60 days after
the retiring Trustee resigns or is removed, the retiring Trustee, the Issuers
or the Holder or Holders of at least 10% in principal amount of the outstanding
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 8.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
8.8, the Issuers' obligations under Section 8.7 shall continue for the benefit
of the retiring Trustee.
SECTION 8.9 Successor Trustee by Merger, Etc.
---------------------------------
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee.
SECTION 8.10 Eligibility; Disqualification.
-----------------------------
The Trustee shall at all times satisfy the requirements of TIA
Section 310(a)(1) and TIA Section 310(a)(5). The Trustee shall have a combined
capital and surplus of at least $25,000,000 as set forth in its most recent
published annual report of condition. The Trustee shall comply with TIA Section
310(b).
SECTION 8.11 Preferential Collection of Claims against
------------------------------------------
Issuers.
- -------
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
ARTICLE IX
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
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SECTION 9.1 Option to Effect Legal Defeasance or Covenant
----------------------------------------------
Defeasance.
- ----------
The Issuers may elect to have either Section 9.2 or 9.3 be applied
to all outstanding Securities upon compliance with the conditions set forth
below in this Article IX.
SECTION 9.2 Legal Defeasance and Discharge.
------------------------------
The Issuers may at their option, within one year of the final
Stated Maturity of the Securities and upon the Issuers' exercise under Section
9.1 of the option applicable to this Section 9.2, elect to have their
obligations and the obligations of the Guarantors discharged with respect to
all outstanding Securities on the date the conditions set forth below are
satisfied (hereinafter, "Legal Defeasance"). For this purpose, such Legal
Defeasance means that the Issuers shall be deemed to have paid and discharged
the entire Indebtedness represented by the outstanding Securities, which shall
thereafter be deemed to be "outstanding" only for the purposes of Section 9.5
and the other Sections of this Indenture referred to in (a) and (b) below, and
to have satisfied all their, and the Guarantors', other obligations under such
Securities and this Indenture and the Mortgage Documents and the Liens of the
Trustee thereunder shall be deemed to have been paid and discharged (and the
Trustee, on demand of and at the expense of the Issuers, shall execute proper
instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (a) the rights of
Holders of outstanding Securities to receive solely from the trust fund
described in Section 9.4, and as more fully set forth in such section, payments
in respect of the principal of, premium, if any, and interest on such
Securities when such payments are due, (b) the Issuers' obligations with
respect to such Securities under Sections 2.4, 2.6, 2.7, 2.10 and 5.2, (c) the
rights, powers, trusts, duties and immunities of the Trustee hereunder and the
Issuers' obligations in connection therewith and (d) this Article IX. Subject
to compliance with this Article IX, the Issuers may exercise their option under
this Section 9.2 notwithstanding the prior exercise of its option under Section
9.3 with respect to the Securities.
SECTION 9.3 Covenant Defeasance.
-------------------
Upon the Issuers' exercise under Section 9.1 of the option
applicable to this Section 9.3, the Issuers and the Guarantors shall be
released from their respective obligations under the covenants contained in
Sections 5.3, 5.6, 5.7, 5.8, 5.10, 5.11, 5.12, 5.13, 5.14, 5.15, 5.18, 5.19,
5.20, 5.22 and Article VI with respect to the outstanding Securities on and
after the date the conditions set forth below are satisfied (hereinafter,
"Covenant Defeasance"), and the Securities shall thereafter be deemed not
"outstanding" for the purposes of any direction, waiver, consent or declaration
or act of Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "outstanding" for all other purposes
hereunder. For this purpose, such Covenant Defeasance means that, with respect
to the outstanding Securities, the Issuers and the Guarantors need not comply
with and shall have no liability in respect of any term, condition or
limitation set forth in any such covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such covenant or by reason of
any reference in any such covenant to any other provision herein or in any
other document and the Liens of the Trustee under the Mortgage Documents shall
be deemed to have been paid and
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discharged, but, except as specified above, the remainder of this Indenture and
such Securities shall be unaffected thereby. In addition, upon the Issuers'
exercise under Section 9.1 of the option applicable to this Section 9.3,
Sections 7.1(c), 7.1(d), 7.1(e), 7.1(h), 7.1(i) and 7.1(j) shall not constitute
Events of Default.
SECTION 9.4 Conditions to Legal or Covenant Defeasance.
------------------------------------------
The following shall be the conditions to the application of either
Section 9.2 or Section 9.3 to the outstanding Securities, unless otherwise
specified herein:
(a) the Issuers must irrevocably deposit with the Trustee,
in trust, for the benefit of the Holders of the Securities, U.S. Legal Tender,
U.S. Government Obligations or a combination thereof, in such amounts as will
be sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, premium, if any, and interest on
such Securities on the stated date for payment thereof or on the redemption
date of such principal or installment of principal of, premium, if any, or
interest on such Securities, and the Holders of Securities must have a valid,
perfected, exclusive security interest in such trust;
(b) in the case of the Legal Defeasance, the Issuers shall
have delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to Trustee confirming that (A) the Issuers have received
from, or there has been published by the Internal Revenue Service, a ruling or
(B) since the date of this Indenture, there has been a change in the applicable
Federal income tax law, in either case to the effect that, and based thereon,
such opinion of counsel shall confirm that, the Holders of such Securities will
not recognize income, gain or loss for Federal income tax purposes as a result
of such Legal Defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the case
if such Legal Defeasance had not occurred;
(c) in the case of the Covenant Defeasance, the Issuers
shall have delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to such Trustee confirming that the Holders of such
Securities will not recognize income, gain or loss for Federal income tax
purposes as a result of such Covenant Defeasance and will be subject to Federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and
be continuing on the date of such deposit or insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the period ending
on the 91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under, this
Indenture or any other material agreement or instrument to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
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(f) the Issuers shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the Issuers with
the intent of preferring the Holders of such Securities over any other
creditors of the Company or any of its Subsidiaries or with the intent of
defeating, hindering, delaying or defrauding any other creditors of the
Company, its Subsidiaries or others; and
(g) the Issuers shall have delivered to the Trustee an
Officers' Certificate and an opinion of counsel, each stating that the
conditions precedent provided for in, in the case of the Officers' Certificate,
(a) through (f) and, in the case of the opinion of counsel, clauses (a) (with
respect to the validity and perfection of the security interest), (b), (c) and
(e) of this Section have been complied with.
SECTION 9.5 Deposited U.S. Legal Tender and U.S. Government
------------------------------------------------
Obligations to Be Held in Trust; Other Miscellaneous Provisions.
- ---------------------------------------------------------------
Subject to Section 9.6, all money and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 9.5, the
"Trustee") pursuant to Section 9.4 in respect of the outstanding Securities
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Securities and this Indenture, to the payment, either
directly or through any Paying Agent as the Trustee may determine, to the
Holders of such Securities of all sums due and to become due thereon in respect
of principal, premium, if any, and interest, but such money need not be
segregated from other funds except to the extent required by law.
The Issuers jointly and severally agree to pay and indemnify the
Trustee against any tax, fee or other charge imposed on or assessed against the
U.S. Legal Tender or U.S. Government Obligations deposited pursuant to Section
9.4 or the principal and interest received in respect thereof other than any
such tax, fee or other charge which by law is for the account of the Holders of
the outstanding Securities.
Anything in this Article IX to the contrary notwithstanding, the
Trustee shall deliver or pay to the Issuers from time to time upon the request
of the Issuers any U.S. Legal Tender or U.S. Government Obligations held by it
as provided in Section 9.4 which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 9.4(a)), are in excess of the amount thereof which would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 9.6 Repayment to Issuers.
--------------------
Any money deposited with the Trustee or any Paying Agent, or then
held by the Issuers, in trust for the payment of the principal of or interest
on any Security and remaining unclaimed for two years after such principal or
interest has become due and payable shall be paid to the Issuers on their
request; and the Holder of such Security shall thereafter look only to the
Issuers for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to
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such trust money shall thereupon cease; provided, however, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the
expense of the Issuers cause to be published once, in the New York Times and
The Wall Street Journal (national edition), notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less
than 30 days from the date of such notification or publication, any unclaimed
balance of such money then remaining will be repaid to the Issuers.
SECTION 9.7 Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any U.S. Legal
Tender or U.S. Government Obligations in accordance with Section 9.2 or 9.3, as
the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Issuers' obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to Section 9.2 or 9.3 until such time as the Trustee or Paying Agent
is permitted to apply such money in accordance with Section 9.2 and 9.3, as the
case may be; provided, however, that, if the Issuers make any payment of
principal of or interest on any Security following the reinstatement of its
obligations, the Issuers shall be subrogated to the rights of the Holders of
such Securities to receive such payment from the money held by the Trustee or
Paying Agent.
ARTICLE X
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 10.1 Supplemental Indentures Without Consent of
-------------------------------------------
Holders.
- -------
Without the consent of any Holder, the Issuers, when authorized by
Board Resolutions, and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto, or may amend, modify or
supplement the Securities, this Indenture, or any of the exhibits hereto, in
form satisfactory to the Trustee and the Issuers, for any of the following
purposes:
(1) to cure any ambiguity, defect, or inconsistency,
or to make any other provisions with respect to matters or questions
arising under this Indenture which shall not be inconsistent with the
provisions of this Indenture, provided such action pursuant to this
clause (1) shall not adversely affect the interests of any Holder in any
respect;
(2) to add to the covenants of the Issuers for the
benefit of the Holders, or to surrender any right or power herein
conferred upon the Issuers or to make any other change that does not
adversely affect the rights of any Holder; provided, that the Issuers
--------
have delivered to the Trustee an Opinion of Counsel stating that such
change does not adversely affect the rights of any Holder;
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(3) to provide for additional collateral for or for
guarantors of the Securities;
(4) to provide for uncertificated Securities in
addition to or in place of certificated Securities;
(5) to evidence the succession of another person to
the Issuers, and the assumption by any such successor of the obligations
of the Issuers, herein and in the Securities in accordance with Article
VI; or
(6) to comply with the TIA.
The terms of any document entered into pursuant to this Section
shall be subject to prior approval, if required, of any applicable Gaming
Authority.
SECTION 10.2 Amendments, Supplemental Indentures and Waivers
------------------------------------------------
with Consent of Holders.
- -----------------------
Subject to Section 7.8 and the last sentence of this paragraph,
with the consent of the Holders of not less than a majority in aggregate
principal amount of then outstanding Securities, by written act of said Holders
delivered to the Issuers and the Trustee, the Issuers, when authorized by Board
Resolutions, and the Trustee may amend or supplement any of the exhibits
hereto, this Indenture or the Securities or enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Mortgage
Documents, this Indenture or the Securities or of modifying in any manner the
rights of the Holders under any of the exhibits hereto, this Indenture or the
Securities. Subject to Section 7.8 and the last sentence of this paragraph,
the Holder or Holders of a majority in aggregate principal amount of then
outstanding Securities may waive compliance by the Issuers with any provision
of the Mortgage Documents, this Indenture or the Securities. Notwithstanding
the foregoing provisions of this Section 10.2, no such amendment, supplemental
indenture or waiver shall,
(a) without the consent of the Holder of each outstanding
Security affected thereby:
(i) change the Stated Maturity on any
Security, or reduce the principal amount thereof or the rate (or
extend the time for payment) of interest thereon, or change the
place of payment where, or the coin or currency in which, any
Security or any premium or the interest thereon is payable, or
impair the right to institute suit for the enforcement of any such
payment on or after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date), or reduce the Change
of Control Purchase Price or the Asset Sale Offer Price or
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alter the provisions of Article III in a manner adverse to the
Holders;
(ii) reduce the percentage in principal
amount of outstanding Securities, the consent of whose Holders is
required for any such amendment, supplemental indenture or waiver
provided for in this Indenture; or
(iii) release any Collateral from the
Liens created by the Mortgage Documents, except in accordance with
this Indenture and such documents, or modify any of the waiver
provisions (except to increase any required percentage or to
provide that certain other provisions of this Indenture cannot be
modified or waived).
(b) without the consent of the Holders of not less than
two-thirds in aggregate principal amount of the then outstanding Securities
affected thereby (except as set forth in clause (a) of this sentence), modify
the obligations of the Issuers to make and consummate a Change of Control Offer
or modify any of the provisions or definitions with respect thereto.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Issuers shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Issuers to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture or waiver.
After an amendment, supplement or waiver under this Section 10.2 or
10.4 becomes effective, it shall bind each Holder, subject to the limitations
set forth above.
In connection with any amendment, supplement or waiver under this
Article X, the Issuers may, but shall not be obligated to, offer to any Holder
who consents to such amendment, supplement or waiver, or to all Holders,
consideration for such Holder's consent to such amendment, supplement or
waiver.
The terms of any document entered into pursuant to this Section
shall be subject to prior approval, if required, of any applicable Gaming
Authority.
SECTION 10.3 Compliance with TIA.
-------------------
Every amendment, waiver or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
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SECTION 10.4 Revocation and Effect of Consents.
---------------------------------
Until an amendment, waiver or supplement becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the
same debt as the consenting Holder's Security, even if notation of the consent
is not made on any Security. However, any such Holder or subsequent Holder may
revoke the consent as to his Security or portion of his Security by written
notice to the Issuers or the person designated by the Issuers as the person to
whom consents should be sent if such revocation is received by the Issuers or
such person before the date on which the Trustee receives an Officers'
Certificate certifying that the Holders of the requisite principal amount of
Securities have consented (and not theretofore revoked such consent) to the
amendment, supplement or waiver.
The Issuers may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to any
amendment, supplement or waiver, which record date shall be the date so fixed
by the Issuers notwithstanding the provisions of the TIA. If a record date is
fixed, then notwithstanding the last sentence of the immediately preceding
paragraph, those persons who were Holders at such record date, and only those
persons (or their duly designated proxies), shall be entitled to revoke any
consent previously given, whether or not such persons continue to be Holders
after such record date. No such consent shall be valid or effective for more
than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it
shall bind every Securityholder; provided, that any such waiver shall not
--------
impair or affect the right of any Holder to receive payment of principal and
premium of and interest on a Security, on or after the respective dates set for
such amounts to become due and payable expressed in such Security, or to bring
suit for the enforcement of any such payment on or after such respective dates.
SECTION 10.5 Notation on or Exchange of Securities.
-------------------------------------
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee may require the Holder of the Security to deliver it to
the Trustee or require the Holder to put an appropriate notation on the
Security. The Trustee may place an appropriate notation on the Security about
the changed terms and return it to the Holder. Alternatively, if the Issuers
or the Trustee so determine, the Issuers in exchange for the Security shall
issue, the Guarantors shall endorse and the Trustee shall authenticate a new
Security that reflects the changed terms. Any failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment, supplement or waiver.
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SECTION 10.6 Trustee to Sign Amendments, Etc.
--------------------------------
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article X, provided, that the Trustee may, but
--------
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
any amendment, supplement or waiver authorized pursuant to this Article X is
authorized or permitted by this Indenture.
ARTICLE XI
RIGHT TO REQUIRE REPURCHASE
SECTION 11.1 Repurchase of Securities at Option of the Holder
-------------------------------------------------
Upon Change of Control.
- ----------------------
(a) In the event that a Change of Control (the date on which
such event occurs being referred to as the "Change of Control Date") occurs,
each Holder of Securities shall have the right, at such Holder's option,
subject to the terms and conditions hereof, to require the Issuers to
repurchase all or any part of such Holder's Securities (provided, that the
principal amount of such Securities at maturity must be $1,000 or an integral
multiple thereof) on a date (the "Change of Control Purchase Date") that is
no later than 75 days after the occurrence of such Change of Control, at a cash
price (the "Change of Control Purchase Price") equal to 101% of the principal
amount thereof, plus accrued and unpaid interest, if any, to the Change of
Control Purchase Date.
(b) In the event that, pursuant to this Section 11.1, the
Company shall be required to commence an offer to purchase Securities (a
"Change of Control Offer"), the Company shall follow the procedures set forth
in this Section 11.1 as follows:
(1) within 30 days following any Change of Control,
the Company or the Trustee (upon the request and at the expense of the
Company) shall send, by first-class mail, a notice to each of the
Securityholders, at his address appearing in the First Mortgage Note
Register, which (to the extent consistent with this Indenture) shall
govern the terms of the Change of Control Offer and shall state:
(i) that the Change of Control Offer is
being made pursuant to this Section 11.1;
(ii) the Change of Control Purchase Price
together with accrued and unpaid interest;
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(iii) the purchase date for such validly
tendered Securities, which date shall be a business day no earlier
than 45 days nor later than 60 days from the date such notice is
mailed;
(iv) the Change of Control Put Date (as
defined below);
(v) that any Security or portion thereof
not tendered or accepted for payment will continue to accrue
interest;
(vi) that, unless (a) the Company default
in depositing U.S. Legal Tender with the Paying Agent (which may
not for purposes of this Section 11.1, notwithstanding anything in
this Indenture to the contrary, be the Issuers or any of the
Guarantors or any Affiliate of any of the Guarantors (or any other
obligor on the Securities) or any Affiliate of the Issuers (or such
other obligor)) in accordance with the last paragraph of this
clause (b) or (b) such Change of Control payment is prevented for
any reason, any Security or portion thereof accepted for payment
pursuant to the Change of Control Offer shall cease to accrue
interest after the Change of Control Purchase Date;
(vii) that Holders electing to have a
Security, or portion thereof, purchased pursuant to a Change of
Control Offer will be required to surrender the Security, with the
form entitled "Option of Holder to Elect Purchase" on the reverse
of the Security completed, to the Paying Agent (which may not for
purposes of this Section 11.1, notwithstanding anything in this
Indenture to the contrary, be the Issuers or any of the Guarantors
or any Affiliate of any of the Guarantors (or any other obligor on
the Securities) or any Affiliate of the Issuers (or such other
obligor)) at the address specified in the notice prior to the close
of business on the fifth Business Day prior to the Change of
Control Purchase Date (the "Change of Control Put Date");
(viii) that Holders will be entitled to
withdraw their elections, in whole or in part, if the Paying Agent
(which, for purposes of this Section 11.1, notwithstanding any
other provision of this Indenture, may not be the Issuers or an
Affiliate of the Issuers or any of the Guarantors or any Affiliate
of any of the Guarantors) receives, up to the close of business on
the Change of Control Put Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the
principal
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amount of the Securities the Holder is withdrawing and a statement
that such Holder is withdrawing his election to have such principal
amount of Securities purchased; and
(ix) a brief description of the events
resulting in such Change of Control.
(2) the Change of Control Offer shall commence within
30 days following the Change of Control Date;
(3) the Change of Control Offer shall remain open for
20 Business Days and no longer, except to the extent that a longer period
is required by applicable law (the "Change of Control Offer Period");
(4) within 5 Business Days following the expiration of
a Change of Control Offer (and in any event not earlier than 45 days nor
later than 60 days following the mailing of the notice described above),
the Company shall purchase all of the tendered Securities at the Change
of Control Purchase Price together with accrued interest to the Change of
Control Purchase Date;
(5) if the Change of Control Purchase Date is on or
after an interest payment record date and on or before the related
interest payment date, any accrued interest will be paid to the Person in
whose name a Security is registered at the close of business on such
record date, and no additional interest will be payable to
Securityholders who tender Securities pursuant to the Change of Control
Offer and who are paid on the Change of Control Purchase Date; and
(6) the Company shall provide the Trustee with notice
of the Change of Control Offer at least 5 Business Days before the
commencement of any Change of Control Offer.
On or before the Change of Control Purchase Date, the Company shall
(i) accept for payment Securities or portions thereof properly tendered
pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent
U.S. Legal Tender sufficient to pay the Change of Control Purchase Price
(including accrued and unpaid interest) of all Securities so tendered and (iii)
deliver to the Trustee Securities so accepted together with an Officers'
Certificate listing the Securities or portions thereof being purchased. The
Paying Agent will promptly mail to the Holders of Securities so accepted
payment in an amount equal to the Change of Control Purchase Price (together
with accrued and unpaid interest), and the Trustee shall promptly authenticate
and mail or deliver to such Holders a new Security equal in principal amount to
any unpurchased portion of the Security surrendered. Any Securities not so
accepted shall be promptly mailed or delivered to the Holder thereof. The
Company will publicly announce the results of the Change of Control Offer on or
as soon as practicable after the Change of Control Purchase Date.
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ARTICLE XII
MISCELLANEOUS
SECTION 12.1 TIA Controls.
------------
If any provision of this Indenture limits, qualifies, or conflicts
with the duties imposed by operation of the TIA, the imposed duties, upon
qualification of this Indenture under the TIA, shall control.
SECTION 12.2 Notices.
-------
Any notices or other communications to the Issuers or the Trustee
required or permitted hereunder shall be in writing, and shall be sufficiently
given if made by hand delivery, by telex, by telecopier or registered or
certified mail, postage prepaid, return receipt requested, addressed as
follows:
if to Trump Atlantic City Associates:
Trump Atlantic City Associates
Mississippi Avenue and The Boardwalk
Atlantic City, New Jersey 08401
Attention: Corporate Secretary
Telephone: (609) 441-6000
if to Trump Atlantic City Funding, Inc.:
Trump Atlantic City Funding, Inc.
Mississippi Avenue and The Boardwalk
Atlantic City, New Jersey 08401
Attention: Corporate Secretary
Telephone: (609) 441-6000
if to Trump Plaza Associates:
Trump Plaza Associates
Mississippi Avenue and The Boardwalk
Atlantic City, New Jersey 08401
Attention: Corporate Secretary
Telephone: (609) 441-6000
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if to Trump Taj Mahal Associates:
Trump Taj Mahal Associates
1000 Boardwalk
Atlantic City, New Jersey 08401
Attention: Corporate Secretary
Telephone: [(609) 949-1000]
if to The Trump Taj Mahal Corporation:
The Trump Taj Mahal Corporation
1000 Boardwalk
Atlantic City, New Jersey 08401
Attention: Corporate Secretary
Telephone: [(609) 949-1000]
if to the Trustee:
First Bank National Association
180 E. 5th Street
St. Paul, Minnesota 55101
Attention: Richard Prokosch
Telephone: (612) 244-0721
The Issuers, the Guarantors or the Trustee by notice to each other
party may designate additional or different addresses as shall be furnished in
writing by such party. Any notice or communication to the Issuers, the
Guarantors or the Trustee shall be deemed to have been given or made as of the
date so delivered, if personally delivered; when answered back, if telexed;
when receipt is acknowledged, if telecopied; and 5 Business Days after mailing
if sent by registered or certified mail, postage prepaid (except that a notice
of change of address shall not be deemed to have been given until actually
received by the addressee).
Any notice or communication mailed to a Securityholder shall be
mailed to him by first class mail or other equivalent means at his address as
it appears on the registration books of the Registrar and shall be deemed to
have been given upon the date so mailed.
Failure to mail a notice or communication to a Securityholder or
any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
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SECTION 12.3 Communications by Holders with Other Holders.
--------------------------------------------
Securityholders may communicate pursuant to TIA Section 312(b) with
other Securityholders with respect to their rights under this Indenture or the
Securities. The Issuers, the Trustee, the Registrar and any other person shall
have the protection of TIA Section 312(c).
SECTION 12.4 Certificate and Opinion as to Conditions
-----------------------------------------
Precedent.
- ---------
Upon any request or application by the Issuers to the Trustee to
take any action under this Indenture, the Issuers shall furnish to the Trustee:
(1) an Officers' Certificate (in form and substance
reasonably satisfactory to the Trustee) stating that, in the opinion of
the signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel (in form and substance
reasonably satisfactory to the Trustee) stating that, in the opinion of
such counsel, all such conditions precedent have been complied with.
SECTION 12.5 Statements Required in Certificate or Opinion.
---------------------------------------------
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the person making such
certificate or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of
the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such person,
he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion
of each such person, such condition or covenant has been complied with;
provided, however, that with respect to matters of fact an
-------
Opinion of Counsel may rely on an Officers' Certificate or certificates
of public officials.
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SECTION 12.6 Rules by Trustee, Paying Agent, Registrar.
-----------------------------------------
The Trustee may make reasonable rules for action by or at a meeting
of Securityholders. The Paying Agent or Registrar may make reasonable rules
for its functions.
SECTION 12.7 Legal Holidays.
--------------
A "Legal Holiday" used with respect to a particular place of
payment is a Saturday, a Sunday or a day on which banking institutions in New
York, New York are not required to be open. If a payment date is a Legal
Holiday in New York, New York, payment may be made at such place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for
the intervening period.
SECTION 12.8 Governing Law.
-------------
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE ISSUERS AND THE GUARANTORS HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN
THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING
IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE AND THE
SECURITIES, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE
ISSUERS AND THE GUARANTORS IRREVOCABLY WAIVE, TO THE FULLEST EXTENT THEY MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND 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 AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR
ANY SECURITYHOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY OF THE ISSUERS OR
THE GUARANTORS IN ANY OTHER JURISDICTION.
SECTION 12.9 No Interpretation of Other Agreements.
-------------------------------------
This Indenture may not be used to interpret another indenture, loan
or debt agreement of any of the Issuers or any of their Subsidiaries. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
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SECTION 12.10 No Recourse against Others.
--------------------------
A direct or indirect partner, director, officer, employee or
stockholder, as such, past, present or future of either of the Issuers, the
Guarantors or any successor entity shall not have any personal liability in
respect of the obligations of the Issuers or the Guarantors under the
Securities or this Indenture by reason of his or its status as such partner,
director, officer, employee or stockholder except to the extent such is an
Issuer or a Guarantor. Each Securityholder by accepting a Security waives and
releases all such liability. Such waiver and release are part of the
consideration for the issuance of the Securities.
SECTION 12.11 Successors.
----------
All agreements of the Issuers or the Guarantors in this Indenture
and the Securities shall bind their successors. All agreements of the Trustee
in this Indenture shall bind its successor.
SECTION 12.12 Duplicate Originals.
-------------------
All parties may sign any number of copies or counterparts of this
Indenture. Each signed copy or counterpart shall be an original, but all of
them together shall represent the same agreement.
SECTION 12.13 Severability.
------------
In case any one or more of the provisions in this Indenture or in
the Securities shall be held invalid, illegal or unenforceable, in any respect
for any reason, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions shall not in any way be
affected or impaired thereby, it being intended that all of the provisions
hereof shall be enforceable to the full extent permitted by law.
SECTION 12.14 Table of Contents, Headings, Etc.
---------------------------------
The Table of Contents, Cross-Reference Table and headings of the
Articles and the Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
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SECTION 12.15 Gaming Laws.
-----------
This Indenture, the Mortgage Documents, the Securities and the
security interests thereunder are subject to the Casino Control Act of the
State of New Jersey and the rules and regulations thereunder (the "Gaming
Regulations") (and each Issuer represents and warrants that all requisite
approvals thereunder have been obtained), and the exercise of remedies under
the Mortgage Documents with respect to the Collateral will be subject to the
Gaming Regulations.
ARTICLE XIII
GUARANTY
SECTION 13.1 Guaranty.
--------
(a) In consideration of good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, each of the
Guarantors, jointly and severally, hereby irrevocably and unconditionally
guarantees, which guarantee shall be secured by a perfected security interest
in all of the Collateral owned by such Guarantors and which Guaranty shall be
senior to all unsubordinated Indebtedness of such Guarantor (the "Guaranty"),
to each Holder of a Security authenticated and delivered by the Trustee and to
the Trustee and its successors and assigns, irrespective of the validity and
enforceability of this Indenture, the Securities or the obligations of the
Issuers under this Indenture or the Securities, that: (w) the principal and
premium (if any) of and interest on the Securities will be paid in full when
due, whether at the maturity or interest payment date, by acceleration, call
for redemption, upon an Offer to Purchase, or otherwise, and interest on the
overdue principal and interest, if any, of the Securities, if lawful, and all
other obligations of the Company to the Holders or the Trustee under this
Indenture or the Securities will be promptly paid in full or performed, all in
accordance with the terms of this Indenture and the Securities; (x) all other
obligations of the Company to the Holders or the Trustee under this Indenture
or the Securities will be promptly paid in full or performed, all in accordance
with the terms of this Indenture and the Securities; and (y) in case of any
extension of time of payment or renewal of any Securities or any of such other
obligations, they will be paid in full when due or performed in accordance with
the terms of the extension or renewal, whether at maturity, by acceleration,
call for redemption, upon an Offer to Purchase or otherwise. Failing payment
when due of any amount so guaranteed for whatever reason, each Guarantor shall
be obligated to pay the same before failure so to pay becomes an Event of
Default. This Guaranty is a guarantee of payment and not of collection.
Failing payment when due of any amount so guaranteed for whatever reason, the
Guarantors shall be jointly and severally obligated to pay the same before
failure to so pay becomes an Event of Default.
(b) Each Guarantor hereby agrees that its obligations with
regard to this Guaranty shall be unconditional, irrespective of the validity,
regularity or enforceability of the Securities or this Indenture, the absence
of any action to enforce the same, any delays in obtaining or realizing upon or
failures to obtain or realize upon collateral, the recovery of any
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judgment against the Issuers, any action to enforce the same or any other
circumstances that might otherwise constitute a legal or equitable discharge or
defense of a Guarantor. Each Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of either of the Issuers, any right to require a proceeding first
against either of the Issuers or right to require the prior disposition of the
assets of either of the Issuers to meet its obligations, protest, notice and
all demands whatsoever and covenants that this Guaranty will not be discharged
except by complete performance of the obligations contained in the Securities
and this Indenture.
(c) If any Holder or the Trustee is required by any court or
otherwise to return to either of the Issuers or any Guarantor, or any
Custodian, Trustee, or similar official acting in relation to either of the
Issuers or such Guarantor, any amount paid by either of the Issuers or such
Guarantor to the Trustee or such Holder, this Guaranty, to the extent
theretofore discharged, shall be reinstated in full force and effect. Each
Guarantor agrees that it will not be entitled to any right of subrogation in
relation to the Holders in respect of any obligations guaranteed hereby until
payment in full of all obligations guaranteed hereby. Each Guarantor further
agrees that, as between such Guarantor, on the one hand, and the Holders and
the Trustee, on the other hand, (i) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Section 7.2 for the purposes of this
Guaranty, notwithstanding any stay, injunction or other prohibition preventing
such acceleration as to the Issuers of the obligations guaranteed hereby, and
(ii) in the event of any declaration of acceleration of those obligations as
provided in Section 7.2, those obligations (whether or not due and payable)
will forthwith become due and payable by each of the Guarantors for the purpose
of this Guaranty.
(d) It is the intention of each Guarantor and the Issuers
that the obligations of each Guarantor hereunder shall be in, but not in excess
of, the maximum amount permitted by applicable law. Accordingly, if the
obligations in respect of the Guaranty would be annulled, avoided or
subordinated to the creditors of any Guarantor by a court of competent
jurisdiction in a proceeding actually pending before such court as a result of
a determination both that such Guaranty was made without fair consideration
and, immediately after giving effect thereto, such Guarantor was insolvent or
unable to pay its debts as they mature or left with an unreasonably small
capital, then the obligations of such Guarantor under such Guaranty shall be
reduced by such court if and to the extent such reduction would result in the
avoidance of such annulment, avoidance or subordination; provided,
--------
however, that any reduction pursuant to this paragraph shall be made in the
- -------
smallest amount as is strictly necessary to reach such result. For purposes of
this paragraph, "fair consideration", "insolvency", "unable to pay its debts as
they mature", "unreasonably small capital" and the effective times of
reductions, if any, required by this paragraph shall be determined in
accordance with applicable law. The provisions of this Section 13.1(d) shall
survive until the Securities are no longer outstanding.
SECTION 13.2 Execution and Delivery of Guaranty.
----------------------------------
To evidence its Guaranty set forth in Section 13.1, each Guarantor
agrees to execute a Guaranty substantially in the form annexed hereto as
Exhibit B and that this Indenture
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shall be executed on behalf of such Guarantor by two Officers or an Officer and
an Assistant Secretary by manual or facsimile signature.
Each Guarantor agrees that its Guaranty set forth in Section 13.1
shall remain in full force and effect and apply to all the Securities
notwithstanding any failure to endorse on each Security a notation of such
Guaranty.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security to which a Guaranty
relates, the Guaranty shall be valid nevertheless.
The delivery of any Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the Guaranty
set forth in this Indenture on behalf of each Guarantor.
SECTION 13.3 Certain Bankruptcy Events.
-------------------------
Each Guarantor hereby covenants and agrees that in the event of the
insolvency, bankruptcy, dissolution, liquidation or reorganization of either of
the Issuers, such Guarantor shall not file (or join in any filing of), or
otherwise seek to participate in the filing of, any motion or request seeking
to stay or to prohibit (even temporarily) execution on the Guaranty and hereby
waives and agrees not to take the benefit of any such stay of execution,
whether under Section 362 or 105 of the United States Bankruptcy Code or
otherwise.
SECTION 13.4 Rights Under the Guaranty.
-------------------------
No payment by any Guarantor pursuant to the provisions hereof to
the Trustee shall entitle such Guarantor to any payment out of any Collateral
held by the Trustee under this Indenture or any Mortgage Documents.
(a) Each of the Guarantors waives notice of the issuance,
sale and purchase of the Securities and notice from the Trustee or the holders
from time to time of any of the Securities of their acceptance and reliance on
this Guaranty.
(b) Notwithstanding any payment or payments made by the
Guarantors by reason of this Guaranty, the Guarantors shall not be subrogated
to any rights of the Trustee or any Holder of the Securities against the
Issuers until all the Securities shall have been paid or deemed to have been
paid within the meaning of this Indenture. Any payment made by the Guarantors
by reason of this Guaranty shall be in all respects subordinated to the full
and complete payment or discharge under this Indenture of all obligations
guaranteed hereby, and no payment by the Guarantors by reason of this Guaranty
shall give rise to any claim of the Guarantors against the Trustee or any
Holder of the Securities. Unless and until the Securities shall have been paid
or deemed to have been paid within the meaning of this Indenture, none of the
Guarantors will assign or otherwise transfer any such claim against the Issuers
to any other person.
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(c) No set-off, counterclaim, reduction or diminution of any
obligation or any defense of any kind or nature (other than performance by the
Guarantor of its obligation hereunder) which the Guarantor may have or assert
against the Trustee or any holder of any Securities shall be available
hereunder to the Guarantor against the Trustee.
(d) Each Guarantor agrees to pay all costs, expense and
fees, including all reasonable attorneys' fees, which may be incurred by the
Trustee in enforcing or attempting to enforce the Guaranty or protecting the
rights of the Trustee or the Holders of Securities, if any, in accordance with
this Indenture.
SECTION 13.5 Severability.
------------
In case any provision of this Guaranty shall be invalid, illegal or
unenforceable, that portion of such provision that is not invalid, illegal or
unenforceable shall remain in effect, and the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 13.6 Merger or Consolidation of Guarantors.
-------------------------------------
No Guarantor shall consolidate or merge with or into (whether or
not such Guarantor is the surviving Person) another Person unless (i) subject
to the provisions of the following paragraph, the Person formed by or surviving
any such consolidation or merger (if other than such Guarantor) assumes all the
obligations of such Guarantor pursuant to a supplemental indenture and
supplemental Mortgage Documents in form reasonably satisfactory to the Trustee,
pursuant to which such Person shall unconditionally guarantee, on a senior
secured basis, all of such Guarantor's obligations under such Guarantor's
guarantee, this Indenture and the Mortgage Documents on the terms set forth in
this Indenture; (ii) immediately before and immediately after giving effect to
such transaction on a pro forma basis, no Default or Event of Default shall
have occurred or be continuing; and (iii) immediately after such transaction,
the surviving Person holds all Permits required for operation of the business
of, and such entity is controlled by a Person or entity (or has retained a
Person or entity which is) experienced in, operating casino hotels or otherwise
holds all Permits (including those required from Gaming Authorities) to operate
its business.
In the event of a sale or other disposition of all of the Equity
Interests of any Guarantor (including pursuant to a merger or consolidation) to
any person other than a Subsidiary Guarantor, then such Guarantor may be
released and relieved of any obligation under its Guaranty; provided, that (x)
immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing and (y) such Asset Sale and the
application of the Net Cash Proceeds therefrom are in accordance with the
applicable provisions of this Indenture, including without limitation Section
5.15 and Article VI.
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SIGNATURE
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed as of the date first written above.
TRUMP ATLANTIC CITY ASSOCIATES
By:TRUMP HOTELS & CASINO RESORTS
HOLDINGS, L.P.,
its general partner
By: TRUMP HOTELS & CASINO
RESORTS, INC.,
its managing general partner
By:
---------------------------------
Name:
Title:
Attest: _______________
TRUMP ATLANTIC CITY FUNDING, INC.
By:
---------------------------------
Name:
Title:
Attest: _______________
FIRST BANK NATIONAL
ASSOCIATION, as Trustee
By:
----------------------------------
Name:
Title:
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Attest: _______________
TRUMP ATLANTIC CITY ASSOCIATES,
its general partner
By: TRUMP HOTELS & CASINO RESORTS
HOLDINGS, L.P., its general partner
By: TRUMP HOTELS & CASINO RESORTS,
INC., its managing general partner
By:
----------------------------------
Name:
Title:
TRUMP TAJ MAHAL FUNDING, INC.
By:
----------------------------------
Name:
Title:
GUARANTORS
TRUMP PLAZA ASSOCIATES
By: TRUMP ATLANTIC CITY ASSOCIATES,
its general partner
By: TRUMP HOTELS & CASINO RESORTS
HOLDINGS, L.P., its general partner
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By: TRUMP HOTELS & CASINO RESORTS,
INC., its managing general partner
By:
----------------------------------
Name:
Title:
Attest: _________________
TRUMP TAJ MAHAL ASSOCIATES
By: TRUMP ATLANTIC CITY ASSOCIATES,
its general partner
By: TRUMP HOTELS & CASINO RESORTS
HOLDINGS, L.P., its general partner
By: TRUMP HOTELS & CASINO RESORTS,
INC., its managing general partner
By:
----------------------------------
Name:
Title:
THE TRUMP TAJ MAHAL CORPORATION
By:
----------------------------------
Name:
Title:
Attest: _________________
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Exhibit A
[FORM OF SECURITY]
TRUMP ATLANTIC CITY ASSOCIATES
TRUMP ATLANTIC CITY FUNDING, INC.
% FIRST MORTGAGE NOTES
------------
DUE 2006
No. $
CUSIP
-------------------------
Trump Atlantic City Associates, a New Jersey partnership, and Trump
Atlantic City Funding, Inc., a Delaware corporation (hereinafter collectively
called the "Issuers," which term includes any successor entity under the
Indenture hereinafter referred to), for value received, hereby promise to pay
to ______________, or registered assigns, the principal sum of
___________________________________________ Dollars, on April __, 2006.
Interest Payment Dates: April and October .
--
Record Dates: April and October .
--
Reference is made to the further provisions of this Security on the
reverse side, which will, for all purposes, have the same effect as if set
forth at this place.
A-1
<PAGE>
IN WITNESS WHEREOF, the Issuers have caused this Instrument to be
duly executed under their respective corporate seals.
Dated:
Attest: TRUMP ATLANTIC CITY ASSOCIATES
By: TRUMP HOTELS & CASINO RESORTS
HOLDINGS, L.P., its general partner
By: TRUMP HOTELS & CASINO RESORTS,
INC., its managing general partner
By:
--------------------------------
- -----------------------
Secretary
Attest: TRUMP ATLANTIC CITY FUNDING, INC.
By:
--------------------------------
- -----------------------
Secretary
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the
within-mentioned Indenture.
FIRST BANK NATIONAL ASSOCIATION,
as trustee
By: _____________________________
Authorized Signatory
Dated:
A-2
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
TRUMP ATLANTIC CITY FUNDING, INC.
% FIRST MORTGAGE NOTESDUE 2006
------------
1. Interest.
--------
Trump Atlantic City Associates, a New Jersey partnership, and Trump
Atlantic City Funding, Inc., a Delaware corporation (collectively, the
"Issuers"), jointly and severally promise to pay interest on the principal
amount of this Security at the rate of % per annum from the date of
-------
issuance or from the most recent Interest Payment Date to which interest has
been paid or provided for. Interest on this Security will be payable
semiannually on April and October , commencing October ,
--
1996, to the person in whose name this Security is registered at the close of
business on April or October , preceding such Interest Payment
--
Date (each, a "Record Date"). Interest on this Security will be computed on
the basis of a 360-day year, consisting of twelve 30-day months.
2. Method of Payment.
-----------------
The Issuers shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of
business on the Record Date immediately preceding the Interest Payment Date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. Except as provided below, the Issuers shall pay principal and
interest in such coin or currency of the United States of America as at the
time of payment shall be legal tender for payment of public and private debts
("U.S. Legal Tender"). The Issuers may deliver any such interest payment to
the Paying Agent or the Issuers may mail any such interest payment to a Holder
at the Holder's registered address. Notwithstanding the preceding two
sentences, in the case of Securities of which The Depository Trust Company or
its nominee is the Holder, such payments must be made by wire transfer of
Federal funds.
3. Paying Agent and Registrar.
--------------------------
Initially, First Bank National Association, a national banking
association (the "Trustee"), will act as Paying Agent and Registrar. The
Issuers may change any Paying Agent, Registrar or Co-registrar without notice
to the Holders. The Issuers or any of their Subsidiaries may, subject to
certain exceptions, act as Paying Agent, Registrar or Co-registrar.
4. Indenture.
---------
The Issuers issued the Securities under an Indenture, dated as of
April , 1996 (the "Indenture"), between the Issuers, the Guarantors named
--
therein and the Trustee. Capital-
A-3
<PAGE>
ized terms herein are used as defined in the Indenture unless otherwise defined
herein. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act, as in
effect on the date of the Indenture. The Securities are subject to all such
terms, and Holders of Securities are referred to the Indenture and said Act for
a statement of them. The Securities are senior, secured obligations of each of
the Issuers limited in aggregate principal amount to $1,100,000,000.
5. Redemption.
----------
The Securities are redeemable in whole or from time to time in part
at any time on and after April , 2001, at the option of the Issuers, at
--
the Redemption Price (expressed as a percentage of principal amount) set forth
below, if redeemed during the 12-month period commencing April of each
--
of the years indicated below, in each case, together with any accrued but
unpaid interest through the Redemption Date. Except as provided in the next
paragraph, the Securities may not otherwise be redeemed at the option of the
Issuers.
12-Month
Period Beginning Redemption Price
---------------- ----------------
April , 2001 ..................... %
--
April , 2002........................ %
--
April , 2003........................ %
--
April , 2004 and thereafter......... 100.000 %
--
Any Governmental Authority with appropriate jurisdiction and
authority relating to a Gaming License held by an Issuer or an Affiliate or
wholly owned Subsidiary of an Issuer may require a Holder to be qualified under
any applicable law administered by such Governmental Authority. If a Holder
does not qualify under the Casino Control Act, the Holder must dispose of its
interest in the Securities, within 30 days after an Issuer's notice of such
finding (or within such earlier date as the CCC may require), or the Issuers
may redeem such Securities to the extent necessary in the reasonable, good
faith judgment of a general partner of the Company, to prevent the loss,
failure to obtain or material impairment or to secure the reinstatement of any
material Gaming License. If a Holder does not qualify under any applicable law
administered by a Governmental Authority other than the Casino Control Act, the
Issuers may redeem such Securities to the extent necessary in the reasonable,
good faith judgment of a general partner of the Company, to prevent the loss,
failure to obtain or material impairment or to secure the reinstatement of any
material Gaming License. In such event, the Redemption Price shall be the
principal amount thereof, plus accrued and unpaid interest to the date of
redemption (or such lesser amount as may be required by applicable law).
Any redemption of the Securities shall comply with Article III of
the Indenture.
A-4
<PAGE>
6. Notice of Redemption.
--------------------
Notice of redemption will be mailed by first class mail at least 30
days but not more than 60 days before the Redemption Date (unless another
notice period shall be required by applicable laws or by order of any Gaming
Authority) to each Holder of Securities to be redeemed at his registered
address. Securities in denominations larger than $1,000 may be redeemed in
part, but only in $1,000 integrals.
Except as set forth in the Indenture, from and after any Redemption
Date, if monies for the redemption of the Securities called for redemption
shall have been deposited with the Paying Agent (other than either of the
Issuers or an Affiliate of either of the Issuers) on such Redemption Date, the
Securities called for redemption will cease to bear interest and the only right
of the Holders of such Securities will be to receive payment of the Redemption
Price, including any accrued and unpaid interest to the Redemption Date, unless
the Issuers default on such payment.
7. Denominations; Transfer; Exchange.
---------------------------------
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder may
register the transfer of, or exchange Securities in accordance with, the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not register
the transfer of or exchange any Securities selected for redemption.
8. Persons Deemed Owners.
---------------------
The registered Holder of a Security may be treated as the owner of
it for all purposes.
9. Unclaimed Money.
---------------
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee and the Paying Agent(s) will pay the money back to
the Issuers at their written request. After that, all liability of the Trustee
and such Paying Agent(s) with respect to such money shall cease.
10. Legal Defeasance or Covenant Defeasance Prior to Redemption or
---------------------------------------------------------------
Maturity.
- --------
If the Issuers, within one year of the final Stated Maturity of the
Securities in the case of Legal Defeasance, or at any time in the case of
Covenant Defeasance, deposit with the Trustee, in trust, for the benefit of the
Holders, U.S. Legal Tender, non-callable government securities or a combination
thereof, in such amounts as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants selected by the Trustee, to
pay the principal of, premium, if any and interest on the Securities to
redemption or maturity and comply
A-5
<PAGE>
with the other provisions of the Indenture relating thereto, the Issuers may
elect to have their obligations discharged, in the case of a Legal Defeasance
(in which case the Indenture would cease to be of further effect, except as to
certain limited obligations and to the rights of Holders to receive payments
when due from the trust funds therefore), or, in the case of a Covenant
Defeasance, to be discharged from certain provisions of the Indenture and the
Securities (including the financial covenants, but excluding their obligation
to pay the principal of and interest on the Securities).
11. Amendment; Supplement; Waiver.
-----------------------------
Subject to certain exceptions, the Indenture or the Securities may
be amended or supplemented with the written consent of the Holders of a simple
majority, 66 2/3% or 100% in aggregate principal amount of the Securities then
outstanding, depending on the provisions, and any existing Default or Event of
Default or compliance with any provision may be waived with the consent of the
Holders of the same specified percentage of aggregate principal amount of the
Securities then outstanding. Without notice to or consent of any Holder, the
parties thereto may amend or supplement the Indenture, the Mortgage Documents
or the Securities to, among other things, cure any ambiguity, defect or
inconsistency, provide for uncertificated Securities in addition to or in place
of certificated Securities, or make any other change that does not adversely
affect the rights of any Holder of a Security.
12. Restrictive Covenants.
---------------------
The Indenture imposes certain limitations on the ability of the
Issuers and their Subsidiaries to, among other things, incur additional
Indebtedness and Disqualified Capital Stock, make payments in respect of its
Equity Interests, enter into transactions with Affiliates, incur Liens, sell
assets, merge or consolidate with any other person and sell, lease, transfer or
otherwise dispose of substantially all of its properties or assets. The
limitations are subject to a number of important qualifications and exceptions.
The Issuers must annually report to the Trustee on compliance with such
limitations.
13. Change of Control.
-----------------
In the event there shall occur any Change of Control, each Holder
of Securities shall have the right, at such Holder's option but subject to the
limitations and conditions set forth in the Indenture, to require the Issuers
to purchase on the Change of Control Purchase Date in the manner specified in
the Indenture, all or any part (in integral multiples of $1,000) of such
Holder's Securities at a Change of Control Purchase Price equal to 101% of the
principal amount thereof, together with accrued and unpaid interest, if any, to
the Change of Control Purchase Date.
A-6
<PAGE>
14. Security.
--------
In order to secure the obligations under the Indenture, the
Issuers, the Guarantors and the Trustee have entered into the Mortgage
Documents and the Collateral Agency Agreement in order to create and govern
security interests in certain assets of the Issuers, the Guarantors and their
Subsidiaries.
15. Sale of Assets.
--------------
The Indenture imposes certain limitations on the ability of the
Issuers or any of their Subsidiaries to sell assets. In the event the proceeds
from a permitted Asset Sale exceed certain amounts, as specified in the
Indenture, the Issuers and the Guarantors will be required either to reinvest
the proceeds of such Asset Sale in their business or to repay certain
indebtedness and to make an offer to purchase each Holder's Securities at 100%
of the principal amount thereof, together with accrued and unpaid interest, if
any, to the Asset Sale Purchase Date.
16. Gaming Laws.
-----------
The rights of the Holder of this Security and any owner of any
beneficial interest in this Security are subject to the gaming laws,
regulations and the jurisdiction and requirements of the Gaming Authorities and
the further limitations and requirements set forth in the Indenture.
17. Successors.
----------
When a successor assumes all the obligations of its predecessor
under the Securities and the Indenture, the predecessor will be released from
those obligations.
18. Defaults and Remedies.
---------------------
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of
Securities may not enforce the Indenture or the Securities except as provided
in the Indenture. The Trustee may require reasonable security or indemnity
satisfactory to it before it enforces the Indenture or the Securities. Subject
to certain limitations, Holders of a majority in aggregate principal amount of
the Securities then outstanding may direct the Trustee in its exercise of any
trust or power.
19. Trustee Dealings with Issuers.
-----------------------------
The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of any of the Securities, make loans
to, accept deposits from, and perform services for the Issuers or their
Affiliates, and may otherwise deal with the Issuers or their respective
Affiliates with the same rights it would have if it were not the Trustee.
A-7
<PAGE>
20. No Recourse Against Others.
--------------------------
No direct or indirect partner, director, officer, employee or
stockholder, as such, past, present or future of either of the Company or
Funding, any Guarantor or any successor entity shall have any personal
liability in respect of the obligations of the Issuers or any Guarantor under
the Indenture or the Securities or the guarantees thereof by reason of his or
its status as such partner, director, officer, employee or stockholder, except
to the extent such is an Issuer or a Guarantor. Each Holder of a Security by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities.
21. Authentication.
--------------
This Security shall not be valid until the Trustee or
authenticating agent signs the certificate of authentication on the other side
of this Security.
22. Abbreviations and Defined Terms.
-------------------------------
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
23. CUSIP Numbers.
-------------
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Issuers will cause CUSIP
numbers to be printed on the Securities as a convenience to the Holders of the
Securities. No representation is made as to the accuracy of such numbers as
printed on the Securities and reliance may be placed only on the other
identification numbers printed hereon.
A-8
<PAGE>
[FORM OF ASSIGNMENT]
I or we assign this Security to
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
(Print or type name, address and zip code of assignee)
Please insert Social Security or other identifying number of
assignee _________________ and irrevocably appoint ___________ agent to
transfer this Security on the books of the Issuers. The agent may substitute
another to act for him.
Dated: __________ Signed:
----------------------------------------
(Sign exactly as your name appears on the other side
- ------------------------
of this Security)
- --------------------------------------------------------------------
Signature guarantee should be made by a guarantor institution participating in
the Securities Transfer Agents Medallion Program or in such other guarantee
program acceptable to the Trustee.
A-9
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Issuers
pursuant to any of the following provisions of the Indenture, check the
appropriate box:
[_] Section 5.15; [_] Article XI.
If you want to elect to have only part of this Security purchased
by the Issuers pursuant to the Indenture, state the principal amount you want
to be purchased: $________
Date: ________________ Signature:
--------------------------------
(Sign exactly as your name appears on the
other side of this Security)
A-10
<PAGE>
EXHIBIT B
---------
FORM OF GUARANTY
----------------
For value received, __________________, a __________________
[corporation/partnership], hereby irrevocably, unconditionally guarantees, on a
senior secured basis, to the Holder of the Security upon which this Guaranty is
endorsed the due and punctual payment, as set forth in the Indenture pursuant
to which such Security and this Guaranty were issued, of the principal of,
premium (if any) and interest on such Security when and as the same shall
become due and payable for any reason according to the terms of such Security
and Article XIII of the Indenture. The Guaranty of the Security upon which
this Guaranty is endorsed will not become effective until the Trustee signs the
certificate of authentication on such Security.
-------------------------------------
By:
-------------------------------
Attest:
-----------------------------
B-1
<PAGE>
EXHIBIT 4.28
INDENTURE OF MORTGAGE AND SECURITY AGREEMENT
TRUMP PLAZA ASSOCIATES,
TRUMP TAJ MAHAL ASSOCIATES,
TRUMP ATLANTIC CITY ASSOCIATES,
TRUMP ATLANTIC CITY FUNDING, INC.
and
THE TRUMP TAJ MAHAL CORPORATION
collectively, Mortgagor
and
FIRST BANK NATIONAL ASSOCIATION, AS COLLATERAL AGENT
Mortgagee
Dated as of April __, 1996
____________________________________________________
Record and return to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: Wallace L. Schwartz, Esq.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 1.01. Definitions............................ 10
Section 1.02. Notices................................ 23
Section 1.03. Form and Contents of Documents
Delivered to Mortgagee.............. 24
Section 1.04. Compliance Certificates and Opinions... 25
Section 1.05. Effect of Headings and Table of
Contents............................ 26
Section 1.06. Successors and Assigns; Amendments..... 26
Section 1.07. Separability Clause.................... 26
Section 1.08. Benefits of Mortgage................... 26
Section 1.09. Governing Law.......................... 26
Section 1.10. Limitation on Liability................ 27
Section 1.11. Provisions Required by Trust
Indenture........................... 28
Section 1.12. Rights of Mortgagee.................... 28
Section 1.13. Mortgage Subject to Casino Control
Act................................. 29
Section 1.14. Discharge of Lien...................... 29
Section 1.15. General Application.................... 30
Section 1.16. Mortgage Deemed to be Security
Agreement........................... 30
Section 1.17. No Duplication of Notices or
Payments............................ 31
ARTICLE TWO
RELEASE; SUBORDINATION
Section 2.01. Possession by Mortgagor................ 31
Section 2.02. Obsolete Property...................... 31
Section 2.03. F,F&E Financing Agreements............. 32
Section 2.04. Released Fee Land...................... 33
ARTICLE THREE
REMEDIES
Section 3.01. Events of Default...................... 35
Section 3.02. [Intentionally omitted]................ 38
Section 3.03. Application of Moneys Received by
Mortgagee........................... 38
Section 3.04. Restoration of Rights and Remedies..... 38
Section 3.05. Rights and Remedies Cumulative......... 38
Section 3.06. Delay or Omission Not Waiver........... 38
Section 3.07. Undertaking for Costs.................. 39
i
<PAGE>
Page
----
Section 3.08. Waiver of Appraisement and Other
Laws................................... 39
Section 3.09. Entry.................................. 40
Section 3.10. Power of Sale; Suits for Enforcement... 40
Section 3.11. Incidents of Sale...................... 41
Section 3.12. Receiver............................... 42
Section 3.13. Suits to Protect the Trust Estate...... 42
Section 3.14. Management of the Premises............. 43
ARTICLE FOUR
CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
Section 4.01. Consolidation, Merger, Conveyance or
Transfer only on Certain Terms...... 43
Section 4.02. Successor Entity Substituted........... 43
ARTICLE FIVE
COVENANTS AND REPRESENTATIONS OF MORTGAGOR
Section 5.01. Performance of Obligations............. 44
Section 5.02. F,F&E Financing Agreements............. 44
Section 5.03. Limitations on Liens and Transfers..... 44
Section 5.04. Environmental.......................... 46
Section 5.05. Refinancing Liens...................... 50
Section 5.06. Warranty of Leasehold Estate and
Title.................................. 52
Section 5.07. After-Acquired Property; Further
Assurances: Recording.................. 53
Section 5.08. Payment of Taxes and Certain Claims;
Maintenance of Properties;
Compliance with Legal Require-
ments and Insurance Requirements.... 55
Section 5.09. Permitted Contests..................... 57
Section 5.10. Mechanics' and Other Liens............. 58
Section 5.11. To Insure.............................. 58
Section 5.12. Limitations on Building Demolition,
Alterations, Improvements and New Con-
struction........................... 67
Section 5.13. Leases................................. 70
Section 5.14. Compliance Certificates................ 72
Section 5.15. EAB Mortgage........................... 72
Section 5.16. To Keep Books; Inspection by
Mortgagee........................... 73
Section 5.17. Advances by Mortgagee.................. 74
Section 5.18. Waiver of Stay, Extension or Usury
Laws................................ 74
Section 5.19. Eminent Domain......................... 74
Section 5.20. Facility Leases........................ 77
Section 5.21. Superior Mortgages..................... 83
Section 5.22. Indemnification........................ 85
ii
<PAGE>
SCHEDULES AND EXHIBITS
Schedule 1 - Owned Land
Schedule 2 - Ground Leases and Ground Lease Land
Schedule 3 - Existing Encumbrances
Schedule 4 - Parking Leases and Parking Lease Land
Schedule 5 - Expansion Site
Schedule 6 - Permitted Easements
Schedule 7 - Form of Non-Disturbance and Attornment
Agreement
Schedule 8 - Form of Lease Modification Containing EAB
Consent
Schedule 9 - Certain Existing Leases and Licenses
Exhibit A - Form of Trust Indenture
iii
<PAGE>
INDENTURE OF MORTGAGE AND SECURITY AGREEMENT
--------------------------------------------
INDENTURE OF MORTGAGE AND SECURITY AGREEMENT
("Mortgage"), dated as of April __, 1996, between TRUMP
PLAZA ASSOCIATES, a New Jersey partnership ("Plaza Asso-
ciates"), TRUMP TAJ MAHAL ASSOCIATES, a New Jersey part-
nership ("Taj Associates"), TRUMP ATLANTIC CITY ASSOCI-
ATES, a New Jersey partnership (the "Company"), TRUMP
ATLANTIC CITY FUNDING, INC., a Delaware corporation and a
wholly owned subsidiary of the Company ("Funding" and,
together with the Company, the "Issuers"), and THE TRUMP
TAJ MAHAL CORPORATION, a Delaware corporation ("TTMC"),
each having an office at Mississippi Avenue and The
Boardwalk, Atlantic City, New Jersey 08401 (Taj Associ-
ates, Plaza Associates and Issuers, collectively, "Mort-
gagor"), and FIRST BANK NATIONAL ASSOCIATION, a national
banking association having an office at 180 East Fifth
Street, St. Paul, Minnesota 55101, as Collateral Agent
under the Collateral Agency Agreement ("Mortgagee").
W I T N E S S E T H:
-------------------
In consideration of $10.00 in hand paid by
Mortgagee to Mortgagor and for other good and valuable
consideration, the receipt and sufficiency whereof is
hereby acknowledged, and in order to secure (i) the
punctual payment and performance when due of all of
Mortgagor's obligations under the Guarantee; (ii) the
punctual payment and performance when due of all of and
Mortgagor's obligations under the Mortgage Notes, the
Trust Indenture and the Debt Documents; (iii) payment by
Mortgagor to Mortgagee of all sums expended or advanced
by Mortgagee pursuant to any term or provision of this
Mortgage; (iv) performance of each covenant, term, condi-
tion and agreement of Mortgagor herein contained; (v) all
costs and expenses, including, without limitation, rea-
sonable counsel fees and expenses as provided in Section
3.07, which may arise in respect of this Mortgage or of
the obligations secured hereby; and (vi) performance and
observance of all of the provisions herein contained,
Mortgagor has executed and delivered this Mortgage and
has bargained, sold, alienated, mortgaged, pledged, re-
leased, conveyed and confirmed unto Mortgagee and its
successors hereunder and assigns forever, all of its
right, title and interest in, to and under all of the
following described property:
<PAGE>
GRANTING CLAUSES
Granting Clause First
All of the property, rights, title, interest,
privileges and franchises particularly described in
annexed Schedule 1 (the "Owned Land") which Schedule is
----------
hereby made a part of, and deemed to be described in,
this Granting Clause as fully as if set forth in this
Granting Clause at length.
Granting Clause Second
All of the property, rights, title, interest,
privileges and franchises of Mortgagor as lessee under
(a) all Facility Leases and (b) all Parking Leases,
together with (i) all credits, deposits, privileges and
rights of Mortgagor as lessee under the Facility Leases
and the Parking Leases, now or at any time existing, (ii)
the leaseholds and the leasehold estates created by the
Facility Leases and the Parking Leases and (iii) all of
the estates, rights, titles, claims or demands whatsoever
of Mortgagor, either in law or in equity, in possession
or in expectancy, of, in and to the Facility Leases, the
Leased Facilities, the Parking Leases and the Parking
Lease Land, together with (x) any and all other, further
or additional title, estates, interests or rights which
may at any time be acquired by Mortgagor in or to the
Leased Facilities or the Parking Lease Land or any part
thereof, and Mortgagor expressly agrees that if Mortgagor
shall, at any time prior to payment in full of all in-
debtedness secured hereby, acquire fee simple title or
any other greater estate to the Leased Facilities (in-
cluding, without limitation, to the Ground Lease Land
pursuant to Article Forty-Fourth [or Fifty-Second] of the
Ground Leases) or the Parking Lease Land, the lien of
this Mortgage shall attach, extend to, cover and be a
lien upon such fee simple title or other greater estate
and thereupon the lien of this Mortgage shall be prior to
the lien of any mortgage or deed of trust placed on such
acquired title, estate, interest or right subsequent to
the date of this Mortgage and (y) any right to possession
or statutory term of years derived from, or incident to,
the Facility Leases or the Parking Leases pursuant to
Section 365(h) of the Code or any Comparable Provision.
Granting Clause Third
All of the rents, issues, profits, revenues
accounts, accounts receivable and other income and pro-
ceeds (including, without limitation, all rents, fees,
2
<PAGE>
charges, accounts, issues, profits, revenues and payments
for or from (a) the use or occupancy of the rooms and
other public facilities in the Hotel and (b) the opera-
tion of the Casino) of the property subjected or required
to be subjected to the lien of this Mortgage, including,
without limitation, the property described in Granting
Clauses First, Second and Sixth (said property described
in Granting Clauses First, Second and Sixth and similar
other property subjected or required to be subjected to
the lien of this Mortgage, together with all such rents,
issues, profits, revenues, accounts, accounts receivable
and other income and proceeds therefrom is hereinafter
collectively referred to as the "Premises") and all of
--------
the estate, right, title and interest of every nature
whatsoever of Mortgagor in and to the same and every part
thereof.
Granting Clause Fourth
All of the rights of Mortgagor as lessor under
the Leases in effect on the date of execution of this
Mortgage or hereafter entered into by Mortgagor, includ-
ing modifications, extensions and renewals of all of the
same, and the immediate and continuing right as security
in accordance with the Assignment of Leases and Rents,
and, after the occurrence, and during the continuance, of
an Event of Default, to (a) make claim for, collect,
receive and receipt for (and to apply the same as provid-
ed herein) any and all rents, fees, charges, income,
revenues" issues, profits, security and other sums of
money payable or receivable thereunder or pursuant there-
to, and all proceeds thereof, whether payable as rent,
insurance proceeds, condemnation awards, security or
otherwise and whether payable prior to or subsequent to
the Stated Maturity of any of the Debt Documents, (b) re-
ceive and give notices and consents thereunder, (c) bring
actions and proceedings thereunder or for the enforcement
thereof, (d) make waivers and agreements thereunder or
with respect thereto, (e) take such action upon the
happening of a default under any Lease, including the
commencement, conduct and consummation of any proceedings
at law or in equity as shall be permitted by any provi-
sion of any Lease, and (f) do any and all things which
Mortgagor or any lessor is or may become entitled to do
under the Leases; provided, that, except as may be set
--------
forth to the contrary in the Assignment of Leases and
Rents, the assignment made by this Granting Clause Fourth
shall not impair or diminish any right, privilege or
obligation of Mortgagor under the Leases nor shall any
such obligation be imposed upon Mortgagee.
3
<PAGE>
Granting Clause Fifth
Without limiting the generality of the provi-
sions of Granting Clause Third, all of Mortgagor's
rights, title, interest, privileges and franchises in and
to the following, now owned or hereafter acquired by
Mortgagor, to the extent of Mortgagor's interest therein
and thereto and to the extent assignable (collectively,
"Operating Assets"):
----------------
(a) bookings for the use of guest rooms, ban-
quet facilities, meeting rooms at the Casino Hotel or at
any other improvements now or hereafter located on any of
the Land;
(b) all contracts respecting utility services
for, and the maintenance, operations, or equipping of,
the Premises, including guaranties and warranties relat-
ing thereto;
(c) the Permits;
(d) all contract rights, leases (whether with
respect to real property, personal property or both real
and personal property), concessions, trademarks, trade
names, service marks, logos, copyrights, warranties and
other items of intangible personal property, and any and
all good will associated with the same relating to the
ownership or operation of the Casino Hotel or of any
other improvements now or hereafter located on any of the
Land, including, without limitation, (1) telephone and
other communication numbers, (2) all software licensing
agreements as are required to operate computer software
systems at the Casino Hotel or at any other improvements
now or hereafter located on any of the Land and books and
records relating to the software programs and (3)
lessee's interest under leases of Tangible Personal
Property;
(e) all contracts, purchase orders, requisi-
tions and agreements entered into by or on behalf of
Mortgagor or which have been assigned to Mortgagor, for
the design, construction, and furnishing of the Casino
Hotel or of any other improvements now or hereafter
located on any of the Land, including, without limita-
tion, architect's agreements, engineering agreements,,
construction contracts, consulting agreements and agree-
ments or purchase orders for all items of Tangible Per-
sonal Property and payment and performance bonds in favor
of Mortgagor in connection with the Trust Estate (and all
warranties and guarantees thereunder and warranties and
guarantees of any subcontractor and bond issued in con-
4
<PAGE>
nection with the work to be performed by any subcontrac-
tor);
(f) the following personal property (the
"Tangible Personal Property") now or hereafter acquired
--------------------------
by Mortgagor (directly or by way of lease) which are
located on, or to be located on, or which are in use or
held in reserve storage for future use in connection with
the gaming or other operations of, the Casino Hotel or of
any other improvements now or hereafter located on any of
the Land, which are on hand or on order whether stored
on-site or off-site:
(i) all furniture, furnishings, equip-
ment, machinery, apparatus, appliances, fixtures and
fittings and other articles of tangible personal
property;
(ii) all slot machines, electronic gaming
devices, crap tables, blackjack tables, roulette
tables, baccarat tables, big six wheels and other
gaming tables, and all furnishings and equipment to
be used in connection with the operation thereof;
(iii) all cards, dice, gaming chips and
placques, tokens, chip racks, dealing shoes, dice
cups, dice sticks, layouts, paddles, roulette balls
and other consumable supplies and items;
(iv) all china, glassware, linens,-kitch-
en utensils, silverware and uniforms;
(v) all consumables and operating sup-
plies of every kind and nature, including, without
limitation, accounting supplies, guest supplies,
forms, printing, stationery, food and beverage
stock, bar supplies, laundry supplies and brochures
to existing purchase orders;
(vi) all upholstery material, carpets and
rugs, beds, bureaus, chiffonniers, chairs, chests,
desks, bookcases, tables, curtains, hangings, pic-
tures, divans, couches, ornaments, bars, bar fix-
tures, safes, stoves, ranges, refrigerators, radios,
televisions, clocks, electrical equipment, lamps,
mirrors, heating and lighting fixtures and equip-
ment, ice machines, air conditioning machines, fire
prevention and extinguishing apparatus, laundry
machines, and all similar and related articles used
in bedrooms, sitting rooms, bathrooms, boudoirs,
halls, closets, kitchens, dining rooms, offices,
lobbies, basements and cellars in the Casino Hotel
5
<PAGE>
and in any other improvements now or hereafter
located on any of the Land;
(vii) all sets and scenery, costumes,
props and other items of tangible personal property
on hand or on order for use in the production of
shows in any showroom, convention space, exhibition
hall, or sports and entertainment arena of the
Casino Hotel or in any other improvements now or
hereafter located on any of the Land; and
(viii) all cars, limousines, vans, buses,
trucks and other vehicles owned or leased by Mort-
gagor for use in connection with the operation of
the Premises, together with all equipment, parts and
supplies used to service, repair, maintain and equip
the foregoing;
(g) all drawings, designs, plans and specifi-
cations prepared by architects, engineers, interior
designers, landscape designers and any other profession-
als or consultants for the design, development, construc-
tion and/or improvement of the Casino Hotel, or for any
other development of the Premises, as amended from time
to time;
(h) any administrative and judicial proceed-
ings initiated by Mortgagor, or in which Mortgagor has
intervened, concerning the Premises, and agreements, if
any, which are the subject matter of such proceedings;
(i) any customer lists utilized by Mortgagor
including lists of transient guests and restaurant and
bar patrons and "high roller" lists; and
(j) all of the good will in connection with
the assets listed in this Granting Clause Fifth and in
connection with the operation of the Premises.
Except as may be set forth to the contrary in
the Assignment of Operating Assets, the assignment made
by this Granting Clause Fifth shall not impair or dimin-
ish any right, privilege or obligation of Mortgagor with
respect to the Operating Assets, nor shall any such
obligation be imposed on Mortgagee.
Granting Clause Sixth
(a) All of Mortgagor's rights, title, inter-
est, privileges and franchises in and to all buildings,
structures (surface and subsurface), and other improve-
ments of every kind and description, including, without
limitation, all pedestrian bridges, entrance-ways, park-
6
<PAGE>
ing lots, plazas, curb-cuts, walkways, driveways and
landscaping and such fixtures as constitute real proper-
ty, now or hereafter erected or placed on the Land or on
any other land or any interest therein hereafter acquired
by Mortgagor and all of Mortgagor's rights, title, inter-
est, privileges and franchises in and to all fixtures and
articles of personal property now or hereafter attached
to or contained in and used in connection with such
buildings and improvements, including, without limita-
tion, all apparatus, furniture, furnishings, machinery,
motors, elevators, fittings, radiators, cooking ranges,
ice boxes, ice machines, printing presses, mirrors, bars,
mechanical refrigerators, furnaces, coal and oil burning
apparatus, wall cabinets, machinery, generators, parti-
tions, steam and hot water boilers, lighting and power
plants, pipes, plumbing, radiators, sinks, bath tubs,
water closets, gas and electrical fixtures, awnings,
shades, screens, blinds, dishwashers, freezers, vacuum
cleaning systems, office equipment and other furnishings,
and all plumbing, heating, lighting, cooking, laundry,
ventilating, incinerating, air-conditioning and sprinkler
equipment or other fire prevention or extinguishing
apparatus and material, and fixtures and appurtenances
thereto; and all renewals or replacements thereof or
articles in substitution therefor, whether or not the
same are or shall be attached to the Land, any other land
or any interest therein hereafter acquired by Mortgagor
or to any such buildings and improvements thereon, in any
manner.
(b) All of Mortgagor's rights, title, inter-
est, privileges and franchises in and to all other prop-
erty, real, personal or mixed (other than Excepted Prop-
erty), of every kind and description and wheresoever
situate, now owned or which may be hereafter acquired by
Mortgagor (including, without limitation, (i) the Ground
Lease Land, if Mortgagor acquires the fee simple title to
the Ground Lease Land or any part thereof whether by
exercise of any or all of the options contained in Arti-
cles Forty-Fourth [and Fifty-Second] of the Ground Leases
or otherwise, and/or the Parking Lease Land or any part
thereof and/or any other Leased Facilities, if Mortgagor
acquires fee simple title to such Leased Facilities or
any part thereof, (ii) all air rights and rights to
maintain supporting columns, all rights to construct and
maintain tunnels and bridges and other elevated struc-
tures, all rights to create private rights of way over
streets now or hereafter owned or enjoyed by Mortgagor
appurtenant to real property, including, without limita-
tion, those rights, if any, granted by (t) Ordinance #68
of 1983 adopted December 20, 1983 by the City of Atlantic
City, New Jersey (the "City") (u) Ordinance #35 of 1981
----
adopted May 21, 1981 by the City and recorded July 13,
7
<PAGE>
1982 in Deed Book 3700 page 337, (v) Vacation Ordinance
#17 of 1982, adopted March 11, 1982 by The Board of
Commissioners of the City and recorded July 13, 1982 in
Deed Book 3700 page 341, (w) Ordinance #36 of 1982 adopt-
ed February 10, 1983 by the City, (x) deeds from the City
dated May 3, 1982 and recorded on May 7, 1982 in (A) Deed
Book 3685 page 120, (B) Deed Book 3685 page 105, (C) Deed
Book 3685 page 110, (D) Deed Book 3685 page 124, (E) Deed
Book 3685 page 115 and (F) Deed Book 3685 page 128, (y)
corrective deeds from the City (A) dated June 28, 1982
and recorded July 13, 1982 in Deed Book 3701 page 1, (B)
dated June 29, 1982 and recorded July 13, 1982 in Deed
Book 3701 page 13, (C) dated June 28, 1982 and recorded
July 13, 1982, in Deed Book 3701 page 9, (D) dated June
29, 1982 and recorded July 13, 1982 in Deed Book 3701
page 21, (E) dated June 28, 1982 and recorded July 13,
1982 in Deed Book 3701 page 5, and (F) dated June 29,
1982 and recorded July 13, 1982 in Deed Book 3701 page 17
and (z) easements from the City dated June 1, 1982 and
recorded June 8, 1982 in (A) Deed Book 3693 page 56, (B)
Deed Book 3693 page 60 and (C) Deed Book 3693 page 64, as
corrected by corrective easements dated June 29, 1982 and
recorded July 13, 1982 in (A) Deed Book 3701 page 25, (B)
Deed Book 3701 page 33, and (C) Deed Book 3701 page 29,
and (iii) to the extent assignable, all easements, li-
censes, rights of way, gores of land, streets, ways,
alleys, passages, sewer rights, waters, water courses,
water rights and powers, and all estates, rights, titles,
interests, privileges, franchises, liberties, tenements,
hereditaments and appurtenances of any nature whatsoever,
in any way for the benefit of, or belonging, relating or
pertaining to, the Trust Estate), it being the intention
hereof that all property, interests, rights, privileges
and franchises now owned by Mortgagor or acquired by
Mortgagor after the date hereof (other than Excepted
Property) shall be as fully embraced within and subjected
to the lien hereof as if such property were specifically
described herein.
* * *
TOGETHER with all of Mortgagor's right, title
and interest in and to any and all mineral and water
rights and any title or reversion, in and to the beds of
the ways, streets, avenues and alleys adjoining the
Premises to the center line thereof and in and to all
strips, gaps and gores adjoining the Premises on all
sides thereof; and
TOGETHER with any and all of Mortgagor's right,
title and interest in and to the tenements,
hereditaments, easements, appurtenances, passages, wa-
ters, water courses, riparian rights, other rights,
8
<PAGE>
liberties and privileges thereof or in any way now or
hereafter appertaining to the Premises, including, with-
out limitation, any other claim at law or in equity as
well as any after-acquired title, franchise or license
and the reversion and reversions and remainder and re-
mainders thereof; and
TOGETHER with any and all awards and other
compensation heretofore or hereafter to be made to the
present and all subsequent owners of the Trust Estate for
any taking by eminent domain, either permanent or tempo-
rary, of all or any part of the Trust Estate or any
easement or appurtenances thereof, including severance
and consequential damage and change in grade of streets,
all in accordance with and subject to the provisions of
the Superior Instrument Requirements and Section 5.19;
and
TOGETHER with any and all proceeds of any
unearned premiums on any insurance policies described in
Sections 5.11 and 5.12, and the right to receive and
apply the proceeds of any insurance, judgments, or set-
tlements made in lieu thereof, for damage to the Trust
Estate or otherwise, all in accordance with and subject
to the provisions of Section 5.11, Article IV of the
Trust Indenture, and the Superior Instrument Require-
ments.
EXCLUDING, with respect to all of the herein-
above granted property, rights, title, interest, privi-
leges and franchises described in Granting Clauses First
through Sixth or in the four immediately preceding para-
graphs, all Excepted Property now or hereafter existing.
TO HAVE AND TO HOLD all of said Premises,
Leases, Facility Leases, Operating Assets, properties,
options, credits, deposits, rights, privileges and fran-
chises of every kind and description, real, personal or
mixed, hereby and hereafter granted, bargained, sold,
alienated, assigned, transferred, hypothecated, pledged,
released, conveyed, mortgaged, or confirmed as aforesaid,
or intended, agreed or covenanted so to be, together with
all the appurtenances thereto appertaining (said Premis-
es, Leases, Facility Leases, Operating Assets, proper-
ties, options, credits, deposits, rights, privileges and
franchises, other than Excepted Property now or hereafter
existing, being herein collectively called the "Trust
-----
Estate") unto Mortgagee and its successors and assigns
- ------
forever.
SUBJECT, HOWEVER, on the date hereof, to Exist-
ing Encumbrances and, after the date hereof, to Permitted
Liens (other than Restricted Encumbrances).
9
<PAGE>
BUT IN TRUST, NEVERTHELESS, for the ratable
benefit and security of the Holders.
UPON CONDITION that, until the happening of an
Event of Default, Mortgagor shall be permitted to possess
and use the Trust Estate, and to receive and use the
rents, issues, profits, revenues and other income of the
Trust Estate.
AND IT IS HEREBY COVENANTED AND DECLARED that
the Trust Estate is to be held and applied by Mortgagee,
subject to the further covenants, conditions and trusts
hereinafter set forth, and Mortgagor does hereby covenant
and agree to and with Mortgagee, for the ratable benefit
of the Holders, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 1.01. Definitions.
-----------
For all purposes of this Mortgage, except as
otherwise expressly provided or unless the context other-
wise requires:
(a) the terms defined in this Article One have
the meanings assigned to them in this Article One and
include the plural as well as the singular;
(b) all accounting terms not otherwise defined
herein have the meanings assigned to them, and all compu-
tations herein provided for shall be made, in accordance
with generally accepted accounting principles in effect
on the date hereof consistently applied; and
(c) the words "herein," "hereof" and "hereun-
der" and other words of similar import refer to this
Mortgage as a whole and not to any particular Article,
Section or other subdivision.
"Acquisition Date" means the date on which
----------------
Mortgagor acquires a fee or leasehold interest in the
Adjacent Site.
"Additional Parcel 1" means the portion of the
-------------------
Ground Lease Land designated as "Additional Parcel 1" on
Schedule 2.
"Affiliate" has the meaning set forth in Sec-
---------
tion 1.1 of the Trust Indenture.
10
<PAGE>
"Alterations" has the meaning set forth in Sec-
-----------
tion 5.12.
"Appraised Value" means the fair market value
---------------
of the Casino Hotel, and of all other property now or
hereafter owned or leased by Mortgagor and subject to the
lien of this Mortgage, as determined by an Independent
Appraiser on the basis of an appraisal in conformity with
the criteria set forth at 12 C.F.R. Section 564.4 or such
similar published policy or regulation as from time to
time governs real estate related transactions by institu-
tions regulated by the Office of Thrift Supervision;
provided, that the value of the Casino Hotel and such
- --------
other property shall not include the value of (i) any
furniture, fixtures and equipment therein to the extent
of the Outstanding Amount of any Indebtedness secured by
any F,F&E Financing Agreements with respect thereto and
(ii) any Excepted Property.
"Appraiser" means a "state certified appraiser"
---------
as defined in 12 C.F.R. Section 564.2(i) who is (i) of recog-
nized standing among appraisers of properties similar to
the Casino Hotel and (ii) experienced in the appraisals
of properties of a similar size and scope to that of the
Casino Hotel, selected by Mortgagor.
"Architect" means an Independent Person select-
---------
ed by Mortgagor and licensed as an architect in the State
of New Jersey.
"Assignment of Leases and Rents" means the
------------------------------
Assignment of Leases and Rents of even date herewith made
by Mortgagor, as assignor, in favor of the Trustee, as
assignee.
"Assignment of Operating Assets" means the As-
------------------------------
signment of Operating Assets of even date herewith made
by Mortgagor, as assignor, in favor of the Trustee, as
assignee.
"Casino" means that portion of the Casino Hotel
------
used for gaming and related activities.
"Casino Hotel" means collectively (i) the
------------
casino and hotel complex currently known as the "Trump
Plaza Hotel and Casino" in Atlantic City, New Jersey and
ancillary structures and facilities located on the Pre-
mises and all furniture, fixtures and equipment at any
time contained therein in each case owned by or leased to
Plaza Associates and covered by the lien of the Mortgage
Documents and (ii) the casino and hotel complex currently
known as the "Trump Taj Mahal Casino Resort" in Atlantic
City, New Jersey and ancillary structures and facilities
11
<PAGE>
located on the Premises and all furniture, fixtures and
equipment at any time contained therein in each case
owned by or leased to Taj Associates and covered by the
lien of the Mortgage Documents.
"Casino Hotel Parcel" means collectively, (i)
-------------------
the entire block located in Atlantic City, New Jersey and
bounded by Pacific Avenue, Columbia Place, the Boardwalk
and Mississippi Avenue and (ii) DESCRIBE TAJ MAHAL PAR-
CEL.
"Casualty" means any act or occurrence of any
--------
kind or nature which results in damage, loss or destruc-
tion to any buildings or improvements on the Premises
and/or Tangible Personal Property.
"Certificate of Appraised Value" means the
------------------------------
certificate of an Independent Appraiser stating the
Appraised Value.
"Code" means the Federal Bankruptcy Code, Title
----
11 of the United States Code, as amended.
"Collateral Agency Agreement" means the
---------------------------
Collateral Agency Agreement, dated as of April ___, 1996,
by and among Mortgagee, Trustee and Mortgagor and the
[Secured Parties (as defined therein)].
"Company" means Trump Atlantic City Associates,
-------
a New Jersey partnership.
"Comparable Provision" has the meaning set
--------------------
forth in Section 5.20(b)(viii).
"Debt Documents" has the meaning set forth in
--------------
Section 1 of the Collateral Agency Agreement.
"Default" means any event which is, or after
-------
notice or lapse of time or both would be, an Event of
Default. Without limiting the generality of the previous
provisions of this definition, the term "Default" shall
include the occurrence of an event as to which a notice
of default has been given to Mortgagor under any Facility
Lease by a Lessor or under any Superior Mortgage by the
holder thereof, which has not yet been cured.
"Depositary" means (i) a Depositary (as defined
----------
in Section 12.8 of the Ground Leases) and (ii) an Inde-
pendent entity to which insurance proceeds or condemna-
tion awards are paid to be held in trust for Restoration
pursuant to the provisions of a Superior Mortgage.
12
<PAGE>
"EAB Mortgage" means that certain mortgage
------------
dated October 28, 1988 encumbering TSA's interest in the
TSA Parcel, made by TSA in favor of European American
Bank securing a note in the original principal amount of
$10,000,000 and recorded November 16, 1988 in Mortgage
Book 4046, Page 51, as amended on August 1, 1991, and all
other assignments and other documents executed in connec-
tion therewith.
"Egg Harbor Mortgage" means that certain mort-
-------------------
gage dated October 5, 1990 encumbering the Egg Harbor
Parcel made by Mortgagor in favor of Mutual Benefit Life
Insurance Company securing a note in the original princi-
pal amount of $1,550,000 and recorded October 11, 1990 in
Mortgage Book 4453, Page 1, and that certain collateral
assignment of leases dated October 5, 1990 made by Mort-
gagor in favor of Mutual Benefit Life Insurance Company
and recorded October 11, 1990 in Deed Book 5142, Page 75,
and any replacements, modifications and refinancings of
either of them, as the case may be, to the extent the
same are permitted under Section 5.21(b)(i).
"Egg Harbor Parcel" means the portion of the
-----------------
Owned Land designated as the "Egg Harbor Parcel" on
Schedule 1.
"Event of Default" has the meaning set forth in
----------------
Section 3.01.
"Excepted Property" means:
-----------------
(1) the personal property owned by les-
sees under Leases and the personal property of
any Hotel guests;
(2) counterchecks and any other property
to the extent that the granting of a security
interest therein is prohibited by the New Jer-
sey Casino Control Act, N.J.S.A. 5:12-1 et
------- --
seq., and the regulations promulgated there-
---
under;
(3) cash to the extent not subject to a
security interest pursuant to Section ___ of
the Trust Indenture; and
(4) any property deemed to be Excepted
Property pursuant to the provisions of Section
2.03.
"Existing Encumbrances" means the matters set
---------------------
forth in Schedule 3.
13
<PAGE>
["Expansion Site" means the Additional Parcel
---------------
1.]
["Expansion Site Lease" means the Rothenberg
---------------------
Lease upon either the assignment thereof, or the grant of
a sublease thereunder, to Mortgagor.]
"Facility Leases" means, collectively:
---------------
(1) the Ground Leases;
[(2) any Expansion Site Lease;]
(3) any other lease now existing or here-
after entered into or assumed by Mortgagor as
lessee with respect to any real property wheth-
er it be land, land and buildings and improve-
ments thereon or only buildings and improve-
ments (excluding the Operating Leases); and
(4) any and all modifications, extensions
and renewals of the leases described in clauses
(1) through (3) above, to the extent the same
are permitted under Section 5.20.
"F,F&E Financing Agreement" means a purchase-
-------------------------
money, landlord's or other lien or encumbrance upon any
after-acquired Tangible Personal Property and/or other
items constituting Operating Assets which are financed,
purchased or leased by Mortgagor.
"Full Insurable Value" means the actual re-
--------------------
placement cost (excluding the costs of foundation, foot-
ing, excavation, paving, landscaping and other similar,
noninsurable improvements) of the insurable properties in
question.
"Ground Lease Land" means the real property
-----------------
described in Schedule 2.
"Ground Leases" means the leases described in
-------------
Schedule 2 as amended or supplemented to the extent
permitted by Section 5.20.
"Guarantee" means collectively, each guarantee
---------
made from time to time by the Guarantors of the Issuers'
Indenture Obligations (as defined in the Trust Indenture)
pursuant to Article Thirteen of the Trust Indenture.
"Guarantors" has the meaning set forth in
----------
Section 1.1 of the Trust Indenture.
14
<PAGE>
"Holder" has the meaning set forth in Section
------
1.1 of the Trust Indenture.
"Hotel" means that portion of the Casino Hotel
-----
not included within the Casino.
"Impositions" has the meaning set forth in
-----------
Section 5.08.
"Indebtedness" has the meaning set forth in
------------
Section 1.1 of the Trust Indenture.
"Independent" when used with respect to any
-----------
specified Person means such a Person who (i) is in fact
independent, (ii) does not have any direct financial
interest or any material indirect financial interest in
Mortgagor or in any Affiliate of Mortgagor and (iii) is
not connected with Mortgagor or any Affiliate of Mortgag-
or as an officer, employee, promoter, underwriter, trust-
ee, partner, director or person performing similar func-
tions. Whenever it is herein provided that any Indepen-
dent Person's opinion or certificate shall be furnished
to Mortgagee, such Person shall be appointed by a Mort-
gagor Order and such opinion or certificate shall state
that the signer has read this definition and that the
signer is Independent within the meaning thereof. A
Person who is performing or who has performed services as
an independent contractor to any specified Person shall
not be considered not Independent merely by reason of the
fact that such Person is performing or has performed such
services.
"Insurance Amount" has the meaning set forth in
----------------
Section 5.11(a)(i).
"Insurance Requirements" means all terms of any
----------------------
insurance policy covering or applicable to the Trust
Estate or any part thereof, all requirements of the
issuer of any such policy, and all orders, rules, regula-
tions and other requirements of the National Board of
Fire Underwriters (or any other body exercising similar
functions) applicable to or affecting the Trust Estate or
any part thereof or any use or condition of the Trust
Estate or any part thereof.
"Insurance Trustee" means the Trustee or, if
-----------------
the Trustee so elects, any bank, trust company or insur-
ance company with a net worth in excess of $100,000,000,
designated by the Trustee.
"Insurer" means (i) an insurance company or
-------
companies selected by Mortgagor authorized to issue
insurance in the State of New Jersey with an A.M. Best
15
<PAGE>
rating level of A minus or better and an A.M. Best finan-
cial size category of VIII or better or (ii) Lloyds of
London so long as its financial capacity is not such that
prudent owners of first-class casino and hotel complexes
in Atlantic City, New Jersey would be unwilling to accept
Lloyds of London; provided, that with respect to the
--------
insurance required to be maintained pursuant to Section
5.11(a)(i), up to 1.0% of the total amount of such insur-
ance in excess of the first $10,000,000 thereof may be
maintained with an insurance company or companies not
meeting the foregoing A.M. Best rating level and/or A.M.
Best financial size categories; and provided, further,
-------- -------
that Mortgagor shall in all events use commercially
reasonable efforts to obtain insurance issued by insur-
ance companies having an A.M. Best rating level of better
than A minus.
"Land" means, collectively, the Owned Land and
----
the Leased Land.
"Lease" means each lease or sublease (made by
-----
Mortgagor as lessor or sublessor, as the case may be) of
any space in any building or buildings, an interest in
which building or buildings constitutes a part of the
Trust Estate, including every agreement relating thereto
or entered into in connection therewith and every guaran-
tee of the performance and observance of the covenants,
conditions and agreements to be performed by the lessee
or sublessee under any such lease or sublease. For
purposes hereof, the term "Lease" shall include any
license agreement, concession agreement or other occupan-
cy agreement. Notwithstanding the foregoing, the term
"Lease" shall not include any transient room rentals.
"Leased Facilities" means, collectively, the
-----------------
Leased Land and any buildings and improvements now or
hereafter located thereon.
"Leased Land" means, collectively, the Ground
-----------
Lease Land and any other land that is now or hereafter
subject to a Facility Lease.
"Legal Requirements" means all laws, statutes,
------------------
codes, acts, ordinances, orders, judgments, decrees,
injunctions, rules, regulations, permits, licenses,
authorizations, directions and requirements (including,
without limitation, the New Jersey Casino Control Act,
the New Jersey Environment Cleanup Responsibility Act and
the New Jersey Spill Compensation and Control Act of
1976) of all governments, departments, commissions,
boards, courts, authorities, agencies, officials and
officers, of governments, federal, state and municipal
(including, without limitation, the New Jersey Department
16
<PAGE>
of Environmental Protection and Energy, the Atlantic City
Bureau of Investigations, the Division of Gaming Enforce-
ment of the State of New Jersey, and the Casino Control
Commission of the State of New Jersey, foreseen or un-
foreseen, ordinary or extraordinary, which now are or at
any time hereafter become applicable to the Trust Estate
or any part thereof, or any of the adjoining sidewalks,
or any use or condition of the Trust Estate or any part
thereof, including, without limitation, the use of the
Casino Hotel as a gaming or gambling facility.
"Lessors" means the lessors under the Facility
-------
Leases.
"Maturity" when used with respect to any In-
--------
debtedness means the date on which the principal (or any
portion thereof) of such Indebtedness becomes due and
payable as therein or herein provided, whether at the
Stated Maturity, upon acceleration, optional redemption,
required repurchase, scheduled principal payment or
otherwise.
"Mortgage Documents" has the meaning set forth
------------------
in Section 1.1 of the Trust Indenture.
"Mortgage Notes" means the Issuers' First Mort-
--------------
gage Notes due 2006 in an aggregate principal amount of
$1,100,000,000, issued pursuant to the Trust Indenture,
including the guarantees thereof by the Guarantors.
"Mortgagee" has the meaning set forth in Sec-
---------
tion 1.12.
"Mortgagor" means the Persons named as "Mort-
---------
gagor" in the first paragraph of this instrument includ-
ing any successor entity which shall have become such
pursuant to the applicable provisions of this Mortgage.
"Mortgagor Order" and "Mortgagor Request" mean,
--------------- -----------------
respectively, a written order or request signed with a
Mortgagor Signature and delivered to Mortgagee.
"Mortgagor Signature" means the signature of
-------------------
(i) the president or a vice president of (1) [Taj Associ-
ates or Plaza Associates] Taj Associates or Plaza Associ-
ates or (2) the corporate general partner of Taj Associ-
ates or Plaza Associates and (ii) the treasurer, secre-
tary or an assistant secretary of (1) Taj Associates or
Plaza Associates or (2) the corporate general partner of
Taj Associates or Plaza Associates.
"Notices" has the meaning set forth in Section
-------
1.02.
17
<PAGE>
"Obligations" has the meaning set forth in
-----------
Section 1 of the Collateral Agency Agreement.
"Officer" means any Person authorized to exe-
-------
cute a Mortgagor Signature.
"Officers' Certificate" means a certificate
---------------------
signed with a Mortgagor Signature and delivered to Mort-
gagee.
"Operating Assets" has the meaning set forth in
----------------
Granting Clause Fifth.
"Operating Leases" means:
----------------
(1) the Parking Leases; and
(2) the operating leases described in
clause (vi) of the definition of Permitted
Leases set forth in Section 1.1 of the Trust
Indenture.
"Opinion of Counsel" means a written opinion of
------------------
counsel who may (except as otherwise expressly provided
in this Mortgage) be an employee of Mortgagor or of an
Affiliate of Mortgagor.
"Original Policy" means the ALTA Loan Policies
---------------
of Title Insurance issued by Commonwealth Land Title
Insurance Company, First American Title Insurance Co. and
Chicago Title Insurance Company, pursuant to _________
Title Insurance Company Title Commitment No. _________,
redated the date hereof, insuring Mortgagee as to the
liens of this Mortgage in an aggregate amount of
$1,200,000,000.
"Outstanding Amount" has the meaning set forth
------------------
in Section 1.1 of the Trust Indenture.
"Owned Land" has the meaning set forth in
----------
Granting Clause First.
"Parking Lease Land" means the real property
------------------
described in Schedule 4.
"Parking Leases" means the leases and licenses
--------------
described in Schedule 4.
"Parking Parcel" means the portion of the Owned
--------------
Land designated as the "Parking Parcel" on Schedule 1.
"Parking Parcel Mortgage" means the following
-----------------------
mortgage encumbering portions of the Parking Parcel, and
18
<PAGE>
any replacements, modifications and refinancings thereof,
to the extent the same are permitted under Section
5.21(b)(i): Mortgage made by Donald J. Trump, nominee, to
Albert Rothenberg and Robert Rothenberg, dated October 3,
1983, securing a note in the original principal amount of
$4,100,000 and recorded October 6, 1983 in Mortgage Book
2900, page 233.
"Permits" has the meaning set forth in Section
-------
1.1 of the Trust Indenture.
"Permitted Liens" has the meaning set forth in
---------------
Section 1.1 of the Trust Indenture.
"Person" means any individual, corporation,
------
limited or general partnership, joint venture, associa-
tion, joint stock company, trust, unincorporated organi-
zation or any other entity or government or any agency or
political subdivision thereof.
"Premises" has the meaning set forth in Grant-
--------
ing Clause Third.
"Refinancing Indebtedness" means any substitu-
------------------------
tion, refunding, refinancing or replacement of any In-
debtedness secured by this Mortgage, provided (a) the
same is permitted under the definition of "Permitted
Indebtedness" in the Trust Indenture, (b) the same com-
plies with the terms and provisions of Section 5.05 and
(c) any such substitution, refunding, refinancing or
replacement of such Indebtedness is a substitution,
refunding, refinancing or replacement of less than the
entire outstanding amount of such Indebtedness.
"Refinancing Lien" means any mortgage, assign-
----------------
ment, security agreement, financing statement or other
lien securing Refinancing Indebtedness and any replace-
ments, modifications and refinancings thereof, to the
extent the same constitute "Refinancing Indebtedness" and
are otherwise permitted under Section 5.21(b)(i).
"Released Fee Land" has the meaning set forth
-----------------
in Section 2.04.
"Restricted Encumbrances" means (i) Leases
-----------------------
permitted by and made in accordance with Section 5.13 of
this Mortgage, (ii) the Assignment of Leases and Rents
and the Assignment of Operating Assets executed as of
even date herewith, and any other instrument now or
hereafter executed, as additional security for the obli-
gations secured by this Mortgage, (iii) any Refinancing
Lien and (iv) the leases and licenses listed on Schedule
9; it being intended that Restricted Encumbrances consti-
19
<PAGE>
tute those Permitted Liens which are subordinate to, or
pari passu with, the lien of this Mortgage.
"Restoration" has the meaning set forth in Sec-
-----------
tion 5.11(e)(iii).
"Rothenberg Lease" means that certain Amended
----------------
Lease dated March 9, 1979 among Albert Rothenberg and
Robert Rothenberg, as lessors, and Boardwalk Properties,
Inc., as lessee, covering a portion of the Adjacent Site,
the lessee's interest in which Amended Lease has been
assigned to Donald J. Trump, as such lease has been
amended to the date of this Mortgage.
"Securities Act" has the meaning set forth in
--------------
Section 1.1 of the Trust Indenture.
"Secured Creditors" has the meaning set forth
-----------------
in Section 1 of the Collateral Agency Agreement.
"Settlement Costs" has the meaning set forth in
----------------
Section 5.19.
"Stated Maturity", when used with respect to
---------------
any Indebtedness, means the date specified in such In-
debtedness as the fixed date on which the principal of
such Indebtedness is due and payable.
"Superior Instrument Requirements" means the
--------------------------------
applicable terms, conditions and provisions of (i) the
Ground Leases with respect to the Ground Lease Land, (ii)
the Parking Parcel Mortgage with respect to the Parking
Parcel, (iii) the Parking Leases with respect to the
Parking Lease Land and (iv) the Egg Harbor Mortgage with
respect to the Egg Harbor Parcel.
"Superior Mortgages" means, collectively, the
------------------
Parking Parcel Mortgage and the Egg Harbor Mortgage.
"Taking" means the acquisition or condemnation
------
by eminent domain of the whole or any part of the Premis-
es, by a competent authority, for any public or quasi-
public use or purpose.
"Tangible Personal Property" has the meaning
--------------------------
set forth in Granting Clause Fifth.
"TIA" means the Trust Indenture Act of 1939, as
---
amended.
"Trust Estate" has the meaning stated in the
------------
habendum to the Granting Clauses.
20
<PAGE>
"Trust Indenture" means that certain Indenture
---------------
of even date herewith among Mortgagor, and First National
Bank Association, as Trustee, as it may from time to time
be supplemented, modified or amended by one or more trust
indentures or other instruments supplemental thereto
entered into pursuant to the applicable provisions there-
of, a form of which (without exhibits) is attached hereto
as Exhibit A.
---------
"Trust Indenture Act" has the meaning set forth
-------------------
in Section 1.1 of the Trust Indenture.
"Trustee" means the Person named as the "Trust-
-------
ee" in the first paragraph of the Trust Indenture and any
successor thereto.
"TSA" means Trump Seashore Associates, a New
---
Jersey general partnership.
"TSA Parcel" means the portion of the Ground
----------
Lease Land designated as the "TSA Parcel" on Schedule 2.
"Uniform Commercial Code" means the New Jersey
-----------------------
Uniform Commercial Code N.J.S.A. 12A.
Section 1.02. Notices.
-------
(a) Any request, demand, authorization, direc-
tion, notice (including, without limitation, a notice of
default), consent, waiver or other document provided or
permitted by this Mortgage to be made upon, given or
furnished to, or filed with, Mortgagor or Mortgagee
(collectively, "Notices") shall be in writing and shall
-------
be deemed given either (i) when delivered by hand (in-
cluding by overnight courier) or (ii) two days after
sending by registered or certified mail, postage prepaid,
addressed as follows:
To Mortgagor:
Trump Plaza Associates
Trump Taj Mahal Associates
Mississippi Avenue and The Boardwalk
Atlantic City, New Jersey 08401
Attn: Chief Financial Officer
with a copy to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Attn: Jack H. Nusbaum, Esq.
21
<PAGE>
To Mortgagee:
First Bank National Association
c/o First Trust National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attn: Corporate Trust Department
(b) By Notice to the other party any party may
designate additional or substitute addresses for Notices
which, notwithstanding Subsection (a) above, shall be
deemed given when received.
Section 1.03. Form and Contents of Documents
Delivered to Mortgagee.
------------------------------
Whenever several matters are required to be
certified by, or covered by an opinion of, any specified
Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only
one document, but one such Person may certify or give an
opinion with respect to some matters and one or more
other such Persons as to other such matters in one or
several documents.
Any certificate or opinion of an Officer of
Mortgagor may be based, insofar as it relates to legal
matters, upon a certificate or opinion of, or representa-
tions by, counsel, unless such Officer knows that the
certificate or opinion or representations with respect to
the matters upon which his certificate or opinion is
based are erroneous. Any Opinion of Counsel may be
based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an
Officer or Officers of Mortgagor stating that the infor-
mation with respect to such factual matters is in the
possession of Mortgagor, unless such counsel knows that
the certificate or opinion or representations with re-
spect to such matters are erroneous. If appropriate to
the matter being opined upon and to the extent not pro-
hibited by the Trust Indenture Act, any Opinion of Coun-
sel may be subject to rights of creditors and the avail-
ability of equitable remedies.
Whenever any Person is required to make, give
or execute two or more applications, requests, consents,
certificates, statements, opinions or other instruments
under this Mortgage, they may, but need not, be consoli-
dated to form one instrument.
Whenever in this Mortgage, in connection with
any application or certificate or report to Mortgagee, it
22
<PAGE>
is provided that Mortgagor shall deliver any document as
a condition of the granting of such application, or as
evidence of Mortgagor's compliance with any term hereof,
it is intended that the truth and accuracy, at the time
of the granting of such application or at the effective
date of such certificate or report (as the case may be),
of the facts and opinions stated in such document shall
in such case be conditions precedent to the right of
Mortgagor to have such application granted or to the
sufficiency of such certificate or report.
Every application, certificate, report, affida-
vit, opinion, consent, statement or other instrument
required to be delivered to Mortgagee under this Mortgage
or under any other Mortgage Document shall be in writing
and shall be prepared and delivered without cost or
expense to Mortgagee.
Section 1.04. Compliance Certificates and Opinions.
------------------------------------
Upon any application or request by Mortgagor to
Mortgagee to take any action under any provision of this
Mortgage, Mortgagor shall furnish to Mortgagee an
Officers' Certificate stating that all conditions prece-
dent, if any, provided for in this Mortgage relating to
the proposed action have been complied with and an Opin-
ion of Counsel stating that in the opinion of such coun-
sel all such conditions precedent, if any, have been com-
plied with, except that in the case of any such appli-
cation or request as to which the furnishing of such
documents is specifically required by any provision of
this Mortgage relating to such particular application or
request, no additional certificate or opinion need be
furnished. Every certificate or opinion with respect to
compliance with a condition or covenant provided for in
this Mortgage shall include:
(a) a statement that each individual signing
such certificate or opinion has read such condition or
covenant and the definitions herein relating thereto;
(b) a brief statement as to the nature and
scope of the examination or investigation upon which the
statements or opinions contained in such certificate or
opinion are based;
(c) a statement that, in the opinion of each
such individual, he has made such examination or investi-
gation as is necessary to enable him to express an in-
formed opinion as to whether or not such condition or
covenant has been complied with; and
23
<PAGE>
(d) a statement as to whether, in the opinion
of each such individual, such condition or covenant has
been complied with.
Section 1.05. Effect of Headings and Table of Contents.
----------------------------------------
The Article and Section headings herein and in
the Table of Contents are for convenience only and shall
not affect the construction hereof.
Section 1.06. Successors and Assigns; Amendments.
----------------------------------
(a) Subject to the provisions of Sections 1.10
and 4.02 hereof and Section 6.2 of the Trust Indenture,
and without limiting the generality of Section 1.12
hereof, this Mortgage shall be binding upon and inure to
the benefit of the parties hereto and of the respective
successors and assigns of the parties hereto to the same
effect as if each such successor or assign were in each
case named as a party to this Mortgage.
(b) This Mortgage may not be modified, amend-
ed, discharged, released nor any of its provisions waived
except by agreement in writing executed by Mortgagor and
Mortgagee and in accordance with the provisions of this
Mortgage and the Trust Indenture.
Section 1.07. Separability Clause.
-------------------
In case any provision in this Mortgage shall be
invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
Section 1.08. Benefits of Mortgage.
--------------------
Without limiting the generality of Section
1.12, nothing in this Mortgage, express or implied, shall
give to any Person, other than the parties hereto and
their successors and assigns, any benefit or any legal or
equitable right, remedy or claim under this Mortgage.
Section 1.09. Governing Law.
-------------
This Mortgage shall be deemed to be a contract
under the laws of the State of New Jersey and shall be
construed in accordance with and governed by the laws of
the State of New Jersey.
24
<PAGE>
Section 1.10. Limitation on Liability.
-----------------------
Notwithstanding anything herein or in any other
agreement, document, certificate, instrument, statement
or omission referred to below to the contrary, Section
12.10 of the Trust Indenture is incorporated herein by
reference.
Section 1.11. Provisions Required by Trust Indenture.
--------------------------------------
Whenever the provisions of this Mortgage and
the provisions of the Trust Indenture shall be inconsis-
tent, the provisions of the Trust Indenture shall govern.
Section 1.12. Rights of Mortgagee.
-------------------
(a) Except as otherwise provided in Section
8.2 of the Trust Indenture:
(i) Mortgagee may rely, and shall be
protected in acting or refraining from acting, upon
any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, con-
sent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document believed
by it to be genuine and to have been signed or
presented by the proper party or parties;
(ii) any request or direction of Mortgag-
or mentioned herein shall be sufficiently evidenced
by a Mortgagor Request or Mortgagor Order;
(iii) whenever in the administration of
this Mortgage, Mortgagee shall deem it desirable
that a matter be proved or established prior to
taking, suffering or omitting any action hereunder,
Mortgagee (unless other evidence be herein specifi-
cally prescribed) may, in the absence of bad faith
on its part, rely upon an Officers' Certificate;
(iv) Mortgagee may consult with counsel
and any written advice of such counsel or any opin-
ion of Counsel shall be full and complete authoriza-
tion and protection in respect of any action taken,
suffered or omitted by Mortgagee hereunder in good
faith and in reliance thereon;
(v) Mortgagee shall be under no obliga-
tion to exercise any of the rights or powers vested
in it by this Mortgage at the request or direction
of any of the Holders pursuant to the Trust Inden-
ture, unless such Holders shall have offered to
Mortgagee reasonable security or indemnity against
25
<PAGE>
the costs, expenses and liabilities which might be
incurred therein or thereby in compliance with such
request or direction;
(vi) Mortgagee shall not be bound to make
any investigation into the facts or matters stated
in any resolution, certificate, statement, instru-
ment, opinion, report, notice, request, direction,
consent, order, approval, appraisal, bond, deben-
ture, note, coupon, security or other paper or
document but Mortgagee, in its discretion, may make
such further inquiry or investigation into such
facts or matters as it may see fit, and, if Mortgag-
ee shall determine to make such further inquiry or
investigation, it shall be entitled (subject to the
express limitations with respect thereto contained
in this Mortgage) to examine the books, records and
premises of Mortgagor, personally or by agent or
attorney;
(vii) Mortgagee may execute any of the
trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or
attorneys, and Mortgagee shall not be responsible
for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it
hereunder;
(viii) Mortgagee shall not be personally
liable, in case of entry by it upon the Trust Es-
tate, for debts contracted or liabilities or damages
incurred in the management or operation of the Trust
Estate;
(ix) Mortgagor shall pay or cause to be
paid to the Trustee all compensation and other
amounts provided in Section 8.7 of the Trust Inden-
ture; and
(x) no provision of this Mortgage shall
require Mortgagee to expend or risk its own funds or
otherwise incur any financial liability in the
performance of its obligations hereunder, or in the
exercise of any of its rights or powers.
(b) The provisions of this Section 1.12 shall
apply to all Mortgage Documents.
Section 1.13. Mortgage Subject to Casino Control Act.
--------------------------------------
Each provision of this Mortgage is subject to
and shall be enforced in compliance with the provisions
of the New Jersey Casino Control Act.
26
<PAGE>
Section 1.14. Discharge of Lien.
-----------------
If (a) Mortgagor shall pay or cause to be paid,
or there shall otherwise be paid, to Mortgagee all
amounts required to be paid by Mortgagor pursuant to the
Guarantee, this Mortgage and the Mortgage Notes and the
conditions precedent for the Trust Indenture to cease,
determine and become null and void (except for any sur-
viving rights of transfer or exchange of the Mortgage
Notes provided in the Trust Indenture and for the obliga-
tion to pay the Trustee's fees and expenses provided in
Section 8.7 of the Trust Indenture) in accordance with
Article Nine of the Trust Indenture shall have occurred,
or (b) there shall have occurred a Legal Defeasance (as
defined in Section 9.2 of the Trust Indenture) of the
Mortgage Notes, or (c) there shall have occurred a Cove-
nant Defeasance (as defined in Section 9.3 of the Trust
Indenture), then in any such case Mortgagee shall prompt-
ly cancel and discharge the Mortgage Documents, includ-
ing, without limitation, this Mortgage, and any financing
statements filed in connection herewith and execute and
deliver to Mortgagor all such instruments as may be
necessary, required or appropriate to evidence such
discharge and satisfaction of said lien or liens.
Section 1.15. General Application.
-------------------
(a) The remedies of Mortgagee upon any default
by Mortgagor in the fulfillment of any of its obligations
hereunder shall be limited in each instance by the provi-
sions of Section 1.10, whether or not the provisions
providing for such remedies explicitly refer to such
Section.
(b) The assertion of any rights upon any
Default shall be subject in each instance to, if re-
quired, the giving of any notice and the expiration of
any grace period provided for in Section 3.01 as a condi-
tion to such Default becoming an Event of Default, unless
the Trust Indenture Act requires otherwise, in which case
the Trust Indenture Act shall control.
(c) For the purposes of this Mortgage, it is
understood that an event which does not materially dimin-
ish the value of Mortgagee's interest in the Trust Estate
shall not be deemed an "impairment of security," as that
phrase is used in this Mortgage.
Section 1.16. Mortgage Deemed to be Security Agreement.
----------------------------------------
To the extent that the grant of a security
interest in any portion of the Trust Estate is governed
by the Uniform Commercial Code, this Mortgage is hereby
27
<PAGE>
deemed to be as well a security agreement under the Uni-
form Commercial Code for the purpose of creating hereby a
security interest in all of Mortgagor's right, title and
interest in and to said property, securing the obliga-
tions secured hereby, for the benefit of Mortgagee.
Section 1.17. Intentionally Omitted.
---------------------
ARTICLE TWO
RELEASE; SUBORDINATION
Section 2.01. Possession by Mortgagor.
-----------------------
So long as there shall have been no accelera-
tion of maturity of any Indebtedness secured hereby,
including, without limitation, the Mortgage Notes, Mort-
gagor shall be suffered and permitted, with power freely
and without let or hindrance on the part of Mortgagee,
subject to the provisions of this Mortgage and the Trust
Indenture, to possess, use, manage, operate and enjoy the
Trust Estate and every part thereof and to collect,
receive, use, invest and dispose of the rents, issues,
tolls, profits, revenues and other income from the Trust
Estate or any part thereof, to use, consume and dispose
of any consumables, goods, wares and merchandise in the
ordinary course of business of operating the Casino Hotel
and to adjust and settle all matters relating to choses
in action, leases and contracts.
Section 2.02. Obsolete Property.
-----------------
Mortgagor shall have the right, at any time and
from time to time, unless an Event of Default shall have
occurred and be continuing and subject to the terms of
the Trust Indenture and the TIA, without any release from
or consent by Mortgagee:
(a) to sell or dispose of, free from the lien
of this Mortgage, any Tangible Personal Property which,
in its reasonable opinion, may have become obsolete or
unfit for use or which is no longer necessary in the
conduct of its businesses or the operation of the Trust
Estate, and no purchaser of any such property shall be
bound to inquire into any question affecting Mortgagor's
right to sell or otherwise dispose of the same free from
the lien of this Mortgage;
(b) to alter, repair, replace, change the
location or position of and add to any Tangible Personal
Property; provided, however, that no change shall be made
-------- -------
in the location of any such property subject to the lien
28
<PAGE>
of this Mortgage which would in any respect impair the
security of this Mortgage upon such property; or
(c) to renew, extend, surrender, terminate,
modify or amend any leases of Tangible Personal Property,
when, in Mortgagor's reasonable opinion, it is prudent to
do so.
Mortgagor shall retain any net cash proceeds
(except as provided in Section 5.3 of the Trust Inden-
ture) received from the sale or disposition of any Tangi-
ble Personal Property under Subsection (a) of this Sec-
tion 2.02, in the business of operating the Casino Hotel.
Mortgagee shall, from time to time, promptly
execute any written instrument in form satisfactory to
Mortgagee to confirm the propriety of any action taken by
Mortgagor under this Section 2.02, upon receipt by Mort-
gagee of a Mortgagor Request requesting the same, togeth-
er with an Officers' Certificate stating that the action
so to be confirmed was duly taken in conformity with this
Section 2.02, and that the execution of such written
instrument is appropriate to confirm the propriety of
such action under this Section 2.02; provided, that Mort-
--------
gagee shall have no liability thereunder and all costs
and expenses (including, without limitation, reasonable
attorneys' fees and disbursements) shall be paid by
Mortgagor.
Section 2.03. F,F&E Financing Agreements.
--------------------------
Notwithstanding any provision contained in this
Mortgage or the Trust Indenture to the contrary, if
Mortgagor acquires Tangible Personal Property and/or
other items constituting operating assets subject to any
F,F&E Financing Agreement, or becomes the lessee under a
lease for any of the same and if the document evidencing
such F,F&E Financing Agreement prohibits subordinate
liens or the provisions of any such lease prohibits any
assignment thereof by the lessee, and if any such prohi-
bition is customary with respect to similar transactions
of the lender or lessor (as evidenced by an Officers'
Certificate delivered to Mortgagee, together with such
other evidence as Mortgagee may reasonably request), as
the case may be, then the property so purchased or the
lessee's interest in the lease, as the case may be, shall
be deemed to be Excepted Property. If any such F,F&E
Financing Agreement permits subordinate liens then Mort-
gagee shall execute and deliver to Mortgagor, at
Mortgagor's expense, such documents as the holder of such
F,F&E Financing Agreement may reasonably request to
evidence the subordination of the lien of this Mortgage
and the Mortgage Documents to the lien of such F,F&E
29
<PAGE>
Financing Agreement; provided, however, that Mortgagee
-------- -------
shall have no obligation to execute and deliver such
documents, and the lien of this Mortgage shall not be
subordinate to any such F,F&E Financing Agreement, unless
(a) such F,F&E Financing Agreement shall contain a provi-
sion binding upon the holder of such F,F&E Financing
Agreement that (i) if the holder of such F,F&E Financing
Agreement shall give to Mortgagor any notice of default
thereunder, such holder shall at the same time and in the
same manner serve a copy of such notice on Mortgagee at
the address designated herein (or such other address as
Mortgagee may designate by notice given to the holder of
such F,F&E Financing Agreement in the manner provided for
notices hereunder), and that no such notice to Mortgagor
shall be deemed to have been duly given unless and until
a copy thereof has been so provided to Mortgagee, and
(ii) promptly following the last date upon which Mortgag-
or may cure such default, if Mortgagor shall fail to cure
such default, the holder of such F,F&E Financing Agree-
ment shall give notice to Mortgagee stating the manner in
which Mortgagor shall have failed to cure its said de-
fault, in which event Mortgagee shall be permitted to
cure the default and, with respect thereto, Mortgagee
shall have the same amount of time, after such notice,
within which to cure the said default, as is provided for
under the provisions of such F,F&E Financing Agreement to
be given to Mortgagor therefor after notice or (b) Mort-
gagor delivers to Mortgagee an Officers' Certificate
certifying that although Mortgagor has used reasonable
efforts to have included in such F,F&E Financing Agree-
ment such a provision, Mortgagor has been unsuccessful in
obtaining such a provision because such provision is not
customarily included by the lender or lessor in its F,F&E
Financing Agreements in similar transactions.
Section 2.04. Released Fee Land.
-----------------
(a) Notwithstanding anything in Granting
Clauses First, Second and Sixth to the contrary, if
Mortgagor is about to exercise its option(s) under Arti-
cle Forty-Fourth or Fifty-Second of any Ground Lease,
Mortgagor shall have the right, unless an Event of De-
fault, or a Default, shall have occurred and be continu-
ing, to have an Affiliate exercise said options(s) or for
Mortgagor to exercise said options(s) on behalf of an
Affiliate and in connection therewith to cause fee simple
title to the Ground Lease Land or any part thereof to be
conveyed to an Affiliate of Mortgagor (provided, that no
--------
portion of the purchase price for the Ground Lease Land
or part thereof is paid by Mortgagor), free from the lien
of this Mortgage (the land to be so conveyed is hereinaf-
ter referred to as the "Released Fee Land"); provided,
----------------- --------
that Mortgagor furnishes Mortgagee with the following:
30
<PAGE>
(i) an Officers' Certificate requesting
the release of the Released Fee Land from the Trust
Estate and stating that (A) Mortgagor is not re-
quired to own the Released Fee Land in order to
maintain all Permits and in order to comply with the
provisions of all material contracts to which Mort-
gagor is a party or by which Mortgagor is bound, (B)
there has been delivered to Mortgagor and Mortgagee
a true copy of the instrument required by Section
5.20(b)(xiv), (C) said Affiliate has received all
Permits necessary to own the Released Fee Land
(including, without limitation, all approvals re-
quired by the Casino Control Commission of the State
of New Jersey or successor governmental authority),
(D) there has been delivered to Mortgagor and Mort-
gagee a true copy of an instrument executed by such
Affiliate stating that (x) said Affiliate may only
engage in the activity of owning the Released Fee
Land, and (y) said Affiliate shall not convey the
Released Fee Land to another Affiliate of Mortgagor,
unless such other Affiliate executes and delivers to
Mortgagor and Mortgagee, the instruments that would
have been required to be delivered pursuant to
clauses (B) and (D) if Mortgagor conveyed the Re-
leased Fee Land to such other Affiliate (provided,
--------
that this restriction shall only be effective until
such time as this Mortgage shall be satisfied of
record), and (E) the deed conveying the Released Fee
Land to such Affiliate shall state that such convey-
ance is made subject to the terms, provisions and
conditions of the applicable Ground Lease and that
the fee and leasehold interests in the Released Fee
Land shall not merge by reason of Mortgagor and/or
any Affiliate owning both the leasehold and fee
estate therein, and that such estates shall always
remain separate and distinct;
(ii) an executed counterpart of an agree-
ment between Mortgagor and said Affiliate in record-
able form, confirming that notwithstanding the
exercise of any option contained in the Ground Lease
by Mortgagor or by an Affiliate of Mortgagor, the
provisions of Articles Forty-Fourth and Fifty-Second
of said Ground Lease remain in full force and effect
and said options continue to be exercisable by
Mortgagor, its successors and assigns, from time to
time, in accordance with the provisions thereof;
(iii) an Opinion of Counsel to the effect
that (A) Mortgagor is not required to own the Re-
leased Fee Land in order to maintain in good stand-
ing all Permits or by the provisions of any material
contract to which Mortgagor is a party or by which
31
<PAGE>
it is bound and (B) the instruments described in
clauses (B) and (D) of subparagraph (i) were duly
executed by and are binding upon said Affiliate; and
(iv) an endorsement to the Original Poli-
cy, confirming that no merger of the fee and lease-
hold estates in the Released Fee Land has resulted
from such conveyance.
(b) Mortgagee shall, from time to time,
promptly execute any written instrument in form reason-
ably satisfactory to the prospective purchaser to confirm
the release of the Released Fee Land, upon receipt by
Mortgagee of a Mortgagor Request requesting the same,
together with an Officers, Certificate stating that
Mortgagor is entitled to such release by virtue of
Mortgagor's compliance with this Section 2.04; provided,
--------
that Mortgagee shall have no liability thereunder and all
costs and expenses (including, without limitation, rea-
sonable attorneys' fees and disbursements) shall be paid
by Mortgagor.
ARTICLE THREE
REMEDIES
Section 3.01. Events of Default.
-----------------
"Event of Default," whenever used herein, means
----------------
an "Event of Default," as defined in Section 7.1 of the
Trust Indenture, shall occur and be continuing (whatever
the reason for such event and whether it shall be volun-
tary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or
governmental body).
Section 3.02. [Intentionally omitted]
Section 3.03. Application of Moneys Received by
Mortgagee.
---------------------------------
Any moneys received by Mortgagee pursuant to
the provisions of this Article Three (including moneys
received after any action or act by Mortgagee under
Section 3.10) shall be applied by Mortgagee in accordance
with the provisions of Section 7.6 of the Trust Inden-
ture.
32
<PAGE>
Section 3.04. Restoration of Rights and Remedies.
----------------------------------
If Mortgagee has instituted any proceeding to
enforce any right or remedy under this Mortgage and such
proceeding has been discontinued or abandoned for any
reason or has been determined adversely to Mortgagee,
then and in every such case Mortgagor and Mortgagee
shall, subject to any determination in such proceeding,
be restored to their respective former positions hereun-
der, and thereafter all rights and remedies of Mortgagee
shall continue as though no such proceeding had been
instituted.
Section 3.05. Rights and Remedies Cumulative.
------------------------------
No right or remedy herein conferred upon or
reserved to Mortgagee is intended to be exclusive of any
other right or remedy, and every right and remedy shall,
to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder
or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropri-
ate right or remedy.
Section 3.06. Delay or Omission Not Waiver.
----------------------------
No delay or omission of Mortgagee to exercise
any right or remedy accruing upon an Event of Default
shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence
therein. Every right and remedy given by this Article
Three or by applicable law to Mortgagee may be exercised,
from time to time, and as often as may be deemed expedi-
ent, by Mortgagee.
Section 3.07. Undertaking for Costs.
---------------------
If any action or proceeding shall be commenced
(including, without limitation, an action to foreclose
this Mortgage or to collect the Indebtedness or under the
Guarantee secured hereby) to which action or proceeding
Mortgagee is made or becomes a party, or in which it
becomes necessary in the opinion of Mortgagee to defend
or uphold the lien of this Mortgage, then Mortgagor shall
pay to Mortgagee all expenses, including, without limita-
tion, reasonable attorneys, fees, disbursements and court
costs incurred by Mortgagee in connection therewith,
together with interest at the rate then payable on such
Indebtedness, from the date of payment less the net
amount received by Mortgagee, as its interest may appear
under any title insurance policy, and, until paid, all
33
<PAGE>
such expenses, together with interest as aforesaid, shall
be secured by the lien of this Mortgage.
Section 3.08. Waiver of Appraisement and Other Laws.
-------------------------------------
To the full extent that it may lawfully so
agree, Mortgagor will not at any time insist upon, plead,
claim or take the benefit or advantage of, any appraise-
ment, valuation, stay, extension or redemption law now or
hereafter in force, in order to prevent or hinder the
enforcement of this Mortgage or the absolute sale of the
Trust Estate, or any part thereof, or the possession
thereof by any purchaser at any sale under this Article
Three; and Mortgagor, for itself and all who may claim
under Mortgagor, so far as Mortgagor or they now or
hereafter may lawfully do so, hereby waives the benefit
of all such laws. Mortgagor, for itself and all who may
claim under Mortgagor, waives, to the extent that Mort-
gagor may lawfully do so, all right to have the property
in the Trust Estate marshalled upon any foreclosure
hereof, and agrees that any court having jurisdiction to
foreclose this Mortgage may order the sale of the Trust
Estate as an entirety.
If any law in this Section 3.08 referred to and
now in force, of which Mortgagor or its successor or
successors might take advantage despite this Section
3.08, shall hereafter be repealed or cease to be in
force, such law shall not thereafter be deemed to consti-
tute any part of the contract herein contained or to
preclude the application of this Section 3.08.
Section 3.09. Entry.
-----
Mortgagor agrees that upon the occurrence, and
during the continuance, of an Event of Default, Mortgag-
or, upon demand of Mortgagee, shall forthwith surrender
to Mortgagee the actual possession of, and it shall be
lawful for Mortgagee by such officers or agents as it may
appoint to enter and take possession of, the Trust Estate
(and the books and papers of Mortgagor), and to hold,
operate and manage the Trust Estate (including the making
of all needful repairs, and such alterations, additions
and improvements as Mortgagee shall deem wise) and to
receive the rents, issues, tolls, profits, revenues and
other income thereof, and, after deducting the costs and
expenses of entering, taking possession, holding, operat-
ing and managing the Trust Estate, as well as payments
for taxes, insurance and other proper charges upon the
Trust Estate and reasonable compensation to itself, its
agents and counsel, to apply the same as provided in
Section 3.03; provided, however, that Mortgagee's rights
-------- -------
under this Section 3.09 shall be subject to the provi-
34
<PAGE>
sions of the New Jersey Casino Control Act and Section
3.14. Whenever all that is then due upon the Debt Docu-
ments, including without limitation, the Mortgage Notes
and under any of the terms of this Mortgage shall have
been paid and all defaults hereunder shall have been
cured, Mortgagee shall surrender possession to Mortgagor.
Section 3.10. Power of Sale; Suits for Enforcement.
------------------------------------
If an Event of Default shall occur and be
continuing, Mortgagee, with or without entry, in its
discretion, may:
(a) sell, subject to any mandatory require-
ments of applicable law, the Trust Estate as an entirety,
or in such parcels, as Mortgagee may determine, to the
highest bidder at public auction at such place and at
such time (which sale may be adjourned by Mortgagee from
time to time in its discretion by announcement at the
time and place fixed for such sale, without further
notice) and upon such terms as Mortgagee may fix and
briefly specify in a notice of sale to be published as
required by law; or
(b) proceed to protect and enforce its rights
under this Mortgage by sale pursuant to judicial proceed-
ings or by a suit, action or proceeding in equity or at
law or otherwise, whether for the specific performance of
any covenant or agreement contained in this Mortgage or
in aid of the execution of any power granted in this
Mortgage or for the foreclosure of this Mortgage or for
the enforcement of any other legal, equitable or other
remedy, as Mortgagee shall deem most effectual to protect
and enforce any of the rights of Mortgagee; the failure
to join tenants shall not be asserted as a defense to any
foreclosure or proceeding to enforce the rights of Mort-
gagee.
Section 3.11. Incidents of Sale.
-----------------
Upon any sale of any of the Trust Estate,
whether made under the power of sale hereby given or
pursuant to judicial proceedings, to the extent permitted
by law:
(a) subject to the provisions of Section 3.14
and the receipt of any required prior approvals of the
New Jersey Casino Control Commission, Mortgagee may bid
for and purchase the property offered for sale, and upon
compliance with the terms of sale may hold, retain,
possess and dispose of such property, without further
accountability, and may, in paying the purchase money
therefor, deliver the Mortgage Notes or any other Debt
35
<PAGE>
Document or claims for interest thereon in lieu of cash
to the amount which shall, upon distribution of the net
proceeds of such sale, be payable thereon, and the Mort-
gage Notes or any other Debt Document, in case the
amounts so payable thereon shall be less than the amount
due thereon, shall be returned to Mortgagee after being
appropriately stamped to show partial payment;
(b) Mortgagee may make and deliver to the
purchaser or purchasers a good and sufficient deed, bill
of sale and instrument of assignment and transfer of the
property sold;
(c) Mortgagee is hereby irrevocably appointed
the true and lawful attorney of Mortgagor, in its name
and stead, to make all necessary deeds, bills of sale and
instruments of assignment and transfer of the property
thus sold; and for that purpose it may execute all neces-
sary deeds, bills of sale and instruments of assignment
and transfer, and may substitute one or more persons,
firms or corporations with like power, Mortgagor hereby
ratifying and confirming all that its said attorney or
such substitute or substitutes shall lawfully do by
virtue hereof; but if so requested by Mortgagee or by any
purchaser, Mortgagor shall ratify and confirm any such
sale or transfer by executing and delivering to Mortgagee
or to such purchaser or purchasers all proper deeds,
bills of sale, instruments of assignment and transfer and
releases as may be designated in any such request;
(d) all right, title, interest, claim and
demand whatsoever, either at law or in equity or other-
wise, of Mortgagor of, in and to the property so sold
shall be divested and such sale shall be a perpetual bar
both at law and in equity against Mortgagor, its succes-
sors and assigns, and against any and all persons claim-
ing or who may claim the property sold or any part there-
of from, through or under Mortgagor, its successors and
assigns; and
(e) the receipt of Mortgagee or of the officer
making such sale shall be a sufficient discharge to the
purchaser or purchasers at such sale for his or their
purchase money and such purchaser or purchasers and his
or their assigns or personal representatives shall not,
after paying such purchase money and receiving such
receipt, be obliged to see to the application of such
purchase money, or be in anywise answerable for any loss,
misapplication or non-application thereof.
36
<PAGE>
Section 3.12. Receiver.
--------
Upon the occurrence of an Event of Default and
commencement of judicial proceedings by Mortgagee to
enforce any right under this Mortgage, Mortgagee shall be
entitled, as against Mortgagor, without notice or demand
and without regard to the adequacy of the security for
the Mortgage Notes, the Guarantee or any other Debt
Document or the solvency of Mortgagor, to the appointment
of a receiver of the Trust Estate, and of the rents,
issues, profits, revenues and other income thereof;
provided, however, that Mortgagee's rights under this
Section 3.12 shall be subject to the provisions of the
New Jersey Casino Control Act and Section 3.14 hereof.
Section 3.13. Suits to Protect the Trust Estate.
---------------------------------
Mortgagor hereby acknowledges the right of
Mortgagee, in the name and on behalf of Mortgagor, (a) to
appear in and defend any action or proceeding brought
with respect to the Trust Estate or any part thereof and
(b) upon 5 days' prior notice to Mortgagor (or such
shorter period or without notice if deemed necessary and
appropriate by Mortgagee), Mortgagee shall have power to
institute and to maintain such proceedings as Mortgagee
may deem necessary and appropriate, but in the case of
(a) and (b) to prevent any impairment of security or any
impairment of the Trust Estate by any acts which may be
unlawful or in violation of this Mortgage and to protect
Mortgagee's interests in the Trust Estate and in the
rents, issues, profits, revenues and other income arising
therefrom, including the right to institute and maintain
proceedings to restrain the enforcement of or compliance
with any governmental enactment, rule or order that may
be unconstitutional or otherwise invalid, if the enforce-
ment of or compliance with such enactment, rule or order
would impair the security hereunder or be materially
prejudicial to the interests of Mortgagee.
Section 3.14. Management of the Premises.
--------------------------
Without limiting the generality of any other
provision of this Article Three, following an Event of
Default and the taking of possession of the Trust Estate
or any part thereof by Mortgagee and/or the appointment
of a receiver of the Trust Estate or any part thereof,
Mortgagee or any such receiver shall be authorized, in
addition to the rights and powers of Mortgagee and such
receiver set forth elsewhere in this Mortgage, to take
any action permitted under Article Seven of the Trust
Indenture.
37
<PAGE>
ARTICLE FOUR
CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
Section 4.01. Consolidation, Merger, Conveyance
or Transfer only on Certain Terms.
---------------------------------
Mortgagor shall comply with all provisions
applicable to Mortgagor in Article Six of the Trust
Indenture.
Section 4.02. Successor Entity Substituted.
----------------------------
Upon any consolidation or merger, or any sale,
assignment, conveyance, transfer or disposition of the
Trust Estate or any portion thereof in accordance with
Section 6.1 of the Trust Indenture (other than a lease),
the successor Person formed by such consolidation or into
which Mortgagor is merged or the successor Person to
which such sale, assignment, conveyance, transfer or
disposition is made shall succeed to, and be substituted
for, and may exercise every right and power of, Mortgagor
under this Mortgage with the same effect as if such
successor had been named as Mortgagor herein; and there-
after, except in the case of a lease, the Person named as
"Mortgagor" in the first paragraph of this instrument or
any successor Person which shall theretofore have become
such in the manner prescribed in this Article shall be
discharged from all obligations and covenants under this
Mortgage.
ARTICLE FIVE
COVENANTS AND REPRESENTATIONS OF MORTGAGOR
Section 5.01. Performance of Obligations.
--------------------------
Mortgagor shall duly and punctually pay and
perform the Obligations in accordance with the terms of
the Debt Documents (including, without limitation, Arti-
cle Thirteen of the Trust Indenture).
Section 5.02. F,F&E Financing Agreements.
--------------------------
Mortgagor shall comply with all of the terms
and conditions set forth in any F,F&E Financing Agree-
ments before the expiration of any applicable notice and
cure periods contained in any F,F&E Financing Agreements.
38
<PAGE>
Section 5.03. Limitations on Liens and Transfers.
-----------------------------------
(a) Except as otherwise expressly permitted
under this Mortgage and the Trust Indenture (including,
without limitation, Article Five of the Trust Indenture
Mortgagor shall not create, incur, suffer or permit to be
created or incurred or to exist any mortgage, lien,
charge or encumbrance on or pledge of any of the Trust
Estate.
(b) The lien of this Mortgage on the date
hereof shall be subject and subordinate to the lien of
any Existing Encumbrances to the extent that each thereof
encumbers Mortgagor's interest in the Trust Estate or any
part thereof. The foregoing provisions of this Section
5.03(b) shall be self-operative and no further instrument
shall be required to give effect to such subordination.
Mortgagee shall, however, from time to time, after re-
ceipt of a Mortgagor Request therefor (accompanied by an
Officers' Certificate stating that said conditions have
been satisfied) execute instruments in form and substance
reasonably satisfactory to the holder of a particular
Superior Mortgage confirming such subordination.
(c) Except as otherwise expressly permitted
under this Mortgage and the Trust Indenture (including,
without limitation, Article Six of the Trust Indenture),
Mortgagor shall not sell, assign, lease or otherwise
transfer all or any portion of the Trust Estate or any
interest therein (including, without limitation, any
interest in the Ground Leases). Without limiting the
generality of the foregoing, Mortgagor shall not sepa-
rate, or attempt to separate, its ownership of its inter-
est in the Ground Leases from the ownership of the build-
ings constituting the Casino Hotel or any part thereof.
Notwithstanding the foregoing, Mortgagor shall have the
right, at any time and from time to time, unless an Event
of Default shall have occurred and be continuing, without
any release from or consent by Mortgagee, to grant inter-
ests in the Owned Land in the nature of rights-of-way or
easements or other rights or privileges in the nature of
easements, including, without limitation, the rights-of-
way and easements substantially in the forms attached as
Schedule 6, and/or suffer or permit the acquisition
thereof to or by governmental authorities or public
utilities or others; provided, (i) that none of the same
--------
will reduce or impair, in any material respect, (A) the
value or usefulness of the Trust Estate or any part
thereof or (B) the normal operation of the Casino Hotel
in accordance with all Legal Requirements and all Per-
mits, (ii) Mortgagor has delivered to Mortgagee an
Officers' Certificate, dated not earlier than 10 days
prior to the date of each such grant, certifying that (A)
39
<PAGE>
no Event of Default has occurred and is continuing and
(B) the conditions set forth in this Section 5.03(c) for
such grant have been fulfilled and (iii) Mortgagor has
delivered to Mortgagee a duplicate original of the in-
strument, if any, pursuant to which such grant is to be
made, and such other instruments, certificates and opin-
ions as Mortgagee may reasonably request. The foregoing
provisions of this Section 5.03(c) shall be self-opera-
tive and no further instrument shall be required to
evidence the consent of Mortgagee to the grant or other
conveyance of such rights-of-way or easements. Mortgagee
shall, however, from time to time, after receipt of a
Mortgagor Request therefor (accompanied by an Officers'
Certificate stating that said conditions have been satis-
fied) execute instruments in form and substance reason-
ably satisfactory to Mortgagee confirming the permissi-
bility of such grant or other conveyance.
Section 5.04. Environmental.
-------------
Without limiting the generality of any other
provision of this Mortgage, Mortgagor covenants, repre-
sents and warrants to Mortgagee as follows:
(a) Mortgagor shall comply with any and all
federal, state and local environmental legislation,
rules, and regulations in effect as of the date of this
Mortgage and subsequent thereto, including, without
limitation, the Spill Compensation and Control Act
(N.J.S.A. 58:10-23.11 et seq.) (the "Spill Act"); the
------ ---------
Environmental Cleanup Responsibility Act (N.J.S.A.
13:lK-6 et seq.) ("ECRA"); the Solid Waste Management Act
------ ----
(N.J.S.A. 13:E-1 et seq.); the Resource, Conservation and
Recovery Act (42 U.S.C. Section 6901 et seq.) ("RCRA");
------ ----
the Comprehensive Environmental Response, Compensation
and Liability Act (42 U.S.C. Section 9601 et seq.)
------
("CERCLA") and such other environmental legislation,
------
rules and regulations, as are in or may come into effect
and apply to (i) Mortgagor and/or Mortgagee with respect
to the Premises or (ii) the transactions contemplated
hereby, and as to any occupants or users of the collater-
al, whether as lessees, tenants, licensees or otherwise,
Mortgagor shall use its best efforts to cause same to
comply with said legislation, rules and regulations.
Mortgagor agrees to pay all costs required in connection
with compliance with the foregoing legislation, rules and
regulations.
(b) Mortgagor has not used in the past, nor
shall Mortgagor use in the future, the Premises for the
purpose of refining, producing, storing, handling, trans-
ferring, processing or transporting "Hazardous Substanc-
es", as such term is defined in ECRA, the Spill Act,
40
<PAGE>
CERCLA or the regulations relating thereto, except that
Mortgagor and its subsidiaries have used, and Mortgagor
may continue in the future to use, substances in the
operation and maintenance of the Premises, including,
without limitation, heating oil, gasoline and cleaning
chemicals which could be considered as "Hazardous Sub-
stances" under the preceding definition.
(c) To the best of Mortgagor's knowledge,
after due inquiry and investigation, none of the real
property owned, leased and/or occupied by Mortgagor and
located in the State of New Jersey, including, without
limitation, the Premises, has been or is now being used
as a "Major Facility" as such term is defined in N.J.S.A.
58:10-23.llb(l). Mortgagor will not use the Premises in
the future as a "Major Facility".
(d) To the best of Mortgagor's knowledge,
after due inquiry and investigation, no lien has been
attached to any revenues or any real or personal property
owned by Mortgagor or the Premises, as a result of the
Chief Executive of the New Jersey Spill Compensation Fund
expending monies from said fund to pay for "Cleanup
Costs", as such term is defined in N.J.S.A. 58:10-
23.llb(d), arising from an intentional or unintentional
action or omission of Mortgagor or any previous owner
and/or operator of such real property.
(e) There is no asbestos or asbestos contain-
ing material on the Premises. To the best of Mortgagor's
knowledge, there are no underground storage tanks located
at or on Additional Parcel 1, the Bordonaro Parcel, the
Egg Harbor Parcel or the Parking Lease Land. To the best
of Mortgagor's: knowledge, after due inquiry and investi-
gation, there are no underground storage tanks located at
or on the Casino Hotel Parcel or the Parking Parcel.
Mortgagor has not installed or placed, or permitted to be
installed or placed, any underground storage tanks at or
on the Premises. Underground storage tanks shall have
the definition as set forth in N.J.S.A. 58:10A-22(p).
(f) Mortgagor has not received a summons,
citation, directive, letter, other written communication,
or, to the best of its knowledge, any oral communication,
from the New Jersey Department of Environmental Protec-
tion and Energy or from any other person, firm or corpo-
ration concerning any intentional or unintentional action
or omission on Mortgagor's part resulting in the releas-
ing, spilling, leaking, pumping, pouring, emitting,
emptying or dumping of "Hazardous Substances", as such
term is defined in N.J.S.A. 58:10-23.llb(k), into the
waters or onto the lands of the State of New Jersey, or
into the waters outside the jurisdiction of the State of
41
<PAGE>
New Jersey, in either case resulting in damage to the
lands, waters, fish, shellfish, wildlife, biota, air and
other resources owned, managed, held in trust or other-
wise controlled by the State of New Jersey.
(g) In connection with any purchase of the
Premises or any business or assets located thereon or any
"closing, terminating or transferring operations" of any
"industrial establishment", as that term is defined in
ECRA, occurring on or after December 31, 1983, Mortgagor
required that the owner and or operator of the industrial
establishment comply with the provisions of ECRA and the
owner and or operator did comply therewith.
(h) Upon the occurrence of an Event (as here-
inafter defined), Mortgagee shall have the right to have
its consultants perform a comprehensive environmental
audit of the Premises. Such audit shall be conducted by
an environmental consultant chosen by Mortgagee and may
include a visual survey, a record review, an area recon-
naissance assessing the presence of hazardous or toxic
waste or substances, PCBs or storage tanks at the Premis-
es, an asbestos survey of the Premises, which may include
random sampling of the improvements and air quality
testing, and such further site assessments as Mortgagee
may reasonably require due to the results obtained from
the foregoing. Mortgagor grants Mortgagee, its agents,
consultants and contractors the right to enter the Pre-
mises for the purposes of performing such studies and the
cost of such studies shall be due and payable by Mortgag-
or to Mortgagee upon demand and shall be secured by the
lien of this Mortgage. Mortgagee shall direct the envi-
ronmental consultant to use its best efforts not to
hinder Mortgagor's or any tenant's operations when con-
ducting such audit, sampling or inspections. For purpos-
es of this paragraph, the term "Event" shall mean (i) the
occurrence of any Event of Default, (ii) the issuance of
any summons, citation, directive or similar written
notice from the New Jersey Department of Environmental
Protection and Energy or from any other local, state or
federal entity or from any other person, firm or corpora-
tion concerning any alleged material violation of any and
all federal, state and local environmental legislation,
rules and regulations in effect as of the date of this
Mortgage and subsequent thereto or (iii) the initiation
of any legal action, suits or other legal or administra-
tive proceedings relating to or in connection with any
alleged violation of any and all federal, state and local
environmental legislation, rules and regulations in
effect as of the date of this Mortgage and subsequent
thereto.
42
<PAGE>
(i) If a lien shall be filed against the
Premises by the New Jersey Department of Environmental
Protection and Energy, pursuant to and in accordance with
the provisions of N.J.S.A. 58:10-23.llf(f), as a result
of the Chief Executive of the New Jersey Spill Compensa-
tion Fund having expended monies from said fund to pay
for "Damages", as such term is defined in N.J.S.A. 58:10-
23.llg, and/or "Cleanup and Removal Costs", as such term
is defined in N.J.S.A. 58:10-23(b), arising from an
intentional or unintentional action or omission of Mort-
gagor resulting in the releasing, spilling, pumping,
pouring, emitting, emptying or dumping of "Hazardous
Substances", as such term is defined in N.J.S.A. 58:10-
23.11(b)k into waters of the State of New Jersey or onto
lands from which it might flow or drain into said waters,
then, unless there is a good faith basis for contesting
such lien and Mortgagor is so contesting such lien in
accordance with Section 5.09, Mortgagor shall, within 30
days from the date that Mortgagor is given notice that
the lien has been placed against the Premises or within
such shorter period of time if the State of New Jersey
has commenced steps to cause the Premises to be sold
pursuant to the lien, either (i) pay the claim and remove
the lien from the Premises, or (ii) furnish (A) a bond
satisfactory to a title company selected by Mortgagee
(the "Title Insurer") in the amount of the claim out of
-------------
which the lien arises, (B) to the Trustee, a cash deposit
(which may be disbursed by the Trustee in its sole dis-
cretion) in the amount of the claim out of which the lien
arises, or (C) other security reasonably satisfactory to
Mortgagee in an amount sufficient to discharge the claim
out of which the lien arises.
(j) Mortgagor shall use its best efforts to
cause compliance by all lessees with all applicable Legal
Requirements relating to environmental protection.
(k) Mortgagor shall promptly provide Mortgagee
with copies of all notices received by or prepared by
Mortgagor in connection with ECRA, CERCLA, the Spill Act,
RCRA or any other environmental law, rule or regulation
relating to the Premises. For purposes of this para-
graph, the term "notice" shall mean any summons, cita-
tion, directive, order, claim, pleading, letter, applica-
tion, filing, report, findings, declarations or other
materials pertinent to compliance of the Trust Estate and
Mortgagor with such environmental laws, rules or regula-
tions.
(l) If this Mortgage is foreclosed, Mortgagor
shall deliver the Premises in compliance with all appli-
cable federal, state and local environmental laws, ordi-
43
<PAGE>
nances, rules and regulations, including, without limita-
tion, ECRA.
(m) Without limiting the generality of Section
5.22, Mortgagor agrees to defend, indemnify and save
Mortgagee harmless from and against any loss or liabili-
ty, cost or expense (including, without limitation,
reasonable attorneys' fees, consultants' fees, disburse-
ments and court costs) arising out of, or incurred in
connection with, Mortgagor's misrepresentation, or fail-
ure promptly (but in no event to exceed the time period
permitted by law) to comply with and perform its obliga-
tions, under this Section,5.04. The provisions of this
subsection (m) shall survive any transfer of the Premis-
es, including a transfer after a foreclosure of this
Mortgage.
Section 5.05. Refinancing Liens.
-----------------
Any Refinancing Liens shall, at the option of
Mortgagor, be on a parity with or junior to the lien of
this Mortgage; provided, that if the holder of any Refi-
--------
nancing Lien which is junior to the lien of this Mortgage
shall have notified Mortgagee (in the manner and at the
address set forth herein for the giving of Notices) of
the existence of its junior lien and its address for
notices, then contemporaneously with the giving of any
notice to Mortgagor in respect of a default hereunder,
Mortgagee shall send a copy of such notice to such junior
lienholder at the address specified in such junior
lienholder's notice and such junior lienholder shall have
the right to cure such default within the time given to
Mortgagor to cure such default; and provided further,
-------- -------
that a Refinancing Lien may be on a parity with the lien
of this Mortgage only if (a) the instrument creating such
lien states that "Pursuant to Section 5.05 of a certain
Indenture of Mortgage and Security Agreement dated as of
April ___, 1996, between Trump Plaza Associates, Trump
Taj Mahal Associates, Trump Atlantic City Associates,
Trump Atlantic City Funding, Inc. and The Trump Taj Mahal
Corporation, collectively, as mortgagor, and First Na-
tional Bank Association, as Collateral Agent, as mortgag-
ee, the lien created by this instrument ranks pari passu
with the lien created by said Indenture recorded in
Mortgage Book at page in the Atlantic County,
New Jersey Clerk's Office," (b) said instrument provides
for rights and remedies substantially identical to those
contained in this Mortgage, (c) said instrument provides
that upon the acceleration of maturity of any Indebted-
ness secured hereby, the Refinancing Indebtedness secured
by such lien shall be deemed accelerated, (d) said in-
strument provides that if the Outstanding Amount of the
Indebtedness secured hereby is greater than the Outstand-
44
<PAGE>
ing Amount of the Refinancing Indebtedness secured by
said instrument, then (1) the exercise of the rights and
remedies of the holders of such Refinancing Indebtedness
or the trustee or other representative thereof shall be
directed by Mortgagee for the ratable benefit of the
Mortgagee (acting on behalf of the Secured Creditors) and
such holders, and such holders or any trustee or other
representative agree not to assert any claim against the
Trustee in connection therewith and (2) that if the
Trustee commences a foreclosure proceeding with respect
to this Mortgage, the holder of such instrument shall
commence a foreclosure proceeding with respect to such
Refinancing Indebtedness and if the holder fails to do
so, the Trustee may join such holder as a co-plaintiff to
the foreclosure action, (e) if the holder of such Refi-
nancing Indebtedness shall at any time elect to obtain
the appointment of a receiver for the Premises, such
holder shall obtain such appointment for the benefit of
both such holder and the Trustee, (f) said instrument
provides that in the event of any Taking or Casualty,
with respect to which this Mortgage provides that the
proceeds or awards in connection therewith are to be used
for purposes of Restoration, said proceeds or award will
be paid to Mortgagor or held by the Trustee or the Insur-
ance Trustee in accordance with Sections 5.11 and 5.19
hereof, as the case may be, and for the purpose of Resto-
ration as therein set forth, (g) said instrument provides
that the proceeds or award from a Taking or Casualty
which in accordance with the terms of this Mortgage are
not to be made available for Restoration and other moneys
or proceeds arising from the sale or other disposition of
the Trust Estate shall be for the ratable benefit of the
Trustee (acting on behalf of the Holders) and the holders
of said instrument, (h) said instrument provides that
neither any waiver, approval or consent, or any other act
or failure to act by a holder of said instrument shall be
made, given or take place if the effect thereof would
impair the validity and priority of the lien created by
this Mortgage or adversely affect the rights of Mortgagee
hereunder and that without limiting the generality of the
foregoing provisions of this clause (h), if either the
Trustee or the holder of such Refinancing Indebtedness
obtains a New Lease (as defined in and pursuant to the
provisions of Section 29.03 of the Ground Leases or any
similar new lease under any other Facility Lease), the
Trustee and such holder shall cooperate with one another
in such reasonable manner as shall not adversely affect
the rights of the Trustee (acting on behalf of the Hold-
ers) and such holder with respect to the ownership of the
lessee's interest under such New Lease and the operation
of the Trust Estate; (i) said instrument provides that if
the provisions of clause (d) of this Section 5.05 are not
applicable then (1) the exercise of the rights and reme-
45
<PAGE>
dies of the Holders or the Trustee shall be directed by
the holders of the Refinancing Indebtedness or the trust-
ee or other representative of such holders for the rat-
able benefit of such holders or trustee or other repre-
sentative (acting on behalf of the holders of such Refi-
nancing Indebtedness) and the Holders, and the Holders or
the Trustee agree not to assert any claim against such
holders or trustee or other representative in connection
therewith, (2) if the Trustee commences a foreclosure
proceeding, the holder of said instrument shall likewise
do so and if such holder fails to do so, the Trustee may
join such holder as a co-plaintiff to the foreclosure
action and (3) if the holder of such Refinancing Indebt-
edness commences a foreclosure proceeding, the Trustee
shall likewise do so and if the Trustee fails to do so,
such holder may join the Trustee as a co-plaintiff to the
foreclosure action, and said instrument provides that all
of the rights, privileges, remedies and benefits afforded
to the Trustee, as mortgagee, under this Mortgage and
contained in said instrument are contractual benefits for
the benefit of, and may be enforced by, the Trustee.
Section 5.06. Warranty of Leasehold Estate and Title.
--------------------------------------
Mortgagor represents and warrants that as of
the date hereof:
(a) Mortgagor is duly authorized under the
laws of the State of New Jersey and all other applicable
laws to execute and deliver the Mortgage Documents, and
all corporate and partnership action on Mortgagor's part
necessary for the valid execution and delivery of the
Mortgage Documents has been duly and effectively taken;
(b) Mortgagor is the lawful owner and is
lawfully seized and possessed of the Owned Land and all
buildings and improvements thereon, free and clear of all
liens, charges or encumbrances, other than the Mortgage
Documents and the Existing Encumbrances;
(c) Mortgagor is the holder of and has good
and marketable title to the leasehold interests and
leasehold estates under all existing Facility Leases,
subject to no lien, encumbrance or charge other than the
Mortgage Documents and the Existing Encumbrances;
(d) (i) each existing Facility Lease is a
valid and subsisting demise of the respective Leased Land
for the term therein set forth, and without limiting the
generality of the foregoing, all conditions to the effec-
tiveness of the Ground Leases contained in Article Fifty-
First of the Ground Leases have been either waived or
satisfied, (ii) there are no defaults under any Facility
46
<PAGE>
Lease by any lessor or the lessee as to which written
notice has been given to or by the lessee, (iii) Mortgag-
or has delivered to Mortgagee a true and correct copy of
each existing Facility Lease, and all modifications,
amendments and supplements thereto, and (iv) each exist-
ing Facility Lease is in full force and effect and has
not been modified, amended or supplemented, except as
described on Schedule 2 or 5;
(e) Mortgagor has good title to the Operating
Assets, subject to no lien, encumbrance or charge, other
than the Mortgage Documents and the Existing Encumbranc-
es;
(f) Mortgagor has good and lawful right and
authority to execute this Mortgage and to grant, bargain,
sell, alien, convey, assign, transfer, hypothecate,
pledge, mortgage and confirm the Trust Estate as provided
herein (including, without limitation, with respect to
the Operating Assets and Facility Leases), without the
consent of any third party, other than governmental
authorities and certain Superior Mortgage holders and
other secured Persons but any applicable or necessary
consent or approval of any such governmental authority,
Superior Mortgage holders and other such Persons has been
given or waived in accordance with applicable law at or
prior to the execution and delivery of this Mortgage, and
this Mortgage constitutes a valid first mortgage lien and
deed of trust and first priority security interest in the
Trust Estate, subject only to Existing Encumbrances
(including, without limitation, the Superior Mortgages)
and the Mortgage Documents; and
(g) (i) all amounts due under the Superior
Mortgages and the instruments secured thereby have been
paid to the extent they were due and payable to the date
hereof, and (ii) there is no existing default under said
Superior Mortgages or instruments, or in the performance
of any of the terms, covenants, conditions or warranties
therein on the part of Mortgagor to be performed and ob-
served thereunder as to which written notice has been
given to Mortgagor.
Mortgagor hereby does and shall forever warrant
and defend (a) the title to the Trust Estate (including,
without limitation, Mortgagor's leasehold estate under,
and the lessee's interests in, each existing Facility
Lease) (subject to Permitted Liens) and (b) the priority
of the lien of the Mortgage Documents thereon (subject to
Permitted Liens other than Restricted Encumbrances),
against the claims and demands of all persons whomsoever,
at Mortgagor's sole cost and expense.
47
<PAGE>
Section 5.07. After-Acquired Property; Further
Assurances; Recording.
--------------------------------
All property, real, personal or mixed or any
interest therein (other than Excepted Property), of every
kind and description and wheresoever situate, which may
be hereafter acquired by Mortgagor (including, without
limitation, fee title to any Leased Land) shall immedi-
ately upon the acquisition thereof by Mortgagor, and
without any further mortgage, conveyance or assignment,
become subject to the lien of this Mortgage as fully as
though now owned by Mortgagor and covered by the Granting
Clauses. Nevertheless, Mortgagor shall do, execute,
acknowledge and deliver all and every such further acts,
conveyances, mortgages, financing statements and assur-
ances as Mortgagee shall require for accomplishing the
express purposes of this Mortgage.
Mortgagor shall, as provided in Section 5.13,
from time to time subject to the lien of this Mortgage
its right, title and interest under all Leases.
Mortgagor shall use reasonable efforts to
insure that all Operating Assets or any interest therein
hereafter acquired by Mortgagor shall be assignable to
Mortgagee, and to the extent such assignment to Mortgagee
requires the consent of any governmental authority or any
other Person, Mortgagor shall use all reasonable efforts
to obtain such consent or a waiver thereof.
Mortgagor shall cause this instrument and all
other instruments of further assurance, including all
financing statements and continuation statements covering
security interests in personal property, to be promptly
recorded, registered and filed, and at all times to be
kept recorded, registered and filed, and shall execute
and file such financing statements and cause to be issued
and filed such continuation statements, all in such
manner and in such places as may be required by law or as
requested by Mortgagee to fully preserve and protect the
rights of Mortgagee as a secured party under the Uniform
Commercial Code to all property comprising the Trust
Estate (to the extent a grant of a security interest
therein is governed by the Uniform Commercial Code) and
to perfect, preserve and protect the lien of this Mort-
gage as a valid direct first mortgage lien of record and
a valid first priority security interest on the Trust
Estate subject to Permitted Liens (including, without
limitation, the Superior Mortgages), other than Restrict-
ed Encumbrances.
Mortgagor shall pay all filing or recording
fees, and all expenses incident to the execution and
48
<PAGE>
delivery of this Mortgage, any financing statement or
continuation statement with respect to the personal
property constituting part of the Trust Estate, and any
instrument of further assurance, and all federal, state,
county and municipal stamp taxes and other taxes, duties,
imposts, assessments and charges arising out of or in
connection with the execution and delivery of this Mort-
gage, any financing statement or continuation statement
with respect to the personal property constituting part
of the Trust Estate or any instrument of further assur-
ance.
Mortgagor shall furnish to Mortgagee promptly
after the acquisition hereafter by Mortgagor of any fee
interest or leasehold interest in real property, (a) a
mortgagee policy of title insurance on the most recent
form of American Land Title Association standard loan
policy, extended coverage, which policy shall (i) contain
all such endorsements and affirmative insurance, to the
extent reasonably applicable, as is contained in the
Original Policy and (ii) evidence that title to such real
property is subject to no liens or encumbrances which
would (A) render title unmarketable or (B) violate any
other provision of this Mortgage or the Trust Indenture,
(b) an as-built survey meeting the "Minimum Standard
Detail Requirements for ALTA/ACSM Land Title Surveys",
certified within 60 days prior to the acquisition date by
a surveyor licensed in the State of New Jersey using the
same form of certification as that contained in the
surveys of the Premises delivered to Mortgagee on the
date of this Mortgage and (c) an Officers' Certificate
certifying that the mortgagee policy of title insurance
and survey delivered pursuant to clauses (a) and (b)
comply, respectively, with the provisions of such clauses
(a) and (b). Upon delivery of all of the items required
under this paragraph, any liens or encumbrances on such
real property shall constitute Permitted Liens hereunder.
Section 5.08. Payment of Taxes and Certain Claims;
Maintenance of Properties; Compliance
with Legal Requirements and Insurance
Requirements.
-------------------------------------
Mortgagor shall:
(a) subject to the provisions of Section 5.09
and, pay or cause to be paid before the date on which any
fine, penalty, interest or cost may be added for nonpay-
ment (but no later than when the same are payable by
Mortgagor pursuant to any Superior Instrument Require-
ment), all taxes (including, without limitation, real
estate taxes, personal or other property taxes and all
sales, value added, use and similar taxes), assessments
49
<PAGE>
(including, without limitation, all assessments for
public improvements or benefits, whether or not commenced
or completed prior to the date hereof and whether or not
to be completed prior to the satisfaction of this Mort-
gage), water, sewer or other rents, rates and charges,
excises, levies, license fees, permit fees, inspection
fees and other authorization fees and other charges, in
each case whether general or special, ordinary or ex-
traordinary, foreseen or unforeseen, of every character
(including, without limitation, all interest, additions
to tax and penalties thereon), that may be assessed,
levied, confirmed or imposed on or in respect of or be a
lien upon (i) the Trust Estate (including, without limi-
tation, the Leased Land) or any part thereof or any rent
therefrom or any estate, right or interest therein, or
(ii) any acquisition, occupancy, use, leasing, or posses-
sion of or activity conducted on the real property or any
part thereof included in the Trust Estate or any gross
receipts thereof or of the rent therefrom (all of the
foregoing being referred to collectively as "Imposi-
------
tions"). Notwithstanding the foregoing or any other
- -----
provision of this Mortgage, Mortgagor shall not be re-
quired to pay any income, profits or revenue tax upon the
income of Mortgagee or the Holders nor any franchise,
excise, corporate, estate, inheritance, succession,
capital levy or transfer tax of Mortgagee or the Holders
nor any interest, additions to tax or penalties in re-
spect thereof, unless such tax is imposed, levied or
assessed in substitution for any Imposition that Mortgag-
or is required to pay pursuant to this Section 5.08.
Mortgagor shall deliver to Mortgagee, at Mortgagee's
request, official receipts or other proof evidencing
payments of any Impositions in accordance with the re-
quirements of this Section 5.08. Mortgagor shall not be
entitled to any credit for taxes or assessments paid
against the Mortgage Notes;
(b) except for such property which Mortgagor
may dispose of or replace pursuant to Section 2.02,
maintain and keep all of Mortgagor's properties used or
useful in the conduct of Mortgagor's business, including,
without limitation, the Casino Hotel and all Tangible
Personal Property, in such good repair, working order and
condition, except for reasonable wear and use, and make
or cause to be made all such needful and proper repairs,
renewals and replacements thereto consistent with the
standards of first-class casino and hotel complexes in
Atlantic City, New Jersey;
(c) occupy and continuously operate the Casino
Hotel and keep the Casino Hotel supplied with Tangible
Personal Property, all in a manner consistent with the
50
<PAGE>
standards of first-class casino and hotel complexes in
Atlantic City, New Jersey;
(d) subject to the provisions of Section 5.09,
(i) comply with all Legal Requirements and Insurance
Requirements, whether or not compliance therewith shall
require structural changes in the buildings and improve-
ments included in the Trust Estate or interfere with the
use and enjoyment of the Trust Estate or any part there-
of, (ii) procure, maintain and comply with all Permits
required for (1) the use of the Casino as a gaming and
gambling facility, (2) the on-premises consumption of
alcoholic beverages at the Casino Hotel and (3) any other
use of the Trust Estate or any part thereof then being
made, and for the proper erection, installation, opera-
tion and maintenance of the improvements or any part
thereof, (iii) comply with all obligations of Mortgagor
under, and keep in full force and effect, all easements
which in any respect inure to the benefit of, or other-
wise affect, the Trust Estate or any part thereof, if the
failure to comply with the same would impair Mortgagee's
security hereunder, and (iv) without limiting the gener-
ality of clause (iii), comply with any instruments of
record at the time in force affecting the Trust Estate or
any part thereof, if the failure to comply with the same
would impair Mortgagee's security hereunder. Without
limiting the generality of the foregoing, Mortgagor
represents and warrants that at the time of the execution
of this Mortgage, Mortgagor is in compliance with the
requirements of clauses (i), (ii), (iii) and (iv) above;
and
(e) in the event of the passage after the date
of this Mortgage of any law of the State of New Jersey,
or any other governmental entity, changing in any way the
laws now in force for the taxation of mortgages, or debts
secured thereby, for federal, state or local purposes, or
the manner of the operation of any such taxes, so as to
affect the interest of Mortgagee, pay the full amount of
such new or additional taxes.
Section 5.09. Permitted Contests.
------------------
Notwithstanding anything in this Mortgage to
the contrary, Mortgagor, at Mortgagor's expense, may
contest (after prior notice to Mortgagee) by appropriate
legal proceedings conducted in good faith and with due
diligence, the amount or validity or application, in
whole or in part, of any Imposition or lien therefor or
any Legal Requirement or Insurance Requirement or the
application of any instrument of record (including,
without limitation, any Superior Instrument Requirement)
affecting the Trust Estate or any part thereof or any
51
<PAGE>
claims of holders of F,F&E Financing Agreements, mechan-
ics, materialmen, suppliers, or vendors or lien therefor,
and may withhold payment of the same pending such pro-
ceedings if permitted by law, or make payment under
protest, or defer compliance with any such Legal Require-
ment, any such Insurance Requirement or the terms of any
such instrument, and the same shall not be a Default
hereunder; provided, that (a) in the case of any Imposi-
--------
tions or lien therefor or any claims of mechanics, mate-
rialmen, suppliers or vendors or lien therefor, such
proceedings shall suspend the collection thereof from
each of Mortgagor, Mortgagee, the Holders and the Trust
Estate, (b) neither the Trust Estate nor any interest
therein would be in any significant danger of being sold,
forfeited, or lost, (c) such action will not result in
(i) the termination of any Facility Lease or (ii) the
holder of any Superior Mortgage having a right to exer-
cise any rights or remedies thereunder, (d) in the case
of a Legal Requirement, neither the Holders nor Mortgagee
shall be in any significant danger of any civil liability
or any danger of any criminal liability, and the failure
of Mortgagor to comply with such Legal Requirement shall
not affect the continuance in good standing of any Permit
or result in the suspension, termination, non-renewal or
material adverse modification of any Permit, and (e) in
the case of an Insurance Requirement, the failure of
Mortgagor to comply therewith shall not affect the valid-
ity of any insurance required to be maintained by Mort-
gagor hereunder.
Section 5.10. Mechanics' and Other Liens.
--------------------------
Subject to the provisions of Section 5.03,
Mortgagor shall cause to be removed, either by payment,
or bonding or otherwise, all claims and demands of me-
chanics, materialmen, laborers, and others which, if
unpaid, might result in, or permit the creation of, a
lien on the Premises and/or Trust Estate or any part
thereof, or on the revenues, rents, issues, income and
profits arising therefrom and in general shall do or
cause to be done everything necessary so that the lien
hereof shall be fully preserved, at the cost of Mortgag-
or, without expense to Mortgagee.
Section 5.11. To Insure.
---------
(a) Mortgagor, at Mortgagor's expense, shall
maintain with Insurers:
(i) insurance with respect to Mortgagor's
insurable properties constituting a part of the
Trust Estate against loss or damage by fire, light-
ning, and other risks from time to time included
52
<PAGE>
under "all-risk" policies and against loss or damage
by sprinkler leakage, water damage, collapse, mali-
cious mischief and explosion in respect of any steam
and pressure boilers and similar apparatus located
on such insurable properties, in amounts at all
times sufficient to prevent Mortgagor from becoming
a coinsurer within the terms of the applicable
policies, but in any event such insurance shall be
maintained in not less than the greatest of the
following (the "Insurance Amount"): (A) 100% of the
----------------
then Full Insurable Value of such insurable proper-
ties, determined from time to time (but not less
frequently than once in any 36 calendar months), by
an Appraiser or Insurer, (B) the then Outstanding
Amount of Indebtedness under the Debt Documents or
(C) the amount required to be maintained pursuant to
the Superior Instrument Requirements;
(ii) war risk insurance as and when such
insurance is obtainable from the United States of
America or any agency thereof as promptly as reason-
ably practicable after the same becomes so obtain-
able, in an amount not less than the Insurance
Amount, or, if such insurance cannot be obtained in
an amount not less than the Insurance Amount, in
such lesser amount as may then be so obtainable;
(iii) comprehensive general liability
insurance, including, without limitation, blanket
contractual liability coverage, broad form property
damage, independent contractor's coverage and per-
sonal injury coverage against any and all claims
arising out of or connected with the possession,
use,, leasing, operation or condition of such insur-
able properties, in an amount not less than
$100,000,000 combined single limit coverage for
personal injury and property damage with respect to
any one occurrence, which may be under an umbrella
policy. Anything contained in this clause (iii) to
the contrary notwithstanding, the Superior Instru-
ment Requirements with respect to the kinds and
amount of insurance described in this clause (iii)
shall be satisfied by Mortgagor;
(iv) workers' compensation insurance to
the extent required by law;
(v) business interruption insurance
covering not less than 6 months of loss, provided
that, at any time that Mortgagor is renewing any
policy for such insurance or taking out any new or
replacement policy for such insurance covering a
period of less than 12 months, Mortgagor shall
53
<PAGE>
deliver to Mortgagee an Officers' Certificate certi-
fying that the period of coverage to be maintained
by Mortgagor under such policy is the maximum that
can be maintained at rates determined by Mortgagor
to be reasonable for such coverage;
(vi) to the extent available, flood
insurance in an amount not less than the Insurance
Amount, or, if such insurance cannot be obtained in
an amount not less than the Insurance Amount, such
lesser amount as may then be so obtainable but in no
event less than $100,000,000; and
(vii) such other insurance with respect
to such insurable properties against loss or damage
of the kinds (A) from time to time customarily
insured against by persons owning or using first-
class casino and hotel complexes in Atlantic City,
New Jersey and (B) required to be maintained pursu-
ant to any Superior Instrument Requirements.
Notwithstanding the foregoing, to the extent
not violative of any Superior Instrument Requirements,
(A) Mortgagor may maintain a deductible with respect to
the insurance policies described in clauses (i), (ii),
(vi) and (vii) in an amount not to exceed $250,000, (B)
Mortgagor may maintain a deductible with respect to the
insurance policies described in clause (iii) in an amount
not to exceed $500,000, and (C) Mortgagor may maintain a
deductible with respect to the insurance policies de-
scribed in clause (v) in an amount not to exceed
$1,000,000.
(b) (i) Each policy of insurance maintained
by Mortgagor pursuant to Section 5.11(a) shall, (A)
except in the case of workers' compensation insurance,
name Mortgagor as an insured and shall name as additional
insureds (1) Mortgagee and (2) to the extent required by
the Superior Instrument Requirements, the lessors under
any Facility Leases and the holders of the Superior
Mortgages, (B) provide that all insurance proceeds for
losses, except in the case of comprehensive general
liability insurance and workers' compensation insurance
or as otherwise provided in Subsections (d), (e) and (f)
of this Section 5.11, be payable solely to Mortgagee (or
if such insurance proceeds are for losses sustained
solely to property covered by a Superior Mortgage, such
other party as is required to receive such proceeds under
a Superior Mortgage), (C) include effective waivers
(whether under the terms of any such policy or otherwise)
by the insurer of all claims for insurance premiums
against all loss payees and named insureds (other than
Mortgagor) and all rights of subrogation against any
54
<PAGE>
named insured, (D) except in the case of comprehensive
general liability and workers' compensation insurance,
provide that any losses shall be payable notwithstanding
(1) any act, failure to act, negligence of, or violation
or breach of warranties, declarations or conditions
contained in such policy by Mortgagor or Mortgagee or any
other named insured or loss payee (including, without
limitation, (v) the holder of any Refinancing Lien, (w)
the lessors under the Facility Leases with respect to any
Leased Facilities, (x) the holder of the Note Mortgage,
(y) the lessors under the Parking Leases with respect to
any Parking Lease Land and (z) the holder of any Superior
Mortgage with respect to the property encumbered thereby,
(2) the occupation or use of the insurable properties for
purposes more hazardous than permitted by the terms of
the policy, (3) any foreclosure or other proceeding or
notice of sale relating to the insurable properties or
(4) any change in the title to or owners hip or posses-
sion of the insurable properties, (E) contain a non-
contributory mortgagee clause in favor of Mortgagee, and
(F) provide that if all or any part of such policy is
cancelled, terminated or expires, the insurer will forth-
with give notice thereof to each named insured and loss
payee and that no cancellation, non-renewal, reduction in
amount or material change in coverage thereof shall be
effective until at least 30 days after receipt by each
named insured and loss payee of written notice thereof.
Mortgagor may effect the insurance required under this
Section 5.11 under blanket and/or umbrella policies
covering properties owned or leased by Affiliates of
Mortgagor; provided, that such policies otherwise comply
--------
with this Mortgage and provide that the amount of cover-
age afforded thereunder with respect to the Trust Estate
shall not be reduced by claims thereunder against such
other properties.
(ii) Mortgagor may effect the insurance
required under this Section 5.11 under blanket and/or
umbrella policies covering properties owned or leased by
Affiliates of Mortgagor; provided, that (A) such policies
--------
otherwise comply with this Mortgage, (B) except with
respect to flood insurance and earthquake insurance,
provide that the amount of coverage afforded thereunder
with respect to the Trust Estate shall not be reduced by
claims thereunder against such other properties' and (C)
in the case of flood insurance provide that the amount of
coverage afforded thereunder with respect to the Trust
Estate shall not be reduced below $100,000,000 by reason
of claims thereunder against such other properties.
(c) Mortgagor shall deliver to Mortgagee
duplicate originals of all insurance policies that Mort-
gagor is required to maintain pursuant to this Section
55
<PAGE>
5.11. Mortgagee shall not be responsible for effecting or
renewing any insurance or for the responsibility or
solvency of the insurers.
(d) Mortgagor shall notify Mortgagee immedi-
ately upon obtaining knowledge of any Casualty which (i)
results in damage, loss or destruction in an amount in
excess of $5,000,000 to any buildings or improvements on
the Premises and/or any Tangible Personal Property or
(ii) pursuant to any Superior Instrument Requirement,
would require the deposit of insurance proceeds with the
Depositary, or action or proceeding with respect thereto.
Whenever the Superior Instrument Requirements require or
permit the selection of the Depositary by Mortgagor,
Mortgagor shall select the Insurance Trustee as the
Depositary. Within 30 days after any Casualty which
results in any damage, loss or destruction in an amount
in excess of $10,000,000 to any buildings or improvements
on the Premises and/or any Tangible Personal Property,
Mortgagor shall deliver to Mortgagee a certificate of an
Architect stating whether, in such Architect's opinion,
applicable Legal Requirements permit the Restoration of
said buildings and improvements for the same uses and to
the same size and quality in all material respects, as
existed immediately prior to the Casualty (and if said
certificate states that Legal Requirements do not permit
such Restoration, said certificate shall describe the
manner closest approximating such criteria to which the
buildings and improvements could be so restored and shall
be accompanied by a Certificate of Appraised Value dated
not more than 10 days prior to delivery setting forth the
Appraised value immediately prior to the Casualty and the
estimated Appraised Value immediately after the Restora-
tion). If Mortgagor is required to deliver such Certifi-
cates of Appraised Value and if based on such Certifi-
cates of Appraised Value immediately after Restoration,
(i) the aggregate Outstanding Amount of Indebtedness
immediately after such Restoration shall exceed the
greater of (A) 80% of the Appraised Value immediately
after such Restoration or (B) the quotient of the Out-
standing Amount of Indebtedness immediately prior to such
Casualty divided by the Appraised Value immediately prior
to the Casualty multiplied by the Appraised Value immedi-
ately after such Restoration, or (ii) applicable Legal
Requirements do not permit the Restoration of the Casino
Hotel for use as a casino and hotel complex, then, in
either of such events, the proceeds of any insurance
shall not be applied to Restoration but shall instead be
paid and delivered to Mortgagee to the extent of the then
Outstanding Amount under the Debt Documents and any other
interest or other sums due hereunder or thereunder to be
applied to the satisfaction of this Mortgage to the
extent proceeds are available for such purpose and pro-
56
<PAGE>
vided that no additional sums are due to Mortgagee or the
Secured Creditors, the balance of any net insurance pro-
ceeds shall be paid to Mortgagor.
(e) Subject to the provisions of Section
5.11(d), if a Casualty occurs, the following shall apply:
(i) If the cost of Restoration is less
than $10,000,000, the net insurance proceeds shall
be paid by Mortgagee to Mortgagor (unless the Supe-
rior Instrument Requirements provide that the same
shall be paid to the Depositary).
(ii) If the cost of Restoration is
$10,000,000 or more or if the Superior Instrument
Requirements provide that the same shall be paid to
the Depositary, the net insurance proceeds shall be
paid by Mortgagee to the Insurance Trustee (or other
Depositary required by the Superior Instrument Re-
quirements, provided that such Depositary holds such
proceeds in trust for purposes of paying the costs
of Restoration).
(iii) Mortgagor shall commence with
reasonable promptness under the circumstances and
thereafter with due diligence proceed to perform and
complete in a good and workmanlike manner the resto-
ration, repair, replacement or rebuilding of the
damage or destruction resulting from the Casualty
(all such restoration, repair, replacement and
rebuilding following a Casualty or a Taking are
referred to as "Restoration") in accordance with the
-----------
plans and specifications submitted to the Insurance
Trustee, in conformance with all Legal Requirements
and Superior Instrument Requirements, and in accor-
dance with the further provisions of this Subsection
(e), regardless of the extent of any such Casualty
and whether or not net insurance proceeds, if any,
shall be available or, if available, shall be suffi-
cient, for the purpose of the Restoration. All
Restoration work shall be performed in accordance
with the applicable provisions of Section 5.12 and
in conformance with all Superior Instrument Require-
ments, Legal Requirements and Insurance Requirements
and, prior to commencing any Restoration, Mortgagor
shall obtain all Permits necessary in connection
therewith, and shall obtain and keep in full force
and effect until the completion of such Restoration,
such additional insurance as the Insurance Trustee
and Superior Instrument Requirements may require.
The plans and specifications for the Restoration
shall be accompanied by a certificate of Mortgagor
and an Opinion of Counsel to the effect that upon
57
<PAGE>
the completion of the Restoration pursuant to the
plans and specifications, the Premises and all
buildings and improvements thereon will comply with
all Superior Instrument Requirements, Legal Require-
ments and Insurance Requirements.
(iv) Any insurance proceeds which Mort-
gagor receives shall be held by Mortgagor in trust
for the purpose of paying the cost of the Restora-
tion, except as otherwise provided herein.
(v) Any net insurance proceeds that the
Insurance Trustee holds pursuant to this Subsection
(e), shall be deposited in an interest-bearing
investment reasonably designated by Mortgagor (to
the extent Mortgagor is permitted to designate such
investment under the Superior Instrument Require-
ments) (and the interest thereon shall be added to
such proceeds) and shall be paid by the Insurance
Trustee to reimburse Mortgagor for, or to make
payment for, the Restoration, after the Insurance
Trustee deducts therefrom the amount of any reason-
able costs and expenses incurred in connection with
the performance of its obligations under this Sec-
tion 5.11. The Insurance Trustee shall make such
payments not more frequently than once every 30 days
upon the written request of Mortgagor (unless more
frequent payments are required by Superior Instru-
ment Requirements), by paying to Mortgagor or the
persons named in the certificate described in clause
(vi) of this Subsection (e) the respective amounts
stated in such certificate from time to time as the
Restoration progresses, provided Mortgagor has
complied with the requirements of this Subsection
(e) and such payment is permitted by any applicable
Superior Instrument Requirements. Mortgagor's
request shall be accompanied by (A) the certificate
described in clause (vi) of this Subsection (e) and
(B) a title company or official search, or other
evidence reasonably acceptable to the Insurance
Trustee, showing that there have not been filed with
respect to the Premises, any vendor's, contractor's,
mechanic's, laborer's or materialman's statutory or
similar lien which has not been discharged of record
(or bonded against or secured by other security) or
any other encumbrance irrespective of its priority
(other than Permitted Liens).
(vi) The certificate required by clause
(v) of this Subsection (e) shall (A) be an Officers'
Certificate, countersigned by the Architect in
charge of the Restoration with respect to the mat-
ters described in (1) and (5) below, (B) be dated
58
<PAGE>
not more than 10 days prior to such request and (C)
set forth (in addition to any other requirements
contained in any applicable Superior Instrument
Requirements) that:
(1) all of the Restoration theretofore
performed is in substantial compliance with the
plans and specifications theretofore submitted
to the Insurance Trustee and in compliance with
all Superior Instrument Requirements, Legal
Requirements and Insurance Requirements;
(2) the sum then requested either has
been paid by Mortgagor or is justly due to
contractors, subcontractors, materialmen, engi-
neers, architects or other persons who have
rendered services or furnished or contracted to
deliver materials for the Restoration therein
specified, and the names and addresses of such
persons, a brief description of such services
and materials and the several amounts so paid
or due to each of said persons in respect
thereof;
(3) no part of the amount requested has
been or is the basis in any previous or then
pending request for the withdrawal of net in-
surance proceeds, and that the sum then re-
quested does not exceed the value of the ser-
vices and materials described in the certifi-
cate;
(4) except for the amount, if any, stated
pursuant to Subclause (2) of this clause (vi)
in such certificate to be due for services or
materials, and except for amounts in dispute
and/or customary retainages, there is no out-
standing indebtedness known to the person sign-
ing such certificate, after due inquiry, which
is then due for labor, wages, materials, sup-
plies or services in connection with such Res-
toration; and
(5) the remaining cost, as estimated by
the persons signing such certificate, of the
Restoration in order to complete the same does
not exceed the net insurance proceeds remaining
in the hands of Insurance Trustee after payment
of the sum requested in such certificate or if
such estimated cost does exceed such insurance
proceeds such certificate shall state the
amount of any such deficiency. If the certifi-
cate states that such deficiency will exist,
59
<PAGE>
Mortgagor shall deliver the amount of such
deficiency in cash or cash equivalent to the
Insurance Trustee simultaneously with the de-
livery of such certificate, which amount shall
be deemed insurance proceeds for purposes of
this Section 5.11(e).
(vii) If net insurance proceeds shall be
insufficient to pay the entire cost of the Restora-
tion, then, after completion of the Restoration,
Mortgagor shall pay the deficiency. If all or any
part of the net insurance proceeds are not used for
the Restoration in accordance with this Subsection
(e) (because such proceeds exceed the amount re-
quired to complete the Restoration), then upon
completion of the Restoration in accordance with
this Subsection (e), such amount not so used, if
held by the Insurance Trustee, shall be paid to
Mortgagor (if permitted by Superior Instrument Re-
quirements).
(f) Mortgagor shall not take out separate
insurance, concurrent in form or contributing in the
event of loss with that required to be maintained pursu-
ant to this Section 5.11, unless the same is permitted by
Superior Instrument Requirements. Mortgagor shall imme-
diately notify Mortgagee whenever any such separate
insurance is taken out and shall promptly deliver to
Mortgagee a duplicate original of the policy of such
insurance, a copy thereof certified by the insurer or a
certificate thereof. Provided that no Event of Default
has occurred and is continuing, all net business inter-
ruption insurance proceeds shall be paid to Mortgagor, to
be segregated from the other funds of Mortgagor and held
in trust by Mortgagor for the following purposes and in
the following order of priority: (i) for the payment of
Impositions and amounts due under the Facility Leases and
Superior Mortgages, (ii) for debt service for the esti-
mated period of Restoration (for purposes of this Section
5.11(f), interest and principal payments due on any
payment date under the applicable Debt Documents will be
deemed to accrue in equal daily installments: beginning
the day after the immediately preceding payment date and
ending on such payment date), and (iii) for any other
expense incurred in connection with the operation or
business of the Casino Hotel.
(g) Insurance claims by reason of damage or
destruction to any portion of the Trust Estate may be
adjusted by Mortgagor, but Mortgagee shall have the right
(but not the obligation) to join Mortgagor in adjusting,
and approving the adjustment of, any such loss except in
the event of a loss where the amount of insurance reason-
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<PAGE>
ably anticipated to be received with respect to such loss
is less than $5,000,000, and Mortgagor shall assist
Mortgagee in any such adjustment at the request of Mort-
gagee. If Mortgagee at its election as aforesaid joins
Mortgagor in any adjustment process, then Mortgagee's
approval of the adjustment shall not be unreasonably
withheld.
(h) Notwithstanding anything contained herein
to the contrary, if an Event of Default shall have oc-
curred and be continuing, Mortgagee may, at its option,
(A) refrain from paying to Mortgagor or the Insurance
Trustee any net insurance proceeds or (B) instruct the
Insurance Trustee to pay to Mortgagee any insurance
proceeds then held by the Insurance Trustee, as the case
may be.
Section 5.12. Limitations on Building Demolition,
Alterations, Improvements and New
Construction.
-----------------------------------
Unless an Event of Default shall have occurred
and be continuing, Mortgagor shall have the right at all
times to make or permit such demolition, alterations,
improvements or new construction, structural or otherwise
(herein sometimes called collectively "Alterations" and
-----------
each, individually, an "Alteration"), of or on the Trust
----------
Estate, to be made in all cases subject to each of the
following conditions:
(a) No Alteration shall be undertaken or
carried out except in conformity with all Superior In-
strument Requirements, Legal Requirements and Insurance
Requirements.
(b) If the estimated cost of any Alteration,
together with other Alterations that constitute a single
construction plan or project (whether or not accomplished
in several stages or procedures), exceeds $5,000,000, the
building or buildings, structures or other improvements
as so improved or altered, upon the completion of the
work, shall be of a value not less than the value of such
building or buildings, structures or other improvements
immediately prior to the making of such Alteration.
(c) Any Alteration which is structural in
nature or involves an estimated cost of more than
$5,000,000 shall be conducted under the supervision of an
Architect, and no such Alteration shall be undertaken
until 10 days after there shall have been filed with
Mortgagee detailed plans and specifications and cost
estimates therefor, prepared and approved in writing by
such Architect and accompanied by a certificate of such
61
<PAGE>
Architect stating that such plans and specifications
conform to all applicable provisions of this Section
5.12.
(d) No Alteration involving an estimated cost
of more than $5,000,000 shall be undertaken until Mort-
gagor has furnished to Mortgagee, at Mortgagor's sole
cost and expense, a surety bond or bonds, covering per-
formance, and labor and material payments with respect to
the work to be,so performed, naming Mortgagee as obligee,
issued by a responsible surety company, authorized to do
business in the State of New Jersey, in a form generally
and customarily used by such surety in an amount equal to
the estimated cost of construction of the work covered by
the plans and specifications therefor, guaranteeing the
performance and completion of such construction, substan-
tially in conformity with the said plans and specifica-
tions and within a reasonable time, subject to delays by
fire, strikes, lock-out, acts of God, inability to obtain
labor or materials, governmental restrictions, enemy
action, civil commotion or unavoidable Casualty or other
similar causes beyond the control of Mortgagor, free and
clear of all liens, claims and liabilities for the cost
of such Alterations. If such surety bond or bonds shall
be unobtainable Mortgagor shall deliver to Mortgagee
security by cash, letter of credit or other guarantee,
affording substantially the same protection as would such
bond or bonds.
(e) All work done in connection with any
Alterations shall be done promptly and in good and work-
manlike manner. The work in connection with any Alter-
ation shall be prosecuted with reasonable dispatch,
delays due to fire, strikes, lock-outs, acts of God,
inability to obtain labor or materials, governmental
restrictions, enemy action, civil commotion or unavoid-
able Casualty or similar causes beyond the control of
Mortgagor excepted.
(f) If the estimated cost of Alterations
exceeds $5,000,000, Mortgagor shall have delivered to
Mortgagee (i) prior to the commencement of such Alter-
ations, copies of all Permits required for the commence-
ment of such work together with a certificate of the
Architect or an Opinion of Counsel to the effect that all
Permits required for the commencement of such Alterations
have been obtained; and (ii) within a reasonable period
of time after the completion of the Alterations, copies
of all Permits required in connection with the completion
thereof, together with either an Opinion of Counsel or a
certificate of the Architect that all such Permits have
been so obtained by Mortgagor and that Mortgagor has
complied with all the requirements of this Section 5.12.
62
<PAGE>
(g) No Alterations of any kind shall be made
which shall change the use or reduce the size or quality
of any building, structure or other improvements in any
material respect or which shall change the use of the
Casino Hotel from its use as a gaming and hotel facility.
(h) No Alterations costing in excess of
$5,000,000, together with other Alterations that consti-
tute a single construction plan or project (whether or
not accomplished in several stages or procedures), shall
be made if such Alterations are not expected to be com-
pleted at least 120 days prior to the Stated Maturity of
any Indebtedness secured hereby, including, without
limitation, the Mortgage Notes (except if such Alter-
ations are required in order to comply with Legal Re-
quirements or Superior Instrument Requirements).
(i) Mortgagor shall maintain at all times
during the performance of Alterations, in addition to any
insurance required to be maintained under Section 5.11
hereof, appropriate workers' compensation insurance
covering all persons employed for such Alterations to the
extent required by applicable law, and comprehensive
general liability insurance expressly covering the addi-
tional hazards due to such Alterations. Each such policy
of insurance shall comply with the provisions of Section
5.11(b), and Mortgagor shall comply with Subsections (c),
(d), (e), (f), (g) and (h) of Section 5.11 in connection
with all such insurance.
Section 5.13. Leases.
------
Mortgagor shall not (except in accordance with
the provisions of the Trust Indenture):
(a) lease the Trust Estate substantially as an
entirety to any Person, nor shall Mortgagor lease either
the Casino Hotel or the Casino or the Hotel or any park-
ing facilities located on the Parking Parcel or the
Parking Parcel substantially as an entirety to any Per-
son;
(b) enter into any Lease, or renew, modify,
extend, terminate, or amend any Lease, except in the
ordinary course of business of operating the Casino
Hotel;
(c) receive or collect, or permit the receipt
or collection of, any rental payments under any Lease
more than one month in advance of the respective periods
in respect of which they are to accrue, except that, in
connection with the execution and delivery of any Lease
or of any amendment to any Lease, rental payments there-
63
<PAGE>
under may be collected and received in advance in an
amount not in excess of three months' rent and/or a
security deposit may be required thereunder in an amount
not exceeding one year's rent;
(d) collaterally assign, transfer or hypothe-
cate (other than to Mortgagee hereunder or to the holder
of any Superior Mortgage, but in each case only with
respect to the property secured by such mortgage) (i) any
rental payment under any Lease whether then due or to
accrue in the future, (ii) the interest of Mortgagor as
landlord under any Lease or (iii) the rents, issues or
profits of the Trust Estate;
(e) after the date hereof, enter into any
Lease, or renew any Lease, unless such Lease contains
terms to the effect as follows:
(i) the Lease and the rights of the ten-
ants thereunder shall be subject and subordinate to
the rights of Mortgagee under this Mortgage and the
holders of any Superior Mortgage,
(ii) the Lease may be assigned by the
landlord thereunder to Mortgagee,
(iii) the rights and remedies of the
tenant in respect of any obligations of the landlord
thereunder shall be nonrecourse as to any assets of
the landlord other than its equity in the building
in which the leased premises are located or the
proceeds thereof, and
(iv) the rights of the tenant shall be
subject and subordinate to the rights of the lessee
under any New Lease (as defined in Section 29.3 of
the Ground Leases); or
(f) modify any Lease with respect to the
matters described in clauses (i) through (iv) of para-
graph (e).
If Mortgagor enters into a Lease (other than
with Affiliate of Mortgagor) for a term of not less than
3 years, Mortgagee shall deliver a non-disturbance and
attornment agreement substantially in the form of Sched-
ule 7 hereto, following receipt of a certificate of a
leasing broker (who is not an Affiliate of Mortgagor or
the broker involved in such transaction) experienced with
respect to leases of commercial space in the Atlantic
City area stating that the rent under the Lease through-
out the term thereof is not less than fair market rent
and the other terms of the Lease are fair and reasonable
64
<PAGE>
in the commercial leasing market. Mortgagor shall, upon
demand, reimburse Mortgagee for any costs and expenses
(including reasonable attorneys' fees and disbursements)
incurred by Mortgagee in connection with the preparation,
review and delivery of such non-disturbance and attorn-
ment agreements.
Promptly after the execution and delivery
hereof, Mortgagor shall cause the lessee under each Lease
now in effect, and promptly after each Lease is executed
or becomes effective after the date of the execution and
delivery hereof, Mortgagor shall cause the lessee under
each such Lease, to be duly notified in writing (unless
the substance and effect of such notice shall be con-
tained in such Lease) of the subjection of the owner's
interest, as lessor, in and to such Lease to the lien of
this Mortgage and of the name and address of Mortgagee.
Each such notice shall state that the lease of such
lessee is a Lease as herein defined. If a new Mortgagee
is at any time appointed hereunder or the address of
Mortgagee shall at any time be changed, Mortgagor shall
cause each lessee under each Lease to be promptly noti-
fied in writing of the name and address of such new
Mortgagee or the new address of Mortgagee. Mortgagor
shall use reasonable efforts (but shall not be obligated
to incur any expenditure other than de minimis amounts)
-- -------
to obtain from each lessee under each Lease to whom any
notice is sent pursuant to this paragraph an acknowledg-
ment of receipt of such notice, and Mortgagor shall
promptly deliver to Mortgagee, upon request, a copy of
each such acknowledgment of receipt which it is able to
obtain. Mortgagee shall not be responsible for securing
or causing Mortgagor to secure any such acknowledgment.
Section 5.14. Compliance Certificates.
-----------------------
Mortgagor shall deliver to Mortgagee, within
120 days after the end of each fiscal year of Mortgagor,
an Officers' Certificate stating that
(a) a review of the activities of Mortgagor
during such year and of performance under this Mortgage
has been made under the signer's supervision, and
(b) to the best of each signer's knowledge,
based on such review, Mortgagor has fulfilled all of
Mortgagor's obligations under this Mortgage throughout
such year, or, if there has been a default in the ful-
fillment of any such obligation, specifying each such
default known to him and the nature and status thereof.
Promptly after Mortgagor may reasonably be
deemed to have knowledge of a default hereunder, Mortgag-
65
<PAGE>
or shall deliver to Mortgagee a notice specifying the
nature and period of existence thereof and the action
Mortgagor is taking and proposes to take with respect
thereto.
Section 5.15. EAB Mortgage.
------------
Upon any renewal, extension (including, without
limitation, any informal or unwritten extension but not
including any "standstill" period agreed to by the holder
of the EAB Mortgage while an extension is being negotiat-
ed, which standstill period shall not exceed 90 days),
substitution, refunding, refinancing or replacement
(each, a "refinancing") of the EAB Mortgage at or before
the scheduled maturity on September 30, 1996 of the in-
debtedness secured thereby, Mortgagor shall deliver to
Mortgagee (a) an instrument, in form and substance satis-
factory to Mortgagee, executed by the mortgagee under
such refinancing (whether such mortgagee shall be Europe-
an American Bank or any other Person) (i) consenting to
the execution and recordation by TSA of an instrument
providing that so long as TSA owns fee title to the TSA
Parcel (A) TSA shall not terminate the Ground Lease of
the TSA Parcel for any reason whatsoever (including,
without limitation, due to the default of Mortgagor under
such lease) and (B) TSA shall not accept, and, if ten-
dered by Mortgagor shall promptly return to Mortgagor,
any payment of rent or other charges payable under such
Ground Lease in excess of the amount required to pay the
debt service under any mortgage affecting TSA's fee
interest in the TSA Parcel (and TSA shall use such funds
only to pay its debt service obligations under the EAB
Mortgage) at any time that an Event of Default, or a
Default of the types described in Section 3.01(b), (c),
(g), (h), (i) or (m) of this Mortgage or Section 7.1(a),
(b), (f) or (g) of the Trust Indenture, shall have oc-
curred and be continuing under this Mortgage or the Trust
Indenture, (ii) acknowledging and confirming the contin-
ued existence, and, if necessary, consenting to the re-
granting by TSA to Mortgagor, of the option to purchase
the TSA Parcel as described in Article Forty-Fourth of
the Ground Lease of the TSA Parcel and (iii) consenting
to the amendment of Article Twenty-Ninth of the Ground
Lease of the TSA Parcel to replace each 30 day time
period contained in such article with a 90 day time
period, and (b) an instrument or instruments in form and
substance satisfactory to Mortgagee, executed by TSA and,
to the extent necessary, Mortgagor, effecting each of the
matters consented to by such.mortgagee under clause (a)
above. By its receipt hereof, Mortgagee acknowledges (i)
that delivery of an instrument substantially identical to
the form attached hereto as Schedule 8 shall satisfy the
foregoing requirements of clause (a), and (ii) that the
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<PAGE>
failure to renew or extend the EAB Mortgage and a fore-
closure or other realization thereunder shall not consti-
tute a Default hereunder.
Section 5.16. To Keep Books; Inspection by Mortgagee.
--------------------------------------
Mortgagor will keep proper books of record and
account, in which full and correct entries shall be made
of all dealings or transactions of or in relation to the
properties, business and affairs of Mortgagor in accor-
dance with generally accepted accounting principles
consistently applied. Said books shall be maintained in
an office located either in Atlantic City, New Jersey or
in the Borough of Manhattan, City of New York, State of
New York. Mortgagor shall at any and all times, upon
request of Mortgagee and at the expense of Mortgagor,
permit Mortgagee and its representatives to inspect the
Casino Hotel and any other buildings, structures and
improvements now or hereafter located on the Land and the
books of account, records, reports and other papers of
Mortgagor, and to make copies and extracts therefrom, and
will afford and procure a reasonable opportunity to make
any such inspection (provided, that any such inspection
--------
shall not unreasonably interfere with the business opera-
tions of Mortgagor), and Mortgagor will furnish to Mort-
gagee any and all information as Mortgagee may reasonably
request, with respect to the performance by Mortgagor of
its covenants in this Mortgage.
Section 5.17. Advances by Mortgagee.
---------------------
If Mortgagor shall fail to perform any of the
covenants, terms, provisions or conditions contained in
this Mortgage and such failure shall continue for 10 days
following notice thereof given by Mortgagee (or at any
time, without notice, in case of emergency), Mortgagee
may (but is not obligated to), at any time and from time
to time, take any action or make advances, to effect
performance of any such covenant, term, provision or
condition on behalf of Mortgagor; and all moneys so used,
paid or advanced by Mortgagee and all reasonable costs
and expenses incurred by Mortgagee in connection there-
with, together with interest on all of the same at the
rate of interest set forth in the applicable Debt Docu-
ments, shall be immediately due and payable by Mortgagor
to Mortgagee and all such moneys, costs and expenses
shall be secured by the lien of this Mortgage prior to
any Indebtedness secured hereby. No such advance or pay-
ment by Mortgagee shall relieve Mortgagor from any de-
fault hereunder or impair any right or remedy of Mort-
gagee.
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Section 5.18. Waiver of Stay, Extension or Usury Laws.
---------------------------------------
Mortgagor covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon,
or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any usury, stay or extension law
or any other law wherever enacted which would prohibit or
forgive Mortgagor from paying all or any portion of the
Obligations secured by this Mortgage, wherever enacted,
now or at any time hereafter in force, or which may
otherwise affect the covenants or the performance of this
Mortgage; and Mortgagor (to the extent that it may law-
fully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it shall
not hinder, delay or impede the execution of any power
herein granted to Mortgagee, but shall suffer and permit
the execution of every such power as though no such law
had been enacted.
Section 5.19. Eminent Domain.
--------------
(a) Mortgagor shall notify Mortgagee immedi-
ately upon obtaining knowledge of any Taking affecting
the Trust Estate or any part thereof. If the Taking is a
Taking of less than the whole or substantially all of the
Premises but (i) is estimated to result in an award of
more than $10,000,000 or (ii) the Taking will interfere
with or adversely affect the operation of the Casino
Hotel (other than any portion thereof consisting solely
of unimproved, paved or unpaved surface parking) other
than to a de minimis extent, then within 30 days after
such Taking, Mortgagor shall deliver to Mortgagee a
certificate of an Architect stating whether, in such
Architect's opinion, applicable Legal Requirements permit
the Restoration of any buildings and improvements for the
same uses and to the same size and quality in all materi-
al respects as existed immediately prior to the Taking
(and if said certificate states that Legal Requirements
do not permit such Restoration, said certificate shall
describe the manner closest approximating such criteria
to which the buildings and improvements could be so
restored and shall be accompanied by a Certificate of
Appraised Value dated not more than 10 days prior to
delivery setting forth the Appraised Value immediately
prior to the Taking and the estimated Appraised Value
immediately after the permitted Restoration). If Mort-
gagor is required to deliver such Certificate of Ap-
praised Value and if based on such Certificate of Ap-
praised Value immediately after Restoration, (i) the
Outstanding Amount of Indebtedness immediately after such
Restoration shall exceed the greater of (A) 80% of the
Appraised Value immediately after such Restoration or (B)
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<PAGE>
the quotient of the Outstanding Amount of Indebtedness
immediately prior to such Taking divided by the Appraised
Value immediately prior to the Taking multiplied by the
Appraised Value immediately after such Restoration, or
(ii) applicable Legal Requirements do not permit the
Restoration of the Casino Hotel for use as a casino and
hotel complex, then, in any of such events, the Taking
shall be deemed a Taking of "the whole or substantially
all of the Premises." The Taking shall be deemed a
Taking of "less than the whole or substantially all of
the Premises" if Mortgagor is not required to deliver a
Certificate of Appraised Value or if, at the time of
delivery of such Certificate, neither of the tests set
forth in clauses (i) and (ii) is met.
(b) If at any time there shall occur a Taking
of less than the whole or substantially all of the Pre-
mises and the award or awards resulting therefrom payable
to Mortgagor (and not to any lessor under any Facility
Lease or the holder of any Superior Mortgage) (after
there shall have been first deducted the fees and expens-
es incurred in connection with the termination, settle-
ment and collection of such award or awards, including,
without limitation, reasonable counsel fees and expenses,
hereinafter referred to as "Settlement Costs") (i) shall
----------------
be less than $10,000,000 (except to the extent that the
Insurance Trustee or a Depositary is required to hold
such amount pursuant to a Superior Instrument Require-
ment), the entire amount of such award shall be paid to
Mortgagor; and (ii) if such award is $10,000,000 or more,
the entire amount of such award shall be paid to the
Insurance Trustee (or other Depositary required by a
Superior Mortgage, provided that such Depositary holds
such award in trust for purposes of paying the cost of
Restoration). In either event, such awards shall be
applied to the cost of Restoration of the Trust Estate as
nearly as practicable to their uses, value and condition
immediately prior to the Taking (except to the extent
otherwise provided by Superior Instrument Requirements).
Mortgagor shall promptly commence and with due diligence
perform the Restoration in accordance with clauses (iii),
(iv) and (vii) of Section 5.11(e) (after substituting the
words "Taking" for "Casualty" and "award" for "net insur-
ance proceeds"), at no cost to Mortgagee. All claims or
suits arising out of any Taking may be settled by Mort-
gagor, except that Mortgagee shall have the right (but
not the obligation) to participate in such claim or suit,
and to approve settlement thereof (and notwithstanding
anything in the Ground Leases to the contrary, Mortgagor
shall not agree to any settlement or compromise of the
amount of any such claim or suit, except a claim or suit
where the amount reasonably anticipated to be received by
Mortgagor is less than $5,000,000). If Mortgagee at its
69
<PAGE>
election as aforesaid joins such claim or suit,
Mortgagee's approval of such settlement shall not be
unreasonably withheld. The Insurance Trustee shall
promptly pay such sums as are received by it from such
Taking from time to time in accordance with the proce-
dures set forth in clauses (v) and (vi) of Section
5.11(e) (after substituting the words "Taking" for "Casu-
alty" and "award" for "net insurance proceeds").
(c) If at any time there shall occur a Taking
of the whole or substantially all of the Premises, then
the award payable to Mortgagor shall not be applied to
Restoration but shall instead be paid and delivered to
Mortgagee (subject to the rights of the lessors under any
Facility Leases and the holders of any Superior Mortgag-
es) to the extent of the then Outstanding Amount under
the Debt Documents and any other interest or other sums
due hereunder or thereunder to be applied to the satis-
faction of this Mortgage to the extent proceeds are
available for such purpose and provided that no addition-
al sums are due Mortgagee or any Secured Creditor, in-
cluding, without limitation, the Holders under the Mort-
gage Notes or the Trust Indenture, the balance of any
award shall be paid to Mortgagor.
(d) Notwithstanding anything contained herein
to the contrary, if an Event of Default shall have oc-
curred and is continuing, Mortgagee may, at its option,
(i) refrain from paying to Mortgagor or the Insurance
Trustee any award or (ii) instruct the Insurance Trustee
to pay to Mortgagee any award then held by the Insurance
Trustee, as the case may be.
Section 5.20. Facility Leases.
---------------
(a) Mortgagor shall do or cause to be done all
things necessary to preserve and keep unimpaired the
rights of Mortgagor, as lessee under all Facility Leases,
and to prevent any termination, surrender, cancellation,
forfeiture or impairment of any thereof. Mortgagor shall
at all times fully perform and comply with all agree-
ments, covenants, terms and conditions imposed upon or
assumed by it as lessee under each of the Facility Leases
(including, without limitation, the covenant to pay rent
and all taxes, assessments and other charges mentioned
therein) prior to the expiration of any notice and/or
cure period provided in each such Facility Lease. Upon
receipt by Mortgagee from a Lessor of any written notice
of default by the lessee thereunder, Mortgagee may rely
thereon and take any action Mortgagee deems necessary in
its sole discretion to prevent or to cure any default by
Mortgagor in the performance of or compliance with any of
the agreements, covenants, terms or conditions imposed
70
<PAGE>
upon or assumed by Mortgagor as lessee under such Facili-
ty Lease, even though the existence of such default or
the nature thereof be questioned or denied by Mortgagor
or by any party on behalf of Mortgagor. Without limiting
the generality of Section 3.09, Mortgagor hereby express-
ly grants to Mortgagee, and agrees that Mortgagee shall
have, the absolute and immediate right to enter in and
upon the Premises or any part thereof to such extent and
as often as Mortgagee, in its sole discretion, deems
necessary or desirable for the purpose permitted by the
immediately preceding sentence, subject only to applica-
ble Legal Requirements. Without limiting Mortgagor's
obligations or Mortgagee's rights set forth above or
limiting Mortgagee's other remedies under this Mortgage,
Mortgagee may (i) pay and expend such sums of money as
Mortgagee in its sole discretion deems necessary for any
such purpose, and (ii) without limiting the provisions of
(i) above, in the event of a Disqualification (as defined
in Section 52.2 of the Ground Leases), and Mortgagor's
failure to exercise the option contained in Section 52.3
of the appropriate Ground Lease within the period of time
described in Section 5.20(b)(vii), exercise said option
on behalf of Mortgagor and expend any amounts Mortgagee,
in its sole discretion, deems necessary in connection
therewith, and Mortgagor hereby agrees to pay to Mortgag-
ee immediately and without demand, all such sums referred
to in (i) and (ii) above, so paid and expended by Mort-
gagee, together with interest thereon from the date of
each such payment at the highest rate of interest set
forth in the Mortgage Notes. All sums so paid and ex-
pended by Mortgagee, and the interest thereon, shall be
added to and be secured by the lien of this Mortgage.
(b) Mortgagor further covenants and agrees as
follows:
(i) Mortgagor shall not surrender, termi-
nate or cancel any Facility Lease (other than any
Expansion Site Lease), and shall not without the
consent of Mortgagee modify, change, supplement,
alter or amend: any Facility Lease either orally or
in writing if (x) an impairment of the security
granted under this Mortgage would result therefrom
or (y) with respect to any Ground Lease, the term of
such Ground Lease would be reduced thereby or the
leasehold mortgagee protections contained therein
would be reduced or impaired thereby. Without
limiting the generality of the foregoing sentence,
Mortgagor shall be permitted to amend Article Fifty-
Second of the Ground Lease of the TSA Parcel to
increase the purchase price under the option to
purchase described therein from $5,000,000 to
$10,000,000. As further security for the repayment
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<PAGE>
of the indebtedness secured hereby and for the
performance of the covenants herein and in each
Facility Lease contained, Mortgagor hereby assigns
to Mortgagee all of Mortgagor's rights, privileges
and prerogatives as lessee under each Facility Lease
to terminate, cancel, modify, change, supplement,
alter or amend such Facility Lease (including, with-
out limitation, under Section 20.2 of any Ground
Lease), and any such termination, cancellation,
modification, change, supplement, alteration or
amendment of a Facility Lease (other than any Expan-
sion Site Lease) without the prior consent thereto
by Mortgagee shall be void and of no force and
effect. Unless (1) an Event of Default has occurred
and is continuing and (2) either (A) there has been
an acceleration of maturity of any Indebtedness
secured hereby or (B) Mortgagee exercises its rights
under Section 3.09, Mortgagee shall have no right to
terminate, cancel, modify, change, supplement, alter
or amend any Facility Lease.
(ii) Solely for the benefit of Mortgagee,
the Holders and no other person, no release or
forbearance of any of Mortgagor's obligations under
any Facility Lease, pursuant to such Facility Lease
or otherwise, shall release Mortgagor from any of
Mortgagor's other obligations under this Mortgage.
(iii) Unless Mortgagee shall otherwise
expressly consent in writing, the fee title to the
Leased Facilities and Mortgagor's leasehold estates
therein shall not merge and shall always remain
separate and distinct, notwithstanding the union of
said estates either in the Lessor or in the lessee,
or in a third party by purchase or otherwise.
(iv) Mortgagor shall not appoint or
consent to the appointment of an arbitrator pursuant
to Article Twenty-First of the Ground Leases without
the prior consent of Mortgagee. Mortgagor shall
promptly notify Mortgagee in writing of any request
made by Mortgagor, as lessee under any Facility
Lease, or any of the Lessors, for arbitration pro-
ceedings under any Facility Lease and of the insti-
tution of any arbitration proceedings, as well as
all proceedings thereunder. Mortgagor shall prompt-
ly deliver to Mortgagee a copy of the determination
of the arbitrators in each such arbitration proceed-
ing. Mortgagee shall have the right to participate
in such arbitration proceedings in association with
Mortgagor or on its own behalf as an interested
party.
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<PAGE>
(v) Mortgagor shall not consent to the
subordination of any Facility Lease to any mortgage,
deed of trust or other lien on the fee interest of
the Lessor.
(vi) If (A) Mortgagor exercises its
option(s) under Article Forty-Fourth or Fifty-Second
of any Ground Lease to purchase any portion of the
Ground Lease Land, Mortgagor shall deliver a copy of
its election to exercise such option within 5 days
after Mortgagor has delivered notice of such elec-
tion to the Lessor or (B) Mortgagor acquires fee
simple title or any other estate, title or interest
in any Leased Facility (pursuant to the options
described in clause (A), the option or right of
first offer set forth in the Expansion Site Option
Agreement or otherwise), Mortgagor shall promptly
notify Mortgagee of such acquisition and, on request
by Mortgagee, shall cause to be executed and record-
ed all such other and further assurances or other
instruments in writing as may in the opinion of
Mortgagee be required or desirable to carry out the
intent and meaning of clause (x) of Granting Clause
Second.
(vii) In the event of any Disqualifica-
tion, Mortgagor shall exercise the option granted by
Section 52.3 of the appropriate Ground Lease within
60 days after the first day on which Mortgagor may
exercise said option.
(viii) Within 5 days after Mortgagor's
receipt of any notice of any motion, application or
effort to reject any Facility Lease by any Lessor or
any trustee arising from or in connection with any
case, proceeding or other action commenced or pend-
ing by or against any Lessor under the Code or any
comparable provision contained in any present or
future federal, state, local, foreign or other
statute, law, rule or regulation ("Comparable Provi-
---------- -----
sion"), Mortgagor shall give notice thereof to
----
Mortgagee. Mortgagor hereby (A) assigns to Mortgag-
ee any and all of Mortgagor's rights as lessee under
Section 365(h) of the Code or any Comparable Provi-
sion and (B) covenants that it shall not elect to
treat any Facility Lease as terminated pursuant to
Section 365(h) of the Code or any Comparable Provi-
sion without the prior consent of Mortgagee and (C)
agrees that any such election by Mortgagor without
such consent shall be null and void.
(ix) Without limiting the generality of
the foregoing, to the extent permitted by applicable
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<PAGE>
law, Mortgagor hereby unconditionally assigns,
transfers and sets over to Mortgagee all of
Mortgagor's claims and rights to the payment of
damages arising from any rejection by Lessor of any
Facility Lease under the Code or any Comparable
Provision. Mortgagee shall have the right to pro-
ceed in its own name or in the name of Mortgagor in
respect of any claim, suit, action or proceeding
relating to the rejection of any Facility Lease,
including, without limitation, the right to file and
prosecute, in cooperation with Mortgagor, any proofs
of claim, complaints, motions, applications, notices
and other documents, in any case in respect of
Lessor under the Code or any Comparable Provision.
This assignment constitutes a present, irrevocable
and unconditional assignment of the foregoing
claims, rights and remedies, and shall continue in
effect until all of the indebtedness and obligations
secured by this Mortgage shall have been satisfied
and discharged in full. Any amounts received by
Mortgagee in damages arising out of the rejection of
any Facility Lease as aforesaid shall be applied
first to all reasonable costs and expenses of Mort-
gagee (including, without limitation, reasonable
attorneys' fees, disbursements and court costs)
incurred in connection with the exercise of any of
its rights or remedies under this Section 5.20, and
thereafter as provided in Section 3.03.
(x) If there shall be filed by or against
Mortgagor a petition under the Code or any Compara-
ble Provision and Mortgagor, as lessee under any
Facility Lease, shall determine to reject such
Facility Lease, Mortgagor shall give Mortgagee not
less than 10 days' prior notice of the date on which
Mortgagor shall apply to the Bankruptcy Court or
other judicial body with appropriate jurisdiction
for authority to reject such Facility Lease. Mort-
gagee shall have the right, but not the obligation,
to serve upon Mortgagor within such 10-day period a
notice stating that (a) Mortgagee demands that
Mortgagor assume and assign such Facility Lease to
Mortgagee pursuant to Section 365 of the Code or any
Comparable Provision and (b) Mortgagee covenants to
cure or provide adequate assurance of prompt cure of
all defaults and provide adequate assurance of
future performance under such Facility Lease. If
Mortgagee serves upon Mortgagor the notice described
in the preceding sentence, Mortgagor shall not seek
to reject such Facility Lease and shall comply with
the demand provided for in clause (a) of the preced-
ing sentence within 30 days after the notice shall
have been given subject to the performance by Mort-
74
<PAGE>
gagee of the covenant provided for in clause (b) of
the preceding sentence. The foregoing provisions of
this Section 5.20(x) shall not apply to the extent
not permitted by applicable law. Effective upon the
entry of an order for relief in respect of Mortgagor
under Chapter 7 of the Code or any Comparable Provi-
sion, Mortgagor hereby assigns and transfers to
Mortgagee a non-exclusive right to apply to the
Bankruptcy Court or other judicial body with appro-
priate jurisdiction for an order extending the
period during which such Facility Lease may be
rejected or assumed.
(xi) Mortgagor shall promptly give to
Mortgagee copies of (A) all notices of default and
(B) any other communications or notices with respect
to events that relate to the possible impairment of
the security of this Mortgage, which Mortgagor shall
give or receive under any Facility Lease and shall
promptly notify Mortgagee of any default under any
Facility Lease on the part of the Lessor or Mortgag-
or.
(xii) Mortgagor shall enforce with due
diligence all of the obligations of the Lessor under
each Facility Lease, to the end that Mortgagor may
enjoy all of the rights and privileges granted to it
under the Facility Leases.
(xiii) Mortgagor shall notify Mortgagee
within 5 days after the transfer of a fee interest
in any Leased Facility or any portion thereof to or
from an Affiliate.
(xiv) No Affiliate of Mortgagor shall at
any time hereafter acquire fee title to the Leased
Land or any portion thereof unless simultaneously
with such acquisition such Affiliate and Mortgagor
execute and exchange (and deliver to Mortgagee an
executed counterpart of) an instrument in form and
substance satisfactory to Mortgagee providing that
so long as such Affiliate owns such fee title (A)
such Affiliate shall not terminate the applicable
Facility Lease for any reason whatsoever (including,
without limitation, due to the default of Mortgagor
under such Facility Lease) and (B) such Affiliate
shall not accept, and, if tendered by Mortgagor
shall promptly return to Mortgagor, any payment of
rent or other charges payable under such Facility
Lease in excess of the amount required to pay the
debt service and other sums payable under any mort-
gage affecting such Affiliate's fee interest in the
applicable Leased Facility (and such Affiliate shall
75
<PAGE>
use such funds only to pay its debt service obliga-
tions and other sums payable under such mortgage) at
any time that an Event of Default, or a Default of
the types described in Section 3.01(b), (c), (g),
(h), (i) or (m) of this Mortgage or Section 7.1(a),
(b), (f) or (g) of the Trust Indenture, shall have
occurred and be continuing under this Mortgage or
the Trust Indenture.
(c) Mortgagor hereby represents and warrants
that all Fixed Net Rent (as defined in the Ground Leas-
es), taxes and assessments, payable under the Ground
Leases have been paid to the extent they were due and
payable to the date hereof and that Mortgagor has not
received notice of its failure to pay any other amounts
payable under the Ground Leases which has not been cured.
(d) Subject to the provisions of Section
5.20(b)(iii), if both the lessor's and lessee's estates
under any Facility Lease or any portion thereof shall at
any time become vested in one owner, this Mortgage and
the lien created hereby shall nevertheless not be de-
stroyed or terminated by application of the doctrine of
merger and, in such event, Mortgagee shall continue to
have all of the rights and privileges of a first lease-
hold mortgagee.
(e) Mortgagor hereby acknowledges that if any
Facility Lease shall be terminated prior to the natural
expiration of its term due to default by the lessee
thereunder, and if pursuant to such Facility Lease,
Mortgagee or its designee shall acquire from the Lessor a
new lease of the Leased Facility or any portion thereof,
Mortgagor shall have no right, title or interest in or to
such lease or the leasehold estate created thereby, or
the options therein contained.
(f) Each Facility Lease hereafter entered into
or assumed by Mortgagor as lessee or sublessee shall
contain provisions (i) permitting the assignment of the
same to Mortgagee and permitting assignment without the
lessor's consent if this Mortgage is foreclosed; and (ii)
providing protection to Mortgagee, as leasehold mortgag-
ee, not less favorable than the provisions contained in
Article Twenty-Ninth of the Ground Leases.
Section 5.21. Superior Mortgages.
------------------
(a) Mortgagor shall at all times fully perform
and comply with all agreements, covenants, terms and
conditions imposed upon or assumed by it as mortgagor
under the Superior Mortgages prior to the expiration of
any notice and/or cure period provided in each such Supe-
76
<PAGE>
rior Mortgage. If a notice of default has been given by
the holder of any Superior Mortgage, Mortgagee may rely
thereon and take any action Mortgagee deems necessary in
its sole discretion to prevent or to cure any default by
Mortgagor in the performance of or compliance with any of
the agreements, covenants, terms or conditions imposed
upon or assumed by Mortgagor as mortgagor under each of
the Superior Mortgages even though the existence of such
default or the nature thereof be questioned or denied by
Mortgagor or by any party on behalf of Mortgagor. With-
out limiting the generality of Section 3.09, Mortgagor
hereby expressly grants to Mortgagee, and agrees that
Mortgagee shall have, the absolute and immediate right to
enter in and upon the Premises or any part thereof to
such extent and as often as Mortgagee, in its sole dis-
cretion, deems necessary or desirable for the purpose
permitted by the immediately preceding sentence, subject
only to applicable Legal Requirements. Without limiting
Mortgagor's obligations or Mortgagee's rights set forth
above or limiting Mortgagee's other remedies under this
Mortgage, Mortgagee may (i) pay and expend such sums of
money as Mortgagee in its sole discretion deems necessary
or desirable for any such purpose and (ii) in its sole
discretion prepay any Superior Mortgage, and Mortgagor
hereby agrees to pay to Mortgagee immediately and without
demand, all such sums referred to in (i) and (ii) above
so paid and expended by Mortgagee, together with interest
thereon from the date of each such payment at the highest
rate of interest set forth in any outstanding Mortgage
Notes. All sums so paid and expended by Mortgagee and
the interest thereon, shall be added to and be secured by
the lien of this Mortgage.
(b) Mortgagor further covenants and agrees:
(i) Mortgagor shall not, without first
obtaining the consent of Mortgagee in each instance:
(A) modify, replace or refinance any Superior Mort-
gage if (x) the collateral securing the lien thereof
would be increased thereby or (y) such modification,
replacement or refinancing violates any other provi-
sion of this Mortgage or the Trust Indenture or (B)
acquire or permit or suffer any Affiliate of Mort-
gagor to acquire any Superior Mortgage or any inter-
est therein;
(ii) Mortgagor shall timely pay and per-
form all of the obligations to be paid or performed
by the mortgagor under each Superior Mortgage, the
note secured thereby and any other instrument evi-
dencing or securing the indebtedness owing to any
holder of any Superior Mortgage;
77
<PAGE>
(iii) at any time, and from time to time,
Mortgagor shall upon request of Mortgagee promptly
use its reasonable efforts to obtain an estoppel
certificate or letter addressed to Mortgagee from
holders of the Superior Mortgages, such certificate
or letter to be in such form as Mortgagee shall
reasonably request;
(iv) Mortgagor shall promptly give to
Mortgagee copies of (A) all notices of default or
(B) any other notice or communication with respect
to events which relate to the possible impairment of
the security of this Mortgage, which Mortgagor shall
give or receive under the Superior Mortgages and
shall promptly notify Mortgagee of any default under
any Superior Mortgages on the part of Mortgagor.
Section 5.22. Indemnification.
---------------
Mortgagor shall protect, indemnify, hold harm-
less and defend Mortgagee and its directors, officers,
partners, shareholders, agents, servants and employees
from and against any and all liabilities, obligations,
claims, damages, penalties, causes of action, costs and
expenses (including, without limitation, reasonable
attorneys' fees, disbursements and court costs), imposed
upon or incurred by or asserted against Mortgagee by
reason of (a) any injury to or death of Persons or loss
of or damage to property occurring on or about the Pre-
mises or any part thereof or the adjoining sidewalks,
curbs, vaults and vault spaces, if any, streets, alleys
or ways, (b) any use, nonuse or condition of the Premises
or any part thereof or the adjoining sidewalks, curbs,
vaults and vault spaces, if any, streets, alleys or ways,
(c) any failure on the part of Mortgagor to perform or
comply with any of the terms of this Mortgage, (d) per-
formance of any labor or services or the furnishing of
any materials or other property in respect of the Premis-
es or any part thereof made or suffered to be made by or
on behalf of Mortgagor, (e) any negligence or tortious
act on the part of Mortgagor or any of its agents, con-
tractors, lessees, licensees or invitees, or (f) any work
in connection with the Premises; provided, that no
amounts shall be payable to Mortgagee under this Section
5.22 in respect of liabilities, obligations, claims,
damages, penalties, causes of action, costs or expenses
imposed upon or incurred by or asserted against Mortgagee
to the extent the same result from any negligence or
tortious act on the part of Mortgagee or any of its
agents, contractors, lessees, licensees or invitees. All
amounts payable to Mortgagee under this Section 5.22
shall be payable on demand; provided, that with respect
to consequential damages (other than attorneys' fees,
78
<PAGE>
disbursements and court costs imposed upon or incurred by
Mortgagee in connection therewith, which shall in all
events be payable on demand), no such amounts shall be
payable until, and to the extent that, (i) there has been
entered the final determination of a court of competent
jurisdiction awarding such consequential damages to the
party or parties seeking such damages or (ii) an agree-
ment of settlement with respect thereto (which shall have
been previously approved by Mortgagor, such consent not
to be unreasonably withheld) shall have been executed by
Mortgagee and such party or parties. Any such amounts
which are not paid within 5 days after demand therefor by
Mortgagee shall bear interest at the rate set forth in
the Mortgage Notes from the date of such demand and all
such amounts and interest thereon shall be secured by the
lien of this Mortgage. In case any action, suit or
proceeding is brought against Mortgagee by reason of any
such occurrence, Mortgagor, upon request of Mortgagee,
shall, at Mortgagor's expense, resist and defend such
action, suit or proceeding or cause the same to be re-
sisted or defended by counsel designated by Mortgagor and
approved by Mortgagee, which approval shall not be unrea-
sonably withheld; provided, that Willkie, Farr &
--------
Gallagher is hereby approved by Mortgagee.
79
<PAGE>
IN WITNESS WHEREOF, Mortgagor has caused this
Mortgage to be duly executed and attested, all as of the
day and year first above written.
TRUMP PLAZA ASSOCIATES
By: The Trump Taj Mahal
Corporation, managing
general partner
Witness:________________ By: ______________________
Name:
Title:
TRUMP TAJ MAHAL ASSOCIATES
By: The Trump Taj Mahal
Corporation, managing
general partner
Witness:________________ By: ______________________
Name:
Title:
TRUMP ATLANTIC CITY ASSOCIATES
By: Trump Plaza Holding,
Inc., general partner
Witness:________________ By: ______________________
Name:
Title:
TRUMP ATLANTIC CITY FUNDING,
INC.
Witness:_______________ By: ______________________
Name:
Title:
THE TRUMP TAJ MAHAL CORPORATION
Witness:_____________ By: ______________________
Name:
Title:
80
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on April __, 1996, before me,
the subscriber, a Notary Public of the State of New York, person-
ally appeared _______________________, to me known, who, being by
me duly sworn did depose and say that he resides at _____________
______________________; that he is _____________ of The Trump Taj
Mahal Corporation, which is the managing general partner of TRUMP
PLAZA ASSOCIATES, the partnership described in and which executed
the above instrument, and he acknowledged that he signed and
delivered the same on behalf of such managing general partner as
his voluntary act and deed and as the voluntary act and deed of
said corporation on behalf of said general partnership, pursuant
to authority of the board of directors of said corporation, and
that he received a true copy of the within instrument on behalf
of said general partnership.
________________________________
Notary Public
81
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on April __, 1996, before me,
the subscriber, a Notary Public of the State of New York, person-
ally appeared _______________________, to me known, who, being by
me duly sworn did depose and say that he resides at _____________
______________________; that he is _____________ of The Trump Taj
Mahal Corporation which is the managing general partner of TRUMP
TAJ MAHAL ASSOCIATES, the partnership described in and which exe-
cuted the above instrument, and he acknowledged that he signed
and delivered the same on behalf of such managing general partner
as his voluntary act and deed and as the voluntary act and deed
of said corporation on behalf of said general partnership, pursu-
ant to authority of the board of directors of said corporation,
and that he received a true copy of the within instrument on
behalf of said general partnership.
________________________________
Notary Public
82
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on April __, 1996, before me,
the subscriber, a Notary Public of the State of New York, person-
ally appeared _______________________, to me known, who, being by
me duly sworn did depose and say that he resides at _____________
______________________; that he is _____________ of Trump Plaza
Holding, Inc., which is the managing general partner of TRUMP
ATLANTIC CITY ASSOCIATES, the partnership described in and which
executed the above instrument, and he acknowledged that he signed
and delivered the same on behalf of such managing general partner
as his voluntary act and deed and as the voluntary act and deed
of said corporation on behalf of said general partnership, pursu-
ant to authority of the board of directors of said corporation,
and that he received a true copy of the within instrument on
behalf of said general partnership.
________________________________
Notary Public
83
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on April __, 1996, before me,
the subscriber, a Notary Public of the State of New York, person-
ally appeared _______________________, to me known, who, being by
me duly sworn did depose and say that he resides at _____________
______________________; that he is _____________ of
TRUMP PLAZA FUNDING, INC., the corporation described in and which
executed the above instrument, and he acknowledged that he signed
and delivered the same on behalf of the corporation as his volun-
tary act and deed and as the voluntary act and deed of said
corporation, pursuant to authority of the board of directors of
said corporation, and that he received a true copy of the within
instrument on behalf of said corporation.
________________________________
Notary Public
84
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on April __, 1996, before me,
the subscriber, a Notary Public of the State of New York, person-
ally appeared _______________________, to me known, who, being by
me duly sworn did depose and say that he resides at _____________
______________________; that he is _____________ of
THE TRUMP TAJ MAHAL CORPORATION, the corporation described in and
which executed the above instrument, and he acknowledged that he
signed and delivered the same on behalf of the corporation as his
voluntary act and deed and as the voluntary act and deed of said
corporation, pursuant to authority of the board of directors of
said corporation, and that he received a true copy of the within
instrument on behalf of said corporation.
________________________________
Notary Public
85
<PAGE>
EXHIBIT 4.29
================================================================================
ASSIGNMENT
OF
LEASES AND RENTS
TRUMP PLAZA ASSOCIATES,
TRUMP TAJ MAHAL ASSOCIATES,
TRUMP ATLANTIC CITY ASSOCIATES,
TRUMP ATLANTIC CITY FUNDING, INC.
and
THE TRUMP TAJ MAHAL CORPORATION
collectively, as Assignor
to
FIRST BANK NATIONAL ASSOCIATION, as Collateral Agent,
as Assignee
Dated as of April __, 1996
================================================================================
Record and Return to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue, New York, New York 10022
Attention: Wallace L. Schwartz, Esq.
<PAGE>
ASSIGNMENT OF LEASES AND RENTS
THIS ASSIGNMENT (the "Assignment") made as of the ___ day of
----------
April, 1996, by TRUMP PLAZA ASSOCIATES, a New Jersey general partnership
("Plaza Associates"), and TRUMP TAJ MAHAL ASSOCIATES, a New Jersey general
----------------
partnership ("Taj Associates"), TRUMP ATLANTIC CITY ASSOCIATES, a New
--------------
Jersey partnership (the "Company"), TRUMP ATLANTIC CITY FUNDING, INC.,
-------
a Delaware corporation and a wholly owned subsidiary of the Company
("Funding" and, together with the Company, the "Issuers"), and THE
------- -------
TRUMP TAJ MAHAL CORPORATION, a Delaware corporation ("TTMC"), each having
----
an office at Mississippi Avenue and The Boardwalk, Atlantic City, New Jersey
08401 (Taj Associates, Plaza Associates and Issuers, collectively,
"Mortgagor"), and FIRST BANK NATIONAL ASSOCIATION, a national banking
---------
association having an office at 180 East Fifth Street, St. Paul, Minnesota
55101, as Collateral Agent under the Collateral Agency Agreement
("Mortgagee").
---------
W I T N E S S E T H:
WHEREAS, the Issuers (collectively, the "Company")
-------
simultaneously herewith have issued $1,100,000,000 principal amount of ____%
First Mortgage Notes due 2006 (the "Mortgage Notes"), which Mortgage Notes
--------------
were issued pursuant to that certain Indenture (the "Indenture") dated as
---------
of even date herewith among Assignor and First Bank National Association, as
Trustee under the Indenture. Assignor is the owner of certain casino hotel
facilities (collectively, the "Facility") known as Trump Plaza Hotel and
--------
Casino and Trump Taj Mahal Casino Resort located in Atlantic City, Atlantic
County, New Jersey, including the improvements now or hereafter erected
thereon, and the easements, rights and appurtenances thereunto belonging (the
Facility and the real property on which it is located and all other real
property owned or leased by Assignor is more particularly described on
Schedule 1 hereto, and such real property interests together with all
- ----------
buildings and improvements erected thereon are collectively referred to as the
"Property"); and
--------
2
<PAGE>
WHEREAS, the parties hereto desire that additional secured
indebtedness of the Assignors be permitted to be secured equally and ratably
with the Indenture Obligations; and
WHEREAS, Assignor simultaneously herewith has executed and
delivered in favor of Assignee an Indenture of Mortgage and Security Agreement,
dated as of even date herewith between Assignor, as mortgagor and Assignee, as
mortgagee (the "Mortgage"), pursuant to which Assignor has encumbered,
--------
mortgaged and conveyed to Assignee all of Assignor's right, title and interest
in and to the Trust Estate (as defined in the Mortgage), including, without
limitation, all of Assignor's right, title and interest in and to the Property,
as further security for the performance and observance of (i) the Guarantors'
obligations under the Guarantee and (ii) the punctual payment and performance
when due of all of the Assignor's obligations under the Mortgage Notes, the
Indenture and the Debt Documents; and
WHEREAS, Assignor simultaneously herewith has executed in favor of
Assignee an agreement of assignment dated as of even date herewith (the
"Other Assignment"), pursuant to which Assignor has assigned Assignor's
----------------
rights in, to and under the Operating Assets (as defined in the Mortgage) as
additional security for (i) the performance of the Guarantors' obligations
under the Guarantee and (ii) the punctual payment and performance when due of
all of the Assignor's obligations under the Mortgage Notes, the Indenture and
the Debt Documents; and
WHEREAS, Assignor is the owner, in fee simple absolute, of the
Owned Land (as defined in the Mortgage) and the holder of certain leasehold or
license estates with respect to the Leased Land (as defined in the Mortgage);
and Assignor has and may hereafter enter into leases, subleases or occupancy
agreements, as lessor or sublessor, as the case may be, concerning or affecting
the use or occupancy of Assignor's interests or estates in and to the Property
or any part thereof; and
WHEREAS, Assignee has required this Assignment to be made by
Assignor as a condition to the purchase by the Holders of the Mortgage Notes.
3
<PAGE>
NOW, THEREFORE, Assignor, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, does hereby bargain,
sell, transfer, assign, convey, set over and deliver unto Assignee as
additional security for the punctual payment and performance when due of all of
the Guarantors' obligations under the Guarantee and the payment and performance
when due of all of the Assignor's obligations under the Mortgage Notes, the
Indenture and the Debt Documents and any and all amendments, extensions and
renewals thereof (subject, however, to the rights of the holders of Superior
Mortgages and other Permitted Liens (as such terms are defined in the
Mortgage)), all of the following (collectively, the "Assigned Assets"):
---------------
(a) (i) all leases or occupancy agreements wherein Assignor is
lessor concerning or affecting the use or occupancy of the Property or
any part thereof, now existing or which may be executed at any time in
the future, and all amendments, extensions and renewals of said leases or
occupancy agreements, and any of them, all of which are collectively
called the "Leases",
------
(ii) all rents, fees, charges, income, revenues, issues,
profits, security and other payments which may now or hereafter be or
become due or owing under the Leases, and any of them, and any and all
payments derived from or relating to the Leases to which Assignor is
entitled, including, without limitation, (x) claims for the recovery of
damages done to the Property, (y) claims for damages resulting from acts
of insolvency or acts of bankruptcy or otherwise, and (z) lump sum
payments for the cancellation of Leases or the waiver of any obligation
or term thereof prior to the expiration date (collectively, the
"Rents"); and
-----
(b) all of the rents, profits, revenues, accounts, accounts
receivable and other income and proceeds (including, without limitation,
all rents, fees, charges, accounts, issues, profits, revenues and
payments for or from (i) the use or occupancy of the rooms and other
public facilities in the Hotel (as defined in
4
<PAGE>
the Mortgage) and (ii) the operation of the Casino (as defined in the
Mortgage)) of the Trust Estate (as defined in the Mortgage) and all of
the estate, right, title and interest of every nature whatsoever of
Assignor in and to the same and every part thereof (collectively, the
"Profits").
-------
Provided, however, that no Excepted Property (as defined in the
- -------- -------
Mortgage) is conveyed hereby; it being intended hereby to establish a present
and complete transfer unto Assignee of all of Assignor's right, title, interest
and estate in and to the Assigned Assets, provided, however, that
------- -------
Assignor is hereby granted a license by Assignee to (i) collect all of the
Rents and Profits which may become due during the life of this Assignment and
(ii) enter into, renew, modify, extend, terminate, amend, collectively assign,
transfer or hypothecate any or all of the Leases, in accordance with the
provisions of Section 5.13 of the Mortgage, each until an Event of Default
under the Mortgage (an "Event of Default") shall have occurred and Assignee
----------------
shall have notified Assignor (in the manner set forth in the Mortgage for the
giving of Notices (as defined in the Mortgage)) of Assignee's election to
revoke such license (a "Revocation Event"). Upon the occurrence of an
---------- -----
Event of Default, Assignor agrees to deposit with Assignee upon demand such of
the Leases as may from time to time be designated by Assignee.
All capitalized terms not otherwise defined herein shall have the
meaning set forth in the Mortgage.
Assignor hereby appoints Assignee the true and lawful attorney of
Assignor with full power of substitution, and with power for Assignor and in
the name of Assignor and/or in Assignor's name, place and stead, to demand,
collect, receipt and give complete acquittance for any and all Rents and
Profits, and at Assignee's discretion to file any claim or take any other
action or proceeding and-make any settlement of any claims, either in
Assignee's own name or in the name of Assignor or otherwise, which Assignee may
deem necessary or desirable in order to collect and enforce the payment of any
and all Rents and Profits. No right shall be exercised by Assignee under this
paragraph until a Revocation Event has occurred. All lessees under the Leases
are hereby expressly authorized and directed, after the occurrence
5
<PAGE>
of a Revocation Event, to pay all rents and other sums herein assigned to
Assignee or such nominee as Assignee may designate in writing delivered to and
received by such lessees, who thereafter are expressly relieved of any and all
duty, liability or obligation to Assignor in respect of all payments so made.
Assignee is hereby vested with full power to use all measures,
legal and equitable, deemed by Assignee to be necessary or proper to enforce
this Assignment and to collect the Rents and Profits. Assignee shall be under
no obligation to press any of the rights or claims assigned to Assignee
hereunder, or, prior to entering into possession and control of the Property,
to perform or carry out any of the obligations of Assignor under any of the
Leases and does not assume any of the liabilities in connection with or arising
or growing out of the covenants and agreements of Assignor in the Leases. It is
further understood that this Assignment shall not operate to place
responsibility for the control, care, management or repair of Assignor's
estates or interests in and to the Property, or parts thereof, upon Assignee,
prior to entering into possession and control of the Property, nor shall it
operate to make Assignee liable, prior to entering into possession and control
of the Property, for the carrying out of any of the terms and conditions of any
of the Leases, or, prior to entering into possession and control of the
Property, for any waste to Assignor's estates or interests in and to the
Property by any lessee or sublessee of Assignor under any leases, or by any
occupant of the Property, or by any party whatsoever or, prior to entering into
possession and control of the Property, for any dangerous or defective
condition of the Property or for any negligence in the management, upkeep,
repair or control of Assignor's estates or interests in and to the Property
resulting in loss or injury or death to any lessee, licensee, employee or any
other person. No right shall be exercised by Assignee under this paragraph
until a Revocation Event has occurred.
Assignee hereby agrees to promptly remit to Assignor any amounts
collected hereunder by Assignee which are in excess of those applied to pay in
full the aforesaid liabilities and indebtedness at the time due.
Nothing herein contained is intended to limit or reduce the rights
of Assignee or the obligations of
6
<PAGE>
Assignor set forth in the Mortgage, but rather all of the terms, provisions and
conditions of this Assignment are in addition to and in supplement of such
rights and obligations. If any provision contained in this Assignment is in
conflict with, or inconsistent with, any provision in the Mortgage, the
provision contained in the Mortgage shall govern and control.
Upon the termination of the Debt Documents and the payment in full
of the principal sum, interest and other indebtedness secured thereby or the
defeasance of the indebtedness secured thereby in accordance with the
provisions of Article Nine of the Indenture, this Assignment shall be and
become null and void, and all estate, right, title and interest of Assignee in
and to the Leases shall revert to Assignor and Assignee shall promptly cancel
and discharge of record this Assignment and any financing statement filed in
connection herewith and execute and deliver to Assignor all such instruments as
may be appropriate to evidence such discharge and satisfaction of said
Assignment (provided that Assignee shall have no liability thereunder and all
costs and expenses shall be paid by Assignor); otherwise, this Assignment shall
remain in full force and effect as herein provided, shall inure to the benefit
of Assignee and its successors and assigns and shall be binding upon Assignor,
and its successors and assigns, and any subsequent holder of Assignor's right,
title, interest and estate in and to the Property.
Notwithstanding anything herein or in any other agreement,
document, certificate, instrument, statement or omission referred to below to
the contrary, Section 12.10 of the Indenture is incorporated herein by
reference.
This Assignment shall be governed by and construed in accordance
with the laws of the State of New Jersey, without giving effect to the
principles of conflicts of laws.
This Assignment is subject to and shall be enforced in compliance
with the provisions of the New Jersey Casino Control Act.
7
<PAGE>
IN WITNESS WHEREOF, Assignor and Assignee have caused this
Assignment to be duly executed, all as of the date first above set forth.
ASSIGNOR:
TRUMP PLAZA ASSOCIATES
By: The Trump Taj Mahal
Corporation, managing
general partner
Witness:________________ By: ___________________
Name:
Title:
TRUMP TAJ MAHAL ASSOCIATES
By: The Trump Taj Mahal
Corporation, managing
general partner
Witness:________________ By: ______________________
Name:
Title:
TRUMP ATLANTIC CITY ASSOCIATES
By: Trump Plaza Holding, Inc., general
partner
Witness:________________ By:
-----------------------------
Name:
Title:
8
<PAGE>
TRUMP ATLANTIC CITY FUNDING, INC.
Witness:_______________ By:
-----------------------------
Name:
Title:
THE TRUMP TAJ MAHAL CORPORATION
Witness:_______________ By:
-----------------------------
Name:
Title:
ASSIGNEE:
FIRST BANK NATIONAL ASSOCIATION, AS
COLLATERAL AGENT
Witness:_______________ By:
-----------------------------
Name:
Title:
9
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on April __, 1996, before me, the
subscriber, a Notary Public of the State of New York, personally appeared
_______________________, to me known, who, being by me duly sworn did depose
and say that he resides at _______________; that he is _____________ of The
Trump Taj Mahal Corporation, which is the managing general partner of TRUMP
PLAZA ASSOCIATES, the partnership described in and which executed the above
instrument, and he acknowledged that he signed and delivered the same on behalf
of such managing general partner as his voluntary act and deed and as the
voluntary act and deed of said corporation on behalf of said general
partnership, pursuant to authority of the board of directors of said
corporation, and that he received a true copy of the within instrument on
behalf of said general partnership.
________________________________
Notary Public
10
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on April __, 1996, before me, the
subscriber, a Notary Public of the State of New York, personally appeared
_______________________, to me known, who, being by me duly sworn did depose
and say that he resides at _______________; that he is _____________ of The
Trump Taj Mahal Corporation which is the managing general partner of TRUMP TAJ
MAHAL ASSOCIATES, the partnership described in and which executed the above
instrument, and he acknowledged that he signed and delivered the same on behalf
of such managing general partner as his voluntary act and deed and as the
voluntary act and deed of said corporation on behalf of said general
partnership, pursuant to authority of the board of directors of said
corporation, and that he received a true copy of the within instrument on
behalf of said general partnership.
________________________________
Notary Public
11
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on April __, 1996, before me, the
subscriber, a Notary Public of the State of New York, personally appeared
_______________________, to me known, who, being by me duly sworn did depose
and say that he resides at _______________; that he is _____________ of
Trump Plaza Holding, Inc., which is the managing general partner of TRUMP
ATLANTIC CITY ASSOCIATES, the partnership described in and which executed the
above instrument, and he acknowledged that he signed and delivered the same on
behalf of such managing general partner as his voluntary act and deed and as
the voluntary act and deed of said corporation on behalf of said general
partnership, pursuant to authority of the board of directors of said
corporation, and that he received a true copy of the within instrument on
behalf of said general partnership.
________________________________
Notary Public
12
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on April __, 1996, before me, the
subscriber, a Notary Public of the State of New York, personally appeared
_______________________, to me known, who, being by me duly sworn did depose
and say that he resides at _______________; that he is _____________ of
TRUMP PLAZA FUNDING, INC., the corporation described in and which executed the
above instrument, and he acknowledged that he signed and delivered the same on
behalf of the corporation as his voluntary act and deed and as the voluntary
act and deed of said corporation, pursuant to authority of the board of
directors of said corporation, and that he received a true copy of the within
instrument on behalf of said corporation.
________________________________
Notary Public
13
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on April __, 1996, before me, the
subscriber, a Notary Public of the State of New York, personally appeared
_______________________, to me known, who, being by me duly sworn did depose
and say that he resides at _______________; that he is _____________ of
THE TRUMP TAJ MAHAL CORPORATION, the corporation described in and which
executed the above instrument, and he acknowledged that he signed and delivered
the same on behalf of the corporation as his voluntary act and deed and as the
voluntary act and deed of said corporation, pursuant to authority of the board
of directors of said corporation, and that he received a true copy of the
within instrument on behalf of said corporation.
________________________________
Notary Public
14
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on April __, 1996, before me, the
subscriber, a Notary Public of the State of New York, personally appeared,
to me known, who, being by me duly sworn did depose and say that he resides at
___________________________________________________________; that he is
_____________________________ of FIRST BANK NATIONAL ASSOCIATION, one of the
corporations described in and which executed the above instrument, and he
acknowledged that he signed and delivered the same as his voluntary act and deed
and the voluntary act and deed of said corporation pursuant to authority of its
board of directors, and that he received a true copy of the within instrument on
behalf of said corporation.
-----------------------------------------
Notary Public
15
<PAGE>
EXHIBIT 4.30
================================================================================
COLLATERAL AGENCY AGREEMENT
among
FIRST BANK
NATIONAL ASSOCIATION,
as Collateral Agent,
FIRST BANK
NATIONAL ASSOCIATION,
as Trustee under the Existing Indenture
referred to herein for the holders of the
First Mortgage Notes due 2006
of Trump Atlantic City Associates and
Trump Atlantic City Funding, Inc.
THE OTHER SECURED PARTIES SIGNATORY HERETO and
TRUMP ATLANTIC CITY ASSOCIATES
and
TRUMP ATLANTIC CITY FUNDING, INC.,
TOGETHER WITH THE ENTITIES REQUIRED TO GUARANTEE
THE FIRST MORTGAGE NOTES REFERRED TO ABOVE
____________
Dated as of April [17], 1996
================================================================================
<PAGE>
COLLATERAL AGENCY
AGREEMENT
COLLATERAL AGENCY AGREEMENT (the "Collateral Agency Agreement"),
dated as of April [17], 1996, by and among First Bank National Association in
its capacity as collateral agent hereunder (the "Collateral Agent"); First Bank
National Association (the "Trustee"), in its capacity as trustee under the
Existing Indenture (as defined herein); the other secured creditors who by act
of their representatives become signatories hereto as set forth herein; Trump
Atlantic City Associates, a New Jersey general partnership (the "Company");
Trump Atlantic City Funding, Inc., a Delaware corporation ("Funding" and,
together with the Company, the "Issuers"); and Trump Plaza Associates, a New
Jersey general partnership, Taj Mahal Associates, a New Jersey general
partnership, Trump Taj Mahal Corporation, a Delaware corporation, and Trump
Plaza Funding, Inc., a New Jersey corporation (collectively, together with such
entities as may hereafter be required to become guarantors of the Existing
Indenture Obligations, the "Guarantors, and together with the Issuers, the
"Debtors"). As used herein, all capitalized terms not otherwise defined in the
above sentence or in Section 1 hereof shall have the meanings set forth in the
Existing Indenture.
W I T N E S S E T H:
-------------------
WHEREAS, the Company and Funding are concurrently issuing the
Existing Notes and the Guarantors are issuing guarantees of the Existing Notes
pursuant to the Existing Indenture;
WHEREAS, the Debtors are concurrently executing and delivering the
Collateral Documents to which they are a party to the Trustee;
WHEREAS, under the Existing Indenture the Debtors are permitted,
subject to certain conditions, to incur additional secured indebtedness or
guarantees;
WHEREAS, the parties hereto desire that the such additional secured
indebtedness of the Debtors be permitted to be secured equally and ratably with
the Existing Indenture Obligations.
NOW THEREFORE, in consideration of the premises and other benefits,
the receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
2
<PAGE>
Section 1. Definitions. As used herein, the following terms
-----------
shall have the meanings set forth in this Section 1, and all other capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Existing Indenture. All such terms shall include in the singular number the
plural and in the plural number the singular.
"Acceptable Bank" means a bank or trust company in good standing
and incorporated under the laws of the United States or any State thereof or
the District of Columbia, with its principal corporate trust office within the
United States, with capital, surplus and undistributed profits of not less than
$50,000,000.
"Agency Appointment Agreement" means an agreement substantially in
the form of Annex A attached hereto signed on behalf of a secured creditor by
its sole Designated Representative and accepted by the Collateral Agent.
"Cash Collateral" means Collateral consisting of cash.
"Collateral" means property that is subject to the Liens created by
the Collateral Documents.
"Collateral Documents" means the "Mortgage Documents" (as defined
in the Existing Indenture) the Security Agreement between the Debtors and the
Collateral Agent dated April 11, 1996, as it may be amended, modified or
supplemented hereafter and this Collateral Agency Agreement.
"Company Request" means a written request of any of the Debtors in
the form of an Officers' Certificate delivered pursuant to the respective Debt
Documents.
"Debt Documents" means the Existing Indenture and any Secured
Credit Agreements.
"Designated Representative" means the Trustee with respect to the
Existing Indenture and means the person who executes the Agency Appointment
Agreement with respect to each other Secured Creditor.
"Existing Indenture" means the Indenture, dated as of April [17],
1996, among the Debtors and the Trustee, relating to the Existing Notes, as
such Indenture may be amended, modified or supplemented from time to time.
3
<PAGE>
"Existing Indenture Obligations" means the "Indenture Obligations"
as defined in the Existing Indenture.
"Existing Notes" means the Company's and Funding's First Mortgage
Notes due 2006 in an aggregate principal amount originally outstanding of
$1,100,000,000, issued pursuant to the Existing Indenture, including the
guarantees thereof by the Guarantors.
"Collateral Agency Agreement" means this Collateral Agency
Agreement among the Collateral Agent, the Existing Trustee, the other Secured
Creditors, the Debtors, as this Collateral Agency Agreement may be amended,
modified or supplement from time to time.
"Majority Secured Creditors" means the holders of more than 50% in
aggregate principal amount of the Existing Notes and Secured Loans Outstanding
at such time, taken as a whole.
"Obligations" means the Existing Indenture Obligations and the
Secured Obligations.
"Opinion of Counsel" means a written opinion from legal counsel who
is reasonably acceptable to the Collateral Agent.
"Required Secured Creditors" means the holders of more than 25% in
aggregate principal amount of the Existing Notes and Secured Loans Outstanding
at such time, taken as a whole.
"Satisfied" means (a) payment in full and satisfaction of all of
the relevant Obligations and (b) receipt by the relevant Secured Creditor of an
Officers' Certificate of the Company to the effect that (i) each of the
Debtors is at the time of such payments and satisfaction solvent for the
purposes of the United States Bankruptcy Code and (ii) bona fide financial
projections of each of the Debtors demonstrating that the Company, Funding and
the Guarantors each is expected to remain solvent for a period of at least
ninety days after such time.
"Secured Credit Agreement" means collectively, each document
providing Indebtedness of the Debtors which Indebtedness is permitted to be
incurred under the Existing Indenture and is also permitted to be secured under
Section __ or Section __ of the Existing Indenture.
4
<PAGE>
"Secured Creditors" means the Trustee and the Designated
Representatives.
"Secured Loans" means the principal amount borrowed under any
Secured Credit Agreements.
"Secured Obligations" means the obligations of the Issuers and the
Guarantors pursuant to the Secured Loan Agreement and the Secured Loans now or
hereafter existing, to pay principal of and interest on the Secured Loans when
due and payable, whether on maturity or an interest payment date, by
acceleration, call for redemption or otherwise, and interest on the overdue
principal of, and (to the extent lawful) interest, if any, on, the Secured
Loans and all other amounts due or to become due in connection with the Secured
Loan Agreement, including any and all extensions, renewals or other
modifications thereof, in whole or in part, and the performance of all other
obligations of the Issuers and the Guarantors including all costs and expenses
incurred by the Designated Representative or the holders in the collection or
enforcement of any such obligations or realization upon the security therefor.
"Security Interests" means the Liens on the Collateral created by
the Collateral Documents.
Section 2. Appointment. The Trustee, for the benefit of the
-----------
holders of the Existing Notes hereby designates and appoints and the other
Secured Creditors by executing the Agency Appointment Agreement designates and
appoints the Collateral Agent, and the Collateral Agent hereby and thereby
accepts such appointment, to serve as collateral agent and representative of
the Trustee, for the benefit of the holders of the Existing Notes, as
collateral agent and representative of the other Secured Creditors which become
a party to this Collateral Agency Agreement in the manner and upon the terms
and conditions set forth herein and in the other Collateral Documents. Each
Existing Note Holder hereby irrevocably authorizes, and each Existing
Noteholder by its acceptance of an Existing Note shall irrevocably authorize
and direct, and each holder of a Secured Obligation shall by its Designated
Representatives execution of the Agency Appointment Agreement irrevocably
authorizes and directs, the Collateral Agent:
(i) to take such action on behalf of the Secured
Creditors under the provisions of this Collateral Agency Agreement and
the other Collateral Documents and to exercise such powers and to perform
such duties hereunder and under any other
5
<PAGE>
Collateral Document as are specifically delegated to or required of the
Collateral Agent by the terms hereof and thereof and such other powers as
are reasonably incidental thereto; and
(ii) to exercise, on behalf of the Secured Creditors,
all remedies available to the Collateral Agent under the Collateral
Documents, including without limitation the right to foreclose or
otherwise realize upon any Collateral and to initiate, prosecute and
defend any and all legal proceedings with respect to the Collateral
against the Debtors.
Section 3. Nature of Duties. Neither the Collateral Agent nor
----------------
any of its officers, directors, employees or agents shall be liable for any
claims, losses, damages, penalties, actions, judgments, suits, liabilities,
obligations, costs or expenses of any kind or nature whatsoever resulting from
any action the Collateral Agent takes or omits to take under any Collateral
Document or in connection therewith, unless caused by its or their negligence,
bad faith or willful misconduct. The Collateral Agent may perform any of its
duties hereunder by or through its agents or employees. The Collateral Agent
shall have no duty or responsibility, either initially or on a continuing
basis, to provide any Secured Creditor with any credit or other information
with respect to the Issuers or any Guarantor whether coming into its possession
before the issuance of the Obligations or at any time or times thereafter,
except as otherwise provided in this Collateral Agency Agreement. The
Collateral Agent may accept deposits from, lend money to, or generally engage
in any kind of banking, trust or other business with the Company or any of its
Affiliates, in each case as if it were not the Collateral Agent hereunder.
Section 4. Advices. The Collateral Agent shall forward
-------
promptly to each Secured Creditor a copy of each notice, certificate,
instruction or other communication received by the Collateral Agent from the
Debtors or the Secured Creditors under this Collateral Agency Agreement, any
other Collateral Document or any of the Debt Documents (except for any which
the Issuers and/or the Guarantors shall be obligated to furnish directly to
such Secured Creditor). The Collateral Agent shall also promptly furnish to
each Secured Creditor, upon its written request, such other information and
documents concerning the Collateral and the Collateral Agent's actions with
respect thereto as such Secured Creditor may reasonably request.
Section 5. Rights of Collateral Agent.
--------------------------
6
<PAGE>
(a) Right to Rely. The Collateral Agent may rely on any
-------------
document reasonably believed by it to be genuine and to have been signed or
presented by the proper person. Before the Collateral Agent acts or refrains
from acting it may consult with counsel and may require an Officers'
Certificate or an Opinion of Counsel, to the extent required under and in
accordance with the Existing Indenture and Secured Credit Agreements. The
Collateral Agent shall not be liable for any action it takes or omits to take
in good faith in reliance on any such Certificate or Opinion.
(b) Attorneys/Agents. The Collateral Agent may act
----------------
through its attorneys and agents and shall not be responsible for the
misconduct or negligence of any agent appointed with due care.
(c) Good Faith Belief in Authority, Rights or Powers.
------------------------------------------------
The Collateral Agent shall not be liable for any action it takes or omits to
take in the good faith belief that such act or omission was authorized or
within its rights or powers.
(d) No Investigation. The Collateral Agent shall not be
----------------
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, notice, request,
direction, consent, order, bond, debenture or other paper or document, but the
Collateral Agent, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit.
(e) Obligation to Act upon Instructions. The Collateral
-----------------------------------
Agent shall be under no obligation to exercise any of the rights or powers
vested in it by any Collateral Document at the request, order or direction of
or any of the Secured Creditors, pursuant to the provisions of any Debt
Document, unless such Secured Creditor shall have offered to the Collateral
Agent reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby. Upon receipt of such
reasonable security or indemnity, however, the Collateral Agent shall act upon
the instructions of the Required Secured Creditors. Notwithstanding the
foregoing, the Collateral Agent shall not take or refrain from taking such
action if so taking or refraining from taking such action, as the case may be,
would violate applicable law or the terms of the Collateral Documents or the
Debt Documents.
(f) Secured Creditors. The Collateral Agent may deem
-----------------
and treat the Trustee and the Designated Representatives as the owner of the
applicable
7
<PAGE>
Secured Obligation. The rights of the individual owners of Existing Notes
shall be governed by the Existing Indenture and the rights of holders of any
Secured Obligation shall be governed by the applicable Secured Loan Agreement.
No individual holder of any Obligation shall have the right to direct the
Collateral Agent to act other than through its Designated Representative.
Section 6. Compensation and Indemnification.
--------------------------------
(a) Compensation and Expenses. The Company agrees to
-------------------------
pay to the Collateral Agent from time to time upon demand, all reasonable fees,
costs and expenses of the Collateral Agent (including, without limitation, the
reasonable fees and disbursements of counsel) (A) arising in connection with
the preparation, execution, delivery, modification and termination of each
Collateral Document or the enforcement of any of the provisions hereof or
thereof, (B) incurred or required to be advanced in connection with the sale or
other disposition of any Collateral pursuant to any Collateral Document and the
preservation, protection or defense of the Collateral Agent's rights under the
Collateral Documents and in and to the Collateral or (C) in connection with any
action taken pursuant to Section 13.
(b) Stamp and Other Taxes. The Company hereby agrees to
---------------------
indemnify the Collateral Agent, and hold it harmless against, any present or
future claim for liability for any stamp or other similar tax and any penalties
or interest with respect thereto, which may be assessed, levied or collected by
any jurisdiction in connection with any Collateral Document or any Collateral.
(c) Filing Fees, Excise Taxes, Etc. The Company hereby
------------------------------
agrees to pay or to reimburse the Collateral Agent for any and all amounts in
respect of all search, filing, recording and registration fees, taxes, excise
taxes and other similar imposts which may be payable or determined to be
payable in respect of the execution, delivery, performance and enforcement of
each Collateral Document.
(d) Indemnification of Collateral Agent. The Debtors
-----------------------------------
shall jointly and severally indemnify the Collateral Agent for, and hold it
harmless against, any and all claims, demands, expenses (including but not
limited to reasonable compensation, disbursements and expenses of the
Collateral Agent's agents and counsel), losses or liabilities incurred by it
without negligence, bad faith or willful misconduct on its part, in any way
arising out of or in connection with the acceptance and administration of this
Collateral Agency Agreement and its rights or duties hereunder or under any
other Collateral Document. The Collateral Agent shall notify the Company
promptly of any claim asserted against the Collateral Agent
8
<PAGE>
for which it may seek indemnity. The Company need not pay for any settlement
made without its written consent. The Company need not reimburse any expense
or indemnify against any loss or liability to the extent incurred by the
Collateral Agent through its negligence, bad faith or willful misconduct. When
the Collateral Agent incurs expenses or renders services after an Event of
Default specified in Section [7.1(f)] of the Existing Indenture occurs, such
expenses and the compensation for such services are intended to constitute
expenses of administration under any Bankruptcy Law.
(e) Right to Advance Costs. In the event the
-----------------------
Collateral Agent makes demand of the Company for costs incurred under Section
5(a) to 5(d), inclusive, and the Company is unable or refuses to pay such
disbursement or expense of the Collateral Agent, each Secured Creditor shall
have the right, but not the obligation, to advance to the Collateral Agent
amounts to pay such disbursement or expense of the Collateral Agent.
(f) Survival of Obligations. All obligations set forth
-----------------------
in this Section 6 shall survive the execution, delivery and termination of this
Collateral Agency Agreement and the other Collateral Documents and the payment
of all other Obligations.
Section 7. Resignation by or Removal of the Collateral Agent.
-------------------------------------------------
(a) Resignation; Removal. The Collateral Agent may
--------------------
resign from the performance of all its functions and duties hereunder and under
the other Collateral Documents at any time by giving twenty Business Days'
prior written notice to the Company and each Secured Creditor. The Majority
Secured Creditors may, at any time, and the Company may, if the Collateral
Agent ceases to be an Acceptable Bank, remove the Collateral Agent by giving 20
Business Days' prior written notice to the Collateral Agent, the Company, the
Guarantors and the Secured Creditors. Such resignation or removal shall take
effect upon the appointment of a successor Collateral Agent pursuant to
paragraph (b) or (c) below or as otherwise provided below.
(b) Appointment of Successor. Upon any such notice of
------------------------
resignation or removal, the Majority Secured Creditors may appoint, with the
Company's consent, a successor Collateral Agent hereunder, which shall be an
Acceptable Bank. In the event that the Majority Secured Creditors do not
appoint, with the consent of the Company, a successor Collateral Agent within
fifteen days of receipt of such notice, the Company shall appoint an Acceptable
Bank as successor Collateral Agent.
9
<PAGE>
If a successor Collateral Agent shall have been so appointed by the Company,
the Majority Secured Creditors may appoint a successor Collateral Agent within
one year after the Company-appointed successor Collateral Agent takes office to
replace the Collateral Agent.
(c) Effectiveness of Resignation or Removal. A
---------------------------------------
successor Collateral Agent shall deliver a written acceptance of its
appointment to the retiring Collateral Agent, the Secured Creditors and the
Debtors. Immediately thereafter, the retiring Collateral Agent shall transfer
all property held by it as Collateral Agent to the successor Collateral Agent,
and shall execute and deliver to the successor Collateral Agent such documents
as are necessary to perfect or maintain the Security Interests, including any
documents necessary to assign or transfer all interests of the retiring
Collateral Agent in the Collateral to the successor Collateral Agent, in the
form or forms adequate for proper filing or recording in such offices and such
jurisdictions as are necessary to put the successor Collateral Agent in the
same position as was the retiring Collateral Agent with respect to the
Collateral. Thereafter, the resignation or removal of the retiring Collateral
Agent shall become effective and the successor Collateral Agent shall have all
the rights, powers and duties of the Collateral Agent under this Collateral
Agency Agreement. A successor Collateral Agent shall give notice of its
succession to the Secured Creditors and the Debtors.
(d) Consolidation, Merger, Etc. If the Collateral Agent
--------------------------
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation, the resulting,
surviving or transferee corporation without any further act shall, if such
resulting, surviving or transferee corporation is an Acceptable Bank, be the
successor Collateral Agent. The transferring, merging or converting Collateral
Agent shall have all documents necessary to perfect or maintain the Security
Interests, including any documents necessary to assign or transfer all
interests of the transferring, merging or converting Collateral Agent in the
Collateral, executed and delivered to it in the form or forms adequate for
proper filing or recording in such offices and such jurisdictions as are
necessary to put the successor Collateral Agent in the same position as the
transferring, merging or converting Collateral Agent with respect to the
Collateral.
(e) Compensation Continuing. Any person or entity
-----------------------
authorized to act and acting as Collateral Agent hereunder shall continue to be
entitled to receive fees, costs and expenses as provided in Section 6 hereof so
long as such person or entity acts as Collateral Agent hereunder.
10
<PAGE>
Section 8. Held Collateral.
---------------
(a) Possession. Notwithstanding anything in the
----------
Collateral Documents to the contrary, any Collateral that comes into the
possession or control of any Secured Creditor or any Debtor (the "Held
Collateral") shall be delivered by any Secured Creditor or the Debtors to and
shall be held by the Collateral Agent in its name on behalf of the Secured
Creditors
(b) Release. In the event that any Secured Creditor
-------
receives a Company Request from a Debtor with respect to the release of the
Held Collateral (the maker of such Company request being referred to herein as
the "Requester"), and the Requester has fulfilled all the requirements of the
applicable Debt Document, the Collateral Agent shall deliver to each Secured
Creditor (A) a copy of such Company Request and (B) written notice (a "Held
Collateral Release Notice") stating that the Requester has requested a release
of the Held Collateral. In the event that all Secured Creditors return an
executed Held Collateral Release Notice to the Collateral Agent, the Collateral
Agent shall release the Held Collateral that is the subject of such Company
Request from the Security Interests by executing whatever documents the
Requester has provided with the Company Request and delivering the Held
Collateral to the Requester.
(c) Delivery Upon Termination. Upon termination of this
-------------------------
Collateral Agency Agreement in accordance with its terms in the case where the
Collateral Agent has not been required to exercise remedies to foreclose on the
Collateral, the Collateral Agent shall deliver all Held Collateral, to the
persons legally entitled thereto, and thereafter to the Debtors, as their
respective interests may appear.
Section 9. Priority of Rights; Priority of Payments.
----------------------------------------
(a) Priority. As long as all or any portion of the
--------
Existing Indenture Obligations and all or any portion of Secured Obligations
remains outstanding, unpaid or not Satisfied, the Trustee and each holder of
any Existing Notes and each other Secured Party agree that the interests of the
holders of the Existing Obligations, and the interests of the holders of the
Secured Obligations, in the Collateral, including their interests in any
payments to be made from the proceeds of any sale or other disposition thereof,
shall, irrespective of the time of perfection or creation of any security
interests or liens in the Collateral on behalf of and for the benefit of each
Secured Creditor, be equal and ratable to the extent and in the manner provided
in paragraph (b) below. In addition, the interests of the
11
<PAGE>
Collateral Agent, the Trustee, on behalf of the holders of Existing Notes, and
the other Secured Creditors in the Collateral and the proceeds thereof shall be
as set forth in paragraph (b) below.
(b) Proceeds. Except as set forth in Section 8(e) or
--------
10(c), the proceeds of any sale or other disposition by the Collateral Agent or
its agents or employees of the whole or any part of the Collateral, together
with any other monies held by the Collateral Agent in the Collateral Account or
otherwise held by the Collateral Agent on behalf of the Representatives for the
benefit of their respective Secured Creditors, shall be applied by the
Collateral Agent in accordance with this Section 11(b):
(i) first, (A) to the payment of any and all
-----
amounts advanced by a Secured Creditor pursuant to Sections 5(f) and/or
6(e) of this Collateral Agreement.
(ii) second, (A) to the payment of any and all
------
Obligations of the Company then due and owing to the Collateral Agent,
including without limitation any and all amounts to compensate and
indemnify the Collateral Agent pursuant to Section 6(d) and any and all
expenses and fees (including reasonable attorneys' fees);
(iii) third, (A) to the payment of any and all
-----
Existing Indenture Obligations then due and owing to the Trustee on
account of any and all expenses and fees (including reasonable attorneys'
fees) incurred by the Trustee in the course of the performance of its
duties under the Existing Indenture.
(iv) fourth, any surplus then remaining, pro
---
rata in accordance with the relative outstanding principal amounts of
----
Existing Notes and other Secured Loans, respectively, (A) to the Trustee
for payment in accordance with the Existing Indenture to the holders of
the Existing Notes on account of any of the Existing Indenture
Obligations owed to such holders and (B) to the other Secured Creditors
in accordance with the applicable Secured Credit Agreement.
(v) fifth, if no Obligation is then due and
-----
owing, any surplus then remaining shall be paid to the persons legally
entitled thereto, subject, however, to Section 9-504(1)(c) of the
12
<PAGE>
applicable Uniform Commercial Code, and thereafter to the Debtors, as
their respective interests may appear;
(vi) if, however, there remains any deficiency between
(A) the aggregate amount of the proceeds of the sale or other disposition
of the Collateral and (B) the aggregate sum of all Obligations referred
to in subparagraphs (i) and (ii) of this Section 11(b), then the Debtors
shall remain liable to the persons specified therein remaining unpaid to
the extent of any such deficiency.
Section 10. Exercise of Remedies Under the Collateral
------------------------------------------
Documents.
- ---------
(a) Secured Creditors' Duties. The Collateral Agent
-------------------------
shall exercise remedies with respect to the Collateral only in accordance with
this Section 12. The Secured Creditors shall not be entitled to exercise any
remedies with respect to the Collateral.
(b) Secured Creditors' Notices. If any Secured Creditor
--------------------------
has notice of a Default or an Event of Default, such Secured Creditor shall
give notice to the other Secured Creditors, the Collateral Agent and (unless
the Company provided such notice to such Secured Creditor under any Debt
Document) the Company within three Business Days after such notice of Default
or Event of Default. If holders of the Existing Notes by notice to the Company
or the Trustee, pursuant to Section [7.2] of the Existing Indenture, or if the
other Secured Creditors in accordance with the applicable Secured Credit
Agreement declare all unpaid principal and accrued interest to the date of
acceleration on the Existing Notes, Secured Loans then outstanding to be due
and payable in accordance with the applicable Debt Document, or if such
principal and interest ipso facto becomes due and payable pursuant to
---- -----
Section 7.2 of the Existing Indenture or comparable provisions of any Secured
Credit Agreement, as applicable, the Secured Creditor under such Debt Document
shall give notice to the Collateral Agent and the other Secured Creditors of
such acceleration (an "Acceleration Notice") within three Business Days after
such acceleration. Upon receipt by the Collateral Agent of an Acceleration
Notice from the Majority Secured Creditors or notice of an Event of Default
from the Majority Secured Creditors, the Collateral Agent shall, within three
Business Days after receipt of such notice, commence the taking of such actions
toward collection or enforcement of the Collateral Documents and the Collateral
(or any portion thereof), including without limitation action toward
foreclosure upon any Collateral, as the Collateral Agent deems appropriate,
unless instructed otherwise by the Required Secured Creditors. If any Default
or Event of Default which was the
13
<PAGE>
basis for the giving of a notice to the Collateral Agent shall be cured or
waived, and, in the case where there has been an acceleration, rescission of
such acceleration has occurred, in accordance with the terms of the applicable
Debt Document, any direction to the Collateral Agent to take any action in
connection with such notice shall be deemed rescinded upon notification by the
Secured Creditor under the applicable Debt Document to the Collateral Agent of
such cure or waiver and rescission of acceleration, if applicable.
(c) Available Remedies. The Collateral Agent shall have
------------------
the right to exercise any remedies available pursuant to the Collateral
Documents or applicable law.
Section 11. Additional Secured Creditors
----------------------------
The Debtors may incur any or all of the Secured Loans only upon
receipt of an Officers' Certificate stating that the following conditions are
complied with: (i) the Secured Loan complies in all respects with the
definition of such term hereunder (ii) such Secured Creditor irrevocably
appoints the Collateral Agent as its agent pursuant to an agreement in
substantially the same form contained in paragraph 1 of Annex A hereto; (iii)
the proposed Secured Creditor acknowledges the lien of Existing Trustee and the
Collateral Agent pursuant to an agreement in substantially the same form
contained in paragraph 2 of Annex A hereto; (iv) the proposed Secured Creditor
agrees to be bound by this Collateral Agency Agreement pursuant to an agreement
in substantially the same form contained in paragraph 3 of Annex A hereto; (iv)
the Debtors delivers a Consent Agreement substantially in the form contained in
Annex B hereto and (vi) the Company delivers an Opinion of Counsel to the
effect that (a) this Collateral Agency Agreement continues to constitute a
valid and binding obligation of each of the Debtors and the Consent constitutes
a valid and binding obligation of the Debtors and each is enforceable in
accordance with its terms against each of the Debtors, except to the extent
that enforcement thereof may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and (ii) general principles of equity (whether
considered in a proceeding at law or in equity), (b) the Lien of the Collateral
Agent for the benefit of the Secured Creditors continues to constitute a
perfected first priority security interest in the Collateral.
Section 12. Further Assurances. Each party hereto covenants
------------------
to execute and deliver such further instruments and to take such further action
as the
14
<PAGE>
Collateral Agent or any Secured Creditor may at any time or times reasonably
request in order to carry out the provisions and intent of this Agreement.
Section 13. Notices. Any notices or other communications
-------
required or permitted hereunder shall be in writing, and shall be sufficiently
given if made by hand delivery, by telex, by telecopier or registered or
certified mail, postage prepaid, return receipt requested, addressed as
follows:
To the Debtors:
c/o Trump Atlantic City Associates
Mississippi Avenue and The Boardwalk
Atlantic City, New Jersey 08401
Attn: Robert M. Pickus, Esq.
Telecopy Number: (609) 441-7926
To the Collateral Agent or the Existing Trustee:
c/o First Bank National Association
180 East Fifth Street
Minneapolis, Minnesota 55101
Attn: Corporate Trust Department
Telecopy Number: (612) 244-0711
To the other Secured Creditors at the address provided as contemplated in
Annex A hereto.
Any party hereto may by notice to each other party designate such additional or
different addresses as shall be furnished in writing by such party. Any notice
or communication to any party hereto shall be deemed to have been given or made
as of the date so delivered, if personally delivered; when answered back, if
telexed; when receipt is acknowledged, if telecopied; and five calendar days
after mailing if sent by registered or certified mail (except that a notice of
change of address shall not be deemed to have been given until actually
received by the addressee). A copy of any notice given under this Collateral
Agency Agreement to any party shall also be given to each other party hereto.
Any party hereto may give notice to the holders of the Existing Notes at the
addresses set forth for them in the register kept by the Registrar under the
Existing Indenture or may request that the Trustee notify the holders of the
Existing Notes at such addresses.
15
<PAGE>
Section 14. Binding Agreement; Assignment; Obligations
-------------------------------------------
Several. This Collateral Agency Agreement shall be binding upon and inure to
- -------
the benefit of the parties hereto and their respective successors and permitted
assigns. This Collateral Agency Agreement may not be assigned by the Debtors;
provided, however, that this Collateral Agency Agreement shall be
- -------- -------
deemed to be automatically assigned by any of the Debtors to any person which
is a successor to any of the Debtors in accordance with the Existing Indenture
and the applicable Secured Credit Agreement. This Collateral Agency Agreement
shall be deemed to be automatically assigned by the Collateral Agent to any
person who succeeds to the Collateral Agent in accordance with Section 7, and
such assignee shall have all rights and powers of, and act as, the Collateral
Agent hereunder. This Collateral Agency Agreement shall be deemed to be
automatically assigned by the Trustee to the person who succeeds to it in
accordance with the Existing Indenture. Except as otherwise expressly provided
herein, the obligations of each of the parties under this Collateral Agency
Agreement are several and not joint, it being expressly agreed that no Secured
Creditor shall be liable for the failure of any other Secured Creditor to
perform its duties or obligations hereunder. Each Holder, by its acceptance of
an Existing Note consents to and agrees to be bound by the provisions hereof.
Section 15. Governing Law. THE PARTIES HERETO EXPRESSLY
-------------
ACKNOWLEDGE AND AGREE THAT, IN ACCORDANCE WITH THE PROVISIONS OF NEW YORK
GENERAL OBLIGATIONS LAW SECTION 5-1401 GOVERNING AGREEMENTS RELATING TO ANY
OBLIGATION ARISING OUT OF A TRANSACTION COVERING IN THE AGGREGATE NOT LESS THAN
$250,000, THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR
THE PERFECTION OF ANY SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN
RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT MAY BE BROUGHT IN COURTS SITTING IN THE BOROUGH OF MANHATTAN OF THE
STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT
OF NEW YORK AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HERETO
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS.
16
<PAGE>
Section 16. Waiver of Jury Trial. THE PARTIES HERETO HEREBY
--------------------
WAIVE, TO THE FULLEST EXTENT THEY MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW,
ANY RIGHT TO TRIAL BY JURY WHICH ANY OF THEM MIGHT OTHERWISE HAVE UNDER THE
CONSTITUTION OR ANY STATUTE OF THE UNITED STATES OR OF ANY STATE IN ANY LEGAL
ACTION OR PROCEEDING BROUGHT WITH RESPECT TO, OR ARISING OUT OF, THIS
AGREEMENT.
Section 17. Effectiveness; Termination. This Collateral
--------------------------
Agency Agreement shall become effective on the date first written above. This
Collateral Agency Agreement shall become binding upon any Secured Creditor who
becomes a party hereto subsequent to the effectiveness of this Collateral
Agency Agreement upon execution of any agreement substantially in the form of
Annex A to this Collateral Agency Agreement by such Secured Creditor. This
Collateral Agency Agreement shall bind any Person which is required to become a
guarantor under the Existing Indenture upon execution of this Collateral Agency
agreement by such Person. This Collateral Agency Agreement shall remain
effective until, and terminate when all Secured Obligations are Satisfied;
provided, that once the Obligations owed to any Secured Creditor shall have
- --------
been Satisfied, such Secured Creditor shall have no further rights or
obligations hereunder, unless and until such Secured Creditor again becomes a
Secured Creditor by becoming a holder of an Obligation. Upon termination of
this Collateral Agency Agreement, the Collateral Agent shall reassign and
redeliver the Collateral held by it, and not sold, transferred or disposed of
pursuant to any other provision of this Collateral Agency Agreement, in
accordance herewith. Such reassignment and redelivery shall be without
warranty by or recourse to the Collateral Agent, and shall be at the expense of
the Company. Thereafter, the Collateral Agent shall, at the Company's expense,
deliver to the Company and each Secured Creditor (i) written acknowledgement of
cancellation of this Collateral Agency Agreement and (ii) such other documents
as are reasonably requested by the Company and adequate for proper filing or
recording in such offices and such jurisdictions as the Company reasonably
deems necessary to evidence such termination.
Section 18. Amendments, Supplements and Waivers.
-----------------------------------
(a) Consent of Holders. With the written consent of the
------------------
Majority Secured Creditors, the Collateral Agent, the Debtors may, from time to
time, enter into written supplemental agreements for the purpose of amending,
modifying or waiving any provision of this Collateral Agency Agreement or
changing in any manner the rights of the Collateral Agent, the Secured
Creditors,
17
<PAGE>
the Debtors, hereunder or thereunder; provided, however, that no such
-------- -------
supplemental agreement shall:
(i) change the respective percentages of outstanding
aggregate principal amount of Existing Notes and Secured Loans specified
in the definitions of Majority Secured Creditors or Required Secured
Creditors contained herein or otherwise entitled to take any action
hereunder, without the written consent of each Secured Creditor;
(ii) amend, modify or waive any provision of this
Section 19 without the written consent of each Secured Creditor;
(iii) amend, modify or waive any provision of Section
11 without the written consent of each Secured Creditor; or
(iv) amend, modify or waive any provision of this
Collateral Agency Agreement such that either (a) the holders of the
Existing Indenture Obligations or the other Secured Creditors are
materially and adversely affected or (B) the holders of the Existing
Indenture Obligations or any other Secured Creditors are benefitted and
any other Secured Creditor is materially and adversely affected; without
the written consent of a majority in aggregate principal amount of the
adversely affected Obligations.
Any such supplemental agreement shall be binding upon the Company, the
Guarantors, the Collateral Agent and each Secured Creditor and their respective
successors and permitted assigns. The Collateral Agent shall not enter into
any such supplemental agreement unless it shall have received an Officers'
Certificate of the Company reasonably satisfactory to the Collateral Agent to
the effect that the execution, delivery and performance of such supplemental
agreement will not result in a Default or Event of Default.
(b) Without Consent of Holders. Notwithstanding the
--------------------------
provisions of Section 19(a), the Collateral Agent upon approval of the Majority
Secured Creditors, the Debtors may, at any time and from time to time, without
the consent of each Secured Creditor, enter into additional agreements, in
which a security interest is granted in favor of the Collateral Agent on behalf
of the Secured Creditors, or one or more amendments or agreements supplemental
hereto or to any Collateral Document, in form satisfactory to the Collateral
Agent:
18
<PAGE>
(i) to add to the covenants of the Debtors for the
benefit of the Secured Creditors or to surrender any right or power
herein conferred upon the Debtors;
(ii) to mortgage, pledge, hypothecate or grant a
security interest in favor of the Collateral Agent, as additional
security for the payment and performance of the Obligations, in any
property, including any which is required to be mortgaged, pledged or
hypothecated, or in which a security interest is required to be granted,
to the Collateral Agent pursuant to any Collateral Document or otherwise;
and
(iii) to cure any ambiguity, defect or inconsistency or
to make any other change that does not adversely affect the rights of any
Secured Creditor hereunder or under any Collateral Document.
(c) Notice of Amendments. Notice of any amendment,
--------------------
modification or waiver to any Collateral Document or of any additional or
supplemental agreements entered into in accordance with Section 19(a) or (b)
shall be given by the Collateral Agent to each of the Secured Creditors.
Section 19. Inconsistent Provisions. If any provision of this
-----------------------
Collateral Agency Agreement shall be inconsistent with, or contrary to, any
provision in any other Collateral Document or any Debt Document, such provision
of this Collateral Agency Agreement shall be controlling, and shall supersede
such inconsistent provision to the extent necessary to give full effect to all
provisions contained in this Collateral Agency Agreement.
Section 20. Severability. In the event that any provision
------------
contained in this Collateral Agency Agreement shall for any reason be held to
be illegal or invalid under the laws of any jurisdiction, such illegality or
invalidity shall in no way impair the effectiveness of any other provision
hereof or of such provision under the laws of any other jurisdiction;
provided, that in the construction and enforcement of such provision under
- --------
the laws of the jurisdiction in which such holding of illegality or invalidity
exists, and to the extent only of such illegality or invalidity, this
Collateral Agency Agreement shall be construed and enforced as though such
illegal or invalid provision had not been contained herein.
19
<PAGE>
Section 21. Headings. Section headings used herein are
--------
inserted for convenience only and shall not in any way affect the meaning or
construction of any provision of this Collateral Agency Agreement.
Section 22. Counterparts. This Collateral Agency Agreement
------------
may be executed in any number of counterparts, each of which when so executed
and delivered shall be an original, and all of which shall together constitute
one and the same instrument. A complete set of counterparts shall be lodged
with the Collateral Agent and with each Secured Creditor.
20
<PAGE>
IN WITNESS WHEREOF, the Collateral Agent and the Existing Trustee,
for the benefit of the holders of the Existing Notes, the Company, Funding and
the Guarantors have caused this Agreement to be executed and delivered by their
respective officers thereunto duly authorized as of the day and year first
above written.
FIRST BANK NATIONAL ASSOCIATION,
as Collateral Agent
By:
-----------------------------------
Its:
FIRST BANK NATIONAL ASSOCIATION,
as the Existing Trustee
By:
-----------------------------------
Its:
TRUMP ATLANTIC CITY ASSOCIATES,
as Company
BY: TRUMP HOTELS & CASINO RESORTS
HOLDINGS, L.P., its general partner
BY: TRUMP HOTELS & CASINO RESORTS,
INC., its general partner
By:
-----------------------------------
Its:
TRUMP ATLANTIC CITY FUNDING, INC.,
as Funding
21
<PAGE>
By:
-----------------------------------
Its:
TRUMP PLAZA ASSOCIATES,
as Guarantor
BY: TRUMP ATLANTIC CITY ASSOCIATES,
its general partner
BY: TRUMP HOTELS & CASINO RESORTS HOLDINGS,
L.P., its general partner
BY: TRUMP HOTELS & CASINO RESORTS, INC.,
its general partner
By:
-----------------------------------
Its:
TAJ MAHAL ASSOCIATES,
as Guarantor
BY: TRUMP ATLANTIC CITY ASSOCIATES,
its general partner
BY: TRUMP HOTELS & CASINO RESORTS HOLDINGS,
L.P., its general partner
BY: TRUMP HOTELS & CASINO RESORTS, INC.,
its general partner
22
<PAGE>
By:
-----------------------------------
Its:
TRUMP TAJ MAHAL CORPORATION,
as Guarantor
By:
-----------------------------------
Its:
TRUMP PLAZA FUNDING, INC.,
as Guarantor
By:
-----------------------------------
Its:
[ADDITIONAL GUARANTORS FROM TIME TO
TIME], as Guarantors
By:
-----------------------------------
Its:
23
<PAGE>
ANNEX A
First Trust National Association, as Collateral Agent
180 East Fifth Street
St. Paul, Minnesota 55101
The undersign intends to enter into [credit agreement] with [Trump
Atlantic City Associates] and/or [its subsidiar[y][ies]]. Such [credit
agreement] provides that the obligations thereunder are to be secured by the
collateral which is subject to the lien you hold as collateral agent, pursuant
to the Collateral Agency Agreement originally dated April [17], 1996 (the
"Collateral Agency Agreement") by and among yourself, as collateral agent,
First Trust National Association, as trustee under an indenture dated April 17,
1996, and the other parties signatory thereto. Capitalized terms not otherwise
defined herein have the respective meanings ascribed to them in the Collateral
Agency Agreement.
1. The undersigned hereby appoints you as Collateral Agent to act for its
benefit and irrevocably authorizes and directs you to take all actions
described in Section 2(a) and 2(b) of the Collateral Agency Agreement.
2. The undersigned hereby agrees that its interest in the Collateral,
including its interests in any payments to be made from the proceeds of any
sale or other disposition thereof, shall, irrespective of the time of
perfection or creation of any security interests or liens in the Collateral, be
equal and ratable with the other Secured Creditors to the extent and manner
provided in Section 11 of the Collateral Agency Agreement. The undersigned
acknowledges the Lien you [and the other Secured Creditors] hold under the
Collateral Agency Agreement on the Collateral and consents to any Permitted
Liens.
3. From and after this date, the undersigned, on behalf of itself and its
successors and assigns, agrees to be bound by the terms and subject to the
conditions contained in the Collateral Agency Agreement and shall be deemed to
be a party signatory to the Collateral Agency Agreement.
Very truly yours,
[Secured Creditor]
24
<PAGE>
ANNEX B
DEBTORS' CONSENT
First Trust National Association, as Collateral Agent
180 East Fifth Street
St. Paul, Minnesota 55101
Each of the Company, Funding and each Guarantor hereby consents to
the addition of __________ as a party to the Collateral Agency Agreement dated
as April [17] 1996 among _______________ and confirms the grant set forth in
each of the Collateral Documents (as defined in the Collateral Agency
Agreements) of a security interest in, or pledge or assignment of, the
Collateral (as defined in the Collateral Agency Agreements) to the Collateral
Agent for the benefit of the Secured Parties (as defined herein). As used
herein, Secured Parties shall mean the Secured Creditors identified in the
Collateral Agency Agreement and shall include, without limitation, [specify new
secured party].
25
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 12
----------
RATIO OF EARNINGS TO FIXED CHARGES
(In Thousands)
RATIO EARNINGS TO FIXED CHARGES CALCULATION:
Trump AC and Plaza Associates
------------------------------------------------------------ (Pro Forma)
-----------
Year Ended December 31, Year Ended
------------------------------------------------------------ December 31,
EARNINGS: 1991 1992 1993 1994 1995 1995
-------- -------- -------- -------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME (LOSS) before income taxes
and extraordinary items (32,094) 2,185 5,878 (9,735) 10,783 29,884
PLUS:
FIXED CHARGES 38,135 40,191 48,198 50,265 45,467 133,632
LESS:
CAPITALIZED INTEREST 0 0 0 0 0 0
-------- -------- -------- -------- --------- ---------
EARNINGS 6,041 42,376 54,076 40,530 56,250 163,516
-------- -------- -------- -------- --------- ---------
FIXED CHARGES:
INTEREST EXPENSE 34,395 31,843 40,435 49,061 44,264 129,360
PLUS:
CAPITALIZED INTEREST 0 0 0 0 0 0
PREFERRED PARTNERSHIP DIST. 0 6,894 6,317 0 0 1,554
INTEREST ELEMENT OF RENTAL EXPENSE 3,740 1,454 1,446 1,204 1,203 2,718
-------- -------- -------- -------- --------- ---------
FIXED CHARGES 38,135 40,191 48,198 50,265 45,467 133,632
-------- -------- -------- -------- --------- ---------
RATIO OF EARNINGS TO FIXED
CHARGES (DEFICIENCY) (32,094) 1.1 1.1 (9,735) 1.2 1.2
======== ======== ======== ======== ========= =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 12
----------
RATIO OF EARNINGS TO FIXED CHARGES
(In Thousands)
RATIO EARNINGS TO FIXED CHARGES CALCULATION:
Taj Associates
------------------------------------------------------------
Year Ended December 31,
------------------------------------------------------------
EARNINGS: 1991 1992 1993 1994 1995
-------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
INCOME (LOSS) before income taxes
and extraordinary items (71,105) (35,099) (22,539) (36,658) (26,623)
PLUS:
FIXED CHARGES 86,111 107,521 111,619 119,158 123,504
LESS:
CAPITALIZED INTEREST 0 0 0 0 0
-------- -------- -------- -------- ---------
EARNINGS 15,006 72,422 89,080 82,500 96,881
-------- -------- -------- -------- ---------
FIXED CHARGES:
INTEREST EXPENSE 84,918 104,049 108,379 115,311 120,435
PLUS:
CAPITALIZED INTEREST 0 0 0 0 0
PREFERRED PARTNERSHIP DIST. 0 1,825 1,733 2,171 1,554
INTEREST ELEMENT OF RENTAL EXPENSE 1,193 1,647 1,507 1,676 1,515
-------- -------- -------- -------- ---------
FIXED CHARGES 86,111 107,521 111,619 119,158 123,504
-------- -------- -------- -------- ---------
RATIO OF EARNINGS TO FIXED
CHARGES (DEFICIENCY) (71,105) (35,099) (22,539) (36,658) (26,623)
======== ======== ======== ======== =========
</TABLE>
<PAGE>
EXHIBIT 21
LIST OF SUBSIDIARIES OF TRUMP ATLANTIC CITY ASSOCIATES
1. Trump Atlantic City Funding, Inc., a Delaware corporation
2. Trump Plaza Associates, a New Jersey general partnership
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports, and to all references to our Firm, included in or made a part of this
registration statement.
Arthur Andersen LLP
Roseland, New Jersey
April 9, 1996
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________
FORM T-1
Statement of Eligibility and Qualification Under the
Trust Indenture Act of 1939 of a Corporation
Designated to Act as Trustee
FIRST BANK NATIONAL ASSOCIATION
(Exact name of Trustee as specified in its charter)
United States 41-0256895
(State of Incorporation) (I.R.S. Employer
Identification No.)
First Trust Center
180 East Fifth Street
St. Paul, Minnesota 55101
(Address of Principal Executive Offices) (Zip Code)
TRUMP ATLANTIC CITY ASSOCIATES
TRUMP ATLANTIC CITY FUNDING, INC.
TRUMP PLAZA ASSOCIATES
(Exact name of registrant as specified in its charter)
New Jersey 22-3213714
Delaware 22-3418939
New Jersey 22-3241643
(State of Incorporation) (I.R.S. Employer
Identification No.)
Missippi Avenue and The Boardwalk
Atlantic City, N.J. 08401
(Address of Principal Executive Offices) (Zip Code)
% FIRST MORTGAGE NOTES DUE 2006
(Title of the Indenture Securities)
<PAGE>
GENERAL
-------
1. General Information Furnish the following information as to the Trustee.
-------------------
(a) Name and address of each examining or supervising authority to
which it is subject.
Comptroller of the Currency
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes
2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS If the obligor or any underwriter
------------------------------------------
for the obligor is an affiliate of the Trustee, describe each such
affiliation.
None
See Note following Item 16.
Items 3-15 are not applicable because to the best of the Trustee's
knowledge the obligor is not in default under any Indenture for which the
Trustee acts as Trustee.
16. LIST OF EXHIBITS List below all exhibits filed as a part of this statement
----------------
of eligibility and qualification. Each of the exhibits listed below is
incorporated by reference from registration number 33-90786.
1. Copy of Articles of Association.
2. Copy of Certificate of Authority to Commence Business.
3. Authorization of the Trustee to exercise corporate trust powers (included
in Exhibits 1 and 2; no separate instrument).
4. Copy of existing By-Laws.
5. Copy of each Indenture referred to in Item 4. N/A.
6. The consents of the Trustee required by Section 321(b) of the act.
7. Copy of the latest report of condition of the Trustee published pursuant
to law or the requirements of its supervising or examining authority.
<PAGE>
NOTE
The answers to this statement insofar as such answers relate to what persons
have been underwriters for any securities of the obligors within three years
prior to the date of filing this statement, or what persons are owners of 10% or
more of the voting securities of the obligors, or affiliates, are based upon
information furnished to the Trustee by the obligors. While the Trustee has no
reason to doubt the accuracy of any such information, it cannot accept any
responsibility therefor.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee,
First Bank National Association, an Association organized and existing under the
laws of the United States, has duly caused this statement of eligibility and
qualification to be signed on its behalf by the undersigned, thereunto duly
authorized, and its seal to be hereunto affixed and attested, all in the City of
Saint Paul and State of Minnesota on the 29th day of March 1996.
FIRST BANK NATIONAL ASSOCIATION
[SEAL]
/s/ Richard Prokosch
-------------------------------
Richard Prokosch
Trust Officer
/s/ Kathe Barrett
________________________
Kathe Barrett
Assistant Secretary
<PAGE>
EXHIBIT 6
CONSENT
In accordance with Section 321(b) of the Trust Indenture Act of 1939, the
undersigned, FIRST BANK NATIONAL ASSOCIATION hereby consents that reports of
examination of the undersigned by Federal, State, Territorial or District
authorities may be furnished by such authorities to the Securities and Exchange
Commission upon its request therefor.
Dated: March 29, 1996
FIRST BANK NATIONAL ASSOCIATION
/s/ Richard Prokosch
______________________________
Richard Prokosch
Trust Officer
