<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 16, 1998
REGISTRATION NO. 333-43979
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
TRUMP ATLANTIC CITY ASSOCIATES
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
NEW JERSEY 7011 22-3213714
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
2500 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
TRUMP ATLANTIC CITY HOLDING, INC.
2500 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 II, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 9999 22-3550202
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
2500 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 II, INC.
2500 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 CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 9999 13-3592880
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
2500 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
TRUMP ATLANTIC CITY CORPORATION
2500 BOARDWALK
ATLANTIC CITY, NEW JERSEY 08401
(609) 441-6060
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
<PAGE>
------------------------------
TRUMP CASINO SERVICES, L.L.C.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
NEW JERSEY 9999 22-3446804
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
2500 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
TRUMP ATLANTIC CITY CORPORATION
2500 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 COMMUNICATIONS, L.L.C.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
NEW JERSEY 9999 22-3526602
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
2500 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
TRUMP ATLANTIC CITY CORPORATION
2500 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 PLAZA ASSOCIATES
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
NEW JERSEY 7011 22-3241643
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
2500 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
TRUMP ATLANTIC CITY CORPORATION
2500 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 TAJ MAHAL ASSOCIATES
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
NEW JERSEY 7011 13-3469507
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
1000 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
TRUMP ATLANTIC CITY CORPORATION
2500 BOARDWALK
ATLANTIC CITY, NEW JERSEY 08401
(609) 441-6060
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
<PAGE>
WITH A COPY TO:
DANIEL D. RUBINO, ESQ.
WILLKIE FARR & GALLAGHER
ONE CITICORP CENTER
153 EAST 53RD STREET
NEW YORK, NEW YORK 10022
(212) 821-8000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED MARCH 16, 1998
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.
<PAGE>
PROSPECTUS
TRUMP ATLANTIC CITY ASSOCIATES
TRUMP ATLANTIC CITY FUNDING II, INC.
OFFER TO EXCHANGE $1,000 IN PRINCIPAL AMOUNT OF 11 1/4% FIRST MORTGAGE NOTES
(TAC II) DUE 2006, SERIES B
FOR EACH $1,000 IN PRINCIPAL AMOUNT OF OUTSTANDING 11 1/4% FIRST MORTGAGE NOTES
(TAC II) DUE 2006, SERIES A
------------------------
Trump Atlantic City Associates, a New Jersey general partnership ("Trump
AC"), Trump Atlantic City Funding II, Inc., a Delaware corporation ("Funding II"
and, collectively with Trump AC, the "Issuers"), and the Guarantors (as defined)
hereby offer to exchange (the "Exchange Offer") up to $75,000,000 in aggregate
principal amount of their 11 1/4% First Mortgage Notes (TAC II) due 2006, Series
B (the "Exchange Notes") for up to $75,000,000 in aggregate principal amount of
their outstanding 11 1/4% First Mortgage Notes (TAC II) due 2006, Series A
issued in reliance upon an exemption from registration under the Securities Act
of 1933, as amended (the "Securities Act") (the "Original Notes" and, together
with the Exchange Notes, the "Notes"). Funding II is a wholly owned subsidiary
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 Trump
Hotels & Casino Resorts, Inc. ("THCR").
The terms of the Exchange Notes will be substantially identical in all
respects (including principal amount, interest rate, maturity and ranking) to
the terms of the Original Notes for which they may be exchanged pursuant to the
Exchange Offer, except that (i) the Exchange Notes will be freely transferable
by holders thereof (except as provided below) and (ii) the Exchange Notes will
be issued without any covenant of the Issuers regarding registration. The
Exchange Notes will be issued under the indenture governing the Original Notes.
The Exchange Notes will be, and the Original Notes are, senior secured
obligations of the Issuers and will be and are fully and unconditionally
guaranteed, jointly and severally, on a senior basis by Trump Plaza Associates
("Plaza Associates"), Trump Taj Mahal Associates ("Taj Associates") and all
other existing and future Subsidiaries (as defined) of Trump AC (collectively,
the "Guarantors" and, together with the Issuers, the "Registrants"), other than
Trump Atlantic City Funding, Inc. ("Trump AC Funding"), which is one of the
issuers of the TAC I Notes (as defined), Funding II, which is one of the
Issuers, and Trump Atlantic City Funding III, Inc. ("Funding III"), which is one
of the issuers of the TAC III Notes (as defined). The Exchange Notes will rank
PARI PASSU with and be substantially similar to the outstanding $1.2 billion of
11 1/4% First Mortgage Notes due 2006 (the "TAC I Notes") of Trump AC and Trump
AC Funding and the $25 million of TAC III Notes of Trump AC and Funding III.
Funding II and Funding III are guarantors of the TAC I Notes.
The Notes will bear interest from and including their respective dates of
issuance. Holders of Notes (each, a "Holder") whose Original Notes are accepted
for exchange will receive accrued interest thereon to, but not including, the
date of issuance of the Exchange Notes, such interest to be payable with the
first interest payment on the Exchange Notes, but will not receive any payment
in respect of interest on the Original Notes accrued after the issuance of the
Exchange Notes. Interest on the Notes will be payable in cash, semi-annually in
arrears on May 1 and November 1 of each year, commencing May 1, 1998. The Notes
will mature on May 1, 2006. The Notes are not redeemable prior to May 1, 2001,
other than pursuant to a Required Regulatory Redemption (as defined).
Thereafter, the Notes may be redeemed at the redemption prices set forth herein,
together with accrued and unpaid interest and Liquidated Damages (as defined),
if any, to the date of redemption. Trump AC's consolidated outstanding
indebtedness for borrowed money at December 31, 1997 is approximately $1.31
billion, consisting of $1.2 billion of TAC I Notes, $75.0 million of Notes,
$25.0 million of TAC III Notes, $3.2 million of other senior indebtedness and
approximately $8.1 million of other indebtedness. Assuming that the Initial
Offering and the Concurrent Initial Offering had been consummated on January 15,
1997, Trump AC's ratio of consolidated earnings to fixed charges on a pro forma
basis would have been insufficient to cover fixed charges by $25.3 million for
the year ended December 31, 1997. As of December 31, 1997, approximately $1.23
billion of outstanding indebtedness ranks senior to or PARI PASSU with the
Notes, consisting of $1.2 billion of TAC I Notes, $25.0 million of TAC III Notes
and $3.2 million of other senior indebtedness. For a complete description of the
terms of the Exchange Notes, including provisions relating to the ability of the
Issuers to create indebtedness that is senior or PARI PASSU to the Exchange
Notes, see "Description of the Notes." There will be no cash proceeds to the
Issuers from the Exchange Offer.
The Issuers' payment obligations under the Notes, and the guarantees thereof
by Plaza Associates and Taj Associates, 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 Notes will be (i)
subordinate to the liens securing approximately $5.0 million of senior
indebtedness and (ii) PARI PASSU with the liens on property of Taj Associates
and Plaza Associates securing the TAC I Notes and the TAC III Notes. The 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).
The Original Notes were originally issued and sold on December 10, 1997 in a
transaction not registered under the Securities Act in reliance upon the
exemption provided in Section 4(2) of the Securities Act and Rule 144A of the
Securities Act (the "Initial Offering"). Accordingly, the Original Notes may not
be reoffered, resold or otherwise pledged, hypothecated or transferred in the
United States unless so registered or unless an applicable exemption from the
registration requirements of the Securities Act is available. Based upon
interpretations by the Staff (the "Staff") of the Securities and Exchange
Commission (the "Commission") issued to third parties, the Issuers believe that
the Exchange Notes issued pursuant to the Exchange Offer in exchange for the
Original Notes may be offered for resale, resold and otherwise transferred by
Holders thereof (other than any Holder which is (i) an "affiliate" of the
Issuers within the meaning of Rule 405 under the Securities Act, (ii) a broker-
dealer who acquired Original Notes directly from the Issuers or (iii) a
broker-dealer who acquired Original Notes as a result of market making or other
trading activities) without compliance with the registration and prospectus
delivery provisions of the Securities Act provided that such Exchange Notes are
acquired in the ordinary course of such Holder's business and such Holders are
not engaged in, and do not intend to engage in, and have no arrangement or
understanding with any person to participate in, a distribution of such Exchange
Notes. Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. The Letter of
Transmittal accompanying this prospectus (the "Letter of Transmittal") states
that by so acknowledging and by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. Broker-dealers who acquired Original Notes as a result of market
making or other trading activities may use this Prospectus, as supplemented or
amended, in connection with resales of the Exchange Notes. The Issuers have
agreed that, for a period not to exceed 180 days after the Exchange Date (as
defined), they will make this Prospectus available to any broker-dealer for use
in connection with any such resale. Any Holder that cannot rely upon such
interpretations must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction.
The Exchange Notes will constitute a new issue of securities with no
established trading market. Any Original Notes not tendered and accepted in the
Exchange Offer will remain outstanding. To the extent that Original Notes are
tendered and accepted in the Exchange Offer, a Holder's ability to sell
untendered, and tendered but unaccepted, Original Notes could be adversely
affected. Following consummation of the Exchange Offer, the Holders of Original
Notes will continue to be subject to the existing restrictions on transfer
thereof and the Issuers will have no further obligation to such Holders to
provide for the registration under the Securities Act of the Original Notes
except under certain limited circumstances. See "Original Notes Registration
Rights." No assurance can be given as to the liquidity of the trading market for
either the Original Notes or the Exchange Notes.
The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Original Notes being tendered for exchange. The Exchange Offer will
expire at 5:00 p.m., New York City time, on , 1998, unless extended (the
"Expiration Date"). The date of acceptance for exchange of the Original Notes
(the "Exchange Date") will be the first business day following the Expiration
Date, upon surrender of the Original Notes. Original Notes tendered pursuant to
the Exchange Offer may be withdrawn at any time prior to the Expiration Date;
otherwise such tenders are irrevocable. The maximum period of time that the
Exchange Offer can remain in effect without incurring Liquidated Damages is 45
days.
Concurrent with the Exchange Offer, Trump AC, Funding III, a wholly owned
subsidiary of Trump AC, and the Guarantors are offering to exchange (the
"Concurrent Exchange Offer") up to $25,000,000 in aggregate principal amount of
their 11 1/4% First Mortgage Notes (TAC III) due 2006, Series B (the "TAC III
Exchange Notes") for up to $25,000,000 in aggregate principal amount of their
outstanding 11 1/4% First Mortgage Notes (TAC III) due 2006, Series A (the "TAC
III Original Notes" and, together with the TAC III Exchange Notes, the "TAC III
Notes") issued in reliance upon an exemption from registration under the
Securities Act. The TAC III Notes will rank PARI PASSU with and be substantially
similar to the Notes, except the ability of holders of the TAC III Notes to
require Trump AC to repurchase the TAC III Notes in the event of an Asset Sale
Offer or a Change of Control Offer (each as defined) will be subject to and
conditioned on (i) the prior rights of holders of TAC I Notes and Notes to
require such repurchase of their securities and (ii) compliance with provisions
in the TAC I Note Indenture (as defined) and the Note Indenture (as defined)
that limit certain restricted payments, including the acquisition of
indebtedness (including the TAC III Notes).
The initial purchaser (the "Initial Purchaser") of the Original Notes is
Donaldson, Lufkin & Jenrette Securities Corporation. An affiliate of the Initial
Purchaser is a secured creditor of Donald J. Trump ("Trump").
----------------------------------
SEE "RISK FACTORS" ON PAGE 17 FOR A DESCRIPTION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PARTICIPANTS IN THE EXCHANGE OFFER.
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.
----------------------------------
The date of this Prospectus is March , 1998
<PAGE>
AVAILABLE INFORMATION
The Issuers and the Guarantors have filed with the Commission a Registration
Statement on Form S-4 (the "Registration Statement," which term shall include
all amendments, exhibits, annexes and schedules thereto) pursuant to the
Securities Act, and the rules and regulations promulgated thereunder, covering
the Exchange Notes being offered hereby. This Prospectus does not contain all
the information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission.
Statements made in this Prospectus as to the contents of any contract, agreement
or other document referred to in the Registration Statement are not necessarily
complete. With respect to each such contract, agreement or other document filed
as an exhibit to the Registration Statement, reference is made to the exhibit
for a more complete description of the matter involved, and each such statement
shall be deemed qualified in its entirety by such reference.
The Issuers are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and, in accordance
therewith, file reports and other information required by the Commission.
Periodic reports and other information filed by the Issuers with the Commission
may be inspected at the public reference facilities maintained by the Commission
at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, or at its regional
offices located at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and Seven World Trade Center, Suite 1300, New York, New
York 10048. The Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding companies that file
electronically with the Commission. The address of such site is
http://www.sec.gov. Copies of such material can also be obtained from Trump AC
upon request. Any such request should be directed to the Secretary of Trump AC
at 2500 Boardwalk, Atlantic City, New Jersey 08301, telephone number (609)
441-6060.
The Issuers' obligation to file periodic reports with the Commission
pursuant to the Exchange Act may be suspended if the Notes are held of record by
fewer than 300 Holders at the beginning of any fiscal year of the Issuers, other
than the fiscal year in which the Registration Statement or any Shelf
Registration Statement (as defined) becomes effective. The Issuers have agreed
that, whether or not it is required to do so by the rules and regulations of the
Commission, for so long as any of the Notes remain outstanding, they will
furnish to the Holders of the Notes and submit to the Commission (unless the
Commission will not accept such materials) (i) all quarterly and annual
financial information that would be required to be contained in filings with the
Commission on Forms 10-Q and 10-K if the Issuers were required to file such
forms, including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and, with respect to the annual information only, a
report thereon by the Issuers' certified independent accountants, and (ii) all
reports that would be required to be filed with the Commission on Form 8-K if
the Issuers' were required to file such reports. In addition, for so long as any
of the Notes remain outstanding, the Issuers have agreed to make available upon
request to any prospective purchaser of, or beneficial owner of Notes in
connection with any offer or sale thereof, the information required by Rule
144A(d)(4) under the Securities Act.
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE EXCHANGE OFFER COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE ISSUERS OR THE GUARANTORS. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE EXCHANGE NOTES IN
ANY JURISDICTION WHERE, 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 IMPLICATIONS THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE ISSUERS SINCE THE DATE HEREOF.
ii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
AVAILABLE INFORMATION.......................... ii
PROSPECTUS SUMMARY............................. 1
RISK FACTORS................................... 17
High Leverage and Fixed Charges.............. 17
Holding Company Structure.................... 17
Risk in Refinancing and Repayment of
Indebtedness; Need for Additional
Financing.................................. 18
Risks Associated with a Change of Control.... 18
Restrictions on Certain Activities........... 18
Risks Associated with Use of Proceeds........ 18
Non-Recourse Nature of the Notes............. 19
Historical Results; Past Net Losses.......... 19
Control and Involvement of Trump............. 19
Competition.................................. 20
Reliance on Key Personnel.................... 23
Strict Regulation by Gaming Authorities...... 23
Taxes and Fees............................... 23
Limitations on License of the Trump Name..... 23
Seasonal Nature of Revenues and Cash Flow.... 24
Waiver of Defaults........................... 24
Risks Related to Creditworthiness of
Patrons.................................... 25
Failure to File Currency Transaction
Reports.................................... 25
Fraudulent Transfer Considerations........... 25
Forward-Looking Statements................... 26
Lack of Public Market for the Exchange
Notes...................................... 26
Consequences of Failure to Exchange.......... 27
USE OF PROCEEDS................................ 28
THE EXCHANGE OFFER............................. 29
Purpose of the Exchange Offer................ 29
Terms of the Exchange........................ 29
Expiration Date; Extensions; Termination;
Amendments................................. 30
How to Tender................................ 31
Terms and Conditions of the Letter of
Transmittal................................ 32
Withdrawal Rights............................ 33
Acceptance of Original Notes for Exchange;
Delivery of Exchange Notes................. 33
Conditions to the Exchange Offer............. 34
Exchange Agent............................... 34
Solicitation of Tenders; Expenses............ 34
Appraisal Rights............................. 35
Federal Income Tax Consequences.............. 35
Other........................................ 35
CAPITALIZATION................................. 36
CONSOLIDATED SELECTED FINANCIAL DATA........... 37
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS................................... 41
Results of Operations for the Years Ended
December 31, 1997 and 1996................. 41
Results of Operations for the Years Ended
December 31, 1996 and 1995................. 42
<CAPTION>
PAGE
-----
<S> <C>
Liquidity and Capital Resources.............. 44
Seasonality.................................. 45
Inflation.................................... 45
Quantitative and Qualitative Disclosures
about Market Risk..........................
BUSINESS....................................... 46
Trump Plaza.................................. 46
The Taj Mahal................................ 51
TCS.......................................... 55
Trademark/Licensing.......................... 55
Certain Indebtedness......................... 56
Atlantic City Market......................... 56
Competition.................................. 58
Gaming and Other Laws and Regulations........ 60
Properties................................... 67
Legal Proceedings............................ 71
MANAGEMENT..................................... 74
Directors and Executive Officers of Issuers,
Plaza Associates and Taj Associates........ 74
Executive Compensation....................... 78
Employment Agreements........................ 80
Compensation of Directors.................... 83
Compensation Committee Interlocks and Insider
Participation.............................. 83
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS................................. 86
STOCK OWNERSHIP................................ 87
DESCRIPTION OF OTHER INDEBTEDNESS.............. 87
DESCRIPTION OF THE NOTES....................... 88
General...................................... 88
Security for the Notes....................... 88
Note Guarantees.............................. 90
Certain Bankruptcy Limitations............... 90
Optional Redemption.......................... 91
Certain Covenants............................ 92
Reports...................................... 101
Events of Defaults and Remedies.............. 102
Legal Defeasance and Covenant Defeasance..... 103
Amendments and Supplements................... 104
Gaming Laws.................................. 105
Trustee...................................... 105
No Personal Liability of Partners,
Stockholders, Officers, Directors;
Non-recourse............................... 105
The Mortgage................................. 105
Certain Definitions.......................... 106
Book-entry; Delivery; Form and Transfer...... 119
ORIGINAL NOTES REGISTRATION RIGHTS............. 122
UNITED STATES FEDERAL INCOME TAX
CONSIDERATIONS............................... 124
United States Holders........................ 124
Non-United States Holders.................... 125
PLAN OF DISTRIBUTION........................... 127
LEGAL MATTERS.................................. 128
EXPERTS........................................ 128
INDEX TO FINANCIAL STATEMENTS.................. F-1
</TABLE>
iii
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS APPEARING ELSEWHERE OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. UNLESS THE CONTEXT OTHERWISE REQUIRES, THE TERM
"ISSUERS" AS USED IN THIS PROSPECTUS INCLUDES TRUMP AC AND FUNDING II. 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. SEE "RISK FACTORS--
FORWARD-LOOKING STATEMENTS."
TRUMP ATLANTIC CITY ASSOCIATES
Trump AC owns and operates two "Four Star" Atlantic City casino hotels
located on The Boardwalk in Atlantic City (the "Atlantic City Properties"): the
Trump Taj Mahal Casino Resort (the "Taj Mahal") and Trump Plaza Hotel and Casino
("Trump Plaza"), which also includes Trump World's Fair. Through its ownership
of two successful land-based casino hotels, Trump AC has a leading presence in
the Atlantic City market, which, in terms of gaming revenues, demonstrated a
growth rate of approximately 2.4% for the year ended December 31, 1997 versus
December 31, 1996. Trump AC has approximately one-quarter of Atlantic City's
casino square footage, slot machines, table games and hotel room inventory. In
addition, management believes the combination of the Taj Mahal with Trump Plaza
provides operational efficiencies and economies of scale from the expertise and
experience of management at the two operating entities. In May 1996, Trump AC
completed an expansion program at Trump Plaza (the "Trump Plaza Expansion"),
which included increasing Trump Plaza's frontage on The Boardwalk, opening a new
casino and restaurant and an additional 349 rooms, constructing a new
entranceway for easier access by car and renovating and integrating Trump
World's Fair into Trump Plaza. In July 1997, Trump AC completed an expansion
program at the Taj Mahal (the "Taj Mahal Expansion"), which included
construction of a new bus terminal, expansion of parking facilities and
expansion of casino floor space.
Management believes that Trump AC benefits from the following factors:
- LEADING ATLANTIC CITY FACILITIES. Trump AC owns and operates two of the
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 growth in the Atlantic
City gaming market. Management believes that its leading size and market
share in Atlantic City provides 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 completed the Trump Plaza
Expansion in May 1996 and the Taj Mahal Expansion in July 1997, which
expansion increased gaming space and hotel room capacity at the Atlantic
City Properties, allowing Trump AC to meet existing room demand and
positioning Trump AC to benefit from current and proposed infrastructure
improvements in Atlantic City.
- 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.
<PAGE>
The following table profiles Trump AC's current casino and hotel capacity at
the Atlantic City Properties:
<TABLE>
<CAPTION>
TRUMP
PLAZA TRUMP
MAIN TRUMP WORLD'S
FACILITY PLAZA EAST FAIR TAJ MAHAL TOTAL
--------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Gaming square footage...................................... 74,226 14,886 49,193 147,720 286,025
Slot machines.............................................. 2,201 371 1,518 4,136 8,226
Table games................................................ 101 0 16 218 335
Hotel rooms................................................ 555 349 500 1,250 2,654
</TABLE>
Management announced in the third quarter of 1997 that it is exploring
transactions involving Trump Plaza, including the possible sale of the property
or another form of business combination or strategic alliance.
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.
Management believes that as a result of the Trump Plaza Expansion and Trump
Plaza's strategic location, Trump Plaza is one of the premier host properties in
Atlantic City. The Trump Plaza Expansion was completed in May 1996 and increased
Trump Plaza's prime central frontage on The Boardwalk to nearly a quarter of a
mile. Management believes that the construction of the new convention center and
the tourist corridor linking the new convention center with The Boardwalk
enhances the desirability of Atlantic City generally and, as a result of Trump
Plaza's central location, benefits Trump Plaza in particular. In addition,
management has taken advantage of recent gaming regulatory changes that 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.
As part of the Trump Plaza Expansion, Trump Plaza opened the Ocean View
Casino and Bar and a total of 349 rooms, including nine super suites, located in
a hotel tower adjacent to and east of Trump Plaza's main tower ("Trump Plaza
East"), which is fully integrated into Trump Plaza. Trump Plaza East has
approximately 15,000 square feet of casino space. Trump Plaza also completed
construction of a new entranceway to Trump Plaza to provide easier access by car
to Trump Plaza.
In May 1996, Trump AC completed the renovations and integration of Trump
World's Fair, located on The Boardwalk adjacent to the original Atlantic City
Convention Center, into Trump Plaza. Trump World's Fair contains 49,193 square
feet of casino floor space, approximately 16,000 square feet of which is
directly accessible from The Boardwalk, and 500 hotel rooms, connected to Trump
Plaza's main tower by an enclosed walkway overlooking The Boardwalk.
Management believes the increased hotel capacity as a result of the Trump
Plaza Expansion enables Trump Plaza better to meet demand and accommodate its
casino guests, as well as to host additional and larger conventions and
corporate meetings.
Trump Plaza's management team has launched a variety of initiatives designed
to increase the level of casino gaming activity generally at Trump Plaza and to
attract casino patrons who tend to wager more frequently 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,
2
<PAGE>
the introduction of new slot machines and table games and the addition of bill
acceptors on slot machines. Trump World's Fair is seeking to attract the "middle
market" segment (primarily bus customers and Boardwalk pedestrian traffic) by
offering high value food and entertainment attractions.
THE TAJ MAHAL. The Taj Mahal ranked first among all Atlantic City casinos
in terms of total gaming revenues for the year ended December 31, 1997. 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 growth of the Atlantic City market.
In recent years, Taj Associates, the owner and operator of the Taj Mahal,
has completed construction of the Taj Entertainment Complex (as defined),
reconfigured and expanded the casino floor to provide race simulcasting, poker
wagering and keno, opened an Asian themed table game area, opened the Bengal
Club for mid-level slot players 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 customers' overall gaming experience. Taj
Associates continually monitors operations to adapt to and anticipate industry
trends. From 1994 to mid-1997, the Taj Mahal refurbished substantially all of
its hotel guest rooms and corridors and replaced all of its existing slot
machines with new, more efficient machines with bill acceptors. Moreover, to
further attract high-end players, the Taj Mahal opened the Dragon Room, an Asian
themed table gaming area with 16 table games, and the Sultan's Palace, a
separate 5,900 square-foot high-end slot lounge and private club.
The Taj Mahal Expansion consisted of the construction of a new 14-bay bus
terminal, which was completed in December 1996, a 2,400 space expansion of the
existing self parking facilities, which was completed in May 1997, and an
approximately 7,000 square foot casino expansion with approximately 260 slot
machines with frontage on The Boardwalk, which was completed in July 1997. In
addition, to increase entertainment opportunities for customers, the Hard Rock
Cafe opened in November 1996, the All Star Cafe opened in March 1997 and the
Stage Deli of New York opened in October 1997. A Warner Brothers Studio Store
opened at the Taj Mahal in May 1997.
ATLANTIC CITY MARKET
The Atlantic City 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 $3.91 billion in gaming revenues
in 1997, an approximately 2.1% increase over 1996 gaming revenues of
approximately $3.83 billion. From 1992 to 1997, total gaming revenues in
Atlantic City have increased approximately 21.4%, while the number of hotel
rooms increased by 25.5% during that period. Although total visitor volume to
Atlantic City remained relatively constant in 1997, the volume of bus customers
dropped to 9.4 million in 1997, continuing a decline from 11.7 million in 1991.
The volume of customers traveling by other means to Atlantic City has grown from
20.4 million in 1992 to 34.3 million in 1997.
The approximately $3.91 billion of gaming revenues produced by the 12
Atlantic City casino hotels in 1997 exceeded the approximately $3.77 billion of
gaming revenues produced by all casinos 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 casinos.
Due principally to an improved regulatory environment, the general
improvement of economic conditions in 1995, 1996 and 1997 and existing high
occupancy rates, significant investment in the Atlantic City market has been
initiated, occurring and/or announced. For example, Trump Plaza is located at
the end of the $88 million "Grand Boulevard" corridor, featuring redesigned
roadways, improved lighting, complete landscaping, a cascading waterfall and a
60 foot lighthouse tower with evening laser shows. In addition, The New Jersey
Sports and Exposition Authority ("NJSEA") has overseen the development of the
new Atlantic City Convention Center, which opened in May 1997 and is the largest
exhibition space
3
<PAGE>
between New York City and Washington, D.C. The new Atlantic City Convention
Center is located at the base of the Atlantic City Expressway. Trump Plaza has a
prime location adjacent to the existing Atlantic City Convention Center, which
is scheduled to undergo a $50 million renovation, and near the new Atlantic City
Convention Center, which holds 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. Additionally, the State of New Jersey has
commenced a long-term capital plan to upgrade and expand the Atlantic City
International Airport. To date, approximately $18 million has been spent on
renovation of the airport terminal and upgrades of the airport's access roads
and parking facilities. 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.
THCR'S CORPORATE STRUCTURE
The general partners of Trump AC are THCR Holdings, a Delaware limited
partnership, and Trump Atlantic City Holding, Inc. ("Trump AC Holding"), a
Delaware corporation wholly owned by THCR Holdings. THCR Holdings is a Delaware
limited partnership which is owned approximately 61.8% by THCR as both a general
and limited partner, and approximately 38.2% by Donald J. Trump ("Trump"). THCR
Holdings' wholly owned subsidiaries include the following:
- Trump AC and its subsidiaries, Plaza Associates and Taj Associates. Plaza
Associates owns and operates Trump Plaza, which also includes Trump
World's Fair, located in Atlantic City, New Jersey. Taj Associates owns
and operates the Taj Mahal, located in Atlantic City, New Jersey.
- Trump Indiana, Inc. ("Trump Indiana"). Trump Indiana, which commenced
operations in June 1996, owns and operates a riverboat gaming facility at
Buffington Harbor, on Lake Michigan, Indiana.
- Trump's Castle Associates, L.P. ("Castle Associates"). Castle Associates
owns and operates Trump Marina Hotel Casino ("Trump Marina"), located in
Atlantic City, New Jersey.
- Trump Casino Services, L.L.C. ("TCS"). TCS, through a services agreement,
provides to each of Plaza Associates, Taj Associates and Castle Associates
certain central management, financial and other functions and services
necessary and incidental to the respective operation of each of their
casino hotels.
Management announced in the first quarter of 1998 that it had retained
Donaldson, Lufkin & Jenrette, Inc. and Bear Stearns & Co. to explore
transactions involving THCR, including the possible sale of all or a portion of
the company.
4
<PAGE>
ORGANIZATIONAL STRUCTURE
[Chart depicting organizational structure of THCR]
5
<PAGE>
THE EXCHANGE OFFER
<TABLE>
<S> <C>
THE EXCHANGE OFFER.............. The Issuers are offering to exchange up to $75,000,000
aggregate principal amount of 11 1/4% First Mortgage Notes
(TAC II) due 2006, Series B for up to $75,000,000
aggregate principal amount of its outstanding 11 1/4%
First Mortgage Notes (TAC II) due 2006, Series A issued in
reliance upon an exemption from registration under the
Securities Act. The terms of the Exchange Notes will be
substantially identical in all respects (including
principal amount, interest rate, maturity and ranking) to
the terms of the Original Notes for which they may be
exchanged pursuant to the Exchange Offer, except that (i)
the Exchange Notes will be freely transferable by Holders
thereof except as provided herein (see "The Exchange
Offer--Terms of the Exchange" and "The Exchange
Offer--Terms and Conditions of the Letter of Transmittal")
and (ii) the Exchange Notes will be issued without any
covenant regarding registration under the Securities Act.
Exchange Notes issued pursuant to the Exchange Offer in
exchange for the Original Notes may be offered for resale,
resold and otherwise transferred by Holders thereof (other
than any Holder which is (i) an "affiliate" of the Issuers
within the meaning of Rule 405 under the Securities Act,
(ii) a broker-dealer who acquired Original Notes directly
from the Issuer or (iii) broker-dealers who acquired
Original Notes as a result of market making or other
trading activities) without compliance with the
registration and prospectus delivery provisions of the
Securities Act provided that such Exchange Notes are
acquired in the ordinary course of such Holders' business
and such Holders are not engaged in, and do not intend to
engage in, and have no arrangement or understanding with
any person to participate in, a distribution of such
Exchange Notes.
CONCURRENT EXCHANGE OFFER....... Concurrent with the Exchange Offer, Trump AC and Funding
III are offering to exchange up to $25,000,000 in
aggregate principal amount of their TAC III Exchange Notes
for up to $25,000,000 in aggregate principal amount of
their outstanding TAC III Original Notes issued in
reliance upon an exemption from registration under the
Securities Act. The TAC III Notes will rank PARI PASSU
with and be substantially similar to the Notes, except the
ability of holders of the TAC III Notes to require Trump
AC to repurchase the TAC III Notes in the event of an
Asset Sale Offer or a Change of Control Offer will be
subject to and conditioned on (i) the prior rights of
holders of TAC I Notes and Notes to require such
repurchase of their securities and (ii) compliance with
provisions in the TAC I Note Indenture and the Note
Indenture that limit certain restricted payments,
including the acquisition of indebtedness (including the
TAC III Notes).
MINIMUM CONDITION............... The Exchange Offer is not conditioned upon any minimum
aggregate principal amount of Original Notes being
tendered for exchange.
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
EXPIRATION DATE................. The Exchange Offer will expire at 5:00 p.m., New York City
time, on , 1998 unless extended.
EXCHANGE DATE................... The first date of acceptance for exchange of the Original
Notes will be the first business day following the
Expiration Date.
CONDITIONS TO THE EXCHANGE The obligation of the Issuers to consummate the Exchange
OFFER......................... Offer is subject to certain conditions. See "The Exchange
Offer-- Conditions to the Exchange Offer." The Issuers
reserve the right to terminate or amend the Exchange Offer
at any time prior to the Expiration Date upon the
occurrence of any such condition.
WITHDRAWAL RIGHTS............... Tenders may be withdrawn at any time prior to the
Expiration Date. Any Original Notes not accepted for any
reason will be returned without expense to the tendering
Holders thereof as promptly as practicable after the
expiration or termination of the Exchange Offer.
PROCEDURES FOR TENDERING See "The Exchange Offer -- How to Tender."
ORIGINAL NOTES................
FEDERAL INCOME TAX The exchange of Original Notes for Exchange Notes by
CONSEQUENCES.................. Holders will not be a taxable exchange for federal income
tax purposes, and Holders should not recognize any taxable
gain or loss or any interest income as a result of such
exchange.
EFFECT ON HOLDERS OF ORIGINAL As a result of the making of this Exchange Offer, and upon
NOTES......................... acceptance for exchange of all validly tendered Original
Notes pursuant to the terms of this Exchange Offer, the
Issuers will have fulfilled a covenant contained in the
terms of the Original Notes and the Registration Rights
Agreement (the "Registration Rights Agreement") dated as
of December 10, 1997 between the Issuers, the Guarantors
and the Initial Purchaser, and, accordingly, the Holders
of the Original Notes will have no further registration or
other rights under the Registration Rights Agreement,
except under certain limited circumstances. See "Original
Notes Registration Rights." Holders of the Original Notes
who do not tender their Original Notes in the Exchange
Offer will continue to hold such Original Notes and will
be entitled to all the rights and limitations applicable
thereto under the Note Indenture, dated as of December 10,
1997, among the Issuers, the Guarantors and U.S. Bank
National Association, formerly known as First Bank
National Association, as Trustee (the "Trustee"), relating
to the Original Notes and the Exchange Notes (the "Note
Indenture"). All untendered, and tendered but unaccepted,
Original Notes will continue to be subject to the
restrictions on transfer provided for in the Original
Notes and the Note Indenture. To the extent that Original
Notes are tendered and accepted in the Exchange Offer, the
trading market, if any, for the Original Notes could be
adversely affected. See "Risk Factors--Consequences of
Failure to Exchange."
</TABLE>
7
<PAGE>
TERMS OF THE NOTES
The Exchange Offer applies to $75,000,000 aggregate principal amount of the
Original Notes. The form and terms of the Exchange Notes are the same as the
form and terms of the Original Notes for which they may be exchanged except that
the Exchange Notes have been registered under the Securities Act and, therefore,
will not bear legends restricting the transfer thereof. The Exchange Notes will
evidence the same debt as the Original Notes and will be entitled to the
benefits of the Note Indenture. See "Description of the Notes."
<TABLE>
<S> <C>
ISSUERS................................ Trump AC and Funding II as joint and several obligors.
NOTES OFFERED.......................... $75,000,000 aggregate principal amount of 11 1/4% First Mortgage Notes
(TAC II) due 2006, Series B.
MATURITY DATE.......................... May 1, 2006.
INTEREST............................... 11 1/4% 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................. May 1 and November 1, commencing May 1, 1998.
GUARANTORS............................. The Notes are fully and unconditionally guaranteed on a joint and
several, senior basis by Plaza Associates, Taj Associates, TCS, Trump
Atlantic City Corporation ("TACC"), Trump Communications L.L.C. ("Trump
Communications") and each future majority owned or controlled subsidiary
of Trump AC. The only Subsidiaries that are not Guarantors are Trump AC
Funding (which is one of the issuers of the TAC I Notes), Funding II
(which is one of the Issuers) and Funding III (which is one of the
issuers of the TAC III Notes). Funding II and Funding III are guarantors
of the TAC I Notes.
OPTIONAL REDEMPTION.................... The Notes are redeemable in cash at the option of the Issuers, in whole
or in part, at any time on or after May 1, 2001 at the redemption prices
set forth herein, together with accrued and unpaid interest and
Liquidated Damages, if any, through the redemption date. In addition,
the 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 Notes--Certain Covenants--Repurchase of Notes at the Option of
the Holder Upon a Change in Control"), each Holder of Notes may require
Trump AC to repurchase such Holder's Notes at 101% of the principal
amount thereof, together with accrued and unpaid interest and Liquidated
Damages, if any, to the date of repurchase. The TAC I Note Indenture,
the TAC III Note Indenture (subject to certain conditions) and the
indenture governing the Senior Notes (as defined) contain comparable
provisions. There can be no assurance that funds necessary to effect
such a purchase would be available if such an event were to occur.
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
SECURITY............................... The Notes are secured, on a PARI PASSU basis with the TAC I Notes and
the TAC III Notes, by one or more mortgages (the "Mortgage")
representing a first lien and security interest (subject to the liens
securing approximately $5.0 million of senior indebtedness) on
substantially all of the assets comprising Trump Plaza and the Taj
Mahal. The security interest held by a collateral agent on behalf of the
Trustee and the trustees under the TAC I Note Indenture and the
indenture governing the TAC III Notes (the "TAC III Note Indenture")
also includes assignments of leases and rents and operating assets and
encumbers furniture, fixtures, machinery and equipment. THCR Holdings'
direct and indirect equity interests in Trump AC and its subsidiaries,
including Plaza Associates and Taj Associates, are pledged exclusively
for the benefit of the holders of the 15 1/2% Senior Secured Notes due
2005 (the "Senior Notes") issued by THCR Holdings and its subsidiary,
Trump Hotels & Casino Resorts Funding, Inc. ("THCR Funding"). As of
December 31, 1997, approximately $1.23 billion of outstanding
indebtedness ranks senior to or PARI PASSU with the Notes, consisting of
$1.2 billion of TAC I Notes, $25.0 million of TAC III Notes and $5.0
million of other senior indebtedness.
NON-RECOURSE........................... No direct or indirect stockholder, partner, employee, officer or
director, as such, past, present or future, of either 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
Note Indenture, the 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 Note Indenture contains certain covenants which, among other things,
- 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 Note Indenture, subject to
certain exceptions;
- limit the making of certain dividends, distributions and other
restricted payments by Trump AC and its Subsidiaries;
- limit the lines of business in which Trump AC and its Subsidiaries may
engage to those relating to the casino hotel business in Atlantic
City;
- limit the existence of certain liens on assets of Trump AC and its
Subsidiaries;
- restrict the use of proceeds from certain asset sales by Trump AC and
its Subsidiaries;
- limit transactions by Trump AC and its Subsidiaries with affiliates of
Trump AC (other than wholly owned Subsidiaries);
- restrict Trump AC and its Subsidiaries from engaging in certain
leasing activities;
- limit the Issuers' ability to merge, sell or consolidate;
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
- limit the obligations of Funding II to those incident to its
obligations under the Note Indenture and to its guarantee of the TAC I
Notes;
- limit Trump AC and its Subsidiaries from paying any amounts pursuant
to management, services or similar agreements with Trump;
- require the maintenance of insurance; and
- 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 include (i) default in payment of interest (or
Liquidated Damages, if any) 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 specific covenants,
including those relating to merger, consolidation or sale of assets,
failure to make or consummate a Change of Control Offer or an Asset Sale
Offer as required; (iv) default in the performance or breach of certain
other covenants of the Issuers (other than those specifically covered
elsewhere in the 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, 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 Note Indenture or
the 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. An Event
of Default under the Note Indenture could permit acceleration of the
Notes, the TAC I Notes and the TAC III 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."
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
MODIFICATION OF INDENTURE.............. Amendments to the Note Indenture are permitted with the consent of the
holders of not less than a majority of the principal amount of the
outstanding Notes; PROVIDED, HOWEVER,that the consent of all Holders is
required to release any of the collateral from the Liens (as defined in
the Note Indenture) 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 Note or that would reduce the percentage in principal
amount of outstanding 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 are
required to approve any change in the obligations of the Issuers to make
an offer to repurchase Holders' 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.
TAC I NOTE INDENTURE PROVISIONS........ The Original Notes were issued pursuant to Section 5.11(c) of the
indenture governing the TAC I Notes (the "TAC I Note Indenture"), which
permits Trump AC to incur up to $75.0 million of additional indebtedness
for further acquisitions, renovations and improvements with respect to
Trump Plaza and the Taj Mahal; PROVIDED, HOWEVER, that no Indebtedness
is permitted to be incurred pursuant to Section 5.11(c) of the TAC I
Note Indenture which in an aggregate principal amount exceeds 75% of the
cost of such acquisitions, renovations or improvements being financed,
and PROVIDED FURTHER that the Average Life (as defined) to Stated
Maturity (as defined) of any such Indebtedness must equal or exceed the
remaining Average Life to Stated Maturity of the TAC I Notes and the
Stated Maturity of the final scheduled principal payment of such
Indebtedness must be on or later than the Stated Maturity of the final
scheduled principal payment of the TAC I Notes. The TAC III Original
Notes were issued pursuant to Section 5.11(e) of the TAC I Note
Indenture, which permits Trump AC to incur up to $25.0 million of
additional indebtedness for working capital and other general corporate
purposes. Pursuant to Section 5.14 of the TAC I Note Indenture, which
permits Trump AC to incur Permitted Liens (as defined), the Original
Notes are, and the Exchange Notes will be, secured by the assets of
Trump AC, Plaza Associates and Taj Associates on an equal and ratable
basis with the TAC I Notes and the TAC III Notes.
</TABLE>
For additional information regarding the Notes, see "Description of the
Notes."
ORIGINAL NOTES REGISTRATION RIGHTS
Pursuant to the Registration Rights Agreement, the Issuers agreed (i) to
file a Registration Statement on or prior to 45 days after the issuance date of
the Original Notes (the "Issuance Date") with respect to the Exchange Offer,
(ii) to use their best efforts to cause such Registration Statement to be
declared effective under the Securities Act within 150 days after the Issuance
Date and (iii) upon the Registration Statement being declared effective, to
offer the Exchange Notes in exchange for surrender of the Original Notes. In
certain circumstances, the Issuers will be required to provide a shelf
registration statement (the "Shelf Registration Statement") to cover resales of
the Original Notes by the Holders thereof. If the Issuers do not comply with
their obligations under the Registration Rights Agreement, they will be required
to pay Liquidated
11
<PAGE>
Damages to Holders of the Original Notes under certain circumstances. See
"Original Notes Registration Rights."
USE OF PROCEEDS
There will be no proceeds to Trump AC from the exchange pursuant to the
Exchange Offer. The net proceeds to Trump AC from the Initial Offering were
approximately $69.1 million, after deducting discounts and commissions and
expenses of the Initial Offering. The net proceeds of the Initial Offering will
be used for further renovations, improvements and acquisitions in Atlantic City
with respect to Trump Plaza and the Taj Mahal in accordance with the Note
Indenture. The use of the net proceeds may include the development of the Steel
Pier (as defined), located across The Boardwalk from the Taj Mahal, or other
improvements at Trump Plaza or the Taj Mahal, although no specific plans have
been established. The net proceeds to Trump AC from the offering of the TAC III
Original Notes (the "Concurrent Initial Offering") were approximately $22.4
million, after deducting discounts and commissions and expenses of the
Concurrent Initial Offering. The net proceeds of the Concurrent Initial Offering
are being used for working capital and other general corporate purposes at Trump
AC and its Subsidiaries in accordance with the TAC III Note Indenture.
RISK FACTORS
See "Risk Factors" for a description of certain factors that should be
considered by participants in the Exchange Offer.
12
<PAGE>
SUMMARY FINANCIAL INFORMATION
SUMMARY FINANCIAL INFORMATION OF PLAZA ASSOCIATES
The following table sets forth (a) certain historical consolidated financial
information of Plaza Associates for each of the five years ended December 31,
1993 through 1997. All financial information should be read in connection with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated and condensed financial statements and the
related notes thereto all of which are included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
HISTORICAL
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------
<CAPTION>
1993 1994 1995 1996 1997
------------ ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues......................... $ 300,491 $ 295,063 $ 327,178 $ 409,030 $ 414,330
Depreciation and amortization........ 17,554 15,653 16,213 23,019 24,391
Income from operations............... 49,640 43,415 59,787 46,356 43,964
Interest expense, net................ 39,889 48,219 43,261 46,321 48,028
Extraordinary gain (loss) (a)........ 4,120 -- (9,250) (59,132) --
Net income (loss) (b)................ 9,338 (8,870) 1,533 (54,903) (4,064)
OTHER DATA:
EBITDA (c)........................... $ 68,241 $ 60,524 $ 75,319 $ 70,244 $ 70,004
Cash flows from:
Operating activities............... 21,820 19,950 30,747 40,819 22,731
Investing activities............... (12,679) (21,691) (112,934) (77,565) (17,074)
Financing activities............... (13,550) (1,508) 86,980 47,468 (5,758)
Capital expenditures (d)............. 10,052 20,489 109,756 73,573 14,845
BALANCE SHEET DATA (AT END OF PERIODS):
Total assets......................... $ 374,498 $ 375,643 $ 480,024 $ 598,117 $ 595,395
Total long-term debt, net of current
maturities......................... 395,948 403,214 332,721 406,522 403,595
Total capital (deficit).............. (54,710) (63,580) 110,812 138,222 144,303
OPERATING DATA (AT END OF PERIOD): (E)
Casino square footage (f)............ 60,000 73,000 73,604 139,474 138,305
Number of hotel rooms................ 557 555 732 1,404 1,404
Hotel occupancy rate................. 87.6% 88.6% 89.7% 89.7% 87.4%
TABLE GAMES:
Total Atlantic City table drop (g)... $ 6,835,572 $ 6,832,517 $ 7,110,612 $ 7,415,721 $ 7,640,972
Atlantic City table drop growth...... (3.1)% 0.0% 4.1% 4.3% 3.0%
Trump Plaza table drop (g)........... $ 626,621 $ 599,881 $ 626,832 $ 686,908 $ 654,399
Trump Plaza table games market share
(h)................................ 9.2% 8.8% 8.8% 9.3% 8.6%
Trump Plaza table games fair share
(i)................................ 7.8% 8.0% 8.6% 10.6% 9.4%
Trump Plaza table games efficiency
(j)................................ 118.0% 110.6% 102.5% 87.2% 91.1%
Trump Plaza table units.............. 87 89 97 127 117
Trump Plaza table revenue............ $ 93,392 $ 92,770 $ 96,518 $ 104,025 $ 96,687
Trump Plaza table revenue per unit
per day (actual dollars)........... $ 2,940 $ 2,855 $ 2,726 $ 2,244 $ 2,258
SLOTS:
Total Atlantic City slot revenue..... $ 2,214,638 $ 2,297,280 $ 2,572,719 $ 2,626,021 $ 2,720,146
Atlantic City slot revenue growth.... 4.8% 3.7% 12.0% 2.1% 3.6%
Trump Plaza slot revenue (k)......... $ 173,215 $ 170,316 $ 204,230 $ 269,276 $ 280,950
Trump Plaza slot market share (h).... 7.8% 7.4% 7.9% 10.3% 10.3%
Trump Plaza slot fair share (i)...... 7.6% 8.0% 8.2% 11.5% 12.1%
Trump Plaza slot efficiency (j)...... 103.1% 92.5% 96.7% 89.0% 85.5%
Trump Plaza slot units............... 1,812 2,076 2,339 3,629 4,083
Trump Plaza slot revenue per unit per
day (actual dollars) (k)........... $ 262 $ 225 $ 239 $ 203 $ 189
</TABLE>
- ------------------------
(a) 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 $4.1
million has been reported as an extraordinary gain for the year ended
December 31, 1993. The extraordinary loss of $9.3 million for the year ended
December 31, 1995 relates to the redemption of the 12 1/2% Pay-in-Kind Notes
due 2003 of Trump AC (the "Plaza PIK Notes") and related warrants to acquire
Plaza PIK Notes (the "Plaza PIK Note Warrants") and the write off of related
unamortized deferred financing costs. The extraordinary loss for the year
ended December 31, 1996 of $59.1 million relates to the redemption of $330
million aggregate principal amount of 10- 7/8 Mortgage Notes due 2001 (the
"Plaza Notes") and the Plaza PIK Note Warrants and the write-off of
unamortized deferred financing costs.
13
<PAGE>
(b) Net income (loss) for the years ended December 31, 1993, 1994, 1995 and 1996
includes $3.9, $4.9, $3.7 million and $0.3 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, non-operating income, and the noncash write-down
of the New Jersey Reinvestment Development Authority ("CRDA") investments.
EBITDA includes preopening costs of $4.1 million in 1996. As adjusted for
this item, EBITDA in 1996 would have been $74.4 million. 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 Plaza'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 one measure of Trump Plaza's historical
ability to service its debt; however, investors should note that funds
depicted by EBITDA are not available for management's discretionary use.
(d) Capital expenditures attributable to Trump Plaza East were approximately
$2.8 million, $8.7 million, $24.9 million and $8.8 million for the years
ended December 31, 1993, 1994, 1995 and 1996, respectively. Capital
expenditures for the renovation of Trump World's Fair were $73.7 million and
$56.6 million for the years ended December 31, 1995 and 1996, respectively.
(e) 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.
(f) The expansion of 13,000 square feet was commenced in April 1994 and
completed at the end of that year.
(g) Table drop represents the total dollar value of chips purchased for table
games for the period indicated.
(h) 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.
(i) 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.
(j) Efficiency is the ratio of Trump Plaza's market share to its fair share.
(k) Slot revenue is shown on the cash basis and excludes amounts reserved for
progressive jackpot accruals.
14
<PAGE>
SUMMARY FINANCIAL INFORMATION OF TAJ ASSOCIATES
The following table sets forth historical consolidated financial information
of Taj Associates for each of the years ended December 31, 1993 through 1995 and
for the period from January 1, 1996 through April 17, 1996 (the date of
acquisition) and for the period from April 17, 1996 through December 31, 1996
and for the year ended December 31, 1997. The results set forth for the interim
period are not necessarily indicative of the results for the full year. All
financial information should be read in connection with "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and the
consolidated and condensed financial statements and the related notes thereto
all of which are included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
HISTORICAL
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
<CAPTION>
FOR THE FOR THE
PERIOD FROM PERIOD FROM
JANUARY 1, APRIL 17,
1996 1996 FOR THE
YEARS ENDED DECEMBER 31, THROUGH THROUGH YEAR ENDED
------------------------------- APRIL 17, DECEMBER 31, DECEMBER 31,
1993 1994 1995 1996 1996 1997
--------- --------- --------- ------------- ------------ ------------
(DOLLARS IN THOUSANDS) (PREDECESSOR) (SUCCESSOR)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues..................... $ 498,911 $ 517,182 $ 553,748 $ 145,966 $ 420,450 $ 567,936
Depreciation and amortization.... 36,858 39,750 43,387 13,647 37,820 41,445
Income from operations........... 84,458 76,634 89,890 4,902 62,253 83,404
Interest expense, net............ (106,997) (113,292) (116,513) (35,499) (66,666) (93,579)
Extraordinary loss............... -- -- -- (116,375) -- --
Net income (loss)................ (22,539) (36,658) (26,623) (146,972) 5,587 (10,175)
OTHER DATA:
EBITDA (b)....................... $ 124,080 $ 119,936 $ 136,463 $ 19,351 $ 102,521 $ 127,015
Cash flows from:
Operating activities........... 48,634 33,422 62,899 14,473 (1,422) 43,426
Investing activities........... (22,160) (27,231) (32,571) (8,247) (32,395) (47,266)
Financing activities........... (2,492) (3,039) (2,583) (7,252) (16,655) (2,144)
Capital expenditures (c)......... 16,752 23,030 26,498 5,277 29,079 40,772
BALANCE SHEET DATA (AT END OF
PERIOD):
Total assets..................... $ 811,508 $ 807,612 $ 821,793 $ 825,561 $1,051,136 $1,051,169
Total long-term debt, net of
current maturities (d)......... 625,765 656,701 694,192 817,508 801,273 800,759
Total capital (deficit).......... 106,641 67,812 39,635 (108,574) 192,829 182,654
OPERATING DATA (AT END OF PERIOD):
(E)
Casino square footage (f)........ 130,110 132,317 132,856 139,101 147,720
Number of hotel rooms............ 1,250 1,250 1,250 1,250 1,250
Hotel occupancy rate............. 92.3% 92.4% 91.2% 92.0% 91.7%
TABLE GAMES:
Total Atlantic City table drop
(g)............................ $6,835,572 $6,832,517 $7,110,612 $7,415,721 $7,640,972
Atlantic City table drop
growth......................... (3.1)% 0.0% 4.1% 4.3% 3.0%
Taj Mahal table drop (g)......... $1,062,042 $1,125,029 $1,192,200 $ 1,283,543 $ 1,279,056
Taj Mahal table games market
share (h)...................... 15.5% 16.5% 16.8% 17.3% 16.7%
Taj Mahal table games fair
share(i)....................... 14.5% 14.2% 13.3% 13.8% 12.7%
Taj Mahal table games efficiency
(j)............................ 106.9% 116.2% 126.3% 125.4% 131.5%
Taj Mahal table units............ 163 159 150 165 158
Taj Mahal table revenue.......... $ 173,432 $ 184,774 $ 201,817 $ 215,561 $ 202,730
Taj Mahal table revenue per unit
per day (actual dollars)....... $ 2,915 $ 3,184 $ 3,686 $ 3,569 $ 3,515
SLOTS:
Total Atlantic City slot
revenue........................ $2,214,638 $2,297,280 $2,572,719 $ 2,626,021 $ 2,720,146
Atlantic City slot revenue
growth......................... 4.8% 3.7% 12.0% 2.1% 3.6%
Taj Mahal slot revenue (k)....... $ 264,504 $ 259,114 $ 285,248 $ 284,595 $ 308,132
Taj Mahal slot market share
(h)............................ 11.9% 11.3% 11.1% 10.8% 11.3%
Taj Mahal slot fair share (i).... 13.1% 12.6% 12.3% 11.7% 11.8%
Taj Mahal slot efficiency (j).... 90.8% 89.7% 90.2% 92.3% 95.8%
Taj Mahal slot units............. 3,146 3,342 3,514 3,699 3,978
Taj Mahal slot revenue per unit
per day (actual dollars) (k)... $ 230 $ 213 $ 222 $ 210 $ 212
</TABLE>
15
<PAGE>
- ------------------------
(a) On April 17, 1996, as part of the Taj Acquisition, THCR acquired Taj
Associates. In connection with the Taj Acquisition, Taj Associates became a
wholly owned subsidiary of Trump AC. Therefore, the financial data for the
period ended December 31, 1996 reflects the operations of Taj Associates for
the period from April 17, 1996 through December 31 1996.
(b) EBITDA represents income from operations before interest expense, taxes,
depreciation, amortization, non-operating income, and the noncash write-down
of the CRDA investments. EBITDA includes payments under the service
agreement between Taj Associates and Trump, lease payments on the Specified
Parcels (as defined) and nonrecurring costs of a litigation settlement
amounting to $4.3 million, $8.0 million, $4.6 million $1.4 million and
$120,000 for the three years ended December 31, 1995 and for the period from
January 1, 1996 through April 17, 1996 and for the period from April 17,
1996 through December 31, 1996, respectively. As adjusted for these items,
EBITDA would have been $128,371, $127,796, $140,835, $20,736 and $102,335,
respectively. 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 one measure of Taj
Associates historical ability to service its debt; however, investors should
note that funds depicted by EBITDA are not available for management's
discretionary use.
(c) The total cost of the Taj Mahal Expansion, including amounts expended in
1996, was approximately $43.5 million. Capital expenditures attributable to
the expansion of the facility were approximately $10.3 million for the
period from acquisition, April 17, 1996, to December 31, 1996 and $33.2
million for the year ended December 31, 1997.
(d) The years ended December 31, 1993, 1994 and 1995 include approximately
$580,464, $611,533, and $649,139 of 11.35% Mortgage Bonds, Series A, due
1999 (the "Taj Bonds"), net of discount of approximately $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%.
(e) Atlantic City industry data has been compiled from information filed with
and published by the CCC and is unaudited.
(f) 1993, 1994, 1995, 1996 and 1997 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.
16
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION SET FORTH ELSEWHERE IN THIS PROSPECTUS,
BEFORE TENDERING THEIR ORIGINAL NOTES FOR THE EXCHANGE NOTES OFFERED HEREBY,
HOLDERS OF ORIGINAL NOTES SHOULD CONSIDER CAREFULLY THE FOLLOWING FACTORS, WHICH
MAY BE GENERALLY APPLICABLE TO THE ORIGINAL NOTES AS WELL AS THE EXCHANGE NOTES.
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS WHICH INVOLVE RISKS AND
UNCERTAINTIES. THE ISSUERS' ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS,
INCLUDING THOSE SET FORTH IN THE FOLLOWING RISK FACTORS AND ELSEWHERE IN THIS
PROSPECTUS.
HIGH LEVERAGE AND FIXED CHARGES
Trump AC and its Subsidiaries have a substantial amount of indebtedness on a
consolidated basis. At December 31, 1997, Trump AC's consolidated indebtedness
for borrowed money totaled approximately $1.31 billion, principally representing
the TAC I Notes, the Notes and the TAC III Notes. See "Business-- Certain
Indebtedness." Assuming that the Initial Offering and the Concurrent Initial
Offering had been consummated on January 1, 1997, Trump AC's ratio of
consolidated earnings to fixed charges on a pro forma basis would have been
insufficient to cover fixed charges by $25.3 million for the year ended December
31, 1997. As of December 31, 1997 Trump AC's debt to partner's capital ratio was
4.0.
Interest on the Notes is payable semiannually in cash. The ability of the
Issuers to pay interest on the Notes will be dependent upon the ability of Plaza
Associates and Taj Associates to generate enough cash from operations sufficient
for such purposes. The Guarantors have no outstanding debt (other than their
guarantees) and there are no contractual restrictions on the ability of the
Guarantors to make payments to Trump AC. See "--Holding Company Structure";
"--Risk in Refinancing and Repayment of Indebtedness; Need for Additional
Financing" and "--Historical Results; Past Net Losses."
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. 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. 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.
HOLDING COMPANY STRUCTURE
Funding II 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,
the covenants contained in the TAC I Note Indenture, the Note Indenture and the
TAC III Note Indenture. See "Business--Gaming and Other Laws and Regulations."
17
<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. Cash flow from operations may not be
sufficient to repay a substantial portion of the principal amount of the TAC I
Notes, the Notes and the TAC III Notes upon maturity in 2006. The future
operating performance and the ability to refinance the TAC I Notes, the Notes
and the TAC III 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 TAC I Notes, the Notes and the TAC III Notes or other
attempts to raise capital.
RISKS ASSOCIATED WITH A CHANGE OF CONTROL
The Note Indenture contains provisions relating to certain changes of
control of THCR, THCR Holdings, Trump AC, Plaza Associates and Taj Associates.
Upon the occurrence of any such change of control, Trump AC would be obligated
to make an offer to purchase all of the 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. The TAC I Note Indenture, the TAC III Note
Indenture (subject to certain conditions) and the indenture governing the Senior
Notes (the "Senior Note Indenture") contain comparable provisions. 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 Notes."
RESTRICTIONS ON CERTAIN ACTIVITIES
The Note Indenture imposes restrictions on Trump AC and its subsidiaries.
Generally, these restrictions 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 Note
Indenture, which could permit acceleration of the Notes, the TAC III Notes and
the TAC I Notes and acceleration of certain other indebtedness of THCR and its
subsidiaries under other instruments that may contain cross-acceleration or
cross-default provisions. On the other hand, the Note Indenture, the TAC I Note
Indenture and the TAC III Note Indenture each allow Trump AC to make
distributions to THCR Holdings to pay for, among other things, certain general
and administrative expenses of THCR and THCR Holdings and interest payments on
the Senior Notes. See "Description of the Notes--Certain Covenants--Limitation
on Restricted Payments."
RISKS ASSOCIATED WITH USE OF PROCEEDS
The net proceeds from the Initial Offering will be used for further
renovations, improvements and acquisitions in Atlantic City with respect to
Trump Plaza and the Taj Mahal. The use of the net proceeds may include the
development of the Steel Pier, located across The Boardwalk from the Taj Mahal,
or other improvements at Trump Plaza or the Taj Mahal, although no specific
plans have been established. Any such development or improvements may require
Trump AC to obtain various licenses and regulatory approvals depending on the
nature of the development and improvements, including for any development with
respect to the Steel Pier. The failure to obtain required licenses, permits or
approvals in a timely manner or the loss or suspension of any such license,
permit or approval may delay, restrict or prevent such
18
<PAGE>
development from completion or completion as scheduled. In addition, such
developments or improvements are inherently subject to 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. Accordingly, no assurance
can be given that any such improvements will be completed. Trump AC may be
required to utilize the proceeds for maintenance or other capital expenditure
requirements that arise in the ordinary course of business.
NON-RECOURSE NATURE OF THE 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
liability in respect of the obligations of the Issuers under the Note Indenture,
the Notes or any guarantees thereof solely by reason of the status as such
partner, employee, officer, stockholder or director.
HISTORICAL RESULTS; PAST NET LOSSES
TRUMP PLAZA. Plaza Associates had net losses of $8.9 million, $55.0 million
(including an extraordinary loss of $59.1 million) and $4.1 million for the
years ended December 31, 1994, 1996 and 1997, respectively, and net income of
$9.3 million and $1.5 million (including an extraordinary gain of $4.1 million
in 1993 and an extraordinary loss of $9.2 million in 1995) for the years ended
December 31, 1993 and 1995, respectively. On May 29, 1992, Plaza Associates and
Plaza Funding completed a restructuring of their indebtedness (the "1992 Plaza
Restructuring"), the purpose of which was to alleviate their liquidity problems
by improving the amortization schedule and extending the maturity of Plaza
Associates' indebtedness. See "Business--Trump Plaza--Historical Background--The
1992 Events." 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. A portion of the proceeds from the June 1995 Offerings (as defined)
was contributed to Plaza Associates to help reduce its indebtedness.
THE TAJ MAHAL. Taj Associates had net losses of $22.5 million, $36.7
million and $26.6 million for the years ended December 31, 1993, 1994 and 1995,
respectively. For the period from January 1, 1996 through April 17, 1996 (the
date of acquisition), Taj Associates had net losses of $147.0 million (including
an extraordinary loss of $116.4 million). For the period from April 17, 1996
through December 31, 1996, Taj Associates had net income of $5.6 million. Taj
Associates had net losses of $10.2 million for the year ended December 31, 1997.
CONTROL AND INVOLVEMENT OF TRUMP
Trump's Substantial Voting Power. Through his beneficial ownership of THCR's
Class B Common Stock, par value $.01 per share (the "THCR Class B Common
Stock"), Trump exercises considerable influence over the affairs of THCR and
controls approximately 38.2% of the total voting power of THCR. 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 Exchange Offer,
Trump will continue to pursue, develop, control and conduct all of his gaming
business through THCR.
RELIANCE ON TRUMP. 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, even though 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 Initial Offering or the Exchange Offer. The association of
the "Trump" name with high quality
19
<PAGE>
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 Notes could be
adversely affected. 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 "Business--Gaming and Laws and Other
Regulations." 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. As
security for certain of his personal indebtedness, Trump has pledged, and caused
Trump Casinos, Inc. ("TCI") 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's Common Stock, par value $.01 per
share ("THCR Common Stock"), and to have such shares registered for resale under
the Securities Act. The Initial Purchaser has rendered financial advisory
services to THCR, Trump AC and Taj Associates in the past, acted as a co-manager
in the June 1995 Offerings, served as underwriters in the 1996 Offerings and
acted as initial purchaser in the Concurrent Initial Offering. In addition, an
affiliate of the Initial Purchaser is a secured creditor of Trump.
COMPETITION
THE ATLANTIC CITY MARKET. Competition in the Atlantic City casino hotel
market is intense. The Atlantic City Properties compete with each other and with
other casino hotels located in Atlantic City, including Trump Marina, which is
wholly owned by THCR Holdings, the parent of Trump AC. 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 Atlantic City Properties, all of which compete for patrons. In
addition, there are several sites on The Boardwalk and in the Marina district of
Atlantic City (the "Marina") 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 casino resort by Mirage
Resorts Incorporated ("Mirage") to be built at the Marina and a casino resort by
MGM Grand, Inc. to be built on The Boardwalk), although management is not aware
of any current construction on such sites by third parties. Substantial new
expansion and development activity has recently been completed or has been
announced in Atlantic City, including the expansion at Harrah's, Hilton,
Caesar's, Resorts, Tropicana and Bally's Wild West Casino, which intensifies
competitive pressures in the Atlantic City market. 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 the Atlantic City Properties. 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 five years,
although at varying rates. 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. During 1996, six casinos (including Trump Plaza and the Taj
Mahal) experienced increased gaming revenues compared to 1995, while six casinos
experienced decreased revenues. In 1997, eight casinos (including Trump Plaza
and the Taj Mahal) experienced increased gaming revenues compared to 1996, while
four casinos experienced decreased revenues.
20
<PAGE>
In 1992, 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, 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. During 1996, a total of
approximately 65,870 square feet of casino floor space was added, an increase of
47.2%, including Trump World's Fair's 49,193 square feet. Slot machines
increased by approximately 1,911 units during 1996 and table games increased by
approximately 44 units during 1996, of which Trump World's Fair accounted for
1,518 units and 16 units, respectively. During 1997, a total of approximately
51,870 square feet of casino floor space was added. Slot machines increased by
approximately 2,153 units and table games increased by approximately 82 units
during 1997. See "Business--Competition--Atlantic City."
The Atlantic City Properties 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, the Atlantic City Properties 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 and Niagara
Falls), 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 December 1996, Bay Cruises began
operation of a gambling cruise ship where patrons are taken from a pier in
Sheepshead Bay in Brooklyn, New York to international waters to gamble. Bay
Cruises temporarily ceased operations pending the outcome of its appeal of a
federal prosecutor's ruling that the ships must travel 12, rather than 3, miles
offshore to reach international waters. On December 2, 1997, a federal judge
overruled the prosecutor's ruling, and Bay Cruises announced plans to resume
operations. In September 1997, another gambling cruise ship was launched off the
coast of Montauk, New York. On January 28, 1998, Manhattan Cruises began
offering nightly gambling cruises departing from Manhattan, New York City and
five other companies are currently seeking permission to operate similar
cruises. On December 5, 1997, the mayor of New York City proposed the
construction of a casino on Governors Island, located in the middle of New York
Harbor; however the proposal would require an amendment to the New York State
Constitution and the sale of the island to New York by the federal government.
In Delaware, a total of approximately 2,000 slot machines were installed at 3
horse tracks in 1996, and track owners in several other states are seeking to do
the same. In December 1996, the temporary Casino Niagara opened in Niagara
Falls, Ontario. Ontario officials expect that two-thirds of Casino Niagara's
patrons will come from the United States, predominantly from western New York.
In February 1998, the Ontario Casino Commission designated a consortium whose
principal investor is Hyatt Hotels Corporation ("Hyatt") as the preferred
developer of the permanent Casino Niagara.
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, the Atlantic City Properties compete directly with each other and
with Trump Marina for gaming patrons.
21
<PAGE>
OTHER COMPETITION. In addition, the Atlantic City Properties face
competition in a number of states from casino facilities 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 the Atlantic City Properties. 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. Management cannot predict the impact of this decision on
the ability of Native American tribes to negotiate compacts with 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 5,500 slot machines. An
ongoing expansion at Foxwoods, due to be completed in April 1998, will include
additional hotel rooms, restaurants and retail stores. A high speed ferry
between New York City and Foxwoods is due to begin service in March 1998. The
Mashantucket Pequot Nation has also announced plans for a high speed train
linking Foxwoods to the interstate highway and an airport outside Providence,
Rhode Island. In addition, in October 1996, the Mohegan Nation opened the
Mohegan Sun Resort in Uncasville, Connecticut, located 10 miles from Foxwoods.
Developed by Sun Hotel International, Ltd., the Mohegan Sun Resort has 75% of
the gaming capacity of Foxwoods. The Mohegan Nation has announced plans for an
expansion of the casino facilities and the construction of a hotel, convention
center and entertainment center to be completed by the year 2000. In addition,
the Eastern Pequots are seeking formal recognition as a Native American tribe
for the purpose of opening a casino in the North Stonington area. There can be
no assurance that any continued expansion of gaming operations of the
Mashantucket Pequot Nation, the gaming operations of the Mohegan Nation or the
commencement of gaming operations by the Eastern Pequots would not have a
materially adverse impact on the operations of the Atlantic City Properties. See
"Business--Competition--Other Competition."
Legislation permitting other forms of casino gaming has been proposed, from
time to time, in various states, including those bordering New Jersey. Six
states have presently legalized riverboat gambling while others are considering
its approval, including New York and Pennsylvania. 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 the
Atlantic City Properties 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 three 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. On January 28, 1997, the New York State Senate rejected a constitutional
amendment to legalize casino gambling in certain areas of New York State,
effectively postponing any new gambling constitutional amendment until 1999. To
the extent that legalized gaming becomes more prevalent in New Jersey or other
jurisdictions near Atlantic City, competition would intensify. In particular,
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, would have a
material adverse impact on Trump AC.
22
<PAGE>
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 and the Chief Executive
Officer of THCR Holdings. Mr. Ribis' employment agreement with THCR and THCR
Holdings expires on June 12, 2000 (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.
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. In May 1996, the CCC granted Plaza Associates
a license to operate Trump World's Fair through May 1997. In June 1996, the CCC
granted TCS a license through July 1997, which license has been renewed through
July 1998. In December 1996, the CCC allowed Plaza Associates to operate Trump
Plaza and Trump World's Fair under one casino license through May 1999. 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. A petition seeking approval of the Initial
Offering by the CCC was filed on November 5, 1997. On December 3, 1997, the CCC
approved the Initial Offering and the Exchange Offer.
The Casino Control Act imposes substantial restrictions on the ownership of
securities of Trump AC and its subsidiaries. See "Business--Gaming and Other
Laws and Regulations." A Holder of Notes may be required to meet the
qualification provisions of the Casino Control Act relating to financial sources
and/or security holders. The Note Indenture provides that if the CCC requires a
holder of securities (whether the record or beneficial owner) to qualify under
the Casino Control Act and such holder does not so qualify, then such holder
must dispose of his interest in the 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 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 holder (or such lesser amount as may be required by the
CCC). If a holder is found unqualified by the CCC, 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.
TAXES AND FEES
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 to use the
"Trump" name and likeness in connection with gaming and related activities
pursuant to a trademark license agreement between Trump and THCR (the "License
Agreement"). See "Business--Trademark/Licensing." THCR's rights under the
23
<PAGE>
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 any 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.
SEASONAL NATURE OF REVENUES AND CASH FLOW
The gaming industry in Atlantic City is seasonal in nature, with the
heaviest activity 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.
WAIVER OF DEFAULTS
The Note Indenture contains provisions permitting the Issuers, the
Guarantors and the Trustee to enter into a supplemental indenture or to amend,
modify or supplement the Notes or the Mortgage Documents for certain limited
purposes without the consent of the Holders. In addition, with the consent of
the Holders of not less than a majority in aggregate principal amount of the
Notes at the time outstanding, the Issuers, the Guarantors and the Trustee are
permitted to amend or supplement the Note Indenture or any supplemental
indenture, the Mortgage Documents, the Notes or modify the rights of the
Holders, subject to certain limitations. See "Description of the
Notes--Amendments and Supplements." The holders of not less than two-thirds in
aggregate principal amount of the then outstanding Notes affected thereby
(subject to certain limitations) 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 Notes specified in the preceding paragraph may waive
compliance with certain restrictive covenants and provisions of the Note
Indenture and the Mortgage Documents.
24
<PAGE>
There can be no assurance that the Holders will not amend or supplement the
Note Indenture or any supplemental indenture, the Mortgage Documents, the Notes
or modify the rights of the Holders or waive compliance with certain restrictive
covenants and provisions of the Note Indenture and the Mortgage Documents. Any
such amendment or waiver may adversely affect the rights of Holders.
RISKS RELATED TO CREDITWORTHINESS OF PATRONS
Trump Plaza and the Taj Mahal are exposed to certain risks related to the
creditworthiness of their patrons. Historically, Trump Plaza and the Taj Mahal
have extended credit on a discretionary basis to certain qualified patrons. For
the years ended December 31, 1995, 1996 and 1997, Trump Plaza's credit play as a
percentage of total dollars wagered was approximately 17.7%, 17.4% and 18.9%,
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, 1995, 1996 and 1997, the Taj Mahal's credit play as a
percentage of total dollars wagered was approximately 24.5%, 29.7% and 31.2%,
respectively. In 1997, 21.7% of receivables at Trump Plaza and 56.7% of
receivables at the Taj Mahal were due from non-United States patrons. There can
be no assurance that defaults in the repayment of credit by patrons of Trump
Plaza and the Taj Mahal could not have a material adverse effect on the results
of operations of Trump Plaza and the Taj Mahal.
FAILURE TO FILE CURRENCY TRANSACTION REPORTS
The United States Department of the Treasury (the "Treasury") has adopted
regulations pursuant to which a casino is required to file a report of each
deposit, withdrawal, exchange of currency, gambling tokens or chips, or other
payments or transfers by, through or to such casino which involves a transaction
in currency of more than $10,000 per patron, per gaming day (a "Currency
Transaction Report"). 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, Plaza Associates and Taj
Associates are 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.
As the result of an audit conducted by the Treasury's Office of Financial
Enforcement in 1995, Plaza Associates was alleged to have failed to file timely
the Currency Transaction Report 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. From 1992 through 1995, the Service conducted an audit of
Currency Transaction Reports filed by Taj Associates for the period from April
2, 1990 through December 31, 1991. The Treasury has received a report detailing
the audit as well as the response of Taj Associates. As a result of Taj
Associates' audit, the Treasury has notified Taj Associates that it failed to
timely file Currency Transaction Reports in connection with certain currency
transactions. Taj Associates paid a fine of $477,000 in connection with 106 of
these violations. Although Trump AC believes that its fines are no larger than
those of similar size casinos in Atlantic City, there can be no assurances as to
whether the Treasury will impose further fines on Trump Plaza and the Taj Mahal,
which could have an adverse effect on the results of operations of these
entities.
FRAUDULENT TRANSFER CONSIDERATIONS
The obligations of Taj Associates, Plaza Associates or any other Guarantor
under its guarantee of the Notes, as well as the security interest granted by
Taj Associates or Plaza Associates in its assets to secure the Notes and its
respective guarantee, may be subject to review under state or federal fraudulent
transfer 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, 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,
25
<PAGE>
(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 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 Notes will 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, and will not be
secured by the assets of Subsidiaries of Trump AC other than Plaza Associates
and Taj Associates.
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 Initial Offering
(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.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Prospectus, including without
limitation, statements containing the words "believes," "anticipates,"
"intends," "will," "expects" and words of similar import, constitute
"forward-looking statements." Such forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause the actual
results, performance or achievements of the Issuers or industry results to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the following: general economic and business conditions, both
domestic and foreign; demographic changes; existing government regulations and
changes in, or the failure to comply with, government regulations; legislative
proposals; liability and other claims asserted against the Issuers; competition
in the gaming industry; changes in operating strategy or expansion and
development plans; the ability to attract and retain qualified personnel; the
availability and terms of capital to fund the expansion of the Issuers'
business; and other factors referenced in this Prospectus. Certain of these
factors are discussed in more detail elsewhere in this Prospectus, including,
without limitation, under the captions " Prospectus Summary," "Risk Factors" and
"Business." Given these uncertainties, prospective investors are cautioned not
to place undue reliance on such forward-looking statements. The Issuers disclaim
any obligation to update any such factors or to publicly announce the result of
any revisions to any of the forward-looking statements contained herein to
reflect future events or developments. All forward-looking statements are
expressly qualified by such cautionary statements.
LACK OF PUBLIC MARKET FOR THE EXCHANGE NOTES
The Exchange Notes will constitute a new issue of securities with no
established trading market, and there can be no assurance as to (i) the
liquidity of any such market that may develop, (ii) the ability of Holders of
Exchange Notes to sell their Exchange Notes or (iii) the price at which the
Holders of Exchange Notes would be able to sell their Exchange Notes. If such a
market were to exist, the Exchange Notes could trade at prices that may be
higher or lower than their principal amount or purchase price, depending on many
factors, including prevailing interest rates, the market for similar notes and
the financial performance of the Issuers and their subsidiaries. The Issuers
have been advised by the Initial Purchaser that the Initial Purchaser presently
intends to make a market in the Exchange Notes. However, the Initial Purchaser
is not obligated to do so, and any market-making activity with respect to the
Exchange
26
<PAGE>
Notes may be discontinued at any time without notice. In addition, such
market-making activity will be subject to the limits imposed by the Exchange
Act. There can be no assurance that, even following registration of the Exchange
Notes, an active trading market will exist for the Exchange Notes or that any
such trading market will be liquid.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Original Notes who do not exchange their Original Notes for
Exchange Notes pursuant to the Exchange Offer will continue to be subject to the
restrictions on transfer of such Original Notes as set forth in the legend
thereon as a consequence of the issuance of the Original Notes pursuant to
exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws. In
general, the Original Notes may not be offered or sold unless registered under
the Securities Act and applicable state securities laws, or pursuant to an
exemption therefrom. Except under certain limited circumstances, the Issuers do
not intend to register the Original Notes under the Securities Act. In addition,
any Holder of Original Notes who tenders in the Exchange Offer for the purpose
of participating in a distribution of the Exchange Notes may be deemed to have
received restricted securities and, if so, will be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. To the extent Original Notes are
tendered and accepted in the Exchange Offer, the trading market, if any, for the
Original Notes not tendered could be adversely affected. See "The Exchange
Offer" and "Original Notes Registration Rights."
27
<PAGE>
USE OF PROCEEDS
There will be no proceeds to Trump AC from the exchange pursuant to the
Exchange Offer. The net proceeds to Trump AC from the Initial Offering were
approximately $69.1 million, after deducting discounts and commissions and
expenses of the Initial Offering. The net proceeds of the Initial Offering will
be used for further renovations, improvements and acquisitions in Atlantic City
with respect to Trump Plaza and the Taj Mahal in accordance with the Note
Indenture. The use of the net proceeds may include the development of the Steel
Pier, located across The Boardwalk from the Taj Mahal, or other improvements at
Trump Plaza or the Taj Mahal, although no specific plans have been established.
The net proceeds to Trump AC from the Concurrent Initial Offering were
approximately $22.4 million, after deducting discounts and commissions and
expenses of the Concurrent Initial Offering. The net proceeds of the Concurrent
Initial Offering are being used for working capital and other general corporate
purposes at Trump AC and its Subsidiaries in accordance with the TAC III Note
Indenture.
28
<PAGE>
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The Original Notes were originally issued and sold on December 10, 1997.
Such sales were not registered under the Securities Act in reliance upon the
exemption provided by Section 4(2) of the Securities Act and Rule 144A of the
Securities Act. Pursuant to the Registration Rights Agreement, the Issuers and
the Guarantors have agreed to file by the 45th day following the closing date of
the Initial Offering (the "Closing Date"), a Registration Statement with respect
to an offer to exchange the Original Notes for the Exchange Notes and to use
their best efforts to cause such registration statement to become effective by
the 150th day following the Closing Date and, upon becoming effective, to
commence the Exchange Offer and cause the same to remain open for acceptance for
not less than 30 days after the date of commencement. If the Exchange Offer is
not consummated within 45 days following the date the Registration Statement is
declared effective or, under certain circumstances, the Initial Purchaser so
requests, the Issuers and the Guarantors will file and use their best efforts to
cause to be declared effective a Shelf Registration Statement with respect to
resales of the Original Notes and the guarantees thereof from time to time and
will use their best efforts to keep such registration statement effective until
three years after the effective date thereof. If the applicable registration
statement is not filed or declared effective or ceases to be effective or the
Exchange Offer is not consummated within the applicable time periods related
thereto (each, a "Registration Default"), the Issuers will be required to pay
Liquidated Damages to each Holder of the Original Notes, in the amount of $.05
per week per $1,000 principal amount of Original Notes for the initial 90-day
period following such Registration Default. The amount of such Liquidated
Damages will increase by an additional $.05 per week per $1,000 principal amount
of Original Notes at the beginning of each subsequent 90-day period, up to a
maximum amount of $.30 per week per $1,000 principal amount of Original Notes.
If, subsequently, such Registration Default is cured, the accrual of Liquidated
Damages will cease. See "Original Notes Registration Rights."
The sole purpose of the Exchange Offer is to fulfill the obligations of the
Issuers with respect to the Registration Rights Agreement.
TERMS OF THE EXCHANGE
The Issuers hereby offer to exchange, upon the terms and subject to the
conditions set forth herein and in the Letter of Transmittal, $1,000 in
principal amount of Exchange Notes for each $1,000 in principal amount of the
Original Notes. The terms of the Exchange Notes are identical in all respects to
the terms of the Original Notes for which they may be exchanged pursuant to this
Exchange Offer, except that the Exchange Notes will generally be freely
transferable by Holders thereof, and the Holders of the Exchange Notes (as well
as remaining Holders of any Original Notes) will not be entitled to registration
rights under the Registration Rights Agreement. See "Original Notes Registration
Rights." The Exchange Notes will evidence the same debt as the Original Notes
and will be entitled to the benefits of the Note Indenture. See "Description of
the Notes."
The Exchange Offer is not conditioned upon any minimum aggregate principal
amount of Original Notes being tendered for exchange.
Based on interpretations by the Staff set forth in no-action letters issued
to third parties, the Issuers believe that Exchange Notes issued pursuant to the
Exchange Offer in exchange for the Original Notes may be offered for resale,
resold and otherwise transferred by Holders thereof (other than any Holder which
is (i) an "affiliate" of the Issuers within the meaning of Rule 405 under the
Securities Act, (ii) a broker-dealer who acquired Original Notes directly from
the Issuer or (iii) broker-dealers who acquired Original Notes as a result of
market making or other trading activities) without compliance with the
registration and prospectus delivery provisions of the Securities Act provided
that such Exchange Notes are acquired in the ordinary course of such Holder's
business, and such Holders are not engaged in, and do not intend to engage in,
and have no arrangement or understanding with any person to participate in, a
distribution of such Exchange Notes. Each broker-dealer that receives Exchange
Notes pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such
29
<PAGE>
Exchange Notes. The Letter of Transmittal states that by so acknowledging, and
by delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act. Broker-dealers who
acquired Original Notes as a result of market making or other trading activities
may use this Prospectus, as supplemented or amended, in connection with resales
of the Exchange Notes. The Issuers have agreed that, for a period not to exceed
180 days after the Exchange Date, they will make this Prospectus available to
any broker-dealer for use in connection with any such resale. Any Holder that
cannot rely upon such interpretations must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction.
Tendering Holders of Original Notes will not be required to pay brokerage
commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the exchange of the Original Notes
pursuant to the Exchange Offer.
The Exchange Notes will bear interest from and including their respective
dates of issuance. Holders whose Original Notes are accepted for exchange will
receive accrued interest thereon to, but not including, the date of issuance of
the Exchange Notes, such interest to be payable with the first interest payment
on the Exchange Notes, but will not receive any payment in respect of interest
on the Original Notes accrued after the issuance of the Exchange Notes.
EXPIRATION DATE; EXTENSIONS; TERMINATION; AMENDMENTS
The Exchange Offer expires on the Expiration Date. The term "Expiration
Date" means 5:00 p.m., New York City time, on , 1998, unless the Issuers
in their sole discretion extend the period during which the Exchange Offer is
open, in which event the term "Expiration Date" means the latest time and date
on which the Exchange Offer, as so extended by the Issuers, expires. The Issuers
reserve the right to extend the Exchange Offer at any time and from time to time
prior to the Expiration Date by giving written notice to U.S. Bank National
Association (the "Exchange Agent") and by timely public announcement
communicated, unless otherwise required by applicable law or regulation, by
making a release to the Dow Jones News Service. During any extension of the
Exchange Offer, all Original Notes previously tendered pursuant to the Exchange
Offer will remain subject to the Exchange Offer.
The initial Exchange Date will be the first business day following the
Expiration Date. The Issuers expressly reserve the right to (i) terminate the
Exchange Offer and not accept for exchange any Original Notes for any reason,
including if any of the events set forth below under "--Conditions to the
Exchange Offer" shall have occurred and shall not have been waived by the
Issuers and (ii) amend the terms of the Exchange Offer in any manner, whether
before or after any tender of the Original Notes. If any such termination or
amendment occurs, the Issuers will notify the Exchange Agent in writing and will
either issue a press release or give written notice to the Holders of the
Original Notes as promptly as practicable. Unless the Issuers terminate the
Exchange Offer prior to 5:00 p.m., New York City time, on the Expiration Date,
the Issuers will exchange the Exchange Notes for the Original Notes on the
Exchange Date.
If the Issuers waive any material condition to the Exchange Offer, or amend
the Exchange Offer in any other material respect, and if at the time that notice
of such waiver or amendment is first published, sent or given to Holders of
Original Notes in the manner specified above, the Exchange Offer is scheduled to
expire at any time earlier than the expiration of a period ending on the fifth
business day from, and including, the date that such notice is first so
published, sent or given, then the Exchange Offer will be extended until the
expiration of such period of five business days.
This Prospectus and the related Letter of Transmittal and other relevant
materials will be mailed by the Issuers to record Holders of Original Notes and
will be furnished to brokers, banks and similar persons whose names, or the
names of whose nominees, appear on the lists of Holders for subsequent
transmittal to beneficial owners of Original Notes.
30
<PAGE>
HOW TO TENDER
The tender to the Issuers of Original Notes by a Holder thereof pursuant to
one of the procedures set forth below will constitute an agreement between such
Holder and the Issuers in accordance with the terms and subject to the
conditions set forth herein and in the Letter of Transmittal.
GENERAL PROCEDURES. A Holder of an Original Note may tender the same by (i)
properly completing and signing the Letter of Transmittal or a facsimile thereof
(all references in this Prospectus to the Letter of Transmittal shall be deemed
to include a facsimile thereof) and delivering the same, together with the
certificate or certificates representing the Original Notes being tendered and
any required signature guarantees (or a timely confirmation of a book-entry
transfer (a "Book-Entry Confirmation") pursuant to the procedure described
below), to the Exchange Agent at its address set forth on the back cover of this
Prospectus on or prior to the Expiration Date or (ii) complying with the
guaranteed delivery procedures described below.
If tendered Original Notes are registered in the name of the signer of the
Letter of Transmittal and the Exchange Notes to be issued in exchange therefor
are to be issued (and any untendered Original Notes are to be reissued) in the
name of the registered Holder, the signature of such signer need not be
guaranteed. In any other case, the tendered Original Notes must be endorsed or
accompanied by written instruments of transfer in form satisfactory to the
Issuers and duly executed by the registered Holder and the signature on the
endorsement or instrument of transfer must be guaranteed by a firm (an "Eligible
Institution") that is a member of a recognized signature guarantee medallion
program within the meaning of Rule 17Ad-15 under the Exchange Act. If the
Exchange Notes and/or Original Notes not exchanged are to be delivered to an
address other than that of the registered Holder appearing on the note register
for the Original Notes, the signature on the Letter of Transmittal must be
guaranteed by an Eligible Institution.
Any beneficial owner whose Original Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender Original Notes should contact such Holder promptly and instruct such
Holder to tender Original Notes on such beneficial owner's behalf. If such
beneficial owner wishes to tender such Original Notes himself, such beneficial
owner must, prior to completing and executing the Letter of Transmittal and
delivering such Original Notes, either make appropriate arrangements to register
ownership of the Original Notes in such beneficial owner's name or follow the
procedures described in the immediately preceding paragraph. The transfer of
record ownership may take considerable time.
BOOK-ENTRY TRANSFER. The Exchange Agent will make a request to establish an
account with respect to the Original Notes at The Depository Trust Company (the
"Book-Entry Transfer Facility") for purposes of the Exchange Offer within two
business days after receipt of this Prospectus, and any financial institution
that is a participant in the Book-Entry Transfer Facility's systems may make
book-entry delivery of Original Notes by causing the Book-Entry Transfer
Facility to transfer such Original Notes into the Exchange Agent's account at
the Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's procedures for transfer. However, although delivery of Original Notes
may be effected through book-entry transfer at the Book-Entry Transfer Facility,
the Letter of Transmittal, with any required signature guarantees and any other
required documents, must, in any case, be transmitted to and received by the
Exchange Agent at the address specified on the back cover page of this
Prospectus on or prior to the Expiration Date or the guaranteed delivery
procedures described below must be complied with.
THE METHOD OF DELIVERY OF ORIGINAL NOTES AND ALL OTHER DOCUMENTS IS AT THE
ELECTION AND RISK OF THE HOLDER. IF SENT BY MAIL, IT IS RECOMMENDED THAT
REGISTERED MAIL, RETURN RECEIPT REQUESTED, BE USED, PROPER INSURANCE BE
OBTAINED, AND THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE
TO PERMIT DELIVERY TO THE EXCHANGE AGENT ON OR BEFORE THE EXPIRATION DATE.
Unless an exemption applies under the applicable law and regulations
concerning "backup withholding" of federal income tax, the Exchange Agent will
be required to withhold, and will withhold, 31% of the gross proceeds otherwise
payable to a Holder pursuant to the Exchange Offer if the Holder does not
31
<PAGE>
provide his taxpayer identification number (social security number or employer
identification number) and certify that such number is correct. Each tendering
Holder should complete and sign the main signature form and the Substitute Form
W-9 included as part of the Letter of Transmittal, so as to provide the
information and certification necessary to avoid backup withholding, unless an
applicable exemption exists and is proved in a manner satisfactory to the
Issuers and the Exchange Agent.
GUARANTEED DELIVERY PROCEDURES. If a Holder desires to accept the Exchange
Offer and time will not permit a Letter of Transmittal or Original Notes to
reach the Exchange Agent before the Expiration Date, a tender may be effected if
the Exchange Agent has received at its office listed on the back cover hereof on
or prior to the Expiration Date a letter, telegram or facsimile transmission
from an Eligible Institution setting forth the name and address of the tendering
Holder, the names in which the Original Notes are registered and, if possible,
the certificate numbers of the Original Notes to be tendered, and stating that
the tender is being made thereby and guaranteeing that within five New York
Stock Exchange trading days after the date of execution of such letter, telegram
or facsimile transmission by the Eligible Institution, the Original Notes, in
proper form for transfer, will be delivered by such Eligible Institution
together with a properly completed and duly executed Letter of Transmittal (and
any other required documents). Unless Original Notes being tendered by the
above-described method (or a timely Book-Entry Confirmation) are deposited with
the Exchange Agent within the time period set forth above (accompanied or
preceded by a properly completed Letter of Transmittal and any other required
documents), the Issuers may, at their option, reject the tender. Copies of a
Notice of Guaranteed Delivery which may be used by Eligible Institutions for the
purposes described in this paragraph are being delivered with this Prospectus
and the related Letter of Transmittal.
A tender will be deemed to have been received as of the date when the
tendering Holder's properly completed and duly signed Letter of Transmittal
accompanied by the Original Notes (or a timely Book-Entry Confirmation) is
received by the Exchange Agent. Issuances of Exchange Notes in exchange for
Original Notes tendered pursuant to a Notice of Guaranteed Delivery or letter,
telegram or facsimile transmission to similar effect (as provided above) by an
Eligible Institution will be made only against deposit of the Letter of
Transmittal (and any other required documents) and the tendered Original Notes
(or a timely Book-Entry Confirmation).
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for exchange of any tender of Original Notes will be
determined by the Issuers, whose determination will be final and binding. The
Issuers reserve the absolute right to reject any or all tenders not in proper
form or the acceptances for exchange of which may, in the opinion of counsel to
the Issuers, be unlawful. The Issuers also reserve the absolute right to waive
any of the conditions of the Exchange Offer or any defect or irregularities in
tenders of any particular Holder whether or not similar defects or
irregularities are waived in the case of other Holders. None of the Issuers, the
Exchange Agent or any other person will be under any duty to give notification
of any defects or irregularities in tenders or shall incur any liability for
failure to give any such notification. The Issuers' interpretation of the terms
and conditions of the Exchange Offer (including the Letter of Transmittal and
the instructions thereto) will be final and binding.
TERMS AND CONDITIONS OF THE LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, the following terms
and conditions, which are part of the Exchange Offer.
The party tendering Original Notes for exchange (the "Transferor")
exchanges, assigns and transfers the Original Notes to the Issuers and
irrevocably constitutes and appoints the Exchange Agent as the Transferor's
agent and attorney-in-fact to cause the Original Notes to be assigned,
transferred and exchanged. The Transferor represents and warrants that it has
full power and authority to tender, exchange, assign and transfer the Original
Notes and to acquire Exchange Notes issuable upon the exchange of such tendered
Original Notes, and that, when the same are accepted for exchange, the Issuers
will acquire good and unencumbered title to the tendered Original Notes, free
and clear of all liens, restrictions, charges and encumbrances and not subject
to any adverse claim. The Transferor also warrants
32
<PAGE>
that it will, upon request, execute and deliver any additional documents deemed
by the Issuers to be necessary or desirable to complete the exchange, assignment
and transfer of tendered Original Notes. The Transferor further agrees that
acceptance of any tendered Original Notes by the Issuers and the issuance of
Exchange Notes in exchange therefor shall constitute performance in full by the
Issuers of their obligations under the Registration Rights Agreement and that
the Issuers shall have no further obligations or liabilities thereunder (except
in certain limited circumstances). All authority conferred by the Transferor
will survive the death or incapacity of the Transferor and every obligation of
the Transferor shall be binding upon the heirs, legal representatives,
successors, assigns, executors and administrators of such Transferor.
By tendering Original Notes, the Transferor certifies (a) that it is not an
"affiliate" of the Issuers within the meaning of Rule 405 under the Securities
Act, that it is not a broker-dealer that owns Original Notes acquired directly
from the Issuers or an affiliate of the Issuers, that it is acquiring the
Exchange Notes offered hereby in the ordinary course of such Transferor's
business and that such Transferor has no arrangement with any person to
participate in the distribution of such Exchange Notes or (b) that it is an
"affiliate" (as defined) of the Issuers or of the initial purchasers in the
Initial Offering of the Original Notes, and that it will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable to it.
WITHDRAWAL RIGHTS
Original Notes tendered pursuant to the Exchange Offer may be withdrawn at
any time prior to the Expiration Date.
For a withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by the Exchange Agent at its address set
forth on the back cover of this Prospectus. Any such notice of withdrawal must
specify the person named in the Letter of Transmittal as having tendered
Original Notes to be withdrawn, the certificate numbers of Original Notes to be
withdrawn, the principal amount of Original Notes to be withdrawn (which must be
an authorized denomination), a statement that such Holder is withdrawing his
election to have such Original Notes exchanged, and the name of the registered
Holder of such Original Notes, and must be signed by the Holder in the same
manner as the original signature on the Letter of Transmittal (including any
required signature guarantees) or be accompanied by evidence satisfactory to the
Issuers that the person withdrawing the tender has succeeded to the beneficial
ownership of the Original Notes being withdrawn. The Exchange Agent will return
the properly withdrawn Original Notes promptly following receipt of notice of
withdrawal. All questions as to the validity of notices of withdrawals,
including time of receipt, will be determined by the Issuers, and such
determination will be final and binding on all parties.
ACCEPTANCE OF ORIGINAL NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES
Upon the terms and subject to the conditions of the Exchange Offer, the
acceptance for exchange of Original Notes validly tendered and not withdrawn and
the issuance of the Exchange Notes will be made on the Exchange Date. For the
purposes of the Exchange Offer, the Issuers shall be deemed to have accepted for
exchange validly tendered Original Notes when, as and if the Issuers have given
written notice thereof to the Exchange Agent.
The Exchange Agent will act as agent for the tendering Holders of Original
Notes for the purposes of receiving Exchange Notes from the Issuers and causing
the Original Notes to be assigned, transferred and exchanged. Upon the terms and
subject to the conditions of the Exchange Offer, delivery of Exchange Notes to
be issued in exchange for accepted Original Notes will be made by the Exchange
Agent promptly after acceptance of the tendered Original Notes. Original Notes
not accepted for exchange by the Issuers will be returned without expense to the
tendering Holders (or in the case of Original Notes tendered by book-entry
transfer into the Exchange Agent's account at the Book-Entry Transfer Facility
pursuant to the procedures described above, such non-exchanged Original Notes
will be credited to an account maintained with such Book-Entry Transfer
Facility) promptly following the Expiration Date or, if the Issuers terminate
the Exchange Offer prior to the Expiration Date, promptly after the Exchange
Offer is so terminated.
33
<PAGE>
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, or any extension
of the Exchange Offer, the Issuers will not be required to issue Exchange Notes
in respect of any properly tendered Original Notes not previously accepted and
may terminate the Exchange Offer (by oral or written notice to the Exchange
Agent and by timely public announcement communicated, unless otherwise required
by applicable law or regulation, by making a release to the Dow Jones News
Service) or, at its option, modify or otherwise amend the Exchange Offer, if (a)
there shall be threatened, instituted or pending any action or proceeding
before, or any injunction, order or decree shall have been issued by, any court
or governmental agency or other governmental regulatory or administrative agency
or commission, (i) seeking to restrain or prohibit the making or consummation of
the Exchange Offer or any other transaction contemplated by the Exchange Offer,
(ii) assessing or seeking any damages as a result thereof, or (iii) resulting in
a material delay in the ability of the Issuers to accept for exchange or
exchange some or all of the Original Notes pursuant to the Exchange Offer; (b)
any statute, rule, regulation, order or injunction shall be sought, proposed,
introduced, enacted, promulgated or deemed applicable to the Exchange Offer or
any of the transactions contemplated by the Exchange Offer by any government or
governmental authority, domestic or foreign, or any action shall have been
taken, proposed or threatened, by any government, governmental authority, agency
or court, domestic or foreign, that in the sole judgment of the Issuers might
directly or indirectly result in any of the consequences referred to in clauses
(a)(i) or (ii) above or, in the sole judgment of the Issuers, might result in
the Holders of Exchange Notes having obligations with respect to resales and
transfers of Exchange Notes which are greater than those described in the
interpretations of the Commission referred to on the cover page of this
Prospectus, or would otherwise make it inadvisable to proceed with the Exchange
Offer; or (c) a material adverse change shall have occurred in the business,
condition (financial or otherwise), operations, or prospects of the Issuers.
The foregoing conditions are for the sole benefit of the Issuers and may be
asserted by them with respect to all or any portion of the Exchange Offer
regardless of the circumstances (including any action or inaction by the
Issuers) giving rise to such condition or may be waived by the Issuers in whole
or in part at any time or from time to time in their sole discretion. The
failure by the Issuers at any time to exercise any of the foregoing rights will
not be deemed a waiver of any such right, and each right will be deemed an
ongoing right which may be asserted at any time or from time to time. In
addition, the Issuers have reserved the right, notwithstanding the satisfaction
of each of the foregoing conditions, to terminate or amend the Exchange Offer.
Any determination by the Issuers concerning the fulfillment or
non-fulfillment of any conditions will be final and binding upon all parties.
In addition, the Issuers will not accept for exchange any Original Notes
tendered and no Exchange Notes will be issued in exchange for any such Original
Notes, if at such time any stop order shall be threatened or in effect with
respect to the Registration Statement of which this Prospectus constitutes a
part or qualification of the Note Indenture under the Trust Indenture Act of
1939 (the "Trust Indenture Act").
EXCHANGE AGENT
U.S. Bank National Association has been appointed as the Exchange Agent for
the Exchange Offer. Letters of Transmittal must be addressed to the Exchange
Agent at its address set forth on the back cover page of this Prospectus.
Delivery to an address other than as set forth herein, or transmissions of
instructions via a facsimile or telex number other than the ones set forth
herein, will not constitute a valid delivery.
SOLICITATION OF TENDERS; EXPENSES
The Issuers have not retained any dealer-manager or similar agent in
connection with the Exchange Offer and will not make any payments to brokers,
dealers or others for soliciting acceptances of the Exchange Offer. The Issuers
will, however, pay the Exchange Agent reasonable and customary fees for its
34
<PAGE>
services and will reimburse it for reasonable out-of-pocket expenses in
connection therewith. The Issuers will also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding tenders for their customers. The expenses to be
incurred in connection with the Exchange Offer, including the fees and expenses
of the Exchange Agent and printing, accounting and legal fees, will be paid by
the Issuers and are estimated at approximately $500,000.
No person has been authorized to give any information or to make any
representations in connection with the Exchange Offer other than those contained
in this Prospectus. If given or made, such information or representations should
not be relied upon as having been authorized by the Issuers. Neither the
delivery of this Prospectus nor any exchange made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Issuers since the respective dates as of which information is
given herein. The Exchange Offer is not being made to (nor will tenders be
accepted from or on behalf of) Holders of Original Notes in any jurisdiction in
which the making of the Exchange Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction. However, the Issuers may, at
their discretion, take such action as it may deem necessary to make the Exchange
Offer in any such jurisdiction and extend the Exchange Offer to Holders of
Original Notes in such jurisdiction. In any jurisdiction the securities laws or
blue sky laws of which require the Exchange Offer to be made by a licensed
broker or dealer, the Exchange Offer is being made on behalf of the Issuers by
one or more registered brokers or dealers which are licensed under the laws of
such jurisdiction.
APPRAISAL RIGHTS
HOLDERS OF ORIGINAL NOTES WILL NOT HAVE DISSENTERS' RIGHTS OR APPRAISAL
RIGHTS IN CONNECTION WITH THE EXCHANGE OFFER.
FEDERAL INCOME TAX CONSEQUENCES
The exchange of Original Notes for Exchange Notes by Holders will not be a
taxable exchange for federal income tax purposes, and Holders should not
recognize any taxable gain or loss or any interest income as a result of such
exchange.
OTHER
Participation in the Exchange Offer is voluntary and Holders should
carefully consider whether to accept. Holders of the Original Notes are urged to
consult their financial and tax advisors in making their own decisions on what
action to take.
As a result of the making of, and upon acceptance for exchange of all
validly tendered Original Notes pursuant to the terms of this Exchange Offer,
the Issuers will have fulfilled a covenant contained in the terms of the
Original Notes and the Registration Rights Agreement. Holders of the Original
Notes who do not tender their certificates in the Exchange Offer will continue
to hold such certificates and will be entitled to all the rights, and
limitations applicable thereto, under the Note Indenture, except for any such
rights under the Registration Rights Agreement, which by their terms terminate
or cease to have further effect as a result of the making of this Exchange
Offer. See "Description of the Notes." All untendered Original Notes will
continue to be subject to the restriction on transfer set forth in the Note
Indenture. To the extent that Original Notes are tendered and accepted in the
Exchange Offer, the trading market, if any, for the Original Notes could be
adversely affected. See "Risk Factors--Consequences of Failure to Exchange."
The Issuers may in the future seek to acquire untendered Original Notes in
open market or privately negotiated transactions, through subsequent exchange
offers or otherwise. The Issuers have no present plan to acquire any Original
Notes which are not tendered in the Exchange Offer.
35
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of Trump AC as of December
31, 1997. The table should be read in conjunction with Trump AC's consolidated
financial statements and related notes thereto included elsewhere in this
Prospectus:
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
1997
----------------------
<S> <C>
(IN THOUSANDS)
Cash............................................................... $ 114,879
-----------
TAC I Notes........................................................ 1,200,000
Notes.............................................................. 75,000(a)
TAC III Notes...................................................... 25,000(b)
Mortgage Indebtedness.............................................. 3,229
Other Debt (including current maturities).......................... 8,089
Total Partner's Capital............................................ 327,939
-----------
Total Capitalization............................................... $ 1,639,257
-----------
-----------
</TABLE>
- ------------------------
(a) Does not include unamortized discount of $2.9 million.
(b) Does not include unamortized discount of $1.4 million.
36
<PAGE>
CONSOLIDATED SELECTED FINANCIAL DATA
TRUMP AC
The following table sets forth historical consolidated financial information
of Trump AC for each of the five years ended December 31, 1993 through 1997 (see
Notes 1 and 2 below). All financial information should be read in connection
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the consolidated and condensed financial statements and the
related notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEARS 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 $ 752,228 $ 889,116
Other......................................................... 69,203 66,869 74,182 190,995 231,235
--------- --------- --------- --------- ---------
Gross Revenues.............................................. 333,284 328,320 372,255 943,223 1,120,351
Promotional allowances........................................ 32,793 33,257 45,077 113,743 138,085
--------- --------- --------- --------- ---------
Net Revenues................................................ 300,491 295,063 327,178 829,480 982,266
--------- --------- --------- --------- ---------
COSTS AND EXPENSES:
Gaming.......................................................... 136,895 139,540 164,396 453,841 555,457
Other........................................................... 24,778 19,765 21,261 54,613 65,462
General and administrative...................................... 71,624 76,690 65,521 147,464 168,143
Depreciation and amortization................................... 17,554 15,653 16,213 60,870 66,018
Preopening...................................................... -- -- -- 4,145 --
--------- --------- --------- --------- ---------
Total costs and expenses...................................... 250,851 251,648 267,391 720,933 855,080
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Income from operations.......................................... 49,640 43,415 59,787 108,547 127,186
Interest expense, net........................................... (39,889) (48,219) (43,261) (112,122) (141,249)
Other non-operating income (expense)(a)......................... (3,873) (4,931) (5,743) 14,194 --
Extraordinary (loss) gain(b).................................... 4,120 -- (9,250) (59,132) --
(Provision) benefit for income taxes............................ (660) 865 -- -- --
--------- --------- --------- --------- ---------
Net income (loss)............................................... $ 9,338 $ (8,870) $ 1,533 $ (48,513) $ (14,063)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
OTHER DATA
Ratio of Earnings to Fixed Charges(c)........................... 1.1x (9,735) 1.2x 1.1x (14,063)
BALANCE SHEET DATA (AT END OF PERIOD):
Cash and cash equivalents....................................... $ 14,393 $ 11,144 $ 15,937 $ 71,320 $ 114,879
Property and equipment, net..................................... 293,141 298,354 425,262 1,456,267 1,460,050
Total assets.................................................... 374,498 375,643 480,024 1,659,006 1,739,073
Total long-term debt, net of current maturities................. 395,948 403,214 332,721 1,207,795 1,300,027
Total capital (deficit)......................................... (54,710) (63,580) 110,812 331,858 327,939
</TABLE>
- ------------------------
<TABLE>
<S> <C>
Note 1: On June 12, 1995, as part of the June 1995 Offerings, THCR issued $140 million of THCR Common Stock and
contributed the proceeds from such offering to THCR Holdings, the beneficial owner of 100% of Trump AC,
for an approximately 60% general partnership interest in THCR Holdings.
Note 2: On April 17, 1996, as part of the Taj Acquisition, THCR acquired Taj Associates. In connection with the
Taj Acquisition, Taj Associates became a wholly owned subsidiary of Trump AC. Therefore, the financial
data as of December 31, 1996 and 1997 reflect the Taj Acquisition and includes the operations of Taj
Associates for the period from the date of acquisition (April 17, 1996) through December 31, 1996.
(a) Other non-operating expense for the years ended December 31, 1993, 1994 and 1995 includes $3.9 million,
$4.9 million and $3.7 million, respectively, of real estate taxes and leasing costs associated with Trump
Plaza East. Other non-operating expense for the year ended December 31, 1995 also includes $2.0 million
in costs associated with Trump World's Fair. Other non-operating income for the year ended December 31,
1996 includes $15.0 million license fee revenue.
</TABLE>
37
<PAGE>
<TABLE>
<S> <C>
(b) 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 $4.1 million has been reported as an extraordinary gain for
the year ended December 31, 1993. The extraordinary loss of $9.3 million for the year ended December 31,
1995 relates to the redemption of $60 million aggregate principal amount of the Plaza PIK Notes and the
Plaza PIK Note Warrants and the write-off of related unamortized deferred financing costs. [The
extraordinary loss for the year ended December 31, 1996 of $59.1 million relates to the redemption of
$330 million aggregate principal amount of the Plaza Notes and the Plaza PIK Note Warrants and the
write-off of unamortized deferred financing costs.]
(c) For the 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 1994 and 1997.
</TABLE>
38
<PAGE>
PLAZA ASSOCIATES
The following table sets forth historical consolidated financial information
of Plaza Associates for each of the five years ended December 31, 1993 through
1997. All financial information should be read in connection with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the consolidated and condensed financial statements and the related notes
thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEARS 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 $ 368,958 $ 370,718
Other........................................................... 69,203 66,869 74,182 105,713 107,965
--------- --------- --------- --------- ---------
Gross Revenues................................................ 333,284 328,320 372,255 474,671 478,683
Promotional allowances.......................................... 32,793 33,257 45,077 65,641 64,353
--------- --------- --------- --------- ---------
Net Revenues.................................................. 300,491 295,063 327,178 409,030 414,330
--------- --------- --------- --------- ---------
COSTS AND EXPENSES:
Gaming.......................................................... 136,895 139,540 164,396 223,846 233,825
Other........................................................... 24,778 23,380 21,261 28,426 31,992
General and administrative...................................... 71,624 73,075 65,521 83,239 80,158
Depreciation and amortization................................... 17,554 15,653 16,213 23,019 24,391
Preopening...................................................... -- -- -- 4,145 --
--------- --------- --------- --------- ---------
Total costs and expenses...................................... 250,851 251,648 267,391 362,674 370,366
--------- --------- --------- --------- ---------
Income from operations.......................................... 49,640 43,415 59,787 46,356 43,964
Interest expense, net........................................... (39,889) (48,219) (43,261) (46,321) (48,028)
Other non-operating income (expense)(a)......................... (3,873) (4,931) (5,743) 4,194 --
Extraordinary (loss) gain(b).................................... 4,120 -- (9,250) (59,132) --
(Provision) benefit for income taxes............................ (660) 865 -- -- --
--------- --------- --------- --------- ---------
Net income (loss)............................................... $ 9,338 $ (8,870) $ 1,533 $ (54,903) $ (4,064)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
BALANCE SHEET DATA (AT END OF PERIOD):
Cash and cash equivalents....................................... $ 14,393 $ 11,144 $ 15,937 $ 26,657 $ 26,556
Property and equipment, net..................................... 293,141 298,354 425,262 525,893 526,814
Total assets.................................................... 374,498 375,643 480,024 598,117 595,395
Total long-term debt, net of current maturities................. 395,948 403,214 332,721 406,522 403,595
Total capital (deficit)......................................... (54,710) (63,580) 110,812 138,222 144,303
</TABLE>
- ------------------------
<TABLE>
<S> <C>
Note 1: On June 12, 1995, as part of the June 1995 Offerings, THCR issued $140 million of THCR Common Stock and
contributed the proceeds from such offering to THCR Holdings, the beneficial owner of 100% of Trump AC,
for an approximately 60% general partnership interest in THCR Holdings.
(a) Other non-operating expense for the years ended December 31, 1993, 1994 and 1995 includes $3.9 million,
$4.9 million and $3.7 million, respectively, of real estate taxes and leasing costs associated with Trump
Plaza East. Other non-operating expense for the year ended December 31, 1995 also includes $2.0 million
in costs associated with Trump World's Fair. Other non-operating income for the year ended December 31,
1996 includes $5.0 million license fee revenue.
(b) 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 $4.1 million has been reported as an extraordinary gain for
the year ended December 31, 1993. The extraordinary loss of $9.3 million for the year ended December 31,
1995 relates to the redemption of $60 million aggregate principal amount of Plaza PIK Notes and Plaza PIK
Note Warrants to acquire an aggregate of $12 million in principal amount of additional Plaza PIK Notes
and the write-off of related unamortized deferred financing costs. The extraordinary loss for the year
ended December 31, 1996 of $59.1 million relates to the redemption of $330 million aggregate principal
amount of Plaza Notes and the Plaza PIK Note Warrants and the write-off of unamortized deferred financing
costs.
</TABLE>
39
<PAGE>
TAJ ASSOCIATES
The following table sets forth historical consolidated financial information
of Taj Associates for each of the years ended December 31, 1993 through 1995 and
for the period from January 1, 1996 through April 17, 1996 (the date of
acquisition) and for the period from April 17, 1996 through December 31, 1996
and for the year ended December 31, 1997. All financial information should be
read in connection with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the consolidated and condensed
financial statements and the related notes thereto included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
FOR THE
FOR THE PERIOD FROM
PERIOD FROM APRIL 17,
JANUARY 1, 1996 FOR YEAR
1996 THROUGH ENDED
YEARS ENDED DECEMBER 31, THROUGH DECEMBER DECEMBER
------------------------------- APRIL 17, 31, 31,
1993 1994 1995 1996 1996(A) 1997
--------- --------- --------- ------------ ----------- -----------
(DOLLARS IN THOUSANDS) (PREDECESSOR) (SUCCESSOR)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
REVENUES:
Gaming............................................. $ 442,064 $ 461,622 $ 501,378 $ 132,870 $ 383,270 $ 518,398
Other.............................................. 113,291 117,738 116,368 30,866 85,282 123,270
--------- --------- --------- ------------ ----------- -----------
Gross Revenues................................... 555,355 579,360 617,746 163,736 468,522 641,668
Promotional allowances............................. 56,444 62,178 63,998 17,770 48,102 73,732
--------- --------- --------- ------------ ----------- -----------
Net Revenues..................................... $ 498,911 $ 517,182 $ 553,748 $ 145,966 $ 420,450 $ 567,936
--------- --------- --------- ------------ ----------- -----------
COSTS AND EXPENSES:
Gaming............................................. 237,566 260,472 283,786 88,731 229,995 321,632
Other.............................................. 40,605 40,697 39,842 10,925 26,187 33,470
General and administrative......................... 99,424 99,629 96,843 27,761 64,195 87,985
Depreciation and amortization...................... 36,858 39,750 43,387 13,647 37,820 41,445
--------- --------- --------- ------------ ----------- -----------
Total Costs and Expenses........................... 414,453 440,548 463,858 141,064 358,197 484,532
--------- --------- --------- ------------ ----------- -----------
Income from operations............................. 84,458 76,634 89,890 4,902 62,253 83,404
Interest expense, net.............................. (106,997) (113,292) (116,513) (35,499) (66,666) (93,579)
Other non-operating income(b)...................... -- -- -- -- 10,000 --
Extraordinary loss................................. -- -- -- (116,375) -- --
--------- --------- --------- ------------ ----------- -----------
Net income (loss).................................. $ (22,539) $ (36,658) $ (26,623) $ (146,972) $ 5,587 $ (10,175)
--------- --------- --------- ------------ ----------- -----------
--------- --------- --------- ------------ ----------- -----------
BALANCE SHEET DATA (AT END OF PERIOD):
Cash and cash equivalents............................ $ 58,044 $ 61,196 $ 88,941 $ 87,895 $ 37,423 $ 31,439
Property and equipment, net.......................... 722,834 706,785 690,987 691,173 929,950 932,242
Total assets......................................... 811,508 807,612 821,793 825,561 1,051,136 1,051,169
Total long-term debt, net of current maturities...... 625,765 656,701 694,192 817,508 801,273 800,759
Total capital (deficit).............................. 106,641 67,812 39,635 (108,574) 192,829 182,654
</TABLE>
- ------------------------
(a) On April 17, 1996, as part of the Taj Acquisition, THCR acquired Taj
Associates. In connection with the Taj Acquisition, Taj Associates became a
wholly owned subsidiary of Trump AC. Therefore, the financial data for the
year ended December 31,, 1996 reflects the operations of Taj Associates for
the period from April 17, 1996 through December 31, 1996.
(b) Other non-operating income for the period from April 17, 1996 through
December 31, 1996 includes $10.0 million license fee revenue.
40
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997
The financial information presented below reflects the results of operations
of Trump AC. Because Trump AC has no business operations other than its interest
in Plaza Associates and Taj Associates its results of operations are not
discussed below. Taj Associates was acquired on April 17, 1996.
The following table includes selected data of Plaza Associates and Taj
Associates (since April 17, 1996, date of acquisition) for the years ended
December 31, 1996 and 1997:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------
1996
1996 1997 TAJ 1997 1996 1997
PLAZA PLAZA ASSOCIATES TAJ TOTAL TOTAL
ASSOCIATES ASSOCIATES (1) ASSOCIATES TRUMP AC TRUMP AC
----------- ----------- ------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
(IN MILLIONS)
Revenues:
Gaming........................................ $ 368.9 $ 370.7 $ 383.3 $ 518.4 $ 752.2 $ 889.1
Other......................................... 105.7 108.0 85.3 123.2 191.0 231.2
----------- ----------- ------------- ----------- ----------- -----------
Gross Revenues................................ 474.6 478.7 468.6 641.6 943.2 1,120.3
Less: Promotional Allowances.................... 65.6 64.4 48.1 73.7 113.7 138.1
----------- ----------- ------------- ----------- ----------- -----------
Net Revenues.................................. 409.0 414.3 420.5 567.9 829.5 982.2
----------- ----------- ------------- ----------- ----------- -----------
Costs & Expenses:
Gaming........................................ 223.9 233.8 230.0 321.6 453.9 555.5
Pre-opening................................... 4.1 -- -- -- 4.1 --
General & Administrative...................... 83.3 80.2 64.2 88.0 147.5 168.1
Depreciation & Amortization................... 23.0 24.4 37.8 41.4 60.9 66.0
Other......................................... 28.4 32.0 26.2 33.5 54.6 65.5
----------- ----------- ------------- ----------- ----------- -----------
Total Costs and Expenses...................... 362.7 370.4 358.2 484.5 721.0 855.1
----------- ----------- ------------- ----------- ----------- -----------
Income from Operations.......................... 46.3 43.9 62.3 83.4 108.5 127.1
----------- ----------- ------------- ----------- ----------- -----------
Non-Operating Income.......................... 4.9 .6 10.7 1.1 16.6 2.9
Interest Expense.............................. (47.1) (48.6) (67.4) (94.7) (114.5) (144.1)
----------- ----------- ------------- ----------- ----------- -----------
Total Non-Operating Expense................... (42.2) 48.0 (56.7) (93.6) (97.9) (141.2)
----------- ----------- ------------- ----------- ----------- -----------
Income (loss) before extraordinary loss....... 4.1 (4.1) 5.6 (10.2) 10.6 (14.1)
Extraordinary Loss............................ (59.1) -- -- -- (59.1) --
----------- ----------- ------------- ----------- ----------- -----------
Net Income/(loss)............................. $ (55.0) $ (4.1) $ 5.6 $ (10.2) $ (48.5) $ (14.1)
----------- ----------- ------------- ----------- ----------- -----------
----------- ----------- ------------- ----------- ----------- -----------
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------
1996
1996 1997 TAJ 1997 1996 1997
PLAZA PLAZA ASSOCIATES TAJ TOTAL TOTAL
ASSOCIATES ASSOCIATES (1) ASSOCIATES TRUMP AC TRUMP AC
----------- ----------- ------------- ----------- ----------- -----------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Table Game Revenues............................. $ 104.1 $ 96.4 $ 161.9 $ 202.7 $ 266.0 $ 299.1
Incr (Decr) over Prior Period................... $ (7.7) $ 40.8 $ 33.1
Table Game Drop................................. $ 686.9 $ 654.4 $ 942.5 $ 1,279.1 $ 1,629.4 $ 1,933.5
Incr (Decr) over Prior Period................... $ (32.5) $ 336.6 $ 304.1
Table Win Percentage............................ 15.2% 14.7% 17.2% 15.9% 16.3% 15.5%
(.5) (1.3)
Incr (Decr) over Prior Period................... pts pts (.8) pts
Number of Table Games........................... 127 117 167 155 284 282
Incr (Decr) over Prior Period................... (10) (2) (12)
Slot Revenues................................... $ 264.8 $ 274.3 $ 206.2 $ 297.4 $ 471.0 $ 571.7
Incr (Decr) over Prior Period................... $ 9.5 $ 91.2 $ 100.7
Slot Handle..................................... $ 3,179.8 $ 3,381.1 $ 2,510.3 $ 3,583.7 $ 5,690.1 $ 6,964.8
Incr (Decr) over Prior Period................... $ 201.3 $ 1,073.4 $ 1,274.7
Slot Win Percentage............................. 8.3% 8.1% 8.2% 8.3% 8.3% 8.2%
(.2)
Incr (Decr) over Prior Period................... pts .1 pts (.1) pts
Number of Slot Machines......................... 3,629 4,083 3,799 4,136 7,428 8,219
Incr (Decr) over Prior Period................... 454 337 791
Poker Revenues.................................. -- -- $ 13.1 $ 16.0 $ 13.1 $ 16.0
Incr (Decr) over Prior Period................... -- $ 2.9 $ 2.9
Number of Poker Tables.......................... -- -- 64 63 64 63
Incr (Decr) over Prior Period................... -- (1) (1)
Other Gaming Revenues........................... -- -- $ 2.1 $ 2.3 $ 2.1 $ 2.3
Incr (Decr) over Prior Period................... -- $ .2 $ .2
Total Gaming Revenues........................... $ 368.9 $ 370.7 $ 383.3 $ 518.4 $ 752.2 $ 889.1
Incr (Decr) over Prior Period................... $ 1.8 $ 135.1 $ 136.9
</TABLE>
- ------------------------
(1) Since date of acquisition April 17, 1996.
Gaming revenues are the primary source of Trump AC's revenues. The increase
in gaming revenues is primarily attributable to the acquisition of Taj
Associates on April 17, 1996.
Table games revenues represent the amount retained by Trump AC from amounts
wagered at table games. The table win percentage 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 Atlantic City industry table win percentages were
15.4% and 15.0% for the years December 31, 1996 and 1997, respectively.
During the second quarter of 1997, Trump AC revised its estimates of the
useful lives of buildings, building improvements, and furniture and fixtures
which were acquired in 1996. Buildings and building improvements were
reevaluated to have a new forty year life and furniture and fixtures were
determined to have a seven year life. Trump AC believes these changes more
appropriately reflect the timing of the economic benefits to be received from
these assets during their estimated useful lives. For the year ended December
31, 1997, the net effect of applying these new lives was to increase net income
by $6.0 million.
Non-operating income for the year ended December 31, 1996 included a
one-time $15.0 million non-refundable licensing fee resulting from an agreement
with Atlantic Jersey Thermal Systems, Inc.
The extraordinary loss of $59.1 million for the year ended December 31, 1996
relates to the redemption of the Plaza Notes and the write-off of unamortized
deferred financing costs on April 17, 1996.
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996
The financial information presented below reflects the results of operations
of Trump AC. Because Trump AC has no business operations other than its interest
in Plaza Associates and Taj Associates its results of operations are not
discussed below. Taj Associates was acquired on April 17, 1996.
42
<PAGE>
The following table includes selected data of Plaza Associates and Taj
Associates (since date of acquisition) for the year ended December 31, 1996 and
of Plaza Associates for the year ended December 31, 1995:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1996
1995 1996 TAJ 1996
PLAZA PLAZA ASSOCIATES TOTAL
ASSOCIATES ASSOCIATES (1) TRUMP AC
----------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
(IN MILLIONS)
REVENUES:
Gaming....................................................... $ 298.1 $ 368.9 $ 383.3 $ 752.2
Other........................................................ 74.2 105.7 85.3 191.0
----------- ----------- ------------- -----------
Gross Revenues............................................... 372.3 474.6 468.6 943.2
Less: Promotional Allowances................................... 45.1 65.6 48.1 113.7
----------- ----------- ------------- -----------
Net Revenues................................................. 327.2 409.0 420.5 829.5
----------- ----------- ------------- -----------
Costs & Expenses:
Gaming....................................................... 164.4 223.9 230.0 453.9
Pre-opening.................................................. -- 4.1 -- 4.1
General & Administrative..................................... 65.5 83.3 64.2 147.5
Depreciation & Amortization.................................. 16.2 23.0 37.8 60.9
Other........................................................ 21.3 28.4 26.2 54.6
----------- ----------- ------------- -----------
Total Costs and Expenses..................................... 267.4 362.7 358.2 721.0
----------- ----------- ------------- -----------
Income from Operations......................................... 59.8 46.3 62.3 108.5
----------- ----------- ------------- -----------
Non-Operating Income (Expense)............................... (4.7) 4.9 10.7 16.6
Interest Expense............................................. (44.3) (47.1) (67.4) (114.5)
----------- ----------- ------------- -----------
Total Non-Operating Expense.................................. (49.0) (42.2) (56.7) (97.9)
----------- ----------- ------------- -----------
Income before extraordinary loss............................. 10.8 4.1 5.6 10.6
Extraordinary Loss........................................... (9.3) (59.1) -- (59.1)
----------- ----------- ------------- -----------
Net (Loss) Income.............................................. $ 1.5 $ (55.0) $ 5.6 $ (48.5)
----------- ----------- ------------- -----------
----------- ----------- ------------- -----------
Table Game Revenues............................................ $ 96.4 $ 104.1 $ 161.9 $ 266.0
Incr (Decr) over Prior Period.................................. $ 7.7 $ 161.9 $ 169.6
Table Game Drop................................................ $ 626.8 $ 686.9 $ 942.5 $ 1,629.4
Incr (Decr) over Prior Period.................................. $ 60.1 $ 942.5 $ 1,002.6
Table Win Percentage........................................... 15.4% 15.2% 17.2% 16.3%
(0.2)
Incr (Decr) over Prior Period.................................. pts 17.2pts .9 pts
Number of Table Games.......................................... 97 127 167 294
Incr (Decr) over Prior Period.................................. 30 167 197
Slot Revenues.................................................. $ 201.7 $ 264.8 $ 206.2 $ 471.0
Incr (Decr) over Prior Period.................................. $ 63.1 $ 206.2 $ 269.3
Slot Handle.................................................... $ 2,368.7 $ 3,179.8 $ 2,510.3 $ 5,690.1
Incr (Decr) over Prior Period.................................. $ 811.1 $ 2,510.3 $ 3,321.4
Slot Win Percentage............................................ 8.5% 8.3% 8.2% 8.3%
(0.2)
Incr (Decr) over Prior Period.................................. pts 8.2pts (.2) pts
Number of Slot Machines........................................ 2,339 3,629 3,799 7,428
Incr (Decr) over Prior Period.................................. 1,290 3,799 5,089
Poker Revenues................................................. -- -- $ 13.1 $ 13.1
Incr (Decr) over Prior Period.................................. -- $ 13.1 $ 13.1
Number of Poker Tables......................................... -- -- 64 64
Incr (Decr) over Prior Period.................................. -- 64 64
Other Gaming Revenues.......................................... -- -- $ 2.1 $ 2.1
Incr (Decr) over Prior Period.................................. -- $ 2.1 $ 2.1
Total Gaming Revenues.......................................... $ 298.1 $ 368.9 $ 383.3 $ 752.2
Incr (Decr) over Prior Period.................................. $ 70.8 $ 383.3 $ 454.1
</TABLE>
- ------------------------
(1) Since date of acquisition April 17, 1996.
43
<PAGE>
Gaming revenues are the primary source of Trump AC's revenues. The increase
in gaming revenues is primarily attributable to the acquisition of Taj
Associates on April 17, 1996.
Table games revenues represent the amount retained by Trump AC from amounts
wagered at table games. The table win percentage 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 Atlantic City industry table win percentages were
15.8% and 15.4% for the year ended December 31, 1995 and 1996, respectively.
Non-operating income for the year ended December 31, 1996 included a
one-time $15.0 million non-refundable licensing fee resulting from an agreement
with Atlantic Jersey Thermal Systems, Inc.
The extraordinary loss of $59.1 million for the year ended December 31, 1996
relates to the redemption of the Plaza Notes and the write-off of unamortized
deferred financing costs on April 17, 1996. The extraordinary loss of $9.3
million for the year ended December 31, 1995 relates to the redemption and
write-off of unamortized deferred financing costs relating to the redemption of
Plaza PIK Notes and Plaza PIK Note Warrants on June 12, 1995.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operating activities are Trump AC's principal source of
liquidity. Proceeds from the 1997 Offerings are intended by Trump AC to provide
expansion funds and working capital for operations. Accordingly, the company
expects to have sufficient liquidity to meet its obligations. Cash flow is
managed based upon the seasonality of the operations. Any excess cash flow
achieved from operations during peak periods is utilized to subsidize non-peak
periods where necessary. With proceeds from the 1996 Offerings, Trump AC, among
other things, retired the outstanding Taj Bonds, retired the outstanding Plaza
Notes, satisfied the indebtedness of Taj Associates under its loan agreement
with Nat West, purchased certain real property used in the operation of Trump
Plaza and the Taj Mahal and paid Bankers Trust to release certain liens and
guarantees.
The indentures under which the TAC I Notes, the Notes and the TAC III Notes
were issued restrict the ability of Trump AC and its subsidiaries to make
distributions or pay dividends, as the case may be, unless certain financial
ratios are achieved. In addition, the ability of Plaza Associates and Taj
Associates to make payments of dividends or distributions (except for payment of
interest) through Trump AC to THCR Holdings may be restricted by the New Jersey
Casino Control Commission ("CCC").
Capital expenditures for Trump AC for the year's ended December 31, 1996 and
1997 were $193.0 million and $56.4 million respectively. Capital expenditures
for the year ended December 31, 1996 includes Trump Plaza East and Trump World's
Fair expansions of $35.5 million and $57.9 million respectively. Capital
expenditures for improvements to Trump Plaza's existing facilities were
approximately $8.3 million and $14.8 million for the years ended December 31,
1996 and 1997, respectively. In addition, in 1996 and 1997, Plaza Associates
exercised its option to purchase from Trump Seashore Associates and Seashore
Four Associates, both entities beneficially owned by Trump, two of the parcels
of land underlying Trump Plaza's main tower, pursuant to the terms of the
leases, the payments under which were terminated upon the exercise of such
option. The exercise price and associated closing costs were $14.5 million for
Trump Seashore Associates and $10.2 million for Seashore Four Associates.
Capital expenditures attributable to the Taj Mahal were $90.9 million for
the period from acquisition, April 17, 1996 , to December 31, 1996 and $40.8
million for the year ended December 31, 1997. Capital expenditures for
improvements to existing facilities were approximately $18.8 million for the
period from acquisition, April 17, 1996, to December 31, 1996 and $7.6 million
for the year ended December 31, 1997. Capital expenditures attributable to the
expansion of the facility were approximately $10.3 million for the period from
acquisition, April 17, 1996, to December 31, 1996 and $33.2 million for the year
ended December 31, 1997. Capital expenditures for the period from acquisition,
April 17, 1996, to December 31,
44
<PAGE>
1996 included the purchase of property previously leased upon which a portion of
the casino hotel complex is situated for $61.8 million.
The Taj Mahal Expansion consisted of the construction of a new 14-bay bus
terminal which was completed in December 1996, a 2,400 space expansion of the
existing self parking facilities, which was completed in May 1997, and an
approximate 7,000 square foot casino expansion with 260 slot machines which was
completed in July 1997. The total costs of the Taj Mahal Expansion including
amounts expended in 1996 were approximately $43.5 million and have been funded
principally out of cash from operations.
Trump AC has assessed the Year 2000 issue and has begun implementing a plan
to resolve the issue, which is expected to be completed in early 1999. Based
upon management's assessment it is anticipated that associated costs incurred to
satisfactorily complete the plan will not be material.
SEASONALITY
The gaming industry in Atlantic City is seasonal, with the heaviest activity
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 operations as a result of inflation
during 1995, 1996 or 1997.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Pursuant to the General Instructions to Rule 305 of Regulation S-K, the
quantitative and qualitative disclosures called for by Rule 305 of Regulation
S-K are inapplicable to the Registrants at this time.
45
<PAGE>
BUSINESS
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.
Management believes that as a result of the Trump Plaza Expansion and Trump
Plaza's strategic location, Trump Plaza is one of the premier host properties in
Atlantic City. The Trump Plaza Expansion was completed in May 1996 and increased
Trump Plaza's prime central frontage on The Boardwalk to nearly a quarter of a
mile. Management believes that the construction of the new convention center and
the tourist corridor linking the new convention center with The Boardwalk
enhances the desirability of Atlantic City generally and, as a result of Trump
Plaza's central location, benefits Trump Plaza in particular. In addition,
management has taken advantage of recent gaming regulatory changes that 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.
As part of the Trump Plaza Expansion, Trump Plaza opened the Ocean View
Casino and Bar and a total of 349 rooms, including nine super suites, located at
Trump Plaza East, which is fully integrated into Trump Plaza. Trump Plaza East
has approximately 15,000 square feet of casino space. Trump Plaza also completed
construction of a new entranceway to Trump Plaza to provide easier access by car
to Trump Plaza.
In May 1996, Trump AC completed the renovations and integration of Trump
World's Fair, located on The Boardwalk adjacent to the original Atlantic City
Convention Center, into Trump Plaza. Trump World's Fair contains 49,193 square
feet of casino floor space, approximately 16,000 square feet of which is
directly accessible from The Boardwalk, and 500 hotel rooms, connected to Trump
Plaza's main tower by an enclosed walkway overlooking The Boardwalk.
Management believes the increased hotel capacity as a result of the Trump
Plaza Expansion enables Trump Plaza to better meet demand and accommodate its
casino guests, as well as to host additional and larger conventions and
corporate meetings.
The following table details Trump Plaza's current casino and hotel capacity:
<TABLE>
<CAPTION>
TRUMP TRUMP
PLAZA MAIN TRUMP WORLD'S
FACILITY PLAZA EAST FAIR TOTAL
----------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Gaming square footage........................... 74,226 14,886 49,193 138,305
Slot machines................................... 2,201 371 1,518 4,090
Table games..................................... 101 0 16 117
Hotel rooms..................................... 555 349 500 1,404
</TABLE>
Trump Plaza's management team has launched a variety of initiatives designed
to increase the level of casino gaming activity generally at Trump Plaza and to
attract casino patrons who tend to wager more frequently 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.
46
<PAGE>
ATLANTIC CITY MARKETING STRATEGY
TRUMP PLAZA. Trump Plaza East has been integrated into Trump Plaza and
together the two are operated as a single casino hotel facility. Trump Plaza
presently intends to 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 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 is seeking 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 World's Fair features a Boardwalk
level casino offering walk-in customers direct access from The Boardwalk to 569
slot machines. In addition, Trump World's Fair contains a new bus terminal that
has a dedicated escalator leading directly to a separate casino entertainment
area that contains a 500-seat buffet-style restaurant and a casino with
approximately 510 slot machines. The new bus terminal and dedicated casino
facilities allow Trump World's Fair to serve efficiently a high volume of bus
customers. The second floor of Trump World's Fair has approximately 439 slot
machines and 16 table games along with additional restaurants. Moreover, with
its prime location adjoining the original Atlantic City Convention Center and
near the new Atlantic City Convention Center, and 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.
TRUMP PLAZA BUSINESS STRATEGY
GENERAL. A primary element of Trump Plaza's business strategy is to seek to
attract patrons who tend to wager more frequently and in larger denominations
than the typical Atlantic City gaming customer. Such high-end players typically
wager $5 or more per play in slots and $25 or more per play in table games. In
the fall of 1992, Plaza Associates decided to de-emphasize marketing efforts
directed at "high roller" patrons from the Far East, who tend to wager $50,000
or more per play in table games. Plaza Associates determined that the potential
benefit derived from these patrons did not outweigh the high costs associated
with attracting such players and the resultant volatility in the results of
operations of Trump Plaza. Revenues derived from high roller patrons have
declined since 1992, although management believes that such revenue loss has not
had a significant impact on profitability for the reasons discussed above. In
addition, this shift in marketing strategy has allowed Plaza Associates to focus
its efforts on attracting high-end players.
Although considered one property, Trump Plaza and Trump World's Fair have
separate marketing identities. Trump Plaza caters to the mid to high level
segment while Trump World's Fair focuses on the "middle" market. Trump Plaza's
concentration of special events, entertainment, suites and variety of gourmet
restaurants define its presence and highly perceived image. The suite renovation
and high-end slot club expansion projects indicate Plaza Associates' commitment
to this segment of the market. While Trump Plaza strives to accommodate the more
lucrative drive-in patron, Trump World's Fair offers a fun, relaxing experience
which is extremely appealing to the bus rider. A combination of lower slot
denominations, including Atlantic City's largest nickel lounge, lower table
limits, sweepstakes, bus bingo programs, on-floor tournaments and a premier
buffet make this possible.
"COMPING" STRATEGY. In order to compete effectively with other Atlantic
City casino hotels, Plaza Associates offers complimentary drinks, meals, room
accommodations and/or travel arrangements to its patrons ("complimentaries" or
"comps"). Management monitors Trump Plaza's policy so as to provide
complimentaries primarily to patrons with a demonstrated propensity to wager at
Trump Plaza. A patron's propensity to wager is determined by a review of the
patron's prior gaming history at Trump Plaza as well
47
<PAGE>
as other gaming establishments in Atlantic City. Each patron is analyzed to
ensure that the patron's gaming activity, net of any complementaries, is
profitable to Plaza Associates.
ENTERTAINMENT. 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.
PLAYER DEVELOPMENT/CASINO HOSTS. Plaza Associates currently employs gaming
representatives in New Jersey, New York and other states, as well as several
international representatives, to promote Trump Plaza 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. Trump Plaza's casino hosts
assist patrons on the casino floor, make room and dinner reservations and
provide general assistance. They also solicit Trump Card (the frequent player
slot card) sign-ups in order to increase Plaza Associates' marketing base.
PROMOTIONAL ACTIVITIES. The Trump Card constitutes a key element in Trump
Plaza's direct marketing program. 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. Plaza Associates' computer systems record data
about the cardholders, including playing preferences, frequency and denomination
of play and the amount of gaming revenues produced.
Trump Plaza designs promotional offers, conveyed via direct mail and
telemarketing, to patrons expected to provide revenues based upon their
historical gaming patterns. Such information is gathered on slot wagering by the
Trump Card and on table game wagering by the casino game supervisors.
Promotional activities include the mailing of vouchers for complimentary slot
play. Trump Plaza also utilizes a special events calendar (E.G., birthday
parties, sweepstakes and special competitions) to promote its gaming operations.
BUS PROGRAM. Trump Plaza has a bus program, which transports approximately
1,700 gaming patrons per day during the week and 2,400 per day on the weekends.
Trump Plaza's bus program offers incentives and discounts to certain scheduled
and chartered bus customers. Trump Plaza's Transportation Facility (as defined)
contains 13 bus bays and is connected by an enclosed pedestrian walkway to Trump
Plaza. The Transportation Facility provides patrons with immediate access to the
casino, and contains a comfortable lounge area for patrons waiting for return
buses. Trump World's Fair has a newly constructed bus terminal with a dedicated
escalator leading directly to a casino entertainment area complete with an
international buffet. Trump World's Fair's bus terminal provides patrons with a
spacious lounge area with a view of the Atlantic Ocean and The Boardwalk. Trump
World's Fair's bus program transports approximately 1,200 gaming patrons per day
during the week and 2,100 per day on weekends.
CREDIT POLICY. Historically, Trump Plaza has extended credit on a
discretionary basis to certain qualified patrons. For the years ended December
31, 1995, and 1996 and 1997, credit play as a percentage of total dollars
wagered was approximately 17.7%, 17.4% and 18.9%, respectively. As part of Trump
Plaza's business strategy, Trump Plaza has imposed stricter standards on
applications for new or additional credit. Trump Plaza bases credit limits on
each individual patron's creditworthiness, as determined by an examination of
the following criteria: (i) checking each patron's personal checking account for
current and average balances, (ii) performing a credit check on each domestic
patron and (iii) checking each patron's credit limits and indebtedness at all
casinos in the United States as well as many island casinos. The above
determination of a patron's continued creditworthiness is performed for
continuing patrons on a yearly basis or more frequently if Trump Plaza deems a
re-determination of creditworthiness is necessary. In addition, depositing of
markers is regulated by the State of New Jersey. Markers in increments of $1,000
or less are deposited in a maximum of 7 days; markers of increments of $1,001 to
$5,000 are deposited in a
48
<PAGE>
maximum of 14 days; and markers in increments of over $5,001 are deposited in a
maximum of 45 days. Markers may be deposited sooner at the request of patrons or
at Trump Plaza's discretion.
FACILITIES AND AMENITIES
TRUMP PLAZA. The casino in Trump Plaza's main tower currently offers 101
table games and 2,201 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.
The entry level of Trump Plaza's main tower includes a cocktail lounge,
three 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 an ocean view high-end slot area. An enclosed walkway
connects Trump Plaza at the casino level with the original Atlantic City
Convention Center and with Trump World's Fair.
On February 16, 1996, Trump Plaza opened the approximately 15,000
square-foot Ocean View Casino and Bar and 249 of its 349 hotel rooms at Trump
Plaza East. Management opened the remaining rooms and suites at Trump Plaza East
in March 1996. 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, complemented by six additional television sets along the
bar. With its high ceilings and windows overlooking the Atlantic Ocean and The
Boardwalk, Trump Plaza has created a new and exciting entertainment environment
for its casino patrons.
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's main tower 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.
Trump Plaza's main tower is connected by an enclosed pedestrian walkway to a
10-story parking garage, which can accommodate approximately 2,650 cars, and
contains 13 bus bays, a comfortable lounge, a gift shop and a 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 Entertainment Company, L.P. ("Time Warner") opened
its second largest Warner Brothers Studio Store occupying the entire first floor
of retail space on The Boardwalk at Trump Plaza East (approximately 17,000
square feet).
TRUMP WORLD'S FAIR. Trump World's Fair is connected to Trump Plaza's main
tower by an enclosed walkway overlooking The Boardwalk and adds an additional
500 hotel rooms to Trump Plaza. In addition, Trump World's Fair is outfitted
with approximately 50,000 square feet of casino floor space housing 1,518-slot
machines and 16 table games. In addition to the casino, Trump World's Fair
features three restaurants, including a state-of-the-art buffet, a cocktail
lounge, convention and ballroom and meeting room space. The enclosed walkway
runs through a portion of the original Atlantic City Convention Center, which is
located between Trump World's Fair and Trump Plaza's main tower. Plaza
Associates has acquired an easement with regard to this walkway through the
original Atlantic City Convention Center.
49
<PAGE>
EMPLOYEES AND LABOR RELATIONS
Plaza Associates has approximately 3,770 full time equivalent employees of
whom approximately 1,500 are covered by collective bargaining agreements. The
collective bargaining agreement with Local No. 54 expires on September 15, 1999.
Management believes that its relationships with its employees are satisfactory.
Certain of Plaza Associates' employees must be licensed or registered under the
Casino Control Act.
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 ("Local 137"). In connection with such finding, 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 desired 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.
HISTORICAL BACKGROUND
THE 1992 EVENTS. Plaza Associates and Plaza Funding restructured their
indebtedness through the 1992 Plaza Restructuring in order to alleviate their
liquidity problems. On May 29, 1992, Plaza Associates and Plaza Funding
completed the 1992 Plaza Restructuring, the purpose of which 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 of
Plaza Funding 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 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 1993 EVENTS. The Successor Plaza Bonds and the Stock Units were
redeemed in 1993 out of the proceeds of a refinancing designed to enhance Plaza
Associates' liquidity and to position Plaza Associates for a subsequent
deleveraging transaction. The 1993 refinancing included (i) the sale by Plaza
Funding of the Plaza Notes and (ii) the sale by Trump AC (known prior to April
17, 1996 as Trump Plaza Holding Associates) of the Plaza PIK Notes and the Plaza
PIK Note Warrants. Upon consummation of the
50
<PAGE>
refinancing, Plaza Funding held a 1% equity interest in Plaza Associates and
Trump AC Holding, known prior to April 17, 1996 as Trump Plaza Holding, Inc.,
held a 99% equity interest.
THE 1995 AND 1996 EVENTS. In connection with the initial public offering
(the "June 1995 Stock Offering") of 10 million shares of THCR Common Stock, THCR
Holdings repurchased and redeemed the Plaza PIK Notes and the Plaza PIK Note
Warrants. In addition, in connection with the June 1995 Stock Offering and the
offering by THCR Holdings and its wholly owned finance subsidiary, THCR Funding,
of the Senior Notes (together with the June 1995 Stock Offering, the "June 1995
Offerings"), Trump transferred, pursuant to a contribution agreement, to THCR
Holdings his ownership interests in Plaza Funding and Trump AC. Upon the
consummation of the June 1995 Offerings, THCR Holdings owned Plaza Associates.
In connection with the Taj Acquisition, THCR Holdings became the owner of both
Plaza Associates and Taj Associates, through its ownership interest in Trump AC.
As part of the 1996 Offerings, Trump AC and its wholly owned finance subsidiary,
Trump AC Funding, issued the TAC I Notes.
THE 1997 EVENTS. In December 1997, Trump AC and Funding II issued the
Original Notes and Trump AC and Funding III issued the TAC III Original Notes.
THE TAJ MAHAL
The Taj Mahal ranked first among all Atlantic City casinos in terms of total
gaming revenues for the year ended December 31, 1997. 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 growth of the Atlantic City market.
In recent years, Taj Associates, the owner and operator of the Taj Mahal,
has completed construction of the Taj Entertainment Complex, reconfigured and
expanded the casino floor to provide race simulcasting, poker wagering and keno,
opened an Asian themed table game area, opened the Bengal Club for mid-level
slot players 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 customers' overall gaming experience. Taj Associates continually
monitors operations to adapt to and anticipate industry trends. From 1994 to
mid-1997, the Taj Mahal refurbished substantially all of its hotel guest rooms
and corridors and replaced all of its existing slot machines with new, more
efficient machines with bill acceptors. Moreover, to further attract high-end
players, the Taj Mahal opened the Dragon Room, an Asian themed table gaming area
with 16 table games, and the Sultan's Palace, a separate 5,900 square-foot
high-end slot lounge. In conjunction with the Sultan's Palace, the Taj Mahal
opened the relocated and expanded President's Club for high-end slot players.
The Taj Mahal Expansion consisted of the construction of a new 14-bay bus
terminal, which was completed in December 1996, a 2,400 space expansion of the
existing self parking facilities, which was completed in May 1997, and an
approximately 7,000 square foot casino expansion with approximately 260 slot
machines with frontage on The Boardwalk, which was completed in July 1997. In
addition, to increase entertainment opportunities for customers, the Hard Rock
Cafe opened in November 1996, the All Star Cafe opened in March 1997 and the
Stage Deli of New York opened in October 1997. A Warner Brothers Studio Store
opened at the Taj Mahal in May 1997.
THE TAJ MAHAL OPERATIONS
GENERAL. The Taj Mahal currently has approximately 147,700 square feet of
gaming space, 218 table games and 4,136 slot machines, which includes an
approximately 12,000 square-foot poker, keno and race simulcasting room with 63
poker tables, which was added in 1993 and expanded in 1994. The casino's
offerings include blackjack, progressive blackjack, craps, roulette, baccarat,
mini baccarat, sic-bo, pai gow,
51
<PAGE>
pai gow poker, Caribbean stud poker, big six, mini big six, mini dice 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 May 1996, the Taj Mahal opened the Sultan's Palace,
a high-end slot lounge. In August 1996, the Taj Mahal opened the relocated and
expanded President's Club for high-end slot players in conjunction with the
Sultan's Palace.
In December 1996, the Taj Mahal opened a new bus terminal with 14 bays. In
November 1996, the Hard Rock Cafe opened at the Taj Mahal adjacent to the casino
and The Boardwalk. In March 1997, the All Star Cafe opened at the Taj Mahal. A
Warner Brothers Studio Store opened in May 1997. An additional simulcasting
facility featuring horse racing was completed in June 1997. Construction of an
approximately 7,000 square-foot casino expansion with 260 slot machines, with
Boardwalk frontage, was completed in July 1997. In October 1997, the Stage Deli
of New York opened at the Taj Mahal. In addition, 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 high end 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 30 acres of land. The Taj Mahal has
1,250 guest rooms (including 242 suites), 18 dining and 12 beverage locations,
parking for approximately 6,950 cars, a 14-bay bus terminal and approximately
65,000 square feet of ballroom, meeting room and pre-function area space. In
addition, the Taj Mahal 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 (the "Taj Entertainment Complex") and the Mark Etess
Arena, which comprises an approximately 63,000 square-foot exhibition hall and
entertainment facility. The Xanadu Theater and 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.
GAMING ENVIRONMENT. The Taj Mahal's management continues to capitalize on
the Taj Mahal's status as one of the largest facilities in Atlantic City and a
"must see" attraction, while maintaining the attractiveness of the property and
providing a comfortable gaming experience. In 1994, the Taj Mahal completed a
major redecoration of the hotel lobby, a casino floor expansion and a
reconfiguration, as well as the addition of a new mid-level player slot club.
The casino floor expansion and reconfiguration accommodated the addition of
keno, poker tables and slot machines. In the period 1994 through 1996, the Taj
Mahal substantially replaced all of its existing slot machines with new, more
efficient machines with bill acceptors. In addition, in June 1993, the Taj Mahal
completed a 10,000 square-foot poker and simulcast area (which was subsequently
enlarged to 12,000 square feet), which features 63 poker tables in the largest
poker room in Atlantic City. For the year ended December 31, 1997, the Taj Mahal
captured approximately 45.3% of the total Atlantic City poker revenues. In 1996
and 1997 the Taj Mahal expanded its casino floor by approximately 6,200 and
8,600 square feet, respectively. The 1997 expansion accommodated casino space
with Boardwalk frontage and a second horserace simulcasting location.
The Taj Mahal currently intends to reconfigure its casino floor, subject to
approval by the CCC on an ongoing basis, to accommodate changes in patron
demand. Management continuously monitors the configuration of the casino floor
and the games it offers to patrons with a view towards making changes and
improvements. For example, the Taj Mahal's casino floor has clear, large signs
for the convenience of patrons. Additionally, as new games have been approved by
the CCC, management has integrated such games to the extent it deems
appropriate. In 1994, the Taj Mahal introduced the newly-approved games of
52
<PAGE>
keno and Caribbean stud poker and, in 1995, introduced the games of pai gow, pai
gow poker and let it ride poker. Progressive blackjack and mini dice were also
added in 1996 and 1997, respectively.
"COMPING" STRATEGY. In order to compete effectively with other casino
hotels, the Taj Mahal offers complimentaries. Currently, the policy at the Taj
Mahal is to focus 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. A patron's propensity
to wager is determined by a review of the patron's prior gaming history at the
Taj Mahal as well as other gaming establishments in Atlantic City. Each patron
is analyzed to ensure that the patron's gaming activity, net of any
complementaries, is profitable to Taj Associates. 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. The Taj Mahal believes headline entertainment, as well as
other entertainment and revue shows, is an effective means of attracting and
retaining gaming patrons. 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 Xanadu Theater, together with the
Mark Etess Arena (an approximately 63,000 square-foot exhibition hall facility),
afford the Taj Mahal more flexibility in the use of its larger entertainment
arena 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. The Taj Mahal employs sales representatives as a means
of attracting high-end slot and table gaming patrons to the property. The Taj
Mahal currently employs numerous gaming representatives in New Jersey, New York
and other states, as well as several international representatives, to host
special events, offer incentives and contact patrons directly in the United
States, Canada and South America. In addition, targeted marketing to
international clientele will be continued and expanded through new sales
representatives in Latin America, Mexico, Europe, the Far East and the Middle
East.
The casino hosts assist patrons on the casino floor, make room and dinner
reservations and provide general assistance. They also solicit Trump Card (a
player identification card) sign-ups in order to increase the Taj Mahal's
marketing base.
The Taj Mahal also plans to continue the development of its slot and coin
programs through direct mail and targeted marketing campaigns emphasizing the
high-end player. "Motorcoach Marketing," the Taj Mahal's customer bus-in
program, has been an important component of player development and will continue
to focus on tailoring its player base and maintaining a low-cost package.
PROMOTIONAL ACTIVITIES. The Trump Card, a player identification card,
constitutes a key element in the Taj Mahal's direct marketing program. Both
table and slot machine players are encouraged to register for and utilize their
personalized Trump Card to earn various complimentaries and incentives based on
their level of play. The Trump Card is inserted during play into a card reader
attached to the table or slot machine for use in computerized rating systems.
These computer systems record data about the cardholder, including playing
preferences, frequency and denomination of play and the amount of gaming
revenues produced. Sales and management personnel are able to monitor the
identity and location of the cardholder and the frequency and denomination of
such cardholder's play. They can also use this information to provide attentive
service to the cardholder while the patron is on the casino floor.
The Taj Mahal designs promotional offers, conveyed via direct mail and
telemarketing, to patrons expected to provide revenues based upon their
historical gaming patterns. Such information is gathered on slot wagering by the
Trump Card and on table game wagering by the casino games supervisor.
Promotional activities at the Taj Mahal include the mailing of vouchers for
complimentary slot play and utilization of a
53
<PAGE>
special events calendar (E.G., birthday parties, sweepstakes and special
competitions) to promote its gaming operations.
The Taj Mahal conducts slot machine and table game tournaments in which cash
prizes are offered to a select group of players invited to participate in the
tournament based upon their tendency to play. Special events such as "Slot
Sweepstakes" and "bingo" are designed to increase mid-week business. Players at
these tournaments tend to play at their own expense during "off-hours" of the
tournament. At times, tournament players are also offered special dining and
entertainment privileges that encourage them to remain at the Taj Mahal.
CREDIT POLICY. Historically, the Taj Mahal has extended credit on a
discretionary basis to certain qualified patrons. For the years ended December
31, 1995, 1996 and 1997, the Taj Mahal's credit play as a percentage of total
dollars wagered was approximately 24.5%, 29.7% and 31.2%, respectively. The Taj
Mahal bases credit limits on each individual patron's creditworthiness, as
determined by an examination of the following criteria: (i) checking each
patron's personal checking account for current and average balances, (ii)
performing a credit check on each domestic patron and (iii) checking each
patron's credit limits and indebtedness at all casinos in the United States as
well as many island casinos. The above determination of a patron's continued
creditworthiness is performed for continuing patrons on a yearly basis or more
frequently if the Taj Mahal deems a re-determination of creditworthiness is
necessary. In addition, depositing of markers is regulated by the State of New
Jersey. Markers in increments of $1,000 or less are deposited in a maximum of 7
days; markers of increments of $1,001 to $5,000 are deposited in a maximum of 14
days; and markers in increments of over $5,001 are deposited in a maximum of 45
days. Markers may be deposited sooner at the request of patrons or at the Taj
Mahal's discretion.
EMPLOYEES
Taj Associates has approximately 4,500 full time equivalent employees for
the operation of the Taj Mahal, of whom approximately 1,750 employees are
covered by collective bargaining agreements. The collective bargaining agreement
with Local No. 54 expires on September 15, 1999. Management believes that its
relationships with its employees are satisfactory and that its staffing levels
are sufficient to provide superior service. Certain of Taj Associates' employees
must be licensed or registered under the Casino Control Act.
TAJ ACQUISITION
On April 17, 1996, a subsidiary of THCR was merged (the "Taj Merger") with
and into THCR Holding Corp., known prior to April 17, 1996 as Taj Mahal Holding
Corp. As a result of the Taj Merger and the related transactions discussed
below, THCR Holdings acquired Taj Associates (the "Taj Acquisition"). The Taj
Acquisition included, among other things:
(a) the payment of an aggregate of approximately $31,181,000 in cash and
the issuance of 323,423 shares of THCR Common Stock to the holders of THCR
Holding Corp.'s Class A Common Stock, par value $.01 per share;
(b) the contribution (i) by Trump to Trump AC of all of his direct and
indirect ownership interests in Taj Associates, pursuant to the contribution
agreement, dated as of April 17, 1996, among, Trump, TCI, TM/GP Corporation,
known after the Taj Acquisition as THCR/LP Corporation ("THCR/LP"), and THCR
Holdings in exchange for a modification of Trump's limited partnership
interest in THCR Holdings and (ii) by THCR to Trump AC of all of its direct
ownership interests in Taj Associates acquired in the Taj Merger;
(c) the public offerings by (i) THCR of 12,500,000 shares of THCR Common
Stock (plus 750,000 shares of THCR issued in connection with the partial
exercise of the underwriters' over-allotment
54
<PAGE>
option (together, the "1996 Stock Offering")), and (ii) Trump AC and Trump
AC Funding of the TAC I Notes (collectively with the 1996 Stock Offering,
the "1996 Offerings");
(d) the redemption, immediately prior to the Taj Merger, of the
outstanding shares of THCR Holding Corp.'s Class B Common Stock, par value
$.01 per share, in accordance with its terms, for $.50 per share;
(e) the redemption of the outstanding Taj Bonds;
(f) the retirement of the outstanding Plaza Notes;
(g) the satisfaction of the indebtedness of Taj Associates under its
loan agreement with Nat West;
(h) the purchase of certain real property used in the operation of the
Taj Mahal (the "Specified Parcels") that was leased from Taj Mahal Realty
Corp. ("Realty Corp.");
(i) the purchase of Trump Plaza East;
(j) the payment to Bankers Trust to obtain releases of liens and
guarantees that Bankers Trust had in connection with indebtedness owed by
Trump to Bankers Trust; and
(k) the issuance to Trump of warrants to purchase 1,800,000 shares of
THCR Common Stock (the "Trump Warrants").
TCS
TCS, a New Jersey limited liability company, was formed on June 27, 1996 for
the purpose of reducing operating costs by consolidating certain administrative
functions of, and providing certain services to, each of Plaza Associates and
Taj Associates, the owner and operator of Trump Plaza and the Taj Mahal,
respectively. Trump AC and TACC, a wholly owned subsidiary of Trump AC, own a
99% and 1% interest, respectively, in TCS. In June 1996, the CCC granted TCS an
initial casino license which, in July 1997, was renewed through July 1998. On
July 8, 1996, TCS, Plaza Associates and Taj Associates entered into an agreement
pursuant to which TCS provides to each of Taj Associates and Plaza Associates
certain management, financial and other functions and services necessary and
incidental to the respective operation of each of their casino hotels. On
October 23, 1996, TCS, Plaza Associates, Taj Associates and Castle Associates,
the owner and operator of Trump Marina, entered into an Amended and Restated
Services Agreement pursuant to which TCS also provides those same functions and
services to Castle Associates in connection with the operation of Trump Marina.
Trump Communications, a New Jersey limited liability company and a subsidiary of
TCS, was formed on January 31, 1997 for the purpose of reducing operating costs
by consolidating advertising functions of, and providing certain services, to
each of Plaza Associates, Taj Associates and Castle Associates.
TRADEMARK/LICENSING
Subject to certain restrictions, THCR has the exclusive right to use the
"Trump" name and likeness in connection with gaming and related activities
pursuant to the License Agreement. Pursuant to the License Agreement, Trump
granted to THCR the world-wide right and license to use the Trump Names and the
Marks in connection with casino and gaming activities and related services and
products. 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 pursuant to
an employment, management, consulting or similar services agreement with THCR.
Upon expiration of the term of the license, Trump will 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 a 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.
55
<PAGE>
CERTAIN INDEBTEDNESS
TAC I NOTES. As a part of the Taj Acquisition, Trump AC and Trump AC
Funding issued the TAC I Notes, which mature on May 1, 2006. The TAC I Notes
include restrictive covenants prohibiting or limiting, among other things, the
sale of assets, the making of acquisitions and other investments, capital
expenditures, the incurrence of additional debt and liens and the payment of
dividends and distributions. Non-compliance could result in the acceleration of
such indebtedness.
TAC III NOTES. Concurrent with the Initial Offering, Trump AC and Funding
III, a wholly owned subsidiary of Trump AC, offered $25,000,000 aggregate
principal amount of TAC III Notes in the Concurrent Initial Offering. The TAC
III Notes include restrictive covenants prohibiting or limiting, among other
things, the sale of assets, the making of acquisitions and other investments,
capital expenditures, the incurrence of additional debt and liens and the
payment of dividends and distributions. Non-compliance could result in the
acceleration of such indebtedness.
PLAZA NOTES. An aggregate of $330 million of the Plaza Notes of Plaza
Funding were retired in connection with the Taj Acquisition. The Plaza Notes
were issued by Plaza Funding, with Plaza Associates providing a full and
unconditional guaranty thereof. The Plaza Notes were retired through repurchase
and defeasance and Plaza Funding and Plaza Associates were released from their
obligations under all financial and negative covenants and certain other
provisions contained in the indenture under which the Plaza Notes were issued
(the "Plaza Note Indenture"), and the Plaza Note Security (as defined in the
Plaza Note Indenture) was released against the deposit of cash or U.S.
government obligations in an amount sufficient to effect the redemption on June
15, 1998 of all of the Plaza Notes so defeased, at a redemption price of 105% of
the principal amount thereof, together with accrued and unpaid interest to such
date. Additionally, Plaza Funding irrevocably instructed the Plaza Note Trustee
(as defined in the Plaza Note Indenture) to provide notice of such redemption
not less than 30 or more than 60 days prior to June 15, 1998.
OTHER INDEBTEDNESS. In addition to the foregoing, Trump AC's long-term
indebtedness includes approximately $11.3 million of indebtedness, including, as
of December 31, 1997, approximately $3.2 million due under outstanding mortgage
notes described above.
ATLANTIC CITY MARKET
The Atlantic City 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 $3.91 billion in gaming revenues
in 1997, an approximately 2.1% increase over 1996 gaming revenues of
approximately $3.83 billion. From 1992 to 1997, total gaming revenues in
Atlantic City have increased approximately 21.4%, while hotel rooms increased by
25.5% during that period. Although total visitor volume to Atlantic City
remained relatively constant in 1997, the volume of bus customers dropped to 9.4
million in 1997, continuing a decline from 11.7 million in 1991. The volume of
customers traveling by other means to Atlantic City has grown from 20.4 million
in 1992 to 34.3 million in 1997.
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 were no significant additions to hotel capacity
in Atlantic City until 1996. Las Vegas visitor volumes have increased, in part,
due to the continued addition of new hotel capacity. Both markets have exhibited
a strong 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
56
<PAGE>
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 3.6% in 1997, continuing a trend
of increases over the past five years. From 1992 through 1997, slot revenue
growth in Atlantic City has averaged 5.2% per year. Total table revenue did not
increase in 1997, while table game revenue from 1992 to 1997 has increased on
average 0.8% 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. 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 1992, the number of slot machines in Atlantic City has increased 54%,
while the number of table games has increased by 12.6%. Slot revenues increased
from 66% of total casino revenues in 1992 to 70% in 1997. 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.
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, comprehensive
amendments to New Jersey gaming laws were made in January 1995, which have
eliminated duplicative regulatory oversight and channeled operator's funds from
regulatory support into uses of the CRDA. Administrative costs of regulation
will be reduced while increasing funds will be available for new development. In
addition, in 1994, legislation was enacted which eliminated the requirement that
a casino consist of a "single room" in a casino hotel. A casino may now consist
of "one or more locations or rooms" approved by the CCC for casino gaming.
Atlantic City's new convention center, with 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, is the largest exhibition
space between New York City and Washington, D.C. It is located at the base of
the Atlantic City Expressway and opened in May 1997. The old convention center,
built in the late 1920s and located on The Boardwalk, will receive an
approximately $50 million facelift following the opening of the new convention
center and will continue to be used for special events. The State of New Jersey
has commenced a long-term capital plan to upgrade and expand the Atlantic City
International Airport. To date, approximately $18 million has been spent on
renovation of the airport terminal and upgrades of the airport's access roads
and parking facilities.
In addition to the planned casino expansions, major infrastructure
improvements have begun. The CRDA is currently overseeing the development of the
$88 million "Grand Boulevard" corridor that will link the new convention center
with The Boardwalk. The project has been substantially completed as of December
31, 1997.
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 and high occupancy rates, significant
investment in the Atlantic City market has been initiated and/or announced.
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."
57
<PAGE>
COMPETITION
ATLANTIC CITY. Competition in the Atlantic City casino hotel market is
intense. The Atlantic City Properties compete with each other and with other
casino hotels located in Atlantic City, including Trump Marina, which is wholly
owned by THCR Holdings, the parent of Trump AC. 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
Atlantic City Properties, all of which compete for patrons. In addition, there
are several sites on The Boardwalk and the Marina 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
casino resort by Mirage to be built at the Marina and a casino resort by MGM
Grand, Inc. to be built on The Boardwalk), although management is not aware of
any current construction on such sites by third parties. Substantial new
expansion and development activity has recently been completed or has been
announced in Atlantic City, including the expansion at Harrah's, Hilton,
Caesar's, Resorts, Tropicana and Bally's Wild West Casino, which intensifies
competitive pressures in the Atlantic City market. 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 the Atlantic City Properties. There also can be no
assurance that the Atlantic City development projects which are planned or
underway will be completed.
The Atlantic City Properties 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, the Atlantic City Properties 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 and Niagara
Falls), 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 December 1996, Bay Cruises began
operation of a gambling cruise ship where patrons are taken from a pier in
Sheepshead Bay in Brooklyn, New York to international waters to gamble. Bay
Cruises temporarily ceased operations pending the outcome of its appeal of a
federal prosecutor's ruling that the ships must travel 12, rather than 3, miles
offshore to reach international waters. On December 2, 1997, a federal judge
overruled the prosecutor's ruling, and Bay Cruises announced plans to resume
operations. In September 1997, another gambling cruise ship was launched off the
coast of Montauk, New York. On January 28, 1998, Manhattan Cruises began
offering nightly gambling cruises departing from Manhattan, New York City and
five other companies are currently seeking permission to operate similar
cruises. On December 5, 1997, the mayor of New York City proposed the
construction of a casino on Governors Island, located in the middle of New York
Harbor; however the proposal would require an amendment to the New York State
Constitution and the sale of the island to New York by the federal government.
In Delaware, a total of approximately 2,000 slot machines were installed at 3
horse tracks in 1996, and track owners in several other states are seeking to do
the same. In December 1996, the temporary Casino Niagara opened in Niagara
Falls, Ontario. Ontario officials expect that two-thirds of Casino Niagara's
patrons will come from the United States, predominantly from western New York.
In February 1998, the Ontario Casino Commission designated a consortium whose
principal investor is Hyatt Hotels Corporation ("Hyatt") as the preferred
developer of the permanent Casino Niagara.
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
58
<PAGE>
the common use of the "Trump" name, the Atlantic City Properties compete
directly with each other and with Trump Marina for gaming patrons.
OTHER COMPETITION. In addition, the Atlantic City Properties face
competition from casino facilities in a number of states operated by federally
recognized Native American tribes. Pursuant to 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 the
Atlantic City Properties. 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. Management
cannot predict the impact of this decision on the ability of Native American
tribes to negotiate compacts with states.
In 1991, the Mashantucket Pequot Nation opened 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 5,500 slot machines. An ongoing expansion at Foxwoods, due to be
completed in April 1998, will include additional hotel rooms, restaurants and
retail stores. A high speed ferry between New York City and Foxwoods is due to
begin service in March 1998. The Mashantucket Pequot Nation has also announced
plans for a high speed train linking Foxwoods to the interstate highway and an
airport outside Providence, Rhode Island. In addition, in October 1996, the
Mohegan Nation opened the Mohegan Sun Resort in Uncasville, Connecticut, located
10 miles from Foxwoods. Developed by Sun Hotel International, Ltd., the Mohegan
Sun Resort has 75% of the gaming capacity of Foxwoods. The Mohegan Nation has
announced plans for an expansion of the casino facilities and the construction
of a hotel, convention center and entertainment center to be completed by the
year 2000. In addition, the Eastern Pequots are seeking formal recognition as a
Native American tribe for the purpose of opening a casino in the North
Stonington area. There can be no assurance that any continued expansion of
gaming operations of the Mashantucket Pequot Nation, the gaming operations of
the Mohegan Nation or the commencement of gaming operations by the Eastern
Pequots would not have a materially adverse impact on the operations of the
Atlantic City Properties.
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. The Oneida
Nation opened a hotel in October 1997 that included expanded gaming facilities,
and has announced plans to construct a golf course and convention center.
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 Native American
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 Aquinnah Wampanoag
Tribe is seeking to open a casino in Fall River, 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.
59
<PAGE>
STATE LEGISLATION. Legislation permitting other forms of casino gaming has
been proposed, from time to time, in various states, including those bordering
New Jersey. Six states have presently legalized riverboat gambling while others
are considering its approval, including New York and Pennsylvania. 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 the Atlantic City Properties could be adversely
affected by such competition, particularly if casino gaining 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 three
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. On January 28,
1997, the New York State Senate rejected a constitutional amendment to legalize
casino gambling in certain areas of New York State, effectively postponing any
new gambling constitutional amendment until 1999. To the extent that legalized
gaming becomes more prevalent in New Jersey or other jurisdictions near Atlantic
City, competition would intensify. In particular, 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, would have a material adverse impact on Trump AC.
GAMING AND OTHER LAWS AND REGULATIONS
THE FOLLOWING IS ONLY A SUMMARY OF THE APPLICABLE PROVISIONS OF THE CASINO
CONTROL ACT AND CERTAIN OTHER LAWS AND REGULATIONS. IT DOES NOT PURPORT TO BE A
FULL DESCRIPTION THEREOF AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
CASINO CONTROL ACT AND SUCH OTHER LAWS AND REGULATIONS. UNLESS OTHERWISE
INDICATED, ALL REFERENCES TO "TRUMP PLAZA" INCLUDE (A) TRUMP PLAZA'S MAIN TOWER,
INCLUDING TRUMP PLAZA EAST AND (B) TRUMP WORLD'S FAIR.
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; the 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; the 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.
OPERATING LICENSES. In June 1995, the CCC renewed Plaza Associates' license
to operate Trump Plaza through June 1999. In May 1996, the CCC granted Plaza
Associates a license to operate Trump World's Fair through May 1997. In December
1996, the CCC allowed Plaza Associates to operate Trump
60
<PAGE>
Plaza and Trump World's Fair under one casino license through May 1999. In June
1995, the CCC renewed Taj Associates' license to operate the Taj Mahal through
March 1999. In June 1996, the CCC also granted TCS a license through July 1997,
which license has been renewed through July 1998. Timely applications for
renewal of the TCS casino license will be made to the CCC. In June 1995, the CCC
renewed Castle Associates' casino license and approved Trump as a natural person
qualifier through May 1999. None of these licenses are transferable and their
renewal will include a financial review of the relevant operating entities as
well as their holding and intermediary companies. Upon revocation, suspension
for more than 120 days or failure to renew a casino license, the Casino Control
Act provides for the appointment of a conservator to take possession of the
hotel and casino's business and property, subject to all valid liens, claims and
encumbrances.
CASINO LICENSE. No casino hotel facility may operate unless the appropriate
license and approvals are obtained from the CCC, which has broad discretion with
regard to the issuance, renewal, revocation and suspension of such licenses and
approvals, which are non-transferable. The qualification criteria with respect
to the holder of a casino license include its financial stability, integrity and
responsibility; the integrity and adequacy of its financial resources which bear
any relation to the casino project; its good character, honesty and integrity;
and the sufficiency of its business ability and casino experience to establish
the likelihood of a successful, efficient casino operation. The casino licenses
currently held by Plaza Associates, Taj Associates and Castle Associates are
renewable for periods of up to four years and the license held by TCS is
renewable for a period of up to one year. 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, except the TCS license, entitles the holder to operate
one casino. 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 outlines the content of existing CCC precedent with respect to the
subject. In its May 18, 1995 declaratory rulings with respect to Plaza
Associates' petition, the CCC, among other things, determined that Plaza
Associates' operation of Trump World's Fair casino space would not result in
undue economic concentration in Atlantic City casino operations.
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 when due; to make
necessary capital and maintenance expenditures to insure that it has a superior
first-class facility; and to pay, exchange, refinance or extend debts which will
mature or become due and payable during the license term.
In the event a licensee fails to demonstrate financial stability, the CCC
may take such action as it deems necessary to fulfill the purposes of the Casino
Control Act and protect the public interest, including: issuing conditional
licenses, approvals or determinations; establishing an appropriate cure period;
imposing reporting requirements; placing restrictions on the transfer of cash or
the assumption of liabilities; requiring reasonable reserves or trust accounts;
denying licensure; or appointing a conservator. See
"--Conservatorship."
Management believes that it has adequate financial resources to meet the
financial stability requirements under the Casino Control Act for the
foreseeable future.
Pursuant to the Casino Control Act, CCC Regulations and precedent, no entity
may hold a casino license unless each officer, director, principal employee,
person who directly or indirectly holds any beneficial interest or ownership in
the licensee, each person who in the opinion of the CCC has the ability to
control or elect a majority of the board of directors of the licensee (other
than a banking or other licensed lending institution which makes a loan or holds
a mortgage or other lien acquired in the ordinary course of business) and any
lender, underwriter, agent or employee of the licensee or other person whom
61
<PAGE>
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.
CONTROL PERSONS. An entity qualifier or intermediary or holding company,
such as Trump AC, Trump AC Holding, Plaza Funding or TACC is required to
register with the CCC and meet the same basic standards for approval as a casino
licensee; PROVIDED, HOWEVER, that the CCC, with the concurrence of the Director
of the Division, may waive compliance by a publicly-traded corporate holding
company with the requirement that 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 an issue of publicly-traded mortgage bonds so long as the bonds remained
widely distributed and freely traded in the public market and the holder has no
ability to control the casino licensee. The CCC may require holders of less than
15% of a series of debt to qualify as financial sources even if not active in
the management of the issuer or 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
62
<PAGE>
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 Antitrust Division of the Department of Justice upon request, any
document or information which bears any relation to such debt or equity
securities.
Generally, the CCC requires each institutional holder seeking waiver of
qualification to execute a certification to the effect that (i) the holder has
reviewed the definition of Institutional Investor under the Casino Control Act
and believes that it meets the definition of Institutional Investor; (ii) the
holder purchased the securities for investment purposes only and holds them in
the ordinary course of business; (iii) the holder has no involvement in the
business activities of and no intention of influencing or affecting, the affairs
of the issuer, the casino licensee or any affiliate; and (iv) if the holder
subsequently determines to influence or affect the affairs of the issuer, the
casino licensee or any affiliate, it shall provide not less than 30 days' prior
notice of such intent and shall file with the CCC an application for
qualification before taking any such action. If an Institutional Investor
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 "--Interim Casino Authorization."
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. Trump AC, Trump AC Funding, Funding II and
Funding III are deemed to be Regulated Companies, 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.
Under the terms of the TAC I Note Indenture and the Note Indenture, if a
holder of such securities does not qualify under the Casino Control Act when
required to do so, such holder must dispose of its interest in such securities,
and Trump AC, Trump AC Funding, Funding II and Funding III may redeem the
securities at the lesser of the outstanding amount or fair market value.
INTERIM CASINO AUTHORIZATION. Interim casino authorization is a process
which permits a person who enters into a contract to obtain property relating to
a casino operation or who obtains publicly-traded securities relating to a
casino licensee to close on the contract or own the securities until plenary
licensure
63
<PAGE>
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 that 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, the 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 to 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 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.
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 that such persons do not have the ability to exercise
significant control over the building or the operation of the casino therein.
64
<PAGE>
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.
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. 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, 1995,
1996 and 1997, Plaza Associates' gross revenue tax was approximately $24.0
million, $29.8 million and $30.1 million, respectively, and its license,
investigation and other fees and assessments totaled approximately $4.4 million,
$6.0 million and $4.9 million, respectively. For the years ended December 31,
1995, 1996 and 1997, Taj Associates' gross revenue tax was approximately $40.2
million, $40.7 million and $41.7 million, respectively, and its license,
investigation and other fees and assessments totaled approximately $5.2 million,
$5.0 million and $3.9 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 (the "CRDA
Bonds"). 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 the CRDA Bonds issued to the licensee.
Thereafter, the licensee (i) is entitled to an investment tax credit in an
amount equal to twice the purchase price of such CRDA Bonds or twice the amount
of its investments authorized in lieu of such bond investments or made in
projects designated as eligible by the CRDA and (ii) has the option of entering
into a contract with the CRDA to have its tax credit comprised of direct
investments in approved eligible projects which may not comprise more than 50%
of its eligible tax credit in any one year.
From the monies made available to the CRDA, the CRDA was required to set
aside $175 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 were used to fund up to 27% of the cost
to casino licensees of expanding their hotel facilities to provide additional
hotel rooms, a portion of which has been required to be available with respect
to the new Atlantic City Convention Center.
MINIMUM CASINO PARKING CHARGES. Since July 1, 1993, each casino licensee
has been required to pay the New Jersey State Treasurer a $1.50 charge for every
use of a parking space for the purpose of parking motor vehicles in a parking
facility owned or leased by a casino licensee or by any person on behalf of a
65
<PAGE>
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 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 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 Plaza Associates,
Trump AC, Trump AC Funding, Funding II, Funding III, Taj Associates 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 Plaza Associates, Taj
Associates and TCS must be licensed by or registered with the CCC, depending on
the nature of the position held. Casino employees are subject to more stringent
requirements than non-casino employees and must meet applicable standards
pertaining to financial stability, integrity and responsibility, good character,
honesty and integrity, business ability and casino experience and New Jersey
residency. These requirements have resulted in significant competition among
Atlantic City casino operators for the services of qualified employees.
GAMING CREDIT. Plaza Associates' and Taj 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 Atlantic City Properties is conducted by
trained and supervised personnel. Plaza Associates and Taj 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.
66
<PAGE>
OTHER LAWS AND REGULATIONS
The Treasury has adopted regulations pursuant to which a casino is required
to file a report of each deposit, withdrawal, exchange of currency, gambling
tokens or chips, or other payments or transfers by, through or to such casino
which involves a transaction in currency of more than $10,000 per patron, per
gaming day (a "Currency Transaction Report"). Such reports are required to be
made on forms prescribed by the Secretary of the Treasury and are filed with the
Commissioner of the Service. In addition, Plaza Associates and Taj Associates
are 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 Treasury's Office of Financial
Enforcement in 1995, Plaza Associates was alleged to have failed to file timely
the Currency Transaction Report 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 filed by Taj
Associates for the period from April 2, 1990 through December 31, 1991. The
Treasury has received a report detailing the audit as well as the response of
Taj Associates. As a result of Taj Associates' audit, the Treasury has notified
Taj Associates that it failed to timely file Currency Transaction Reports in
connection with certain currency transactions. In December 1997, Taj Associates
paid a fine of $477,000 in connection with 106 of these violations.
Plaza Associates and Taj Associates have adopted the following internal
control procedures to increase compliance with these Treasury regulations: (i)
computer exception reporting; (ii) establishment of a committee to review
Currency Transaction Report transactions and reporting which consists of
executives from the Casino Operations, Marketing and Administration Departments;
(iii) internal audit testing of compliance with the Treasury regulations; (iv)
training for all new and existing employees in compliance with the Treasury
regulations; and (v) a self-disciplinary program for employee violations of the
policy.
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 as well as in
other jurisdictions. Management believes all required licenses and permits
necessary to conduct the business of Trump AC has been obtained for operations
in New Jersey.
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 subject to the liens of the
mortgages associated with the TAC I Notes, the Notes and the TAC III Notes
(collectively, the "Plaza Mortgages") and certain other liens.
PLAZA CASINO PARCEL. Trump Plaza's main tower is located on The Boardwalk
in Atlantic City, New Jersey, next to the 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").
67
<PAGE>
The Plaza Casino Parcel consists of four tracts of land, three of which are
currently owned by Plaza Associates and one of which is leased by Plaza Hotel
Management Company ("PHMC") to Plaza Associates pursuant to a non-renewable
ground lease, which expires on December 31, 2078 (the "PHMC Lease"). The land
which is subject to the PHMC Lease is referred to as the "Plaza Leasehold
Tract." Seashore Four and Trump Seashore Associates ("Trump Seashore") had
leased to Plaza Associates two of the tracts which are now owned by Plaza
Associates. Trump Seashore and Seashore Four are 100% beneficially owned by
Trump and are, therefore, affiliates of THCR. Plaza Associates purchased the
tract from Seashore Four in January 1997 and the tract from Trump Seashore in
September 1996 for $10 million and $14.5 million, respectively.
The PHMC Lease is a "net lease" 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 Tract
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 Tract are owned by Plaza Associates during the
term of the PHMC Lease, and upon the expiration of the term of the PHMC Lease
(for whatever reason), ownership of such improvements will vest in PHMC. The
PHMC Lease also contains an option pursuant to which Plaza Associates may
purchase the Plaza Leasehold Tract at certain times during the term of such PHMC
Lease under certain circumstances.
TRUMP PLAZA EAST. In connection with the Taj Acquisition, Plaza Associates
exercised its option to purchase certain of the fee and leasehold interests
comprising Trump Plaza East for a purchase price of $28.0 million. During the
years ended December 31, 1995 and 1996, Plaza Associates incurred approximately
$3.8 million and $1.1 million, respectively, in expenses associated with its
lease of Trump Plaza East. Plaza Associates currently leases a portion of the
land which comprises Trump Plaza East from an unrelated third party.
In September 1993, Trump (as predecessor in interest to Plaza Associates
under the lease for Trump Plaza East) entered into a sublease with Time Warner
(the "Time Warner Sublease") 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. Time Warner renovated the premises in connection with opening of
the Warner Brothers Studio Store. The lease term is for ten years and gives Time
Warner the option to renew for two additional 5-year terms. Time Warner is
required to pay percentage rent monthly in an amount equal to (i) 7.5% of gross
annual sales up to $15.0 million and (ii) 10% of gross annual sales in excess of
$15 million. The terms of the Time Warner Sublease give Time Warner the right to
terminate the sublease if (i) gross annual sales are less than $5.0 million for
year two or less than $5.0 million as adjusted by CPI for years three through
nine; and (ii) Trump Plaza ceases to operate as a first class hotel.
TRUMP WORLD'S FAIR. Pursuant to the option to purchase Trump World's Fair,
on June 12, 1995, using proceeds from the June 1995 Offerings, Plaza Associates
acquired title to Trump World's Fair. Further, pursuant to an easement agreement
with the NJSEA, Plaza Associates has an exclusive easement over, in and through
the portions of the original Atlantic City Convention Center 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 $2.0 million
annually, such annual payment to be adjusted every five years to reflect changes
in the consumer price index. Plaza Associates has 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 "Business--Gaming and Other Laws and
Regulations--New Jersey Gaming Regulations--Approved Hotel Facilities."
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 bound by Pacific Avenue, Mississippi
Avenue, Atlantic Avenue and Missouri Avenue. Plaza Associates has constructed
the
68
<PAGE>
Transportation Facility on the Plaza Garage Parcel. 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.
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.
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 that
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, 1997, of approximately $1.4 million and is encumbered by the Plaza
Mortgages. This facility is currently being utilized by TCS.
SUPERIOR MORTGAGES. The liens securing the indebtedness on the Plaza Garage
Parcel, the Egg Harbor Parcel and liens securing indebtedness on certain parking
facilities are each senior to the liens of the Plaza Mortgages. The principal
amount currently secured by such mortgages is, in the aggregate, approximately
$3.2 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 superior to the liens of the Plaza
Mortgages.
THE TAJ MAHAL
Taj Associates currently owns the parcels of land which are used in
connection with the operation of the Taj Mahal. Each of these parcels is
encumbered by the mortgages securing the TAC I Notes, the Notes and the TAC III
Notes.
THE CASINO PARCEL. The land comprising the Taj Mahal site consists of
approximately 30 acres, bounded by The Boardwalk to the south, vacated former
States Avenue to the east, Pennsylvania Avenue to the west and Pacific Avenue to
the north. The Taj Mahal was opened to the public on April 2, 1990.
TAJ ENTERTAINMENT COMPLEX. In connection with the Taj Acquisition, Taj
Associates purchased the Taj Entertainment Complex from Realty Corp. The Taj
Entertainment Complex is a 20,000-square-foot multipurpose 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.
STEEL PIER. In connection with the Taj Acquisition, Taj Associates
purchased the approximately 3.6 acre pier and related property located across
The Boardwalk from the Taj Mahal (the "Steel Pier") from Realty Corp. 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 Environment Protection ("NJDEP"), the agency which
administers the Coastal Area Facilities Review Act ("CAFRA"). A condition
imposed on Taj Associates' CAFRA permit 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. In
March 1993, Taj Associates obtained a modification of its CAFRA permit providing
for the extensions 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 of the required commencement
69
<PAGE>
and completion dates of the improvements of the Steel Pier based upon the same
interim use of the Steel Pier as an amusement park pursuant to a sublease ("Pier
Sublease") with an amusement park operator. The Pier Sublease terminates on
December 31, 1998 unless extended.
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 of Castle Associates which are presently leased to commercial tenants
and used for office space and vehicle maintenance facilities. In connection with
the Taj Acquisition, Taj Associates purchased from Realty Corp. a warehouse
complex of approximately 34,500 square feet.
Taj Associates has entered into a lease with Trump-Equitable Company for the
lease of office space in 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 6,950 cars of
which 6,725 spaces are located in indoor parking garages and 225 surface spaces
are located on land purchased from Realty Corp. in connection with the Taj
Acquisition. In addition, Taj Associates entered into a lease agreement with
Castle Associates to share its employee parking facilities.
THEMED RESTAURANTS AND SPECIALTY STORE. 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 rent of $907,500
during such renewal term. The Hard Rock Cafe opened in November 1996.
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 $1.0
million 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 All Star Cafe opened in March 1997.
Stage Deli of Atlantic City, Inc. ("Stage Deli") has entered into a ten-year
and five-month lease commencing July 7, 1997 (the "Stage Deli Lease") with Taj
Associates for the lease of space at the Taj Mahal for a Stage Deli of New York
restaurant. Stage Deli has an option to renew the Stage Deli Lease for an
additional five-year term. The basic rent under the Stage Deli Lease is (i)
$400,000 per year for the first three years of the lease, (ii) $436,000 per year
for the fourth through sixth years of the lease, (iii) $475,240 per year for the
seventh through ninth years of the lease and (iv) $518,011.56 per year for the
last year of the lease, paid in equal monthly installments. In addition, Stage
Deli will pay percentage rent in an amount equal to the difference, if any,
between (i) 6% of Stage Deli's gross monthly sales made during each lease year
and (ii) the applicable monthly basic rent. The Stage Deli of New York opened in
October 1997.
Time Warner has entered into a ten-year lease (the "Time Warner Taj Lease")
with Taj Associates for the lease of space at the Taj Mahal for a Warner
Brothers Studio Store. Time Warner has an option to
70
<PAGE>
renew the Time Warner Taj Lease for two additional five-year terms. Time Warner
pays percentage rent monthly in an amount equal to (i) 7.5% of gross annual
sales up to $5.0 million and (ii) 10% sales of gross annual sales in excess of
$5.0 million. No minimum or "base" rent is payable under the Time Warner Taj
Lease. The terms of the lease give Time Warner the right to terminate the lease
if (i) gross annual sales are less than $2.5 million for the second year of the
lease or less than $2.5 million as adjusted by CPI for the third through ninth
years of the lease; and (ii) the Taj Mahal ceases to operate as a first class
hotel. The Warner Brothers Studio Store opened in May 1997.
LEGAL PROCEEDINGS
GENERAL. Trump AC, its partners, certain members of its former executive
committee, and certain of its employees, have been involved in various legal
proceedings. Such persons and entities are vigorously defending the allegations
against them and intend to contest vigorously any future proceedings. In
general, Trump AC 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, judgments, fines and penalties) incurred by them in
said legal proceedings.
PLAZA ASSOCIATES. The CRDA is required to set aside funds 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. These
investments are to fund up to 27% of the cost to casino licensees of such
projects. See "Business--Gaming and Other Laws and Regulations--New Jersey
Gaming Regulations-- Investment Alternative Tax Obligations." In June 1993,
Plaza Associates made application for such funding to the CRDA with respect to
its proposed construction of the Trump Plaza East facilities, demolition of a
certain structure adjacent thereto, development of an appurtenant public park,
roadway and parking area and acquisition of the entire project site. The CRDA,
in rulings through January 10, 1995, approved the hotel development project and,
with respect to same and pursuant to a credit agreement between them, reserved
to Plaza Associates the right to take investment tax credits up to approximately
$14.2 million. Plaza Associates has, except for three small parcels discussed
below, acquired the site and had constructed and presently operates and
maintains the proposed hotel tower, public park, roadway and parking area.
As part of its approval and on the basis of its powers of eminent domain,
the CRDA, during 1994, initiated certain condemnation proceedings in the
Superior Court of New Jersey, Atlantic County, to acquire five small parcels of
land within the project site. Plaza Associates has since aquired two of the
parcels, and proceedings with respect to those parcels have been concluded. The
proceedings with respect to the remaining three parcels, which, if acquired,
will be included in the public park and parking area of the project, are
currently pending and include a claim by the defendants that the CRDA did not
properly determine that the parcels were to be used for public purposes. The
CRDA motion seeking dismissal of this claim has been briefed and, in February
1998, argued by the parties. Additionally, with respect to the two parcels to be
included in the public park portion of the project, the CRDA, by a separate
motion, seeks an order that the Plaza Associates application and credit
agreement be deemed amended so as to terminate the CRDA obligation to acquire
the two parcels and enabling the CRDA to abandon the condemnation proceedings
with respect to these two parcels. This motion, which is opposed by Plaza
Associates, has been briefed and, in February 1998, argued by Plaza Associates
and the CRDA.
The defendants in two of the condemnation proceedings filed a separate joint
complaint in the New Jersey Superior Court alleging, among other claims, that
the CRDA and Plaza Associates are wrongfully attempting to deprive them of
property rights in violation of their constitutional and civil rights. COKING,
ET AL. V. CASINO REINVESTMENT DEVELOPMENT AUTHORITY, ET AL., Docket No.
ATL-L-2555-97. The CRDA's motion for summary judgment on the complaint and Plaza
Associates' motion to dismiss it for failure to state a claim were granted by
the New Jersey Superior Court on October 24, 1997 and November 11, 1997.
71
<PAGE>
OTHER LITIGATION. On March 13, 1997, THCR filed a lawsuit in the United
States District Court, District of New Jersey, against Mirage, the State of New
Jersey ("State"), the New Jersey Department of Transportation ("NJDOT"), the
South Jersey Transportation Authority ("SJTA"), the CRDA, the New Jersey
Transportation Trust Fund Authority and others. THCR was seeking declaratory and
injunctive relief to recognize and prevent violations by the defendants of the
casino clause of the New Jersey State Constitution and various federal
securities and environmental laws relating to proposed infrastructure
improvements in the Atlantic City marina area. While this action was pending,
defendants State and CRDA then filed an action in the New Jersey State Court
seeking declaration of the claim relating to the casino clause of the New Jersey
State Constitution. On May 1, 1997, the United States District Court dismissed
the federal claims and ruled that the State constitutional claims should be
pursued in State Court. This decision is currently being appealed. On May 14,
1997 the State Court entered a summary judgment in favor of the State and CRDA.
This decision is also being appealed.
On June 26, 1997, THCR filed an action against NJDOT, SJTA, Mirage and
others, in the Superior Court of New Jersey, Chancery Division, Atlantic County
(the "Chancery Division Action"). THCR is seeking to declare unlawful and enjoin
certain actions and omissions of the defendants arising out of and relating to a
certain Road Development Agreement dated as of January 10, 1997, by and among
NJDOT, SJTA and Mirage (the "Road Development Agreement") and the public funding
of a certain road and tunnel project to be constructed in Atlantic City, as
further described in the Road Development Agreement. THCR moved to consolidate
this action with other previously filed related actions. Defendants opposed
THCR's motion to consolidate the Chancery Division Action, initially moved to
dismiss this action on procedural grounds and subsequently moved to dismiss this
action on substantive grounds. On October 20, 1997, the Chancery Court denied
the defendants' motion to dismiss this action on procedural grounds, but granted
the motion to dismiss this action on substantive grounds. This decision is
currently being appealed.
On June 26, 1997, THCR also filed an action, in lieu of prerogative writs,
against the CRDA, in the Superior Court of New Jersey, Law Division, Atlantic
County, seeking review of the CRDA's April 15, 1997 approval of funding ($120
million principal amount plus interest) for the road and tunnel project
discussed above, a declaratory judgment that the said project is not eligible
for such CRDA funding, and an injunction prohibiting the CRDA from contributing
such funding to the said project. Defendants moved to dismiss this action on
procedural grounds and also sought to transfer this action to New Jersey's
Appellate Division. On October 3, 1997, the New Jersey Superior Court
transferred this action to the Appellate Division where it is currently pending.
On September 9, 1997, Mirage filed a complaint against Trump, THCR and
Hilton Hotels Corporation, in the United States District Court for the Southern
District of New York. The complaint seeks damages for alleged violations of
antitrust laws, tortious interference with prospective economic advantage and
tortious inducement of a breach of fiduciary duties arising out of activities
purportedly engaged in by defendants in furtherance of an alleged conspiracy to
impede Mirage's efforts to build a casino resort in the Marina district of
Atlantic City, New Jersey. Among other things, Mirage contends that the
defendants filed several frivolous lawsuits and funded others that challenge the
proposed state funding mechanisms for the construction of a proposed roadway and
tunnel that would be paid for chiefly through government funds and which would
link the Atlantic City Expressway with the site of Mirage's proposed new casino
resort. On November 10, 1997, THCR and Trump moved to dismiss the complaint.
On August 14, 1996, certain stockholders of THCR filed two derivative
actions in the Court of Chancery in Delaware (Civil Action Nos. 15148 and 15160)
(the "Delaware cases") against each of the members of the Board of Directors of
THCR, THCR, THCR Holdings, Castle Associates and Trump Casinos II, Inc.
("TCI-II"). The plaintiffs claim that the directors of THCR breached their
fiduciary duties in connection with its acquisition of Castle Associates (the
"Castle Acquisition") by purchasing these interests at an excessive price in a
self-dealing transaction. The complaint sought to enjoin the transaction, and
also sought damages and an accounting. The injunction was never pursued. These
plaintiffs served a
72
<PAGE>
notice of dismissal in the Delaware cases on December 29, 1997. The Court of
Chancery has not yet ordered the Delaware cases dismissed.
On October 16, 1996, a stockholder of THCR filed a derivative action in the
United States District Court, Southern District of New York (96 Civ. 7820)
against each member of the Board of Directors of THCR, THCR, THCR Holdings,
Castle Associates, TCI, TCI-II, TCHI and Salomon Brothers, Inc ("Salomon"). The
plaintiff claims that certain of the defendants breached their fiduciary duties
and engaged in ultra vires acts in connection with the Castle Acquisition and
that Salomon was negligent in the issuance of its fairness opinion with respect
to the Castle Acquisition. The plaintiff also alleges violations of the federal
securities laws for alleged omissions and misrepresentations in THCR's proxies,
and that Trump, TCI-II and TCHI breached the acquisition agreement by supplying
THCR with untrue information for inclusion in the proxy statement delivered to
THCR's stockholders in connection with the Castle Acquisition. The plaintiff
seeks removal of the directors of THCR, and injunction, rescission and damages.
The Delaware cases were amended and refiled in the Southern District of New
York and consolidated with the federal action for all purposes, including
pretrial proceedings and trial. On or about January 17, 1997, the plaintiffs
filed their Consolidated Amended Derivative Complaint (the "First Amended
Complaint"), reflecting the consolidation. On or about March 24, 1997, the
plaintiffs filed their Second Consolidated Amended Derivative Complaint (the
"Second Amended Complaint"). In addition to the allegations made in the First
Amended Complaint, the Second Amended Complaint claims that certain of the
defendants breached their fiduciary duties and wasted corporate assets in
connection with the previously contemplated transaction with Colony Capital,
Inc. ("Colony Capital"). The Second Amended Complaint also includes claims
against Colony Capital for aiding and abetting certain of those violations. In
addition to the relief sought in the First Amended Complaint, the Second Amended
Complaint sought to enjoin the previously contemplated transaction with Colony
Capital or, if it was effectuated, to rescind it. On March 27, 1997, THCR and
Colony Capital mutually agreed to end negotiations with respect to such
transaction. On June 26, 1997, plaintiffs served their Third Consolidated
Amended Derivative Complaint (the "Third Amended Complaint"), which omitted the
claims against Colony Capital. THCR and the other defendants in the action moved
to dismiss the Third Amended Complaint on August 5, 1997. The plaintiffs opposed
the defendants' motions to dismiss the Third Amended Complaint by response dated
October 24, 1997. The defendants' reply was served December 9, 1997.
Various legal proceedings are now pending against Trump AC. Trump AC
considers all such proceedings to be ordinary litigation incident to the
character of its business. 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 and Taj Associates may be involved in
routine administrative proceedings involving alleged violations of 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 Plaza Associates or Taj Associates
or on the ability of Plaza Associates or Taj Associates to otherwise retain or
renew any casino or other licenses required under the Casino Control Act for the
operation of Trump Plaza and the Taj Mahal.
73
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS OF THE ISSUERS, PLAZA ASSOCIATES AND TAJ
ASSOCIATES
MANAGEMENT OF TRUMP AC AND FUNDING II
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. THCR Holdings owns
100% of Trump AC, directly and through its ownership of Trump AC Holding.
Funding II is a wholly owned subsidiary of Trump AC. Trump AC and TACC are the
general partners of Plaza Associates and Taj Associates. The Board of Directors
of Funding II consists of Messrs. Trump, Nicholas L. Ribis, Robert M. Pickus,
Wallace B. Askins and Don M. Thomas. The Note Indenture requires that two
directors of Funding II 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 Trump
AC and Funding II and a brief account of the business experience during the past
five years of each member of the board of directors of Funding II and of the
executive officers of Trump AC and Funding II.
DONALD J. TRUMP--Trump, 51 years old, has been Chairman of the Board of THCR
and THCR Funding since their formation in 1995. 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 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 of Trump AC Holding since February 1993 and was
President of Trump AC Holding from February 1993 until December 1997. Trump was
a partner in Trump AC 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 and the Chairman of the Board of Directors of Funding II and
Funding III since their formation in November 1997. Trump has been Chairman of
the Board of Directors of THCR Holding Corp. and THCR/LP since October 1991;
President and Treasurer of THCR Holding Corp. since March 4, 1991; Chairman of
the Board of Directors, President and Treasurer of TCI since June 1988; 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 TACC since March 1991. Trump was President and Treasurer of
TACC from March 1991 until December 1997. Trump has been the sole director of
Trump Indiana since its formation. Trump has been Chairman of the Board of
Partner Representatives of Castle Associates, the partnership that owns Trump
Marina, since May 1992; and was Chairman of the Executive Committee of Castle
Associates from June 1985 to May 1992. Trump is the Chairman of the Board of
Directors, President and Treasurer of Trump's Castle Funding, Inc. ("Castle
Funding"). Trump is the Chairman of the Board and Treasurer of Trump's Castle
Hotel & Casino, Inc. ("TCHI"). Trump is the President, Treasurer, sole director
and sole shareholder of TCI-II. Trump has been a Director of THCR Enterprises,
Inc., a Delaware corporation ("THCR Enterprises"), since its formation in
January 1997. 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, 53 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
74
<PAGE>
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 June 1993. Mr. Ribis
served as Vice President of Trump AC Holding from February 1995 until December
1997. Mr. Ribis has served as President of Trump AC Holding since December 1997.
Mr. Ribis has served as a director of Trump AC Holding since June 1993. Mr.
Ribis has been Chief Executive Officer, President and a director of Trump AC
Funding since its formation in January 1996 and Chief Executive Officer,
President and a director of Funding II and Funding III since their formation in
November 1997. Mr. Ribis served as Vice President of TACC until December 1997.
Mr. Ribis has served as the President of TACC since December 1997. Mr. Ribis has
been the President and Chief Executive Officer of Trump Indiana since its
formation. Mr. Ribis has been a Director of THCR/LP and THCR Holding Corp. since
October 1991 and was Vice President of THCR/LP and THCR Holding Corp. until June
1995; Chief Executive Officer of Taj Associates since February 1991; Vice
President of TCI since February 1991 and Secretary of TCI 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
served as Vice President of THCR/LP and THCR Holding Corp. since February 1998.
He has also been Chief Executive Officer of Castle Associates since March 1991;
member of the Executive Committee of Castle Associates from April 1991 to May
1992; member of the Board of Partner Representatives of Castle Associates since
May 1992; and has served as the Vice President and Assistant Secretary of TCHI
since December 1993 and January 1991, respectively. Mr. Ribis is now a director
of TCHI. Mr. Ribis has served as Vice President of TCI-II since December 1993
and had served as Secretary of TCI-II from November 1991 to May 1992. Mr. Ribis
has been Vice President of Trump Corp. since September 1991. Mr. Ribis has been
the President and a director of THCR Enterprises since January 1997. 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, 43 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. Mr. Pickus served
as the Assistant Secretary of Trump AC Holding from April 1994 until February
1998. Since February 1998, Mr. Pickus has served as the Secretary of Trump AC
Holding. Mr. Pickus has been Secretary and a director of Trump AC Funding since
its formation in January 1996 and Secretary and a director of Funding II and
Funding III since their formation in November 1997. Mr. Pickus has been the
Executive Vice President and Secretary of Trump Indiana since its inception. Mr.
Pickus has been the Executive Vice President of Corporate and Legal Affairs of
Taj Associates since February 1995, and a Director of THCR Holding Corp. and
THCR/ LP since November 1995. He was the Senior Vice President and Secretary of
Castle Funding from June 1988 to December 1993 and General Counsel of Castle
Associates from June 1985 to December 1993. Mr. Pickus served as the Assistant
Secretary of TACC until February 1998. Since February 1998, Mr. Pickus has
served as the Secretary of TACC. Mr. Pickus was also Secretary of TCHI from
October 1991 until December 1993. Mr. Pickus is a director of TCHI, and has
served as the Assistant Secretary of TCHI since February 1998. Mr. Pickus has
been the Executive Vice President of Corporate and Legal Affairs of Castle
Associates since February 1995, Secretary of Castle Associates since February
1996 and a member of the Board of Partner Representatives of Castle Associates
since October 1995. Mr. Pickus is currently the Secretary of THCR Holding Corp.,
has been the Vice President, Secretary and Director of THCR Enterprises since
January 1997 and has been Executive Vice President of TCS since its inception.
R. BRUCE MCKEE--Mr. McKee, 52 years old, has served as the Senior Vice
President of Corporate Finance of THCR, Trump AC Funding and TACC since June
1997. Mr. McKee has served as the Senior Vice President of Corporate Finance of
Funding II and Funding III since December 1997. Mr. McKee
75
<PAGE>
served as President and Chief Operating Officer of Castle Associates from
October 1996 until June 1997. Mr. McKee was acting Chief Operating Officer of
Taj Associates from October 1995 through October 1996, Senior Vice President,
Finance of Taj Associates from July 1993 through October 1996 and Vice
President, Finance of Taj Associates from September 1990 through June 1993. Mr.
McKee has been the Assistant Treasurer of THCR/LP, Realty Corp. and TCI since
September 1991. Mr. McKee served as the Assistant Treasurer of THCR Holding
Corp. from September 1991 until February 1998. Previously, Mr. McKee was 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.
JOHN P. BURKE--Mr. Burke, 50 years old, served as the Senior Vice President
of Corporate Finance of THCR from January 1996 until June 1997. Mr. Burke has
served as the Senior Vice President of THCR since June 1997. Mr. Burke has been
Senior Vice President of Corporate Finance of 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 the Treasurer of Trump Indiana since its formation. Mr. Burke has been
Treasurer of Trump AC Funding since its formation in January 1996 and Treasurer
of Funding II and Funding III since their formation in November 1997. Mr. Burke
has been Treasurer of TACC since February 1998. Mr. Burke was a Director of
THCR/LP and THCR Holding Corp. from October 1991 to April 1996 and was Vice
President of THCR/LP until June 1995. Mr. Burke has served as the Assistant
Treasurer of THCR Holding Corp. and THCR/LP since February 1998. Mr. Burke has
been the Corporate Treasurer of Castle Associates since October 1991, the Vice
President of Castle Associates, Castle Funding, TCI-II and TCHI since December
1993, a member of the Board of Partner Representatives of Castle Associates
since March 1997 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. Mr. Burke has been the Vice President and Treasurer of
THCR Enterprises since January 1997.
WALLACE B. ASKINS--Mr. Askins, 67 years old, has been a director of THCR and
THCR Funding since June 1995. He has also been a director of Trump AC Holding
since April 11, 1994, and was a partner representative of the Board of Partner
Representatives of Castle Associates from May 1992 to June 1995. Mr. Askins has
been a director of Trump AC Funding since April 1996 and a director of Funding
II and Funding III since December 1997. Mr. Askins served as a director of
TCI-II 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, 67 years old, has been a director of THCR and
THCR Funding since June 1995. Mr. Thomas has been a director of Trump AC Funding
since April 1996 and a director of Funding II and Funding III since December
1997. He has also been the Senior Vice President of Corporate Affairs of the
Pepsi-Cola Bottling Co. of New 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 during a portion of which time
Mr. Thomas served as acting Chairman of the CCC. Mr. Thomas was a director of
Trump Plaza GP until June 1993 and has been a director of Trump AC Holding since
June 1993. Mr. Thomas is an attorney licensed to practice law in the State of
New York.
All of the persons listed above are citizens of the United States and have
been qualified or licensed by the CCC.
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.
76
<PAGE>
MANAGEMENT OF PLAZA ASSOCIATES
Trump AC is the managing general partner of Plaza Associates. Trump AC
Holding is the managing general partner of Trump AC. The Board of Directors of
Trump AC Holding consists of Messrs. Trump, Ribis, Wallace B. Askins and Don M.
Thomas.
Set forth below are the names, ages, positions and offices held with Plaza
Associates and a brief account of the business experience during the past five
years of each of the executive officers of Plaza Associates other than those who
are also directors or executive officers of Trump AC or Funding II.
BARRY J. CREGAN--Mr. Cregan, 43 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 President of Trump AC Holding.
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 Marina. 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.
FRED A. BURO--Mr. Buro, 41 years old, has been the Executive 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, 46 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 Tropicana 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.
All of the persons listed above are citizens of the United States and are
licensed by the CCC.
MANAGEMENT OF TAJ ASSOCIATES
Set forth below are the names, ages, positions and offices held with Taj
Associates and a brief account of the business experience during the past five
years of each of the executive officers and certain key employees of Taj
Associates other than those who are also directors or executive officers of
Trump AC or Funding II.
RODOLFO E. PRIETO--Mr. Prieto, 54 years old, has been Chief Operating
Officer of Taj Associates since October 1996. Mr. Prieto has been Vice President
of Trump AC Holding since February 1998. From December 1995 to October 1996, Mr.
Prieto was the Executive Vice President, Operations of Taj Associates. 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;
Executive 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 September 1986 to November 1994.
LARRY W. CLARK--Mr. Clark, 53 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, and Vice
President, Casino Administration of Taj Associates from April 1991 to May 1991
and from January 1990 to November 1990. Prior to joining the Taj Mahal, Mr.
Clark was Vice President, Casino Operations of the Dunes Hotel & Country Club
from November 1990 to April 1991 and Director of Casino Marketing and Vice
President, Casino Operations of the Showboat Hotel & Casino from November 1988
to January 1990.
WALTER KOHLROSS--Mr. Kohlross, 56 years old, has been Senior Vice President,
Food & Beverages of Taj Associates since June 1992, Vice President International
Marketing of Taj Associates from June 1993
77
<PAGE>
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, 51 years old, has been Executive Vice
President, International Marketing of Taj Associates since May 1996. From
November 1995 to May 1996, Mr. Niglio was Senior Vice President, Casino
Marketing of Taj Associates. 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 Castle Associates 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.
PATRICK J. O'MALLEY--Mr. O'Malley, 43 years old, has been the Executive Vice
President of Finance of Taj Associates since October 1996. Prior to joining the
Taj Mahal, Mr. O'Malley was the Executive Vice President of Hotel Operations of
Plaza Associates from September 1995 to October 1996. 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 Marriott International Hotels.
LORETTA I. VISCOUNT--Ms. Viscount, 38 years old, has been Assistant
Secretary of Trump AC Holding since Febrary 1998, Vice President of Legal
Affairs of Taj Associates since January 1997, Executive Director of Legal
Affairs for Taj Associates from May 1996 to January 1997; and Executive Director
of Legal Affairs for Castle Associates from September 1987 to May 1996. Prior to
that, Ms. Viscount served as in-house counsel to the Claridge Hotel and Casino
and had been engaged in the private practice of law since 1982.
All of the persons listed above are citizens of the United States and are
licensed by the CCC.
Rodolfo 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, which became
effective on February 28, 1997.
EXECUTIVE COMPENSATION
Plaza Associates and Taj Associates do not offer their executive officers
stock option or stock appreciation right plans, long-term incentive plans or
defined benefit pension plans.
The following table sets forth compensation paid or accrued during the years
ended December 31, 1997, 1996 and 1995 to the Chairman of the Board of Trump AC
Holding, the Chief Executive Officer of Plaza Associates and Taj Associates,
each of the four most highly compensated executive officers of Plaza Associates
and Taj Associates whose salary and bonuses exceeded $100,000 for the year ended
December 31, 1997.
78
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NAME AND OTHER ANNUAL ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) COMPENSATION
- ---------------------------------------------- --------- ------------ ---------- ---------------- -------------
Donald J. Trump............................... 1997 $ -- $ -- $ -- $ --
Chairman of the Board of Trump AC Holding 1996 -- -- -- 1,031,000(2)
1995 -- -- -- 2,743,000(2)
Nicholas L. Ribis............................. 1997 $ 1,098,076 $ -- $ -- $ 2,613(3)
Chief Executive Officer of Plaza Associates 1996 998,250 -- -- 1,188(3)
and Taj Associates 1995 1,075,881 -- -- 1,294(3)
Barry J. Cregan............................... 1997 $ 766,632 $ -- $ -- $ 4,000(3)
President and Chief Operating Officer of 1996 744,813 28,500 -- 4,737(3)
Plaza Associates 1995 637,000 284,800 -- 4,576(3)
Rodolfo Prieto(4)............................. 1997 $ 459,116 $ -- $ -- $ 4,000(3)
President and Chief Operating Officer Casino 1996 316,106 -- -- 3,800(3)
Operations of Taj Associates 1995 17,673 -- -- --
Larry Clark................................... 1997 $ 340,538 $ 235,746 $ -- $ 4,000(3)
Executive V.P. Casino Operations of Taj 1996 309,400 109,700 -- 3,800(3)
Associates 1995 276,611 124,200 -- 3,696(3)
Nicholas L. Niglio(5)......................... 1997 $ 332,515 $ 287,563 $ -- $ 4,000(3)
Senior V.P. Casino Marketing of Taj 1996 278,984 186,916 -- 3,800(3)
Associates 1995 228,792 100,236 -- 3,696(3)
</TABLE>
- ------------------------------
(1) Represents the dollar value of annual compensation not properly categorized
as salary or bonus, including amounts reimbursed for income taxes and
directors' fees. Following Commission rules, perquisites and other personal
benefits are not included in this table if the aggregate amount of that
compensation is the lesser of either $50,000 or 10% of the total of salary
and bonus for that officer.
(2) The amounts listed represent (i) amounts paid by Plaza Associates to Trump
Plaza Management Corp. ("TPM"), a corporation beneficially owned by Trump,
for services provided under a services agreement (the "TPM Services
Agreement") and (ii) amounts paid pursuant to the Taj Services Agreement. In
addition, Trump was reimbursed $483,000 and $549,000 in 1996 and 1995,
respectively, for expenses incurred pursuant to the TPM Services Agreement
and the Taj Services Agreement. The TPM Services Agreement and the Taj
Services Agreement both expired in 1996. Trump is not an employee of Plaza
Associates or Taj Associates.
(3) Represents vested and unvested contributions made by Plaza Associates, Taj
Associates and/or TCS under the Trump Plaza Hotel and Casino Retirement
Savings Plan, the Trump Taj Mahal Retirement Savings Plan and Trump Casino
Services Retirement Savings Plan, respectively. Funds accumulated for an
employee under these plans consisting of a certain percentage of the
employee's compensation plus the 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.
(4) Mr. Prieto commenced employment with Taj Associates in December 1995.
(5) Mr. Niglio commenced employment with Taj Associates in February 1995.
79
<PAGE>
EMPLOYMENT AGREEMENTS
As a result of the June 1995 Offerings, THCR and THCR Holdings entered into
a revised employment agreement with Mr. Ribis (the "Ribis THCR 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 Ribis THCR
Agreement is five years. Under the Ribis THCR Agreement, Mr. Ribis's annual
salary is $1,996,500. Mr. Ribis's annual salary is paid in equal parts by THCR,
Plaza Associates, Taj Associates and Castle Associates. 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 Ribis THCR 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 Ribis THCR 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 Ribis THCR
Agreement defines "change of control" as the occurrence of any of the following
events: (i) any person (other 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 Ribis THCR Agreement also provides certain
demand and piggyback registration rights for THCR Common Stock issued pursuant
to the foregoing. Pursuant to the Ribis THCR 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 had an employment agreement with Taj Associates pursuant to which
Mr. Ribis acted as Chief Executive Officer of Taj Associates. This agreement has
been terminated in connection with the Taj Acquisition and the Castle
Acquisition and now Mr. Ribis is compensated for his services to Taj Associates
under the Ribis THCR Agreement.
Plaza Associates had an employment agreement with Barry J. Cregan (the
"Cregan Agreement") pursuant to which Mr. Cregan acted as President and Chief
Operating Officer of Plaza Associates. The Cregan Agreement, which expired on
December 31, 1997, provided for an annual base salary of $750,000. Pursuant to
the Cregan Agreement, Mr. Cregan devoted all of his professional time to Plaza
Associates. Subsequent to the expiration of the Cregan Agreement Mr. Cregan has
continued to act as President and Chief Operating Officer of Plaza Associates.
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 May
4, 2000, provides for an annual base salary of $300,000, 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 $300,000. 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
80
<PAGE>
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 Fred Buro (the "Buro
Agreement") pursuant to which Mr. Buro acts as Executive Vice President of
Marketing of Plaza Associates. The Buro Agreement, which expires on May 11,
2000, provides for an annual base salary of $300,000, 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 $300,000. Pursuant to the
Buro Agreement, Mr. Buro devotes all of his professional time to Plaza
Associates. In the event that Plaza Associates terminates the Buro Agreement (i)
because Mr. Buro's CCC license is terminated or (ii) because Mr. Buro has
committed an act constituting Cause (defined as a breach by Mr. Buro of any
provision of the Buro Agreement or any employee conduct rules, an act of
dishonesty, the deliberate and intentional refusal by Mr. Buro to perform his
duties under the Buro Agreement, certain disabilities or death), Plaza
Associates shall pay to Mr. Buro all compensation earned to the date of such
termination. In the event that Plaza Associates terminates the Buro Agreement
for any other reason, Plaza Associates shall offer to pay Mr. Buro an amount
equal to twelve months of Mr. Buro's then current salary, which offer, if
accepted, will constitute complete satisfaction of all obligations and
liabilities arising out of the Buro Agreement. So long as Plaza Associates
continues to pay Mr. Buro's salary pursuant to the Buro Agreement, Mr. Buro
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.
The Rigot Agreement and the Buro 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.
TCS has an employment agreement with Kevin S. Smith, Esq. (the "Smith
Agreement") pursuant to which Mr. Smith acts as the Vice President of Corporate
Litigation & Risk Management of TCS. The Smith Agreement, which expires on
December 31, 2000, provides for a bonus of $25,000 upon signing and an annual
base salary of $160,000, with any bonus and increases in salary provided in
TCS's sole and absolute discretion. Pursuant to the Smith Agreement, Mr. Smith
devotes all of his professional time to TCS. In the event that TCS terminates
the Smith Agreement because Mr. Smith has committed an act constituting Cause
(defined as the denial or revocation of Mr. Smith's CCC license, conviction of a
disqualifying crime, breach of trust, certain disabilities or death), TCS shall
pay to Mr. Smith all compensation earned to the date of such termination.
Taj Associates has an employment agreement with Rodolfo E. Prieto (the
"Prieto Agreement") pursuant to which he serves as President and Chief Operating
Officer of Taj Associates. The Prieto Agreement, which expires December 31,
2000, provides for a bonus of $100,000 upon signing, an annual salary of
$550,000 through July 1998, $600,000 through July 1999 and $650,000 through
expiration, and, in addition, an annual bonus at the sole discretion of Taj
Associates. Pursuant to the Prieto Agreement, Mr. Prieto has agreed that in the
event the agreement is terminated by him, he would not solicit or contact,
directly or through any other casino in Atlantic City, any customers whom he
developed during his employment with Taj Associates for a period of one year.
81
<PAGE>
Taj Associates has an agreement with Patrick O'Malley (the "O'Malley
Agreement") pursuant to which Mr. O'Malley serves as Executive Vice President of
Finance and Accounting of Taj Associates. The O'Malley Agreement, which expires
on October 13, 1999, provides for an annual base salary of $250,000 per year and
an annual bonus at the sole discretion of Taj Associates. In the event Taj
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), Taj 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 Finance
and Accounting, a demotion or change in Mr. O'Malley's title or office, any
removal from his position or a change in control of Taj 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 Taj Associates
terminates the O'Malley Agreement without Cause, Taj 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 termination. 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.
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 June 30,
2001, provides for a bonus of $50,000, net of taxes, upon signing, an annual
salary of $350,000 and, in addition, a minimum guaranteed bonus of at least
$125,000 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") pursuant to which he serves as Executive Vice President,
International Marketing of Taj Associates. The Niglio Agreement, which expires
on June 30, 2001, provides for a bonus of $100,000, net of taxes, upon signing,
an annual salary of $350,000 and, in addition, a minimum guaranteed bonus of
$100,000, net of taxes. 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 one year.
Taj Associates may terminate the employment agreements of Messrs. Clark,
Prieto 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. Prieto's agreement is terminated without cause, Taj Associates
would be obligated to pay Mr. Prieto for the number of months remaining in the
agreement plus expenses to move to Nevada. If Mr. Niglio's employment agreement
is terminated without cause, Taj Associates would be obligated to pay Mr. Niglio
the lesser of twelve 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 Clark Agreement, the Prieto Agreement and the Niglio
Agreement (a) in the event that the CCC license of Mr. Clark, Mr. Prieto 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.
The Prieto Agreement and the O'Malley Agreement provide for discretionary
bonuses. Factors considered by Taj Associates in the awarding of all
discretionary bonuses generally are the attainment by
82
<PAGE>
Taj Associates of budgeted or forecasted goals and the individual's perceived
contribution to the attainment of such goals.
COMPENSATION OF DIRECTORS
All of the directors of Funding II currently serve as an officer or on the
Board of Directors of THCR and receive no additional compensation for their
service with Funding II. 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.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In general, the compensation of executive officers of Plaza Associates and
Taj Associates is determined by Trump AC's managing general partner, Trump AC
Holding. No officer or employee of Trump AC Holding, other than Messrs. Trump
and Ribis who serve on the Board of Directors of Trump AC Holding, participated
in the deliberations concerning executive compensation.
TAJ ACQUISITION. On April 17, 1996, a subsidiary of THCR was merged with
and into THCR Holding Corp. and each outstanding share of THCR Holding Corp.'s
Class A Common Stock, which in the aggregate represented 50% of the economic
interest in Taj Associates, was converted into the right to receive, at each
holder's election, either (a) $30 in cash or (b) that number of shares of THCR
Common Stock having a market value equal to $30. Trump held the remaining 50%
interest in Taj Associates and contributed such interest in Taj Associates to
Trump AC in exchange for limited partnership interests in THCR Holdings. The
outstanding shares of THCR Holding Corp.'s Class C Common Stock all of which
were held by Trump, were canceled in connection with the Taj Acquisition. In
addition, Trump received the Trump Warrants. See "Business--The Taj Mahal--Taj
Acquisition."
CERTAIN RELATED PARTY TRANSACTIONS--PLAZA ASSOCIATES. Seashore Four was the
fee owner of a parcel of land constituting a portion of the Plaza Casino Parcel,
which it leased to Plaza Associates. Plaza Associates recorded rental expenses
of approximately $1.0 million in 1996 concerning rent owed to Seashore Four. In
January 1997, Plaza Associates exercised the option to purchase the land under
the lease with Seashore Four for $10 million.
Trump Seashore was the fee owner of a parcel of land constituting a portion
of the Plaza Casino Parcel, which it leased to Plaza Associates. Plaza
Associates made rental payments to Trump Seashore of approximately $1.0 million
in 1996. In September 1996, Plaza Associates exercised the option to purchase
the land under the lease with Trump Seashore for $14.5 million.
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.
("MBI"), a wholly owned subsidiary of Midlantic National Bank ("Midlantic"), in
exchange for a reduction in indebtedness to Midlantic, (ii) MBI leased Trump
Plaza East to Trump (the "Trump Plaza East Lease") for a term of five years,
which would have expired on June 30, 1998, during which time Trump would have
been obligated to pay MBI $260,000 per month in lease payments and (iii) Plaza
Associates acquired an option to purchase Trump Plaza East. In October 1993,
Plaza Associates assumed the Trump Plaza East Lease and related expenses. On
April 17, 1996, in connection with the Taj Acquisition, Plaza Associates
purchased Trump Plaza East and the Trump Plaza East Lease, and related
obligations were terminated.
CERTAIN RELATED PARTY TRANSACTIONS--TAJ ASSOCIATES. Taj Associates has a
lease with Trump-Equitable Company, for the lease of office space in The Trump
Tower in New York City, which Taj Associates uses as a marketing office. 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.
83
<PAGE>
From October 4, 1991 until April 17, 1996, Taj Associates leased the
Specified Parcels from Realty Corp., consisting of land adjacent to the site of
the Taj Mahal, which is 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. On April 17, 1996, in
connection with the Taj Acquisition, Taj Associates purchased the Specified
Parcels from Realty Corp. and the lease and related obligations were terminated.
On October 4, 1991, Taj Associates entered into a guarantee with First
Fidelity Bank, National Association (now known as First Union National Bank)
("First Fidelity") of the performance by Realty Corp. of its obligations under a
loan of approximately $78 million owing to First Fidelity (the "First Fidelity
Loan"), which loan was secured by a mortgage on the Specified Parcels. Such
guarantee was 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, Realty Corp.'s obligations to First Fidelity
under the First Fidelity Loan were satisfied and First Fidelity, among other
things, released Taj Associates from the guarantee.
Taj Associates and Trump were parties to the Taj Services Agreement, which
became effective in April 1991, and which provided that Trump would 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 paid an annual
fee (the "Annual Fee") equal to 1% 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. During the year 1995, and the period from
January 1, 1996 to April 17, 1996, Trump earned approximately $1.7 million and
$0.4 million, respectively, in respect of the Annual Fee, including amounts paid
to a third party pursuant to an assignment agreement. In addition, during the
year 1995, and the period from January 1, 1996 to April 17, 1996, Taj Associates
reimbursed Trump $261,000 and $148,000, respectively, for expenses pursuant to
the Taj Services Agreement. Taj Associates 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. The Taj Services Agreement was terminated upon consummation of the
Taj Acquisition on April 17, 1996.
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 had
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 Taj Mahal
(collectively, the "Taj Marks"), in its advertising, marketing and promotional
activities through December 31, 1999. Upon consummation of the Taj Acquisition,
the Taj License Agreement was terminated and the Taj Marks were licensed to THCR
under the License Agreement.
OTHER RELATIONSHIPS. The Commission 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. 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 of THCR
(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 of THCR in the last fiscal
year.
Trump is the sole director of TACC, a general partner of Plaza Associates,
of which Messrs. Trump, Ribis and Pickus are executive officers. Messrs. Trump
and Ribis also serve on the Board of Directors of Trump AC Holding, 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
84
<PAGE>
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 THCR
Holding Corp., which held, prior to April 17, 1996, an indirect equity interest
in Taj Associates, of which Mr. Trump is an executive officer. Such persons also
serve on the Board of Directors of THCR/LP, the former managing general partner
of Taj Associates, of which Messrs. Trump and Ribis are executive officers. See
"--Employment Agreements."
Mr. Ribis also serves on the Board of Directors of Realty Corp., which,
prior to the Taj Acquisition, leased 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.
Messrs. Ribis, Pickus and Burke are members of the Board of Partner
Representatives of Castle Associates and members of the Board of Directors of
TCHI, the general partner of Castle Associates of which Messrs. Ribis, Pickus
and Burke are executive officers. In addition, Trump is the sole director and an
officer of Castle Funding. Messrs. Ribis, Pickus and Burke received no
compensation from these entities other than from Castle Associates for their
services as executive officers. Trump is not compensated by these entities other
than pursuant to the Castle Services Agreement.
Messrs. Trump and Ribis serve on the Board of Directors of THCR, of which
Trump is Chairman of the Board. Messrs. Ribis, Pickus and Burke are executive
officers of THCR and are compensated for their services by 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 Plaza
Associates and Taj Associates.
85
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Affiliate party transactions are governed by the provisions of the TAC I
Note Indenture, the Note Indenture and the TAC III Note Indenture which
provisions 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, Funding II or Funding
III, as applicable.
Trump, Ribis and certain affiliates have engaged in certain related party
transactions with respect to THCR and its subsidiaries. See
"Management--Compensation Committee Interlocks and Insider
Participation--Certain Related Party Transactions--Plaza Associates,"
"Management--Compensation Committee Interlocks and Insider
Participation--Certain Related Party Transactions--Taj Associates" and
"Management--Compensation Committee Interlocks and Insider
Participation--Certain Related Party Transactions--Other Relationships."
Plaza Associates and Taj Associates have joint insurance coverage with
Castle Associates and other entities affiliated with Trump, for which the annual
premiums paid by Plaza Associates and Taj Associates were approximately $3.0
million for the year ended December 31, 1997.
Plaza Associates leased portions of its Egg Harbor Parcel to Castle
Associates. Lease payments by Castle Associates to Plaza Associates totaled
$5,000 in 1996. Castle Associates did not make any lease payments to Plaza
Associates in 1997.
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 and
June 1993 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 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 (i) not
terminate, amend or modify certain agreements in a manner which may adversely
affect the rights or interests of such directors unless an additional sum of
$600,000 was first deposited with the Indemnification Trustee, and (ii) 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 a trust fund equal to $500,000 for the benefit of
such directors; PROVIDED FURTHER 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. In June 1993,
an additional sum of $600,000 was deposited with the Indemnification Trustee for
the benefit of the directors of Plaza Funding and certain former directors of
Trump Plaza GP.
In connection with the Taj Acquisition, Trump AC has agreed to provide to
the former officers and Directors of THCR Holding Corp. and THCR/LP (the "Taj
Indemnified Parties"), including Messrs. Ribis, Pickus and Burke,
indemnification as provided in the THCR's Amended and Restated Certificate of
Incorporation and Amended and Restated By-Laws until April 17, 2002. In
addition, THCR agreed, and agreed to cause THCR Holding Corp. and THCR/LP to
agree, that until April 17, 2002, unless otherwise required by law, the
Certificate of Incorporation and By-Laws of THCR Holding Corp. and THCR/LP shall
not be amended, repealed or modified to reduce or limit the rights of indemnity
afforded to the former directors, officers and employees of THCR Holding Corp.
and THCR/LP or the ability of THCR Holding Corp. or THCR/LP to indemnify such
persons, nor to hinder, delay or make more difficult the
86
<PAGE>
exercise of such rights of indemnity or the ability to indemnify. In addition,
Trump AC has also agreed to purchase and maintain in effect, until April 17,
2002, directors' and officers' liability insurance policies covering the Taj
Indemnified Parties on terms no less favorable than the terms of the then
current insurance policies' coverage or, if such directors' and officers'
liability insurance is unavailable for an amount no greater than 150% of the
premium paid by THCR Holding Corp. (on an annualized basis) for directors' and
officers' liability insurance during the period from January 1, 1996, to April
17, 1996, Trump AC has agreed to obtain as much insurance as can be obtained for
a premium not in excess (on an annualized basis) of such amount.
STOCK OWNERSHIP
The general partners of Trump AC are THCR Holdings, a Delaware limited
partnership, and Trump AC Holding, a Delaware corporation wholly owned by THCR
Holdings. THCR Holdings is a Delaware limited partnership which is owned
approximately 61.8% by THCR as both a general and limited partner, and
approximately 38.2% by Trump. Funding II and Funding III are wholly owned
subsidiaries of Trump AC.
DESCRIPTION OF OTHER INDEBTEDNESS
TAC I NOTES. As a part of the Taj Acquisition, Trump AC and Trump AC
Funding issued the TAC I Notes, which mature on May 1, 2006. The TAC I Notes
include restrictive covenants prohibiting or limiting, among other things, the
sale of assets, the making of acquisitions and other investments, capital
expenditures, the incurrence of additional debt and liens and the payment of
dividends and distributions. Non-compliance could result in the acceleration of
such indebtedness.
TAC III NOTES. Concurrent with the Initial Offering, Trump AC and Funding
III, a wholly owned subsidiary of Trump AC, offered $25,000,000 aggregate
principal amount of TAC III Notes in the Concurrent Initial Offering. The TAC
III Notes include restrictive covenants prohibiting or limiting, among other
things, the sale of assets, the making of acquisitions and other investments,
capital expenditures, the incurrence of additional debt and liens and the
payment of dividends and distributions. Non-compliance could result in the
acceleration of such indebtedness.
PLAZA NOTES. An aggregate of $330 million of the Plaza Notes of Plaza
Funding were retired in connection with the Taj Acquisition. The Plaza Notes
were issued by Plaza Funding, with Plaza Associates providing a full and
unconditional guaranty thereof. The Plaza Notes were retired through repurchase
and defeasance and Plaza Funding and Plaza Associates were released from their
obligations under all financial and negative covenants and certain other
provisions contained in the Plaza Note Indenture, and the Plaza Note Security
(as defined in the Plaza Note Indenture) was released against the deposit of
cash or U.S. government obligations in an amount sufficient to effect the
redemption on June 15, 1998 of all of the Plaza Notes so defeased, at a
redemption price of 105% of the principal amount thereof, together with accrued
and unpaid interest to such date. Additionally, Plaza Funding irrevocably
instructed the Plaza Note Trustee to provide notice of such redemption not less
than 30 or more than 60 days prior to June 15, 1998.
OTHER INDEBTEDNESS. In addition to the foregoing, Trump AC's long-term
indebtedness includes approximately $11.3 million of indebtedness, including, as
of December 31, 1997, approximately $3.2 million due under outstanding mortgage
notes described above.
87
<PAGE>
DESCRIPTION OF THE NOTES
Set forth below is a summary of certain provisions of the Notes. The Notes
were issued pursuant to the Note Indenture, dated as of December 10, 1997, by
and among Trump AC and Funding II, as joint and several obligors; Taj
Associates, Plaza Associates, TACC, TCS and Trump Communications, as guarantors;
and U.S. Bank National Association, formerly known as First Bank National
Association, as Trustee. The following summaries of certain provisions of the
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 Note Indenture and exhibits thereto. Wherever
particular provisions of the 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 Notes are senior obligations of the Issuers, limited in aggregate
principal amount to $75.0 million and secured as set forth under "--Security for
the Notes" below. The Notes are guaranteed on a senior basis by Trump AC's
existing Subsidiaries, Plaza Associates, Taj Associates, TACC, TCS and Trump
Communications, and by each future Subsidiary of Trump AC, other than Trump AC
Funding, which is one of the issuers of the TAC I Notes, Funding II, which is
one of the Issuers, and Funding III, which is one of the issuers of the TAC III
Notes. The term "Subsidiary," however, does not include Unrestricted
Subsidiaries. At December 31, 1997, Trump AC's consolidated outstanding
indebtedness for borrowed money totaled approximately $1.31 billion, consisting
of $1.2 billion of TAC I Notes, $75.0 million of Notes, $25.0 million of TAC III
Notes, approximately $5.0 million of other senior indebtedness and approximately
$8.7 million of other indebtedness. The Notes will be issued only in fully
registered form, without coupons, in denominations of $1,000 and integral
multiples thereof. The Notes are non-recourse to the partners of Trump AC. See
"--No Personal Liability of Partners, Stockholders, Officers, Directors;
Non-recourse" below.
The Notes mature on May 1, 2006. The Notes 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 May 1 and November 1 of each year,
commencing May 1, 1998, to the persons in whose names such Notes are registered
at the close of business on the April 15 or October 15 immediately preceding
such interest payment date. Interest is calculated on the basis of a 360-day
year consisting of twelve 30-day months.
The Trustee is initially acting as paying agent ("Paying Agent") and
registrar ("Registrar"). The Issuers may change the Paying Agent or Registrar
without prior notice to Holders of the 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 and Liquidated Damages, if any,
on the Notes is payable, and the 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 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.
SECURITY FOR THE NOTES
The obligations of the Issuers with respect to the Notes are being secured,
on a PARI PASSU basis with the TAC I Notes and the TAC III Notes, by one or more
mortgages and assignments of leases and rents
88
<PAGE>
(collectively, the "Mortgage"), which will encumber Plaza Associates' and Taj
Associates' respective interests in the Casino Hotels, 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 $5.0 million
principal amount as of December 31, 1997, and ranking PARI PASSU with the liens
on such assets securing the TAC I Notes and the TAC III Notes). See "-- The
Mortgage" below. Certain of the assets of Plaza Associates and Taj Associates
not covered by the Mortgage have also been assigned to the Collateral Agent
under the Collateral Agency Agreement as security for the Notes pursuant to
other agreements. The holders of the TAC I Notes and the TAC III Notes also have
a security interest in the Collateral on an equal and ratable basis with the
Notes pursuant to the terms of the Collateral Agency Agreement. Subject to
certain limited exceptions, all Equity Interests owned by the Issuers and their
Subsidiaries, including without limitation 100% of the Equity Interests of 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 are
restricted by the terms of the 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 Note Indenture.
The Note Indenture contains certain covenants limiting the ability of Trump
AC and its Subsidiaries to incur Indebtedness. The lien and security interest of
the Mortgage is 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 are available to pay
Obligations in respect of the 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 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
"Business--Gaming and Other Laws and Regulations." If the Trustee or Collateral
Agent takes possession of or otherwise acquires either of the Casino Hotels, it
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 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 Collateral Agent 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 Note Indenture, the Mortgage and the other documents and
instruments executed in connection therewith is also subject to general
principles of equity.
89
<PAGE>
NOTE GUARANTEES
The Issuers' obligations under the Notes, the Note Indenture and the
Mortgage Documents are jointly and severally irrevocably and fully and
unconditionally guaranteed by the Guarantors. Each guarantee is a senior
obligation of the respective Guarantor and secured by all of the Collateral,
subject to certain exceptions. See "--Security for the Notes" above. The
obligations of each Guarantor under its guarantee and of Plaza Associates and
Taj Associates under the Mortgage are limited in a manner intended to avoid it
being deemed a fraudulent conveyance under applicable law. See "--Certain
Bankruptcy Limitations" below.
The Note Indenture provides 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 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 (in the case of a merger or consolidation of Plaza Associates and
Taj Associates) supplemental Mortgage Documents in form reasonably satisfactory
to the Trustee, pursuant to which such Person shall unconditionally guarantee,
on a senior basis, all of such Guarantor's obligations under such Guarantor's
guarantee, the Note Indenture and (in the case of a merger or consolidation of
Plaza Associates and Taj Associates) the Mortgage Documents on the terms set
forth in the 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 Note Indenture further provides 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 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 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 the Note 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, Plaza Associates or Taj Associates 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 a bankruptcy court,
it is impossible to predict, in the event of the bankruptcy of an Issuer, Plaza
Associates or Taj Associates, whether and for how long payments under the Notes
would be delayed, whether or when the Trustee would be permitted to foreclose on
the Collateral or whether or to what
90
<PAGE>
extent Holders of the 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 Notes. See "Risk Factors-- Holding Company Structure."
Holders of the Notes are 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 Initial Offering. See "Risk
Factors--Fraudulent Transfer Considerations."
If the obligations of a Guarantor under its guarantee and any security
interests granted to secure such guarantee were avoided, Holders of 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 Notes. Equity Interests in Subsidiaries and
certain other assets are not included in the Collateral. See "--Security for the
Notes" above.
OPTIONAL REDEMPTION
Except as indicated in the next succeeding paragraph, the Issuers do not
have the right to redeem any Notes prior to May 1, 2001. The Notes will be
redeemable at the option of the Issuers, in whole or in part, at any time on or
after May 1, 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 May 1 of the years indicated below, in each case
(subject to the right of Holders of record on a record date to receive interest
due (and the corresponding Liquidated Damages due, if any) on an interest
payment date that is on or prior to such redemption date) together with accrued
and unpaid interest (and Liquidated Damages, if any) thereon to the redemption
date:
<TABLE>
<CAPTION>
REDEMPTION
12-MONTH PERIOD BEGINNING MAY 1, PRICE
- --------------------------------------------------------------------------------- -----------
<S> <C>
2001............................................................................. 105.625%
2002............................................................................. 103.750%
2003............................................................................. 101.875%
2004 and thereafter.............................................................. 100.000%
</TABLE>
The Notes of a particular Holder 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 (and
Liquidated Damages, if any) through the date on which such 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 Notes issued pursuant
to the Note Indenture (other than a Required Regulatory Redemption), Notes will
be chosen for redemption by the Trustee as provided in the Note Indenture, but,
in general, pro rata or by lot. On and after the redemption date, interest
ceases to accrue on such Notes or portions thereof called for redemption unless
the Issuers default in the payment therefor. If a Note is redeemed subsequent to
an interest record date but on or prior to the
91
<PAGE>
related interest payment date, then any accrued interest (and Liquidated
Damages, if any) will be paid to the person in whose name such Note is
registered at the close of business on such record date.
The Notes do 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 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 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 Note, a new Note or
Notes in a principal amount equal to the unredeemed portion thereof will be
issued.
CERTAIN COVENANTS
REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER UPON A CHANGE OF CONTROL
The Note Indenture provides that in the event that a Change of Control has
occurred, each Holder of 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 Notes (PROVIDED, that the principal amount of such 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 (and Liquidated
Damages, if any) 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 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 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 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
92
<PAGE>
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 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 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 II (together with any new directors whose election by such Board of
Directors or whose nomination for election by the stockholders of THCR or
Funding II, as applicable, is approved by the Permitted Holder or by a vote
of the 66-2/3% of the directors of THCR or Funding II, 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 II, as applicable, then in office.
On or before the Change of Control Purchase Date, Trump AC will (i) accept
for payment 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 and
Liquidated Damages, if any) of all Notes so tendered and (iii) deliver to the
Trustee Notes so accepted together with an Officers' Certificate listing the
Notes or portions thereof being purchased. The Paying Agent will promptly mail
to the Holders of Notes so accepted payment in an amount equal to the Change of
Control Purchase Price (together with accrued and unpaid interest and Liquidated
Damages, if any), and the Trustee will promptly authenticate and mail or deliver
to such Holders a new Note or Notes equal in principal amount to any unpurchased
portion of the Note or Notes surrendered. Any 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 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 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 Note Indenture provides 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
93
<PAGE>
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 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 November 1, 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 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 Notes;
(b) Trump AC, Funding II and the Guarantors may incur Indebtedness
evidenced by the Notes, the guarantees thereof and represented by the Note
Indenture, and Trump AC, Funding III and the Guarantors may incur
Indebtedness evidenced by the TAC III Notes, the guarantees in favor of the
holders of such TAC III Notes and represented by the TAC III Note Indenture;
(c) INTENTIONALLY LEFT BLANK;
(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, as if
incurred hereunder, any Indebtedness outstanding under Section 5.11(d) of
the TAC I Note Indenture as of the Issue Date and any Indebtedness issued to
refinance, refund or replace such Indebtedness or any Indebtedness incurred
under this clause (d));
(e) INTENTIONALLY LEFT BLANK;
(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) and (b)
of this covenant or (except with respect to any Indebtedness incurred under
Section 5.11(d) or 5.11(h) of the TAC I Note Indenture) 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, as if incurred
hereunder, any Indebtedness outstanding under Section 5.11(h) of the TAC I
Note Indenture as of the Issue Date and any Indebtedness issued to
refinance, replace or refund such Indebtedness or any Indebtedness incurred
under this clause (h)) of up to $30.0 million.
94
<PAGE>
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 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 Note Indenture provides 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
AC 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 April 17, 1996, 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 April 17, 1996, 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 April 17, 1996 and on or prior to the date
of such proposed Restricted Payment from (i) the sale of its Qualified Capital
Stock (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 equity
offering by THCR prior to or substantially concurrent with the issuance of the
TAC I Notes on April 17, 1996, including the exercise of the underwriters'
overallotment option, except for amounts Trump AC received therefrom (including
by Capital Contribution) in excess of $270 million) or (ii) (without
duplication) 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 April 17,
1996 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 (I) $50.0 million in the aggregate minus
(II) the aggregate amount of any Restricted Payments made pursuant to clause (w)
of the second paragraph of the "LIMITATION ON RESTRICTED PAYMENTS" covenant
contained in the TAC I Note Indenture on or prior to the Issue Date, 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
specified in clause (i) or (ii) of the first paragraph under "Events of Default
and Remedies"), (x) a
95
<PAGE>
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 the TAC I Notes substantially concurrent with a purchase by Trump AC
of Notes pursuant to a Change of Control Offer or an Asset Sale Offer, PROVIDED,
that in the case of a purchase pursuant to an Asset Sale Offer, such purchase of
Notes represents a PRO RATA application of the Asset Sale Offer Amount to the
Notes and the TAC I Notes, based upon the aggregate principal amount then
outstanding. 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 Note Indenture provides 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 April 17, 1996................................. 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 Note Indenture provides 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 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 Note 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 Note
Indenture, the TAC I Note Indenture, the TAC III 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 and
restrictions in clause (a) or clause (d), 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.
96
<PAGE>
LIMITATION ON LIENS
The Note Indenture provides 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 Note Indenture or upon any income or profits
therefrom.
LIMITATION ON SALE OF ASSETS AND SUBSIDIARY STOCK; EVENT OF LOSS
The Note Indenture provides 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 Notes in accordance with the terms of
the Note Indenture or to the repurchase of the Notes pursuant to an irrevocable,
unconditional cash offer by Trump AC (the "Asset Sale Offer") to repurchase
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 (l)(a), and not reinvested
under clause (l)(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 Notes, all within the applicable period and as otherwise provided
above in clause (1) of the first paragraph of this covenant.
The Note Indenture provides 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 Notes tendered
97
<PAGE>
(on a PRO RATA basis if the Asset Sale Offer Amount is insufficient to purchase
all Notes so tendered) at the Asset Sale Offer Price (together with accrued
interest).
Notwithstanding the foregoing, if an Asset Sale Offer is commenced and TAC I
Notes are outstanding at the date of commencement thereof, then the Asset Sale
Offer shall be made concurrent with an asset sale offer under the TAC I Note
Indenture, and the holders which elect to have purchased will be accepted PRO
RATA in proportion to the aggregate principal amount thereof, PROVIDED, that in
so repurchasing such TAC I Notes Trump AC is in compliance with the provisions
of "Limitation on Restricted Payments."
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 Note
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;
(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 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 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 Note 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 Note Indenture provides 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
98
<PAGE>
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 Funding II, 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 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 April 17, 1996 or (3) the arrangements, as in effect on April 17,
1996, which are described under the caption "Certain Transactions" in the
prospectus dated April 11, 1996 in connection with the offering of the TAC I
Notes.
Funding II will maintain at least two Independent Directors on its Board of
Directors.
LIMITATION ON MERGER, SALE OR CONSOLIDATION
The Note Indenture provides 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, Funding II, as applicable, to any other Person, unless,
among other things: (a) Trump AC or Funding II, as applicable, shall be the
continuing Person, or the Person (if other than Trump AC or Funding II) formed
by such consolidation or into which Trump AC or Funding II is merged or to which
the properties and assets of Trump AC or Funding II are transferred (the
"Surviving Entity") shall be a partnership or corporation, in the case of Trump
AC, and a corporation, in the case of Funding II, 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 Funding II, as applicable, under the Notes
and the Note Indenture, and the 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. Funding II 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
Note Indenture and (b) the transaction shall not impair the rights and powers of
the Trustee and Holders of the 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 Funding II, as applicable, is not the
99
<PAGE>
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 Funding II, as applicable, and Trump AC or Funding II shall in such
case be discharged from all obligations and covenants and under the Note
Indenture, the Notes and the Mortgage Documents.
LIMITATION ON LINES OF BUSINESS
The Note Indenture provides 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 which, in the reasonable
good faith judgment of the Board of Directors of Funding II, is a Related
Business. The Note Indenture also provides that Trump AC will own or lease, as
applicable, substantially all of its consolidated assets through Trump AC, Plaza
Associates and Taj Associates.
LIMITATION ON ACTIVITIES OF FUNDING II
Funding II will not conduct any business (including having any Subsidiary)
whatsoever, other than to comply with its obligations under the Note Indenture
and the Notes and its obligations as a guarantor of the TAC I Notes under the
TAC I Note Indenture. Funding II will not incur or otherwise become liable for
any Indebtedness (other than the Notes, the TAC I Notes and any renewal,
extension, substitution, refunding, refinancing or replacement thereof in
accordance with the Note Indenture or the TAC I Note Indenture, as applicable)
or make any Restricted Payments.
RESTRICTION ON CERTAIN AGREEMENTS
The Note Indenture provides that other than employment agreements in the
ordinary course of business consistent with industry practice and approved by
the compensation committee of Funding II, 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 Trump AC if the TPM Services
Agreement is assigned or transferred by TPM and (ii) to TPM 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 TPM 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 Note Indenture provides 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 the Notes (for the benefit of
all holders of Indebtedness secured pursuant to the Collateral Agency Agreement)
and (b) from and at all times after the Issue Date until the 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 Note
Indenture (except worker's compensation) shall name the Issuers, Taj Associates,
Plaza Associates and the Collateral Agent as
100
<PAGE>
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.
RESTRICTION ON SALE AND ISSUANCE OF SUBSIDIARY STOCK
The Note Indenture provides 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 Note
Indenture, including the covenants "LIMITATION ON SALE OF ASSETS AND SUBSIDIARY
STOCK; EVENT OF LOSS" and "LIMITATION ON MERGER, SALE OR CONSOLIDATION." See
"--Note Guarantees" above.
LIMITATION ON USE OF PROCEEDS FROM THE INITIAL OFFERING
The Note Indenture provides that Trump AC and its Subsidiaries shall use the
proceeds from the Initial Offering (after deducting discounts and commissions
and reasonable expenses of the Initial Offering) only 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, and for no other purpose.
FUTURE GUARANTORS
The Note Indenture provides that all present and future Subsidiaries of
Trump AC (other than Trump AC Funding, which is one of the issuers of the TAC I
Notes, Funding II, which is one of the Issuers, and Funding III, which is one of
the issuers of the TAC III Notes) jointly and severally will guarantee
irrevocably and unconditionally all principal, premium, if any, and interest and
Liquidated Damages, if any, on the Notes on a senior basis.
LIMITATION ON STATUS AS INVESTMENT COMPANY
The Note Indenture prohibits 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 Note Indenture provides that whether or not Trump AC or Funding II is
subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange
Act, each of Trump AC and Funding II 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,
within 15 days of each Required Filing Date, (i) transmit by mail to all
Holders, as their names and addresses appear in the 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,
101
<PAGE>
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 Note Indenture defines an Event of Default as, among other things, (i)
the failure by the Issuers to pay any installment of interest (including any
defaulted interest) or Liquidated Damages, if any, on the 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 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 Notes or the 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 Notes outstanding,
(iv) certain events of bankruptcy, insolvency or reorganization in respect of
either or both of 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 Note
Indenture and the 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 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 Notes shall have already become due and payable, either
the Trustee or the holders of 25% in aggregate principal amount of the 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
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 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 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 Notes, the
holders of not less than specified percentages in aggregate principal amount of
the 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 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 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 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
Note Indenture and applicable law, the holders of not less than a majority in
aggregate
102
<PAGE>
principal amount of the 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.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Note Indenture provides that the Issuers may, at their option and at any
time within one year of the final Stated Maturity of the Notes, elect to have
their Obligations and the Obligations of the Guarantors discharged with respect
to the outstanding Notes ("Legal 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
Notes and the Note Indenture shall cease to be of further effect as to all
outstanding 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
(and Liquidated Damages, if any) on such Notes when such payments are due from
the trust funds; (ii) the Issuers' obligations with respect to such Notes
concerning issuing temporary Notes, registration of Notes, mutilated, destroyed,
lost or stolen 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 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 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 Notes. In the
event Covenant Defeasance occurs, the Collateral will be released from the Liens
in favor of the 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
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 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 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 Notes, and the Holders of
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 Service, a ruling or (B) since the date of the 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 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 Note 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 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 Notes
103
<PAGE>
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 Notes when due, then the obligations of the Issuers under
the Note Indenture will be revived, and no such Legal Defeasance or Covenant
Defeasance will be deemed to have occurred.
AMENDMENTS AND SUPPLEMENTS
The Note Indenture contains provisions permitting the Issuers, the
Guarantors and the Trustee to enter into a supplemental indenture or to amend,
modify or supplement the 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 Notes at the time
outstanding, the Issuers, the Guarantors and the Trustee are permitted to amend
or supplement the Note Indenture or any supplemental indenture, the Mortgage
Documents, the 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 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 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
Notes, the consent of whose Holders is required for any such amendment,
supplemental indenture or waiver provided for in the Note Indenture or (iii)
release any Collateral from the Liens created by the Mortgage Documents, except
in accordance with the 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 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 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 Notes specified in the preceding paragraph may waive
compliance with certain restrictive covenants and provisions of the Note
Indenture and the Mortgage Documents.
104
<PAGE>
GAMING LAWS
In certain circumstances, Holders of the 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 "Business--Gaming
and Other Laws and Regulation." The Note Indenture provides that if the CCC
requires that a 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 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 Notes. If any Holder is found unqualified by the
CCC, it is unlawful for the Holder (i) to receive any interest upon the Notes,
(ii) to exercise, directly or through any trustee or nominee any right conferred
by the 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 Note Indenture further requires the Trustee to report the names of all
record Holders of the Notes to certain Gaming Authorities promptly after the
initial issuance of the Notes and prior to the scheduled expiration date of the
applicable casino license. The 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 Notes, certain other
information concerning the Trustee's enforcement of rights under the Note
Indenture and other matters respecting the security for the Notes.
TRUSTEE
The Trustee is U.S. Bank National Association, formerly known as First Bank
National Association, a national banking association. U.S. Bank National
Association also serves as trustee for the TAC I Note Indenture, the TAC III
Note Indenture, the Senior Note Indenture and the Plaza Note Indenture.
The 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 Note Indenture. During the existence of an Event of Default, the
Trustee will exercise such of the rights and powers vested in it under the 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 Note Indenture provides 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 Note
Indenture or the 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 person is an Issuer or Guarantor.
THE MORTGAGE
The Notes are secured by the Mortgage in favor of the Collateral Agent for
the benefit of the holders of the Notes, the TAC I Notes and the TAC III Notes,
subject to the terms of the Collateral Agency Agreement. The Mortgage encumbers
the Issuers', Plaza Associates' and Taj Associates' (collectively, the
"Mortgagor") respective fee and leasehold interests in the Casino Hotels, any
additions and improvements constructed thereon and the interest of the Issuers,
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 the Issuers,
Plaza Associates and Taj Associates, 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 Notes."
105
<PAGE>
Enforceability of certain provisions of the 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 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.
"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 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.
"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 equity offering by THCR prior to or
substantially concurrent with the issuance of the TAC I Notes on April 17, 1996
(including proceeds from the exercise of the underwriters' overallotment option)
except for such contributions of proceeds therefrom in excess of $270 million,
less amounts received therefrom by Trump AC from the sale of its Qualified
Capital Stock to THCR Holdings.
106
<PAGE>
"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 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 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 in 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 as of April 17,
1996 by and among the Issuers, Trump AC Funding, Funding III, the Guarantors,
the Collateral Agent, the Trustee, the trustee under the TAC I Note Indenture
and the trustee under the TAC III Note Indenture as well as such other persons
as may be permitted to become parties thereunder pursuant to the terms thereof.
"COLLATERAL AGENT" shall mean U.S. 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
107
<PAGE>
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 than 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
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,
108
<PAGE>
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 (i) the Taj Bonds, (ii) the Plaza Notes or
(iii) the Plaza PIK 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 an 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 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 Notes.
109
<PAGE>
"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 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
Notes shall have traded on such trading day, or (b) if no such sales of such
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
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 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 Notes, selected for
such purpose by Funding II or (d) if none of clauses (a) through (c) are
applicable, the fair market value of such Notes as of the date of determination
as determined in such manner as shall be satisfactory to Funding II, 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 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 LEASE" means the ground lease, as amended or supplemented in
accordance with the Mortgage Documents, which expires on December 31, 2078,
pursuant to which Plaza Associates is the current lessee and Plaza Hotel
Management is the current lessor.
"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
110
<PAGE>
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 Lease, 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 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 Note 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.
111
<PAGE>
"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 Notes under the 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 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 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 Liquidated
Damages, or monetary penalty, or damages, due by the Issuers or the Guarantors
under the terms of the Notes or the Note Indenture.
"PARTNERS" means each of THCR Holdings and Trump AC Holding or any
additional or substitute partners admitted under the Partnership Agreement so
long as (i) each is a partner under the Partnership
112
<PAGE>
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 April 17, 1996, 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 Guarantor, and
any Wholly owned Guarantor may incur Indebtedness to any other Wholly owned
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 Notes, and that
the date of any event that causes such Guarantor to no longer be a Wholly
owned 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.
"PERMITTED INVESTMENT" means (a) Investments in any of the 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 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 OF
INCURRENCE OF ADDITIONAL INDEBTEDNESS AND DISQUALIFIED CAPITAL STOCK";
(b) any lease of Plaza Associates or Taj Associates, as tenant or
subtenant, existing on the date of the Note Indenture and listed on a
schedule thereto or referred to in the Mortgage or a 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 Note 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 the following:
(a) Liens existing on the Issue Date and Liens securing Refinancing
Indebtedness in respect of secured Indebtedness existing on the Issue Date;
113
<PAGE>
(b) the Lien of the trustee under the TAC III Note Indenture as provided
for in the Note Indenture and the Mortgage Documents, and the Lien of the
trustee as provided for in the TAC III Note Indenture and the mortgage
documents relating thereto;
(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) INTENTIONALLY LEFT BLANK;
(e) INTENTIONALLY LEFT BLANK;
(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 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 (including Refinancing
Indebtedness in respect thereof), 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;
114
<PAGE>
(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; and
(n) a notice of intention filed by a mechanic, materialman or laborer
under the New Jersey mechanic's lien law, or a building contract filed by a
contractor or subcontractor thereunder.
"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 Funding II shall certify, and counsel reasonably acceptable to the
Trustee shall opine, that Trump AC qualifies as a partnership or substantially
similar passthrough 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.
"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 April 17, 1996 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 April 17, 1996 in exchange for, or out of the Net Cash
Proceeds of a substantially concurrent issuance and sale of, Qualified Equity
Interests of Trump AC.
115
<PAGE>
"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 Notes or the 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 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
Funding II 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 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 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.
"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
116
<PAGE>
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 Subsidiaries or any 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 Note, means May 1, 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 Notes and the Note 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 Notes
and the Note Indenture.
"SUPERIOR MORTGAGES" means those certain mortgages, each as in effect on the
Issue Date, known as the "Rothenberg," "CFS," "Wozo" and "Arbor" mortgages,
securing the Plaza Garage Parcel, the Egg Harbor Parcel and certain property
used or to be used for surface parking, as 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 Funding II 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 Funding II 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.
117
<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 TPM.
"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, TACC, TCS, Trump Communications, Trump AC
Funding, Funding II 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 covenant "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) the 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
covenant "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.
118
<PAGE>
WHOLLY OWNED SUBSIDIARY" means a Subsidiary all the Equity Interests of
which are owned by Trump AC or another Wholly owned Subsidiary of Trump AC.
BOOK-ENTRY; DELIVERY; FORM AND TRANSFER
The Original Notes sold to Qualified Institutional Buyers are in the form of
one or more registered global notes without interest coupons (collectively, the
"U.S. Global Notes"). Upon issuance, the U.S. Global Notes were deposited with
the Trustee, as custodian for The Depository Trust Company ("DTC"), in New York,
New York, and registered in the name of DTC or its nominee, in each case for
credit to the accounts of DTC's Direct and Indirect Participants (as defined).
Beneficial interests in all Global Notes and all Certificated Notes (as
defined), if any, are subject to certain restrictions on transfer and bear a
restrictive legend. In addition, transfer of beneficial interests in any Global
Notes is subject to the applicable rules and procedures of DTC and its Direct or
Indirect Participants, which may change from time to time.
The Global Notes may be transferred, in whole and not in part, only to
another nominee of DTC or to a successor of DTC or its nominee in certain
limited circumstances. Beneficial interests in the Global Notes may be exchanged
for Original Notes in certificated form in certain limited circumstances. See
"-- Transfer of Interests in Global Notes for Certificates Notes."
Initially, the Trustee will act as Paying Agent and Registrar. The Original
Notes may be presented for registration of transfer and exchange at the offices
of the Registrar.
DEPOSITARY PROCEDURES
DTC has advised the Issuers that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Direct Participants") and to facilitate the clearance and settlement of
transactions in those securities between Direct Participants through electronic
book-entry changes in accounts of Participants. The Direct Participants include
securities brokers and dealers (including the Initial Purchaser), banks, trust
companies, clearing corporations and certain other organizations. Access to
DTC's system is also available to other entities that clear through or maintain
a direct or indirect, custodial relationship with a Direct Participant
(collectively, the "Indirect Participants"). DTC may hold securities
beneficially owned by other persons only through the Direct Participants or
Indirect Participants and such other persons' ownership interest and transfer or
ownership interest will be recorded only on the records of the Direct
Participant and/or Indirect Participant, and not on the records maintained by
DTC.
DTC has also advised the Issuers that, pursuant to DTC's procedures, (i)
upon deposit of the Global Notes, DTC will credit the accounts of the Direct
Participants designated by the Initial Purchaser with portions of the principal
amount of the Global Notes allocated by the Initial Purchaser to such Direct
Participants, and (ii) DTC will maintain records of the ownership interests of
such Direct Participants in the Global Notes and the transfer of ownership
interests by and between Direct Participants. DTC will not maintain records of
the ownership interests of, or the transfer of ownership interests by and
between, Indirect Participants or other owners of beneficial interest in the
Global Notes. Direct Participants and Indirect Participants must maintain their
own records of the ownership interests of, and the transfer of ownership
interests by and between, Indirect Participants and other owners of beneficial
interests in the Global Notes.
Investors in the U.S. Global Notes may hold their interests therein directly
through DTC if they are Direct Participants in DTC or indirectly through
organizations that are Direct Participants in DTC. All ownership interests in
any Global Notes may be subject to the procedures and requirements of DTC.
The laws of some states require that certain persons take physical delivery
in definitive, certificated form of securities that they own. This may limit or
curtail the ability to transfer beneficial interests in a
119
<PAGE>
Global Note to such persons. Because DTC can act only on behalf of Direct
Participants, which in turn act on behalf of Indirect Participants and others,
the ability of a person having a beneficial interest in a Global Note to pledge
such interest to persons or entities that are not Direct Participants in DTC, or
to otherwise take actions in respect of such interests, may be affected by the
lack of physical certificates evidencing such interests. For certain other
restrictions on the transferability of the Notes see "--Transfers of Interests
in Global Notes for Certificated Notes."
EXCEPT AS DESCRIBED IN "TRANSFERS OF INTERESTS IN GLOBAL NOTES FOR
CERTIFICATED NOTES", OWNERS OF BENEFICIAL INTERESTS IN THE GLOBAL NOTES WILL NOT
HAVE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF THE
NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR
HOLDERS UNDER THE NOTE INDENTURE FOR ANY PURPOSE.
Under the terms of the Note Indenture, the Issuers, the Guarantors and the
Trustee will treat the persons in whose names the Notes are registered
(including Notes represented by Global Notes) as the owners thereof for the
purpose of receiving payments and for any and all other purposes whatsoever.
Payments in respect of the principal, premium, Liquidated Damages, if any, and
interest on Global Notes registered in the name of DTC or its nominee will be
payable by the Trustee to DTC or its nominee as the registered holder under the
Note Indenture. Consequently, neither the Issuers, the Trustee nor any agent of
the Issuers or the Trustee has or will have any responsibility or liability for
(i) any aspect of DTC's records or any Direct Participant's or Indirect
Participant's records relating to or payments made on account of beneficial
ownership interests in the Global Notes or for maintaining, supervising or
reviewing any of DTC's records or any Direct Participant's or Indirect
Participant's records relating to the beneficial ownership interests in any
Global Note or (ii) any other matter relating to the actions and practices of
DTC or any of its Direct Participants or Indirect Participants.
DTC has advised the Issuers that their current payment practice (for
payments of principal, interest and the like) with respect to securities such as
the Notes is to credit the accounts of the relevant Direct Participants with
such payment on the payment date in amounts proportionate to such Direct
Participant's respective ownership interests in the Global Notes as shown on
DTC's records. Payments by Direct Participants and Indirect Participants to the
beneficial owners of the Notes will be governed by standing instructions and
customary practices between them and will not be the responsibility of DTC, the
Trustee, the Issuers or the Guarantors. Neither the Issuers, the Guarantors, nor
the Trustee will be liable for any delay by DTC or its Direct Participants or
Indirect Participants in identifying the beneficial owners of the Notes and the
Issuers and the Trustee may conclusively rely on and will be protected in
relying on instructions from DTC or its nominee as the registered owner of the
Notes for all purposes.
The Global Notes trade in DTC's Same-Day Funds Settlement System and,
therefore, transfers between Direct Participants in DTC will be effected in
accordance with DTC's procedures, and will be settled in immediately available
funds. Transfers between Indirect Participants who hold an interest through a
Direct Participant will be effected in accordance with the procedures of such
Direct Participant but generally will settle in immediately available funds.
DTC has advised the Issuers that it will take any action permitted to be
taken by a Holder of Notes only at the direction of one or more Direct
Participants to whose account interests in the Global Notes are credited and
only in respect of such portion of the aggregate principal amount of the Notes
as to which such Direct Participant or Direct Participants has or have given
direction. However, if there is an Event of Default under the Notes, DTC
reserves the right to exchange Global Notes (without the direction of one or
more of its Direct Participants) for legended Notes in certificated form, and to
distribute such certificated forms of Notes to its Direct Participants. See
"--Transfers of Interests in Global Notes for Certificated Notes."
The information in this section concerning DTC and its book-entry system has
been obtained from sources that the Issuers believe to be reliable, but the
Issuers take no responsibility for the accuracy thereof.
120
<PAGE>
TRANSFERS OF INTERESTS IN GLOBAL NOTES FOR CERTIFICATED NOTES
An entire Global Note may be exchanged for definitive Notes in registered,
certificated form without interest coupons ("Certificated Notes") if (i) DTC (x)
notifies the Issuers that it is unwilling or unable to continue as depositary
for the Global Notes and the Issuers thereupon fail to appoint a successor
depositary within 90 days or (y) has ceased to be a clearing agency registered
under the Exchange Act, (ii) the Issuers, at their option, notify the Trustee in
writing that they elect to cause the issuance of Certificated Notes or (iii)
there shall have occurred and be continuing a Default or an Event of Default
with respect to the Notes. In any such case, the Issuers will notify the Trustee
in writing that, upon surrender by the Direct and Indirect Participants of their
interest in such Global Note, Certificated Notes will be issued to each person
that such Direct and Indirect Participants and the DTC identify as being the
beneficial owner of the related Notes.
Beneficial interests in Global Notes held by any Direct or Indirect
Participant may be exchanged for Certificated Notes upon request to DTC, by such
Direct Participant (for itself or on behalf of an Indirect Participant), to the
Trustee in accordance with customary DTC procedures. Certificated Notes
delivered in exchange for any beneficial interest in any Global Note will be
registered in the names, and issued in any approved denominations, requested by
DTC on behalf of such Direct or Indirect Participants (in accordance with DTC's
customary procedures).
In all cases described herein, such Certificated Notes will bear a
restrictive legend unless the Issuers determine otherwise in compliance with
applicable law.
Neither the Issuers, the Guarantors nor the Trustee will be liable for any
delay by the holder of the Global Notes or DTC in identifying the beneficial
owners of Notes, and the Issuers and the Trustee may conclusively rely on, and
will be protected in relying on, instructions from the holder of the Global Note
or DTC for all purposes.
TRANSFERS OF CERTIFICATED NOTES FOR INTERESTS IN GLOBAL NOTES
Certificated Notes may only be transferred if the transferor first delivers
to the Trustee a written certificate (and in certain circumstances, an opinion
of counsel) confirming that, in connection with such transfer, it has complied
with the requisite restrictions on transfer.
SAME DAY SETTLEMENT AND PAYMENT
The Note Indenture requires that payments in respect of the Notes
represented by the Global Notes (including principal, premium, if any, interest
and Liquidated Damages, if any) be made by wire transfer of immediately
available same day funds to the accounts specified by the holder of interests in
such Global Note. With respect to Certificated Notes, the Issuers will make all
payments of principal, premium, if any, interest and Liquidated Damages, if any,
by wire transfer of immediately available same day funds to the accounts
specified by the holders thereof or, if no such account is specified, by mailing
a check to each such holder's registered address. The Issuers expect that
secondary trading in the Certificated Notes will also be settled in immediately
available funds.
121
<PAGE>
ORIGINAL NOTES REGISTRATION RIGHTS
The Issuers and the Initial Purchaser entered into the Registration Rights
Agreement on the Closing Date of the Initial Offering, pursuant to which the
Issuers agreed for the benefit of the Holders of the Original Notes to, at their
cost, (i) within 45 days after the Issue Date, file the Registration Statement
under the Securities Act with the Commission with respect to the Exchange Offer,
with terms substantially identical in all material respects to the Original
Notes (except that such Exchange Notes will not contain terms with respect to
transfer restrictions) and (ii) to use its best efforts to cause such
Registration Statement to be declared effective under the Securities Act within
150 days after the Issue Date. Upon such Registration Statement being declared
effective, the Issuers will offer Exchange Notes in exchange for properly
tendered Original Notes. The Issuers will keep the Exchange Offer open for not
less than 30 days (or longer if required by applicable law) after the date
notice of such Exchange Offer is mailed to the Holders of the Original Notes.
For each Original Note surrendered to the Issuers pursuant to such Exchange
Offer, the Holder of such Original Note will receive Exchange Notes having a
principal amount at maturity equal to that of the surrendered Original Note.
Under existing Commission interpretations, the Exchange Notes would, in
general, be freely transferable after the Exchange Offer without further
registration under the Securities Act; PROVIDED that in the case of
broker-dealers participating in the Exchange Offer, a prospectus meeting the
requirements of the Securities Act will be delivered upon resale by such
broker-dealers in connection with resales of the Exchange Notes. The Issuers
have agreed, for a period of 180 days after consummation of the Exchange Offer,
to make available a prospectus meeting the requirements of the Securities Act to
any such broker-dealer for use in connection with any resale of any Exchange
Notes acquired in the Exchange Offer. A broker-dealer which delivers such a
prospectus to purchasers in connection with such resales will be subject to
certain of the civil liability provisions under the Securities Act and will be
bound by the provisions of the Registration Rights Agreement (including certain
indemnification rights and obligations).
Each Holder of the Original Notes that wishes to exchange such Original
Notes for Exchange Notes in the Exchange Offer will be required to make certain
representations, including representations that (i) any Exchange Notes to be
received by it will be acquired in the ordinary course of its business, (ii) it
has no arrangement with any person to participate in the distribution of the
Exchange Notes and (iii) it is not an "affiliate," as defined in Rule 405 of the
Securities Act, of the Issuers, or if it is an affiliate, it will comply with
the registration and prospectus delivery requirements of the Securities Act to
the extent applicable.
If the Holder is not a broker-dealer, it will be required to represent that
it is not engaged in, and does not intend to engage in, the distribution of the
Exchange Notes. If the Holder is a broker-dealer that will receive Exchange
Notes for its own account in exchange for Original Notes that were acquired as a
result of market-making activities or other trading activities, it will be
required to acknowledge that it will deliver a prospectus in connection with any
resale of such Exchange Notes.
In the event that applicable interpretations of the Staff of the Commission
do not permit the Issuers to effect such an Exchange Offer, or if for any other
reason the Exchange Offer is not consummated within 210 days of the Issue Date,
the Issuers will, at their own expense, (a) within 45 days after such filing
obligation arises, file a Shelf Registration Statement covering resales of the
Original Notes, (b) use their best efforts to cause such Shelf Registration
Statement to be declared effective under the Securities Act on or prior to 150
days after such obligation arises and (c) use their best efforts to keep
effective such Shelf Registration Statement until the earlier of 24 months
following the Issue Date and such time as all of the Original Notes have been
sold thereunder, or otherwise cease to be a Transfer Restricted Security (as
defined in the Registration Rights Agreement). The Issuers will, in the event a
Shelf Registration Statement is required to be filed, provide to each Holder of
the Original Notes copies of the prospectus which is a part of such Shelf
Registration Statement, notify each Holder when such Shelf Registration
Statement for the Original Notes has become effective and take certain other
actions as are required to permit unrestricted resales of the Original Notes. A
Holder of the Original Notes who sells such Original
122
<PAGE>
Notes pursuant to the Shelf Registration Statement generally would be required
to be named as a selling security holder in the related prospectus and to
deliver a prospectus to purchasers, will be subject to certain of the civil
liability provisions under the Securities Act in connection with such sales and
will be bound by the provisions of the Registration Rights Agreement which are
applicable to such a Holder (including certain indemnification and contribution
rights and obligations).
If (a) either of the registration statements described above is not filed on
or before the date specified for such filing, (b) either of such registration
statements is not declared effective by the Commission on or prior to the date
specified for such effectiveness (the "Effectiveness Target Date"), (c) a
Registration Statement becomes effective but the Issuers fail to consummate the
Exchange Offer within 45 days of the earlier of the effectiveness of such
registration statement or the Effectiveness Target Date or (d) the Shelf
Registration Statement is declared effective but thereafter ceases to be
effective or usable in connection with resales of the Original Notes during the
period specified in the Registration Rights Agreement (each such event referred
to in clauses (a) through (d) above, a Registration Default), then the Issuers
will pay liquidated damages ("Liquidated Damages") to each Holder of the
Original Notes, with respect to the first 90-day period immediately following
the occurrence of such Registration Default in an amount equal to $.05 per week
per $1,000 principal amount of the Original Notes held by such Holder. Upon a
Registration Default, Liquidated Damages will accrue at the rate specified above
until such Registration Default is cured and the amount of Liquidated Damages
will increase by an additional $.05 per week per $1,000 principal amount of
Original Notes with respect to each subsequent 90-day period until all
Registration Defaults have been cured, up to a maximum amount of Liquidated
Damages of $.30 per week per $1,000 principal amount of Original Notes
(regardless of whether one or more than one Registration Default is
outstanding). All accrued Liquidated Damages will be paid by the Issuers on each
interest payment date to the Holders of Original Notes by wire transfer of
immediately available funds or by mailing checks to their registered addresses
if no such accounts have been specified.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Registration Rights
Agreement, a copy of which is filed as an exhibit to the Registration Statement
of which this Prospectus is a part.
123
<PAGE>
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of United States federal income tax
considerations for original holders of the Notes. This summary is based upon
existing United States federal income tax law, which is subject to change,
possibly retroactively. This summary does not discuss all aspects of United
States federal income taxation which may be important to particular investors in
light of their individual investment circumstances, such as Notes held by
investors subject to special tax rules (E.G., financial institutions, insurance
companies, broker-dealers, traders in securities, tax-exempt organizations, and,
except to the extent described below, non-"United States Holders (as defined))
or to persons that will hold the Notes as part of a straddle, hedging, or
"synthetic" security transaction for United States federal income tax purposes
or that have a functional currency other than the United States dollar, all of
whom may be subject to tax rules that differ significantly from those summarized
below. In addition, this summary does not discuss any foreign, state, or local
tax considerations. This summary assumes that investors will hold their Notes as
"capital assets" (generally, property held for investment) under the United
States Internal Revenue code of 1986, as amended (the "Code"). Prospective
investors are urged to consult their tax advisors regarding the United States
federal, state, local, and foreign income and other tax considerations of the
purchase, ownership, and disposition of the Notes.
For purposes of this summary, a "United States Holder" is a beneficial owner
of a Note that is (i) an individual who is a citizen or resident of the United
States, (ii) a corporation, partnership, or other entity created or organized
under the laws of the United States or any state or political subdivision
thereof, (iii) an estate the income of which is subject to United States federal
income taxation regardless of its source, or (iv) a trust the administration of
which is subject to the primary supervision of a United States court and which
has one or more United States persons who have the authority to control all
substantial decisions of the trust.
UNITED STATES HOLDERS
ORIGINAL ISSUE DISCOUNT
The Notes will be issued with original issue discount, for United States
federal income tax purposes, in an amount equal to the excess of their stated
principal amount due at maturity over their issue price. Accordingly, United
States Holders will be required to include original issue discount in ordinary
income over the period that they hold the Notes in advance of the receipt of the
cash attributable thereto. The amount of original issue discount to be included
in income will be determined using a constant yield method, which will result in
a greater portion of such discount being included in income in the later part of
the term of the Notes. Any amount of discount included in income will increase a
United States Holder's adjusted tax basis in the Notes.
SALE OR EXCHANGE
A United States Holder will recognize capital gain or loss upon a sale,
exchange, or retirement of a Note in an amount equal to the excess of the amount
realized (reduced by any amount attributable to accrued but unpaid stated
interest) and the Holder's adjusted tax basis in such Note. Under the recently
enacted Taxpayer Relief Act of 1997, net capital gain (I.E., generally, capital
gain in excess of capital loss) recognized by an individual upon a sale of a
Note that has been held for more than 18 months will be generally subject to tax
at a rate not to exceed 20%. Net capital gain recognized by an individual upon
the sale of a Note that has been held for more than 12 months but for not more
than 18 months will continue to be subject to tax at a rate not to exceed 28%
and capital gain recognized upon the sale of a Note that has been held for 12
months or less will continue to be subject to tax at ordinary income tax rates.
In addition, capital gain recognized by a corporate taxpayer upon the sale of a
Note will continue to be subject to tax at the ordinary income tax rates
applicable to corporations.
124
<PAGE>
NON-UNITED STATES HOLDERS
INTEREST
Interest (including accrued original issue discount) paid by the Issuers to
a non-United States Holder will not be subject to United States federal income
or withholding tax if (i) such interest is not effectively connected with the
conduct of a trade or business within the United States by such non-United
States Holder, (ii) the non-United States Holder does not actually or
constructively own a 10% or more interest in Funding II and is not a controlled
foreign corporation with respect to which the Issuers are a "related person"
within the meaning of the Code and (iii) the requirements of section 871(h) or
881(c) of the Code are satisfied as described below under the heading "Owner
Statement Requirement."
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 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, such Holder is present in the United States for 183 or more days in
the taxable year and certain other requirements are met.
OWNER STATEMENT REQUIREMENT
Sections 871(h) and 881(c) of the Code require that either the beneficial
owner of a Note or a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business (a "Financial Institution") and that holds a Note on behalf of such
owner file a statement with the Issuers or their agent to the effect that the
beneficial owner is not a United States person in order to avoid withholding of
United States Federal income tax. Under current regulations, this requirement
will be satisfied if the Issuers or their agent receive (i) a statement (an
"Owner's Statement") from the beneficial owner of a Note in which such owner
certifies, under penalties of perjury, that such owner is not a United States
person and provides such owner's name and address or (ii) a statement from the
Financial Institution holding the Note on behalf of the beneficial owner in
which the Financial Institution certifies, under penalties of perjury, that it
has received the Owner's Statement together with a copy of the Owner's
Statement. The beneficial owner must inform the Issuers or their agent (or, in
the case of a statement described in clause (ii) of the immediately preceding
sentence, the Financial Institution) within 30 days of any change in information
on the Owner's Statement.
FEDERAL ESTATE TAXES
If interest on the Notes is exempt from withholding of United States federal
income tax under the rules described above, the 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
In the case of payments of interest (including accrued original issue
discount) to non-United States Holders, current Treasury regulations provide
that the 31% backup withholding tax and certain information reporting will not
apply to such payments with respect to which either an Owner's Statement has
been received or an exemption has otherwise been established; PROVIDED THAT
neither the Issuers not 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 current 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 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
125
<PAGE>
reporting requirements, but not backup withholding, will also apply to a payment
of the proceeds of a disposition of the 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 Notes
by or through a foreign office of a foreign broker not subject to the preceding
sentence.
Recently, the Treasury Department has promulgated final regulations (the
"Final Regulations") regarding the withholding and information reporting rules
discussed above. In general the Final Regulations do not significantly alter the
substantive withholding and information reporting requirements but unify current
certification procedures and forms and clarify reliance standards. Under the
Final Regulations, special rules apply which permit the shifting of primary
responsibility for withholding to certain financial intermediaries acting on
behalf of beneficial owners. The Final Regulations are generally effective for
payments made after December 31, 1998, subject to certain transition rules.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules will be refunded or credited against the non-Unites
States Holder's United States federal income tax liability, provided that the
required information is furnished to the Service.
126
<PAGE>
PLAN OF DISTRIBUTION
Based on interpretations by the Staff set forth in no-action letters issued
to third parties, the Issuers believe that Exchange Notes issued pursuant to the
Exchange Offer in exchange for the Original Notes may be offered for resale,
resold and otherwise transferred by Holders thereof (other than any Holder which
is (i) an "affiliate" of the Issuers within the meaning of Rule 405 under the
Securities Act, (ii) a broker-dealer who acquired Original Notes directly from
the Issuers or (iii) broker-dealers who acquired Original Notes as a result of
market-making or other trading activities) without compliance with the
registration and prospectus delivery provisions of the Securities Act provided
that such Exchange Notes are acquired in the ordinary course of such Holders'
business, and such Holders are not engaged in, and do not intend to engage in,
and have no arrangement or understanding with any person to participate in, a
distribution of such Exchange Notes; provided that broker-dealers
("Participating Broker-Dealers") receiving Exchange Notes in the Exchange Offer
will be subject to a prospectus delivery requirement with respect to resales of
such Exchange Notes. To date, the Staff has taken the position that
Participating Broker-Dealers may fulfill their prospectus delivery requirements
with respect to transactions involving an exchange of securities such as the
exchange pursuant to the Exchange Offer (other than a resale of an unsold
allotment from the sale of the Original Notes to the Initial Purchaser) with the
prospectus contained in the Registration Statement. Pursuant to the Registration
Rights Agreement, the Issuers have agreed to permit Participating Broker-Dealers
and other persons, if any, subject to similar prospectus delivery requirements
to use this Prospectus in connection with the resale of such Exchange Notes. The
Issuers have agreed that, for a period not to exceed 180 days after the Exchange
Date, they will make this Prospectus, and any amendment or supplement to this
Prospectus, available to any broker-dealer that requests such documents in the
Letter of Transmittal.
Each Holder of the Original Notes who wishes to exchange its Original Notes
for Exchange Notes in the Exchange Offer will be required to make certain
representations to the Issuers as set forth in "The Exchange Offer--Terms and
Conditions of the Letter of Transmittal." In addition, each Holder who is a
broker-dealer and who receives Exchange Notes for its own account in exchange
for Original Notes that were acquired by it as a result of market-making
activities or other trading activities, will be required to acknowledge that it
will deliver a prospectus in connection with any resale by it of such Exchange
Notes.
The Issuers will not receive any proceeds from any sale of Exchange Notes by
broker-dealers. Exchange Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the Exchange Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or at negotiated prices. Any such resale may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such broker-
dealer and/or the purchasers of any such Exchange Notes. Any broker-dealer that
resells Exchange Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker or dealer that participates in a distribution
of such Exchange Notes may be deemed to be an "underwriter" within the meaning
of the Securities Act and any profit on any such resale of Exchange Notes and
any commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
The Issuers have agreed to pay all expenses incidental to the Exchange Offer
other than commissions and concessions of any brokers or dealers and will
indemnify Holders of the Notes (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act, as set forth in the
Registration Rights Agreement.
127
<PAGE>
LEGAL MATTERS
The validity of the Exchange Notes will be passed upon for the Issuers by
Willkie Farr & Gallagher, One Citicorp Center, 153 East 53rd Street, New York,
New York 10022.
EXPERTS
The consolidated financial statements and schedule of Trump AC included in
this 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.
128
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Trump Atlantic City Associates and Subsidiaries
Report of Independent Public Accountants................................................................. F-2
Consolidated Balance Sheets as of December 31, 1996 and 1997............................................. F-3
Consolidated Statements of Operations for the years ended December 31, 1995, 1996 and 1997............... F-4
Consolidated Statements of Capital for the years ended December 31, 1995, 1996 and 1997.................. F-5
Consolidated Statements of Cash Flows for the years ended December 31, 1995, 1996 and 1997............... F-6
Notes to Consolidated Financial Statements............................................................... F-8
Financial Statement Schedule
Report of Independent Public Accountants................................................................. S-1
Schedule II--Valuation and Qualifying Accounts for the Years Ended December 31, 1995, 1996 and 1997...... S-2
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Trump Atlantic City Associates and Subsidiaries:
We have audited the accompanying consolidated balance sheets of Trump
Atlantic City Associates and Subsidiaries (a New Jersey general partnership) as
of December 31, 1996 and 1997, and the related consolidated statements of
operations, capital and cash flows for each of the three years in the period
ended December 31, 1997. These consolidated financial statements are the
responsibility of the management of Trump Atlantic City Associates and
Subsidiaries. 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 Subsidiaries as of December 31, 1996 and 1997, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1997, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
ROSELAND, NEW JERSEY
FEBRUARY 5, 1998
F-2
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1997
--------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................................................... $ 71,320 $ 114,879
Trade receivables, net of allowances for doubtful accounts of $17,355 and $17,095,
respectively (Note 2)................................................................. 39,087 47,417
Accounts receivable, other (Note 5)..................................................... 6,144 9,061
Inventories............................................................................. 9,393 9,880
Prepaid expenses and other current assets............................................... 6,495 7,319
Due from affiliates, net (Note 7)....................................................... 5,237 21,880
--------- ---------
Total current assets.................................................................. 137,676 210,436
--------- ---------
PROPERTY AND EQUIPMENT (Notes 2, 5 and 7):
Land and land improvements.............................................................. 159,390 171,364
Buildings and building improvements..................................................... 1,280,947 1,334,794
Furniture, fixtures and equipment....................................................... 194,050 217,623
Leasehold improvements.................................................................. 2,404 2,404
Construction in progress................................................................ 23,067 1,404
--------- ---------
1,659,858 1,727,589
Less--Accumulated depreciation and amortization......................................... (203,591) (267,539)
--------- ---------
Net property and equipment............................................................ 1,456,267 1,460,050
--------- ---------
OTHER ASSETS:
Deferred bond issuance costs, net of accumulated amortization of $5,052 and $11,613,
respectively
(Note 3).............................................................................. 39,153 36,842
Other Assets............................................................................ 25,910 31,745
--------- ---------
Total other assets.................................................................... 65,063 68,587
--------- ---------
Total assets.......................................................................... $1,659,006 $1,739,073
--------- ---------
--------- ---------
LIABILITIES AND CAPITAL
CURRENT LIABILITIES:
Current maturities of long-term debt (Note 3)........................................... $ 9,410 $ 6,964
Accounts payable........................................................................ 22,598 23,392
Accrued payroll......................................................................... 16,653 17,759
Self-insurance reserves (Note 5)........................................................ 9,911 10,508
Accrued interest payable (Note 3)....................................................... 23,160 23,850
Other accrued expenses.................................................................. 25,202 14,908
Other current liabilities............................................................... 3,578 6,911
--------- ---------
Total current liabilities............................................................. 110,512 104,292
--------- ---------
NON-CURRENT LIABILITIES:
Long-term debt, net of current maturities (Note 3)...................................... 1,207,795 1,300,027
Other long-term liabilities............................................................. 8,841 6,815
--------- ---------
Total non-current liabilities......................................................... 1,216,636 1,306,842
--------- ---------
Total liabilities..................................................................... 1,327,148 1,411,134
--------- ---------
COMMITMENTS AND CONTINGENCIES (Note 5):
CAPITAL:
Partners' Capital....................................................................... 363,646 373,790
Accumulated Deficit..................................................................... (31,788) (45,851)
--------- ---------
Total Capital........................................................................... 331,858 327,939
--------- ---------
Total liabilities and capital........................................................... $1,659,006 $1,739,073
--------- ---------
--------- ---------
</TABLE>
The accompanying notes to financial statements are an integral
part of these consolidated financial statements.
F-3
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1996 1997
---------------- ---------------- ----------------
<S> <C> <C> <C>
REVENUES:
Gaming................................................... $ 298,073 $ 752,228 $ 889,116
Rooms.................................................... 19,986 68,214 81,619
Food and Beverage........................................ 44,602 98,635 114,597
Other.................................................... 9,594 24,146 35,019
---------------- ---------------- ----------------
Gross Revenues....................................... 372,255 943,223 1,120,351
Less-Promotional allowances.............................. 45,077 113,743 138,085
---------------- ---------------- ----------------
Net Revenues......................................... 327,178 829,480 982,266
---------------- ---------------- ----------------
COSTS AND EXPENSES:
Gaming................................................... 164,396 453,841 555,457
Rooms.................................................... 8,656 22,690 28,229
Food and Beverage........................................ 12,605 31,923 37,233
General and Administrative............................... 65,521 147,464 168,143
Depreciation and Amortization............................ 16,213 60,870 66,018
Preopening............................................... -- 4,145 --
---------------- ---------------- ----------------
267,391 720,933 855,080
---------------- ---------------- ----------------
Income from operations............................... 59,787 108,547 127,186
---------------- ---------------- ----------------
NON-OPERATING INCOME (EXPENSE):
Interest income.......................................... 1,003 2,339 2,891
Interest expense (Note 3)................................ (44,264) (114,461) (144,140)
Non-operating income (expense)(Note 4)................... (5,743) 14,194 --
---------------- ---------------- ----------------
Non-operating expense, net........................... (49,004) (97,928) (141,249)
---------------- ---------------- ----------------
Income (loss) before extraordinary items................. 10,783 10,619 (14,063)
Extraordinary loss....................................... (9,250) (59,132) --
---------------- ---------------- ----------------
Net income (loss)........................................ $ 1,533 $ (48,513) $ (14,063)
---------------- ---------------- ----------------
---------------- ---------------- ----------------
</TABLE>
The accompanying notes to financial statements are an integral
part of these consolidated financial statements.
F-4
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
RETAINED
EARNINGS/
PARTNERS' (ACCUMULATED
CAPITAL DEFICIT) TOTAL
---------- ------------ ----------
<S> <C> <C> <C>
Balance, December 31, 1994................................................. $ (78,772) $ 15,192 $ (63,580)
Capital Contributed by Trump Hotels & Casino Resorts Holdings, L.P......... 172,859 -- 172,859
Net Income................................................................. -- 1,533 1,533
---------- ------------ ----------
Balance, December 31, 1995................................................. 94,087 16,725 110,812
Capital Contributed by Trump Hotels & Casino Resorts Holdings, L.P......... 269,559 -- 269,559
Net Loss................................................................... -- (48,513) (48,513)
---------- ------------ ----------
Balance, December 31, 1996................................................. 363,646 (31,788) 331,858
Capital Contributed by Trump Hotels & Casino Resorts Holdings, L.P......... 10,144 -- 10,144
Net Loss................................................................... -- (14,063) (14,063)
---------- ------------ ----------
Balance, December 31, 1997................................................. $ 373,790 $ (45,851) $ 327,939
---------- ------------ ----------
---------- ------------ ----------
</TABLE>
The accompanying notes to financial statements are an integral
part of these consolidated financial statements.
F-5
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
1995 1996 1997
---------------- ---------------- ----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)...................................... $ 1,533 $ (48,513) $ (14,063)
Adjustments to reconcile net income (loss) to net cash
flows provided by operating activities:
Noncash charges:
Extraordinary loss................................. 9,250 59,132 --
Depreciation and amortization...................... 16,213 60,870 66,018
Accretion of discount on indebtedness.............. 1,130 132 68
Amortization of deferred loan offering costs....... 1,791 5,588 6,561
Provision for losses on receivables................ 1,057 8,599 7,399
Utilization of CRDA credits and donations.......... 388 -- 53
Valuation allowance of CRDA investments............ (1,098) 3,013 3,762
Increase in receivables.............................. (8,318) (20,296) (20,944)
Decrease (increase) in inventories................... 371 47 (486)
Decrease (increase) in prepaid expenses and other
current assets..................................... (765) 1,495 (408)
Decrease (increase) in other assets.................. 6,283 (2,309) 97
Decrease in amounts due from affiliates.............. (1,504) (3,668) (16,643)
Increase (decrease) in accounts payable, accrued
expenses and other current liabilities............. 592 (16,153) (3,775)
Decrease in other long-term liabilities.............. -- (1,430) (2,438)
---------------- ---------------- ----------------
Net cash flows provided by operating activities...... 26,923 46,507 25,201
---------------- ---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment.................. (109,756) (193,000) (56,368)
Purchases of CRDA investments........................ (3,178) (6,725) (8,723)
Purchase of Taj Holding, net cash received........... -- 46,714 --
---------------- ---------------- ----------------
Net cash flows used in investing activities.......... (112,934) (153,011) (65,091)
---------------- ---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cost of issuing debt................................. -- (41,042) (4,254)
Issuance of Trump AC Mortgage Notes.................. -- 1,200,000 95,605
Retirement of long-term debt......................... -- (1,156,836) --
Retirement of NatWest Loan........................... -- (36,500) --
Additional Borrowings................................ 4,218 6,170 3,440
Payments and current maturities of long-term debt.... (4,527) (14,690) (11,342)
Redemption of PIK Notes.............................. (81,746) -- --
Contributed Capital by Trump Hotel and Casino Resorts
Holdings, L.P...................................... 172,859 204,785 --
---------------- ---------------- ----------------
Net cash flows provided by financing activities...... 90,804 161,887 83,449
---------------- ---------------- ----------------
NET INCREASE IN CASH AND CASH EQUIVALENTS................ 4,793 55,383 43,559
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR........... 11,144 15,937 71,320
---------------- ---------------- ----------------
CASH AND CASH EQUIVALENTS AT END OF YEAR................. $ 15,937 $ 71,320 $ 114,879
---------------- ---------------- ----------------
---------------- ---------------- ----------------
</TABLE>
F-6
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS, EXCEPT FOR SHARE DATA) (CONTINUED)
<TABLE>
<CAPTION>
1995 1996 1997
---------------- ---------------- ----------------
<S> <C> <C> <C>
Supplemental Disclosures of Cash Flow Information:
- During 1996 and 1997, THCR Holdings purchased
certain parcels of land amounting to $14,455 and
$10,144, respectively and contributed the parcels to
Trump AC.
- Equipment purchased under capital leases........... $ 3,317 $ 9,994 $ 3,569
- Cash paid during the year for interest............. $ 36,936 $ 138,128 $ 128,617
---------------- ---------------- ----------------
---------------- ---------------- ----------------
Supplemental Disclosure of Noncash Activities:
- During 1996, THCR purchased all of the capital stock of Taj Holding for $31,181 in cash and 323,423
shares of its common stock valued at $9,319. In addition, the contribution by Trump of his 50% interest in
Taj Associates amounting to $40,500, net of the $10,000 payment to Bankers Trust, was recorded as minority
interest. In conjunction with the acquisition, the accumulated deficit amounting to $108,574 was recorded
as an increase to Property, Plant & Equipment.
- This transaction has been recorded by Trump AC.
Fair Value of net assets acquired.................................................... $1,005,816
Cash paid for the capital stock and payment to Bankers Trust......................... (41,181)
Minority interest of Trump........................................................... (30,500)
----------------
Liabilities assumed................................................................ $ 934,135
</TABLE>
- In connection with the purchase of the Specified Parcels, in 1996 THCR
issued 500,000 shares of its common stock valued at $10,500, and
contributed the Specified Parcels to Trump AC.
The accompanying notes to financial statements are an integral
part of these consolidated financial statements.
F-7
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) ORGANIZATION
The accompanying consolidated financial statements include those of Trump
Atlantic City Associates ("Trump AC"), a New Jersey general partnership formerly
known as Trump Plaza Holding Associates, and its subsidiaries, Trump Plaza
Associates, a New Jersey general partnership ("Plaza Associates"), which owns
and operates the Trump Plaza Hotel and Casino located in Atlantic City, New
Jersey ("Trump Plaza"), Trump Taj Mahal Associates, a New Jersey general
partnership ("Taj Associates"), which owns and operates the Trump Taj Mahal
Casino Resort located in Atlantic City, New Jersey (the "Taj Mahal"), Trump
Atlantic City Funding, Inc., a Delaware corporation ("Trump AC Funding"), Trump
Atlantic City Funding II, ("Trump AC Funding II"), Trump Atlantic City Funding
III, Inc. ("Trump AC Funding III)", Trump Atlantic City Corporation, a Delaware
Corporation ("TACC"), Trump Casino Services, L.L.C., a New Jersey limited
liability company ("Trump Services"), and Trump Communications, L.L.C., a New
Jersey limited liability company. Trump AC's sole sources of liquidity are
distributions in respect of its interests in Plaza Associates and Taj
Associates. Trump AC is owned by Trump Hotels & Casino Resorts Holdings, L.P., a
Delaware limited partnership ("THCR Holdings") (See below). Trump AC and Trump
AC Funding have no independent operations and, therefore, their ability to
service debt is dependent upon the successful operations of Plaza Associates and
Taj Associates. There are no restrictions on the ability of the guarantors (the
"Subsidiary Guarantors") of the Trump AC Mortgage Notes (as defined below) to
distribute funds to Trump AC.
The separate financial statements of the Subsidiary Guarantors have not been
included because (i) the Subsidiary Guarantors constitute all of Trump AC's
direct and indirect subsidiaries; (ii) the Subsidiary Guarantors have fully and
unconditionally guaranteed the Trump AC Mortgage Notes on a joint and several
basis; (iii) the aggregate assets, liabilities, earnings and equity of the
Subsidiary Guarantors are substantially equivalent to the assets, liabilities,
earnings and equity of Trump AC on a consolidated basis; and (iv) the separate
financial and other disclosures concerning the Subsidiary Guarantors are not
deemed material to investors. The assets and operations of the nonguarantor
subsidiaries are not significant.
All significant intercompany balances and transactions have been eliminated
in the accompanying consolidated financial statements. The minority interests in
Plaza Associates and Taj Associates have not been separately reflected in the
consolidated financial statements of Trump AC since they are not material.
Trump AC was formed in February 1993. On June 12, 1995, Trump Hotels &
Casino Resorts, Inc., ("THCR"), completed a public offering of 10,000,000 shares
of common stock (the "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"), a then 60% subsidiary
of THCR, 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, Donald J. Trump ("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. 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.
F-8
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(1) ORGANIZATION (CONTINUED)
On April 17, 1996, pursuant to the Agreement and Plan of Merger, as amended
(the "Taj Merger Agreement"), between THCR and Taj Mahal Holding Corp. ("Taj
Holding"), each outstanding share of Class A Common Stock of Taj Holding (the
"Taj Holding Class A Common Stock"), which in the aggregate represented 50% of
the economic interest in Taj Associates, was converted into the right to
receive, at each holder's election, either (a) $30 in cash or (b) that number of
shares of Common Stock having a market value equal to $30. Trump held the
remaining 50% interest in Taj Associates and contributed such interest in Taj
Associates to Trump AC in exchange for limited partnership interests in THCR
Holdings. In addition, the outstanding shares of Taj Holding's Class C Common
Stock, all of which were held by Trump, were canceled in connection with the Taj
Merger. The following transactions occurred in connection with the Taj Merger
(collectively referred to as the "Taj Merger Transaction"):
(a) the payment of an aggregate of $31,181,000 in cash and the issuance
of 323,423 shares of THCR Common Stock to the holders of Taj Holding Class A
Common Stock pursuant to the Taj Merger Agreement;
(b) the contribution by Trump to Trump AC of all of his direct and
indirect ownership interests in Taj Associates, and the contribution by THCR
to Trump AC of all of its indirect ownership interests in Taj Associates
acquired in the Taj Merger Transaction;
(c) the public offerings by (i) THCR of 12,500,000 shares of Common
Stock (plus 750,000 shares of Common Stock issued in connection with the
partial exercise of the underwriters' over-allotment option) (the "1996
Stock Offering") for net proceeds of $386,062,000 and (ii) Trump AC and
Trump Atlantic City Funding, Inc. ("Trump AC Funding"), Trump AC's wholly
owned finance subsidiary, of $1,200,000,000 aggregate principal amount of
11 1/4% First Mortgage Notes due 2006 (the "Trump AC Mortgage Notes") (the
"1996 Notes Offering" and together with the 1996 Stock Offering, the "1996
Offerings");
(d) the redemption of the outstanding shares of Taj Holding's Class B
Common Stock, par value $.01 per share, immediately prior to the Taj Merger
Transaction for $.50 per share in accordance with its terms;
(e) the redemption of the outstanding 11.35% Mortgage Bonds, Series A,
due 1999 of Trump Taj Mahal Funding, Inc. (the "Taj Bonds");
(f) the retirement of the outstanding 10 7/8% Mortgage Notes due 2001 of
Trump Plaza Funding, Inc.;
(g) the satisfaction of the indebtedness of Taj Associates under its
loan agreement with National Westminster Bank USA;
(h) the purchase of certain real property used in the operation of the
Taj Mahal that was leased from a corporation wholly owned by Trump (the
"Specified Parcels");
(i) the purchase of certain real property used in the operation of Trump
Plaza that was leased from an unaffiliated third party;
(j) the payment to Bankers Trust Company ("Bankers Trust") to obtain
releases of liens and guarantees that Bankers Trust had in connection with
indebtedness owed by Trump to Bankers Trust; and
F-9
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(1) ORGANIZATION (CONTINUED)
(k) the issuance to Trump of warrants (the "Trump Warrants") to purchase
an aggregate of 1.8 million shares of Common Stock, (i) 600,000 shares of
which may be purchased on or prior to April 17, 1999, at $30 per share, (ii)
600,000 shares of which may be purchased on or prior to April 17, 2000, at
$35 per share, and (iii) 600,000 shares of which may be purchased on or
prior to April 17, 2001, at $40 per share.
As a result of the contribution by Trump to Trump AC of his direct and
indirect ownership interests in Taj Associates and the contribution by THCR to
Trump AC of its indirect ownership interests in Taj Associates acquired in the
Taj Merger Transaction, together with THCR's contribution to THCR Holdings of
the proceeds from the 1996 Stock Offering. Trump's aggregate beneficial equity
interest in THCR Holdings decreased from approximately 40% to approximately 25%,
and THCR's aggregate beneficial equity interest in THCR Holdings increased from
approximately 60% to approximately 75%. Trump's limited partnership interest in
THCR Holdings represents his economic interest in the assets and operations of
THCR Holdings. In 1996, as a result of THCR Holdings acquisition of Castle
Associates, Trump's beneficial interest increased to 37% which is used to
calculate minority interest in 1996 and all subsequent periods. Due to the
acquisition of 1,706,500 shares of treasury stock during 1997, Trump's voting
interest in THCR increased to 38% as of December 31, 1997.
The Taj Merger Transaction has been accounted for as a "purchase" for
accounting and reporting purposes and the results of Taj Associates have been
included in the accompanying financial statements since the date of acquisition.
Accordingly, the excess of the purchase price over the fair value of the net
assets acquired ($200,782,000), which was allocated to land ($7,979,000) and
building ($192,803,000) based on an appraisal on a pro rata basis, consists of
the following:
(a) $40,500,000 representing the payment of $30.00 for each of the
1,350,000 shares of Taj Holding Class A Common Stock. Holders of 298,739
shares of Taj Holding Class A Common Stock elected to receive 323,423 shares
of THCR Common Stock and holders of 1,051,261 shares of Taj Holding Class A
Common Stock elected to receive $31,181,000 in cash;
(b) $40,500,000, representing the contribution by Trump to Trump AC (on
behalf, and at the direction, of THCR Holdings) of all direct and indirect
ownership interest in 50% of Taj Associates;
(c) $9,900,000 of fees and expenses associated with the Taj Merger
Transaction;
(d) $108,574,000, representing the negative book value of Taj Associates
at the date of the Taj Merger Transaction; and
(e) $1,308,000 of closing costs associated with the purchase of the
Specified Parcels.
In connection with the Taj Merger Transaction, THCR purchased the Specified
Parcels from Trump Taj Mahal Realty Corp., a corporation owned by Trump, and Taj
Associates was released from its guarantee to First Union National Bank (the
"Guarantee"). The aggregate cost of acquiring the Specified Parcels was
$50,600,000 in cash and 500,000 shares of THCR Common Stock valued at
$10,500,000 (an average value of $21.00 per share based on the price of the THCR
Common Stock several days before and after the date of the amended Taj Merger
Agreement). The obligation of Taj Associates which had been accrued with respect
to the Guarantee ($17,923,000) was eliminated. In addition, THCR exercised the
option to purchase a tower adjacent to Trump Plaza's main tower ("Trump Plaza
East") for $28,084,000, which amount has been included in land and building.
F-10
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(1) ORGANIZATION (CONTINUED)
Unaudited pro forma information, assuming that the Taj Merger had occurred
on January 1, 1996, is as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996
--------------
<S> <C>
Net revenues.................................................................. $ 984,789,000
--------------
--------------
Income from operations........................................................ $ 115,504,000
--------------
--------------
Loss before extraordinary loss................................................ $ (11,906,000)
--------------
--------------
Extraordinary loss............................................................ $ (59,132,000)
--------------
--------------
Net income (loss)............................................................. $ (71,038,000)
--------------
--------------
</TABLE>
The pro forma information is presented for informational purposes only and
does not purport to present what the results of operations would have been had
the Taj Merger Transaction, in fact, occurred on January 1, 1996 or to project
the results of operations for any future period.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND BASIS OF PRESENTATION
Trump AC has no operations, except for its ownership of Plaza Associates and
Taj Associates. Through these entities, Trump AC operates luxury casino hotels,
located on The Boardwalk in Atlantic City which provide high quality amenities
and services to its casino patrons and hotel guests. A substantial portion of
Trump AC's revenues are derived from its gaming operations. Competition in the
Atlantic City casino 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.
Trump AC 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.
F-11
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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
-------------------------------------------
<S> <C> <C> <C>
1995 1996 1997
------------- ------------- -------------
Rooms........................................... $ 4,836,000 $ 14,906,000 $ 19,175,000
Food and Beverage............................... 22,868,000 54,754,000 63,644,000
Other........................................... 10,240,000 4,076,000 15,783,000
------------- ------------- -------------
$ 31,780,000 $ 79,900,000 $ 98,602,000
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
INVENTORIES
Inventories of provisions and supplies are carried at the lower of cost
(weighted average) or market.
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>
During the second quarter of 1997, Trump AC revised its estimates of the
useful lives of buildings, building improvements and furniture and fixtures
which were acquired in 1996. Buildings and building improvements were
reevaluated to have a forty year life and furniture and fixtures were determined
to have a seven year life. Trump AC believes these changes more appropriately
reflect the timing of the economic benefits to be received from these assets
during their estimated useful lives. For the year ended December 31, 1997, the
net effect of applying these new lives was to increase net income by $5,995,000.
LONG-LIVED ASSETS
The provisions of Statement of Financial Accounting Standard No. 121
"Accounting for the Impairment of Long-Lived Assets" ("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. Trump AC does not believe that any such
changes have occurred.
F-12
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
State income taxes are recorded in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109").
SFAS No. 109 requires recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred tax assets and
liabilities are determined based on the difference between the financial
statement and the tax basis of assets and liabilities using enacted tax rates.
The accompanying consolidated financial statements do not include a
provision for federal income taxes since any income or losses are allocated to
the partners and are reportable for federal income tax purposes by the partners.
Under the New Jersey Casino Control Act (the "Casino Control Act"), both
Plaza Associates and Taj Associates are required to file a New Jersey
corporation business tax return. For New Jersey State Income Tax purposes, Plaza
Associates and Taj Associates have net operating loss carry-forwards of
approximately $100,000,000 and $225,000,000, respectively. No tax benefit has
been reflected in the accompanying financial statements for those losses as
utilization of such carryforwards are not considered more likely than not.
STATEMENTS OF CASH FLOWS
For purposes of the statements of cash flows, cash and cash equivalents
include hotel and casino funds, funds on deposit with banks and temporary
investments purchased with a maturity of three months or less.
RECLASSIFICATIONS
Certain reclassifications have been made to prior year financial statements
to conform to the current year presentation.
F-13
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(3) LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1996 1997
---------------- ----------------
<S> <C> <C>
Trump AC Mortgage Notes (11 1/4 First Mortgage Notes, due 2006) (a).......... $ 1,200,000,000 $ 1,200,000,000
Trump AC Mortgage Notes (11 1/4 First Mortgage Notes, due 2006), net of
unamortized discount of $2,900,000 (a)..................................... -- 72,100,000
Trump AC Mortgage Notes (11 1/4 First Mortgage Notes, due 2006), net of
unamortized discount of $1,427,000 (a)..................................... -- 23,573,000
Mortgage notes payable (b)................................................... 3,407,000 3,229,000
Capitalized lease obligations (c)............................................ 13,798,000 8,089,000
---------------- ----------------
1,217,205,000 1,306,991,000
Less--current maturities..................................................... 9,410,000 6,964,000
---------------- ----------------
$ 1,207,795,000 $ 1,300,027,000
---------------- ----------------
---------------- ----------------
</TABLE>
- ------------------------
(a) On April 17, 1996, Trump AC together with Trump AC Funding, a wholly owned
subsidiary of Trump AC, issued the Trump AC Mortgage Notes in an aggregate
principal amount of $1,200,000,000 which bear interest at 11.25% and are due
May 1, 2006. Interest on the Trump AC Mortgage Notes is due semi-annually on
each May 1 and November 1, commencing on November 1, 1996. The Trump AC
Mortgage Notes are guaranteed as to payment of principal and interest
jointly and severally by Taj Associates, Plaza Associates, Trump AC and all
future subsidiaries of Trump AC (other than Trump AC Funding). The Trump AC
Mortgage Notes are jointly and severally secured by mortgages representing a
first lien and security interest on substantially all of the assets of Taj
Associates and Plaza Associates.
The indenture pursuant to which the Trump AC Mortgage Notes were issued
restricts the ability of Trump AC and its subsidiaries to make distributions
or to pay dividends, as the case may be, unless certain financial ratios are
achieved. In addition, the ability of Plaza Associates and Taj Associates to
make payments of dividends or distributions (except for payment of interest)
through Trump AC to THCR Holdings may be restricted by the CCC.
On December 10, 1997, Trump AC together with Trump AC Funding II, a wholly
owned subsidiary of Trump AC, issued Trump AC Mortgage Notes in an aggregate
principal amount of $75,000,000 which bear interest at 11.25% and are due
May 1, 2006. Interest on the Trump AC Mortgage Notes is due semi-annually on
each May 1 and November 1. The Trump AC Mortgage Notes are guaranteed as to
payment of principal and interest jointly and severally by Taj Associates,
Plaza Associates, Trump AC and all future subsidiaries of Trump AC (other
than Trump AC Funding). The Trump AC Mortgage Notes are jointly and
severally secured by mortgages representing a first lien and security
interest on substantially all of the assets of Taj Associates and Plaza
Associates.
On December 10, 1997, Trump AC together with Trump AC Funding III, a wholly
owned subsidiary of Trump AC, issued Trump AC Mortgage Notes in an aggregate
principal amount of $25,000,000 which bear interest at 11.25% and are due
May 1, 2006. Interest on the Trump AC Mortgage Notes is due
F-14
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(3) LONG-TERM DEBT (CONTINUED)
semi-annually on each May 1 and November 1. The Trump AC Mortgage Notes are
guaranteed as to payment of principal and interest jointly and severally by
Taj Associates, Plaza Associates, Trump AC and all future subsidiaries of
Trump AC (other than Trump AC Funding). The Trump AC Mortgage Notes are
jointly and severally secured by mortgages representing a first lien and
security interest on substantially all of the assets of Taj Associates and
Plaza Associates.
Underwriting costs, legal and accounting fees, printing costs and other
expenses of $45,296,000 associated with the issuance of the Trump AC
Mortgage Notes are being amortized using the effective interest method over
the term of the Trump AC Mortgage Notes. Amortization is included in
interest expense in the accompanying statements of operations and totaled
$5,052,000 and $6,561,000 from the date of issuance through December 31,
1996 and for the year ended December 31, 1997, respectively.
(b) Interest on these notes is payable with interest rates ranging from 8.5% to
10.5%. The notes are due at various dates between 1998 and 2012 and are
secured by certain real property.
(c) Interest on these leases are payable with interest rate ranging from 7.9% to
13.5%. The leases are due at various dates between 1998 and 2000 and are
secured by equipment.
Future minimum payments under capital leases (principal portion included in
the table below of debt maturities) are as follows:
<TABLE>
<S> <C>
1998............................................................. $ 6,808,000
1999............................................................. 2,417,000
2000............................................................. 309,000
------------
Total Minimum Payments........................................... 8,806,000
Less--Amount representing interest............................... 717,000
------------
Present Value of minimum lease payments.......................... $ 8,089,000
------------
------------
</TABLE>
The aggregate maturities of long-term debt as of December 31, 1997 are as
follows:
<TABLE>
<S> <C>
1998............................................................. $ 6,964,000
1999............................................................. 2,755,000
2000............................................................. 361,000
2001............................................................. 63,000
2002............................................................. 68,000
Thereafter....................................................... 1,296,780,000
---------------
$ 1,306,991,000
---------------
---------------
</TABLE>
The ability of Trump AC to repay its long-term debt when due will depend on
the ability of Plaza Associates and Taj Associates to generate cash from
operations sufficient for such purposes or on the ability of Trump AC to
refinance such indebtedness. Cash Flow from operations may not be sufficient
to repay a substantial portion of the principal amount of the Trump AC
Mortgage Notes upon maturity in 2006. 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 Trump AC. There can
F-15
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(3) LONG-TERM DEBT (CONTINUED)
be no assurance that the future operating performance of Plaza Associates
and 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.
(4) NON-OPERATING INCOME (EXPENSE)
Non-operating income (expense) in 1995 and 1996 included $3,939,000 and
$806,000, respectively, of costs associated with Trump Plaza East and Trump
World's Fair (see Note 7), net of miscellaneous non-operating credits.
During 1996, Plaza Associates and Taj Associates each entered into an
agreement with Atlantic Thermal Systems, Inc. ("Atlantic Thermal") pursuant to
which Atlantic Thermal was granted an exclusive license to use, operate and
maintain certain steam and chilled water production facilities located at Plaza
Associates and Taj Associates. In consideration for the license, Atlantic
Thermal paid Plaza Associates and Taj Associates a $15,000,000 non-refundable
license fee. This amount has been included in other non-operating income in the
accompanying financial statements.
(5) COMMITMENTS AND CONTINGENCIES
LEASES AND EMPLOYMENT AGREEMENTS
Pursuant to the acquisition of Trump World's Fair described in Note 7, Plaza
Associates entered into an easement agreement with the New Jersey Sports and
Exposition Authority ("NJSEA"). Under the terms of the agreement, Plaza
Associates has an exclusive easement over, in and through portions of the old
Atlantic City Convention Center. The easement is for a 25-year term with annual
payments of $2,000,000, adjusted every five years for changes in the Consumer
Price Index.
Trump AC leases certain property (primarily land), office, warehouse space,
certain parking space, and various equipment under operating leases. Rent
expense for the years ended December 31, 1995, 1996 and 1997 was $3,609,000,
$7,200,000 and $7,129,000, respectively, of which $2,127,000, $1,981,000, and
$0, respectively, relates to affiliates.
Future minimum lease payments under the noncancelable operating leases are
as follows:
<TABLE>
<CAPTION>
TOTAL
--------------
<S> <C>
1998.......................................................................... $ 9,249,000
1999.......................................................................... 6,703,000
2000.......................................................................... 4,450,000
2001.......................................................................... 3,747,000
2002.......................................................................... 3,000,000
Thereafter.................................................................... 111,000,000
--------------
$ 138,149,000
--------------
--------------
</TABLE>
Certain of these leases contain options to purchase the leased properties at
various prices throughout the leased terms.
F-16
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(5) COMMITMENTS AND CONTINGENCIES (CONTINUED)
As of December 31, 1997, Trump AC has entered into employment agreements
with certain key employees and had approximately $9,415,000 of commitments under
employee agreements. These commitments mature at various dates through 2001.
Taj Associates received a permit under the Coastal Area Facilities Review
Act ("CAFRA") (which included a condition of Taj Associates' casino license)
that initially required 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, which has been renewed annually based upon an interim use of the
Steel Pier for an amusement park. Taj Associates received additional one-year
extensions 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 pursuant to a sublease ("Pier Sublease") with an amusement park
operator. The pier sublease terminates on December 31, 1998 unless extended.
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
Casino Control Act, Plaza Associates and Taj Associates are required to maintain
certain licenses. Casino licenses must be renewed periodically, are not
transferable, are dependent on the financial stability of the licensee and can
be revoked at any time.
In June 1995, the New Jersey Casino Control Commission ("CCC") renewed Plaza
Associates' and Taj Associates' licenses to operate Trump Plaza and the Taj
Mahal. The CCC renewed Plaza Associates' and Taj Associates' casino licenses for
a period of four years through 1999. In June 1996, the CCC granted TCS, an
initial casino license which, in July 1997, was renewed through July 1998. 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, Taj 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 and Taj Associates have
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,
judgments, fines and penalties) incurred by them in said legal proceedings.
Various legal proceedings are now pending against Plaza Associates and Taj
Associates. Plaza Associates and Taj Associates consider all such proceedings to
be ordinary litigation incident to the character of their business. Plaza
Associates and Taj Associates believe that the resolution of these claims
F-17
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(5) COMMITMENTS AND CONTINGENCIES (CONTINUED)
will not, individually or in the aggregate, have a material adverse effect on
their financial condition or results of operations.
Plaza Associates and Taj Associates are also a party to various
administrative proceedings involving allegations that they have violated certain
provisions of the Casino Control Act. Plaza Associates and Taj Associates
believe that the final outcome of these proceedings will not, either
individually or in the aggregate, have a material adverse effect on their
financial condition, results of operations or on the ability of Plaza Associates
or Taj Associates to otherwise retain or renew any casino or other licenses
required under the Casino Control Act for the operation of the respective
properties.
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 normal 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. The costs of the ultimate disposition of these claims may differ
from these reserve amounts.
FEDERAL INCOME TAX EXAMINATION
Plaza Associates and Taj Associates are currently involved in examinations
with the Internal Revenue Service ("IRS") concerning Plaza Associates' federal
partnership income tax returns for the years 1989 through 1992 and Taj
Associates' federal partnership income tax returns for the tax years 1992 and
1993. While any adjustment which results from this examination could affect
Plaza Associates' and Taj Associates' state income tax returns, Plaza Associates
and Taj Associates do not believe that adjustments, if any, will have a material
adverse effect on its financial condition or results of operations.
CASINO REINVESTMENT DEVELOPMENT AUTHORITY OBLIGATIONS
Pursuant to the provisions of the Casino Control Act, Plaza Associates and
Taj Associates, 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 and Taj Associates intend on satisfying their obligations
primarily by depositing funds to be used for the purchase of bonds. Plaza
Associates and Taj Associates are required to make quarterly deposits with the
CRDA based on 1.25% of its gross revenue. For the years ended December 31, 1995,
1996 and 1997, Trump AC charged to operations $1,141,000, $3,477,000 and
$3,789,000 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 years ended December 31,
1995, 1996 and 1997, Plaza Associates credited operations for $2,239,000,
$464,000 and $27,000, respectively, resulting from the recapture of the
valuation allowance on the CRDA receivable.
In connection with Trump Plaza East (see Note 7), the CRDA has approved the
refund of up to $14,135,000 of qualifying deposits made by Plaza Associates.
Included in receivables at December 31, 1997, is a receivable from the CRDA of
$5,115,000. While the receivable is fully realizable by Plaza Associates,
F-18
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(5) COMMITMENTS AND CONTINGENCIES (CONTINUED)
the amount of actual reimbursements Plaza Associates will receive in any one
year is limited to 75% and 50%, respectively, of the amount of funds Plaza
Associates deposited with the CRDA to cover its Atlantic City non-housing and
South Jersey obligations. Accordingly, Plaza Associates has recorded $2,836,000
as a current receivable and $2,279,000 as other assets in the accompanying
financial statements.
CONCENTRATIONS OF CREDIT RISKS
In accordance with casino industry practice, Plaza Associates and Taj
Associates extend credit to a limited number of casino patrons, after extensive
background checks and investigations of credit worthiness. For the years ended
December 31, 1996 and 1997, approximately 49% of Plaza Associates and Taj
Associates casino receivables (before allowances) were from customers whose
primary residence is outside the United States, of which approximately 36% and
32%, respectively, represents credit extended to patrons from the Far East.
(6) EMPLOYEE BENEFIT PLANS
Plaza Associates and Taj Associates have 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 and Taj Associates will match 50% of the first 5% of
an eligible employee's contributions. Trump AC recorded charges of $886,000,
$1,882,000 and $2,680,000 for matching contributions for the years ended
December 31, 1995, 1996 and 1997, respectively.
Plaza Associates and Taj Associates make payments to various trusteed
multi-employer pension plans under industry-wide union agreements. The payments
are based on the hours worked by or gross wages paid to covered employees. Under
the Employee Retirement Income Security Act, Plaza Associates and Taj Associates
may be liable for their share of the plan's unfunded liabilities, if any, if the
plans are terminated. Based upon 1996 information, the most recent information
available, the combined withdrawal liability of Plaza Associates and Taj
Associates related to the most significant plan's unfunded status approximates
$3,071,000. Pension expense charged to operations for the years ended December
31, 1995, 1996 and 1997 was $423,000, $1,285,000 and $1,595,000 respectively.
F-19
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(7) TRANSACTIONS WITH AFFILIATES
Trump AC has engaged in certain transactions with Trump and entities that
are wholly or partially owned by Trump. Amounts receivable from (owed to) at
December 31 are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
---------------------------
<S> <C> <C>
1996 1997
------------ -------------
Seashore Four Associates (a)..................................... $ (571,000) $ --
Castle Associates (b)............................................ 1,689,000 20,964,000
Trump Casino Services, L.L.C. (b)................................ -- --
Trump Organization (b)........................................... 184,000 670,000
THCR Holdings (b)................................................ 3,935,000 246,000
------------ -------------
$ 5,237,000 $ 21,880,000
------------ -------------
------------ -------------
</TABLE>
- ------------------------
(a) Plaza Associates previously leased two parcels of land under long-term
ground leases from Seashore Four Associates ("Seashore Four") and Trump
Seashore Associates ("Seashore Associates"). In 1995 and 1996, Plaza
Associates paid $950,000 and $1,000,000, respectively, to Seashore Four, and
paid $1,195,000 and $981,000 in 1995 and 1996, respectively, to Seashore
Associates. Plaza Associates purchased the tract from Seashore Associates in
September 1996 and the tract from Seashore Four in January 1997 for
$14,500,000 and $10,000,000, respectively.
(b) Trump Atlantic City Associates engages in various transactions with the
other Atlantic City hotel/ casinos and related casino entities owned by
Trump. These transactions are charged at cost or normal selling price in the
case of retail items and include certain shared professional fees,
insurance, and payroll costs as well as complimentary services offered to
customers.
TCS was formed on June 27, 1996 for the purpose of realizing cost savings
and operational synergies by consolidating certain administrative functions of,
and providing certain services to, Plaza Associates, Castle Associates and Taj
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 paid TPM each year an annual fee of
$1,000,000 in equal monthly installments, and reimbursed 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 and $1,000,000 was charged to
expense for the years ended December 31, 1995 and 1996. The service agreement
was terminated in August 1996.
Taj Associates had entered into a Services Agreement which provided that
Trump 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 was to 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 plus expenses.
For the year ended December 31, 1995 and for the period from January 1, 1996
through
F-20
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(7) TRANSACTIONS WITH AFFILIATES (CONTINUED)
April 17, 1996, Taj Associates incurred $2,004,000 and $512,000, respectively,
under the Services Agreement.
TRUMP PLAZA EAST
Under an agreement with Midlantic National Bank, Trump had (i) an option to
acquire Trump Plaza East and (ii) had a lease agreement for Trump Plaza East
which would expire on June 30, 1998 requiring $260,000 per month in lease
payments. In October 1993, Plaza Associates assumed the option and the lease
agreement from Trump.
Until such time as the Trump Plaza East Purchase Option was exercised or
expired, Plaza Associates was 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 and for part of 1996, Plaza Associates incurred
approximately $2,340,000 and $1,100,000, respectively, of such expenses of which
$2,045,000 and $348,000, respectively, are included in non-operating expenses in
the accompanying consolidated financial statements.
In connection with the Taj Merger Transaction described in Note 1, Plaza
Associates exercised its option to acquire Trump Plaza East. The purchase price
of $28,084,000 has been included in land and building in the accompanying
financial statements.
(8) FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of the following financial instruments approximates fair
value, as follows: (a) cash and cash equivalents, 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, 1997
----------------------------------
<S> <C> <C>
CARRYING AMOUNT FAIR VALUE
---------------- ----------------
Trump AC Mortgage Notes.................................. $ 1,200,000,000 $ 1,170,000,000
Trump AC Funding II Mortgage Notes....................... $ 72,100,000 $ 72,100,000
Trump AC Funding III Mortgage Notes...................... $ 23,573,000 $ 23,573,000
</TABLE>
The fair values of the Trump AC Mortgage Notes are based on quoted market
prices as of December 31, 1997. The fair value of the Trump AC Funding II
Mortgage Notes and the Trump AC Funding III Mortgage Notes approximate the
carrying value based upon the short term nature of the period outstanding.
There are no quoted market prices for other notes payable and a reasonable
estimate could not be made without incurring excessive costs.
F-21
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(9) COMBINED FINANCIAL INFORMATION--TRUMP AC FUNDING, TRUMP AC FUNDING II AND
TRUMP AC FUNDING III
Combined financial information relating to Trump AC Funding, Trump AC
Funding II and Trump AC Funding III as of December 31, 1997 is as follows:
<TABLE>
<S> <C>
Total Assets (including First Mortgage Notes receivable of
$1,295,673,000 and related interest receivable)............ $1,318,861,000
-------------
-------------
Total Liabilities and Capital (including First Mortgage Notes
payable of $1,295,673,000 and related interest payable).... $1,318,861,000
-------------
-------------
Interest Income.............................................. $ 135,688,000
-------------
-------------
Interest Expense............................................. $ 135,688,000
-------------
-------------
Net Income................................................... --
-------------
-------------
</TABLE>
(10) SUBSEQUENT EVENT
As discussed in Note 3, on December 10, 1997 Trump AC together with Trump AC
Funding II and Trump Funding III issued the Trump AC Mortgage Notes in an
aggregate principal amount of $75,000,000 and $25,000,000, respectively. Trump
AC is currently in the process of registering the Trump AC Funding II and Trump
AC Funding III Mortgage Notes. There are a number of risks that prospective
investors should consider, including (i) the high leverage and fixed charges of
Trump AC; (ii) Trump AC's holding company structure; (iii) the risk in
refinancing and repayment of indebtedness and Trump AC's need for additional
financing; (iv) the risk associated with a change of control; (v) the
restrictions imposed on certain activities by certain debt instruments; (vi) the
risk associated with the use of proceeds and (vii) the historical results of
Trump Plaza and Trump Taj Mahal. See "Risk Factors" included elsewhere in this
Prospectus for a discussion of these and other factors.
F-22
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
TRUMP ATLANTIC CITY FUNDING II, INC.
All tendered Original Notes, executed Letters of Transmittal, and other
related documents should be directed to the Exchange Agent. Requests for
assistance and for additional copies of the Prospectus, the Letter of
Transmittal and other related documents should be directed to the Exchange
Agent.
The Exchange Agent
for the Exchange Offer is
U.S. BANK NATIONAL ASSOCIATION
BY FACSIMILE:
(612) 244-1537
Attention: Bernice Chapman
CONFIRM BY TELEPHONE:
(612) 244-1572
BY REGISTERED OR CERTIFIED MAIL:
U.S. Bank National Association
180 East 5th Street
St. Paul, Minnesota 55101
Bernice Chapman
BY HAND/OVERNIGHT COURIER:
U.S. Bank National Association
180 East 5th Street
St. Paul, Minnesota 55101
Bernice Chapman
OR
First Trust New York
100 Wall Street
Bond Window, 20th Floor
New York, New York 10005
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Funding II, which is a Delaware corporation, is empowered by the Delaware
General Corporation Law, subject to the procedures and limitations stated
therein, to indemnify any person against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with any threatened, pending or completed action, suit or
proceeding in which such person is made a party by reason of his being or having
been a director, officer, employee or agent of Funding II. The statute provides
that indemnification pursuant to its provisions is not exclusive of other rights
of indemnification to which a person may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors, or otherwise. The
Certificate of Incorporation and by-laws of Funding II provide for
indemnification of the directors and officers of such entities to the full
extent permitted by the Delaware General Corporation Law.
Funding II maintains an insurance policy providing for indemnification of
its officers, directors and certain other persons against liabilities and
expenses incurred by any of them in certain stated proceedings and under certain
stated conditions.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS
<TABLE>
<S> <C>
3.1.1(19) Certificate of Incorporation of Trump Atlantic City Funding, Inc. (formerly THCR
Atlantic City Funding, Inc.).
3.1.2(19) Certificate of Amendment of Certificate of Incorporation of Trump Atlantic City
Funding, Inc. (formerly THCR Atlantic City Funding, Inc.).
3.2(19) By-Laws of Trump Atlantic City Funding, Inc. (formerly THCR Atlantic City
Funding, Inc.).
3.3-3.7 Intentionally omitted.
3.8.1(5) Partnership Agreement of Trump Atlantic City Associates (formerly Trump Plaza
Holding Associates).
3.8.2(5) Amendment No. 1 to the Partnership Agreement of Trump Atlantic City Associates
(formerly Trump Plaza Holding Associates.).
3.8.3(12) Amendment No. 2 to the Partnership Agreement of Trump Atlantic City Associates
(formerly Trump Plaza Holding Associates).
3.8.4(20) Amended and Restated Partnership Agreement of Trump Atlantic City Associates.
3.9.1(4) Agreement and Plan of Merger between TP/GP Corp. and Trump Plaza Funding, Inc.
3.9.2(19) Form of Second Amended and Restated Agreement of Limited Partnership of Trump
Hotels & Casino Resorts Holdings, L.P.
3.10* Certificate of Incorporation of Trump Atlantic City Funding II, Inc.
3.11* By-Laws of Trump Atlantic City Funding II, Inc.
3.12(24) Certificate of Incorporation of Trump Atlantic City Funding III, Inc.
</TABLE>
II-1
<PAGE>
<TABLE>
<S> <C>
3.13(24) By-Laws of Trump Atlantic City Funding III, Inc.
3.14 Certificate of Incorporation of Trump Atlantic City Corporation, as amended.
3.15 By-Laws of Trump Atlantic City Corporation.
3.16* Certificate of Formation of Trump Casino Services, L.L.C.
3.17* Operating Agreement of Trump Casino Services, L.L.C.
3.18* Certificate of Formation of Trump Communications, L.L.C.
3.19* Operating Agreement of Trump Communications, L.L.C.
3.20 Third Amended and Restated Partnership Agreement of Trump Plaza Associates,
dated April 17, 1996, by and between Trump Atlantic City Associates, Trump Plaza
Funding, Inc. and Trump Taj Mahal Corporation (now known as Trump Atlantic City
Corporation).
3.21 Second Amended and Restated Partnership Agreement of Trump Taj Mahal Associates,
dated April 17, 1996, by and between Trump Atlantic City Associates, TM/GP
Corporation (now known as THCR/LP Corporation), Trump Taj Mahal Corporation (now
known as Trump Atlantic City Corporation) and Trump Taj Mahal, Inc. (now known
as Trump Casinos, Inc.).
4.1(5) Mortgage Note Indenture, among Trump Plaza Funding, Inc., as issuer, Trump Plaza
Associates, as guarantor, and First Bank National Association, as trustee.
4.2(5) Indenture of Mortgage, between Trump Plaza Associates, as mortgagor, and Trump
Plaza Funding, Inc., as mortgagee.
4.3(5) Assignment Agreement between Trump Plaza Funding, Inc. and First Bank National
Association, as trustee.
4.4(5) Assignment of Operating Assets from Trump Plaza Associates to Trump Plaza
Funding, Inc.
4.5(5) Assignment of Leases and Rents from Trump Plaza Associates to Trump Plaza
Funding, Inc.
4.6(5) Indenture of Mortgage between Trump Plaza Associates and First Bank National
Association, as trustee.
4.7(5) Assignment of Leases and Rents from Trump Plaza Associates to First Bank
National Association, as trustee.
4.8(5) Assignment of Operating Assets from Trump Plaza Associates to First Bank
National Association, as trustee.
4.9(5) Trump Plaza Associates Note to Trump Plaza Funding, Inc.
4.10(5) Mortgage Note Certificate (included in Exhibit 4.1).
4.11(5) Pledge Agreement of Trump Plaza Funding, Inc., in favor and for the benefit of
First Bank National Association, as trustee.
4.12-4.18 Intentionally omitted.
4.19.6(20) Pledge Agreement, dated April 17, 1996, from Trump Atlantic City Associates, as
pledgor, to First Bank National Association, as Senior Note Trustee.
</TABLE>
II-2
<PAGE>
<TABLE>
<S> <C>
4.26.1(20) 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, and First Bank National Association,
as trustee.
4.27.1(20) First Mortgage Note Certificate (included in Exhibit 4.26.1).
4.28.1(20) Indenture of Mortgage and Security Agreement, among Trump Taj Mahal Associates,
as mortgagor, and First Bank National Association, as collateral agent, as
mortgagee.
4.28.2(20) Indenture of Mortgage and Security Agreement, among Trump Plaza Associates, as
mortgagor, and First Bank National Association, as collateral agent, as
mortgagee.
4.29.1(20) Assignment of Leases and Rents, among Trump Taj Mahal Associates, as assignor,
and First Bank National Association, as collateral agent, as mortgagee.
4.29.2(20) Assignment of Leases and Rents, among Trump Plaza Associates, as assignor, and
First Bank National Association, as collateral agent, as mortgagee.
4.30.1(20) Collateral Agency Agreement, among First Bank National Association, as
collateral agent, and 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.
4.31 Indenture, dated as of December 10, 1997, by and among Trump Atlantic City
Associates and Trump Atlantic City Funding II, Inc., as issuers, Trump Atlantic
City Corporation, Trump Casino Services, L.L.C., Trump Communications, L.L.C.,
Trump Plaza Associates and Trump Taj Mahal Associates, as guarantors, and U.S.
Bank National Association, as trustee.
4.32* Registration Rights Agreement, dated as of December 10, 1997, by and among Trump
Atlantic City Associates and Trump Atlantic City Funding II, as issuers, Trump
Atlantic City Corporation, Trump Casino Services, L.L.C., Trump Communications,
L.L.C., Trump Plaza Associates and Trump Taj Mahal Associates, as guarantors,
and Donaldson, Lufkin & Jenrette Securities Corporation, as initial purchaser.
4.33(25) Indenture, dated as of December 10, 1997, by and among Trump Atlantic City
Associates and Trump Atlantic City Funding III, Inc., as issuers, Trump Atlantic
City Corporation, Trump Casino Services, L.L.C., Trump Communications, L.L.C.,
Trump Plaza Associates and Trump Taj Mahal Associates, as guarantors, and U.S.
Bank National Association, as trustee.
4.34(24) Registration Rights Agreement, dated as of December 10, 1997, by and among Trump
Atlantic City Associates and Trump Atlantic City Funding III, as issuers, Trump
Atlantic City Corporation, Trump Casino Services, L.L.C., Trump Communications,
L.L.C., Trump Plaza Associates and Trump Taj Mahal Associates, as guarantors,
and Donaldson, Lufkin & Jenrette Securities Corporation, as initial purchaser.
4.35* Indenture of Mortgage and Security Agreement by Trump Plaza Associates as
mortgagor and U.S. Bank National Association (as Collateral Agent) as mortgagee.
4.36* Indenture of Mortgage and Security Agreement by Trump Taj Mahal Associates as
mortgagor and U.S. Bank National Association (as Collateral Agent) as mortgagee.
4.37* Assignment of Leases and Rents by Trump Plaza Associates as assignor and U.S.
Bank National Association (as Collateral Agent) as assignee.
4.38* Assignment of Leases and Rents by Trump Taj Mahal Associates as assignor and
U.S. Bank National Association (as Collateral Agent) as assignee.
</TABLE>
II-3
<PAGE>
<TABLE>
<S> <C>
4.39* Debtors' Consent by Trump Atlantic City Associates, Trump Atlantic City Funding
II, Inc., Trump Atlantic City Corporation, Trump Plaza Associates, Trump Taj
Mahal Associates, Trump Casino Services, L.L.C. and Trump Communications, L.L.C.
4.40(24) Debtors' Consent by Trump Atlantic City Associates, Trump Atlantic City Funding
III, Inc., Trump Atlantic City Corporation, Trump Plaza Associates, Trump Taj
Mahal Associates, Trump Casino Services, L.L.C. and Trump Communications, L.L.C.
5 Opinion of Willkie Farr & Gallagher.
8 Opinion of Willkie Farr & Gallagher with respect to certain tax matters.
10.1-10.6 Intentionally omitted.
10.7(7) Employment Agreement between Trump Plaza Associates and Barry Cregan.
10.8-10.27 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.
10.30(3) Amended and Restated Services Agreement between Trump Plaza Associates and Trump
Plaza Management Corp.
10.31-10.32 Intentionally omitted.
10.33(4) Mortgage from Donald J. Trump, as nominee, to Albert Rothenberg and Robert
Rothenberg, dated October 3, 1983.
10.34(4) Mortgage made by Harrah's Associates to Adeline Bordonaro, dated January 28,
1986.
10.35.1(4) Mortgage from Trump Plaza Associates to The Mutual Benefit Life Insurance
Company, dated October 5, 1990.
10.35.2(4) 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(11) Employment Agreement between Trump Hotels & Casino Resorts Holdings, L.P. and
Nicholas L. Ribis (with exhibits).
10.39.2(6) Severance Agreement between Trump Plaza Associates and Robert M. Pickus.
10.39.4(18) Employment Agreement between Robert M. Pickus and Trump Hotels & Casino Resorts,
Inc.
10.40(9) Employment Contract, dated as of February 7, 1995, between Trump Plaza
Associates and Kevin S. Smith.
10.41(9) Employment Agreement between Trump Plaza Associates and James A. Rigot.
10.42(9) Option and Right of First Offer Agreement between Trump Plaza Associates and
Missouri Boardwalk Inc., dated June 24, 1993.
10.43(9) Lease between Donald J. Trump and Missouri Boardwalk Inc., dated June 24, 1993.
10.44(9) Sublease between Donald J. Trump and Missouri Boardwalk Inc., dated June 24,
1993.
10.45(8) Employment Agreement, dated August 1, 1994, between R. Bruce McKee and Trump Taj
Mahal Associates.
</TABLE>
II-4
<PAGE>
<TABLE>
<S> <C>
10.46(11) Executive Agreement among Donald J. Trump, Trump Hotels & Casino Resorts, Inc.
and Trump Hotels & Casino Resorts Holdings, L.P.
10.47-10.49 Intentionally omitted.
10.50(10) Acquisition Agreement, dated April 27, 1995, between Trump Oceanview, Inc. and
The New Jersey Sports and Exposition Authority.
10.51-10.55 Intentionally omitted.
10.56(10) Agreement of Sublease between Donald J. Trump and Time Warner Entertainment
Company, L.P., as amended.
10.57-10.62 Intentionally omitted.
10.63.2(20) Third Amended and Restated Partnership Agreement of Trump Plaza Associates.
10.65.1(21) Services Agreement, dated as of July 8, 1996, among Trump Plaza Associates,
Trump Taj Mahal Associates and Trump Casino Services, L.L.C.
10.65.2(22) Amended and Restated Service Agreement, dated as of October 23, 1996, by and
among Trump Plaza Associates, Trump Taj Mahal Associates, Trump's Castle
Associates, L.P. and Trump Casino Services, L.L.C.
10.66(21) Thermal Energy Service Agreement, dated as of June 30, 1996, by and between
Atlantic Jersey Thermal Systems, Inc. and Trump Taj Mahal Associates.
10.67(22) Thermal Energy Service Agreement, dated as of September 26, 1996, by and between
Atlantic Jersey Thermal Systems, Inc. and Trump Plaza Associates.
10.68(8) Employment Agreement, dated December 10, 1993, between Larry W. Clark and Trump
Taj Mahal Associates.
10.69(8) Employment Agreement, dated August 1, 1994, between Walter F. Kohlross and Trump
Taj Mahal Associates.
10.70(10) Lease Agreement between Trump's Castle Associates and Trump Taj Mahal
Associates, dated as of December 16, 1994.
10.71(13) Employment Agreement, extended and modified, dated October 10, 1995, between
Larry W. Clark and Trump Taj Mahal Associates.
10.71.1 Second Amendment to Employment Agreement dated May 27, 1997, between Larry W.
Clark and Trump Taj Mahal Associates.
10.72(15) Employment Agreement, dated October 25, 1995, between Rodolfo E. Prieto and
Trump Taj Mahal Associates.
10.73(23) Employment Agreement, dated October 14, 1996, between Trump Taj Mahal Associates
and Patrick J. O'Malley.
10.74(23) Employment Agreement, dated May 3, 1996, between Trump Taj Mahal Associates and
Loretta I. Viscount.
10.75 Intentionally omitted.
12 Computation of Ratio of Earnings to Fixed Charges.
21* List of Subsidiaries of the Registrants.
23.1 Independent Auditors' Consent of Arthur Andersen LLP.
</TABLE>
II-5
<PAGE>
<TABLE>
<S> <C>
23.2 Consent of Willkie Farr & Gallagher (included in their opinions filed as Exhibit
5 and Exhibit 8 hereto).
24* Powers of Attorney (included on the signature page hereto).
25* Statement on Form T-1 of Eligibility of Trustee.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Letter to Clients.
99.4 Form of Letter to Nominees.
</TABLE>
- ------------------------
* Previously filed.
(1) 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 Plaza Holding Associates for the quarter ended
September 30, 1992.
(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) Previously filed in the Registration Statement on Form S-1, Registration No.
33-58608, of Trump Atlantic City Associates (formerly Trump Plaza Holding
Associates).
(4) 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.
(5) 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).
(6) 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.
(7) Incorporated herein by reference to the identically numbered Exhibit in the
Quarterly Report on Form 10-Q of Trump Plaza Funding, Inc. and Trump
Atlantic City Associates (formerly Trump Plaza Holding Associates) for the
quarter ended September 30, 1994.
(8) Incorporated herein by reference to the Exhibit in the Quarterly Report on
Form 10-Q of Trump Taj Mahal Funding, Inc. and Trump Taj Mahal Associates
for the quarter ended September 30, 1994.
(9) 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.
(10) Incorporated herein by reference to the Exhibit in the Annual Report on
Form 10-K of Trump Taj Mahal Funding, Inc. and Trump Taj Mahal Associates
for the year ended December 31, 1994.
(11) 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.
(12) 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-6
<PAGE>
(13) Incorporated herein by reference to the Exhibit in the Quarterly Report on
Form 10-Q of Trump Taj Mahal Funding, Inc. for the quarter ended September
30, 1995.
(14) 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.
(15) Incorporated herein by reference to the Exhibit in the Annual Report on
Form 10-K of Taj Mahal Holding Corp. for the year ended December 31, 1995.
(16) Incorporated herein by reference to the identically numbered Exhibit in the
Current Report on Form 8-K of Trump Hotels & Casino Resorts, Inc., dated
January 10, 1996.
(17) 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.
(18) 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.
(19) Previously filed in Registration Statement on Form S-1, Registration No.
333-643, of Trump Atlantic City Associates, Trump Atlantic City Funding,
Inc. and Trump Plaza Associates.
(20) Incorporated herein by reference to the identically numbered Exhibit to the
Quarterly Report on Form 10-Q of Trump Atlantic City Associates and Trump
Atlantic City Funding, Inc. for the quarter ended March 31, 1996.
(21) Incorporated herein by reference to the identically numbered Exhibit to the
Quarterly Report on Form 10-Q of Trump Atlantic City Associates and Trump
Atlantic City Funding, Inc. for the quarter ended June 30, 1996.
(22) Incorporated herein by reference to the identically numbered Exhibit to the
Quarterly Report on Form 10-Q of Trump Atlantic City Associates and Trump
Atlantic City Funding, Inc. for the quarter ended September 30, 1996.
(23) Incorporated herein by reference to the identically numbered Exhibit to the
Annual Report on Form 10-K of Trump Atlantic City Associates and Trump
Atlantic City Funding, Inc. for the year ended December 31, 1996.
(24) Incorporated herein by reference to the identically numbered Exhibit in the
Registration Statement on Form S-4, Registration No. 333-43975, of Trump
Atlantic City Associates and Trump Atlantic City Funding III, Inc.
(25) Incorporated herein by reference to the identically numbered Exhibit to the
Annual Report on Form 10-K of Trump Atlantic City Associates, Trump Atlantic
City Funding, Inc., Trump Atlantic City Funding II, Inc. and Trump Atlantic
City Funding III, Inc. for the year ended December 31, 1997.
(b) FINANCIAL STATEMENT SCHEDULES
Schedule II -- Valuation and Qualifying Accounts
All other schedules have been omitted because they are not applicable or not
required or the required information is included in the financial statements or
notes thereto.
ITEM 22. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the provisions, described under Item 20 above, or
otherwise, the Registrants have been advised that in the opinion of the
Commission, such
II-7
<PAGE>
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrants of expenses
incurred or paid by a director, officer or controlling person of the Registrants
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 Registrants will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes that:
(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 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.
The undersigned Registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned Registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in this Registration Statement when it became effective.
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrants have duly caused this Amendment No. 1 to Registration Statement to
be signed on their behalf by the undersigned, thereunto duly authorized, in the
City of New York, State of New York, on the 16th day of March, 1998.
<TABLE>
<S> <C> <C>
TRUMP ATLANTIC CITY ASSOCIATES
By: Trump Atlantic City Holding, Inc.
its General Partner
By: /s/ Nicholas L. Ribis
-----------------------------------------
Name: Nicholas L. Ribis
Title: President
TRUMP ATLANTIC CITY FUNDING II, INC.
By: /s/ Nicholas L. Ribis
-----------------------------------------
Name: Nicholas L. Ribis
Title: Chief Executive Officer and
President
TRUMP ATLANTIC CITY CORPORATION
By: /s/ Nicholas L. Ribis
-----------------------------------------
Name: Nicholas L. Ribis
Title: President
TRUMP CASINO SERVICES, L.L.C.
By: Trump Atlantic City Corporation
its General Partner
By: /s/ Nicholas L. Ribis
-----------------------------------------
Name: Nicholas L. Ribis
Title: President
TRUMP COMMUNICATIONS, L.L.C.
By: Trump Atlantic City Corporation
its General Partner
By: /s/ Nicholas L. Ribis
-----------------------------------------
Name: Nicholas L. Ribis
Title: President
</TABLE>
II-9
<PAGE>
<TABLE>
<S> <C> <C>
TRUMP PLAZA ASSOCIATES
By: Trump Atlantic City Corporation
its General Partner
By: /s/ Nicholas L. Ribis
-----------------------------------------
Name: Nicholas L. Ribis
Title: President
TRUMP TAJ MAHAL ASSOCIATES
By: Trump Atlantic City Corporation
its General Partner
By: /s/ Nicholas L. Ribis
-----------------------------------------
Name: Nicholas L. Ribis
Title: President
</TABLE>
II-10
<PAGE>
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
TRUMP ATLANTIC CITY ASSOCIATES
By: Trump Atlantic City Holding, Inc.,
its General Partner
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
* Chairman of the Board of
- ------------------------------ Directors (principal March 16, 1998
Donald J. Trump executive officer)
* Chief Financial Officer
- ------------------------------ (principal financial and March 16, 1998
Francis X. McCarthy, Jr. accounting officer)
/s/ NICHOLAS L. RIBIS
- ------------------------------ President and Director March 16, 1998
Nicholas L. Ribis
*
- ------------------------------ Director March 16, 1998
Wallace B. Askins
*
- ------------------------------ Director March 16, 1998
Don M. Thomas
*By: /s/ NICHOLAS L. RIBIS
-------------------------
Nicholas L. Ribis
ATTORNEY-IN-FACT
II-11
<PAGE>
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
TRUMP ATLANTIC CITY FUNDING II, INC.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
*
- ------------------------------ Chairman of the Board of March 16, 1998
Donald J. Trump Directors
President, Chief Executive
/s/ NICHOLAS L. RIBIS Officer, Chief Financial
- ------------------------------ Officer and Director March 16, 1998
Nicholas L. Ribis (principal executive and
financial officer)
*
- ------------------------------ Director March 16, 1998
Robert M. Pickus
Senior Vice President of
* Corporate Finance
- ------------------------------ (principal accounting March 16, 1998
R. Bruce McKee officer)
*
- ------------------------------ Director March 16, 1998
Wallace B. Askins
*
- ------------------------------ Director March 16, 1998
Don M. Thomas
*By: /s/ NICHOLAS L. RIBIS
-------------------------
Nicholas L. Ribis
ATTORNEY-IN-FACT
II-12
<PAGE>
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
TRUMP ATLANTIC CITY CORPORATION
TRUMP CASINO SERVICES, L.L.C.
By:Trump Atlantic City Corporation
its General Partner
TRUMP COMMUNICATIONS, L.L.C.
By:Trump Atlantic City Corporation
its General Partner
TRUMP PLAZA ASSOCIATES
By:Trump Atlantic City Corporation
its General Partner
TRUMP TAJ MAHAL ASSOCIATES
By:Trump Atlantic City Corporation
its General Partner
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
*
- ------------------------------ Sole Director March 16, 1998
Donald J. Trump
/s/ NICHOLAS L. RIBIS
- ------------------------------ President and Chief March 16, 1998
Nicholas L. Ribis Executive Officer
*
- ------------------------------ Assistant Secretary March 16, 1998
Robert M. Pickus
Senior Vice President of
* Corporate Finance
- ------------------------------ (principal accounting March 16, 1998
R. Bruce McKee and financial officer)
*By: /s/ NICHOLAS L. RIBIS
-------------------------
Nicholas L. Ribis
ATTORNEY-IN-FACT
II-13
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Trump Atlantic City Associates and Subsidiaries:
We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements of Trump Atlantic City Associates and
Subsidiaries (Partnerships) included in this Form S-4 and have issued our report
thereon dated February 5, 1998. 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 Partnerships' management and is presented
for purposes of complying with the Securities and Exchange Commission's rules
and is not part of the basic consolidated financial statements. This schedule
has been subjected to the auditing procedures applied in the audit of the basic
consolidated 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 consolidated financial statements taken as a whole.
ARTHUR ANDERSEN LLP
ROSELAND, NEW JERSEY
FEBRUARY 5, 1998
S-1
<PAGE>
SCHEDULE II
TRUMP ATLANTIC CITY ASSOCIATES AND
SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
<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, 1995: Allowance 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
----------- ---------- ----------- --------------
----------- ---------- ----------- --------------
YEAR ENDED DECEMBER 31, 1996: Allowance for doubtful accounts.... $ 8,077,000 $8,599,000 $ 679,000(C) $17,355,000
----------- ---------- ----------- --------------
----------- ---------- ----------- --------------
Valuation allowance for interest differential on CRDA bonds.... $ 1,077,000 $3,477,000 $ 7,907,000(D) $12,461,000
----------- ---------- ----------- --------------
----------- ---------- ----------- --------------
YEAR ENDED DECEMBER 31, 1997:
Allowance for doubtful accounts................................ $17,355,000 $7,399,000 $(7,659,000)(A) $17,095,000
----------- ---------- ----------- --------------
----------- ---------- ----------- --------------
Valuation allowance for interest differential on CRDA bonds.... $12,461,000 $3,736,000 $ (490,000)(B) $15,707,000
----------- ---------- ----------- --------------
----------- ---------- ----------- --------------
</TABLE>
- ------------------------
(A) Write-off of uncollectible accounts.
(B) Adjustment of allowance applicable to contribution of CRDA deposits.
(C) Includes $(6,916,000) representing the write-off of uncollectible amounts
and $7,596,000 which represents Taj Associates' beginning balance as of
April 17, 1996.
(D) Includes $(464,000) representing the adjustment of allowance applicable to
CRDA contributions and $8,371,000 which represents Taj Associates' beginning
balance as of April 17, 1996.
S-2
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- --------- ---------------------------------------------------------------------------------------------------------
<S> <C>
3.14 Certificate of Incorporation of Trump Atlantic City Corporation, as amended.
3.15 By-Laws of Trump Atlantic City Corporation.
3.20 Third Amended and Restated Partnership Agreement of Trump Plaza Associates, dated April 17, 1996, by and
between Trump Atlantic City Associates, Trump Plaza Funding, Inc. and Trump Taj Mahal Corporation (now
known as Trump Atlantic City Corporation).
3.21 Second Amended and Restated Partnership Agreement of Trump Taj Mahal Associates, dated April 17, 1996, by
and between Trump Atlantic City Associates, TM/GP Corporation (now known as THCR/LP Corporation), Trump
Taj Mahal Corporation (now known as Trump Atlantic City Corporation) and Trump Taj Mahal, Inc. (now known
as Trump Casinos, Inc.).
4.31 Indenture, dated as of December 10, 1997, by and among Trump Atlantic City Associates and Trump Atlantic
City Funding II, Inc., as issuers, Trump Atlantic City Corporation, Trump Casino Services, L.L.C., Trump
Communications, L.L.C., Trump Plaza Associates and Trump Taj Mahal Associates, as guarantors, and U.S.
Bank National Association, as trustee.
5 Opinion of Willkie Farr & Gallagher.
8 Opinion of Willkie Farr & Gallagher with respect to certain tax matters.
10.71.1 Second Amendment to Employment Agreement dated May 27, 1997, between Larry W. Clark and Trump Taj Mahal
Associates.
12 Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Arthur Andersen LLP.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Letter to Clients.
99.4 Form of Letter to Nominees.
</TABLE>
<PAGE>
EXHIBIT 3.14
DELAWARE
CERTIFICATE OF INCORPORATION
OF
THE TRUMP TAJ MAHAL CORPORATION
* * * * * * *
ARTICLE I
The name of the corporation (the "Corporation") is: THE TRUMP TAJ
MAHAL CORPORATION
ARTICLE II
The address of its registered office in the state of Delaware is 1209
Orange Street in the City of Wilmington, County of New Castle. The name of its
registered agent at such address is The Corporation Trust Company.
ARTICLE III
The nature of the business or purposes to be conducted or promoted by
the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware.
ARTICLE IV
The total number of shares of stock which the Corporation shall have
authority to issue is 675,000 shares of Common Stock, $.01 par value per share.
<PAGE>
ARTICLE V
All securities of the Corporation are held subject to the condition
that if a holder thereof is found to be disqualified by the New Jersey Casino
Control Commission pursuant to the provisions of the "Casino Control Act" of New
Jersey, Public Law 1977, Chapter 110, as amended or as may hereinafter be
amended.
ARTICLE VI
The name and mailing address of the incorporator is as follows:
Maurice M. Lefkort
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
ARTICLE VII
In furtherance and not in limitation of the powers conferred by
statute, the by-laws of the Corporation may be made, altered, amended or
repealed by the stockholders or by a majority of the entire board of directors.
ARTICLE VIII
Elections of directors need not be by written ballot.
ARTICLE IX
1. INDEMNIFICATION. The Corporation shall indemnify to the fullest
extent permitted under and in accordance with the
-2-
<PAGE>
laws of the State of Delaware any person who was or is a party or its threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative by reason
of the fact that he is or was a director, officer, incorporator, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, trustee, employee or agent of or in any other 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 the
Corporation, and, with respect to any criminal action or proceeding had no
reasonable cause to believe his conduct was unlawful.
2. PAYMENT OF EXPENSES. Expenses 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 the Corporation) or may (in the case of any
action, suit or proceedings against an officer, trustee, employee or agent) be
paid by the Corporation in advance of the final disposition of such action, suit
or proceeding as authorized by the Board 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 the Corporation as
authorized in this Article 9.
-3-
<PAGE>
3. NONEXCLUSIVITY OF PROVISION. The indemnification and other
rights set forth in this Article shall not be exclusive of any provisions with
respect thereto in the by-laws or any other contract or agreement between the
Corporation and any officer, director, employee or agent of the Corporation.
4. EFFECT OF REPEAL. Neither the amendment nor repeal of this
Article IX, subparagraphs 1, 2, or 3, nor the adoption of any provision of this
Certificate of Incorporation inconsistent with Article IX, subparagraphs 1, 2,
or 3, shall eliminate or reduce the effect of this Article IX, subparagraphs 1,
2, and 3, in respect of any matter occurring before such amendment, repeal or
adoption of an inconsistent provision or in respect of any cause of action, suit
or claim relating to any such matter which would have given rise to a right of
indemnification or right to receive expenses pursuant to this Article IX,
subparagraph 1, 2, or 3, if such provision had not been so amended or repealed
or if a provision inconsistent therewith had not been so adopted.
5. LIMITATION ON LIABILITY. No director shall be personally liable
to the Corporation 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 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 the Corporation or its
stockholders;
-4-
<PAGE>
(ii) shall not have acted in good faith or, in failing to tact, 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 October 16, 1990 to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of a director
of the Corporation shall be eliminated or limited to the fullest extent
permitted by the General Corporation Law of the State of Delaware, as so
amended.
THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a Corporation pursuant to the General Corporation Law of the
State of Delaware makes this Certificate, hereby declaring and certifying that
this is his act and deed and the facts herein stated are true and, accordingly,
has hereunto set his hand this 16th day of October, 1990.
/s/ Maurice M. Lefkort
___________________________________
Maurice M. Lefkort
-5-
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
THE TRUMP TAJ MAHAL CORPORATION
(Adopted in accordance with the provisions of Section 241 of the General
Corporation Law of the State of Delaware)
* * * * * * *
The Trump Taj Mahal Corporation, a corporation organized and existing
under the laws of the State of Delaware (the "Corporation"), does hereby
certify:
FIRST: that the Corporation has not received any payment for any of
its stock.
SECOND: That the Board of Directors of the Corporation by written
consent of its sole member, filed with the minutes of the Board, adopted a
resolution that Article V of the Certificate of Incorporation be deleted and
replaced in its entirety with the following:
ARTICLE V
In accordance with and as provided by the New Jersey Casino
Control Act ("Casino Control Act") (NJSA 5:12-1 et seq.), L. 1978, Ch.
110, as amended or as may hereinafter be amended: (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 Corporation
shall be subject to the right of prior approval by the New Jersey
Casino Control Commission ("Casino Control Commission") and (b) the
Corporation 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 Corporation in the event that the Casino
Control Commission disapproves a transfer in accordance with the
provisions of the Casino Control Act.
<PAGE>
THIRD: That the aforesaid Amendment was duly adopted in accordance
with the applicable provisions of Section 241 of the General Corporation Law of
the State of Delaware.
IN WITNESS WHEREOF, this Certificate of Amendment of the Certificate
of Incorporation has been signed by the President and attested by the Secretary
this 12th day of November 1990.
THE TRUMP TAJ MAHAL CORPORATION
/s/ Donald J. Trump
--------------------------------
Donald J. Trump,
President
ATTEST:
/s/ Harvey I. Freeman
- -------------------------
Harvey I. Freeman,
Assistant Secretary
-2-
<PAGE>
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
THE TRUMP TAJ MAHAL CORPORATION
(Adopted in accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware)
* * * * * *
The Trump Taj Mahal Corporation, a corporation organized and existing
under the laws of the State of Delaware (the "Corporation"), does hereby
certify:
FIRST: That the Certificate of Incorporation of the Corporation be
amended by adding a new sentence to end of Article IV thereof to read as
follows:
No nonvoting equity securities of the Corporation shall be
issued; this provision is included in this Amendment to the
Certificate of Incorporation in compliance with Section 1123 of
the United States Bankruptcy Code, 11 U.S.C. Section 1123, and
shall have no further force and effect beyond that required by
such section and for so long as such section is in effect and
applicable to the Corporation.
SECOND: That the aforesaid Amendment was duly adopted by the Board of
Directors and Shareholders of the Corporation in accordance with the applicable
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
<PAGE>
THE UNDERSIGNED, being the President of the Corporation, hereby
declares and certifies that this is his act and deed and the facts herein stated
are true and, accordingly, has hereunto set his hand this 24th day of September,
1991.
THE TRUMP TAJ MAHAL CORPORATION
/s/ Donald J. Trump
-------------------------------
By: Donald J. Trump,
Title: President
-2-
<PAGE>
THE UNDERSIGNED, being the President of the Corporation, hereby
declares and certifies that this is his act and deed and the facts herein stated
are true and, accordingly, has hereunto set his hand this 24th day of September,
1991.
THE TRUMP TAJ MAHAL CORPORATION
/s/ Donald J. Trump
-------------------------------
By: Donald J. Trump
Title: President
Attest: /s/ Ernest E. East
------------------------
Secretary
<PAGE>
EXHIBIT 3.15
THE TRUMP TAJ MAHAL CORPORATION
Incorporated Under the Laws of
the State of Delaware
BY-LAWS
ARTICLE I
OFFICES.
The registered office of the Corporation in Delaware shall be at 1209
Orange Street in the City of Wilmington, County of New Castle, in the State of
Delaware, and The Corporation Trust Company shall be the resident agent of this
Corporation in charge thereof. The Corporation may also have such other offices
at such other places, within or without the State of Delaware, as the Board of
Directors may from time to time designate or the business of the Corporation may
require.
ARTICLE II
STOCKHOLDERS.
Section 1. ANNUAL MEETING: The annual meeting of stockholders for
the election of directors and the transaction of any other business shall be
held on the first day of May each year, or as soon after such date as may be
practicable, in such city and state and at such time and place as may be
designated by the Board of Directors, and set forth in the notice of such
meeting. If said day be a legal holiday, said meeting shall be held on the next
succeeding business day. At the annual meeting any business may be transacted
and any corporate action may be taken, whether stated in the notice of meeting
or not, except as otherwise expressly provided by statute or the Certificate of
Incorporation.
Section 2. SPECIAL MEETINGS: Special meetings of the stockholders
for any purpose may be called at any time by the Board of Directors, or by the
President, and shall be called by the President at the request of the holders of
a majority of the outstanding shares of capital stock entitled to vote. Special
meetings shall be held at such place or places within or without the State of
Delaware as shall from time to time be designated by the Board of Directors and
stated in the notice of such meeting. At a special meeting no business shall be
transacted and no corporate action shall be taken other than that stated in the
notice of the meeting.
<PAGE>
Section 3. NOTICE OF MEETINGS: Written notice of the time and place
of any stockholder's meeting, whether annual or special, shall be given to each
stockholder entitled to vote thereat, by personal delivery or by mailing the
same to him at his address as the same appears upon the records of the
Corporation at least ten (10) days but not more than sixty (60) days before the
day of the meeting. Notice of any adjourned meeting need not be given except by
announcement at the meeting so adjourned, unless otherwise ordered in connection
with such adjournment. such further notice, if any, shall be given as may be
required by law.
Section 4. QUORUM: Any number of stockholders, together holding at
least a majority of the capital stock of the Corporation issued and outstanding
and entitled to vote, who shall be present in person or represented by proxy at
any meeting duly called, shall constitute a quorum for the transaction of all
business, except as otherwise provided by law, by the Certificate of
Incorporation or by these By-laws.
Section 5. ADJOURNMENT OF MEETINGS: If less than a quorum shall
attend at the time for which a meeting shall have been called, the meeting may
adjourn from time to time by a majority vote of the stockholders present or
represented by proxy and entitled to vote without notice other than by
announcement at the meeting until a quorum shall attend. Any meeting at which a
quorum is present may also be adjourned in like manner and for such time or upon
such call as may be determined by a majority vote of the stockholders present or
represented by proxy and entitled to vote. At any adjourned meeting at which a
quorum shall be present, any business may be transacted and any corporate action
may be taken which might have been transacted at the meeting as originally
called.
Section 6. VOTING LIST: The Secretary shall prepare and make, at
least ten days before every election of directors, a complete list of the
stockholders entitled to vote, arranged in alphabetical order and showing the
address of each stockholder and the number of shares of each stockholder. Such
list shall be open at the place where the election is to be held for said ten
days, to the examination of any stockholder, and shall be produced and kept at
the time and place of election during the whole time thereof, and subject to the
inspection of any stockholder who may be present.
Section 7. VOTING: Each stockholder entitled to vote at any meeting
may vote either in person or by proxy, but no proxy shall be voted on or after
three years from its date, unless said proxy provides for a longer period. Each
stockholder entitled to vote shall at every meeting of the
2
<PAGE>
stockholders be entitled to one vote for each share of stock registered in his
name on the record of stockholders. At all meetings of stockholders all
matters, except as otherwise provided by statute, shall be determined by the
affirmative vote of the majority of shares present in person or by proxy and
entitled to vote on the subject matter. Voting at meetings of stockholders need
not be by written ballot.
Section 8. RECORD DATE OF STOCKHOLDERS: The Board of Directors is
authorized to fix in advance a date not exceeding sixty days nor less than ten
days preceding the date of any meeting of stockholders, or the date for the
payment of any dividend, or the date for the allotment of rights, or the date
when any change or conversion or exchange of capital stock shall go into effect,
or a date in connection with obtaining the consent of stockholders for any
purposes, as a record date for the determination of the stockholders entitled to
notice of, and to vote at, any such meeting, and any adjournment thereof, or
entitled to receive payment of any such dividend, or to any such allotment of
rights, or to exercise the rights in respect of any such change, conversion or
exchange of capital stock, or to give such consent, and, in such case, such
stockholders and only such stockholders as shall be stockholders of record on
the date so fixed shall be entitled to such notice of, and to vote at, such
meeting, and any adjournment thereof, or to receive payment of such dividend, or
to receive such allotment of rights, or to exercise such rights, or to give such
consent, as the case may be, notwithstanding any transfer of any stock on the
books of the Corporation, after such record date fixed as aforesaid.
Section 9. ACTION WITHOUT MEETING: Any action required or permitted
to be taken at any annual or special meeting of stockholders may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted and shall be
delivered to the Corporation by delivery to its registered office in the State
of Delaware, its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing.
3
<PAGE>
Section 10. CONDUCT OF MEETINGS. The Chairman of the Board of
Directors or, in his absence the President or any Vice President designated by
the Chairman of the Board, shall preside at all regular or special meetings of
stockholders. To the maximum extent permitted by law, such presiding person
shall have the power to set procedural rules, including but not limited to rules
respecting the time allotted to stockholders to speak, governing all aspects of
the conduct of such meeting.
ARTICLE III
DIRECTORS.
Section 1. NUMBER AND QUALIFICATIONS: The Board of Directors shall
consist initially of one director, and thereafter shall consist of such number
as may be fixed from time to time by resolution of the Board. The directors
need not be stockholders.
Section 2. ELECTION OF DIRECTORS: The directors shall be elected by
the stockholders at the annual meeting of stockholders.
Section 3. DURATION OF OFFICE: The directors chosen at any annual
meeting shall, except as hereinafter provided, hold office until the next annual
election and until their successors are elected and qualify.
Section 4. REMOVAL AND RESIGNATION OF DIRECTORS: Any director may be
removed from the Board of Directors, with or without cause, by the holders of a
majority of the shares of capital stock entitled to vote, either by written
consent or consents or at any special meeting of the stockholders called for
that purpose, and the office of such director shall forthwith become vacant.
Any director may resign at any time. Such resignation shall take
effect at the time specified therein, and if no time be specified, at the time
of its receipt by the President or Secretary. The acceptance of a resignation
shall not be necessary to make it effective, unless so specified therein.
Section 5. FILLING OF VACANCIES: Any vacancy among the directors,
occurring from any cause whatsoever, may be filled by a majority of the
remaining directors, though less than a quorum, PROVIDED HOWEVER, that the
stockholders removing any director may at the same meeting fill the vacancy
caused by such removal, and PROVIDED FURTHER, that if the directors fail to fill
any such vacancy, the stockholders may at any special meeting called for that
purpose fill such vacancy. In case of any increase in the number of directors,
the additional directors may be elected by the directors in office before such
increase.
4
<PAGE>
Any person election to fill a vacancy shall hold office, subject to
the right of removal as hereinbefore provided, until the next annual election
and until his successor is elected and qualifies.
Section 6. REGULAR MEETINGS: The Board of Directors shall hold an
annual meeting for the purpose of organization and the transaction of any
business immediately after the annual meeting of the stockholders, provided a
quorum of directors is present. Other regular meetings may be held at such
times as may be determined from time to time by resolution of the Board of
Directors.
Section 7. SPECIAL MEETINGS: Special meetings of the Board of
Directors may be called by the Chairman of the Board of Directors or by the
President.
Section 8. NOTICE AND PLACE OF MEETINGS: Meetings of the Board of
Directors may be held at the principal office of the Corporation, or at such
other place as shall be stated in the notice of such meeting. Notice of any
special meeting, and, except as the Board of Directors may otherwise determine
by resolution, notice of any regular meeting also, shall be mailed to each
director addressed to him at his residence or usual place of business at least
two days before the day on which the meeting is to be held, or if sent to him at
such place by telegraph or cable, or delivered personally or by telephone, not
later than the day before the day on which the meeting is to be held. No notice
of the annual meeting of the Board of Directors shall be required if it is held
immediately after the annual meeting of the stockholders and if a quorum is
present.
Section 9. BUSINESS TRANSACTED AT MEETINGS, ETC.: Any business may
be transacted and any corporate action may be taken at any regular or special
meeting of the Board of Directors at which a quorum shall be present, whether
such business or proposed action be stated in the notice of such meeting or not,
unless special notice of such business or proposed action shall be required by
statute.
Section 10. QUORUM: A majority of the Board of Directors at any time
in office shall constitute a quorum. At any meeting at which a quorum is
present, the vote of a majority of the members present shall be the act of the
Board of Directors unless the act of a greater number is specifically required
by law or by the Certificate of Incorporation or these By-laws. The members of
the Board shall act only as the Board and the individual members thereof shall
not have any powers as such.
5
<PAGE>
Section 11. COMPENSATION: The directors shall not receive any
stated salary for their services as directors, but by resolution of the Board of
Directors a fixed fee and expenses of attendance may be allowed for attendance
at each meeting. Nothing herein contained shall preclude any director from
serving the Corporation in any other capacity, as an officer, agent or
otherwise, and receiving compensation therefor.
Section 12. ACTION WITHOUT A MEETING: Any action required or
permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken without a meeting if all members of the Board of
committee, as the case may be, consent thereto in writing, and the writing of
writings are filed with the minutes of the proceedings of the Board or
committee.
Section 13. MEETINGS THROUGH USE OF COMMUNICATIONS EQUIPMENT:
Members of the Board of Directors, or any committee designated by the Board of
Directors, shall, except as otherwise provided by law, the Certificate of
Incorporation or these By-laws, have the power to participate in a meeting of
the Board of Directors, or any committee, by means of a conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation shall constitute
presence in person at the meeting.
ARTICLE IV
COMMITTEES.
Section 1. EXECUTIVE COMMITTEE: The Board of Directors may, by
resolution passed by a majority of the whole Board, designate two or more of
their number to constitute an Executive Committee to hold office at the pleasure
of the Board, which Committee shall, during the intervals between meetings of
the Board of Directors, have and exercise all of the powers of the Board of
Directors in the management of the business and affairs of the Corporation,
subject only to such restrictions of limitations as the Board of Directors may
from time to time specify, or as limited by the Delaware General Corporation
Law, and shall have power to authorize the seal of the Corporation to be affixed
to all papers which may require it.
Any member of the Executive Committee may be removed at any time, with
or without cause, by a resolution of a majority of the whole Board of Directors.
Any person ceasing to be a director shall IPSO FACTO cease to be a
member of the Executive Committee.
6
<PAGE>
Any vacancy in the Executive Committee occurring from any cause
whatsoever may be filled from among the directors by a resolution of a majority
of the whole Board of Directors.
Section 2. OTHER COMMITTEES. Other committees, whose members need
not be directors, may be appointed by the Board of Directors or the Executive
Committee, which committees shall hold office for such time and have such powers
and perform such duties as may from time to time be assigned to them by the
Board of Directors or the Executive Committee.
Any member of such a committee may be removed at any time, with or
without cause, by the Board of Directors or the Executive Committee. Any
vacancy in a committee occurring from any cause whatsoever may be filled by the
Board of Directors or the Executive Committee.
Section 3. RESIGNATION: Any member of a committee may resign at
any time. Such resignation shall be made in writing and shall take effect at
the time specified therein, or, if no time be specified, at the time of its
receipt by the President or Secretary. The acceptance of a resignation shall
not be necessary to make it effective unless so specified therein.
Section 4. QUORUM: A majority of the members of a committee shall
constitute a quorum. The act of a majority of the members of a committee
present at any meeting at which a quorum is present shall be the act of such
committee. The members of a committee shall act only as a committee, and the
individual members thereof shall not have any powers as such.
Section 5. RECORD OF PROCEEDINGS, ETC.: Each committee shall keep
a record of its acts and proceedings, and shall report the same to the Board of
Directors when and as required by the Board of Directors.
Section 6. ORGANIZATION, MEETINGS, NOTICES, ETC.: A committee may
hold its meetings at the principal office of the Corporation, or at any other
place which a majority of the committee may at any time agree upon. Each
committee may make such rules as it may deem expedient for the regulation and
carrying on of its meetings and proceedings. Unless otherwise ordered by the
Executive Committee, any notice of a meeting of such committee may be given by
the Secretary of the Corporation or by the chairman of the committee and shall
be sufficiently given if mailed to each member at his residence or usual place
of business at least two days before the day on which the meeting is to be held,
or if sent to him at such place by telegraph or cable, or delivered personally
or by telephone not later than 24 hours before the time at which the meeting is
to be held.
7
<PAGE>
Section 7. COMPENSATION. The members of any committee shall be
entitled to such compensation as may be allowed them by resolution of the Board
of Directors.
ARTICLE V
OFFICERS.
Section 1. NUMBER. The officers of the Corporation shall be a
President, one or more Vice-Presidents, a Secretary, one or more Assistant
Secretaries, a Treasurer, and such other officers as may be appointed in
accordance with the provisions of Section 3 of this Article V. The Board of
Directors in its discretion may also elect a Chairman of the Board of Directors.
Section 2. ELECTION, TERM OF OFFICE AND QUALIFICATIONS: The
officers, except as provided in Section 3 of this Article V, shall be chosen
annually by the Board of Directors. Each such officer shall, except as herein
otherwise provided, hold office until his successor shall have been chosen and
shall qualify. The Chairman of the Board of Directors, if any, and the
President shall be directors of the Corporation, and should any one of them
cease to be a director, he shall IPSO FACTO cease to be such officer. Except as
otherwise provided by law, any number of offices may be held by the same person.
Section 3. OTHER OFFICERS: Other officers, including one or more
additional vice-presidents, assistant secretaries or assistant treasurers, may
from time to time be appointed by the Board of Directors, which other officers
shall have such powers and perform such duties as may be assigned to them by the
Board of Directors or the officer or committee appointing them.
Section 4. REMOVAL OF OFFICERS: Any officer of the Corporation
may be removed from office, with or without cause, by a vote of a majority of
the Board of Directors.
Section 5. RESIGNATION: Any officer of the Corporation may resign
at any time. Such resignation shall be in writing and shall take effect at the
time specified therein, and if no time be specified, at the time of its receipt
by the President or Secretary. The acceptance of a resignation shall not be
necessary in order to make it effective, unless so specified therein.
Section 6. FILLING OF VACANCIES: A vacancy in any office shall be
filled by the Board of Directors or by the authority appointing the predecessor
in such office.
Section 7. COMPENSATION: The compensation of the officers shall
be fixed by the Board of Directors, or by any committee upon whom power in that
regard may be conferred by the Board of Directors.
8
<PAGE>
Section 8. CHAIRMAN OF THE BOARD OF DIRECTORS: The Chairman of
the Board of Directors shall be a director and shall preside at all meetings of
the Board of Directors at which he shall be present, and shall have such power
and perform such duties as may from time to time be assigned to him by the Board
of Directors.
Section 9. PRESIDENT. The President shall, when present, preside
at all meetings of the stockholders, and, in the absence of the Chairman of the
Board of Directors, at meetings of the Board of Directors. He shall have power
to call special meetings of the stockholders or of the Board of Directors or of
the Executive Committee at any time. He shall be the chief executive officer of
the Corporation, and shall have the general direction of the business, affairs
and property of the Corporation, and of its several officers, and shall have and
exercise all such powers and discharge such duties as usually pertain to the
office of President.
Section 10. VICE-PRESIDENTS: The Vice-Presidents, or any of them,
shall, subject to the direction of the Board of Directors, at the request of the
President or in his absence, or in case of his inability to perform his duties
from any cause, perform the duties of the President, and, when so acting, shall
have all the powers of, and be subject to all restrictions upon, the President.
The Vice-Presidents shall also perform such other duties as may be assigned to
them by the Board of Directors, and the Board of Directors may determine the
order of priority among them.
Section 11. SECRETARY: The Secretary shall perform such duties as
are incident to the office of Secretary, or as may from time to time be assigned
to him by the Board of Directors, or as are prescribed by these By-laws.
Section 12. TREASURER: The Treasurer shall perform such duties and
have powers as are usually incident to the office of Treasurer or which may be
assigned to him by the Board of Directors.
ARTICLE VI
CAPITAL STOCK.
Section 1. ISSUE OF CERTIFICATES OF STOCK: Certificates of
capital stock shall be in such form as shall be approved by the Board of
Directors. They shall be numbered in the order of their issue and shall be
signed by the Chairman of the Board of Directors, the President or one of the
Vice-Presidents, and the Secretary or an Assistant Secretary or
9
<PAGE>
the Treasurer or an Assistant Treasurer, and the seal of the Corporation or a
facsimile thereof shall be impressed or affixed or reproduced thereon, provided,
however, that where such certificates are signed by a transfer agent or an
assistant transfer agent or by a transfer clerk acting on behalf of the
Corporation and a registrar, the signature of any such Chairman of the Board of
Directors, President, Vice-President, Secretary, Assistant Secretary, Treasurer
or Assistant Treasurer may be facsimile. In case any officer or officers who
shall have signed, or whose facsimile signature or signatures shall have been
used on any such certificate or certificates shall cease to be such officer or
officers of the Corporation, whether because of death, resignation or otherwise,
before such certificate or certificates shall have been delivered by the
Corporation, such certificate or certificates may nevertheless be adopted by the
Corporation and be issued and delivered as though the person or persons who
signed such certificate or certificates, or whose facsimile signature or
signatures shall have been used thereon have not ceased to be such officer or
officers of the Corporation.
Section 2. REGISTRATION AND TRANSFER OF SHARES: The name of each
person owning a share of the capital stock of the Corporation shall be entered
on the books of the Corporation together with the number of shares held by him,
the numbers of the certificates covering such shares and the dates of issue of
such certificates. The shares of stock of the Corporation shall be transferable
on the books of the Corporation by the holders thereof in person, or by their
duly authorized attorneys or legal representatives, on surrender and
cancellation of certificates for a like number of shares, accompanied by an
assignment or power of transfer endorsed thereon or attached thereto, duly
executed, and with such proof of the authenticity of the signature as the
Corporation or its agents may reasonably require. A record shall be made of
each transfer.
The Board of Directors may make other and further rules and
regulations concerning the transfer and registration of certificates for stock
and may appoint a transfer agent or registrar or both and may require all
certificates of stock to bear the signature of either or both.
Section 3. LOST, DESTROYED AND MUTILATED CERTIFICATES: The holder
of any stock of the Corporation shall immediately notify the Corporation of any
loss, theft, destruction or mutilation of the certificates therefor. The
Corporation may issue a new certificate of stock in the place of any certificate
theretofore issued by it alleged to have been lost, stolen or destroyed, and the
Board of Directors may, in its discretion, require the owner of the lost, stolen
or destroyed certificate,
10
<PAGE>
or his legal representatives, to give the Corporation a bond, in such sum not
exceeding double the value of the stock and with such surety or sureties as they
may require, to indemnify it against any claim that may be made against it by
reason of the issue of such new certificate and against all other liability in
the premises, or may remit such owner to such remedy or remedies as he may have
under the laws of the State of Delaware.
ARTICLE VII
DIVIDENDS, SURPLUS, ETC.
Section 1. GENERAL DISCRETION OF DIRECTORS: The Board of Directors
shall have power to fix and vary the amount to be set aside or reserved as
working capital of the Corporation, or as reserves, or for other proper purposes
of the Corporation, and, subject to the requirements of the Certificate of
Incorporation, to determine whether any, if any, part of the surplus or net
profits of the Corporation shall be declared as dividends and paid to the
stockholders, and to fix the date or dates for the payment of dividends.
ARTICLE VIII
CASINO CONTROL ACT.
Notwithstanding anything contained herein to the contrary, if the
Corporation holds a casino license or is deemed a holding company, intermediary
company or otherwise a qualifier under the New Jersey Casino Control Act,
N.J.S.A. 5:12-1 ET SEQ. and the regulations promulgated thereunder as from time
to time amended (the "Casino Act"), then the Corporation shall take all action
necessary to comply with the Casino Act, including, but not limited to the
following:
Section 1. NOTICES. To the extent notice to and/or approval of any
actions of the Corporation is required by the new Jersey Casino Control
Commission (the "Commission") under the Casino Act, then it shall be the duty of
the Secretary of the Corporation to so comply. No action of the Corporation for
which notice to or approval of the Commission is required shall be valid without
the aforesaid notice and/or approval.
Section 2. STOCKHOLDER QUALIFICATION. (a) If any record holder or
beneficial owner of securities of the Corporation are found to be "disqualified"
by the Commission pursuant to the provisions of the Casino Act, such holder or
owner thereof shall dispose of such interest in the Corporation.
11
<PAGE>
(b) In order to avoid disciplinary action for the payments of any
dividend, interest or remuneration, or for recognition of any voting right, the
Corporation shall use its best efforts to terminate all relationships with any
persons determined to be disqualified. If the Corporation is unable, after the
exercise of its best efforts, to terminate such relationship by acquisition of
the securities or otherwise, it shall suspend payment of dividends or interest
upon any such securities and shall not permit the exercise of any right, voting
or otherwise, conferred by such securities, or pay or otherwise grant or deliver
any remuneration in any form whatsoever for services rendered or for any other
purpose.
ARTICLE IX
MISCELLANEOUS PROVISIONS.
Section 1. FISCAL YEAR: The fiscal year of the Corporation shall
commence on the first day of January and end on the last day of December.
Section 2. CORPORATE SEAL: The corporate seal shall be in such form
as approved by the Board of Directors and may be altered at their pleasure. The
corporate seal may be used by causing it or a facsimile thereof to be impressed
or affixed or reproduced or otherwise.
Section 3. NOTICES: Except as otherwise expressly provided, any
notice required by these By-laws to be given shall be sufficient if given by
depositing the same in a post office or letter box in a sealed postpaid wrapper
addressed to the person entitled thereto at his address, as the same appears
upon the books of the Corporation, or by telegraphing or cabling the same to
such person at such addresses; and such notice shall be deemed to be given at
the time it is mailed, telegraphed or cabled.
Section 4. WAIVER OF NOTICE: Any stockholder or director may at any
time, by writing or by telegraph or by cable, waive any notice required to be
given under these By-laws, and if any stockholder or director shall be present
at any meeting his presence shall constitute a waiver of such notice.
Section 5. CHECKS, DRAFTS, ETC.: All checks, drafts or other orders
for the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation, shall be signed by such officer or officers, agent or
agents of the Corporation, and in such manner, as shall from time to time be
designated by resolution of the Board of Directors.
12
<PAGE>
Section 6. DEPOSITS: All funds of the Corporation shall be deposited
from time to time to the credit of the Corporation in such bank or banks, trust
companies or other depositories as the Board of Directors may select, and, for
the purpose of such deposit, checks, drafts, warrants and other orders for the
payment of money which are payable to the order of the Corporation, may be
endorsed for deposit, assigned and delivered by any officer of the Corporation,
or by such agents of the Corporation as the Board of Directors or the President
may authorize for that purpose.
Section 7. VOTING STOCK OF OTHER CORPORATIONS: Except as otherwise
ordered by the Board of Directors or the Executive Committee, the President or
the Treasurer shall have full power and authority on behalf of the Corporation
to attend and to act and to vote at any meeting of the stockholders of any
corporation of which the Corporation is a stockholder and to execute a proxy to
any other person to represent the Corporation at any such meeting, and at any
such meeting the President or the Treasurer or the holder of any such proxy, as
the case may be, shall possess and may exercise any and all rights and powers
incident to ownership of such stock and which, as owner thereof, the Corporation
might have possessed and exercised if present. The Board of Directors or the
Executive Committee may from time to time confer like powers upon any other
person or persons.
Section 8. INDEMNIFICATION OF OFFICERS AND DIRECTORS: The
Corporation shall indemnify any and all of its directors or officers, including
former directors or officers, and any employee, who shall serve as an officer or
director of any corporation at the request of this Corporation, to the fullest
extent permitted under and in accordance with the laws of the State of Delaware.
ARTICLE X
AMENDMENTS.
The Board of Directors shall have the power to make, rescind, alter,
amend and repeal these By-laws, provided, however, that the stockholders shall
have power to rescind, alter, amend or repeal any by-laws made by the Board of
Directors, and to enact by-laws which if so expressed shall not be rescinded,
altered, amended or repealed by the Board of Directors. No change of the time
or place for the annual meeting of stockholders for the election of directors
shall be made except in accordance with the laws of the State of Delaware.
13
<PAGE>
EXHIBIT 3.20
THIRD AMENDED AND RESTATED PARTNERSHIP
AGREEMENT OF TRUMP PLAZA ASSOCIATES
THIRD AMENDED AND RESTATED PARTNERSHIP AGREEMENT made this 17th 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 TRUMP ATLANTIC
CITY CORPORATION, a corporation organized under the laws of the State of
Delaware having an address at 1000 The Boardwalk, Atlantic City, New Jersey
08401 ("TACC"). Trump AC and TACC 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 TACC and TACC 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, TACC and Trump AC desire to set forth their respective rights
and obligations as Partners of the Partnership;
<PAGE>
NOW THEREFORE, TACC 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," when used with respect to a Partner, means an
amount equal to (a) the aggregate of (i) the initial amount credited to the
Capital Account of such Partner as reflected in Article 8 hereof, (ii) all other
voluntary capital contributions to the Partnership made or deemed to be made by
such Partner pursuant to this Agreement, (iii) all Net Income and other items of
income credited to the account of such Partner pursuant to Article 9 and (iv)
any additional amount resulting from the
2
<PAGE>
acquisition of additional Partnership Interests, MINUS (b) the aggregate of (i)
all Net Losses and deductions charged to the account of such Partner pursuant to
Article 9 hereof, (ii) all distributions and (iii) any reduction in such amount
due to the transfer of a Partnership Interest. The Capital Accounts shall be
maintained in accordance with the regulations under Section 704(b) and (c) of
the Code. If a Partner is a Transferee, its Capital Account derived from the
transferor shall initially be deemed to be the product of (x) a fraction, the
numerator of which shall be the Percentage Interest transferred to such
Transferee and the denominator of which shall be the Percentage Interest
immediately prior to such transfer of the Partner making such transfer, and (y)
the Capital Account of the Partner making such transfer immediately prior to
such transfer. The Capital Account of a Partner transferring a Partnership
Interest to a Transferee shall be reduced by the amount of its Capital Account
which such Transferee is initially deemed to have acquired.
"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 Article 8,
as such Article 8 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.
"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.
"Contributed Property" shall mean any property or asset, in such
form as may be permitted by the New Jersey Uniform Partnership Law, but
excluding cash, contributed or deemed contributed to the Partnership with
respect to the Partnership Interest held by each Partner.
"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, deple-
3
<PAGE>
tion or amortization" as determined under Section 1.704-1(b)(2)(iv)(g)(3) of the
Regulations.
"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.
"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
in Article 8, the gross fair market value ascribed thereto in Article 8 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;
(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 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
4
<PAGE>
(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 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.
"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 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
Part-
5
<PAGE>
nership (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
9.1; and (f) excluding any items specially allocated pursuant to Section 9.2.
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 9.2, 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.
"Nonrecourse Liabilities" shall have the meaning set forth in
Section 1.704-2(b)(3) of the Regulations.
"Partner" means each of TACC and Trump AC or any Transferee
thereof that becomes substituted as a Partner in accordance herewith 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 TACC 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.
6
<PAGE>
"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 TACC and 99% for Trump AC, subject to appropriate adjustment in
accordance with the provisions hereof.
"Person" means any natural person or Entity.
"Pledge Agreements" means, collectively, the pledge agreement (1)
dated April 17, 1996 from Trump AC, as pledgor, to First Bank National
Association, as trustee, and (2) dated April 17, 1996 from TACC, as pledgor, to
First Bank National Association, as trustee, in each case securing the Senior
Secured Notes due 2005 of Trump Hotels & Casino Resorts Holdings, L.P. and Trump
Hotels & Casino Resorts Funding, Inc., as joint obligors.
"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 means an amount no greater
than (a) the higher of (i) the product of (A) the taxable income of the
Partnership (computed as if the Partnership were an individual taxpayer) 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
(computed as if the Partnership were an individual taxpayer) 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 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.
7
<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 would be subject in the relevant year of
determination (as certified to the Managing 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 ultimate 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.
"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.
8
<PAGE>
(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 Trump Atlantic City Corporation
Mississippi Avenue and 1000 The Boardwalk
The Boardwalk Atlantic City, N.J. 08401
Atlantic City, N.J. 08401
6. MANAGING GENERAL 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 may be decided by either
Partner acting on behalf of the Partnership. Notwithstanding the foregoing,
Trump AC shall have the rights of the Managing General Partner as set forth
herein.
7. TERM. The term for which the Partnership is to exist is to the
close of business on the 31st day of December, 2035, 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 $_______________
TACC $_______________
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
<PAGE>
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) NOT 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
(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,
10
<PAGE>
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.
(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.
11
<PAGE>
(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 promulgated
thereunder. Notwithstanding the foregoing, tax depreciation and amortization
with respect to property contributed pursuant to the Contribution Agreement
between Donald J. Trump and Trump Hotels & Casino Resorts Holdings L.P. ("THCR
Holdings"), dated as of June 12, 1995, shall be allocated on an aggregate basis
for the 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 properties determined
as of the date of contribution (and not taking into account (i) any increase in
the basis of such properties resulting from improvements thereon made subsequent
to the date of contribution or (ii) any additional basis resulting from any new
property purchased by any of THCR Holdings, the Partnership or Trump AC in a
taxable transaction subsequent to the date of contribution; provided, however,
that the Managing General Partner shall not specially allocate any Tax Items
(other than items of depreciation and amortization referred to in this Section
9.3(c)) to cure for the effect of the ceiling rule set forth in Regulation
Section 1.704-3(b).
12
<PAGE>
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 New Jersey Uniform Partnership Law.
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 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 Article 10, subject to the limitations, if any,
set forth in the agreements governing the Partnership's Indebtedness.
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 Managing
General Partner, to any item affecting Tax Amounts, as reflected on the
Partnership's tax
13
<PAGE>
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 9.5, 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 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 General Partner, cash or other
property, valued at its Fair Market Value, to the Partners PRO RATA.
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
14
<PAGE>
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 or before the
Tax Payment Loan Date, all or a portion of such deficit.
(b) The Managing 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 Managing 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
Partner within thirty (30) days after written demand therefor is made by the
Managing General Partner, the Managing General Partner may cause all
distributions that would otherwise be made to such 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.
15
<PAGE>
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 Agreements,
(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 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
16
<PAGE>
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.
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.
17
<PAGE>
(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 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
18
<PAGE>
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, 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 of 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
19
<PAGE>
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 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. Notwith-standing anything to
the contrary contained in this Agreement:
20
<PAGE>
(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 issue 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 issue; 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.
21
<PAGE>
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. TACC and Trump AC
agree that Trump AC, acting through the Partnership, shall have the authority to
handle and resolve all tax controversies involving Trump AC, TACC 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. Notwithstanding the foregoing, Trump shall
have the right to control the resolution of tax matters affecting or relating to
the Partnership in respect to periods ending on or prior to the date hereof,
including requiring the Partnership to adjust the tax basis of assets held by
the Partnership 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 income tax depreciation and cost recovery deductions in
respect of assets held by the Partnership as of the date hereof and
contributions of any interest in the Partnership to Trump AC.
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, TACC 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, TACC 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
22
<PAGE>
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 TACC or the Trump AC managing general partner, were in breach of his duty of
loyalty to TACC 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 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
23
<PAGE>
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.
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.
Partners:
TRUMP ATLANTIC CITY ASSOCIATES
By: TRUMP HOTELS & CASINO RESORTS
HOLDINGS, L.P., General Partner
By: TRUMP HOTELS & CASINO RESORTS,
INC. general partner
By: /s/ Nicholas L. Ribis
--------------------
Nicholas L. Ribis
President
TRUMP ATLANTIC CITY CORPORATION
By: /s/ Nicholas L. Ribis
--------------------------
Nicholas L. Ribis
Vice President
Withdrawing Partner
TRUMP PLAZA FUNDING, INC.
By: /s/ Donald J. Trump
--------------------------
Donald J. Trump
President
24
<PAGE>
EXHIBIT 3.21
SECOND AMENDED AND RESTATED PARTNERSHIP
AGREEMENT OF TRUMP TAJ MAHAL ASSOCIATES
SECOND AMENDED AND RESTATED PARTNERSHIP AGREEMENT made this 12th day
of April, 1996 by and between 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 TRUMP ATLANTIC CITY
CORPORATION, a corporation organized under the laws of the State of Delaware
having an address at 1000 The Boardwalk, Atlantic City, New Jersey 08401
("TACC"), as the continuing partners, and TRUMP CASINOS, INC., a New Jersey
corporation ("TCI") and THCR/LP CORPORATION, a New Jersey corporation
("THCR/LP"), as the withdrawing partners.
WITNESSETH:
WHEREAS, TCI and Donald J. Trump ("Trump"), as general partners, and
Trump as limited partner, formed a partnership (the "Partnership") by entering
into an Agreement of Limited Partnership under the laws of the State of New
Jersey on June 20, 1988, and amended such agreement on August 10, 1988, August
8, 1990, and on December 11, 1990 and December 12, 1990 (the "December 1990
Amendments") (the Agreement of Limited Partnership, as so amended, is
hereinafter referred to as the "Original Agreement"); and
WHEREAS, in connection with the December 1990 Amendments, the partners
of the Partnership converted the Partnership from a limited partnership to a
general partnership and Trump contributed all of the partnership interests in
the Partnership owned by him personally to TCI and TACC in exchange for capital
stock of TCI and TACC; and
WHEREAS, pursuant to a plan of reorganization, the Partnership
admitted THCR/LP as a partner and TCI, TACC and THCR/LP amended and restated in
its entirety the Original Agreement in an Amended and Restated Partnership
Agreement dated as of October 4, 1991, which set forth their respective rights
and obligations in connection with the Partnership (the "Prior Agreement"); and
WHEREAS, pursuant to a merger transaction, THCR/LP has contributed its
entire interest in the Partnership to Trump Hotels & Casinos Resorts Holdings,
L.P. ("THCR Holdings") and such interest has been assigned to Trump AC on
behalf, and at the direction, of THCR Holdings, and TCI has contributed its
entire interest in the Partnership to THCR Holdings and such interest has been
assigned to Trump AC on behalf, and at the direction, of THCR Holdings, and
Trump AC desires to be substituted as a general partner of the Partnership in
lieu of THCR/LP and TCI to the full extent of the interests so assigned; and
WHEREAS, TACC and Trump AC desire to set forth their respective rights
and obligations as Partners of the Partnership;
<PAGE>
NOW, THEREFORE, TACC and Trump AC 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:
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," when used with respect to a Partner, means an
amount equal to (a) the aggregate of (i) the initial amount credited to the
Capital Account of such Partner as reflected in Article 8 hereof, (ii) all other
voluntary capital contributions to the Partnership made or deemed to be made by
such Partner pursuant to this Agreement, (iii) all Net income and other items of
income credited to the account of such Partner pursuant to Article 9 and (iv)
any additional amount resulting from the
-2-
<PAGE>
acquisition of additional Partnership Interests, MINUS (b) the aggregate of (i)
all Net Losses and deductions charged to the account of such Partner pursuant to
Article 9 hereof, (ii) all distributions and (iii) any reduction in such amount
due to the transfer of a Partnership Interest. The Capital Accounts shall be
maintained in accordance with the regulations under Section 704(b) and (c) of
the Code. If a Partner is a Transferee, its Capital Account derived from the
transferor shall initially be deemed to be the product of (x) a fraction, the
numerator of which shall be the Percentage Interest transferred to such
Transferee and the denominator of which shall be the Percentage Interest
immediately prior to such transfer of the Partner making such transfer, and (y)
the Capital Account of the Partner making such transfer immediately prior to
such transfer. The Capital Account of a Partner transferring a Partnership
Interest to a Transferee shall be reduced by the amount of its Capital Account
which such Transferee is initially deemed to have acquired.
"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 Article 8,
as such Article 8 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.
"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.
"Contributed Property" shall mean any property or asset, in such
form as may be permitted by the New Jersey Uniform Partnership Law, but
excluding cash, contributed or deemed contributed to the Partnership with
respect to the Partnership Interest held by each Partner.
"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, deple-
-3-
<PAGE>
tion or amortization" as determined under Section 1.704-1(b)(2)(iv)(g)(3) of the
Regulations.
"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.
"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
in Article 8, the gross fair market value ascribed thereto in such Article 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;
(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 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
-4-
<PAGE>
(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 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.
"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 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
Part-
-5-
<PAGE>
nership (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
9.1; and (f) excluding any items specially allocated pursuant to Section 9.2.
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 9.2, 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.
"Nonrecourse Liabilities" shall have the meaning set forth in
Section 1.704-2(b)(3) of the Regulations.
"Partner" means each of TACC and Trump AC or any Transferee
thereof that becomes substituted as a Partner in accordance herewith 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 TACC 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.
-6-
<PAGE>
"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 TACC and 99% for Trump AC, subject to appropriate adjustment in
accordance with the provisions hereof.
"Person" means any natural person or Entity.
"Pledge Agreements" means, collectively, the pledge agreement (1)
dated April 17, 1996 from Trump AC, as pledgor, to First Bank National
Association, as trustee, and (2) dated April 17, 1996 from TACC, as pledgor, to
First Bank National Association, as trustee, in each case securing the Senior
Secured Notes due 2005 of Trump Hotels & Casino Resorts Holdings, L.P. and Trump
Hotels & Casino Resorts Funding, Inc., as joint obligors.
"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 means an amount no greater
than (a) the higher of (i) the product of (A) the taxable income of the
Partnership (computed as if the Partnership were an individual taxpayer) 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
(computed as if the Partnership were an individual taxpayer) 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 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.
-7-
<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 would be subject in the relevant year of
determination (as certified to the Managing 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 ultimate 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.
"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 Taj Mahal Associates.
3. PURPOSE. The character of the Partnership's business is (i) to
own and operate the Trump Taj Mahal Casino Resort 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 1000 The Boardwalk, Atlantic
City, New Jersey 08401.
-8-
<PAGE>
5. PARTNERS. The name and place of residence of the General
Partners interested in the Partnership is as follows:
Trump Atlantic City Associates Trump Atlantic City Corporation
Mississippi Avenue and 1000 The Boardwalk
The Boardwalk Atlantic City, N.J. 08401
Atlantic City, N.J. 08401
6. MANAGING GENERAL 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 may be decided by either
Partner acting on behalf of the Partnership. Notwithstanding the foregoing,
Trump AC shall have the rights of the Managing General Partner as set forth
herein.
7. TERM. The term for which the Partnership is to exist is to the
close of business on the 31st day of December, 2035, 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 $
TACC $
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 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.
-9-
<PAGE>
(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
(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 charge-back 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 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.
-10-
<PAGE>
(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.
(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
-11-
<PAGE>
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 promulgated
thereunder. Notwithstanding the foregoing, tax depreciation and amortization
with respect to property contributed pursuant to the Contribution Agreement
among Trump, TCI, THCR/LP and the Partnership, dated as of the date hereof,
shall be allocated on an aggregate basis for the 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 properties determined as of the date of contribution (and not taking
into account (i) any increase in the basis of such properties resulting from
improvements thereon made subsequent to the date of contribution or (ii) any
additional basis resulting from any new property purchased by any of THCR
Holdings, the Partnership or Trump AC in a taxable transaction subsequent to the
date of contribution; provided, however, that the Managing General Partner shall
not specially allocate any Tax Items (other than items of depreciation and
amortization referred to in this Section 9.3(c)) to cure for the effect of the
ceiling rule set forth in Regulation Section 1.704-3(b).
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 New Jersey Uniform Partnership Law.
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
-12-
<PAGE>
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 General Partner deems
appropriate in the order provided in this Article 10, subject to the
limitations, if any, set forth in the agreements governing the Partnership's
Indebtedness.
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 Managing
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 9.5, 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
-13-
<PAGE>
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 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 General Partner, cash or other
property, valued at its Fair Market Value, to the Partners, PRO RATA 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
-14-
<PAGE>
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 or before the Tax Payment Loan Date, all or a portion of such
deficit.
(b) The Managing 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 Managing 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
Partner within thirty (30) days after written demand therefor is made by the
Managing General Partner, the Managing General Partner may cause all
distributions that would otherwise be made to such 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 Agreements,
(y) the trans-
-15-
<PAGE>
fer 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, 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 Managing General Partner shall cause the Accountants to prepare
and file on or before the due date (as such date may be extended as the result
of any extension obtained) annually a United States Partnership Return of Income
and any necessary state income and franchise tax returns on a partnership basis.
Such returns (or drafts of such returns) shall be submitted to the Partners for
review no later than March 31st of each year. 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.
-16-
<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
-17-
<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,
-18-
<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:
(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 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.
-19-
<PAGE>
(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 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.
-20-
<PAGE>
(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. TACC and Trump AC
agree that Trump AC, acting through the Partnership, shall have the authority to
handle and resolve all tax controversies involving Trump AC, TACC 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. Notwithstanding the foregoing, Trump shall
have the right to control the resolution of tax matters affecting or relating to
the Partnership in respect to periods ending on or prior to the date hereof,
including
-21-
<PAGE>
requiring the Partnership to adjust the tax basis of assets held by the
Partnership 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 income tax depreciation and cost recovery deductions in respect
of assets held by the Partnership as of the date hereof and contributions of any
interest in the Partnership to Trump AC.
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, TACC 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, TACC 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 TACC or the Trump AC managing general partner, were in breach of
his duty of loyalty to TACC 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
-22-
<PAGE>
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 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
-23-
<PAGE>
and permitted assigns, including any pledgee upon the foreclosure 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: /s/ Nicholas L. Ribis
------------------------
Nicholas L. Ribis
President
TRUMP ATLANTIC CITY CORPORATION
By: /s/ Nicholas L. Ribis
---------------------------
Nicholas L. Ribis
Vice President
WITHDRAWING PARTNERS: THCR/LP CORPORATION
By: /s/ Donald J. Trump
--------------------------
Donald J. Trump
President
TRUMP CASINOS, INC.
By: /s/ Donald J. Trump
---------------------------
Donald J. Trump
President
-24-
<PAGE>
Exhibit 4.31
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
TRUMP ATLANTIC CITY ASSOCIATES
TRUMP ATLANTIC CITY FUNDING II, INC.
Issuers
TRUMP PLAZA ASSOCIATES
TRUMP TAJ MAHAL ASSOCIATES
TRUMP ATLANTIC CITY CORPORATION
TRUMP CASINO SERVICES, L.L.C.
TRUMP COMMUNICATIONS, L.L.C.
Guarantors
and
U.S. BANK NATIONAL ASSOCIATION
Trustee
----------------
INDENTURE
Dated as of December 10, 1997
----------------
$75,000,000 11 1/4% First Mortgage Notes (TAC II) 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
i
<PAGE>
(e)........................................................... 12.5
(f)........................................................... N.A.
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.................................................... 1
SECTION 1.2 Incorporation by Reference of TIA.............................. 29
SECTION 1.3 Rules of Construction.......................................... 30
ARTICLE II
THE SECURITIES
SECTION 2.1 Form and Dating.............................................. 30
SECTION 2.2 Execution and Authentication................................. 31
SECTION 2.3 Registrar and Paying Agent................................... 32
SECTION 2.4 Paying Agent to Hold Assets in Trust......................... 33
SECTION 2.5 Securityholder Lists......................................... 33
SECTION 2.6 Transfer and Exchange........................................ 33
SECTION 2.7 Replacement Securities....................................... 40
SECTION 2.8 Outstanding Securities....................................... 40
SECTION 2.9 Treasury Securities.......................................... 41
SECTION 2.10 Temporary Securities......................................... 41
SECTION 2.11 Cancellation................................................. 41
SECTION 2.12 Defaulted Interest........................................... 42
SECTION 2.13 CUSIP Numbers................................................ 42
ARTICLE III
REDEMPTION
SECTION 3.1 Right of Redemption.......................................... 42
SECTION 3.2 Redemption Pursuant to Applicable Laws....................... 43
SECTION 3.3 Notices to Trustee........................................... 43
SECTION 3.4 Selection of Securities to Be Redeemed....................... 43
SECTION 3.5 Notice of Redemption......................................... 44
SECTION 3.6 Effect of Notice of Redemption............................... 45
SECTION 3.7 Deposit of Redemption Price.................................. 45
SECTION 3.8 Securities Redeemed in Part.................................. 46
iii
<PAGE>
PAGE
ARTICLE IV
SECURITY
SECTION 4.1 Security Interest............................................ 46
SECTION 4.2 Recording; Opinions of Counsel............................... 47
SECTION 4.3 Disposition of Certain Collateral............................ 48
SECTION 4.4 Certain Releases of Collateral............................... 50
SECTION 4.5 Payment of Expenses.......................................... 50
SECTION 4.6 Suits to Protect the Collateral.............................. 50
SECTION 4.7 Trustee's Duties............................................. 50
SECTION 4.8 Restricted Funds Account..................................... 51
ARTICLE V
COVENANTS
SECTION 5.1 Payment of Securities........................................ 51
SECTION 5.2 Maintenance of Office or Agency.............................. 52
SECTION 5.3 Limitation on Restricted Payments............................ 53
SECTION 5.4 Corporate and Partnership Existence.......................... 54
SECTION 5.5 Payment of Taxes and Other Claims............................ 54
SECTION 5.6 Maintenance of Insurance..................................... 55
SECTION 5.7 Compliance Certificate; Notice of Default.................... 55
SECTION 5.8 Provision of Financial Statements............................ 56
SECTION 5.9 Waiver of Stay, Extension or Usury Laws...................... 56
SECTION 5.10 Limitation on Transactions with Affiliates................... 57
SECTION 5.11 Limitation on Incurrence of Additional Indebtedness.......... 57
SECTION 5.12 Restriction on Sale and Issuance of Subsidiary Stock......... 59
SECTION 5.13 Limitation on Dividends and Other Payment Re-
strictions Affecting Subsidiaries............................ 59
SECTION 5.14 Limitation on Liens.......................................... 60
SECTION 5.15 Limitation on Sales of Assets and Subsidiary Stock;
Event of Loss................................................ 60
SECTION 5.16 Future Subsidiary Guarantors................................. 64
SECTION 5.17 Limitation on Activities of Funding II....................... 64
SECTION 5.18 Rule 144A Information Requirement............................ 65
SECTION 5.19 Limitation on Lines of Business.............................. 65
SECTION 5.20 Restriction on Certain Agreements............................ 65
SECTION 5.21 Limitation on Leases......................................... 65
iv
<PAGE>
PAGE
SECTION 5.22 Limitation on Status as Investment Company................... 66
SECTION 5.23 Future Collateral Agreements................................. 66
SECTION 5.24 Limitations on Use of Proceeds from the Offering............. 66
ARTICLE VI
SUCCESSORS
SECTION 6.1 Limitation on Merger, Sale or Consolidation.................. 67
SECTION 6.2 Successor Substituted........................................ 68
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.1 Events of Default............................................ 69
SECTION 7.2 Acceleration of Maturity Date; Rescission and Annulment...... 72
SECTION 7.3 Collection of Indebtedness and Suits for Enforcement by
Trustee...................................................... 73
SECTION 7.4 Trustee May File Proofs of Claim............................. 73
SECTION 7.5 Trustee May Enforce Claims Without Possession of
Securities................................................... 74
SECTION 7.6 Priorities................................................... 74
SECTION 7.7 Limitation on Suits.......................................... 75
SECTION 7.8 Unconditional Right of Holders to Receive Princi-
pal, Premium and Interest.................................... 76
SECTION 7.9 Rights and Remedies Cumulative............................... 76
SECTION 7.10 Delay or Omission Not Waiver................................. 76
SECTION 7.11 Control by Holders........................................... 76
SECTION 7.12 Waiver of Past Default....................................... 77
SECTION 7.13 Undertaking for Costs........................................ 77
SECTION 7.14 Restoration of Rights and Remedies........................... 78
ARTICLE VIII
TRUSTEE
SECTION 8.1 Duties of Trustee............................................ 78
SECTION 8.2 Rights of Trustee............................................ 79
SECTION 8.3 Individual Rights of Trustee................................. 80
SECTION 8.4 Trustee's Disclaimer......................................... 80
SECTION 8.5 Notice of Default............................................ 80
v
<PAGE>
PAGE
SECTION 8.6 Reports by Trustee to Holders................................ 81
SECTION 8.7 Compensation and Indemnity................................... 82
SECTION 8.8 Replacement of Trustee....................................... 83
SECTION 8.9 Successor Trustee by Merger, Etc............................. 84
SECTION 8.10 Eligibility; Disqualification................................ 84
SECTION 8.11 Preferential Collection of Claims against Issuers............ 84
ARTICLE IX
LEGAL DEFEASANCE AND COVENANT DEFEASANCE;
SATISFACTION AND DISCHARGE
SECTION 9.1 Option to Effect Legal Defeasance or Covenant Defeasance..... 84
SECTION 9.2 Legal Defeasance and Discharge............................... 85
SECTION 9.3 Covenant Defeasance.......................................... 85
SECTION 9.4 Conditions to Legal or Covenant Defeasance................... 86
SECTION 9.5 Deposited U.S. Legal Tender and U.S. Government Obligations
to Be Held in Trust; Other Miscellaneous Provisions.......... 87
SECTION 9.6 Repayment to Issuers......................................... 87
SECTION 9.7 Reinstatement................................................ 88
SECTION 9.8 Satisfaction and Discharge of Indenture...................... 88
ARTICLE X
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 10.1 Supplemental Indentures Without Consent of Holders........... 89
SECTION 10.2 Amendments, Supplemental Indentures and Waivers
with Consent of Holders...................................... 90
SECTION 10.3 Compliance with TIA.......................................... 91
SECTION 10.4 Revocation and Effect of Consents............................ 91
SECTION 10.5 Notation on or Exchange of Securities........................ 92
SECTION 10.6 Trustee to Sign Amendments, Etc.............................. 92
vi
<PAGE>
PAGE
ARTICLE XI
RIGHT TO REQUIRE REPURCHASE
SECTION 11.1 Repurchase of Securities at Option of the Holder
Upon Change of Control....................................... 93
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 TIA Controls................................................. 96
SECTION 12.2 Notices...................................................... 96
SECTION 12.3 Communications by Holders with Other Holders................. 98
SECTION 12.4 Certificate and Opinion as to Conditions Precedent........... 98
SECTION 12.5 Statements Required in Certificate or Opinion................ 98
SECTION 12.6 Rules by Trustee, Paying Agent, Registrar.................... 99
SECTION 12.7 Legal Holidays............................................... 99
SECTION 12.8 Governing Law................................................ 99
SECTION 12.9 No Interpretation of Other Agreements........................ 100
SECTION 12.10 No Recourse against Others................................... 100
SECTION 12.11 Successors................................................... 100
SECTION 12.12 Duplicate Originals.......................................... 100
SECTION 12.13 Severability................................................. 100
SECTION 12.14 Table of Contents, Headings, Etc............................. 100
SECTION 12.15 Gaming Laws.................................................. 101
SECTION 12.16 Registration Rights.......................................... 101
ARTICLE XIII
GUARANTY
SECTION 13.1 Guaranty..................................................... 101
SECTION 13.2 Execution and Delivery of Guaranty........................... 103
SECTION 13.3 Certain Bankruptcy Events.................................... 103
SECTION 13.4 Rights Under the Guaranty.................................... 103
SECTION 13.5 Severability................................................. 104
SECTION 13.6 Merger or Consolidation of Guarantors........................ 104
vii
<PAGE>
PAGE
EXHIBITS
Exhibit A Form of First Mortgage Note (TAC II) due 2006................... A-1
Exhibit B Form of Guaranty................................................ B-1
viii
<PAGE>
INDENTURE, dated as of December 10, 1997, between Trump Atlantic
City Associates, a New Jersey partnership (the "Company"), Trump Atlantic
City Funding II, Inc., a Delaware corporation and a wholly-owned subsidiary
of the Company ("Funding II" 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"), Trump Atlantic City Corporation, a
Delaware corporation and a wholly owned subsidiary of the Company ("TACC"),
Trump Casino Services, L.L.C., a New Jersey limited liability company and a
wholly-owned subsidiary of the Company ("TCS"), Trump Communications L.L.C.,
a New Jersey limited liability company and a wholly-owned subsidiary of the
Company ("Trump Communications" and, together with Taj Associates, Plaza
Associates, TACC, TCS and such other persons as may be required from time to
time to execute a Guaranty hereunder, the "Guarantors"); and U.S. 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 Company's
11 1/4% Series A First Mortgage Notes (TAC II) due 2006 and the class of
11 1/4% Series B First Mortgage Notes (TAC II) due 2006 to be exchanged for
the 111/4% Series A First Mortgage Notes (TAC II) 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.
<PAGE>
"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 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.
"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.
"Assignments of Leases and Rents" means collectively, those
Assignments of Leases and Rents dated the date hereof between each of Plaza
Associates and Taj Associates, respectively, and the Collateral Agent as the
same may be amended from time to time in accordance with their terms and, to
the extent applicable, the terms of this Indenture.
"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 Trump Atlantic City Holding, Inc. ("Trump AC
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 Trump AC Holding; (ii) in the case of Funding II, any Authorized
Representative of the Company (with Funding II, 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
2
<PAGE>
designated by the Board of Directors of Trump AC Holding to be an "Authorized
Representative" of such person under this Indenture.
"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 Existing Notes on April
17, 1996 (including proceeds from the exercise of the underwriters' over
allotment option) except for such contributions of proceeds therefrom in
excess of $270 million, less amounts received therefrom by the Company from
the sale of its Qualified Capital Stock to THCR Holdings.
3
<PAGE>
"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.
"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 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 in each case
owned by or leased to Taj Associates which are covered by the Lien of the
Mortgage Documents.
4
<PAGE>
"Casino Sale" shall have the meaning specified in Section 5.15
hereof.
"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 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, 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 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 II (together with any new directors whose election by such Board of
Directors or whose nomination for election by the stockholders of THCR or
Funding II, as applicable, is approved by the Permitted Holder or by a vote
of the 66 2/3% of the directors of THCR or Funding II,
5
<PAGE>
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 II, as applicable, then in office.
"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, Plaza
Associates or Taj Associates which, at the time in question, is subject to
the Liens created by the Mortgage Documents or this Indenture.
"Collateral Agency Agreement" means that agreement dated April 17,
1996 by and among the Issuers, Funding, the Guarantors, the Collateral Agent,
and the Trustee, as well as such other persons as may be permitted to become
parties thereunder pursuant to the terms thereof, as it may be amended from
time to time in accordance with its terms.
"Collateral Agent" shall mean U.S. Bank National Association
(formerly First Bank National Association), as collateral agent under the
Collateral Agency Agreement.
"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
6
<PAGE>
(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.
"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
7
<PAGE>
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 or repurchase of (i) the 11.35% Mortgage Bonds Series A, due 1999
of Trump Taj Mahal Funding, Inc., (ii) the 10 7/8% First Mortgage Notes due
2001 of Trump Plaza Funding, Inc. pursuant to the retirement thereof (and, in
respect of the defeased portion thereof, net losses relating to unamortized
loan costs) or (iii) the 121/2% Pay-in-Kind Notes due 2003 of the Company. 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.
8
<PAGE>
"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.
"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.
"Corporate Trust Office" means the office of the Trustee in the
Borough of Manhattan, The City of New York and 180 East Fifth Street, St.
Paul, Minnesota 55101.
"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.
9
<PAGE>
"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.
"Definitive Securities" means Securities that are in the form of
Security attached hereto as Exhibit A that do not include the information
called for by Footnotes 3 and 6 thereof.
"Depositary" means, with respect to the Securities issuable or
issued in whole or in part in global form, the person specified in Section
2.3 as the Depositary with respect to the Securities, until a successor shall
have been appointed and become such pursuant to the applicable provision of
this Indenture, and, thereafter, "Depositary" shall mean or include such
successor.
"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
Plaza 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 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 each of
the Mortgages.
"Excess Proceeds" shall have the meaning specified in Section 5.15.
10
<PAGE>
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Securities" means the 11 1/4% Series B First Mortgage Notes
(TAC II) due 2006, as supplemented from time to time in accordance with the
terms hereof, to be issued pursuant to this Indenture in connection with the
offer to exchange Exchange Securities for the Initial Securities that may be
made by the Company pursuant to the Registration Rights Agreement that
contain the information referred to in footnotes 1, 2 and 8 to the form of
Security attached hereto as Exhibit A.
"Existing Notes" means the 11 1/4% First Mortgage Notes due 2006
issued by the Company and Funding pursuant to the Existing Note Indenture.
"Existing Note Indenture" means the indenture dated April 17, 1996
between the Company, Funding, the guarantors named therein and First Bank
National Association (now known as U.S. Bank National Association) pursuant
to which the Existing Notes were issued.
"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 each of the
Mortgages.
"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 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 II, 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 II, 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.
11
<PAGE>
"Funding" means Trump Atlantic City Funding, Inc., a co-issuer of
the Existing Notes.
"Funding II" means Trump Atlantic City Funding II, Inc. until a
successor replaces it as an Issuer pursuant to this Indenture, and thereafter
means such successor.
"Funding III" means Trump Atlantic City Funding III, Inc., a
co-issuer of the TAC III Notes.
"Future Collateral Agreements" means collectively those collateral
agreements in favor of the Collateral Agent for the benefit of the Holders
and the other lenders secured thereby pursuant to the Collateral Agency
Agreement, by the Company or any of its Subsidiaries, as the case may be,
including, without limitation, those which are required to be executed and
delivered under Section 5.22.
"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.
"Global Security" means a Security that contains the information
referred to in footnotes 3 and 6 to the form of Security attached hereto as
Exhibit A.
"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.
12
<PAGE>
"Ground Lease" means the ground lease, as amended or supplemented in
accordance with the Mortgage Documents, which expires on December 31, 2078,
pursuant to which Plaza Associates is the current lessee, and Plaza Hotel
Management Company (the "PHMC Lease") is the current lessor.
"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 Lease, 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, TACC, TCS,
Trump Communications and each existing or future subsidiary of the Company
(other than Funding, Funding II and Funding III).
"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 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.
"incurrence" shall have the meaning specified in Section 5.11.
"Incurrence Date" shall have the meaning specified in Section 5.11.
13
<PAGE>
"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, premium, if any, and interest and Liquidated Damages, if any, 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
14
<PAGE>
the extent lawful) interest, if any, 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.
"Initial Purchaser" means Donaldson Lufkin & Jenrette Securities
Corporation.
"Initial Securities" means the 11 1/4% First Mortgage Notes (TAC II)
due 2006, as supplemented from time to time in accordance with the terms
hereof, issued under this Indenture that contain the information referred to
in footnotes 4, 5 and 7 to the form of Security attached hereto as Exhibit A.
"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.
15
<PAGE>
"Issuers" shall mean, collectively, the Company and Funding
II.
"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 by an
Issuer or Guarantor.
"Liquidated Damages" shall have the meaning specified in the
Registration Rights Agreement.
"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.
"Mortgages" means collectively, the Taj Mortgage and the
Plaza Mortgage.
"Mortgage Documents" means the Mortgages, the Assignments of
Leases and Rents, the Security Agreement, the Trademark Security
Agreements, any Future Collateral Agreements and any UCC-1 financing
statements which may be filed in connection therewith.
"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 for this purpose 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,
franchise, 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.
16
<PAGE>
"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).
"Notes" means, collectively, the Initial Securities and, when
and if issued as provided in the Registration Rights Agreement, the
Exchange Securities, which, together with the Guaranty, form the
Securities.
"Note Register" means the list of names and addresses of
Holders held by the Registrar of the Securities.
"Obligation" means any principal, premium or interest
payment, or Liquidated Damages 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.
"Offering" means the Securities being offered and issued by
the Issuers and the Guarantors pursuant to this Indenture.
"Offering Memorandum" means the final Offering Memorandum of
the Issuers dated December 5, 1997, relating to the offering of the
Initial Securities in a transaction exempt from the requirements of
Section 5 of the Securities Act.
"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 each
of the Mortgages.
"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 each
of the Mortgages.
17
<PAGE>
"Parking Parcel Mortgage" shall have the meaning given to it
in the Plaza Mortgage.
"Partners" means each of THCR Holdings and Trump AC 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.
"Partnership Agreement" means the Amended and Restated
Partnership Agreement of the Company, dated April 17, 1996, 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 existing on the Issue Date.
"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
18
<PAGE>
"Permitted Indebtedness"; (d) loans, advances or investments 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.
"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 or referred to in the Mortgages (including
schedules 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 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 existing on the Issue Date, and Liens
securing Refinancing Indebtedness in respect of secured Indebtedness
(including the Securities, provided, that the Securities are secured by
the assets securing such Refinancing Indebtedness in respect of the
Securities on a senior or an equal and ratable basis pursuant to the
terms of the Collateral Agency Agreement) existing on the Issue Date;
(b) the Lien of the Trustee and the Collateral Agent as
provided for in this Indenture and in the Mortgage Documents and the
Lien of the trustee under the TAC III Note Indenture as provided for in
the TAC III Note Indenture and the mortgage documents relating thereto;
(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) INTENTIONALLY LEFT BLANK
(e) INTENTIONALLY LEFT BLANK
19
<PAGE>
(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 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,
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 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 thereof 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;
20
<PAGE>
(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;
(m) Liens on the Equity Interests of the Company or any of
its Subsidiaries in favor of or to the extent required to be pledged
for the benefit of holders of the Senior Notes or of any Refinancing
Indebtedness in respect thereof; and
(n) a notice of intention filed by a mechanic, materialman
or laborer under the New Jersey mechanic's lien law, or a building
contract filed by a contractor or subcontractor thereunder.
"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
II 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.
21
<PAGE>
"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" means Trump Plaza Associates, a
Wholly-owned Subsidiary of the Company.
"Plaza Mortgage" means that certain Indenture of Mortgage and
Security Agreement by Plaza Associates and the Collateral Agent dated
the date hereof in favor of the Holders and the other lenders secured
thereby pursuant to the Collateral Agency Agreement as the same may be
amended from time to time in accordance with its terms..
"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.
"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.
"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 April 17, 1996 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 April 17, 1996 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,
22
<PAGE>
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 pursuant to
Paragraph 5 in the form of Security attached hereto as Exhibit A, which
shall include, without duplication, in each case, accrued and unpaid
interest and Liquidated Damages, if any, to the Redemption Date.
"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.
23
<PAGE>
"Registrar" shall have the meaning specified in Section 2.3.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of the date hereof by and between the Initial
Purchaser, the Issuers and the Guarantors, as such agreement may be
amended, modified or supplemented from time to time in accordance with
the terms thereof.
"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 II 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 pursuant to the Security 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
24
<PAGE>
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 Subsidiary Guarantor.
"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, collectively, the Initial Securities and,
when and if issued as provided in the Registration Rights Agreement,
the Exchange Securities.
"Securities Act" means the Securities Act of 1933, as
amended.
"Securities Custodian" means the Trustee, as custodian with
respect to the Securities in global form, or any successor entity
thereto.
"Security Agreement" means the security agreement dated April
17, 1996 among the Collateral Agent, the Issuers and the Guarantors, as
it may be amended or supplemented from time to time in accordance with
its terms.
"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 May 1, 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
25
<PAGE>
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 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" means those certain mortgages, each as
in effect on the Issue Date, known as the "Rothenberg," "CFS," "Wozo"
and "Arbor" mortgages, securing the Plaza Garage Parcel, the Egg Harbor
Parcel and certain property used or to be used for surface parking, as
more fully described in the Mortgage Documents.
"TAC III Notes" means the 111/4% First Mortgage Notes (TAC
III) due 2006 issued by the Company and Funding III pursuant to the TAC
III Notes Indenture, contemporaneously with the issue of the Notes.
"TAC III Notes Indenture" means the indenture dated the date
hereof between the Company, Funding III, the guarantors named therein
and U.S. Bank National Association pursuant to which the TAC III Notes
were issued.
"TACC" means Trump Atlantic City Corporation, a Wholly-owned
Subsidiary of the Company.
"Taj Associates" means Trump Taj Mahal Associates, a
Wholly-owned Subsidiary of the Company.
"Taj Mortgage" means that certain Indenture of Mortgage and
Security Agreement dated the date hereof between Taj Associates and the
Collateral Agent, for the benefit of the Holders and the other lenders
secured thereby pursuant to the terms of the Collateral Agency
Agreement as it may be amended from time to time in accordance with its
terms.
"Tangible Personal Property" shall have the meaning given to
it in the Mortgages.
"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 (treating the Company as if it were an
individual) for such year as determined in good faith by the Board of
Directors of Funding II and (B) the Tax Percentage and (ii) the product
of (A) the alternative minimum
26
<PAGE>
taxable income attributable to the Company (treating the Company as if
it were an individual) for such year as determined in good faith by the
Board of Directors of Funding II 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, 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.
"TCS" means Trump Casino Services, L.L.C., a Wholly-owned
Subsidiary of the Company.
"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.
"Trademark Security Agreements" means the trademark security
agreements dated April 17, 1996 between Plaza Associates and Taj
Associates, respectively, and the Collateral Agent as they may be
amended or supplemented from time to time in accordance with the terms
thereof.
"Transfer Restricted Securities" means Securities that bear
or are required to bear the legend set forth in Section 2.6.
"Trump" means Donald J. Trump.
27
<PAGE>
"Trump AC Holding" shall mean Trump Atlantic City Holding,
Inc., a Delaware corporation.
"Trump Communications" means Trump Communications, L.L.C., a
wholly-owned Subsidiary of the Company.
"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.
"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, TACC, TCS, Trump Communications, Funding, Funding II, 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 (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 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
28
<PAGE>
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 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.
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.
29
<PAGE>
"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 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 Note
attached as Exhibit A hereto or the form of
30
<PAGE>
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.
Each Global Security shall represent such of the outstanding
Securities as shall be specified therein and each shall represent the
aggregate amount of outstanding Securities that may from time to time
be reduced or increased, as appropriate, to reflect exchanges,
repurchases and redemptions. Any endorsement of a Global Security to
reflect the amount of any increase or decrease in the amount of
outstanding Securities represented thereby shall be made by the Trustee
or the Securities Custodian, at the direction of the Trustee, in
accordance with instructions given by the Holder thereof as required by
Section 2.6.
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 Initial Securities for
original issue in the aggregate principal amount of up to $75,000,000
and shall authenticate Exchange Securities for original issue in the
aggregate principal amount of up to $75,000,000, in each case upon a
written order of the Issuers in the form of an Officers' Certificate;
provided that such Exchange Securities shall be issuable only upon the
valid surrender for cancellation of Initial Securities of a like
aggregate principal amount in accordance with the Registration Rights
Agreement. 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 $75,000,000, 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.
31
<PAGE>
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.
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.
The Issuers initially appoint The Depositary Trust Company
("DTC"), to act as Depositary with respect to the Global Securities.
The Issuers initially appoint the Trustee to act as
Securities Custodian with respect to the Global Securities.
32
<PAGE>
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 (or
Liquidated Damages, if any) 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.
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.
(a) Transfer and Exchange of Definitive Securities.
When Definitive Securities are presented to the Registrar with a
request:
(x) to register the transfer of such Definitive
Securities; or
(y) to exchange such Definitive Securities for an
equal principal amount of Definitive Securities of other authorized
denominations,
the Registrar shall register the transfer or make the exchange as
requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Securities surrendered for
registration of transfer or exchange:
33
<PAGE>
(i) shall be duly endorsed or
accompanied by a written instrument of transfer in
form reasonably satisfactory to the Issuers and the
Registrar, duly executed by the Holder thereof or
his attorney duly authorized in writing; and
(ii) in the case of Transfer Restricted
Securities that are Definitive Securities, shall be
accompanied by the following additional information
and documents, as applicable:
(A) if such Transfer Restricted Security is being
delivered to the Registrar by a Holder for registration in
the name of such Holder, without transfer, a certification
from such Holder to that effect (in substantially the form
set forth on the reverse of the Security); or
(B) if such Transfer Restricted Security is being
transferred to a "qualified institutional buyer" (within the
meaning of Rule 144A promulgated under the Securities Act)
that is aware that any sale of Securities to it will be made
in reliance on Rule 144A under the Securities Act and that is
acquiring such Transfer Restricted Security for its own
account or for the account of another such "qualified
institutional buyer," a certification from such Holder to
that effect (in substantially the form set forth on the
reverse of the Security); or
(C) if such Transfer Restricted Security is being
transferred pursuant to an exemption from registration in
accordance with Rule 144, or outside the United States in an
offshore transaction in compliance with Rule 904 under the
Securities Act, or pursuant to an effective registration
statement under the Securities Act, a certification from such
Holder to that effect (in substantially the form set forth on
the reverse of the Security); or
(D) if such Transfer Restricted Security is being
transferred in reliance on another exemption from the
registration requirements of the Securities Act and with all
applicable securities laws of the States of the United
States, a certification from such Holder to that effect (in
substantially the form set forth on the reverse of the
Security) and an Opinion of Counsel reasonably acceptable to
the Issuers and to the Registrar to the effect that such
transfer is in compliance with the Securities Act.
(b) Restrictions on Transfer of a Definitive Security
for a Beneficial Interest in a Global Security. A Definitive Security
may not be exchanged for a beneficial interest in a Global Security
except upon satisfaction of the requirements set forth below. Upon
receipt by the Trustee of a Definitive Security, duly endorsed or
accompanied by appropriate instruments of transfer, in form
satisfactory to the Trustee, together with:
34
<PAGE>
(i) if such Definitive Security is a
Transfer Restricted Security, certification,
substantially in the form set forth on the reverse
of the Security, that such Definitive Security is
being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under
the Securities Act; and
(ii) whether or not such Definitive
Security is a Transfer Restricted Security, written
instructions directing the Trustee to make, or to
direct the Securities Custodian to make, an
endorsement on the Global Security to reflect an
increase in the aggregate principal amount of the
Securities represented by the Global Security,
then the Trustee shall cancel such Definitive Security and cause, or
direct the Securities Custodian to cause, in accordance with the
standing instructions and procedures existing between the Depositary
and the Securities Custodian, the aggregate principal amount of
Securities represented by the Global Security to be increased
accordingly. If no Global Securities are then outstanding, the Issuers
shall issue and the Trustee shall authenticate a new Global Security in
the appropriate principal amount.
(c) Transfer and Exchange of Global Securities. The
transfer and exchange of Global Securities or beneficial interests
therein shall be effected through the Depositary, in accordance with
this Indenture (including applicable restrictions on transfer set forth
herein, if any) and the procedures of the Depositary therefor.
(d) Transfer of a Beneficial Interest in a Global
Security for a Definitive Security.
(i) Any Person having a beneficial
interest in a Global Security may upon request
exchange such beneficial interest for a Definitive
Security. Upon receipt by the Trustee of written
instructions or such other form of instructions as
is customary for the Depositary, from the
Depositary or its nominee on behalf of any Person
having a beneficial interest in a Global Security,
and upon receipt by the Trustee of a written
instruction or such other form of instructions as
is customary for the Depositary or the Person
designated by the Depositary as having such a
beneficial interest in a Transfer Restricted
Security only, the following additional information
and documents (all of which may be submitted by
facsimile):
(A) if such beneficial interest is being
transferred to the Person designated by the Depositary as
being the beneficial owner, a certification from
35
<PAGE>
the transferor to that effect (in substantially the form set
forth on the reverse of the Security); or
(B) if such beneficial interest is being
transferred to a "qualified institutional buyer" (within the
meaning of Rule 144A promulgated under the Securities Act),
that is aware that any sale of Securities to it will be made
in reliance on Rule 144A under the Securities Act and that is
acquiring such beneficial interest in the Transfer Restricted
Security for its own account or the account of another such
"qualified institutional buyer", a certification to that
effect from the transferor (in substantially the form set
forth on the reverse of the Security); or
(C) if such beneficial interest is being
transferred pursuant to an exemption from registration in
accordance with Rule 144, or outside the United States in an
offshore transaction in compliance with Rule 904 under the
Securities Act, or pursuant to an effective registration
statement under the Securities Act, a certification from the
transferor to that effect (in substantially the form set
forth on the reverse of the Security); or
(D) if such beneficial interest is being
transferred in reliance on another exemption from the
registration requirements of the Securities Act and in
accordance with all applicable securities laws of the States
of the United States, a certification to that effect from the
transferor (in substantially the form set forth on the
reverse of the Security) and an Opinion of Counsel from the
transferee or transferor reasonably acceptable to the Issuers
and to the Registrar to the effect that such transfer is in
compliance with the Securities Act,
then the Trustee or the Securities Custodian, at the direction of
the Trustee, will cause, in accordance with the standing
instructions and procedures existing between the Depositary and
the Securities Custodian, the aggregate principal amount of the
Global Security to be reduced and, following such reduction, the
Issuers will execute and, upon receipt of an authentication order
in the form of an Officers' Certificate, the Trustee's
authenticating agent will authenticate and deliver to the
transferee a Definitive Security in the appropriate principal
amount.
(ii) Definitive Securities issued in
exchange for a beneficial interest in a Global
Security pursuant to this Section 2.6(d) shall be
registered in such names and in such authorized
denominations as the Depositary, pursuant to
instructions from its direct or indirect
participants or otherwise, shall instruct the
Trustee. The Trustee shall deliver such Definitive
Securities to the persons in whose names such
Securities are so registered.
(e) Restrictions on Transfer and Exchange of Global
Securities. Notwithstanding any other provisions of this Indenture
(other than the provisions set forth in
36
<PAGE>
subsection (f) of this Section 2.6), a Global Security may not be
transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary or by the Depositary or any such
nominee to a successor Depositary or a nominee of such successor
Depositary.
(f) Authentication of Definitive Securities in Absence
of Depositary. If at any time:
(i) the Depositary for the Securities
notifies the Issuers that the Depositary is
unwilling or unable to continue as Depositary for
the Global Securities and a successor Depositary
for the Global Securities is not appointed by the
Issuers within ninety days after delivery of such
notice; or
(ii) the Issuers, in its sole
discretion, notifies the Trustee in writing that it
elects to cause the issuance of Definitive
Securities under this Indenture, then the Issuers
will execute, and the Trustee, upon receipt of an
Officers' Certificate requesting the authentication
and delivery of Definitive Securities, will, or its
authenticating agent will, authenticate and deliver
Definitive Securities, in an aggregate principal
amount equal to the principal amount of the Global
Securities, in exchange for such Global Securities.
(g) Legends.
(i) Except as permitted by the following
paragraphs (ii) and (iii) each Security certificate
evidencing the Global Securities and the Definitive
Securities (and all Securities issued in exchange
therefor or substitution thereof) shall bear a
legend in substantially the following form:
"THE NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS,
EXCEPT AS SET FORTH IN THE THIRD SENTENCE HEREOF BY ITS
ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) (A "QIB"), (B) IT IS ACQUIRING THIS NOTE IN
AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER
THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF
REGULA-
37
<PAGE>
TION D UNDER THE SECURITIES ACT) (AN "IAI"), (2) AGREES THAT
IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A)
TO THE ISSUERS OR ANY OF THEIR SUBSIDIARIES, (B) TO A PERSON
WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE
TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR RULE 904
OF THE SECURITIES ACT, (D) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) TO AN
IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE WITH
A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF
WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER
IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS
THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE
ISSUERS THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND
BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUERS)
OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND,
IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION AND (3) AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST
HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION" AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO
THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT.
THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO
REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF
THE FOREGOING."
(ii) Upon any sale or transfer of a
Transfer Restricted Security (including any
Transfer Restricted Security represented by a
Global Security) pursuant to Rule 144 under the Act
or an effective registration statement under the
Securities Act:
(A) in the case of any Transfer Restricted
Security that is a Definitive Security, the Registrar shall
permit the Holder thereof to exchange such Transfer
Restricted Security for a Definitive Security that does not
bear the legend set forth above and rescind any restriction
on the transfer of such Transfer Restricted Security; and
38
<PAGE>
(B) any such Transfer Restricted Security
represented by a Global Security shall not be subject to the
provisions set forth in (i) above (such sales or transfers
being subject only to the provisions of Section 2.6(c)
hereof); provided, however, that with respect to any request
for an exchange of a Transfer Restricted Security that is
represented by a Global Security for a Definitive Security
that does not bear a legend, which request is made in
reliance upon Rule 144, the Holder thereof shall certify in
writing to the Registrar that such request is being made
pursuant to Rule 144 (such certification to be substantially
in the form set forth on the reverse of the Security).
(iii) Any Exchange Securities issued in
connection with the Exchange Offer shall not bear
the legend set forth in (i) above and the Trustee
shall rescind any restriction on the transfer of
such Exchange Securities.
(h) Cancellation and/or Adjustment of Global Security.
At such time as all beneficial interests in a Global Security have
either been exchanged for Definitive Securities, redeemed, repurchased
or cancelled, such Global Security shall be returned to or retained and
cancelled by the Trustee. At any time prior to such cancellation, if
any beneficial interest in a Global Security is exchanged for
Definitive Securities, redeemed, repurchased or cancelled, the
principal amount of Securities represented by such Global Security
shall be reduced and an endorsement shall be made on such Global
Security, by the Trustee or the Securities Custodian, at the direction
of the Trustee, to reflect such reduction.
(i) Obligations with respect to Transfers and Exchanges
of Definitive Securities.
(i) To permit registrations of transfers
and exchanges, the Company shall execute and the
Trustee or any authenticating agent of the Trustee
shall authenticate Definitive Securities and Global
Securities at the Registrar's request.
(ii) No service charge shall be made to
a Holder 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 (fourth
paragraph), 2.10, 3.7, 4.14 (clause 8 of the fifth
paragraph), 9.5, or 10.1 hereof).
(iii) The Registrar shall not be
required to register the transfer of or exchange of
(a) any Definitive Security selected for redemption
in whole or in part pursuant to Article III, except
39
<PAGE>
the unredeemed portion of any Definitive 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 Article X or Section 4.14 hereof or
redemption of Securities pursuant to Article III hereof and
ending at the close of business on the day of such mailing.
(iv) The Trustee shall have no
obligation or duty to monitor, determine or inquire
as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable
law with respect to any transfer of any interest in
any Security (including any transfers between or
among Depositary participants or beneficial owners
of interests in any Global Security) other than to
require delivery of such certificates and other
documentation or evidence as are expressly required
by, and to do so if and when expressly required by
the terms of, this Indenture, and to examine the
same to determine substantial compliance as to form
with the express requirements thereof.
(j) Prior to due presentment for the registration of a
transfer of any Security, the Trustee, any Agent and the Issuers may
deem and treat the Person in whose name any Security is registered as
the absolute owner of such Security for all purposes, and none of the
Trustee, any Agent or the Issuers shall be affected by notice to the
contrary.
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.
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 (including any Security
represented by a Global Security) except those cancelled by it, those
delivered to it for cancellation and those described in this Section
2.8 as not
40
<PAGE>
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 (and Liquidated
Damages, if any) 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.
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
41
<PAGE>
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.
SECTION 2.13 CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers
(if then generally in use), and, if so, the Trustee shall use "CUSIP"
numbers in notices of redemption as a convenience to Holders; provided
that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as
contained in any notice of a redemption and that reliance may be placed
only on the other identification numbers printed on the Securities, and
any such redemption shall not be affected by any defect in or omission
of such numbers. The Company will promptly notify the Trustee of any
change in the "CUSIP" numbers.
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 May 1, 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 and Liquidated Damages, if any, 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.
42
<PAGE>
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 the Securities of
such Holder, in whole or in part, pursuant to, and in accordance with,
a Required Regulatory Redemption. Notwithstanding any other provision
of this Indenture, the Securities of such Holder 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 and
Liquidated Damages, if any, 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 and Liquidated Damages, if any, 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 and
Liquidated Damages, if any, 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
43
<PAGE>
appropriate and in such manner as complies with any applicable
Depositary legal and stock exchange requirements.
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 law 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 and Liquidated Damages, if any, 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
44
<PAGE>
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;
(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 (and Liquidated Damages, if any) 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 (and Liquidated Damages, if any) 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 and Liquidated Damages, if any, 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,
45
<PAGE>
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 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.
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, 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 and the Collateral Agency Agreement, as applicable, as this
Indenture and the Mortgage Documents and the Collateral Agency
Agreement 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 lenders secured thereby
pursuant to the Collateral Agency Agreement. The Collateral is to be
held by the Collateral Agent for the benefit of the Trustee acting for
the equal and ratable benefit of the Holders and for the benefit of any
other Designated Representative, 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
46
<PAGE>
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, Plaza Associates and Taj
Associates warrants and represents that it has caused to be executed
and delivered 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 as
required under the Mortgage Documents. Each of the Issuers, Plaza
Associates and Taj Associates 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 Plaza Associates and
Taj Associates warrants and represents that it has caused to be
executed and delivered, 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 as
required under the Mortgage Documents. Each of Plaza Associates and
Taj Associates 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 security interests under the Mortgage Documents and herein.
(b) The Issuers shall furnish to the Trustee and the
Collateral Agent, concurrently with or promptly after 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 May 1, of each year commencing in 1998, 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
47
<PAGE>
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) 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;
(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;
48
<PAGE>
(vii) alter, repair, replace, change shall the location or
position of and add to any 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 (ii)
through (viii) above shall be held in a Restricted Funds Account,
pending application (which shall be restricted only as provided in
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 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 Issuers request the Trustee to furnish a written
disclaimer, release or quitclaim of any interest in such property under
the Mortgage Documents, the Trustee shall execute (or if appropriate,
request the Collateral Agent to execute) such an instrument prepared by
the Issuers or a Guarantor, upon delivery to the Trustee 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
or the Holders; provided, that the Trustee 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.
49
<PAGE>
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.
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 (to the extent not
granted to the Collateral Agent pursuant to the Collateral Agency
Agreement) 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 or the Trustee. 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
50
<PAGE>
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 4.8 Restricted Funds Account.
The Company or any of its Subsidiaries shall maintain and
establish a Restricted Funds Account as provided in the Security
Agreement, 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 the
other lenders 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 30 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.
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 (and
Liquidated Damages, if any) on the Securities on the dates and in the
manner provided in the Securities and this Indenture. An installment
of principal of or interest (and Liquidated Damages, if any) 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
to the extent necessary to provide the funds to the
51
<PAGE>
Depositary in accordance with the Depositary's procedures 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 (and Liquidated Damages, if any) 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.
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 recession 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.
52
<PAGE>
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
April 17, 1997, 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 April
17, 1996, 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 April 17, 1996 and on or prior to the
date of such proposed Restricted Payment from (i) the sale of its
Qualified Capital Stock (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 prior to or
substantially concurrent with the issuance of the Existing Notes on
April 17, 1996, including the exercise of the underwriters' over
allotment option, except for amounts the Company received therefrom
(including by Capital Contribution) in excess of $270 million) or (ii)
(without duplication) 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 April 17, 1996 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 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 (I) $50.0 million in the aggregate
minus (II) the aggregate amount of any Restricted Payments made
pursuant to clause (w) of the second paragraph of Section 5.3 contained
in the Existing Note Indenture on or prior to the Issue Date, 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
53
<PAGE>
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
the Existing Notes substantially concurrent with a purchase by the
Company of Notes pursuant to a Change of Control Offer or an Asset Sale
Offer, provided, that in the case of a purchase pursuant to an Asset
Sale Offer, such purchase of Notes represents a pro rata application of
the Asset Sale Offer Amount to the Notes and the Existing Notes, based
upon the aggregate principal amount then outstanding. 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 II 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.
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
54
<PAGE>
of the Issuers or any of their Subsidiaries; provided, however, that
neither the Issuers nor their Subsidiaries shall 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 land, leaseholds and the other portions of the
Collateral deemed real estate under applicable law, as constituted on the
Issue Date, subject to certain exceptions, in an amount not less than the
principal amount of the Securities (for the benefit of all holders of
Indebtedness secured pursuant to the Collateral Agency Agreement) 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 Trustee 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 subject to
the Material Instrument Requirement), with no recourse against the Trustee
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. The
Company may effect the insurance required under this Section 5.6 under
blanket and/or umbrella policies covering properties owned or leased by
Affiliates of the Company; provided, that such policies otherwise comply with
this Indenture and the Mortgages.
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 or
55
<PAGE>
has caused to be, kept, observed, performed and fulfilled its
obligations under this Indenture 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 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
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.
56
<PAGE>
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 (or Liquidated Damages, if any) 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 of the
Company) 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 II,
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 April 17, 1996, or (3)
certain existing arrangements as in effect on April 17, 1996 which are
described under the caption "Certain Transactions" in the prospectus
dated April 11, 1996 in connection with the offering of the Existing
Notes.
Funding II 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
57
<PAGE>
"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
November 1, 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, Funding II and the Guarantors may
incur Indebtedness evidenced by the Securities and represented by this
Indenture and the Company and Funding III and the Guarantors may incur
Indebtedness evidenced by the TAC III Notes, the guarantees in favor of
such TAC III Notes and represented by the TAC III Notes Indenture;
(c) INTENTIONALLY LEFT BLANK;
(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, as if incurred
hereunder, any Indebtedness outstanding under Section 5.11(d) of the
Existing Note Indenture as of the Issue Date and any Indebtedness
issued to refinance, refund or replace such Indebtedness) or any
Indebtedness incurred under this Section 5.11(d));
(e) INTENTIONALLY LEFT BLANK;
(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) and (b) of this Section or (except with respect to any
Indebtedness incurred under Section 5.11(d) or 5.11(h) of the Existing
Note Indenture) which is
58
<PAGE>
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, as if
incurred hereunder, any Indebtedness outstanding under Section 5.11(h) of the
Existing Note Indenture as of the Issue Date and any Indebtedness issued to
refinance, replace, or refund such Indebtedness or any Indebtedness incurred
under this clause (h)) 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 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, other
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
59
<PAGE>
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, the Existing
Note Indenture, the TAC III 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) or clause (d),
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.
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
60
<PAGE>
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 is 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.
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, which Asset Sale shall be deemed to
occur upon receipt of such proceeds. All Net Cash Proceeds from an
Event of Loss shall be reinvested or used to repurchase the Securities,
all within the applicable periods and as otherwise provided above in
clause (1) 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 Asset Sale Offer
Amount, plus an amount equal to accrued interest, to the purchase of
all Securities tendered (on a pro rata basis if the Asset Sale Offer
Amount 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 Existing Notes are outstanding at the date of
commencement thereof, then the Asset Sale Offer shall be made
concurrently with an asset sale offer under the Existing Note
Indenture, and the holders which elect to have purchased will be
accepted pro rata in proportion to the aggregate principal amount
thereof; provided, that in so repurchasing such Existing Notes the
Company is in compliance with the provisions of Section 5.3.
61
<PAGE>
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 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 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 Subsidiaries of the
Company; and
(v) the Company 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
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.
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
62
<PAGE>
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 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 and Liquidated Damages, if any), 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
63
<PAGE>
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);
(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, Funding II and Funding III) 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 basis, the Indenture Obligations.
SECTION 5.17 Limitation on Activities of Funding II
Funding II will not conduct any business (including having
any Subsidiary) whatsoever, other than to comply with its obligations
under this Indenture, the Securities and its obligations as a guarantor
of the Existing Notes under the Existing Note Indenture. Funding II
will not incur or otherwise become liable for any Indebtedness (other
than the Securities, the Existing Notes and any renewal, extension,
substitution, refunding, refinancing or replacement
64
<PAGE>
thereof in accordance with this Indenture or the Existing Note
Indenture, as applicable) or make any Restricted Payments.
SECTION 5.18 Rule 144A Information Requirement.
The Company shall furnish to the Holders of the Securities
and prospective purchasers of Securities designated by the Holders of
Transfer Restricted Securities, upon their request, the information
required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act until such time as either the Company has concluded an
offer to exchange the Exchange Securities for the Initial Securities or
a registration statement relating to resales of the Securities has
become effective under the Securities Act. The Company shall also
furnish such information during the pendency of any suspension of
effectiveness of such resale registration statement.
SECTION 5.19 Limitation on Lines of Business.
Neither the Company nor any of its 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 II is a Related
Business. The Company shall own or lease, as applicable, substantially
all of its consolidated assets through the Company, Plaza Associates
and Taj Associates.
SECTION 5.20 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 II, 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 5.21 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
65
<PAGE>
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 April 17, 1996..............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 5.22 Limitation on Status as Investment Company.
None of the Company and its 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 5.23 Future Collateral Agreements.
The Company, Plaza Associates and Taj Associates hereby agree
and consent that 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, Plaza Associates and Taj Associates (including, without
limitation, fee title to any Leased Land) shall immediately upon the
acquisition thereof by the Company, Plaza Associates and Taj
Associates, 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, Plaza Associates and Taj Associates.
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
necessary, including as the Collateral Agent shall reasonably require,
for accomplishing the express purposes of the Indenture and the
Mortgage Documents (including the preceding sentence).
SECTION 5.24 Limitations on Use of Proceeds from the
Offering.
The Company and its Subsidiaries shall use the proceeds from
the Offering (after deducting discounts and commissions and reasonable
expenses of the Offering) only for further acquisitions, renovations or
construction of Improvements with respect to, or related to (including
related demolitions), the Casino Hotels or the financing of equipment
to be used therein, and for no other purpose.
ARTICLE VI
SUCCESSORS
66
<PAGE>
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 II, 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 II,
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 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.
Funding II 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)
67
<PAGE>
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 II, 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 II,
as applicable, and the Company or Funding II 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):
(a) the failure by the Issuers to pay any installment of
interest (including any defaulted interest) or Liquidated Damages, if any, 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
68
<PAGE>
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 II 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 II 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;
(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
69
<PAGE>
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 sum due under the Taj
Mortgage or the Plaza Mortgage, and the continuance of such default for a
period of 30 days after there has been given to the Issuers and respective
Mortgagor a notice specifying such default and requiring it to be remedied
and stating that such notice is a "Notice of Default" under the respective
Mortgage; or
(k) default in the performance, or breach, of any covenant of
Taj Associates or Plaza Associates in the Taj Mortgage or the Plaza Mortgage,
as applicable (other than a covenant, a default in the performance or breach
of which is elsewhere in the applicable Mortgage specifically dealt with) in
any material respect, and continuance of such default or breach for a period
of 30 days after there has been given to Taj Associates or Plaza Associates,
as applicable, a notice specifying such default or breach and requiring it to
be remedied and stating that such notice is a "Notice of Default" under the
Taj Mortgage or the Plaza Mortgage, as applicable, 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) Taj Associates or Plaza Associates, as applicable, delivers
an Officers' Certificate to the Collateral Agent within such 30-day period
stating (A) the applicability of the provisions of clause (i) to such default
or breach, (B) Taj Associates' or Plaza Associates', as applicable, intention
to remedy such default or breach with reasonable diligence and (C) the steps
which Taj Associates or Plaza Associates, as applicable, has undertaken or
intends to undertake to remedy such default or breach and (iii) Taj
Associates or Plaza Associates, as applicable, delivers to the Collateral
Agent additional Officers' Certificates every 30 days thereafter updating the
information contained in the certificate described in clause (ii), in which
case such 30-day period shall be extended for such further period of time
(but in no event more than 60 days after the last day of such 30-day period)
as may reasonably be required to cure the same, provided that Taj Associates
or Plaza Associates, as applicable, is then proceeding and thereafter
continues to proceed to cure the same with reasonable diligence; or
(l) default by Taj Associates or Plaza
Associates under any of the terms of any Facility Lease forming a portion of
the Collateral other than the Rothenberg Lease
70
<PAGE>
(as defined therein) 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 Taj Associates or Plaza Associates under any of
the terms of the Egg Harbor Mortgage or the Parking Parcel 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) if any representation or warranty of Taj Associates or
Plaza Associates, as applicable, set forth in the respective Mortgage or in
any notice, certificate, demand or request delivered to the Collateral Agent
pursuant to the respective Mortgage shall prove to be incorrect as of the
time when made and which has or could reasonably be expected to have a
material adverse effect on the business, financial condition or operations of
the Company or its Subsidiaries, taken as a whole; or
(o) the declaration or payment of any dividend or other
distribution in respect of Equity Interests of any Guarantor in the event
that there shall exist a "default" or "event of default" (as defined therein)
under the Indenture governing the Senior Notes or any Refinancing
Indebtedness in respect thereof; or
(p) an event of default under any of the Mortgage Documents
(without duplication of those items otherwise recited in this Section 7).
An Event of Default shall not be deemed to exist by reason of any
event under paragraph (j) or (l) through (n) above which Taj Associates or
Plaza Associates, as applicable, is contesting in compliance with the
provisions of Section 5.09 of the respective 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 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
71
<PAGE>
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
(and Liquidated Damages, if any) 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 and Liquidated Damages,
if any, 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
(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.
72
<PAGE>
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
Liquidated Damages, 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 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 and Liquidated Damages, if any) shall be entitled and empowered, by
intervention in such proceeding or otherwise to take any and all actions
under the TIA, including
73
<PAGE>
(i) to file and prove a claim for the whole
amount of principal (and premium, if any) and interest (and
Liquidated Damages, if any) 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 (or Liquidated Damages, if any), upon
presentation of the 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;
74
<PAGE>
SECOND: To the Holders in payment of the amounts then
due and unpaid for principal of, premium (if any) and interest
(and Liquidated Damages, if any) 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 (and Liquidated Damages, if any),
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 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.
75
<PAGE>
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 (and Liquidated Damages, if
any) 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,
(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
76
<PAGE>
(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 (or Liquidated Damages, if any)
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 (or Liquidated Damages, if any) on, any Security on or after
the Maturity of such Security.
77
<PAGE>
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.
78
<PAGE>
(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.
79
<PAGE>
(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
80
<PAGE>
Default or an Event of Default in payment of principal (or premium, if
any) of, or interest (or Liquidated Damages, if any) on, 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 Sections 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
81
<PAGE>
(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' 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
82
<PAGE>
for any settlement made without their written consent. The Issuers need not
reimburse any expense 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
83
<PAGE>
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.
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;
SATISFACTION AND DISCHARGE
SECTION 9.1 Option to Effect Legal Defeasance or Covenant
Defeasance.
84
<PAGE>
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 (insofar as they relate to the Securities or the Guaranties) and
the Liens of the Collateral Agent thereunder shall be deemed to have been
paid and discharged, 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 (and Liquidated Damages,
if any) 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, 5.21, 5.23, 5.24 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 Collateral
Agent under the Mortgage Documents (insofar as they relate to the Securities
or the Guaranties) shall be deemed to have been paid and discharged, but,
except as specified above, the remainder of this Indenture and such
Securities shall be unaffected
85
<PAGE>
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
(and Liquidated Damages, if any) 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;
86
<PAGE>
(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 (and Liquidated Damages,
if any), 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
(and Liquidated Damages, if any) on any Security and remaining unclaimed for
two years after such principal or interest (and Liquidated Damages, if any)
has become due and payable shall be paid to the Issuers on their
87
<PAGE>
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 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.
SECTION 9.8 Satisfaction and Discharge of Indenture.
This Indenture shall, upon Company Request, cease to be of further
effect (except as to surviving rights of registration of transfer or exchange
of Securities herein expressly provided for) and the Trustee, on demand of
and at the expense of the Company and the Guarantors, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture when
all Securities theretofore authenticated and delivered (other than (i)
Securities which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 2.7 and (ii) Securities for whose
payment money has theretofore been deposited in trust or segregated and held
in trust by the Company and thereafter repaid to the Company or discharged
from such trust, as provided in Section 9.6) have been delivered to the
Trustee for cancellation; the Issuers and the Guarantors have paid or caused
to be paid all other sums payable hereunder by the Issuers and the
Guarantors; and the Issuers and the Guarantors have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel each stating that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Issuers and the Guarantors to the Trustee under
Section 7.6 shall survive.
88
<PAGE>
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 Mortgage
Documents, 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;
(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.
(7) to provide for the issuance and
authorization of the Exchange Securities.
The terms of any document entered into pursuant to this
Section shall be subject to prior approval, if required, of any
applicable Gaming Authority.
89
<PAGE>
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
Mortgage Documents, 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 Mortgage Documents,
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 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
90
<PAGE>
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.
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
91
<PAGE>
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 (and Liquidated Damages, if
any) 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.
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.
92
<PAGE>
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 and Liquidated Damages, 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 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;
(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;
93
<PAGE>
(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 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;
94
<PAGE>
(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 (and
Liquidated Damages, if applicable) 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 (and
Liquidated Damages, if applicable) 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 and Liquidated
Damages, if any) 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 Liquidated Damages, if
any), 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.
95
<PAGE>
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 II, Inc.:
Trump Atlantic City Funding II, Inc.
2500 Boardwalk
Atlantic City, New Jersey 08401
Attention: Corporate Secretary
Telephone: (609) 441-6000
if to Trump Plaza Associates:
Trump Plaza Associates
2500 Boardwalk
Atlantic City, New Jersey 08401
Attention: Corporate Secretary
Telephone: (609) 441-6000
96
<PAGE>
if to Trump Taj Mahal Associates:
Trump Taj Mahal Associates
1000 Boardwalk
Atlantic City, New Jersey 08401
Attention: Corporate Secretary
Telephone: (609) 449-1000
if to Trump Atlantic City Corporation:
Trump Atlantic City Corporation
1000 Boardwalk
Atlantic City, New Jersey 08401
Attention: Corporate Secretary
Telephone: (609) 449-1000
if to Trump Casino Services, L.L.C.:
Trump Casino Services, L.L.C.
1000 Boardwalk
Atlantic City, New Jersey 08401
Attention: Corporate Secretary
Telephone: (609) 449-1000
if to Trump Communications, L.L.C.:
Trump Communications, L.L.C.
1000 Boardwalk
Atlantic City, New Jersey 08401
Attention: Corporate Secretary
Telephone: (609) 499-1000
if to the Trustee:
U.S. 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
97
<PAGE>
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.
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
98
<PAGE>
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.
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
99
<PAGE>
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.
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
100
<PAGE>
hereof.
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 and the Collateral
Agency Agreement with respect to the Collateral will be subject to the
Gaming Regulations.
SECTION 12.16 Registration Rights.
Certain Holders of the Securities may be entitled to certain
registration rights with respect to such Securities pursuant to, and
subject to the terms of, the Registration Rights Agreement.
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 on a senior basis, which
guarantee (in the case of Plaza Associates and Taj Associates) shall be
secured by a perfected security interest in all of the Collateral owned
by Plaza Associates and Taj Associates as applicable pursuant to the
Mortgage Documents (collectively, 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 (and Liquidated Damages,
if any) 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 (and Liquidated Damages, 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
101
<PAGE>
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 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
102
<PAGE>
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 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.
103
<PAGE>
(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.
(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 in form reasonably satisfactory to the
Trustee, pursuant to which such Person shall unconditionally guarantee,
on a senior basis, all of such Guarantor's obligations under such
Guarantor's guarantee and this Indenture 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.
104
<PAGE>
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.
105
<PAGE>
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 ATLANTIC CITY HOLDING,
INC.,
its general partner
By: /s/ Nicholas L. Ribis
----------------------------------------
Name: Nicholas L. Ribis
Title: Vice President
Attest: /s/ John P. Burke
------------------
John P. Burke
TRUMP ATLANTIC CITY FUNDING II, INC.
By: /s/ Nicholas L Ribis
----------------------------------------
Name: Nicholas L. Ribis
Title: Chief Executive officer and President
Attest: /s/ John P. Burke
------------------
John P. Burke
<PAGE>
U.S. BANK NATIONAL
ASSOCIATION, as Trustee
By: /s/ S. Christopharson
--------------------------
Name: S. Christopharson
Title: Vice President
<PAGE>
GUARANTORS
TRUMP PLAZA ASSOCIATES
By: TRUMP ATLANTIC CITY CORPORATION,
its general partner
By: /s/ Nicholas L. Ribis
--------------------------
Name: Nicholas L. Ribis
Title: Vice President
Attest: /s/ John P. Burke
------------------
John P. Burke
TRUMP TAJ MAHAL ASSOCIATES
By: TRUMP ATLANTIC CITY CORPORATION,
its general partner
By: /s/ Nicholas L. Ribis
--------------------------
Name: Nicholas L. Ribis
Title: Vice President
Attest: /s/ John P. Burke
------------------
John P. Burke
TRUMP ATLANTIC CITY CORPORATION
By: /s/ Nicholas L. Ribis
--------------------------
Name: Nicholas L. Ribis
Title: Vice President
Attest: /s/ John P. Burke
------------------
John P. Burke
TRUMP CASINO SERVICES, L.L.C.
By: TRUMP ATLANTIC CITY CORPORATION,
member
By: /s/ Nicholas L. Ribis
--------------------------
Name: Nicholas L. Ribis
Title: Vice President
Attest: /s/ John P. Burke
------------------
John P. Burke
<PAGE>
TRUMP COMMUNICATIONS, L.L.C.
By: TRUMP ATLANTIC CITY CORPORATION,
member
By: /s/ Nicholas L. Ribis
--------------------------
Name: Nicholas L. Ribis
Title: Vice President
Attest: /s/ John P. Burke
------------------
John P. Burke
<PAGE>
EXHIBIT A
[FORM OF SECURITY]
TRUMP ATLANTIC CITY ASSOCIATES
TRUMP ATLANTIC CITY FUNDING II, INC.
11 1/4% SERIES A (1) FIRST MORTGAGE NOTES (TAC II) DUE 2006
CUSIP No. ______________
No. $
Trump Atlantic City Associates, a New Jersey partnership, and
Trump Atlantic City Funding II, Inc., a Delaware corporation
(hereinafter collectively called the "Issuers," which term includes any
successors under the Indenture hereinafter referred to), for value
received, hereby promises to pay to _____, or registered assigns, the
principal sum of _____ Dollars, on May 1, 2006.
Interest Payment Dates: May 1 and November 1
Record Dates: April 15 and October 15
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.
_________
1 Series A should be replaced with Series B in the Exchange
Securities.
<PAGE>
IN WITNESS WHEREOF, the Issuers has caused this Instrument to
be duly executed under their respective corporate seals .
Dated:
TRUMP ATLANTIC CITY ASSOCIATES
By: TRUMP ATLANTIC CITY HOLDING, INC.,
its managing general partner
Attest: By:
----------------------------------
Name:
Title:
- --------------------------
Secretary
TRUMP ATLANTIC CITY FUNDING II, INC.
By:
----------------------------------
Name:
Title:
Attest:
---------------------
Name:
Title:
<PAGE>
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the
within-mentioned Indenture.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By
---------------------------------
Authorized Signatory
Dated:
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
TRUMP ATLANTIC CITY FUNDING II, INC.
11 1/4% Series A (2) First Mortgage Notes (TAC II) due 2006
Unless and until it is exchanged in whole or in part for
Securities in definitive form, this Security may not be transferred
except as a whole by the Depositary to a nominee of the Depositary or
by a nominee of the Depositary to the Depositary or another nominee of
the Depositary or by the Depositary or any such nominee to a successor
Depositary or a nominee of such successor Depositary. Unless this
certificate is presented by an authorized representative of The
Depositary Trust Company (55 Water Street, New York, New York) ("DTC"),
to the Company or its agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of Cede &
Co. or such other name as requested by an authorized representative of
DTC (and any payment is made to Cede & Co. or such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an
interest herein.(3)
"THE NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS,
EXCEPT AS SET FORTH IN THE THIRD SENTENCE HEREOF BY ITS
ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) (A "QIB"), (B) IT IS ACQUIRING THIS NOTE IN
AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER
THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT) (AN "IAI"), (2) AGREES
THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE
EXCEPT (A) TO THE ISSUERS OR ANY OF THEIR SUBSIDIARIES, (B)
TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN
A TRANSACTION
_________
2 Series A should be replaced with Series B in the Exchange Securities.
3 This paragraph should only be added if the Security is issued in global
form.
<PAGE>
MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION
MEETING THE REQUIREMENTS OF RULE 903 OR RULE 904 OF THE SECURITIES
ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER
THE SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER,
FURNISHES THE TRUSTEE WITH A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE
(THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH
TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS
THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUERS THAT
SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE
TO THE ISSUERS) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO
WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO
THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE
INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING."
1. Interest.
Trump Atlantic City Associates, a New Jersey partnership, and Trump
Atlantic City Funding II, 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 111/4% 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 May 1 and November 1, commencing May 1, 1998, to the person in
whose name this Security is registered at the close of business on April 15 or
October 15, 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.
<PAGE>
The Issuers shall pay interest (and Liquidated Damages, if any) 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 (and Liquidated Damages, if any) 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, U.S. 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
December 10, 1997 (the "Indenture"), between the Issuers, the Guarantors named
therein and the Trustee. Capitalized 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 $75,000,000.
5. Redemption.
The Securities are redeemable in whole or from time to time in part at
any time on and after May 1, 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 May 1 of each of the
years indicated below, in each case, together with any accrued but unpaid
interest to the Redemption Date. Except as provided in the next paragraph, the
Securities may not otherwise be redeemed at the option of the Issuers.
<PAGE>
12-Month
Period Beginning Redemption Price
May 1, 2001 105.625%
May 1, 2002 103.750%
May 1, 2003 101.875%
May 1, 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 or by
order of any Gaming Authority).
Any redemption of the Securities shall comply with Article III of the
Indenture.
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 law 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.
<PAGE>
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 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 therefor), 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, as applicable, 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 aggre-
<PAGE>
gate 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.
14. Security.
In order to secure the obligations under the Indenture, the Issuers,
Plaza Associates, Taj Associates 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, Plaza Associates and Taj
Associates.
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, (and Liquidated Damages, if any) to the Asset Sale Purchase Date.
<PAGE>
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.
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 II, 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
<PAGE>
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.
<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 name appears on
the other side of this Security)
Signature Guarantee (*)
_________
(*) NOTICE: The Signature must be guaranteed by an Institution which is a
member of one of the following recognized signature Guarantee Programs:
(i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New
York Stock Exchange Medallion Program (MNSP); (iii) The Stock Exchange
Medallion Program (SEMP); or (iv) in such other guarantee program
acceptable to the Trustee.
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Issuers
pursuant to Section 4.14 or Article X of the Indenture, check the appropriate
box: Section 4.14 Article X.
If you want to elect to have only part of this Security purchased by
the Issuers pursuant to Section 4.14 or Article X of the Indenture, as the case
may be, state the amount you want to be purchased: $________.
Date: ________________ Signature: ______________________________________
(Sign exactly as your name appears
on the other side of this Security)
Signature Guarantee (**)
_________
(**) NOTICE: The Signature must be guaranteed by an Institution which is a
member of one of the following recognized signature Guarantee Programs:
(i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The
New York Stock Exchange Medallion Program (MNSP); (iii) The Stock
Exchange Medallion Program (SEMP); or (iv) in such other guarantee
program acceptable to the Trustee.
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES (6)
The following exchanges of a part of this Global Security for
Definitive Securities have been made:
<TABLE>
<CAPTION>
Amount of Amount of Signature of
decrease in increase in Principal Amount authorized
Principal Principal of this Global officer of
Amount Amount of this Security following Trustee or
Date of of this Global Global such decrease (or Securities
Exchange Security Security increase) Custodian
- -------- -------------- -------------- ------------------- ------------
<S> <C> <C> <C> <C>
</TABLE>
_________
(6) This schedule should only be added if the Security is issued in global
form.
<PAGE>
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF
TRANSFER RESTRICTED SECURITIES (7)
Re: 11 1/4% SERIES A FIRST MORTGAGE NOTES (TAC II) DUE 2006 OF TRUMP ATLANTIC
CITY ASSOCIATES AND TRUMP ATLANTIC CITY FUNDING II, INC.
This Certificate relates to $______ principal amount of Securities held in
(check applicable space) _____ book-entry or ______ definitive form by
_________________ (the "Transferor").
The Transferor (check applicable box):
/ / has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Security held by the Depositary a Security
or Securities in definitive, registered form of authorized denominations and an
aggregate principal amount equal to its beneficial interest in such Global
Security (or the portion thereof indicated above); or
/ / has requested the Trustee by written order to exchange or register the
transfer of a Security or Securities.
/ / In connection with such request and in respect of each such Security,
the Transferor does hereby certify that Transferor is familiar with the
Indenture relating to the above-captioned Securities and as provided in Section
2.6 of such Indenture, the transfer of this Security does not require
registration under the Securities Act (as defined below) because:
/ / Such Security is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.6(a)(ii)(A) or Section
2.6(d)(i)(A) of the Indenture).
/ / Such Security is being transferred to a "qualified institutional
buyer" (within the meaning of Rule 144A promulgated under the Securities Act),
that is aware that any sale of Securities to it will be made in reliance on Rule
144A under the Securities Act and that is acquiring such Transfer Restricted
Security for its own account, or for the account of another such "qualified
institutional buyer" (in satisfaction of Section 2.06(a)(ii)(B) or Section
2.06(d)(i)(B) of the Indenture).
/ / Such Security is being transferred pursuant to an exemption from
registration in accordance with Rule 144, or outside the United States in an
Offshore Transaction in compliance with Rule 904 under the Securities Act, or
pursuant to an effective registration statement under the Securities Act (in
satisfaction of Section 2.6(a)(ii)(C) or Section 2.6(d)(i)(C) of the Indenture).
__________
(7) This Certificate shall be included only for Initial Securities.
<PAGE>
Such Security is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Securities Act and
in accordance with applicable securities laws of the states of the United
States, other than as provided in the immediately preceding paragraph. An
Opinion of Counsel to the effect that such transfer does not require
registration under the Securities Act accompanies this Certificate (in
satisfaction of Section 2.6(a)(ii)(D) or Section 2.6(d)(i)(D) of the Indenture).
___________________________________
[INSERT NAME OF TRANSFEROR]
By:________________________________
Date: _____________________________
<PAGE>
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF
SECURITIES (8)
Re: 11 1/4% SERIES B FIRST MORTGAGE NOTES (TAC II) DUE 2006.
This Certificate relates to $______ principal amount of Securities
held in (check applicable box) _____ book-entry or ______ definitive form by
_____ (the "Transferor").
The Transferor (check applicable box):
/ / has requested the Trustee by written order to deliver in exchange
for its beneficial interest in the Global Security held by the Depositary a
Security or Securities in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its beneficial interest
in such Global Security (or the portion thereof indicated above); or
/ / has requested the Registrar by written order to exchange or
register the transfer of a Security or Securities.
_________
(8) This certificate shall be included only for the Exchange Securities.
<PAGE>
EXHIBIT B
FORM OF GUARANTY
For value received, _______________, a ____________ corporation/partnership,
hereby irrevocably, unconditionally guarantees, on a senior basis, to the Holder
of any 111/4% First Mortgage Note (TAC II) due 2006 (the "Security") of Trump
Atlantic City Associates and Trump Atlantic City Fund ___, Inc. (collectively,
the "Issuers") upon which this Guaranty is endorsed, the due and punctual
payment as set forth in the Indenture (the "Indenture") among the Issuers, the
guarantors named therein and U.S. Bank National Association, as trustee (the
'Trustee") 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:_________________________________
<PAGE>
EXHIBIT 5
[LETTERHEAD OF WILLKIE FARR & GALLAGHER]
March 13, 1998
Trump Atlantic City Associates
Trump Atlantic City Funding II, Inc.
2500 Boardwalk
Atlantic City, New Jersey 08401
Re: Registration Statement on Form S-4
File No. 333-43979
-----------------------------------
Dear Ladies and Gentlemen:
We are counsel for Trump Atlantic City Associates, a New Jersey general
partnership ("Trump AC"), and Trump Atlantic City Funding II, Inc., a Delaware
corporation ("Funding II") and together with Trump AC, the "Issuers"), and have
acted as such in connection with various legal matters relating to the filing of
a Registration Statement on Form S-4 (File No. 333-43979) ("Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
covering up to $75,000,000 principal amount of outstanding 11 1/4 First Mortgage
Notes (TAC II) due 2006, Series B (the "Exchange Notes") offered in exchange for
up to $75,000,000 principal amount of outstanding 11 1/4 First Mortgage Notes
(TAC II) due 2006, Series A, originally issued and sold in reliance upon an
exemption from registration under the Securities Act (the "Original Notes").
The Original Notes were issued under, and the Exchange Notes are to be
issued under, an indenture (the "Note Indenture"), dated December 10, 1997,
entered into by and among the Issuers, as issuers, U.S. Bank National
Association, as trustee (the "Trustee"), and Trump Atlantic City Corporation, a
Delaware corporation ("TACC"), Trump Plaza Associates, a New Jersey general
partnership ("Plaza Associates"), Trump Taj Mahal Associates, a New Jersey
general partnership ("Taj Associates"), Trump Casino Services, L.L.C., a New
Jersey limited liability corporation ("TCS"), and Trump Communications, L.L.C.,
a New Jersey limited liability corporation, as guarantors ("Trump
Communications" and, together with TACC, Plaza Associates, Taj Associates and
TCS, the "Guarantors"). The exchange will be made pursuant to an exchange offer
contemplated by the Registration Statement (the "Exchange Offer"). Capitalized
terms used but not otherwise defined herein shall have the meanings assigned to
them in the Registration Statement.
<PAGE>
Trump Atlantic City Associates
Trump Atlantic City Funding II, Inc.
March 13, 1998
Page 2
In so acting, we have examined originals or copies, certified or
otherwise, identified to our satisfaction, of the Amended and Restated
Partnership Agreement of Trump AC, the Certificate of Incorporation of Funding
II, the By-Laws of Funding II, the Certificate of Incorporation of TACC, as
amended, the By-Laws of TACC, Plaza Associates' Third Amended and Restated
Partnership Agreement, Taj Associates' Second Amended and Restated Partnership
Agreement, the Certificate of Formation of TCS, the Operating Agreement of TCS,
as amended, the Certificate of Formation of Trump Communications, the Operating
Agreement of Trump Communications and the relevant minutes of the corporate or
partnership proceedings of Trump AC, Funding II, TACC, Plaza Associates, Taj
Associates, TCS, Trump Communications and such documents, corporate records,
certificates or other instruments as in our judgment were necessary or
appropriate to enable us to render the opinions expressed below. As to certain
factual matters, we have relied upon certificates of public officials,
certificates and statements (including representations and warranties as to
facts set forth in any of the documents referred to herein) of officers of the
Issuers and the Guarantors, and such other documents as we have deemed necessary
or appropriate for this opinion. In such examinations, we have assumed the
accuracy of all documents and information furnished to us, the genuineness of
all documents submitted to us as originals and the conformity to originals of
all documents submitted to us as certified, conformed or photostatic copies
thereof, as well as the genuineness of all signatures on all such documents.
Based on the foregoing, we are of the opinion that:
(1) The execution and delivery of the Note Indenture has been duly
authorized by Funding II and by Trump Atlantic City Holding, Inc., a Delaware
corporation ("TACH"), as a general partner of Trump AC, and by each of the
Guarantors, and the Note Indenture constitutes a legal, valid and binding
obligation enforceable against the Issuers and the Guarantors in accordance with
the terms thereof , except insofar as enforceability thereof may be limited by
(a) usury, bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally, (b) general principles of equity,
(c) the Casino Control Act of the State of New Jersey, the regulations adopted
pursuant thereto, or rulings of the New Jersey Casino Control Commission, as
such laws, regulations or rulings may now or hereafter be in effect or (d) other
state gaming laws, the regulations adopted pursuant thereto, or rulings from
other state gaming authorities, as such laws, regulations or rulings may now or
hereafter be in effect;
(2) The Exchange Notes have been duly authorized by the Issuers and,
when duly executed by the proper officers of the Issuers, duly authenticated by
the Trustee and issued by the Issuers in accordance with the terms of the Note
Indenture and
<PAGE>
Trump Atlantic City Associates
Trump Atlantic City Funding II, Inc.
March 13, 1998
Page 3
the Exchange Offer, will constitute legal, valid and binding
obligations of the Issuers, will be entitled to the benefits of the Note
Indenture and will be enforceable against the Issuers in accordance with their
terms, except as enforcement thereof may be limited by (a) usury, bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally, (b) general principles of equity, (c) the Casino
Control Act of the State of New Jersey, the regulations adopted pursuant
thereto, or rulings of the New Jersey Casino Control Commission, as such laws,
regulations or rulings may now or hereafter be in effect or (d) other state
gaming laws, the regulations adopted pursuant thereto, or rulings from other
state gaming authorities, as such laws, regulations or rulings may now or
hereafter be in effect; and
(3) The guarantees of the respective Guarantors under the Note
Indenture (the "Guarantees") have been duly authorized by the respective
Guarantors and, when the Guarantees have been duly executed by the proper
officers of the respective Guarantors and the Exchange Notes have been duly
executed by the proper officers of the Issuers, duly authenticated by the
Trustee and issued by the Issuers in accordance with the terms of the Note
Indenture and the Exchange Offer, the Guarantees will constitute legal, valid
and binding obligations of the Guarantors, will be entitled to the benefits of
the Note Indenture and will be enforceable against the respective Guarantors in
accordance with their terms, except as enforcement thereof may be limited by (a)
usury, bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally, (b) general principles of equity, (c) the
Casino Control Act of the State of New Jersey, the regulations adopted pursuant
thereto, or rulings of the New Jersey Casino Control Commission, as such laws,
regulations or rulings may now or hereafter be in effect or (d) other state
gaming laws, the regulations adopted pursuant thereto, or rulings from other
state gaming authorities, as such laws, regulations or rulings may now or
hereafter be in effect.
No person or entity other than you may rely or claim reliance upon this
opinion. This opinion is limited to the matters stated herein and no opinion is
implied or may be inferred beyond the matters expressly stated. We call to your
attention that we are not admitted to practice, do not purport to be experts in
the laws of, and, accordingly, do not express an opinion as to matters arising
under the laws of any jurisdiction, other than the laws of the State of New
York, the Delaware General Corporation Law and the Federal laws of the United
States. We are not admitted to practice law in the State of New Jersey.
We hereby consent to being named as counsel for the Issuers in the
Registration Statement and under the caption "Legal Matters" in the Prospectus
included in the Registration Statement
<PAGE>
Trump Atlantic City Associates
Trump Atlantic City Funding II, Inc.
March 13, 1998
Page 4
and to the filing of this opinion as an exhibit to the Registration Statement.
Very truly yours,
/s/WILLKIE FARR & GALLAGHER
<PAGE>
Exhibit 8
[Letterhead of Willkie Farr & Gallagher]
March 11, 1998
Trump Atlantic City Associates
Trump Atlantic City Funding II, Inc.
2500 Boardwalk
Atlantic City, New Jersey 08401
Ladies and Gentlemen:
You have requested our opinion as tax counsel to Trump Atlantic City Associates
concerning certain of the federal income and estate tax consequences in
connection with the registration statement on Form S-4, originally filed with
the Securities and Exchange Commission (the "SEC") on January 9, 1998
(No. 333-43979) (which registration statement is hereinafter referred to as
the "Registration Statement"). Capitalized terms used herein and not otherwise
defined shall have the meanings set forth in the Registration Statement.
In rendering this opinion, we have reviewed the Registration Statement and such
other documents that we deemed relevant. We have made inquiry as to the
underlying facts that we considered to be relevant to the conclusion set forth
in this letter. Further, the opinion expressed in this letter is based upon
certain factual representations set forth in the Registration Statement and the
assumption that the transactions will occur as described therein. We have no
reason to believe that these representations and facts are not true but have not
independently attempted to verify them. To the extent that we have examined and
relied upon original documents or copies thereof in rendering the opinion
expressed below, we have assumed (i) the authenticity of all documents submitted
to us as originals, (ii) the conformity to authentic original documents of all
documents submitted to us as copies, and (iii) the genuineness of all
signatures.
Based on such facts, assumptions and representations and our review of such
documents and information as we believed appropriate, and subject to the
qualifications stated below, as of the date hereof, we are of the opinion that,
under current law, the material federal income and estate tax consequences
resulting from the Exchange Offer to a holder of Trump Atlantic City Associates
or Trump Atlantic City Funding II, Inc. will generally be as is described in the
discussion of "Federal Income Tax Considerations" in the Registration Statement.
<PAGE>
Trump Atlantic City Associates
Trump Atlantic City Funding II, Inc.
Page 2
This opinion is given as of the date hereof and is based on the Internal Revenue
Code of 1986, as amended, regulations, rulings and decisions in effect as of the
date hereof, all of which are subject to change (possibly with retroactive
effect) by legislation, administrative action or judicial decision. Any such
change may adversely affect or render inaccurate the opinion expressed herein.
Further, any variation or difference in the facts from those set forth in the
Registration Statement may affect the conclusion stated herein.
No opinion is expressed as to any matter not discussed herein.
This opinion is furnished to you solely for use in connection with the
Registration Statement. We hereby consent to the filing of this opinion as an
Exhibit to the Registration Statement and to the use of our name in the
Registration Statement and in the proxy statement-prospectus included therein.
Very truly yours,
/s/ Willkie Farr & Gallagher
2
<PAGE>
EXHIBIT 10.71.1
[Letterhead of Trump Taj Mahal Casino Resort]
May 27, 1997
Mr. Larry Clark
10 Clipper Court
Abescon, New Jersey 08201
Dear Larry:
This letter will serve as a Second Amendment to the Employment Agreement dated
December 10, 1993, and amended October 10, 1995, entered into between Trump Taj
Mahal Associates d/b/a Trump Taj Mahal Casino Resort and you ("the Agreement").
TTMA shall extend your Agreement, commencing June 1, 1997 and expiring June 30,
2001 ("the Expiration Date").
Paragraph 2 of the Agreement is hereby amended to provide for an annual base
salary of Three Hundred and Fifty Thousand ($350,000.00) Dollars. You shall
also receive a bonus upon signing in the amount of Fifty Thousand ($50,000.00)
Dollars (net amount after payment of taxes).
Paragraph 5b of the Agreement is hereby amended to provide a company provided
car in lieu of the car allowance, in an amount not to exceed Ten Thousand
($10,000.00) Dollars per year, commencing immediately.
Paragraph 5 of the First Amendment shall remain in effect, whereby TTMA shall
pay an annual bonus in a minimum amount of One Hundred Twenty Five Thousand
($125,000.00) Dollars.
Except as hereby modified, all the other terms and conditions of the Agreement
and the First Amendment, dated October 10, 1995, shall remain in full force and
effect.
<PAGE>
Larry W. Clark
Page 2
May 27, 1997
Please acknowledge your agreement with this modification by signing below.
Very truly yours,
/s/ Rodolfo E. Prieto
- ---------------------
RODOLFO E. PRIETO
Chief Operating Officer
Agreed & Consented To:
/s/ Larry W. Clark Date:
- -------------------- --------------
LARRY W. CLARK
<PAGE>
EXHIBIT 12
RATIO OF EARNINGS TO FIXED CHARGES
(In Thousands)
RATIO EARNINGS TO FIXED CHARGES CALCULATION:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------
EARNINGS: 1993 1994 1995 1996 1997
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
INCOME (LOSS) before income taxes and extraordinary items...... 5,878 (9,735) 10,783 10,619 (14,063)
PLUS:
FIXED CHARGES.................................................. 48,198 50,265 45,467 116,861 146,516
LESS:
CAPITALIZED INTEREST........................................... 0 0 0 0 0
--------- --------- --------- --------- ---------
EARNINGS..................................................... 54,076 40,530 56,250 127,480 132,453
--------- --------- --------- --------- ---------
FIXED CHARGES:
INTEREST EXPENSE............................................... 40,435 49,061 44,264 114,461 144,140
PLUS:
CAPITALIZED INTEREST........................................... 0 0 0 0 0
PREFERRED PARTNERSHIP DIST..................................... 6,317 0 0 0 0
INTEREST ELEMENT OF RENTAL EXPENSE............................. 1,446 1,204 1,203 2,400 2,376
--------- --------- --------- --------- ---------
FIXED CHARGES................................................ 48,198 50,265 45,467 116,861 146,516
--------- --------- --------- --------- ---------
RATIO OF EARNINGS TO FIXED CHARGES (DEFICIENCY)................. 1.1 (9,735) 1.2 1.1 (14,063)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
<PAGE>
EXHIBIT 23.1
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Trump Atlantic City Associates and Subsidiaries:
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.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Roseland, New Jersey
March 13, 1998
<PAGE>
EXHIBIT 99.1
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., EASTERN STANDARD TIME, ON
, 1998, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS MAY BE
WITHDRAWN PRIOR TO 5:00 P.M., EASTERN STANDARD TIME, ON THE EXPIRATION DATE.
TRUMP ATLANTIC CITY ASSOCIATES
2500 Boardwalk
Atlantic City, NJ 08401
TRUMP ATLANTIC CITY FUNDING II, INC.
2500 Boardwalk
Atlantic City, NJ 08401
LETTER OF TRANSMITTAL
For 11 1/4% First Mortgage Notes (TAC II) due 2006, Series A
EXCHANGE AGENT:
U.S. BANK NATIONAL ASSOCIATION
BY FACSIMILE:
(612) 244-1537
Attention: Bernice Chapman
CONFIRM BY TELEPHONE:
(612) 244-1572
BY REGISTERED OR CERTIFIED MAIL:
U.S. Bank National Association
180 East 5th Street
St. Paul, Minnesota 55101
Bernice Chapman
BY HAND/OVERNIGHT COURIER:
U.S. Bank National Association
180 East 5th Street
St. Paul, Minnesota 55101
Bernice Chapman
OR
First Trust New York
100 Wall Street
Bond Window, 20th Floor
New York, New York 10005
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE A VALID DELIVERY.
The undersigned acknowledges receipt of the Prospectus dated , 1998
(the "Prospectus") of Trump Atlantic City Associates, a New Jersey general
partnership ("Trump AC"), Trump Atlantic City Funding II, Inc., a Delaware
corporation ("Funding II" and, together with Trump AC, the "Issuers") and all of
the subsidiaries of the Issuers and this Letter of Transmittal for 11 1/4% First
Mortgage Notes (TAC II) due 2006, Series A which may be amended from time to
time (this "Letter"), which together constitute the Issuers' offer (the
"Exchange Offer") to exchange, for each $1,000 in principal amount of its
outstanding 11 1/4% First Mortgage Notes (TAC II) due 2006, Series A issued and
sold in a transaction
<PAGE>
exempt from registration under the Securities Act of 1933, as amended (the
"Original Notes"), $1,000 in principal amount of 11 1/4% First Mortgage Notes
(TAC II) due 2006, Series B (the "Exchange Notes").
The undersigned has completed, executed and delivered this Letter to
indicate the action he or she desires to take with respect to the Exchange
Offer.
All holders of Original Notes who wish to tender their Original Notes must,
prior to the Expiration Date: (1) complete, sign, date and mail or otherwise
deliver this Letter to the Exchange Agent, in person or to the address set forth
above; and (2) tender his or her Original Notes or, if a tender of Original
Notes is to be made by book-entry transfer to the account maintained by the
Exchange Agent at The Depository Trust Company (the "Book-Entry Transfer
Facility"), confirm such book-entry transfer (a "Book-Entry Confirmation"), in
each case in accordance with the procedures for tendering described in the
Instructions to this Letter. Holders of Original Notes whose certificates are
not immediately available, or who are unable to deliver their certificates or
Book-Entry Confirmation and all other documents required by this Letter to be
delivered to the Exchange Agent on or prior to the Expiration Date, must tender
their Original Notes according to the guaranteed delivery procedures set forth
under the caption "The Exchange Offer--How to Tender" in the Prospectus. (See
Instruction 1).
The Instructions included with this Letter must be followed in their
entirety. Questions and requests for assistance or for additional copies of the
Prospectus or this Letter may be directed to the Exchange Agent, at the address
listed above, or Robert M. Pickus, Esq., at (609) 441-6526, 2500 Boardwalk,
Atlantic City, NJ 08401.
<PAGE>
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL, INCLUDING
THE INSTRUCTIONS TO THIS LETTER, CAREFULLY
BEFORE CHECKING ANY BOX BELOW
Capitalized terms used in this Letter and not defined herein shall have the
respective meanings ascribed to them in the Prospectus.
List in Box 1 below the Original Notes of which you are the holder. If the
space provided in Box 1 is inadequate, list the certificate numbers and
principal amount of Original Notes on a separate signed schedule and affix that
schedule to this Letter.
BOX 1
TO BE COMPLETED BY ALL TENDERING HOLDERS
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL
NAME(S) AND ADDRESS(ES) AMOUNT AMOUNT OF
OF REGISTERED HOLDER(S) CERTIFICATE OF ORIGINAL ORIGINAL NOTES
(PLEASE FILL IN IF BLANK) NUMBER(S)(1) NOTES TENDERED(2)
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
----------------------------------------------
----------------------------------------------
----------------------------------------------
TOTALS:
- ---------------------------------------------------------------------------------------------
</TABLE>
(1) Need not be completed if Original Notes are being tendered by book-entry
transfer.
(2) Unless otherwise indicated, the entire principal amount of Original Notes
represented by a certificate or Book-Entry Confirmation delivered to the
Exchange Agent will be deemed to have been tendered.
3
<PAGE>
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned tenders to the Issuers the principal amount of Original Notes
indicated above. Subject to, and effective upon, the acceptance for exchange of
the Original Notes tendered with this Letter, the undersigned exchanges, assigns
and transfers to, or upon the order of, the Issuers all right, title and
interest in and to the Original Notes tendered.
The undersigned constitutes and appoints the Exchange Agent as his or her
agent and attorney-in-fact (with full knowledge that the Exchange Agent also
acts as the agent of the Issuers) with respect to the tendered Original Notes,
with full power of substitution, to: (a) deliver certificates for such Original
Notes; (b) deliver Original Notes and all accompanying evidence of transfer and
authenticity to or upon the order of the Issuers upon receipt by the Exchange
Agent, as the undersigned's agent, of the Exchange Notes to which the
undersigned is entitled upon the acceptance by the Issuers of the Original Notes
tendered under the Exchange Offer; and (c) receive all benefits and otherwise
exercise all rights of beneficial ownership of the Original Notes, all in
accordance with the terms of the Exchange Offer. The power of attorney granted
in this paragraph shall be deemed irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that he or she has full power
and authority to tender, exchange, assign and transfer the Original Notes
tendered hereby and that the Issuers will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim. The undersigned will, upon request, execute
and deliver any additional documents deemed by the Issuers to be necessary or
desirable to complete the assignment and transfer of the Original Notes
tendered.
The undersigned agrees that acceptance of any tendered Original Notes by the
Issuers and the issuance of Exchange Notes in exchange therefor shall constitute
performance in full by the Issuers of their obligations under the Registration
Rights Agreement (as defined in the Prospectus) and that, upon the issuance of
the Exchange Notes, the Issuers will have no further obligations or liabilities
thereunder (except in certain limited circumstances). By tendering Original
Notes, the undersigned certifies (a) that it is not an "affiliate" of the
Issuers within the meaning of Rule 405 under the Securities Act, that it is not
a broker-dealer that owns Original Notes acquired directly from the Issuers or
an affiliate of the Issuers, that it is acquiring the Exchange Notes in the
ordinary course of the undersigned's business and that the undersigned has no
arrangement with any person to participate in the distribution of the Exchange
Notes or (b) that it is an "affiliate" (as so defined) of the Issuers or of the
initial purchasers in the original offering of the Original Notes, and that it
will comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable to it.
The undersigned acknowledges that, if it is a broker-dealer that will
receive Exchange Notes for its own account, it will deliver a prospectus in
connection with any resale of such Exchange Notes. By so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
The undersigned understands that the Issuers may accept the undersigned's
tender by delivering written notice of acceptance to the Exchange Agent, at
which time the undersigned's right to withdraw such tender will terminate.
All authority conferred or agreed to be conferred by this Letter shall
survive the death or incapacity of the undersigned, and every obligation of the
undersigned under this Letter shall be binding upon the undersigned's heirs,
personal representatives, successors and assigns. Tenders may be withdrawn only
in accordance with the procedures set forth in the Instructions contained in
this Letter.
Unless otherwise indicated under "Special Delivery Instructions" below, the
Exchange Agent will deliver Exchange Notes (and, if applicable, a certificate
for any Original Notes not tendered but
4
<PAGE>
represented by a certificate also encompassing Original Notes which are
tendered) to the undersigned at the address set forth in Box 1.
The undersigned acknowledges that the Exchange Offer is subject to the more
detailed terms set forth in the Prospectus and, in case of any conflict between
the terms of the Prospectus and this Letter, the Prospectus shall prevail.
/ / CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
Account Number:
Transaction Code Number:
/ / CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s):
- ------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
Window Ticket Number (if available):
Name of Institution which Guaranteed Delivery:
5
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
BOX 2
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
WHETHER OR NOT ORIGINAL NOTES ARE BEING
PHYSICALLY TENDERED HEREBY
X __________________________________________________________________________
X __________________________________________________________________________
SIGNATURE(S) OF OWNER(S) OR AUTHORIZED SIGNATORY
Date __________________________
Area Code and
Telephone Number: _____________
This box must be signed by registered holder(s) of Original Notes as
their name(s) appear(s) on certificate(s) for Original Notes, or by
person(s) authorized to become registered holder(s) by endorsement and
documents transmitted with this Letter. If signature is by a trustee,
executor, administrator, guardian, officer or other person acting in a
fiduciary or representative capacity, such person must set forth his or her
full title below. (See Instruction 3)
Name(s) ____________________________________________________________________
____________________________________________________________________________
(PLEASE PRINT)
Capacity ___________________________________________________________________
Address ____________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
GUARANTEE OF SIGNATURE(S)
SIGNATURE(S) GUARANTEED BY AN ELIGIBLE INSTITUTION: (IF REQUIRED BY
INSTRUCTION 3)
Authorized Signature _______________________________________________________
Title ______________________________________________________________________
(PLEASE PRINT)
Name of Firm _______________________________________________________________
- --------------------------------------------------------------------------------
6
<PAGE>
BOX 3
<TABLE>
<C> <S> <C>
- ---------------------------------------------------------------------------------------------------
TO BE COMPLETED BY ALL TENDERING HOLDERS
- ---------------------------------------------------------------------------------------------------
PAYOR'S NAME: UNITED STATES TRUST COMPANY OF NEW YORK
- ---------------------------------------------------------------------------------------------------
SUBSTITUTE Part 1--PLEASE PROVIDE YOUR TIN Social Security Number
FORM W-9 IN THE BOX AT RIGHT AND CERTIFY OR ------------------------
Department of the Treasury BY SIGNING AND DATING BELOW. Employer Identification Number
Internal Revenue Service
-------------------------------------------------------------------
Part 2--Check the box if you are NOT subject to back-up withholding
under Department of the provisions of Section 2406(a)(1)(C) of the
Payer's Request for Taxpayer Internal Revenue Code the because (1) you have not been notified
Identification Number (TIN) that you are subject to back-up Treasury withholding as a result of
failure to report all interest or dividends Internal or (2) the
Internal Revenue Service has notified you that you are no longer
subject to back-up withholding. / /
-------------------------------------------------------------------
Part 3--Check if Awaiting TIN: / /
- ---------------------------------------------------------------------------------------------------
CERTIFICATION. Under the penalties of perjury, I certify that the information provided on this
form is true, correct and complete.
Signature -------------------------------------------------------- Date
---------------------------
- ---------------------------------------------------------------------------------------------------
</TABLE>
- ------------------------------------------------
BOX 4
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Original Notes in a principal
amount not exchanged, or Exchange Notes, are to be issued in the name of
someone other than the person whose signature appears in Box 2, or if
Original Notes delivered by book-entry transfer which are not accepted for
exchange are to be returned by credit to an account maintained at the
Book-Entry Transfer Facility other than the account indicated above.
ISSUE AND DELIVER:
(check appropriate boxes)
/ / Original Notes not tendered
/ / Exchange Notes, to:
Name _______________________________________________________________________
(PLEASE PRINT)
Address ____________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
Please complete the Substitute Form W-9 at Box 3
____________________________________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
- ------------------------------------------------------------
- ------------------------------------------------------------
BOX 5
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Original Notes in a principal
amount not exchanged, or Exchange Notes, are to be sent to someone other
than the person whose signature appears in Box 2 or to an address other than
that shown in Box 1.
DELIVER:
(check appropriate boxes)
/ / Original Notes not tendered
/ / Exchange Notes, to:
Name _______________________________________________________________________
(PLEASE PRINT)
Address ____________________________________________________________________
____________________________________________________________________________
(INCLUDE ZIP CODE)
- -----------------------------------------------------
7
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND
CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER AND CERTIFICATES. Certificates for Original
Notes or a Book-Entry Confirmation, as the case may be, as well as a properly
completed and duly executed copy of this Letter and any other documents required
by this Letter, must be received by the Exchange Agent at one of its addresses
set forth herein on or before the Expiration Date. The method of delivery of
this Letter, certificates for Original Notes or a Book-Entry Confirmation, as
the case may be, and any other required documents is at the election and risk of
the tendering holder, but except as otherwise provided below, the delivery will
be deemed made when actually received by the Exchange Agent. If delivery is by
mail, the use of registered mail with return receipt requested, properly
insured, is suggested.
Holders whose Original Notes are not immediately available or who cannot
deliver their Original Notes or a Book-Entry Confirmation, as the case may be,
and all other required documents to the Exchange Agent on or before the
Expiration Date may tender their Original Notes pursuant to the guaranteed
delivery procedures set forth in the Prospectus. Pursuant to such procedure: (i)
tender must be made by or through an Eligible Institution (as defined in the
Prospectus under the caption "The Exchange Offer"); (ii) prior to the Expiration
Date, the Exchange Agent must have received from the Eligible Institution a
properly completed and duly executed Notice of Guaranteed Delivery (by telegram,
telex, facsimile transmission, mail or hand delivery) (x) setting forth the name
and address of the holder, the description of the Original Notes and the
principal amount of Original Notes tendered, (y) stating that the tender is
being made thereby and (z) guaranteeing that, within five New York Stock
Exchange trading days after the date of execution of such Notice of Guaranteed
Delivery, this Letter together with the certificates representing the Original
Notes or a Book-Entry Confirmation, as the case may be, and any other documents
required by this Letter will be deposited by the Eligible Institution with the
Exchange Agent; and (iii) the certificates for all tendered Original Notes or a
Book-Entry Confirmation, as the case may be, as well as all other documents
required by this Letter, must be received by the Exchange Agent within five New
York Stock Exchange trading days after the date of execution of such Notice of
Guaranteed Delivery, all as provided in the Prospectus under the caption "The
Exchange Offer--How to Tender."
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Original Notes will be
determined by the Issuers, whose determination will be final and binding. The
Issuers reserve the absolute right to reject any or all tenders that are not in
proper form or the acceptance of which, in the opinion of the Issuers' counsel,
would be unlawful. The Issuers also reserve the right to waive any
irregularities or conditions of tender as to particular Original Notes. All
tendering holders, by execution of this Letter, waive any right to receive
notice of acceptance of their Original Notes.
Neither the Issuers, the Exchange Agent nor any other person shall be
obligated to give notice of defects or irregularities in any tender, nor shall
any of them incur any liability for failure to give any such notice.
2. PARTIAL TENDERS; WITHDRAWALS. If less than the entire principal amount
of any Senior Note evidenced by a submitted certificate or by a Book-Entry
Confirmation is tendered, the tendering holder must fill in the principal amount
tendered in the fourth column of Box 1 above. All of the Original Notes
represented by a certificate or by a Book-Entry Confirmation delivered to the
Exchange Agent will be deemed to have been tendered unless otherwise indicated.
A certificate for Original Notes not tendered will be sent to the holder, unless
otherwise provided in Box 5, as soon as practicable after the Expiration Date,
in the event that less than the entire principal amount of Original Notes
represented by a submitted certificate is tendered (or, in the case of Original
Notes tendered by book-entry transfer, such non-exchanged Original Notes will be
credited to an account maintained by the holder with the Book-Entry Transfer
Facility).
8
<PAGE>
If not yet accepted, a tender pursuant to the Exchange Offer may be
withdrawn prior to the Expiration Date. To be effective with respect to the
tender of Original Notes, a notice of withdrawal must: (i) be received by the
Exchange Agent before the Company notifies the Exchange Agent that it has
accepted the tender of Original Notes pursuant to the Exchange Offer; (ii)
specify the name of the person who tendered the Original Notes; (iii) contain a
description of the Original Notes to be withdrawn, the certificate numbers shown
on the particular certificates evidencing such Original Notes and the principal
amount of Original Notes represented by such certificates; and (iv) be signed by
the holder in the same manner as the original signature on this Letter
(including any required signature guarantee).
3. SIGNATURES ON THIS LETTER; ASSIGNMENTS; GUARANTEE OF SIGNATURES. If this
Letter is signed by the holder(s) of Original Notes tendered hereby, the
signature must correspond with the name(s) as written on the face of the
certificate(s) for such Original Notes, without alteration, enlargement or any
change whatsoever.
If any of the Original Notes tendered hereby are owned by two or more joint
owners, all owners must sign this Letter. If any tendered Original Notes are
held in different names on several certificates, it will be necessary to
complete, sign and submit as many separate copies of this Letter as there are
names in which certificates are held.
If this Letter is signed by the holder of record and (i) the entire
principal amount of the holder's Original Notes are tendered; and/or (ii)
untendered Original Notes, if any, are to be issued to the holder of record,
then the holder of record need not endorse any certificates for tendered
Original Notes, nor provide a separate bond power. If any other case, the holder
of record must transmit a separate bond power with this Letter.
If this Letter or any certificate or assignment is signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and proper evidence satisfactory to the
Issuer of their authority to so act must be submitted, unless waived by the
Issuers.
Signatures on this Letter must be guaranteed by an Eligible Institution,
unless Original Notes are tendered: (i) by a holder who has not completed the
Box entitled "Special Issuance Instructions" or "Special Delivery Instructions"
on this Letter; or (ii) for the account of an Eligible Institution. In the event
that the signatures in this Letter or a notice of withdrawal, as the case may
be, are required to be guaranteed, such guarantees must be by an eligible
guarantor institution which is a member of The Securities Transfer Agents
Medallion Program (STAMP), The New York Stock Exchanges Medallion Signature
Program (MSP) or The Stock Exchanges Medallion Program (SEMP) (collectively,
"Eligible Institutions"). If Original Notes are registered in the name of a
person other than the signer of this Letter, the Original Notes surrendered for
exchange must be endorsed by, or be accompanied by a written instrument or
instruments of transfer or exchange, in satisfactory form as determined by the
Issuers, in their sole discretion, duly executed by the registered holder with
the signature thereon guaranteed by an Eligible Institution.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering holders should
indicate, in Box 4 or 5, as applicable, the name and address to which the
Exchange Notes or certificates for Original Notes not exchanged are to be issued
or sent, if different from the name and address of the person signing this
Letter. In the case of issuance in a different name, the tax identification
number of the person named must also be indicated. Holders tendering Original
Notes by book-entry transfer may request that Original Notes not exchanged be
credited to such account maintained at the Book-Entry Transfer Facility as such
holder may designate.
5. TAX IDENTIFICATION NUMBER. Federal income tax law requires that a holder
whose tendered Original Notes are accepted for exchange must provide the
Exchange Agent (as payor) with his or her correct taxpayer identification number
("TIN"), which, in the case of a holder who is an individual, is his or her
9
<PAGE>
social security number. If the Exchange Agent is not provided with the correct
TIN, the holder may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, delivery to the holder of the Exchange Notes pursuant to
the Exchange Offer may be subject to back-up withholding. (If withholding
results in overpayment of taxes, a refund may be obtained.) Exempt holders
(including, among others, all corporations and certain foreign individuals) are
not subject to these back-up withholding and reporting requirements. See the
enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for additional instructions.
Under federal income tax laws, payments that may be made by the Issuers on
account of Exchange Notes issued pursuant to the Exchange Offer may be subject
to back-up withholding at a rate of 31%. In order to prevent back-up
withholding, each tendering holder must provide his or her correct TIN by
completing the "Substitute Form W-9" referred to above, certifying that the TIN
provided is correct (or that the holder is awaiting a TIN) and that: (i) the
holder has not been notified by the Internal Revenue Service that he or she is
subject to back-up withholding as a result of failure to report all interest or
dividends; or (ii) the Internal Revenue Service has notified the holder that he
or she is no longer subject to back-up withholding; or (iii) certify in
accordance with the Guidelines that such holder is exempt from back-up
withholding. If the Original Notes are in more than one name or are not in the
name of the actual owner, consult the enclosed Guidelines for information on
which TIN to report.
6. TRANSFER TAXES. The Issuers will pay all transfer taxes, if any,
applicable to the transfer of Original Notes to it or its order pursuant to the
Exchange Offer. If, however, the Exchange Notes or certificates for Original
Notes not exchanged are to be delivered to, or are to be issued in the name of,
any person other than the record holder, or if tendered certificates are
recorded in the name of any person other than the person signing this Letter, or
if a transfer tax is imposed by any reason other than the transfer of Original
Notes to the Company or its order pursuant to the Exchange Offer, then the
amount of such transfer taxes (whether imposed on the record holder or any other
person) will be payable by the tendering holder. If satisfactory evidence of
payment of taxes or exemption from taxes is not submitted with this Letter, the
amount of transfer taxes will be billed directly to the tendering holder.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the certificates listed in this Letter.
7. WAIVER OF CONDITIONS. The Issuers reserve the absolute right to amend or
waive any of the specified conditions in the Exchange Offer in the case of any
Original Notes tendered.
8. MUTILATED, LOST, STOLEN OR DESTROYED CERTIFICATES. Any holder whose
certificates for Original Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the address indicated above, for further
instructions.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the
procedure for tendering, as well as requests for additional copies of the
Prospectus or this Letter, may be directed to the Exchange Agent.
IMPORTANT: This Letter (together with certificates representing tendered
Original Notes or a Book-Entry Confirmation and all other required documents)
must be received by the Exchange Agent on or before the Expiration Date.
10
<PAGE>
EXHIBIT 99.2
TRUMP ATLANTIC CITY ASSOCIATES
TRUMP ATLANTIC CITY FUNDING II, INC.
EXCHANGE OFFER
TO HOLDERS OF ITS
11 1/4% FIRST MORTGAGE NOTES (TAC II) DUE 2006, SERIES A
NOTICE OF GUARANTEED DELIVERY
As set forth in the Prospectus dated , 1998 (the "Prospectus") of
Trump Atlantic City Associates ("Trump AC"), Trump Atlantic City Funding II,
Inc. ("Funding II" and, together with Trump AC, the "Issuers") and all of the
subsidiaries of the Issuers under "The Exchange Offer--How to Tender" and in the
Letter of Transmittal (the "Letter of Transmittal") relating to the offer (the
"Exchange Offer") by the Issuers to exchange up to $75,000,000 in principal
amount of its 11 1/4% First Mortgage Notes (TAC II) due 2006, Series A issued
and sold in a transaction exempt from registration under the Securities Act of
1933, as amended (the "Original Notes"), for $75,000,000 in principal amount of
its 11 1/4% First Mortgage Notes (TAC II) due 2006, Series B (the "Exchange
Notes"), this form or one substantially equivalent hereto must be used to accept
the Exchange Offer of the Issuers if: (i) certificates for the Original Notes
are not immediately available; or (ii) time will not permit all required
documents to reach the Exchange Agent (as defined below) on or prior to the
Expiration Date (as defined in the Prospectus) of the Exchange Offer. Such form
may be delivered by hand or transmitted by telegram, telex, facsimile
transmission or letter to the Exchange Agent.
TO: U.S. BANK NATIONAL ASSOCIATION (the "Exchange Agent")
BY FACSIMILE:
(612) 244-1537
Attention: Bernice Chapman
CONFIRM BY TELEPHONE:
(612) 244-1572
BY REGISTERED OR CERTIFIED MAIL:
U.S. Bank National Association
180 East 5th Street
St. Paul, Minnesota 55101
Bernice Chapman
BY HAND/OVERNIGHT COURIER:
U.S. Bank National Association
180 East 5th Street
St. Paul, Minnesota 55101
Bernice Chapman
OR
First Trust New York
100 Wall Street
Bond Window, 20th Floor
New York, New York 10005
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN
AS SET FORTH ABOVE OR TRANSMITTAL OF THIS INSTRUMENT TO
A FACSIMILE OR TELEX NUMBER OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to the Issuers, upon the terms and conditions
set forth in the Prospectus and the Letter of Transmittal (which together
constitute the "Exchange Offer"), receipt of which are hereby acknowledged, the
principal amount of Original Notes set forth below pursuant to the guaranteed
delivery procedure described in the Prospectus and the Letter of Transmittal.
<TABLE>
<S> <C>
SIGN HERE
Principal Amount of Original Notes Signature(s)
Tendered
Certificate Nos. Please Print the Following
(if available) Information
Name(s)
Address
Total Principal Amount Area Code and Tel. No(s).
Represented by Original Notes
Certificate(s)
Account Number
Dated: , 1998
</TABLE>
2
<PAGE>
GUARANTEE
The undersigned, a member of a recognized signature guarantee medallion
program within the meaning of Rule 17A(d)-15 under the Securities Exchange Act
of 1934, as amended, hereby guarantees that delivery to the Exchange Agent of
certificates tendered hereby, in proper form for transfer, or delivery of such
certificates pursuant to the procedure for book-entry transfer, in either case
with delivery of a properly completed and duly executed Letter of Transmittal
(or facsimile thereof) and any other required documents, is being made within
five trading days after the date of execution of a Notice of Guaranteed Delivery
of the above-named person.
Name of Firm
Authorized Signature
Number and Street or P.O. Box
City State Zip Code
Area Code and Tel. No.
Dated: ____________, 1998
3
<PAGE>
EXHIBIT 99.3
TRUMP ATLANTIC CITY ASSOCIATES
TRUMP ATLANTIC CITY FUNDING II, INC.
OFFER TO EXCHANGE
UP TO $75,000,000 IN PRINCIPAL AMOUNT OF
11 1/4% FIRST MORTGAGE NOTES (TAC II) DUE 2006, SERIES A
SOLD IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED
FOR
$75,000,000 IN PRINCIPAL AMOUNT OF
11 1/4% FIRST MORTGAGE NOTES (TAC II) DUE 2006, SERIES B
To Our Clients:
Enclosed for your consideration is a Prospectus dated , 1998 (as the
same may be amended or supplemented from time to time, the "Prospectus") and a
form of Letter of Transmittal (the "Letter of Transmittal") relating to the
offer (the "Exchange Offer") by Trump Atlantic City Associates ("Trump AC"),
Trump Atlantic City Funding II, Inc. ("Funding II" and, together with Trump AC,
the "Issuers") and the all of the subsidiaries of the Issuers to exchange up to
$75,000,000 in principal amount of its 11 1/4% First Mortgage Notes (TAC II) due
2006, Series A issued and sold in a transaction exempt from registration under
the Securities Act of 1933, as amended (the "Original Notes"), for $75,000,000
in principal amount of its 11 1/4% First Mortgage Notes (TAC II) due 2006,
Series B (the "Exchange Notes").
The material is being forwarded to you as the beneficial owner of Original
Notes carried by us for your account or benefit but not registered in your name.
A tender of any Original Notes may be made only by us as the registered holder
and pursuant to your instructions. Therefore, the Issuers urge beneficial owners
of Original Notes registered in the name of a broker, dealer, commercial bank,
trust company or other nominee to contact such registered holder promptly if
they wish to tender Original Notes in the Exchange Offer.
Accordingly, we request instructions as to whether you wish us to tender any
or all Original Notes, pursuant to the terms and conditions set forth in the
Prospectus and Letter of Transmittal. We urge you to read carefully the
Prospectus and Letter of Transmittal before instructing us to tender your
Original Notes.
YOUR INSTRUCTIONS TO US SHOULD BE FORWARDED AS PROMPTLY AS POSSIBLE IN ORDER
TO PERMIT US TO TENDER ORIGINAL NOTES ON YOUR BEHALF IN ACCORDANCE WITH THE
PROVISIONS OF THE EXCHANGE OFFER. The Exchange Offer will expire at 5:00 p.m.,
Eastern Standard Time, on , , 1998, unless extended (the
"Expiration Date"). Original Notes tendered pursuant to the Exchange Offer may
be withdrawn, subject to the procedures described in the Prospectus, at any time
prior to the Expiration Date.
If you wish to have us tender any or all of your Original Notes held by us
for your account or benefit, please so instruct us by completing, executing and
returning to us the instruction form that appears below. The accompanying Letter
of Transmittal is furnished to you for informational purposes only and may not
be used by you to tender Original Notes held by us and registered in our name
for your account or benefit.
<PAGE>
INSTRUCTIONS
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer of Pioneer Americas
Acquisition Corp.
THIS WILL INSTRUCT YOU TO TENDER THE PRINCIPAL AMOUNT OF ORIGINAL NOTES
INDICATED BELOW HELD BY YOU FOR THE ACCOUNT OR BENEFIT OF THE UNDERSIGNED,
PURSUANT TO THE TERMS OF AND CONDITIONS SET FORTH IN THE PROSPECTUS AND THE
LETTER OF TRANSMITTAL.
<TABLE>
<S> <C> <C>
Box 1 / / Please tender my Original Notes held by you for my account or benefit. I have
identified on a signed schedule attached hereto the principal mount of Original
Notes to be tendered if I wish to tender less than all of my Original Notes.
Box 2 / / Please do not tender any Original Notes held by you for my account or benefit.
</TABLE>
Date: , 1998
--------------------------------------
--------------------------------------
Signature(s)
--------------------------------------
--------------------------------------
Please print name(s) here
Unless a specific contrary instruction is given in a signed Schedule attached
hereto, your signature(s) hereon shall constitute an instruction to us to tender
all of your Original Notes.
2
<PAGE>
EXHIBIT 99.4
TRUMP ATLANTIC CITY ASSOCIATES
TRUMP ATLANTIC CITY FUNDING II, INC.
OFFER TO EXCHANGE
UP TO $75,000,000 IN PRINCIPAL AMOUNT OF
11 1/4% FIRST MORTGAGE NOTES (TAC II) DUE 2006, SERIES A
SOLD IN A TRANSACTION EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED
FOR
$75,000,000 IN PRINCIPAL AMOUNT OF
11 1/4% FIRST MORTGAGE NOTES (TAC II) DUE 2006, SERIES B
To Securities Dealers, Commercial Banks
Trust Companies and Other Nominees:
Enclosed for your consideration is a Prospectus dated , 1998 (as the
same may be amended or supplemented from time to time, the "Prospectus") and a
form of Letter of Transmittal (the "Letter of Transmittal") relating to the
offer (the "Exchange Offer") by Trump Atlantic City Associates ("Trump AC"),
Trump Atlantic City Funding II, Inc. ("Funding II" and, together with Trump AC,
the "Issuers") and all of the subsidiaries of the Issuers to exchange up to
$75,000,000 in principal amount of its 11 1/4% First Mortgage Notes (TAC II) due
2006, Series A issued and sold in a transaction exempt from registration under
the Securities Act of 1933, as amended (the "Original Notes"), for $75,000,000
in principal amount of its 11 1/4% First Mortgage Notes (TAC II) due 2006,
Series B (the "Exchange Notes").
We are asking you to contact your clients for whom you hold Original Notes
registered in your name or in the name of your nominee. In addition, we ask you
to contact your clients who, to your knowledge, hold Original Notes registered
in their own name. The Issuers will not pay any fees or commissions to any
broker, dealer or other person in connection with the solicitation of tenders
pursuant to the Exchange Offer. You will, however, be reimbursed by the Issuers
for customary mailing and handling expenses incurred by you in forwarding any of
the enclosed materials to your clients. The Issuers will pay all transfer taxes,
if any, applicable to the tender of Original Notes to it or its order, except as
otherwise provided in the Prospectus and the Letter of Transmittal.
Enclosed are copies of the following documents:
1. The Prospectus;
2. A Letter of Transmittal for your use in connection with the tender
of Original Notes and for the Information of your clients;
3. A form of letter that may be sent to your clients for whose accounts
you hold Original Notes registered in your name or the name of your nominee,
with space provided for obtaining the clients' instructions with regard to
the Exchange Offer;
4. A form of Notice of Guaranteed Delivery; and
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
Your prompt action is requested. The Exchange Offer will expire at 5:00
p.m., Eastern Standard Time, on , , 1998, unless extended (the
"Expiration Date"). Original Notes tendered pursuant to the Exchange Offer may
be withdrawn, subject to the procedures described in the Prospectus, at any time
prior to the Expiration Date.
<PAGE>
To tender Original Notes, certificates for Original Notes or a Book-Entry
Confirmation, a duly executed and properly completed Letter of Transmittal or a
facsimile thereof, and any other required documents, must be received by the
Exchange Agent as provided in the Prospectus and the Letter of Transmittal.
Additional copies of the enclosed material may be obtained from U.S. Bank
National Association, the Exchange Agent, by calling (612) 244-1572.
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF THE ISSUERS OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO MAKE ANY STATEMENTS ON BEHALF OF EITHER OF THEM WITH RESPECT TO
THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE PROSPECTUS AND
THE LETTER OF TRANSMITTAL.
2
