<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 9, 1998
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
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 III, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 9999 22-3550203
(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 III, 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)
------------------------------
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)
<PAGE>
------------------------------
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. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE OF EACH CLASS PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES TO AMOUNT TO BE PROPOSED MAXIMUM AGGREGATE OFFERING REGISTRATION
BE REGISTERED REGISTERED OFFERING PRICE PRICE FEE
<S> <C> <C> <C> <C>
11 1/4% First Mortgage Notes (TAC III) due
2006........................................... $25,000,000 94.200% $23,550,000 $6,948
Guarantees (1)................................... (2) (2) (2) (2)
</TABLE>
(1) Trump Atlantic City Corporation, Trump Casino Services, L.L.C., Trump
Communications, L.L.C., Trump Plaza Associates and Trump Taj Mahal
Associates are wholly-owned subsidiaries of Trump Atlantic City Associates
and each is registering Guarantees of the payment of the principal of,
premium, if any, and interest on the Notes being registered hereby. Pursuant
to Rule 457(n) under the Securities Act of 1933, as amended, no registration
fee is required with respect to the Guarantees.
(2) Not applicable.
------------------------
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>
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>
SUBJECT TO COMPLETION, DATED JANUARY 9, 1998
PROSPECTUS
TRUMP ATLANTIC CITY ASSOCIATES
TRUMP ATLANTIC CITY FUNDING III, INC.
OFFER TO EXCHANGE $1,000 IN PRINCIPAL AMOUNT OF 11 1/4% FIRST MORTGAGE NOTES
(TAC III) DUE 2006, SERIES B
FOR EACH $1,000 IN PRINCIPAL AMOUNT OF OUTSTANDING 11 1/4% FIRST MORTGAGE NOTES
(TAC III) DUE 2006, SERIES A
------------------------
Trump Atlantic City Associates, a New Jersey general partnership ("Trump
AC"), Trump Atlantic City Funding III, Inc., a Delaware corporation ("Funding
III" and, collectively with Trump AC, the "Issuers"), and the Guarantors (as
defined) hereby offer to exchange (the "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 "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 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 III 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 on a senior secured 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
of the TAC II Notes (as defined), and Trump Atlantic City Funding III, Inc.
("Funding III"), which is one of the Issuers. 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 $75 million of TAC II Notes of Trump AC and Funding II.
The 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. 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. Upon the occurrence of a Change of Control (as defined), but subject
to certain restrictions contained herein, each holder of the Notes (each, a
"Holder") may require the Issuers to purchase 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. See "Description of the
Notes." Trump AC's consolidated outstanding indebtedness for borrowed money at
September 30, 1997 would have been, on a pro forma basis after giving effect to
the issuance of the Notes and the TAC II Notes, approximately $1.31 billion,
consisting of $1.2 billion of TAC I Notes, $75.0 million of TAC II Notes, $25.0
million of Notes, $5.0 million of other senior indebtedness and approximately
$8.7 million of other 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, 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 the Guarantors securing the TAC I Notes and the TAC II
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.
Concurrent with the Exchange Offer, Trump AC, Funding II, a wholly owned
subsidiary of Trump AC, and the Guarantors are offering to exchange (the
"Concurrent 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 "TAC II
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 (the "TAC
II Original Notes" and, together with the TAC II Exchange Notes, the "TAC II
Notes") issued in reliance upon an exemption from registration under the
Securities Act. The TAC II Notes will be secured PARI PASSU with the TAC I Notes
and the Notes by liens on the properties of Plaza Associates and Taj Associates.
The TAC II Notes will rank PARI PASSU with and be substantially similar to the
Notes, except the ability of holders of the TAC II Notes to require Trump AC to
repurchase the TAC II 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 TAC II Notes to require such
repurchase of their securities and (ii) compliance with provisions in the TAC I
Note Indenture (as defined) and the TAC II Note Indenture (as defined) that
limit certain restricted payments, including the acquisition of indebtedness
(including the Notes).
----------------------------------
SEE "RISK FACTORS" ON PAGE 18 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 January , 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................................... 18
Consequences of Failure to Exchange.......... 18
High Leverage and Fixed Charges.............. 18
Holding Company Structure.................... 19
Risk in Refinancing and Repayment of
Indebtedness; Need for Additional
Financing.................................. 19
Risks Associated with a Change of Control.... 19
Restrictions on Certain Activities........... 19
Risks Associated with Use of Proceeds........ 20
Non-Recourse Nature of the Notes............. 20
Historical Results; Past Net Losses.......... 20
Control and Involvement of Trump............. 21
Competition.................................. 21
Reliance on Key Personnel.................... 24
Strict Regulation by Gaming Authorities...... 24
Limitations on License of the Trump Name..... 25
Fraudulent Transfer Considerations........... 25
Forward-Looking Statements................... 26
Lack of Public Market for the Exchange
Notes...................................... 26
USE OF PROCEEDS................................ 27
THE EXCHANGE OFFER............................. 28
Purpose of the Exchange Offer................ 28
Terms of the Exchange........................ 28
Expiration Date; Extensions; Termination;
Amendments................................. 29
How to Tender................................ 30
Terms and Conditions of the Letter of
Transmittal................................ 31
Withdrawal Rights............................ 32
Acceptance of Original Notes for Exchange;
Delivery of Exchange Notes................. 32
Conditions to the Exchange Offer............. 33
Exchange Agent............................... 34
Solicitation of Tenders; Expenses............ 34
Appraisal Rights............................. 34
Federal Income Tax Consequences.............. 34
Other........................................ 34
CAPITALIZATION................................. 36
CONSOLIDATED SELECTED FINANCIAL DATA........... 37
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS................................... 42
Results of Operations for the Nine Months
Ended September 30, 1997 and 1996.......... 42
Results of Operations for the Years Ended
December 31, 1996 and 1995................. 44
Results of Operations for the Years Ended
December 31, 1995 and 1994................. 46
Capital Resources and Liquidity.............. 48
Seasonality.................................. 48
Inflation.................................... 48
<CAPTION>
PAGE
-----
<S> <C>
BUSINESS....................................... 49
Trump Plaza.................................. 49
The Taj Mahal................................ 54
TCS.......................................... 57
Trademark/Licensing.......................... 58
Certain Indebtedness......................... 58
Atlantic City Market......................... 59
Competition.................................. 60
Gaming and Other Laws and Regulations........ 62
Properties................................... 70
Legal Proceedings............................ 73
MANAGEMENT..................................... 76
Directors and Executive Officers of Issuers,
Plaza Associates and Taj Associates........ 76
Executive Compensation....................... 80
Employment Agreements........................ 82
Compensation of Directors.................... 85
Compensation Committee Interlocks and Insider
Participation.............................. 85
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS................................. 89
STOCK OWNERSHIP................................ 90
DESCRIPTION OF OTHER INDEBTEDNESS.............. 90
DESCRIPTION OF THE NOTES....................... 91
General...................................... 91
Security for the Notes....................... 92
Note Guarantees.............................. 93
Certain Bankruptcy Limitations............... 93
Optional Redemption.......................... 94
Certain Covenants............................ 95
Reports...................................... 104
Events of Defaults and Remedies.............. 105
Legal Defeasance and Covenant Defeasance..... 106
Amendments and Supplements................... 107
Gaming Laws.................................. 107
Trustee...................................... 108
No Personal Liability of Partners,
Stockholders, Officers, Directors;
Non-recourse............................... 108
The Mortgage................................. 108
Certain Definitions.......................... 109
Book-entry; Delivery; Form and Transfer...... 122
ORIGINAL NOTES REGISTRATION RIGHTS............. 125
CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSIDERATIONS............................... 127
United States Holders........................ 127
Non-United States Holders.................... 128
PLAN OF DISTRIBUTION........................... 130
LEGAL MATTERS.................................. 131
EXPERTS........................................ 131
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 III. 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, has demonstrated a
ten-year compound annual growth rate of approximately 5.3% through 1996 and a
growth rate of approximately 2.3% for the nine months ended September 30, 1997
versus September 30, 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 TRUMP
MAIN PLAZA WORLD'S TAJ
FACILITY EAST FAIR MAHAL TOTAL
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Gaming square footage.......................................... 74,226 14,886 49,193 147,540 285,845
Slot machines.................................................. 2,201 371 1,518 4,148 8,238
Table games.................................................... 95 0 16 217 328
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 planned 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 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,
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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 nine months ended September 30, 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 15-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 May 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 $3.83 billion in gaming revenues
in 1996, an approximately 1.8% increase over 1995 gaming revenues of
approximately $3.76 billion. From 1991 to 1996, total gaming revenues in
Atlantic City have increased approximately 27.9%, while the number of hotel
rooms increased only slightly during that period. Although total visitor volume
to Atlantic City remained relatively constant in 1996, the volume of bus
customers dropped to 9.8 million in 1996, continuing a decline from 11.7 million
in 1991. The volume of customers traveling by other means to Atlantic City has
grown from 20.1 million in 1991 to 34.0 million in 1996.
The approximately $3.83 billion of gaming revenues produced by the 12
Atlantic City casino hotels in 1996 exceeded the approximately $3.58 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 1994, 1995 and 1996 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
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the new Atlantic City Convention Center, which opened in May 1997 and is the
largest exhibition space 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.
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THE EXCHANGE OFFER
<TABLE>
<S> <C>
THE EXCHANGE OFFER............ The Issuers are offering to exchange up to $25,000,000
aggregate principal amount of 11 1/4% First Mortgage Notes
(TAC III) due 2006, Series B for up to $25,000,000 aggregate
principal amount of its outstanding 11 1/4% First Mortgage
Notes (TAC III) 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 II
are offering to exchange up to $75,000,000 in aggregate
principal amount of their TAC II Exchange Notes for up to
$75,000,000 in aggregate principal amount of their
outstanding TAC II Original Notes issued in reliance upon an
exemption from registration under the Securities Act. The
TAC II Notes will rank PARI PASSU with and be substantially
similar to the Notes, except the ability of Holders of the
Notes to require Trump AC to repurchase the 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 TAC II Notes to require such
repurchase of their securities and (ii) compliance with
provisions in the TAC I Note Indenture and the TAC II Note
Indenture that limit certain restricted payments, including
the acquisition of indebtedness (including the Notes).
MINIMUM CONDITION............. The Exchange Offer is not conditioned upon any minimum
aggregate principal amount of Original Notes being tendered
for exchange.
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.
</TABLE>
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<TABLE>
<S> <C>
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
ORIGINAL NOTES.............. See "The Exchange Offer--How to Tender."
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.
EFFECT ON HOLDERS OF ORIGINAL
NOTES....................... As a result of the making of this Exchange Offer, 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 (the "Registration Rights Agreement") dated as of
December 10, 1997 between the Issuers, the Guarantors and
Donaldson, Lufkin & Jenrette Securities Corporation (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>
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<PAGE>
TERMS OF THE NOTES
The Exchange Offer applies to $25,000,000 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 III as joint and several obligors.
NOTES OFFERED................. $25,000,000 aggregate principal amount of 11 1/4% First
Mortgage Notes (TAC III) 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 secured basis by Plaza Associates,
Taj Associates and each other present and future majority
owned or controlled subsidiary (other than "unrestricted
subsidiaries," a "Subsidiary") of Trump AC, other than Trump
AC Funding (which is one of the issuers of the TAC I Notes),
Funding II (which is one of the issuers of the TAC II Notes)
and Funding III (which is one of the Issuers).
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 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; PROVIDED,
HOWEVER, that the ability of Holders of Notes to require
such repurchase will be (i) subject to the prior rights of
holders of TAC I Notes and TAC II Notes to require such
repurchase of their securities in the event of a Change of
Control and (ii) conditioned on compliance with provisions
in the TAC I Note Indenture and the TAC II Note Indenture
that limit certain restricted payments, including the
acquisition of indebtedness (including the Notes).
</TABLE>
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<TABLE>
<S> <C>
SECURITY...................... The Notes are secured, on a PARI PASSU basis with the TAC I
Notes and the TAC II 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% Senior Secured
Notes due 2005 (the "Senior Notes") issued by THCR Holdings
and its subsidiary, Trump Hotels & Casino Resorts Funding,
Inc. ("THCR Funding").
NON-RECOURSE.................. No direct or indirect stockholder, partner, employee,
officer or director, as such, past, present or future, of
either the Issuers, any Subsidiary 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, (i) limit Trump AC's and its Subsidiaries'
ability to incur certain indebtedness unless, among other
things, Trump AC's Consolidated Coverage Ratio (as defined)
for the four fiscal quarters immediately preceding such
event, taken as one period, would have been at least equal
to the ratios set forth in the Note Indenture, subject to
certain exceptions; (ii) limit the making of certain
dividends, distributions and other restricted payments by
Trump AC and its Subsidiaries; (iii) limit the lines of
business in which Trump AC and its Subsidiaries may engage
to those relating to the casino hotel business in Atlantic
City; (iv) limit the existence of certain liens on assets of
Trump AC and its Subsidiaries; (v) restrict the use of
proceeds from certain asset sales by Trump AC and its
Subsidiaries; (vi) limit transactions by Trump AC and its
Subsidiaries with affiliates of Trump AC (other than wholly
owned Subsidiaries); (vii) restrict Trump AC and its
Subsidiaries from engaging in certain leasing activities;
(viii) limit the Issuers' ability to merge, sell or
consolidate; (ix) limit the obligations of Funding III to
those incident to its obligations under the Note Indenture
and to its guarantee of the TAC I Notes; (x) limit Trump AC
and its Subsidiaries from paying any amounts pursuant to
management, services or similar agreements with Trump; (xi)
require the maintenance of insurance; and (xii) 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).
</TABLE>
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<TABLE>
<S> <C>
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, 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 II
Notes and acceleration of certain other existing or future
indebtedness of the Issuers and their affiliates under other
instruments that may contain cross-acceleration or
cross-default provisions. See "Risk Factors--Restrictions on
Certain Activities."
MODIFICATION OF INDENTURE..... Amendments to the 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.
</TABLE>
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<TABLE>
<S> <C>
TAC I NOTE INDENTURE The TAC II Original Notes were issued pursuant to Section
PROVISIONS.................. 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 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 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 $22.4 million, after deducting discounts and commissions and
expenses of the Initial Offering. The net proceeds of the Concurrent Initial
Offering will be used for working capital and other general corporate purposes
at Trump AC and its Subsidiaries in accordance with the Note Indenture. There
will be no proceeds to Trump AC from the exchange pursuant to the Exchange
Offer. The net proceeds to Trump AC from the offering of the TAC II Original
Notes (the "Concurrent Initial Offering") were approximately $69.1 million,
after deducting discounts and commissions and expenses of the Concurrent Initial
Offering. The net proceeds of the Concurrent 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 TAC II Note Indenture.
The
10
<PAGE>
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.
RISK FACTORS
See "Risk Factors" for a description of certain factors that should be
considered by participants in the Exchange Offer.
11
<PAGE>
SUMMARY FINANCIAL INFORMATION
SUMMARY FINANCIAL INFORMATION OF TRUMP AC
The following table sets forth certain unaudited pro forma financial
information of Trump AC (a) for the year ended December 31, 1996 and (b) for the
last twelve months ended September 30, 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>
PRO FORMA (C)
------------------------------------------------------
<S> <C> <C>
LAST TWELVE MONTHS
YEAR ENDED DECEMBER 31, 1996 ENDED SEPTEMBER 30, 1997
---------------------------- ------------------------
<CAPTION>
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues............................................ $ 984,789 $ 1,000,121
Depreciation and amortization........................... 76,194 69,559
Income from operations.................................. 115,504 119,475
Interest expense, net (b) (excludes amortization of
deferred financing costs)............................. 146,350 145,751
Net loss (e)............................................ (83,706) (34,385)
OTHER DATA:
Ratio of Earnings to Fixed Charges (f).................. (24,574) (34,385)
EBITDA (a).............................................. $ 199,623 $ 193,202
BALANCE SHEET DATA (AT END OF PERIOD):
Cash.................................................... -- $ 183,054
Total assets............................................ -- 1,803,271
Total long-term debt, net of current maturities......... -- 1,300,020(d)
Total capital........................................... -- 345,376
</TABLE>
- ------------------------
(a) EBITDA represents income from operations before interest expense, taxes,
depreciation, amortization, restructuring costs, pre-opening costs,
non-operating income, and the noncash write-down of the New Jersey
Reinvestment Development Authority ("CRDA") investments. EBITDA should not
be construed as an alternative to net income or any other measure of
performance determined in accordance with generally accepted accounting
principles or as an indicator of Trump AC's operating performance, liquidity
or cash flows generated by operating, investing and financing activities.
Management has included information concerning EBITDA as management
understands that it is used by certain investors as one measure of Trump
AC's historical ability to service its debt. EBITDA for the year ended
December 31, 1996 includes $2.3 million of assumed cost savings.
(b) Does not give effect to any return on investment of the net proceeds of the
Initial Offering and the Concurrent Initial Offering. Deferred financing
costs excluded from Interest expense, net were $7.6 million for the year
ended December 31, 1996 and $7.3 million for the last twelve months ended
September 30, 1997.
(c) The Pro Forma Statement of Operations Data and Other Data give effect to the
1996 Offerings (as defined), the Taj Acquisition (as defined), the Initial
Offering and the Concurrent Initial Offering as if the same had occurred on
January 1, 1996.
(d) Net of unamortized discount of $4.4 million.
(e) Net loss includes $59.1 million extraordinary loss for the year ended
December 31, 1996.
12
<PAGE>
(f) For purposes of computing this ratio, earnings consist of income (loss)
before income taxes, extraordinary items, and fixed charges, adjusted to
exclude capitalized interest. Fixed charges consist of interest expense,
including amounts capitalized, 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). On a pro forma basis for the
year ended December 31, 1996 and for the last twelve months period September
30, 1997, earnings were insufficient to cover fixed charges.
13
<PAGE>
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,
1992 through 1996 and (b) certain unaudited financial information of Plaza
Associates for the nine months ended September 30, 1996 and 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> <C>
NINE MONTHS
YEARS ENDED DECEMBER 31, ENDED SEPTEMBER 30,
----------------------------------------------------- --------------------
<CAPTION>
1992 1993 1994 1995 1996 1996 1997
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues................. $ 313,318 $ 300,491 $ 295,063 $ 333,321 $ 418,373 $ 310,781 $ 319,492
Depreciation and
amortization............... 15,842 17,554 15,653 16,213 23,019 16,652 18,115
Income from operations....... 35,003 49,640 43,415 59,787 46,356 42,036 38,639
Interest expense, net........ 31,356 39,889 48,219 43,261 46,321 33,834 36,151
Extraordinary gain (loss)
(a)........................ (38,205) 4,120 -- (9,250) (59,132) (59,132) --
Net income (loss) (b)........ (35,787) 9,338 (8,870) 1,533 (54,903) (46,737) 2,488
OTHER DATA:
EBITDA (c)................... $ 60,399 $ 68,241 $ 60,524 $ 75,290 $ 74,389 $ 63,079 $ 58,045
Capital expenditures (d)..... 8,643 10,052 20,489 109,756 73,573 67,684 24,798
BALANCE SHEET DATA (AT END OF
PERIODS):
Total assets................. $ 370,349 $ 374,498 $ 375,643 $ 480,024 $ 598,117 $ 601,869 $ 602,347
Total long-term debt, net of
current maturities......... 249,723 395,948 403,214 332,721 406,522 409,672 403,179
Total capital (deficit)...... 11,362 (54,710) (63,580) 110,812 138,222 146,388 150,854
OPERATING DATA (AT END OF
PERIOD): (E)
Casino square footage (f).... 60,000 60,000 73,000 73,604 139,474 139,474 139,474
Number of hotel rooms........ 557 557 555 732 1,404 1,404 1,404
Hotel occupancy rate......... 86.9% 87.6% 88.6% 89.7% 89.7% 93.2% 89.6%
TABLE GAMES:
Total Atlantic City table
drop (g)................... $7,055,034 $6,835,572 $6,832,517 $7,110,612 $7,415,721 $5,628,175 $5,795,962
Atlantic City table drop
growth..................... (2.3)% (3.1)% 0.0% 4.1% 4.3% 5.2% 3.0%
Trump Plaza table drop (g)... $ 689,919 $ 626,621 $ 599,881 $ 626,832 $ 686,908 $ 519,449 $ 496,513
Trump Plaza table games
market share (h)........... 9.8% 9.2% 8.8% 8.8% 9.3% 9.2% 8.6%
Trump Plaza table games fair
share (i).................. 8.2% 7.8% 8.0% 8.6% 10.6% 10.3% 9.6%
Trump Plaza table games
efficiency (j)............. 118.8% 118.0% 110.6% 102.5% 87.2% 89.5% 89.7%
Trump Plaza table units...... 98 87 89 97 127 123 118
Trump Plaza table revenue.... $ 95,864 $ 93,392 $ 92,770 $ 96,518 $ 104,025 $ 78,398 $ 71,191
Trump Plaza table revenue per
unit per day(actual
dollars)................... $ 2,679 $ 2,940 $ 2,855 $ 2,726 $ 2,244 $ 1,746 $ 1,653
SLOTS:
Total Atlantic City slot
revenue.................... $2,113,829 $2,214,638 $2,297,280 $2,572,719 $2,626,021 $2,019,813 $2,094,758
Atlantic City slot revenue
growth..................... 14.2% 4.8% 3.7% 12.0% 2.1% 2.5% 3.7%
Trump Plaza slot revenue
(k)........................ $ 68,388 $ 173,215 $ 170,316 $ 204,230 $ 269,276 $ 206,368 $ 219,793
Trump Plaza slot market
share (h).................. 8.0% 7.8% 7.4% 7.9% 10.3% 10.3% 10.5%
Trump Plaza slot fair share
(i)........................ 7.8% 7.6% 8.0% 8.2% 11.5% 11.1% 12.2%
Trump Plaza slot efficiency
(j)........................ 102.6% 103.1% 92.5% 96.7% 89.0% 92.4% 85.9%
Trump Plaza slot units....... 1,727 1,812 2,076 2,339 3,629 3,431 4,080
Trump Plaza slot revenue
per unit per day (actual
dollars) (k)............... $ 267 $ 262 $ 225 $ 239 $ 203 $ 220 $ 197
</TABLE>
- ------------------------
(a) The extraordinary loss for the year ended December 31, 1992 consists of the
effect of stating the Preferred Stock of Trump Plaza Funding, Inc. ("Plaza
Funding") issued at fair value as compared to the carrying value of these
securities and the write off of certain deferred financing charges and
costs. The excess of the carrying value of a note obligation over the amount
of the settlement payment net of related repaid expenses in the amount of
$4.1 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
14
<PAGE>
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.
(b) Net loss for 1992 includes $1.5 million of costs associated with certain
litigation. Net income (loss) for the years ended December 31, 1993, 1994,
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, restructuring costs, pre-opening costs,
non-operating income, and the noncash write-down of the CRDA investments.
EBITDA should not be construed as an alternative to net income or any other
measure of performance determined in accordance with generally accepted
accounting principles or as an indicator of Trump AC's operating
performance, liquidity or cash flows generated by operating, investing and
financing activities. Management has included information concerning EBITDA
as management understands that it is used by certain investors as one
measure of Trump AC's historical ability to service its debt.
(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 attributable to Trump Plaza East were $8.8 million for the nine
months ended September 30, 1996. 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. Capital expenditures attributable
to Trump World's Fair were $56.0 million for the nine months ended September
30, 1996.
(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.
15
<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, 1992 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 period from April 17, 1996 through September 30, 1996 and for the
nine months ended September 30, 1997 (unaudited). 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
---------------------------------------------------------------------------------------------
NINE MONTHS
ENDED
SEPTEMBER
YEARS ENDED DECEMBER 31, 30,
-------------------------------------------------------------------------------- -----------
1992 1993 1994 1995 1996 1996 1996(A)
----------- ----------- ----------- ----------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN
THOUSANDS) (UNAUDITED)
<CAPTION>
FOR THE
FOR THE PERIOD FROM
PERIOD FROM APRIL 17,
JANUARY 1, 1996
1996 THROUGH THROUGH
APRIL 17, DECEMBER 31,
1996 1996
------------- -------------
(PREDECESSOR) (SUCCESSOR)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues................ $ 469,753 $ 498,911 $ 517,182 $ 553,748 $ 145,966 420,450 $ 285,111
Depreciation and
amortization.............. 36,388 36,858 39,750 43,387 13,647 37,820 24,805
Income from operations...... 68,027 84,458 76,634 89,890 4,902 62,253 56,097
Interest expense, net....... (103,126) (106,997) (113,292) (116,513) (35,499) (66,666) (43,210)
Extraordinary loss.......... -- -- -- -- (116,375) -- --
Net income (loss)........... (35,099) (22,539) (36,658) (26,623) (146,972) 5,587 22,887
OTHER DATA:
EBITDA (b).................. $ 111,022 $ 128,371 $ 127,796 $ 140,835 $ 20,736 $ 102,355 $ 82,564
Capital expenditures (c).... 12,111 16,752 23,030 26,498 5,277 29,079 14,354
BALANCE SHEET DATA (AT END OF
PERIOD):
Total assets................ $ 802,556 $ 811,508 $ 807,612 $ 821,793 $ 825,561 $ 1,051,136 $ 1,056,910
Total long-term debt, net of
current maturities (d).... 595,682 625,765 656,701 694,192 817,508 801,273 800,628
Total capital (deficit)..... 130,913 106,641 67,812 39,635 (108,574) 192,829 210,129
OPERATING DATA (AT END OF
PERIOD): (E)
Casino square footage (f)... 120,000 130,110 132,317 132,856 139,101 139,101
Number of hotel rooms....... 1,250 1,250 1,250 1,250 1,250 1,250
Hotel occupancy rate........ 91.3% 92.3% 92.4% 91.2% 92.0% 93.1%
TABLE GAMES:
Total Atlantic City table
drop (g).................. $ 7,055,034 $ 6,835,572 $ 6,832,517 $ 7,110,612 $ 7,415,721 $ 5,628,175
Atlantic City table drop
growth.................... (2.3)% (3.1)% 0.0% 4.1% 4.3% 5.2%
Taj Mahal table drop (g).... $ 1,067,595 $ 1,062,042 $ 1,125,029 $ 1,192,200 $ 1,283,543 $ 986,997
Taj Mahal table games market
share (h)................. 15.1% 15.5% 16.5% 16.8% 17.3% 17.5%
Taj Mahal table games fair
share(i).................. 13.3% 14.5% 14.2% 13.3% 13.8% 14.0%
Taj Mahal table games
efficiency (j)............ 113.5% 106.9% 116.2% 126.3% 125.4% 125.0%
Taj Mahal table units....... 159 163 159 150 165 167
Taj Mahal table revenue..... $ 169,112 $ 173,432 $ 184,774 $ 201,817 $ 215,561 $ 164,281
Taj Mahal table revenue per
unit per day actual
dollars).................. $ 2,913 $ 2,915 $ 3,184 $ 3,686 $ 3,569 $ 3,590
<CAPTION>
1997
-----------
<S> <C>
<S> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues................ $ 437,698
Depreciation and
amortization.............. 31,948
Income from operations...... 70,566
Interest expense, net....... (70,185)
Extraordinary loss.......... --
Net income (loss)........... 381
OTHER DATA:
EBITDA (b).................. $ 104,171
Capital expenditures (c).... 37,948
BALANCE SHEET DATA (AT END OF
PERIOD):
Total assets................ $ 1,059,816
Total long-term debt, net of
current maturities (d).... 801,236
Total capital (deficit)..... 193,210
OPERATING DATA (AT END OF
PERIOD): (E)
Casino square footage (f)... 147,540
Number of hotel rooms....... 1,250
Hotel occupancy rate........ 93.7%
TABLE GAMES:
Total Atlantic City table
drop (g).................. $ 5,795,962
Atlantic City table drop
growth.................... 3.0%
Taj Mahal table drop (g).... $ 991,231
Taj Mahal table games market
share (h)................. 17.1%
Taj Mahal table games fair
share(i).................. 12.9%
Taj Mahal table games
efficiency (j)............ 132.6%
Taj Mahal table units....... 160
Taj Mahal table revenue..... $ 156,516
Taj Mahal table revenue per
unit per day actual
dollars).................. $ 3,583
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
HISTORICAL
--------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------------
1992 1993 1994 1995 1996 1996
----------- ----------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN
THOUSANDS)
<CAPTION>
FOR THE
FOR THE PERIOD FROM
PERIOD FROM APRIL 17,
JANUARY 1, 1996
1996 THROUGH THROUGH
APRIL 17, DECEMBER 31,
1996 1996
------------- -------------
(PREDECESSOR) (SUCCESSOR)
<S> <C> <C> <C> <C> <C> <C>
SLOTS:
Total Atlantic City slot revenue........... $ 2,113,829 $ 2,214,638 $ 2,297,280 $ 2,572,719 $ 2,626,021
Atlantic City slot revenue growth.......... 14.2% 4.8% 3.7% 12.0% 2.1%
Taj Mahal slot revenue (k)................. $ 246,947 $ 264,504 $ 259,114 $ 285,248 $ 284,595
Taj Mahal slot market share (h)............ 11.7% 11.9% 11.3% 11.1% 10.8%
Taj Mahal slot fair share (i).............. 12.7% 13.1% 12.6% 12.3% 11.7%
Taj Mahal slot efficiency (j).............. 92.1% 90.8% 89.7% 90.2% 92.3%
Taj Mahal slot units....................... 2,840 3,146 3,342 3,514 3,699
Taj Mahal slot revenue per unit per day
(actual dollars) (k)..................... $ 238 $ 230 $ 213 $ 222 $ 210
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30,
------------------------
1996(A) 1997
----------- -----------
<S> <C> <C>
(UNAUDITED)
<S> <C> <C>
SLOTS:
Total Atlantic City slot revenue........... $ 2,019,813 $ 2,094,758
Atlantic City slot revenue growth.......... 2.5% 3.7%
Taj Mahal slot revenue (k)................. $ 216,431 $ 235,305
Taj Mahal slot market share (h)............ 10.7% 11.2%
Taj Mahal slot fair share (i).............. 11.8% 11.8%
Taj Mahal slot efficiency (j).............. 90.7% 94.9%
Taj Mahal slot units....................... 3,666 3,924
Taj Mahal slot revenue per unit per day
(actual dollars) (k)..................... $ 215 $ 220
</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
nine months ended September 30, 1996 reflects the operations of Taj
Associates for the period from April 17, 1996 through September 30, 1996.
(b) EBITDA represents income from operations before depreciation, amortization,
restructuring costs, pre-opening costs, non-operating income, the non-cash
write-down of CRDA investments, a nonrecurring cost of a litigation
settlement in 1994, lease payments on the Specified Parcels (as defined) and
payments under the services agreement entered into between Taj Associates
and Trump, dated as of April 1, 1991 (the "Taj Services Agreement"). In
connection with the Taj Acquisition, the lease payments and payments under
the Taj Services Agreement were terminated. EBITDA should not be construed
as an alternative to net income or any other measure of performance
determined in accordance with generally accepted accounting principles or as
an indicator of Taj Associates' operating performance, liquidity or cash
flows generated by operating, investing and financing activities. Management
has included information concerning EBITDA, as management understands that
it is used by certain investors as one measure of Taj Associates' historical
ability to service its debt.
(c) The total cost of the Taj Mahal Expansion, including amounts expended in
1996, was approximately $43.0 million. Capital expenditures attributable to
the expansion of the facility were approximately $30.4 million for the nine
months ended September 30, 1997 and $4.8 million for the period from
acquisition, April 17, 1996, to September 30, 1996.
(d) The years ended December 31, 1992, 1993, 1994 and 1995 include approximately
$550,140, $580,464, $611,533, and $649,139 of 11.35% Mortgage Bonds, Series
A, due 1999 (the "Taj Bonds"), net of discount of approximately $188,162,
$172,417, $153,597, and $131,103, respectively, which is being accreted as
additional interest expense to maturity and results in an effective interest
rate of approximately 18.0%.
(e) Atlantic City industry data has been compiled from information filed with
and published by the CCC and is unaudited.
(f) 1993, 1994, 1995 and 1996 casino square footage includes an approximately
12,000 square foot poker, keno and race simulcasting room.
(g) Table drop represents the total dollar value of chips purchased for table
games for the period indicated.
(h) Market share represents the total Taj Mahal table drop or slot revenues, as
applicable, expressed as a percentage of total Atlantic City table drop or
slot revenues, as applicable.
(i) Fair share is the percentage of the total number of gaming units (table
games or slot machines, as applicable) in the Taj Mahal to the total number
of such units in casinos in Atlantic City.
(j) Efficiency is the ratio of the Taj Mahal's market share to its fair share.
(k) Slot revenue is shown on the cash basis and excludes amounts reserved for
progressive jackpot accruals.
17
<PAGE>
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.
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."
HIGH LEVERAGE AND FIXED CHARGES
Trump AC and its Subsidiaries have a substantial amount of indebtedness on a
consolidated basis. At September 30, 1997, after giving pro forma effect to the
Initial Offering and the Concurrent Initial Offering, Trump AC's consolidated
indebtedness for borrowed money would have totaled approximately $1.31 billion,
principally representing the TAC I Notes, the TAC II Notes and the 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 $6,128,000 for the nine months ended
September 30, 1997.
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. 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.
18
<PAGE>
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 TAC II Note Indenture
and the Note Indenture. See "Business--Gaming and Other Laws and Regulations."
RISK IN REFINANCING AND REPAYMENT OF INDEBTEDNESS; NEED FOR ADDITIONAL FINANCING
The ability of the Issuers to pay their indebtedness when due will depend
upon the ability of Plaza Associates and Taj Associates to generate cash from
operations sufficient for such purpose or to refinance such indebtedness on or
before the date on which it becomes due. Management does not currently
anticipate being able to generate sufficient cash flow from operations to repay
a substantial portion of the principal amount of the TAC I Notes, the Notes and
the TAC II Notes. Thus, the repayment of the principal amount of the TAC I
Notes, the Notes and the TAC II Notes will likely depend primarily upon the
ability to refinance the TAC I Notes, the Notes and the TAC II Notes when due.
The future operating performance and the ability to refinance the TAC I Notes,
the Notes and the TAC II 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 II 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. However, the ability of Holders of the Notes
to require Trump AC to repurchase the Notes in the event of a Change of Control
will be subject to and conditioned on (i) the prior rights of holders of TAC I
Notes and TAC II Notes to require such repurchase of their securities in case of
a Change of Control and (ii) compliance with provisions of the TAC I Note
Indenture and the TAC II Note Indenture that limit certain restricted payments,
including the acquisition of indebtedness (including the Notes). See
"Description of the Notes--Repurchase of the Notes at the Option of the Holder
Upon a Change of Control." The TAC II Note Indenture and the TAC I Note
Indenture each contain change of control purchase provisions that are not
subject to such conditions. There can be no assurance that Trump AC will be
permitted to purchase the Notes if a Change of Control occurs or 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 II Notes and
the TAC I Notes and acceleration of
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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 II 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 working capital
and other general corporate purposes at Trump AC and its Subsidiaries.
Accordingly, Trump AC has broad discretion in determining the precise use of the
proceeds from the Initial Offering. Among other uses, Trump AC may use such
proceeds, together with the net proceeds from the Concurrent Initial Offering,
for further renovations, improvements and acquisitions in Atlantic City with
respect to Trump Plaza and the Taj Mahal. 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
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.
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 $35.8 million (including an
extraordinary loss of $38.2 million), $8.9 million and $55.0 million (including
an extraordinary loss of $59.1 million) for the years ended December 31, 1992,
1994 and 1996, 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. Plaza Associates had net income of $2.5 million for the nine
months ended September 30, 1997. 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 $35.1 million, $22.5
million, $36.7 million and $26.6 million for the years ended December 31, 1992,
1993, 1994 and 1995, respectively. 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
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December 31, 1996, Taj Associates had net income of $5.6 million. Taj Associates
had net income of $0.3 million for the nine months ended September 30, 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 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." 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
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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 four 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 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. 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. In November 1997, Manhattan Cruises announced plans
to operate overnight gambling cruises leaving from Manhattan. 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, 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 the first quarter of
1997, THCR Holdings submitted a proposal to the Ontario
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Casino Corporation to operate Casino Niagara and develop and operate a permanent
casino and hotel complex in Niagara Falls, Ontario.
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.
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 late 1997. 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
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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.
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 CCC will determine the qualification of specific
security holders, including Institutional Investors (as defined in the Casino
Control Act) subsequent to consummation of the Initial Offering. 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).
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.
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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
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.
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, (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
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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 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.
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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 $22.4 million, after deducting discounts and commissions and
expenses of the 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 Note Indenture. There
will be no proceeds to Trump AC from the exchange pursuant to the Exchange
Offer.
The net proceeds to Trump AC from the Concurrent Initial Offering were
approximately $69.1 million, after deducting discounts and commissions and
expenses of the Concurrent Initial Offering. The net proceeds of the Concurrent
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 TAC II 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.
27
<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
28
<PAGE>
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 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.
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<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.
30
<PAGE>
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
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
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<PAGE>
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 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 so 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
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<PAGE>
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.
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").
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<PAGE>
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
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
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<PAGE>
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.
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<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of Trump AC as of
September 30, 1997 and as adjusted to give effect to the Initial Offering and
the Concurrent Initial Offering. 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 SEPTEMBER 30,
1997
--------------------
(IN THOUSANDS)
AS
ACTUAL ADJUSTED
--------- ---------
<S> <C> <C>
Cash.............................................................. $ 91,557 $ 183,054
TAC I Notes....................................................... 1,200,000 1,200,000
TAC II Notes...................................................... -- 75,000(a)
Notes............................................................. -- 25,000(b)
Mortgage Indebtedness............................................. 5,000 5,000
Other Debt (including current maturities)......................... 8,737 8,737
Total Partner's Capital........................................... 345,376 345,376
--------- ---------
Total Capitalization.............................................. $1,559,113 $1,659,113
--------- ---------
--------- ---------
</TABLE>
- ------------------------
(a) Does not include unamortized discount of $2.9 million.
(b) Does not include unamortized discount of $1.5 million.
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<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, 1992 through 1996 (see
Note 1 below) and for the nine months ended September 30, 1996 and 1997
(unaudited). 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 included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED DECEMBER 31, ENDED SEPTEMBER 30,
----------------------------------------------------- --------------------
1992 1993 1994 1995 1996 1996 1997
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Gaming.................................. $ 265,448 $ 264,081 $ 261,451 $ 298,073 $ 752,228 $ 542,011 $ 686,237
Other................................... 82,735 69,203 66,869 74,182 190,995 136,353 177,004
--------- --------- --------- --------- --------- --------- ---------
Gross Revenues........................ 348,183 333,284 328,320 372,255 943,223 678,364 863,241
Promotional allowances.................. 34,865 32,793 33,257 38,934 104,400 82,472 106,051
--------- --------- --------- --------- --------- --------- ---------
Net Revenues.......................... 313,318 300,491 295,063 333,321 838,823 595,892 757,190
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
COSTS AND EXPENSES:
Gaming.................................. 146,328 136,895 139,540 164,839 453,863 315,648 424,379
Other................................... 35,509 24,778 19,765 20,259 56,052 37,660 49,483
General and administrative.............. 75,459 71,624 76,690 71,913 155,346 99,183 124,143
Depreciation and amortization........... 15,842 17,554 15,653 16,213 60,870 41,457 50,146
Preopening.............................. -- -- -- -- 4,145 3,833 --
Restructuring charges................... 5,177 -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Total costs and expenses.............. 278,315 250,851 251,648 273,534 730,276 497,781 648,151
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Income from operations.................. 35,003 49,640 43,415 59,787 108,547 98,111 109,039
Interest expense, net................... (31,356) (39,889) (48,219) (43,261) (112,122) (76,594) (105,665)
Other non-operating income
(expense)(a).......................... (1,462) (3,873) (4,931) (5,743) 14,194 14,193 --
Extraordinary (loss) gain(b)............ (38,205) 4,120 -- (9,250) (59,132) (59,132) --
(Provision) benefit for income taxes.... 233 (660) 865 -- -- -- --
--------- --------- --------- --------- --------- --------- ---------
Net income (loss)..................... $ (35,787) $ 9,338 $ (8,870) $ 1,533 $ (48,513) $ (23,422) $ 3,374
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
OTHER DATA:
Ratio of Earnings to Fixed Charges(c)... 1.1x 1.1x (9,735) 1.2x 1.1x 1.4x 1.0x
BALANCE SHEET DATA (AT END OF PERIOD):
Cash and cash equivalents............... $ 18,802 $ 14,393 $ 11,144 $ 15,937 $ 71,320 $ 127,629 $ 91,557
Property and equipment, net............. 300,266 293,141 298,354 395,942 1,456,267 1,423,006 1,472,046
Total assets............................ 370,349 374,498 375,643 480,024 1,659,006 1,720,286 1,707,666
Total long-term debt, net of current
maturities............................ 249,723 395,948 403,214 332,721 1,207,795 1,208,765 1,204,415
Preferred partnership interest.......... 58,092 -- -- -- -- -- --
Total capital (deficit)................. 11,362 (54,710) (63,580) 110,812 331,858 356,949 345,376
</TABLE>
- ------------------------------
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 September 30, 1996 and 1997 reflect the
Taj Acquisition and the results for the year ended December 31, 1996 and
for the nine months ended September 30, 1996 include the operations of
Taj Associates for the period from the date of acquisition (April 17,
1996).
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
37
<PAGE>
(FOOTNOTES CONTINUED FROM PRECEDING PAGE)
(a) Other non-operating (income) expense for 1992 includes $1.5 million of costs
associated with certain litigation. Other non-operating (income) expense for
the years ended December 31, 1993, 1994 and 1995 includes $3.9 million, $4.9
million and $3.7 million, respectively, of real estate taxes and leasing
costs associated with Trump Plaza East. Other non-operating (income) 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) expense for
the year ended December 31, 1996 and, for the nine months ended September
30, 1996, includes $15.0 million license fee revenue.
(b) The extraordinary loss for the year ended December 31, 1992 consists of the
effect of stating Plaza Funding's Preferred Stock issued at fair value as
compared to the carrying value of these securities and the write-off of
certain deferred financing charges and costs. The excess of the carrying
value of a note obligation over the amount of the settlement payment net of
related prepaid expenses in the amount of $4.1 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 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.
(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 year ended 1994.
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, 1992 through
1996 and for the nine months ended September 30, 1996 and 1997 (unaudited). 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 included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED DECEMBER 31, ENDED SEPTEMBER 30,
---------------------------------------------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1992 1993 1994 1995 1996 1996 1997
---------- ---------- ---------- ---------- ---------- ---------- ----------
<CAPTION>
(DOLLARS IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Gaming............................ $ 265,448 $ 264,081 $ 261,451 $ 298,073 $ 368,958 $ 281,511 $ 285,507
Other............................. 82,735 69,203 66,869 74,182 105,713 79,655 83,726
Gross Revenues.................. 348,183 333,284 328,320 372,255 474,671 361,166 369,233
Promotional allowances............ 34,865 32,793 33,257 38,934 56,298 50,385 49,741
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net Revenues.................... 313,318 300,491 295,063 333,321 418,373 310,781 319,492
---------- ---------- ---------- ---------- ---------- ---------- ----------
Costs and Expenses:
Gaming............................ 146,328 136,895 139,540 164,839 223,868 168,210 178,719
Other............................. 35,509 24,778 23,380 23,932 29,865 20,398 24,590
General and administrative........ 75,459 71,624 73,075 68,550 91,120 59,652 59,429
Depreciation and amortization..... 15,842 17,554 15,653 16,213 23,019 16,652 18,115
Preopening........................ -- -- -- -- 4,145 3,833 --
Restructuring charges............. 5,177 -- -- -- -- -- --
Total costs and expenses........ 278,315 250,851 251,648 273,534 372,017 268,745 280,853
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income from operations............ 35,003 49,640 43,415 59,787 46,356 42,036 38,639
Interest expense, net............. (31,356) (39,889) (48,219) (43,261) (46,321) (33,834) (36,151)
Other non-operating income
(expense)(a).................... (1,462) (3,873) (4,931) (5,743) 4,194 4,193 --
Extraordinary (loss) gain(b)...... (38,205) 4,120 -- (9,250) (59,132) (59,132) --
(Provision) benefit for income
taxes........................... 233 (660) 865 -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss)................. $ (35,787) $ 9,338 $ (8,870) $ 1,533 $ (54,903) $ (46,737) $ 2,488
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
BALANCE SHEET DATA (AT END OF
PERIOD):
Cash and cash equivalents......... $ 18,802 $ 14,393 $ 11,144 $ 15,937 $ 26,657 $ 28,836 $ 23,526
Property and equipment, net....... 300,266 293,141 298,354 395,942 525,893 495,309 532,673
Total assets...................... 370,349 374,498 375,643 480,024 598,117 601,869 602,347
Total long-term debt, net of
current maturities.............. 249,723 395,948 403,214 332,721 406,522 406,672 403,179
Preferred partnership interest.... 58,092 -- -- -- -- -- --
Total capital (deficit)........... 11,362 (54,710) (63,580) 110,812 138,222 146,388 150,854
</TABLE>
- ------------------------
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.
39
<PAGE>
(a) Other non-operating (income) expense for 1992 includes $1.5 million of costs
associated with certain litigation. Other non-operating (income) expense for
the years ended December 31, 1993, 1994 and 1995 includes $3.9 million, $4.9
million and $3.7 million, respectively, of real estate taxes and leasing
costs associated with Trump Plaza East. Other non-operating (income) 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) expense for
the year ended December 31, 1996 includes $5.0 million license fee revenue.
(b) The extraordinary loss for the year ended December 31, 1992 consists of the
effect of stating Plaza Funding's Preferred Stock issued at fair value as
compared to the carrying value of these securities and the write-off of
certain deferred financing charges and costs. The excess of the carrying
value of a note obligation over the amount of the settlement payment net of
related prepaid expenses in the amount of $4.1 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.
40
<PAGE>
TAJ ASSOCIATES
The following table sets forth historical consolidated financial information
of Taj Associates for each of the years ended December 31, 1992 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 period from April 17, 1996 through September 30, 1996 and for the
nine months ended September 30, 1997 (unaudited). 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 included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PERIOD
ENDED
SEPTEMBER
YEARS ENDED DECEMBER 31, 30,
---------------------------------------------------------------------------- ------------
1992 1993 1994 1995 1996 1996 1996(A)
---------- ---------- ---------- ---------- ------------- ------------- ------------
(DOLLARS IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE FOR THE
PERIOD FROM PERIOD FROM
JANUARY 1, APRIL 17,
1996 1996
THROUGH THROUGH
APRIL 17, DECEMBER 31,
1996 1996
------------- -------------
(PREDECESSOR) (SUCCESSOR)
STATEMENT OF OPERATIONS DATA:
Revenues:
Gaming............................ $ 414,045 $ 442,064 $ 461,622 $ 501,378 $ 132,870 $ 383,270 $ 260,500
Other............................. 116,958 113,291 117,738 116,368 30,866 85,282 56,698
---------- ---------- ---------- ---------- ------------- ------------- ------------
Gross Revenues.................. 531,003 555,355 579,360 617,746 163,736 468,522 317,198
Promotional allowances............ 61,250 56,444 62,178 63,998 17,770 48,102 32,087
---------- ---------- ---------- ---------- ------------- ------------- ------------
Net Revenues.................... $ 469,753 $ 498,911 $ 517,182 $ 553,748 $ 145,966 $ 420,450 285,111
COSTS AND EXPENSES:
Gaming............................ 227,394 237,566 260,472 283,786 88,731 229,995 147,438
Other............................. 39,125 40,605 40,697 39,842 10,925 26,187 17,262
General and administrative........ 98,819 99,424 99,629 96,843 27,761 64,195 39,509
Depreciation and amortization..... 36,388 36,858 39,750 43,387 13,647 37,820 24,805
---------- ---------- ---------- ---------- ------------- ------------- ------------
Total Costs and Expenses.......... 401,726 414,453 440,548 463,858 141,064 358,197 229,014
---------- ---------- ---------- ---------- ------------- ------------- ------------
Income from operations............ 68,027 84,458 76,634 89,890 4,902 62,253 56,097
Interest expense, net............. (103,126) (106,997) (113,292) (116,513) (35,499) (66,666) (43,210)
Other non-operating income (b).... -- -- -- -- -- 10,000 10,000
Extraordinary loss................ -- -- -- -- (116,375) -- --
---------- ---------- ---------- ---------- ------------- ------------- ------------
Net income (loss)................. $ (35,099) $ (22,539) $ (36,658) $ (26,623) $ (146,972) $ 5,587 $ 22,887
---------- ---------- ---------- ---------- ------------- ------------- ------------
---------- ---------- ---------- ---------- ------------- ------------- ------------
BALANCE SHEET DATA (AT END OF PERIOD):
Cash and cash equivalents........... $ 34,062 $ 58,044 $ 61,196 $ 88,941 $ 87,895 $ 37,423 $ 32,009
Property and equipment, net......... 742,129 722,834 706,785 690,987 691,173 929,950 926,512
Total assets........................ 802,556 811,508 807,612 821,793 825,561 1,051,136 1,056,910
Total long-term debt, net of current
maturities........................ 595,682 625,765 656,701 694,192 817,508 801,273 800,628
Total capital (deficit)............. 130,913 106,641 67,812 39,635 (108,574) 192,829 210,129
<CAPTION>
1997
------------
<S> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Gaming............................ $ 400,730
Other............................. 93,278
------------
Gross Revenues.................. 494,008
Promotional allowances............ 56,310
------------
Net Revenues.................... $ 437,698
COSTS AND EXPENSES:
Gaming............................ 245,660
Other............................. 24,893
General and administrative........ 64,631
Depreciation and amortization..... 31,948
------------
Total Costs and Expenses.......... 367,132
------------
Income from operations............ 70,566
Interest expense, net............. (70,185)
Other non-operating income (b).... --
Extraordinary loss................ --
------------
Net income (loss)................. $ 381
------------
------------
BALANCE SHEET DATA (AT END OF PERIOD):
Cash and cash equivalents........... $ 31,313
Property and equipment, net......... 938,329
Total assets........................ 1,059,816
Total long-term debt, net of current
maturities........................ 801,236
Total capital (deficit)............. 193,210
</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
nine months ended September 30, 1996 reflects the operations of Taj
Associates for the period from April 17, 1996 through September 30, 1996.
(b) Other non-operating income for the period from April 17, 1996 through
September 30, 1996 and December 31, 1996 includes $10.0 million license fee
revenue.
41
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 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.
The following table includes selected data of Plaza Associates and Taj
Associates (since the date of acquisition, April 17, 1996) for the nine months
ended September 30, 1997 and 1996.
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1997 1996 1997 1996 1997 1996
PLAZA PLAZA TAJ TAJ TOTAL TOTAL
ASSOCIATES ASSOCIATES ASSOCIATES ASSOCIATES TRUMP AC TRUMP AC
----------- ----------- ----------- ----------- ----------- -----------
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Gaming.......................... $ 258,507 $ 281,511 $ 400,730 $ 260,500 $ 686,237 $ 542,011
Other........................... 83,726 79,655 93,278 56,698 177,004 136,353
----------- ----------- ----------- ----------- ----------- -----------
Gross Revenues.................. 369,233 361,166 494,008 317,198 863,241 678,364
Less: Promotional Allowances...... 49,741 50,385 56,310 32,087 106,051 82,472
----------- ----------- ----------- ----------- ----------- -----------
Net Revenues.................... 319,492 310,781 437,698 285,111 757,190 595,892
----------- ----------- ----------- ----------- ----------- -----------
Costs & Expenses:
Gaming.......................... 178,719 168,210 245,660 147,438 424,379 315,648
Pre-opening..................... -- 3,833 -- -- -- 3,833
General & Administrative........ 59,429 59,652 64,631 39,509 124,143 99,183
Depreciation and Amortization... 18,115 16,652 31,948 24,805 50,146 41,457
Other........................... 24,590 20,398 24,893 17,262 49,483 37,660
----------- ----------- ----------- ----------- ----------- -----------
Total Costs and Expenses........ 280,853 368,745 367,132 229,014 648,151 497,781
----------- ----------- ----------- ----------- ----------- -----------
Income from Operations............ 38,639 42,036 70,566 56,097 109,039 98,111
----------- ----------- ----------- ----------- ----------- -----------
Non-Operating Income
(Expense)..................... 429 4,768 892 10,458 1,992 15,676
Interest Expense................ (36,580) (34,409) (71,077) (43,668) (107,657) (78,077)
----------- ----------- ----------- ----------- ----------- -----------
Total Non-Operating Expense..... (36,151) (29,641) (70,185) (33,210) (105,665) (62,401)
----------- ----------- ----------- ----------- ----------- -----------
Income before extraordinary
loss.......................... 2,488 12,395 381 22,887 3,374 35,710
Extraordinary Loss.............. -- (59,132) -- -- -- (59,132)
----------- ----------- ----------- ----------- ----------- -----------
Net Income (Loss)................. $ 2,488 $ (46,737) $ 381 $ 22,887 $ 3,374 $ (23,422)
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
----------------------------------------------------------------------------
1997 1996 1997 1996 1997 1996
PLAZA PLAZA TAJ TAJ TOTAL TOTAL
ASSOCIATES ASSOCIATES ASSOCIATES ASSOCIATES TRUMP AC TRUMP AC
----------- ----------- ----------- ----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Table Game Revenues............... $ 71,085 $ 78,365 $ 156,584 $ 110,606 $ 227,669 $ 188,971
Incr (Decr) over Prior Period..... $ (7,280) $ 45,978 $ 38,698
Table Game Drop................... $ 496,513 $ 519,449 $ 991,231 $ 645,990 $ 1,487,744 $ 1,165,439
Incr (Decr) over Prior Period..... $ (22,936) $ 345,241 $ 322,305
Table Win Percentage.............. 14.3% 15.1% 15.8% 17.1% 15.3% 16.2%
Decrease over Prior Period........ (.8 pts) (1.3 pts) (.9 pts.)
Number of Table Games............. 118 123 160 166 278 289
Decrease over Prior Period........ (5) (6) (11)
Slot Revenues..................... $ 214,422 $ 203,146 $ 230,059 $ 140,093 $ 444,481 $ 343,239
Increase over Prior Period........ $ 11,276 $ 89,966 $ 101,242
Slot Handle....................... $ 2,622,704 $ 2,417,134 $ 2,751,430 $ 1,685,494 $ 5,374,134 $ 4,102,628
Increase over Prior Period........ $ 205,570 $ 1,065,936 $ 1,271,506
Slot Win Percentage............... 8.2% 8.4% 8.4% 8.3% 8.3% 8.4%
Incr (Decr) over Prior Period..... (.2 pts.) .1 pts. (.1 pts.)
Number of Slot Machines........... 4,080 3,431 3,924 3,742 8,004 7,173
Increase over Prior Period........ 649 182 831
Poker Revenues.................... -- -- $ 12,169 $ 8,360 $ 12,169 $ 8,360
Increase over Prior Period........ -- $ 3,809 $ 3,809
Number of Poker Tables............ -- -- 63 64 63 64
Decrease over Prior Period........ -- (1) (1)
Other Gaming Revenues............. -- -- $ 1,918 $ 1,441 $ 1,918 $ 1,441
Increase over Prior Period........ -- $ 477 $ 477
Total Gaming Revenues............. $ 285,507 $ 281,511 $ 400,730 $ 260,500 $ 686,237 $ 542,011
Increase over Prior Period........ $ 3,996 $ 140,230 $ 144,226
</TABLE>
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.
Gaming costs and expenses were $424.4 million for the nine months ended
September 30, 1997, an increase of $108.7 million or 34.4% from $315.6 million
for the comparable period in 1996. This increase is primarily attributable to
the acquisition of Taj Associates on April 17, 1996. Taj Associates' gaming
costs and expenses were $245.7 million for the nine months ended September 30,
1997, an increase of $98.2 million for the period from inception, April 17,
1996, to September 30, 1996. Gaming costs and expenses for Plaza Associates were
$178.7 million for the nine months ended September 30, 1997, an increase of
$10.5 million or 6.2% from $168.2 million for the comparable period in 1996.
Plaza Associates' increase is primarily due to increased promotional and
operating expenses as well as taxes associated with increased levels of gaming
revenues from the comparable period in 1996.
General and administrative expenses were $124.1 million for the nine months
ended September 30, 1997, an increase of $25.0 million or 25.2% from general and
administrative expenses of $99.2 million for the comparable period in 1996. This
increase is primarily attributable to the acquisition of Taj Associates on April
17, 1996. Taj Associates' general and administrative expenses were $64.6 million
for the nine months ended September 30, 1997, an increase of $25.1 million for
the period from inception, April 17, 1996, to September 30, 1996. Plaza
Associates' general and administrative expenses were $59.4 million for the nine
months ended September 30, 1997, a decrease of $.2 million from the comparable
period in 1996.
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
43
<PAGE>
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 nine months ended September 30,
1997, the net effect of applying these new lives was to increase net income by
$4.0 million.
Other non-operating income was $2.0 million for the nine months ended
September 30, 1997, a decrease of $13.7 million from the comparable period in
1996. Taj Associates' non-operating income included a one-time $10.0 million
non-refundable licensing fee in the nine months ended September 30, 1996
resulting from an agreement with Atlantic Jersey Thermal Systems, Inc. Plaza
Associates reflects a decrease in non-operating expense of $4.3 million or 91.0%
from $4.8 million in 1996. This decrease is attributable to a one time $5.0
million non-refundable licensing fee in the nine months ended September 30, 1996
resulting from an agreement with Atlantic Jersey Thermal Systems, Inc.
The extraordinary loss of $59.1 million for the nine months ended September
30, 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, 1996 AND 1995
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 at December 31, 1996, 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 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,
--------------------------------------------------
<S> <C> <C> <C> <C>
1995 1996 1996 1996
PLAZA PLAZA TAJ TOTAL
ASSOCIATES ASSOCIATES ASSOCIATES TRUMP AC
----------- ----------- ----------- -----------
<CAPTION>
(IN MILLIONS)
<S> <C> <C> <C> <C>
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...................................... 39.0 56.3 48.1 104.4
----------- ----------- ----------- -----------
Net Revenues.................................................... 333.3 418.3 420.5 838.8
----------- ----------- ----------- -----------
Costs & Expenses:
Gaming.......................................................... 164.8 223.9 230.0 453.9
Pre-opening..................................................... -- 4.1 -- 4.1
General & Administrative........................................ 71.9 91.1 64.2 155.3
Depreciation & Amortization..................................... 16.2 23.0 37.8 60.9
Other........................................................... 20.6 29.9 26.2 56.1
----------- ----------- ----------- -----------
Total Costs and Expenses........................................ 273.5 372.0 358.2 730.3
----------- ----------- ----------- -----------
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 Income (Expense)............................ (49.0) (42.2) (56.7) (97.9)
----------- ----------- ----------- -----------
Extraordinary Loss.............................................. (9.3) (59.1) -- (59.1)
Provision for Income Taxes...................................... 0.0 0.0 -- 0.0
----------- ----------- ----------- -----------
Net Income (Loss)................................................. $ 1.5 $ (55.0) $ 5.6 $ (48.5)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
44
<PAGE>
Gaming revenues were $752.2 million for the year ended December 31, 1996, an
increase of $454.1 million or 152.3% from gaming revenues of $298.1 million for
1995. This increase in gaming revenues consists of $383.3 million from Taj
Associates since the date of acquisition in addition to an increase in Plaza
Associates table games and slot revenues. Management believes that Plaza
Associates' 23.8% increase in gaming revenues is primarily due to the May 1996
opening of Trump World's Fair, the February 1996 opening of Trump Plaza East,
the availability of additional hotel rooms at both Trump World's Fair and Trump
Plaza East, as well as management's marketing initiatives.
Slot revenues were $471.0 million for the year ended December 31, 1996, an
increase of $269.3 million or 133.5% from slot revenues of $201.7 million for
1995. This increase is directly attributable to the acquisition of Taj
Associates which contributed $206.2 million in slot revenues. Plaza Associates
slot revenues were $264.8 million for the year ended December 31, 1996, an
increase of $63.1 million or 31.3% from slot revenues of $201.7 million for the
year ended December 31, 1995. Plaza Associates' increase is due to the addition
of 1,865 slot machines at Trump World's Fair and Trump Plaza East, as well as
management's marketing programs.
Table games revenues were $266.0 million for the year ended December 31,
1996, an increase of $169.6 million or 175.9% from $96.4 million for 1995. This
increase is attributable to the acquisition of Taj Associates which contributed
$161.9 million in table games revenues with a corresponding $942.5 million of
table games drop (i.e., the dollar value of chips purchased). Plaza Associates'
table games revenue of $104.1 million for the year ended December 31, 1996
increased by $7.7 million or 8.0% from 1995. Plaza Associates' increase is
primarily due to an increase in table games drop by 9.6% for the year ended
December 31, 1996.
During the year ended December 31, 1996, gaming credit extended to customers
was approximately 25.8% of overall table play. This reflects Taj Associates'
gaming credit which was approximately 30.7% of overall table play since its date
of acquisition in addition to Plaza Associates' gaming credit which accounted
for 17.4% of Plaza Associates' overall table play. At December 31, 1996, Plaza
Associates' gaming receivables amounted to approximately $11.7 million, a
decrease of approximately $2.1 million from 1995, with allowances for doubtful
gaming receivables of approximately $5.9 million, a decrease of $2.0 million
from 1995. The increase over the prior year directly reflects Taj Associates'
$41.0 million of gaming receivables at December 31, 1996, with an allowance for
doubtful gaming receivables of $10.9 million.
In addition to table games and slot revenues, Taj Associates' poker/race
simulcasting/keno operations generated approximately $13.1 million in poker
revenue, $1.0 million in race simulcasting revenue, and $1.1 million in keno
revenue since its acquisition date.
Other revenues were $191.0 million for the year ended December 31, 1996, an
increase of $116.8 million or 157.4% from other revenues of $74.2 million for
1995. Other revenues include revenues from rooms, food and beverage and
miscellaneous items. The increase primarily is attributable to the acquisition
of Taj Associates which generated $85.3 million of other revenue since its
acquisition date. Plaza Associates' other revenue was $105.7 million for the
year ended December 31, 1996, an increase of $31.5 million or 42.5% from 1995.
Plaza Associates' increase reflects the additional rooms at Trump Plaza East and
Trump World's Fair as well as increases in rooms, food and beverage revenues
attendant to increased levels of gaming activity due in part to increased
promotional activities.
Promotional allowances were $104.4 million for the year ended December 31,
1996, an increase of $65.4 million or 167.7% from promotional allowances of
$39.0 million for the year ended December 31, 1995. Taj Associates generated
$48.1 million in promotional allowances since its acquisition date. Plaza
Associates experienced an increase in promotional allowances to $56.3 million or
44.4% from promotional allowances of $39.0 million in 1995. Plaza Associates'
increase is attributable primarily to the additional rooms at Trump World's Fair
and Trump Plaza East as well as the addition of three restaurants at Trump
World's Fair, and increases in marketing initiatives during the year ended
December 31, 1996.
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Gaming costs and expenses were $453.9 million for the year ended December
31, 1996, an increase of $289.1 million or 175.4% from $164.8 million for 1995.
This increase was primarily attributable to Taj Associates' gaming costs and
expenses of $230.0 million since its acquisition. Gaming costs and expenses for
Plaza Associates were $223.9 million, an increase of $59.1 million or 35.9% from
$164.8 million for 1995. Plaza Associates' increase is primarily due to
increased promotional and operating expenses as well as taxes associated with
increased levels of gaming revenues from 1995.
General and administrative expenses were $155.3 million for the year ended
December 31, 1996, an increase of $83.4 million or 116.0% from general and
administrative expenses of $71.9 million for 1995. This increase is primarily
due to the acquisition of Taj Associates which recorded $64.2 million in general
and administrative expenses since its acquisition. Plaza Associates' increase of
$19.2 million over 1995 is due in part to expenses associated with the Trump
Plaza East and Trump World's Fair.
Pre-opening expenses of $4.1 million were incurred by Plaza Associates and
reflect the costs associated with the opening Trump World's Fair in 1996.
Other expenses were $56.1 million for the year ended December 31, 1996, an
increase of $35.5 million or 172.3% from 1995. Other expenses include costs
associated with operating Trump Plaza, Trump World's Fair and the Taj Mahal
hotels. The increase over the prior year reflects Taj Associates' $26.2 million
of other expenses since its date of acquisition. Plaza Associates' other
expenses increased by $9.3 million or 45.1 % from 1995. This increase is due to
operating Trump World's Fair and Trump Plaza East, both with opening dates in
1996.
Income from operations was $108.5 million for the year ended December 31,
1996, an increase of $48.7 million or 81.4% from income from operations of $59.8
million for 1995. Taj Associates contributed $62.3 million of income from
operations since its acquisition. Plaza Associates contributed $46.3 million
during the year ended December 31, 1996, a decrease of $13.5 million or 22.6%
from the comparable period in 1995.
Interest expense was $114.5 million for the year ended December 31, 1996, an
increase of $70.2 million or 158.5% from interest expense of $44.3 million for
1995. This increase is attributable to the acquisition of Taj Associates with an
interest expense of $67.4 million at December 31, 1996. Plaza Associates
reflects $47.1 million interest expense at December 31, 1996, compared to $44.3
million for 1995.
Other non-operating income was $16.6 million for the year ended December 31,
1996, an increase of $21.3 million from 1995. Non-operating income includes
$15.0 million of non-refundable licensing fee agreements entered into with
Atlantic Jersey Thermal Services, Inc. by Plaza Associates and Taj Associates
and $1.5 million of interest income.
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.
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
The financial information presented below reflects the results of operations
of Plaza Associates. Because Trump AC had no business operations other than its
interest in Plaza Associates at December 31, 1995, its results of operations are
not discussed below.
Gaming revenues were $298.1 million for the year ended December 31, 1995, an
increase of $36.6 million or 14.0% from gaming revenues of $261.5 million in
1994. This increase in gaming revenues consisted of an increase in both table
games and slot revenues. While 1994 was adversely affected by
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unfavorable winter weather, construction and management turnover, management
believes that the increase in gaming revenues in 1995 is also due to an
increased level of demand evident in the Atlantic City Market generally, as well
as to management's marketing and other initiatives, including the introduction
of new slot machines and table games, the addition of bill acceptors on slot
machines, an increase in casino floor square footage and an increase in
promotional allowances.
Slot revenues were $201.7 million for the year ended December 31, 1995, an
increase of $33.0 million or 19.6% from $168.7 million in 1994. This increase
was primarily due to certain factors mentioned in the foregoing paragraph
including the implementation of an aggressive slot marketing program.
Table games revenues were $96.4 million for the year ended December 31,
1995, an increase of $3.6 million or 3.9% from table games revenues of $92.8
million in 1994. This was primarily due to an increase in table games drop
(i.e., the dollar value of chips purchased) by $27.0 million or 4.5% for the
year ended December 31, 1995 from 1994.
During the year ended December 31, 1995, gaming credit extended to customers
was approximately 17.7% of overall table play, an increase of approximately 0.7%
from 1994. At December 31, 1995, gaming receivables amounted to approximately
$13.8 million, an increase of approximately $0.1 million from 1994, with
allowances for doubtful gaming receivables of approximately $7.9 million, a
decrease of approximately $0.6 million from 1994.
Other revenues were $74.2 million for the year ended December 31, 1995, an
increase of $7.3 million or 10.9% from other revenues of $66.9 million in 1994.
Other revenues include revenues from rooms, food and beverage and miscellaneous
items. This increase primarily reflects increases in food and beverage revenues
attendant to higher levels of gaming activity and promotional allowances and
expenses.
Promotional allowances were $39.0 million for the year ended December 31,
1995, an increase of $5.7 million or 17.1% from $33.3 million in 1994. This
increase is primarily attributable to an increase in gaming activity.
Gaming costs and expenses were $164.8 million for the year ended December
31, 1995, an increase of $25.3 million or 18.1% from gaming costs and expenses
of $139.5 million in 1994. This increase is primarily due to increased
promotional and operating expense and taxes associated with increased levels of
gaming revenues from 1994.
General and administrative expenses were $71.9 million for the year ended
December 31, 1995, a decrease of $4.8 million or 6.3% from general and
administrative expenses of $76.7 million in 1994. This decrease is primarily the
result of cost containment measures.
Income from operations was $59.8 million for the year ended December 31,
1995, an increase of $16.4 million or 37.8% from income from operations of $43.4
million in 1994.
Net interest expense was $43.3 million for the year ended December 31, 1995,
a decrease of $4.9 million or 10.2% from net interest expense of $48.2 million
in 1994. This decrease is attributable to the retirement of the Plaza PIK Notes
in June 1995 partly offset by the increased interest expense associated with
equipment financing and capital leases incurred during 1995.
Other non-operating expense was $5.7 million for the year ended December 31,
1995, an increase of $0.8 million or 16.3% from non-operating expense of $4.9
million in 1994. This increase is primarily attributable to costs associated
with Trump World's Fair.
The extraordinary loss of $9.3 million for the year ended December 31, 1995
relates to the redemption and write-off of unamortized deferred financing costs
relating to the repurchase and redemption on June 12, 1995 of all of the Plaza
PIK Notes and related Plaza PIK Note Warrants.
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CAPITAL RESOURCES AND LIQUIDITY
Cash flows from operating activities are Trump AC's principal source of
liquidity and were $86.7 million for the nine months ended September 1997
compared to $73.3 million for the comparable period in 1996. 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 National Westminster Bank USA ("Nat
West"), purchased certain real property used in the operation of Trump Plaza and
the Taj Mahal and paid Bankers Trust Company ("Bankers Trust") to release
certain liens and guarantees.
Each of the TAC I Note Indenture, the Note Indenture and the TAC II Note
Indenture restricts 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 CCC.
Capital expenditures for Trump AC were $63,449,000 for the nine months ended
September 30, 1997. Capital expenditures for the nine months ended September 30,
1996 includes Trump Plaza East and Trump World's Fair expansions of $36.9
million and $56.0 million, respectively. In addition, in 1997, Plaza Associates
exercised its option to purchase from Seashore Four Associates ("Seashore
Four"), an entity beneficially owned by Trump, one of the parcels of land
underlying Trump Plaza's main tower, pursuant to the terms of a lease, the
payments under which were terminated upon the exercise of such option. The
exercise price and associated closing costs were $10.1 million.
Capital expenditures attributable to the Taj Mahal were $38.0 million for
the nine months ended September 30, 1997 and $76.2 million for the period from
acquisition, April 17, 1996, to September 30, 1996. Capital expenditures for
improvements to existing facilities were approximately $7.6 million for the nine
months ended September 30, 1997 and $9.7 million for the period from
acquisition, April 17, 1996, to September 30, 1996. Capital expenditures
attributable to the expansion of the facility were approximately $30.4 million
for the nine months ended September 30, 1997 and $4.7 million for the period
from acquisition, April 17, 1996, to September 30, 1996. Capital expenditures
for the period from acquisition, April 17, 1996, to September 30, 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 15-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 costs of the Taj Mahal Expansion including amounts
expended in 1996 were approximately $43.0 million and were funded principally
out of cash from operations.
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 1996, 1995 or 1994.
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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 planned 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 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.
The following table details Trump Plaza's current casino and hotel capacity:
<TABLE>
<CAPTION>
TRUMP
PLAZA TRUMP TRUMP
MAIN PLAZA WORLD'S
FACILITY 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............................................................... 95 0 16 111
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.
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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
will continue the marketing strategies it has found successful in the past,
including targeting lucrative high-end drive-in slot customers. Management
believes the additional hotel rooms and gaming facilities at Trump Plaza East
will better enable Trump Plaza to accommodate the more profitable weekend
drive-in patron, who tends to wager more per play and per visit than the typical
walk-in or bus patron.
TRUMP WORLD'S FAIR. Trump World's Fair 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 constructed 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, an Oriental
Pavilion and a casino with approximately 538 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 383 slot machines and 32 table games along with additional
restaurants. Moreover, with its prime location adjoining the Atlantic City
Boardwalk 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.
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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
2,400 gaming patrons per day during the week and 3,500 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 2,600 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, 1994, 1995 and 1996, credit play as a percentage of total dollars wagered
was approximately 17%, 18% and 17%, respectively. As part of Trump Plaza's
business strategy, Trump Plaza has imposed stricter standards on applications
for new or additional credit.
FACILITIES AND AMENITIES
TRUMP PLAZA. The casino in Trump Plaza's main tower currently offers 95
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, two
gift shops, a deli, a coffee shop, an ice cream parlor and a buffet. The casino
level houses the casino, a fast food restaurant, an exclusive slot lounge for
high-end patrons and an ocean view high-end slot area. An enclosed walkway
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connects Trump Plaza at the casino level with the Atlantic City Convention
Center and with Trump World's Fair.
On February 16, 1996, Trump Plaza opened the 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 1,460-slot
machines and 32 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 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 Atlantic City
Convention Center.
EMPLOYEES AND LABOR RELATIONS
Plaza Associates has approximately 4,900 employees of whom approximately
1,700 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.
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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 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.
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THE TAJ MAHAL
The Taj Mahal ranked first among all Atlantic City casinos in terms of total
gaming revenues for the nine months ended September 30, 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 and private club.
The Taj Mahal Expansion consisted of the construction of a new 15-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 May 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 147,500 square feet of
gaming space, 217 table games and 4,148 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, 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 15 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 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), 15 dining and 10 beverage locations,
parking for approximately 6,950 cars, a 15-bay bus terminal and approximately
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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. Approximately 3,300 new slot machines were
placed in service during 1994, 1995 and 1996 to replace older models. 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, 1996, the Taj Mahal captured approximately 49.3% of the
total Atlantic City poker revenues.
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 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. 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.
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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 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, 1994, 1995 and 1996, the Taj Mahal's credit play as a percentage of total
dollars wagered was approximately 22.8%, 24.5% and 29.7%, respectively.
EMPLOYEES
Taj Associates has approximately 5,800 employees for the operation of the
Taj Mahal, of whom approximately 1,980 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.
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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 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 Trump Atlantic City Corporation ("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 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, L.L.C. ("Trump
Communications"), a New Jersey limited liability company and a subsidiary of
TCS, was formed
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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. As of December 31, 1997, Trump
Communications ceased functioning as a separate entity and most of its
activities were consolidated into TCS.
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.
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 II NOTES. Concurrent with the Initial Offering, Trump AC and Funding
II, a wholly owned subsidiary of Trump AC, offered $75,000,000 aggregate
principal amount of TAC II Notes in the Concurrent Initial Offering. The TAC II
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 $13.7 million of indebtedness, including, as
of December 31, 1996, approximately $5.0 million due under outstanding mortgage
notes described above.
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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 $3.83 billion in gaming revenues
in 1996, an approximately 1.8% increase over 1995 gaming revenues of
approximately $3.76 billion. From 1991 to 1996, total gaming revenues in
Atlantic City have increased approximately 27.9%, while hotel rooms increased
only slightly during that period. Although total visitor volume to Atlantic City
remained relatively constant in 1996, the volume of bus customers dropped to 9.8
million in 1996, continuing a decline from 11.7 million in 1991. The volume of
customers traveling by other means to Atlantic City has grown from 20.1 million
in 1991 to 34.0 million in 1996.
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
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 2.1% in 1996, continuing a trend
of increases over the past five years. From 1991 through 1996, slot revenue
growth in Atlantic City has averaged 7.4% per year. Total table revenue
increased 4.3% in 1996, while table game revenue from 1991 to 1996 has decreased
on average 0.4% 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 1991, the number of slot machines in Atlantic City has increased 61%,
while the number of table games has decreased by 5.9%. Slot revenues increased
from 58% of total casino revenues in 1991 to 69% in 1996. 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, on July 25, 1996, 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
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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."
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
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launched off the coast of Montauk, New York. In November 1997, Manhattan Cruises
announced plans to operate overnight gambling cruises leaving from Manhattan. 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, 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 the first quarter of
1997, THCR Holdings submitted a proposal to the Ontario Casino Corporation to
operate Casino Niagara and develop and operate a permanent casino and hotel
complex in Niagara Falls, Ontario.
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.
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 late 1997. 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.
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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.
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.
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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 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. 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."
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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 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
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request by the CCC, it files a certified statement to the effect that it has no
intention of influencing or affecting the affairs of the issuer, the casino
licensee or its holding or intermediary companies; PROVIDED, HOWEVER, that the
Institutional Investor will be permitted to vote on matters put to the vote of
the outstanding security holders; and (ii) if (x) the securities are debt
securities of a casino licensee's holding or intermediary companies or another
subsidiary company of the casino licensee's holding or intermediary companies
which is related in any way to the financing of the casino licensee and
represent either (A) 20% or less of the total outstanding debt of the company or
(B) 50% or less of any issue of outstanding debt of the company, (y) the
securities are equity securities and represent less than 10% of the equity
securities of a casino licensee's holding or intermediary companies or (z) the
securities so held exceed such percentages, upon a showing of good cause. There
can be no assurance, however, that the CCC will make such findings or grant such
waiver and, in any event, an Institutional Investor may be required to produce
for the CCC or the 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.
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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 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
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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.
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, 1994,
1995 and 1996, Plaza Associates' gross revenue tax was approximately $21.0
million, $24.0 million and $29.8 million, respectively, and its license,
investigation and other fees and assessments totaled approximately $4.2 million,
$4.4 million and $6.0 million, respectively. For the years ended December 31,
1994, 1995 and 1996, Taj Associates' gross revenue tax was approximately $36.7
million, $40.2 million and $40.7 million, respectively, and its license,
investigation and other fees and assessments totaled approximately $5.2 million,
$5.2 million and $5.0 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.
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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
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, 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.
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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.
OTHER LAWS AND REGULATIONS
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.
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. Recently, as a result of Taj Associates' audit, the Treasury has
notified Taj Associates that it failed to timely file the Currency Transaction
Report in connection with 172 individual currency transactions. In December
1997, the Treasury agreed to a fine of $477,000 to be paid by Taj Associates in
connection with these violations.
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.
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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 TAC II Notes and the 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").
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. Plaza
Associates currently leases a portion of the land which comprises Trump Plaza
East from an unrelated third party. During the years ended December 31, 1994,
1995 and 1996, Plaza Associates incurred approximately $4.9 million, $3.8
million and $1.1 million, respectively, in expenses associated with its lease of
Trump Plaza East.
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. The Warner
Brothers Studio Store opened in July 1994.
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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 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 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
November 1, 1997, of approximately $1.4 million and is encumbered by the Plaza
Mortgage. 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
$5.0 million.
Plaza Associates has financed or leased and from time to time will finance
or lease its acquisition of furniture, fixtures and equipment. The lien in favor
of any such lender or lessor may be 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 mortgage securing the TAC I Notes, the TAC II Notes and the
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.
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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 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
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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 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 (iii) 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." 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 structure
attached 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, reserved to Plaza Associates the right to take investment tax credits up
to approximately $14.2 million. Plaza Associates has, except for certain small
parcels discussed below, acquired the site and constructed 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 certain small parcels
of land within the project site. These proceedings 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 is currently drafting
a summary judgment motion seeking dismissal of this claim.
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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.
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 have moved to dismiss this action
on procedural grounds and have 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.
THCR and Trump believe that Mirage's claims are without merit.
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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 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.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS OF THE ISSUERS, PLAZA ASSOCIATES AND TAJ
ASSOCIATES
MANAGEMENT OF TRUMP AC AND FUNDING III
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 III 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 III 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 III 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 III and a brief account of the business experience during the
past five years of each member of the board of directors of Funding III and of
the executive officers of Trump AC and Funding III.
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
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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. 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 and, since April
1994, he has been the Assistant 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 is the Assistant Secretary of TACC. Mr. Pickus was
also Secretary of TCHI from October 1991 until December 1993. Mr. Pickus is a
director of TCHI. 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, served as President and Chief
Operating Officer of Castle Associates from October 1996 until June 1997. Mr.
McKee 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 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
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President, Finance of Taj Associates from September 1990 through June 1993. Mr.
McKee has been the Assistant Treasurer of THCR/LP, THCR Holding Corp., Realty
Corp. and TCI since September 1991. 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
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 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. 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.
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.
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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 III.
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. 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 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
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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 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
qualified or 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, 1996, 1995 and 1994 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, 1996 and one additional individual who would have been among the
four most highly paid executive officers but for he was not employed on December
31, 1996 by Plaza Associates or Taj Associates.
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SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NAME AND OTHER ANNUAL
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) ALL OTHER COMPENSATION
- ------------------------------------ --------- ------------ ----------- ---------------- ----------------------
Donald J. Trump..................... 1996 $ -- $ -- $ -- $ 1,031,000(2)
Chairman of the Board of Trump AC 1995 -- -- -- 2,743,000(2)
Holding 1994 -- -- -- 2,353,000(2)(3)
Nicholas L. Ribis................... 1996 $ 998,250 $ -- $ -- $ 1,188(4)
Chief Executive Officer of Plaza 1995 1,075,881 -- -- 1,294(4)
Associates and Taj Associates 1994 1,195,000 250,000 280,407 1,540(4)
Barry J. Cregan(5).................. 1996 $ 739,200 $ 28,500 $ -- $ 10,350(4)
President and Chief Operating 1995 637,000 284,8000 -- 4,576(4)
Officer of Plaza Associates 1994 153,945 -- -- --
Rodolfo Prieto(6)................... 1996 $ 313,404 $ -- $ -- $ 6,502(4)
Chief Operating Officer Casino 1995 17,673 -- -- --
Operations of Taj Associates 1994 -- -- -- --
Larry Clark......................... 1996 $ 306,525 $ 109,700 $ -- $ 6,675(4)
Executive V.P. Casino Operations 1995 270,689 124,200 -- 9,618(4)
of Taj Associates 1994 254,380 97,500 -- 11,794(4)
Nicholas L. Niglio(7)............... 1996 $ 276,356 $ 186,916 $ -- $ 6,428(4)
Senior V.P. Casino Marketing of 1995 223,458 100,236 -- 9,030(4)
Taj Associates 1994 -- -- -- --
R. Bruce McKee(8)................... 1996 $ 264,640 $ -- $ -- $ 6,027(4)
Senior V.P. of Corporate Finance 1995 183,799 292,758 -- 6,630(4)
of THCR 1994 168,250 94,500 -- 7,703(4)
</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, $549,000 and $471,000 in 1996, 1995
and 1994, respectively, for expenses incurred pursuant to the TPM Services
Agreement and the Taj Services Agreement. Trump is not an employee of Plaza
Associates or Taj Associates.
(3) In addition to the payment under the TPM Services Agreement, during 1994,
Plaza Associates paid to Trump an aggregate of $1,572,000 under a
construction service agreement and as a commission to secure a retail lease
at Trump Plaza.
(4) 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
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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.
(5) Mr. Cregan commenced employment with Plaza Associates in September 1994.
(6) Mr. Prieto commenced employment with Taj Associates in December 1995.
(7) Mr. Niglio commenced employment with Taj Associates in February 1995.
(8) Former Acting Chief Operating Officer, Chief Financial Officer and Senior
V.P. of Finance of Taj Associates. From October 1996 to June 1997, Mr. McKee
was the President and Chief Operating Officer of Castle Associates. In June
1997, Mr. McKee became the Senior Vice President of Corporate Finance of
THCR.
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.
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Plaza Associates has an employment agreement with Barry J. Cregan (the
"Cregan Agreement") pursuant to which Mr. Cregan acts as President and Chief
Operating Officer of Plaza Associates. The Cregan Agreement, which will expire
on December 31, 1997, provides for a current annual base salary of $750,000.
Pursuant to the Cregan Agreement, Mr. Cregan devotes all of his professional
time to Plaza Associates. In the event that Plaza Funding or Plaza Associates
terminates Mr. Cregan's employment for Cause (defined as the revocation of Mr.
Cregan's casino key employee license, his conviction of certain crimes, death,
disability or the breach of his duty of trust to Plaza Associates), Plaza
Associates shall pay Mr. Cregan all compensation earned to the date of such
termination. In the event Mr. Cregan terminates the Cregan Agreement for Good
Cause, Plaza Associates is required to pay Mr. Cregan all compensation,
reimbursements and benefits provided for under the Cregan Agreement (a) due as
of the date of such termination and (b) payable from such date of termination
through the expiration date of the Cregan Agreement. "Good Cause" is defined in
the Cregan Agreement as (i) the assignment to Mr. Cregan, without his consent,
of any duties inconsistent with the position of Chief Operating Officer, a
demotion or change in Mr. Cregan's title or office, any removal from his
position or a change in control of Plaza Associates, except in connection with
the termination of Mr. Cregan's employment upon revocation of his casino key
employee license, death or disability, (ii) the filing of a bankruptcy petition
under Chapter 7 of the Bankruptcy Code by Plaza Associates, Plaza Funding or its
respective creditors, (iii) revocation by the CCC or its refusal to renew Plaza
Associates' casino license or the appointment of a conservator in connection
with Trump Plaza, (iv) the failure by Plaza Associates to pay Mr. Cregan the
compensation due under the Cregan Agreement on the dates and at such times such
compensation is due, (v) a sale or long term lease of Trump Plaza or
substantially all of its assets except to an entity wholly owned by Plaza
Associates or Trump or (vi) Nicholas L. Ribis no longer acting as the Chief
Executive Officer of THCR; provided that, Mr. Cregan shall not be entitled to
compensation described in (b) of the prior sentence following the occurrence of
an event described in (v) or (vi) of this sentence. Until the Expiration Date or
the earlier termination of the Cregan Agreement as provided therein and provided
Mr. Cregan is being paid the compensation, reimbursement and benefits set forth
in the Cregan Agreement on the dates and at the times such compensation,
reimbursement and benefits are due to be paid, Mr. Cregan shall not accept
employment, either as an employee, consultant or independent contractor, for or
on behalf of any other casino hotel located within a 300 mile radius of Atlantic
City, New Jersey.
Plaza Associates has an employment agreement with James A. Rigot (the "Rigot
Agreement") pursuant to which Mr. Rigot acts as Executive Vice President of
Casino Operations of Plaza Associates. The Rigot Agreement, which expires on 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 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
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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 Cregan Agreement, 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 Chief Operating Officer of
Taj Associates. The Prieto Agreement, which expires November 30, 1998, provides
for an annual salary of $275,000 and 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.
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
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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 upon signing, an annual salary of $300,000
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 upon signing, an annual
salary of $350,000 and, in addition, a minimum guaranteed bonus of $100,000.
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 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 III currently serve as an officer or on the
Board of Directors of THCR and receive no additional compensation for their
service with Funding III. 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.
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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.
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.
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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 serves on the Board of Directors 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.
Mr. Trump is the sole director of TACC, of which Messrs. Trump, Ribis and Pickus
are executive officers. Trump is not compensated by such entities for serving as
an executive officer, however, he has entered into a personal services agreement
with Plaza Associates and THCR. Messrs. Ribis and Burke are not compensated by
the foregoing entities, however, they are compensated by Plaza Associates for
their service as executive officers.
Messrs. Ribis, Pickus and Burke serve on the Board of Directors of 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. Mr.
Ribis is compensated by Taj Associates for his services as its Chief Executive
Officer. 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
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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.
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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 II 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--Executive Compensation--Compensation Committee Interlocks and
Insider Participation--Certain Related Party Transactions--Plaza Associates,"
"Management--Executive Compensation--Compensation Committee Interlocks and
Insider Participation--Certain Related Party Transactions--Taj Associates" and
"Management--Executive Compensation--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 $3.1
million for the year ended December 31, 1996.
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.
INDEMNIFICATION AGREEMENTS. In addition to the indemnification provisions
in THCR's and its subsidiaries' employment agreements (see "Executive
Compensation--Employment Agreements"), certain former and current directors of
Plaza Funding entered into separate indemnification agreements in May 1992 with
Plaza Associates pursuant to which such persons are afforded the full benefits
of the indemnification provisions of the partnership agreement governing Plaza
Associates. Plaza Associates also entered into an indemnification trust
agreement in November 1992 with Midlantic (the "Indemnification Trustee")
pursuant to which the sum of $100,000 was deposited by Plaza Associates with the
Indemnification Trustee for the benefit of the directors of Plaza Funding and
certain former directors of Trump Plaza GP to provide a source for
indemnification for such persons if Plaza Associates, Plaza Funding or Trump
Plaza GP, as the case may be, fails to immediately honor a demand for
indemnification by such persons. The indemnification agreements with the
directors of Plaza Funding and directors of Trump Plaza GP were amended in June
1993 to provide, among other things, that Plaza Associates would maintain
directors' and officers' insurance covering such persons during the ten-year
term (subject to extension) of the indemnification agreements; PROVIDED,
HOWEVER, that if such insurance would not be available on a commercially
practicable basis, Plaza Associates could, in lieu of obtaining such insurance,
annually deposit an amount in 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 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 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
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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 II NOTES. Concurrent with the Initial Offering, Trump AC and Funding
II, a wholly owned subsidiary of Trump AC, offered $75,000,000 aggregate
principal amount of TAC II Notes in the Concurrent Initial Offering. The TAC II
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 $13.7 million of indebtedness, including, as
of December 31, 1996, approximately $5.0 million due under outstanding mortgage
notes described above.
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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 III, 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 $25.0 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 of the TAC II Notes, and Funding III, which is one of the
Issuers. The term "Subsidiary," however, does not include Unrestricted
Subsidiaries. At September 30, 1997, after giving pro forma effect to the
Initial Offering and the Concurrent Initial Offering, Trump AC's consolidated
outstanding indebtedness for borrowed money would have totaled approximately
$1.31 billion, consisting of $1.2 billion of TAC I Notes, $75.0 million of TAC
II Notes, $25.0 million of 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.
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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 II Notes, by one or more
mortgages and assignments of leases and rents (collectively, the "Mortgage"),
which will encumber Plaza Associates' and Taj Associates' respective interests
in the Casino Hotels, 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, 1996, and ranking PARI PASSU with the liens on such assets securing the TAC
I Notes and the TAC II Notes). See "-- The Mortgage" below. Certain of the
assets of the Guarantors 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 (with
respect to Collateral of Plaza Associates and Taj Associates) the TAC II 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
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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.
NOTE GUARANTEES
The Issuers' obligations under the Notes, the Note Indenture and the
Mortgage Documents are jointly and severally irrevocably and unconditionally
guaranteed by the Guarantors. Each guarantee is a senior obligation of the
respective Guarantor and secured by all of the Collateral of such Guarantor,
subject to certain exceptions. See "--Security for the Notes" above. The
obligations of each Guarantor under its guarantee and 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 supplemental Mortgage Documents in form reasonably satisfactory to
the Trustee, pursuant to which such Person shall unconditionally guarantee, on a
senior secured basis, all of such Guarantor's obligations under such Guarantor's
guarantee, the Note Indenture and 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 or Guarantors prior to such foreclosure. Once such a case is commenced,
the Bankruptcy Code prohibits a secured creditor, such as the Trustee, from
commencing or pursuing a foreclosure on its collateral without bankruptcy court
approval. Moreover, the bankruptcy court may decline to grant such approval,
even if the debtor is in default under the applicable debt instruments, if it
concludes that there exists or that the debtor can provide "adequate protection"
for the interest of such secured creditor. The meaning of the term "adequate
protection" may vary according to circumstances, but it is intended in general
to protect the value of the secured creditor's interest in the collateral, as of
the commencement of the case, and may include cash payments or the granting of
additional security, if and at such times as the court in its discretion
determines, for any diminution in the value of the collateral as a result of the
stay of foreclosure during the pendency of the bankruptcy case. In view of the
lack of a precise definition of the term "adequate protection" and the broad
discretionary powers of a bankruptcy court, it is impossible to predict, in the
event of the bankruptcy of an Issuer or Guarantor, whether and for how
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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 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
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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 (as defined) of the transferee
unless the Permitted Holder (as defined) "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
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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 III (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 III, 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.
Notwithstanding anything herein to the contrary, the obligations of Trump AC
to repurchase Notes pursuant to this covenant shall be subject to and
conditioned upon (i) Trump AC's prior and complete compliance with the
provisions of the TAC I Note Indenture and the TAC II Note Indenture pursuant to
which holders of TAC I Notes and TAC II Notes may require Trump AC to repurchase
their securities in the event of a Change of Control and (ii) the further
condition that, after giving PRO FORMA effect to any repurchase of Notes
pursuant to this covenant, there shall be no violation of the "LIMITATION ON
RESTRICTED PAYMENTS" covenants contained in the TAC I Note Indenture and the TAC
II Note Indenture.
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.
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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 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 III and the Guarantors may incur Indebtedness
evidenced by the Notes, the guarantees thereof and represented by the Note
Indenture, and Trump AC, Funding II and the Guarantors may incur
Indebtedness evidenced by the TAC II Notes, the guarantees in favor of the
holders of such TAC II Notes and represented by the TAC II 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
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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.
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
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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 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 TAC II Notes pursuant to a change of control offer or an
asset sale offer in accordance with the TAC II Note Indenture and the TAC I Note
Indenture, respectively. 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
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TAC I Note Indenture, the TAC II 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.
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 or clause (c) below) 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), and/or (c) 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) or (b) above) is
applied to the redemption or repurchase of the TAC I Notes and/or the TAC II
Notes in accordance with the TAC I Note Indenture and the TAC II Note Indenture,
respectively, (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
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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
(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 anything herein to the contrary, the obligations of Trump AC
to repurchase Notes pursuant to this covenant shall be subject to and
conditioned upon (i) Trump AC's prior and complete compliance with the
provisions of the TAC I Note Indenture and the TAC II Note Indenture limiting
asset sales, and the availability of Net Cash Proceeds from any Asset Sale
following such compliance, and (ii) the further condition that, after giving PRO
FORMA effect to any repurchase of Notes pursuant to this covenant, there shall
be no violation of the "LIMITATION ON RESTRICTED PAYMENTS" covenants contained
in the TAC I Note Indenture and the TAC II Note Indenture.
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.
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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 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 III, 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 III 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 III, as applicable, to any other Person, unless,
among other things: (a) Trump AC or Funding III, as applicable, shall be the
continuing Person, or the Person (if other than Trump AC or Funding III) formed
by such consolidation or into which Trump AC or Funding III is merged or to
which the properties and assets of Trump AC or Funding III 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 III, 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 III, 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
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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 III 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 III, as applicable, is not the continuing Person, the
successor Person formed or remaining shall succeed to, and be substituted for,
and may exercise every right and power of, provisions of Trump AC or Funding
III, as applicable, and Trump AC or Funding III shall in such case be discharged
from all obligations and covenants and under the Note Indenture, the Notes and
the Mortgage Documents.
LIMITATION ON ACTIVITIES OF FUNDING III
Funding III 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 III 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 III, 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
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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 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 Offering (after deducting discounts and commissions and
reasonable expenses of the Offering) only for working capital and other general
corporate purposes at Trump AC and its Subsidiaries, 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 of the TAC II Notes, and Funding
III, which is one of the Issuers) 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 III is
subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange
Act, each of Trump AC and Funding III 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
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reports and other documents which each such Person would have been required to
file with the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act if such
Person were subject to such Sections, together with supplemental information in
respect of summary financial data for each of the Casino Hotels at Trump AC's
cost.
EVENTS OF DEFAULT AND REMEDIES
The 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
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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 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
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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 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.
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
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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 II 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 II Notes,
subject to the terms of the Collateral Agency Agreement. The Mortgage encumbers
the Issuers' and the Guarantors' (collectively, the "Mortgagor") respective fee
and leasehold interests in the Casino Hotels, any additions and improvements
constructed thereon and the interest of the Issuers and the Guarantors in
furniture, furnishings, fixtures, machinery and equipment at any time forming a
part thereof, or used in connection therewith, and substantially all of the
other assets of the Issuers and the Guarantors, except as described herein. The
Mortgagor will have the right to sell, free and clear from the Lien of the
Mortgage Documents, certain tangible personal property which has become obsolete
or unfit for use or which is no longer necessary in the conduct of its
businesses or the operation of the Collateral. See "--Security for the Notes."
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.
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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.
"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.
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"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 II, the Guarantors, the
Collateral Agent, the Trustee, the trustee under the TAC I Note Indenture and
the trustee under the TAC II 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 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,
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(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, but in any case not in excess of such
person's PRO RATA share of such person's net income for such period,
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(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.
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"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 III 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 III, 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.
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"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.
"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
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be determined in good faith by the Board of Directors of the issuer (or managing
general partner of the issuer) of such Disqualified Capital Stock.
"INDEPENDENT DIRECTORS" shall mean directors who are not officers or
employees of THCR or any of its Subsidiaries and who are not Affiliates of Trump
or any of his Affiliates.
"INTEREST SWAP AND HEDGING OBLIGATION" means any obligation of any person
pursuant to any interest rate swap agreement, interest rate cap agreement,
interest rate collar agreement, interest rate exchange agreement, currency
exchange agreement or any other agreement, or arrangement designed to protect
against fluctuations in interest rates or currency values, including, without
limitation, any arrangement whereby, directly or indirectly, such person is
entitled to receive from time to time periodic payments calculated by applying
either a fixed or floating rate of interest on a stated notional amount in
exchange for periodic payments made by such person calculated by applying a
fixed or floating rate of interest on the same notional amount.
"INVESTMENT" means, with respect to any Person, directly or indirectly, (a)
any advance, loan or other extension of credit or capital contribution to any
other Person (by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of others), (b) any
purchase or other acquisition by such Person of any Equity Interest, bonds,
notes, debentures or other securities issued or owned by, any other Person or
(c) other than guarantees of Indebtedness of the Issuers or any Subsidiary to
the extent permitted by the covenant "LIMITATION ON INCURRENCE OF ADDITIONAL
INDEBTEDNESS AND DISQUALIFIED CAPITAL STOCK," the entering into by such Person
of any guarantee of, or other credit support or contingent obligation with
respect to, Indebtedness or other liability of any other Person.
"ISSUE DATE" means the date of first issuance of the 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).
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"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 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
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(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;
(b) the Lien of the Trustee as provided for in the Note Indenture and the
Mortgage Documents, and the Lien of the trustee under the TAC II Note Indenture
as provided for in the TAC II 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;
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(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;
(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 III 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,
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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.
"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 III 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
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such person, (b) any payment on account of the purchase, redemption or other
acquisition or retirement for value of Equity Interests of such person or any
Subsidiary or parent of such person, (c) any purchase, redemption, or other
acquisition or retirement for value of, any payment in respect of any amendment
of the terms of or any defeasance of, any Indebtedness of, or guaranteed by,
such Person, any parent of such Person or any Subsidiary prior to the scheduled
maturity, any scheduled repayment of principal, or scheduled sinking fund
payment, as the case may be, of such Indebtedness (including any payment in
respect of any amendment of the terms of any such Indebtedness, which amendment
is sought in connection with any such acquisition of such Indebtedness or seeks
to shorten any such due date), (d) in connection with the designation of a
Person as an Unrestricted Subsidiary, a Restricted Payment shall be deemed to
exist in the amount provided in the definition of Unrestricted Subsidiary
contained herein and (e) any Restricted Investment by such person; PROVIDED,
that the term "Restricted Payment" does not include (i) any dividend,
distribution or other payment on or with respect to Equity Interests of an
issuer to the extent payable solely in shares of Qualified Capital Stock of such
issuer; or (ii) any dividend, distribution or other payment to Trump AC or to
any of its 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 III 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 III and (B) the Tax
Percentage, reduced by (b) to the extent not previously taken into account, any
income tax benefit attributable to Trump AC which could be realized (without
regard to the actual realization) by its Partners in the current or any prior
taxable year, or portion thereof, commencing on or after the Issue Date
(including any tax losses or tax credits), computed at the applicable Tax
Percentage for the year that such benefit is taken into account for purposes of
this computation. Any part of the Tax Amount not distributed in respect of a tax
period for which it is calculated shall be available for distribution in
subsequent tax periods.
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"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.
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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
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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.
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<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.
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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
125
<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.
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<PAGE>
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States federal income tax
considerations for initial purchasers of the Notes and is for general
information purposes only. 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.
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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 III 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
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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.
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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.
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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 as of December 31, 1996
of Trump AC and the financial statement of Funding III 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.
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INDEX TO FINANCIAL STATEMENTS
<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, 1995 and 1996............................................. F-3
Consolidated Statements of Operations for the years ended December 31, 1994, 1995 and 1996............... F-5
Consolidated Statements of Capital for the years ended December 31, 1994, 1995 and 1996.................. F-6
Consolidated Statements of Cash Flows for the years ended December 31, 1994, 1995 and 1996............... F-7
Notes to Consolidated Financial Statements............................................................... F-8
Trump Atlantic City Associates and Subsidiaries
Condensed Consolidated Balance Sheets of Trump Atlantic City Associates and Subsidiaries as of September
30, 1997 (unaudited) and December 31, 1996............................................................. F-23
Condensed Consolidated Statements of Operations of Trump Atlantic City Associates and Subsidiaries for
the Three Months and Nine Months Ended September 30, 1997 and 1996 (unaudited)......................... F-24
Condensed Consolidated Statement of Capital of Trump Atlantic City Associates and Subsidiaries for the
Nine Months Ended September 30, 1997 (unaudited)....................................................... F-25
Condensed Consolidated Statements of Cash Flows of Trump Atlantic City Associates and Subsidiaries for
the Nine Months Ended September 30, 1997 and 1996 (unaudited).......................................... F-26
Notes to Condensed Consolidated Financial Statements of Trump Atlantic City Associates and Subsidiaries
(unaudited)............................................................................................ F-28
Trump Atlantic City Funding III, Inc.
Report of Independent Public Accountants................................................................. F-32
Balance Sheet as of December 31, 1997.................................................................... F-33
Notes to Balance Sheet................................................................................... F-34
</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, 1995 and 1996, and the related consolidated statements of
operations, capital and cash flows for each of the three years in the period
ended December 31, 1996. 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, 1995 and 1996, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Roseland, New Jersey
February 7, 1997
F-2
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1996
--------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................................................... $ 15,937 $ 71,320
Trade receivables, net of allowances for doubtful accounts of $8,077 and $17,355,
respectively (Note 2)................................................................. 7,494 39,087
Accounts receivable, other (Note 5)..................................................... 6,564 6,144
Inventories............................................................................. 2,609 9,393
Prepaid expenses and other current assets............................................... 5,045 6,495
Due from affiliates, net (Note 7)....................................................... 1,298 5,237
--------- ----------
Total current assets.................................................................. 38,947 137,676
--------- ----------
PROPERTY AND EQUIPMENT (Notes 2, 5 and 7):
Land and land improvements.............................................................. 48,308 159,390
Buildings and building improvements..................................................... 379,686 1,280,947
Furniture, fixtures and equipment....................................................... 90,965 194,050
Leasehold improvements.................................................................. 2,404 2,404
Construction in progress................................................................ 51,183 23,067
--------- ----------
572,546 1,659,858
Less--Accumulated depreciation and amortization........................................... (147,284) (203,591)
--------- ----------
Net property and equipment............................................................ 425,262 1,456,267
--------- ----------
OTHER ASSETS:
Deferred bond issuance costs, net of accumulated amortization of $7,525 and $5,052,
respectively (Note 3)................................................................. 9,866 39,153
Other Assets............................................................................ 5,949 25,910
--------- ----------
Total other assets.................................................................... 15,815 65,063
--------- ----------
Total assets.......................................................................... $ 480,024 $1,659,006
--------- ----------
--------- ----------
LIABILITIES AND CAPITAL
CURRENT LIABILITIES:
Current maturities of long-term debt (Note 3)........................................... $ 2,901 $ 9,410
Accounts payable........................................................................ 8,290 22,598
Accrued payroll......................................................................... 6,815 16,653
Self-insurance reserves (Note 5)........................................................ 3,750 9,911
Accrued interest payable (Note 3)....................................................... 1,497 23,160
Other accrued expenses.................................................................. 6,822 25,202
Other current liabilities............................................................... 2,235 3,578
--------- ----------
Total current liabilities............................................................. 32,310 110,512
--------- ----------
NON-CURRENT LIABILITIES:
Long-term debt, net of current maturities (Note 3)...................................... 332,721 1,207,795
Distribution payable to Trump Plaza Funding, Inc........................................ 3,822 3,822
Deferred state income taxes (Note 2).................................................... 359 450
Other long-term liabilities............................................................. -- 4,569
--------- ----------
Total non-current liabilities......................................................... 336,902 1,216,636
--------- ----------
Total liabilities..................................................................... 369,212 1,327,148
--------- ----------
COMMITMENTS AND CONTINGENCIES (Note 5):
CAPITAL:
Partners' Capital....................................................................... 94,087 363,646
Retained Earnings (Accumulated Deficit)................................................. 16,725 (31,788)
--------- ----------
Total Capital......................................................................... 110,812 331,858
--------- ----------
Total liabilities and capital......................................................... $ 480,024 $1,659,006
--------- ----------
--------- ----------
</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, 1994, 1995 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
1994 1995 1996
---------------- ---------------- ----------------
<S> <C> <C> <C>
REVENUES:
Gaming................................................. $ 261,451 $ 298,073 $ 752,228
Rooms.................................................. 18,312 19,986 68,214
Food and Beverage...................................... 40,149 44,602 98,635
Other.................................................. 8,408 9,594 24,146
---------------- ---------------- ----------------
Gross Revenue........................................ 328,320 372,255 943,223
Less-Promotional allowances............................ 33,257 38,934 104,400
---------------- ---------------- ----------------
Net Revenues......................................... 295,063 333,321 838,823
---------------- ---------------- ----------------
COSTS AND EXPENSES:
Gaming................................................. 139,540 164,839 453,863
Rooms.................................................. 2,715 2,263 14,827
Food and Beverage...................................... 17,050 18,306 41,225
General and Administrative............................. 76,690 71,913 155,346
Depreciation and Amortization.......................... 15,653 16,213 60,870
Preopening............................................. -- -- 4,145
---------------- ---------------- ----------------
251,648 273,534 730,276
---------------- ---------------- ----------------
Income from operations............................... 43,415 59,787 108,547
---------------- ---------------- ----------------
NON-OPERATING INCOME (EXPENSE):
Interest income........................................ 842 1,003 2,339
Interest expense (Note 3).............................. (49,061) (44,264) (114,461)
Non-operating income (expense) (Note 4)................ (4,931) (5,743) 14,194
---------------- ---------------- ----------------
Non-operating expense, net........................... (53,150) (49,004) (97,928)
---------------- ---------------- ----------------
Income (loss) before state income taxes and extraordinary
items.................................................. (9,735) 10,783 10,619
BENEFIT FROM STATE INCOME TAXES.......................... (865) -- --
---------------- ---------------- ----------------
Income (loss) before extraordinary items................. (8,870) 10,783 10,619
Extraordinary loss (Note 3).............................. -- (9,250) (59,132)
---------------- ---------------- ----------------
Net income (loss)........................................ $ (8,870) $ 1,533 $ (48,513)
---------------- ---------------- ----------------
---------------- ---------------- ----------------
</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, 1994, 1995 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
RETAINED
EARNINGS/
PARTNERS' (ACCUMULATED
CAPITAL DEFICIT) TOTAL
---------- ------------ ----------
<S> <C> <C> <C>
Balance, December 31, 1993................................................. $ (78,772) $ 24,062 $ (54,710)
Net Loss................................................................... -- (8,870) (8,870)
---------- ------------ ----------
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
---------- ------------ ----------
---------- ------------ ----------
</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, 1994, 1995 AND 1996
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
1994 1995 1996
----------------- ---------------- ----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)...................................... $ (8,870) $ 1,533 $ (48,513)
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........................ 15,653 16,213 60,870
Accretion of discount on indebtedness................ 1,916 1,130 132
Amortization of deferred loan offering costs......... 1,791 1,791 5,588
Provision for losses on receivables.................. 396 1,057 8,599
Utilization of CRDA credits and donations............ 1,062 388 --
Valuation allowance of CRDA investments.............. 394 (1,098) 3,013
-------- ---------------- ----------------
12,342 30,264 88,821
Increase in receivables.............................. (236) (8,318) (20,296)
Decrease (increase) in inventories................... (91) 371 47
Decrease (increase) in prepaid expenses and other
current assets..................................... (1,385) (765) 1,495
Decrease (increase) in other assets.................. (287) 6,283 (2,309)
Increase (decrease) in amounts due to (from)
affiliates........................................... 109 (1,504) (3,668)
Increase (decrease) in accounts payable, accrued
expenses
and other current liabilities...................... 10,464 592 (16,153)
Decrease in distribution payable to Trump Plaza
Funding, Inc....................................... (101) -- --
Decrease in other long-term liabilities.............. (865) -- (1,430)
-------- ---------------- ----------------
Net cash flows provided by operating activities.... $ 19,950 $ 26,923 $ 46,507
-------- ---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment.................... $ (20,489) $ (109,756) $ (193,000)
Purchases of CRDA investments.......................... (2,525) (3,178) (6,725)
Cash refund of CRDA deposits........................... 1,323 -- --
Purchase of Taj Holding, net cash received............. -- -- 46,714
-------- ---------------- ----------------
Net cash flows used in investing activities........ (21,691) (112,934) (153,011)
-------- ---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cost of issuing debt................................... -- -- (41,042)
Issuance of Trump AC Mortgage Notes.................... -- -- 1,200,000
Retirement of long-term debt........................... -- -- (1,156,836)
Retirement of NatWest Loan............................. -- -- (36,500)
Additional Borrowings.................................. 375 4,218 6,170
Payments and current maturities of long-term debt...... (1,883) (4,527) (14,690)
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 (used in) financing
activities......................................... (1,508) 90,804 161,887
-------- ---------------- ----------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS..... (3,249) 4,793 55,383
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR........... 14,393 11,144 15,937
-------- ---------------- ----------------
CASH AND CASH EQUIVALENTS AT END OF YEAR................. $ 11,144 $ 15,937 $ 71,320
-------- ---------------- ----------------
-------- ---------------- ----------------
</TABLE>
F-6
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996 (CONTINUED)
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
1994 1995 1996
----------------- ---------------- ----------------
<S> <C> <C> <C>
Supplemental Disclosures of Cash Flow Information:
- During 1996, THCR Holdings purchased certain
parcels of land amounting to $14,455 and contributed
the parcels to Trump AC.
- Equipment purchase under capital leases............ $ 375 $ 3,317 $ 10
- Cash paid during the year for interest............. $ 36,538 $ 36,936 $ 138,128
-------- ---------------- ----------------
-------- ---------------- ----------------
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
----------------
----------------
- 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.
</TABLE>
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 Trump Plaza Holding Associates), and its 99% owned subsidiaries, Trump
Plaza Associates ("Plaza Associates"), and Trump Taj Mahal Associates ("Taj
Associates"). Plaza Associates is a New Jersey general partnership which owns
and operates Trump Plaza Hotel and Casino ("Trump Plaza") located in Atlantic
City, New Jersey. Taj Associates is a New Jersey general partnership which owns
and operates the Trump Taj Mahal Casino Resort (the "Taj Mahal"), located in
Atlantic City, New Jersey. Trump Atlantic City Corporation ("TACC"), a New
Jersey corporation, owns the remaining 1% interest in Plaza Associates and Taj
Associates. Trump AC's sole source of liquidity is distributions in respect of
its interests in Plaza Associates and Taj Associates. Trump AC and TACC are
owned by Trump Hotels & Casino Resorts Holdings, L.P. ("THCR Holdings").
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 for the purpose of raising funds for
Plaza Associates. On June 25, 1993, Trump AC completed the sale of 12,000 Units
(the "Units"), each Unit consisting of $5,000 principal amount of 12 1/2%
Pay-In-Kind Notes, due 2003 (the "PIK Notes"), and one PIK Note Warrant (the
"PIK Note Warrants") to acquire $1,000 principal amount of PIK Notes. Trump AC
has no other assets or business other than its 99% equity interest in Plaza
Associates.
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.
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,
F-8
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(1) ORGANIZATION (CONTINUED)
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
(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
F-9
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(1) ORGANIZATION (CONTINUED)
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.
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 and in the past,
Trump AC has targeted the higher-end drive-in slot customer. 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>
1994 1995 1996
------------- ------------- -------------
Rooms........................................... $ 4,311,000 $ 4,836,000 $ 14,882,000
Food and Beverage............................... 15,373,000 17,167,000 45,452,000
Other........................................... 4,169,000 4,076,000 10,245,000
------------- ------------- -------------
$ 23,853,000 $ 26,079,000 $ 70,579,000
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
During 1994, certain Progressive Slot Jackpot Programs were discontinued
which resulted in $585,000 of related accruals being taken into income.
INVENTORIES
Inventories of provisions and supplies are carried at the lower of cost
(weighted average) or market.
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>
LONG-LIVED ASSETS
During 1995, Trump AC adopted the provisions of Statement of Financial
Accounting Standard No. 121" Accounting for the Impairment of Long-Lived Assets"
("SFAS No. 121 "). SFAS 121 requires, among other things, that an entity review
its long-lived assets and certain related intangibles for impairment whenever
changes in circumstances indicate that the carrying amount of an asset may not
be fully recoverable. Impairment of long-lived assets exists if, at a minimum,
the future expected cash flows (undiscounted and without interest charges) from
an entity's operations are less than the carrying value of these assets. As a
result of its review, Trump AC does not believe that any impairment exists in
the recoverability of its long-lived assets.
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 liabilities and assets for the
expected future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred tax liabilities
and assets are determined
F-12
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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. Accordingly, a benefit from state income taxes
has been reflected in the accompanying consolidated financial statements of
Trump AC. For state income tax purposes, available net operating loss
carryforwards have been utilized to offset 1995 and 1996 taxable income. As of
December 31, 1996, Plaza Associates and Taj Associates had a net operating loss
carryforward of approximately $85,000,000 and $210,000,000, respectively, for
New Jersey State Income Tax purposes. 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.
Deferred state income taxes primarily relates to differences in the timing
of reporting depreciation for tax and financial statement purposes.
STATEMENTS OF CASH FLOWS
For purposes of the statements of cash flows, 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,
1995 1996
-------------- ----------------
<S> <C> <C>
Plaza Associates and Plaza Funding Note (10 7/8% Mortgage
Notes, due 2001), net of unamortized discount of
$3,348,000 (a)........................................... $ 326,652,000 $ --
Trump AC Mortgage Notes (11 1/4% First Mortgage Notes, due
2006) (c)................................................ -- 1,200,000,000
Mortgage notes payable (d)................................. 2,953,000 3,407,000
Other notes payable (e).................................... 6,017,000 13,798,000
-------------- ----------------
335,622,000 1,217,205,000
Less--current maturities................................... 2,901,000 9,410,000
-------------- ----------------
$ 332,721,000 $ 1,207,795,000
-------------- ----------------
-------------- ----------------
</TABLE>
- ------------------------
(a) On June 25, 1993, Plaza Funding issued $330,000,000 principal amount of
10 7/8% Mortgage Notes, due 2001 (the "Plaza Notes"), net of discount of
$4,313,000, representing an effective interest rate of approximately 11.12%.
Net proceeds of the offering were used to redeem all of Plaza Funding's
outstanding $225,000,000 principal amount 12% Mortgage Bonds, due 2002 and
together with other funds (see (b)), to redeem all of Plaza Funding's stock
units, comprised of $75,000,000 redeemable Preferred Stock with associated
shares of Common Stock, to repay $17,500,000 principal amount 9.14% Regency
Note due 2003, to make a portion of a distribution to Trump to pay certain
personal indebtedness, and to pay transaction expenses.
On April 17, 1996, the Plaza Notes were redeemed at a premium with the
proceeds from the 1996 Offerings (see note 2). The early redemption of the
Plaza Notes resulted in an extraordinary loss of approximately $59,132,000.
(b) On June 25, 1993, Trump AC issued $60,000,000 principal amount of 12 1/2%
Pay-in-Kind Notes, due 2003 (the "PIK Notes"), together with PIK Note
Warrants to acquire an additional $12,000,000 of PIK Notes at no additional
cost. The PIK Note Warrants were exercised prior to June 12, 1995. The PIK
Notes and the PIK Note Warrants were subsequently redeemed with a portion of
the proceeds contributed to Trump AC by THCR Holdings (See Note 1). Such
redemption resulted in the recognition of an extraordinary loss of
$9,250,000, including the write-off of related unamortized deferred
financing costs.
(c) 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
F-14
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(3) LONG-TERM DEBT (CONTINUED)
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.
Underwriting costs, legal and accounting fees, printing costs and other
expenses of $44,200,000 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 from the date of issuance through December 31, 1996.
(d) Interest on these notes is payable with interest rates ranging from 10.0% to
10.5%. The notes are due at various dates between 1997 and 1998 and are
secured by real property.
(e) Interest on these leases are payable with interest rate ranging from 7.9% to
13.5%. The leases are due at various dates between 1997 and 2001 and are
secured by equipment.
The aggregate maturities of long-term debt as of December 31, 1996 are as
follows:
<TABLE>
<S> <C>
1997......................................................... $ 9,410,000
1998......................................................... 5,844,000
1999......................................................... 1,731,000
2000......................................................... 220,000
2001......................................................... 0
Thereafter................................................... 1,200,000,000
-------------
$1,217,205,000
-------------
-------------
</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. Management does not currently anticipate that cash
flow will be sufficient and that repayment will likely depend upon the ability
to refinance such indebtedness. The future operating performance and the ability
to refinance such indebtedness will be subject to the then prevailing economic
conditions, industry conditions and numerous other financial, business and other
factors, many of which are beyond the control of Trump AC. There can 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.
F-15
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(4) NON-OPERATING INCOME (EXPENSE)
Non-operating income (expense) in 1994, 1995 and 1996 included $4,931,000,
$3,939,000 and $806,000, respectively, of costs associated with Trump Plaza East
and Trump World's Fair (see Note 5), 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
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 has entered into employment agreements with certain key employees
and 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, 1994, 1995, and 1996 was $3,613,000, $3,609,000 and
$7,200,000, respectively, of which $1,900,000, $2,127,000 and $1,981,000,
respectively, relates to affiliates. As of December 31, 1996, Trump AC had
approximately $5,370,000 of commitments under employee agreements. These
commitments mature at various dates through 1999.
Future minimum lease payments under the noncancelable operating leases are
as follows:
<TABLE>
<CAPTION>
TOTAL
--------------
<S> <C>
1997.......................................................................... $ 9,885,000
1998.......................................................................... 5,393,000
1999.......................................................................... 3,978,000
2000.......................................................................... 3,018,000
2001.......................................................................... 3,000,000
Thereafter.................................................................... 113,000,000
--------------
$ 138,274,000
--------------
--------------
</TABLE>
Certain of these leases contain options to purchase the leased properties at
various prices throughout the leased terms.
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
F-16
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(5) COMMITMENTS AND CONTINGENCIES (CONTINUED)
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 has received an additional one-year extension
most recently through March 29, 1998 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.
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. 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 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.
F-17
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(5) COMMITMENTS AND CONTINGENCIES (CONTINUED)
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. Actual results may differ from these reserve amounts.
FEDERAL INCOME TAX EXAMINATION
Taj Associates is currently involved in an examination with the Internal
Revenue Service ("IRS") concerning Taj Associates' federal partnership income
tax returns for the tax years 1992 and 1993. While any adjustment which results
from this examination could affect Taj Associates' state income tax return, Taj
Associates does 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 obligation
primarily by depositing funds and donations of funds deposited. 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, 1994, 1995 and
1996, Trump AC charged to operations $838,000, $1,141,000, and $3,477,000,
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 and 1996, Plaza
Associates credited operations for $2,239,000 and $464,000, respectively,
resulting from the recapture of the valuation allowance on CRDA receivable.
In connection with Trump Plaza East (see below), the CRDA has approved the
use of up to $14,135,000 in deposits made by Plaza Associates for site
improvements. At December 31, 1996, Plaza Associates had recorded a receivable
from the CRDA of $7,413,000. While the receivable is fully realizable by Plaza
Associates, 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 has deposited with the CRDA to cover its Atlantic City
non-housing and South Jersey obligations. Accordingly, Plaza Associates has
recorded $3,150,000 as a current receivable and $4,263,000 as other assets in
the accompanying financial statements.
F-18
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(5) COMMITMENTS AND CONTINGENCIES (CONTINUED)
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. At December 31, 1996,
approximately 47.7% of Plaza Associates and Taj Associates casino receivables
(before allowances) were from customers whose primary residence is outside the
United States.
(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% and
4%, respectively, of an eligible employee's contributions. Trump AC recorded
charges of $848,000, $886,000 and $1,882,000 for matching contributions for the
years ended December 31, 1994, 1995 and 1996, respectively.
Plaza Associates and Taj Associates make payments to various trusted
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 the most recent information, the combined
withdrawal liability of Plaza Associates and Taj Associates related to one of
the plan's unfunded status approximates $3,071,000. Pension expense for the
years ended December 31, 1994, 1995 and 1996 were $651,000, $423,000 and
$1,077,000 respectively.
Plaza Associates and Taj Associates provide no other material
post-retirement or post-employment benefits.
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>
1995 1996
------------ ------------
Seashore Four Associates(a)....................................... $ (571,000) $ (571,000)
Trump Seashore Associates(a)...................................... 756,000 --
Taj Associates(b)................................................. 167,000 --
Castle Associates(b).............................................. (694,000) 1,689,000
Trump Casino Services, L.L.C.(b).................................. -- --
Trump Organization(b)............................................. 64,000 184,000
THCR Holdings(b).................................................. 1,576,000 3,935,000
------------ ------------
$ 1,298,000 $ 5,237,000
------------ ------------
------------ ------------
</TABLE>
- ------------------------
(a) Plaza Associates leases two parcels of land under long-term ground leases
from Seashore Four Associates ("Seashore Four") and Trump Seashore
Associates.("Seashore Associates"). In 1994, 1995 and 1996, Plaza Associates
paid $900,000, $950,000 and $1,000,000, respectively, to Seashore Four, and
paid $1,000,000, $1,195,000 and $981,000 in 1994, 1995 and 1996,
respectively, to Seashore Associates. Plaza Associates purchased the tract
from Seashore Four in January 1997 and the tract from Seashore Associates in
September 1996 for $10,000,000 and $14,500,000, respectively.
(b) Plaza 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 utilization of fleet maintenance and limousine
services, certain shared professional fees, insurance, and payroll costs as
well as complimentary services offered to customers.
Trump Casino Services, L.L.C. ("TCS"), a New Jersey limited liability
company, 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 pays TPM each year an annual fee of
$1,000,000 in equal monthly installments, and reimburses TPM on a monthly basis
for all reasonable out-of-pocket expenses incurred by TPM in performing its
obligations under such services agreement, up to certain amounts. Under such
services agreement, approximately $1,300,000, $1,300,000 and $1,000,000 was
charged to expense for the years ended December 31, 1994, 1995 and 1996.
TRUMP WORLD'S FAIR
Under an Option Agreement with Chemical Bank ("Chemical"), Trump had an
option to purchase (i) Trump World's Fair (including the land, improvements and
personal property used in the operation of
F-20
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(7) TRANSACTIONS WITH AFFILIATES (CONTINUED)
the hotel) and/or certain promissory notes made by Trump and/or certain of his
affiliates and payable to Chemical (the "Chemical Notes") which are secured by
certain real estate assets located in New York, unrelated to Plaza Associates.
In connection with such Option Agreement, Trump assigned his rights to Plaza
Associates. On June 12, 1995, the option to purchase the Trump World's Fair was
exercised. The option price of $60,000,000 was funded with $58,150,000 from the
capital contributed by THCR Holdings (See Note 1), and $1,850,000 of option
payments made by Plaza Associates.
OTHER PAYMENTS TO DONALD J. TRUMP
During 1994, Plaza Associates paid to Trump $1,000,000 under a Construction
Management Service Agreement. The payment was made for construction management
services rendered by Trump with respect to Trump Plaza East. This payment was
capitalized as part of the cost of the building.
During 1994, Plaza Associates also paid Trump a commission of approximately
$572,000 for securing a retail lease at Trump Plaza. The commission has been
capitalized and is being amortized to expense over the 10 year term of the
lease.
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, accrued interest receivables
and payables are based on the short term nature of these financial instruments
and (b) CRDA bonds and deposits are based on the allowances to give effect to
the below market interest rates.
The estimated fair values of other financial instruments are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1996
----------------------------------
<S> <C> <C>
CARRYING AMOUNT FAIR VALUE
---------------- ----------------
Trump AC Mortgage Notes.................................. $ 1,200,000,000 $ 1,188,000,000
</TABLE>
F-21
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(8) FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
The fair values of the Trump AC Mortgage Notes are based on quoted market
prices as of December 31, 1996.
There are no quoted market prices for other notes payable and a reasonable
estimate could not be made without incurring excessive costs.
(9) FINANCIAL INFORMATION--TRUMP AC FUNDING
Financial information relating to Trump AC Funding as of December 31, 1996
and for the period from April 17, 1996 to December 31, 1996 is as follows:
<TABLE>
<S> <C>
Total Assets (including First Mortgage Note receivable of
$1,200,000,000 and related interest receivable)............ $1,222,500,000
-------------
-------------
Total Liabilities and Capital (including AC Notes payable of
$1,200,000,000 and related interest payable)............... $1,222,500,000
-------------
-------------
Interest Income.............................................. $ 95,250,000
-------------
Interest Expense............................................. $ 95,250,000
-------------
Net Income................................................... $ --
-------------
</TABLE>
F-22
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
<S> <C> <C>
(UNAUDITED)
CURRENT ASSETS:
Cash and cash equivalents......................................................... $ 91,557 $ 71,320
Receivables, net.................................................................. 54,687 45,231
Inventories....................................................................... 9,671 9,393
Advances to affiliates, net....................................................... 6,851 5,237
Other current assets.............................................................. 8,452 6,495
------------- ------------
Total Current Assets............................................................ 171,218 137,676
PROPERTY AND EQUIPMENT, NET......................................................... 1,472,046 1,456,267
DEFERRED LOAN COSTS, NET............................................................ 34,207 39,153
OTHER ASSETS........................................................................ 30,195 25,910
------------- ------------
Total Assets.................................................................... $ 1,707,666 $1,659,006
------------- ------------
------------- ------------
</TABLE>
LIABILITIES AND CAPITAL
<TABLE>
<S> <C> <C>
CURRENT LIABILITIES:
Current maturities of long-term debt.............................. $ 9,322 $ 9,410
Accounts payable and accrued expenses............................. 84,214 77,942
Accrued interest payable.......................................... 56,916 23,160
----------- -----------
Total Current Liabilities....................................... 150,452 110,512
LONG-TERM DEBT, net of current maturities........................... 1,204,415 1,207,795
OTHER LONG-TERM LIABILITIES......................................... 3,151 4,569
DISTRIBUTION PAYABLE TO TRUMP PLAZA FUNDING, INC.................... 3,822 3,822
DEFERRED STATE INCOME TAXES......................................... 450 450
----------- -----------
Total Liabilities............................................... 1,362,290 1,327,148
----------- -----------
CAPITAL:
Partners' Capital................................................. 373,790 363,646
Accumulated Deficit............................................... (28,414) (31,788)
----------- -----------
Total Capital..................................................... 345,376 331,858
----------- -----------
Total Liabilities and Capital................................... $1,707,666 $1,659,006
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral
part of these condensed consolidated financial statements.
F-23
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
---------------------- -----------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
---------- ---------- ----------- ----------
REVENUES:
Gaming........................................................ $ 238,596 $ 261,981 $ 686,237 $ 542,011
Rooms......................................................... 23,683 24,310 62,707 48,464
Food and Beverage............................................. 31,751 32,552 87,878 70,854
Other......................................................... 10,669 8,709 26,419 17,035
Gross Revenues.............................................. 304,699 327,552 863,241 678,364
Less--Promotional allowances.................................... 39,250 39,343 106,051 82,472
---------- ---------- ----------- ----------
Net Revenues................................................ 265,449 288,209 757,190 595,892
---------- ---------- ----------- ----------
COSTS AND EXPENSES:
Gaming........................................................ 144,739 150,289 424,379 315,648
Rooms......................................................... 7,484 7,235 21,315 15,587
Food and Beverage............................................. 10,040 10,582 28,168 22,073
Pre-Opening................................................... -- 501 -- 3,833
General and Administrative.................................... 39,215 43,011 124,143 99,183
Depreciation and Amortization................................. 15,137 20,255 50,146 41,457
---------- ---------- ----------- ----------
216,615 231,873 648,151 497,781
---------- ---------- ----------- ----------
Income from operations...................................... 48,834 56,336 109,039 98,111
---------- ---------- ----------- ----------
NON-OPERATING INCOME AND (EXPENSES):
Interest income............................................... 560 854 1,992 1,483
Interest expense.............................................. (35,839) (36,495) (107,657) (78,077)
Other non-operating income.................................... -- 5,011 -- 14,193
---------- ---------- ----------- ----------
(35,279) (30,630) (105,665) (62,401)
---------- ---------- ----------- ----------
Income before extraordinary loss................................ 13,555 25,706 3,374 35,710
Extraordinary Loss.............................................. -- -- -- (59,132)
---------- ---------- ----------- ----------
NET INCOME (LOSS)............................................... $ 13,555 $ 25,706 $ 3,374 $ (23,422)
---------- ---------- ----------- ----------
---------- ---------- ----------- ----------
</TABLE>
The accompanying notes are an integral
part of these condensed consolidated financial statements.
F-24
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
RETAINED
EARNINGS
PARTNERS' (ACCUMULATED
CAPITAL DEFICIT) TOTAL
---------- ------------ ----------
<S> <C> <C> <C>
Balance, December 31, 1996................................................. $ 363,646 $ (31,788) $ 331,858
Net Income................................................................. -- 3,374 3,374
Contributed Capital--Trump Hotels & Casino Resorts Holdings, L.P........... 10,144 -- 10,144
---------- ------------ ----------
Balance, September 30, 1997................................................ $ 373,790 $ (28,414) $ 345,376
---------- ------------ ----------
---------- ------------ ----------
</TABLE>
The accompanying notes are an integral
part of this condensed consolidated financial statement.
F-25
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------------
<S> <C> <C>
1997 1996
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)................................................................... $ 3,374 $ (23,422)
Adjustments to reconcile net loss to net cash flows from operating activities--
Noncash charges--
Extraordinary loss................................................................ -- 59,132
Depreciation and amortization..................................................... 50,146 41,457
Accretion of discounts on indebtedness............................................ -- 132
Provisions for losses on receivables.............................................. 4,982 3,213
Amortization of deferred loan offering costs...................................... 4,946 3,842
Deferred income taxes............................................................. -- 28
Valuation allowance of CRDA investments and utilization of credits and
donations....................................................................... 2,941 2,098
------------- -------------
66,389 86,480
Changes in assets and liabilities:
Increase in receivables........................................................... (14,438) (24,319)
(Increase) decrease in inventories................................................ (278) 47
Increase in advances to affiliates................................................ (1,614) (4,925)
Increase in other current assets.................................................. (1,090) (1,236)
Decrease in other assets.......................................................... 188 1,641
Increase in accounts payable and accrued expenses................................. 6,065 2,160
Increase in accrued interest payable.............................................. 33,756 14,319
Decrease in other long-term liabilities........................................... (2,285) (900)
------------- -------------
Net cash provided by operating activities........................................... 86,693 73,267
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net............................................. (63,449) (186,447)
Purchase of CRDA investments........................................................ (7,994) (4,493)
Purchase of Taj Holding, net of cash acquired....................................... -- 46,714
------------- -------------
Net cash used in investing activities............................................... (71,443) (144,226)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of other long term debt...................................... 2,001 5,906
Payments and current maturities of long-term debt................................... (7,158) (8,117)
Capital contributed from THCR Holdings.............................................. 10,144 219,240
Retirement of long-term debt........................................................ -- (1,156,836)
Issuance of Trump AC Mortgage Notes................................................. -- 1,200,000
Retirement of Nat West loan......................................................... -- (36,500)
Cost of issuing debt................................................................ -- (41,042)
Net cash provided by financing activities......................................... 4,987 182,651
------------- -------------
Net increase in cash & cash equivalents........................................... 20,237 111,692
</TABLE>
F-26
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------------
1997 1996
------------- -------------
<S> <C> <C>
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR...................................... 71,320 15,937
------------- -------------
CASH AND CASH EQUIVALENTS AT SEPTEMBER 30........................................... $ 91,557 $ 127,629
------------- -------------
------------- -------------
CASH INTEREST PAID.................................................................. $ 68,911 $ 14,983
------------- -------------
------------- -------------
Supplemental Disclosure of noncash activities:
Purchase of property and equipment under capitalized lease obligations.............. $ 3,204 $ 8,436
------------- -------------
------------- -------------
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 and Equipment.
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
-------------
-------------
In connection with the purchase of the Specified Parcels in 1996, THCR issued
500,000 shares of its common stock valued at $10,500.
</TABLE>
The accompanying notes are an integral
part of these condensed consolidated financial statements.
F-27
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) CONDENSED FINANCIAL STATEMENTS
The accompanying condensed 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 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
Note 2). 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 in Note 2) to distribute funds to Trump AC.
All significant intercompany balances and transactions have been eliminated
in the accompanying condensed consolidated financial statements.
The accompanying condensed consolidated financial statements have been
prepared by Trump AC without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Accordingly, certain information and note
disclosures normally included in financial statements prepared in conformity
with generally accepted accounting principles have been condensed or omitted. In
the opinion of Trump AC, all adjustments, consisting of only normal recurring
adjustments, necessary to present fairly the financial position, results of
operations and cash flows for the periods presented, have been made.
The casino industry in Atlantic City is seasonal in nature; therefore,
results of operations for the nine months ended September 30, 1997 are not
necessarily indicative of the operating results for a full year.
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.
Certain reclassifications have been made to prior year financial statements
to conform to the current year presentation.
(2) PUBLIC OFFERINGS AND MERGER
On June 12, 1995, Trump Hotels & Casino Resorts, Inc. ("THCR") completed a
public offering of 10,000,000 shares of its common stock, par value $.01 per
share (the "THCR Common Stock"), at $14.00 per share (the "1995 Stock Offering")
for gross proceeds of $140,000,000. Concurrent with the 1995 Stock
F-28
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(2) PUBLIC OFFERINGS AND MERGER (CONTINUED)
Offering, THCR Holdings, a then 60% subsidiary of THCR, and its subsidiary Trump
Hotels & Casino Resorts Funding, Inc. issued 15 1/2% Senior Secured Notes due
2005 for gross proceeds of $155,000,000 (together with the 1995 Stock Offering,
the "1995 Offerings"). From the proceeds of the 1995 Stock Offering, THCR
contributed $126,848,000 to THCR Holdings. THCR Holdings subsequently
contributed $172,859,000 to Trump AC.
On April 17, 1996, pursuant to the Agreement and Plan of Merger, as amended
(the "Taj Merger Agreement"), pursuant to which a wholly owned subsidiary of
THCR was merged (the "Taj Merger") with and into Taj Mahal Holding Corp., a
Delaware corporation now known as THCR Holding Corp. ("Taj Holding"), each
outstanding share of Class A Common Stock of Taj Holding, par value $.01 per
share (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 THCR Common Stock having a market value equal to $30.
Donald J. Trump ("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, par value $.01 per share, 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 THCR Common
Stock (plus 750,000 shares of THCR 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 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") (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
(the "Plaza Notes") of Trump Plaza Funding, Inc.;
(g) the satisfaction of the indebtedness of Taj Associates under its
loan agreement with National Westminster Bank USA ("Nat West");
F-29
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(2) PUBLIC OFFERINGS AND MERGER (CONTINUED)
(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
(k) the issuance to Trump of warrants to purchase an aggregate of 1.8
million shares of THCR 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.
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 outstanding 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 of his 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-30
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(2) PUBLIC OFFERINGS AND MERGER (CONTINUED)
Unaudited pro forma information, assuming that the Taj Merger Transaction
had occurred on January 1, 1996, is as follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, 1996
------------------
<S> <C>
Net Revenues.................................................... $ 749,694,000
Income from operations.......................................... 107,925,000
Loss before extraordinary loss.................................. 16,000,000
Extraordinary loss.............................................. (59,132,000)
Net loss........................................................ $ (43,132,000)
</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.
(3) PROPERTY AND EQUIPMENT
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 three months and nine months ended
September 30, 1997, the net effect of applying these new lives was to increase
net income by $2,108,000 and $4,034,000 respectively
F-31
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Trump Atlantic City Funding III, Inc.
We have audited the accompanying balance sheet of Trump Atlantic City
Funding III, Inc. (a Delaware Corporation) as of December 31, 1997. This balance
sheet is the responsibility of the management of Trump Atlantic City Funding
III, Inc. Our responsibility is to express an opinion on this balance sheet
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Trump Atlantic City Funding III,
Inc. as of December 31, 1997, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Roseland, New Jersey
December 31, 1997
F-32
<PAGE>
TRUMP ATLANTIC CITY FUNDING III, INC.
BALANCE SHEET
DECEMBER 31, 1997
ASSETS
<TABLE>
<S> <C>
Cash........................................................................... $ 10
Due from Trump Atlantic City Associates........................................ 23,550,000
----------
Total Assets........................................................... $23,550,010
----------
----------
</TABLE>
LIABILITIES AND SHAREHOLDER'S EQUITY
<TABLE>
<S> <C>
11 1/4% First Mortgage Notes (TAC III) due 2006, net of discount of
$1,450,000................................................................... $23,550,000
Commitments and Contingencies
Common Stock, $.01 par value, 1,000 shares authorized, 100 shares issued and
outstanding.................................................................. $ 1
Additional paid in capital..................................................... 9
----------
Total Shareholder's Equity............................................. 10
----------
Total Liabilities and Shareholder's Equity............................. $23,550,010
----------
----------
</TABLE>
The accompanying notes to balance sheet are an integral part of this balance
sheet.
F-33
<PAGE>
TRUMP ATLANTIC CITY FUNDING III, INC.
NOTES TO BALANCE SHEET
DECEMBER 31, 1997
(1) ORGANIZATION AND OPERATIONS
Trump Atlantic City Funding III, Inc. ("TAC III"), which is a wholly owned
subsidiary of Trump Atlantic City Associates ("Trump AC"), was formed on
November 18, 1997 to, together with Trump AC, raise funds through the issuance
and sale of debt securities for the benefit of Trump Taj Mahal Associates ("Taj
Associates") and Trump Plaza Associates ("Plaza Associates"). 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").
As TAC III and Trump AC have no operations, their ability to service their
debt is dependent upon the successful operations of Taj Associates and Plaza
Associates.
(2) ISSUANCE OF FIRST MORTGAGE NOTES
On December 10, 1997, Trump AC and TAC III, collectively the issuers, issued
and sold $25,000,000 principal amount of 11 1/4% First Mortgage Notes due 2006
(the "Offering"). Concurrent with the Offering, Trump AC and Trump Atlantic City
Funding II, Inc. ("TAC II") also issued and sold $75,000,000 principal amount of
11 1/4% First Mortgage Notes, due 2006. The TAC II Notes and the TAC III Notes
were issued and sold at a discount of $2,945,000 and $1,450,000, respectively.
Existing and prospective investors should consider among other things, (i)
the high leverage and fixed charges of Trump AC; (ii) the risk in refinancing
and repaying the indebtedness and Trump AC's need for additional financing;
(iii) Trump AC's holding company structure; (iv) the restrictions imposed on
certain activities by certain debt instruments; (v) the historical results; net
losses of Plaza Associates and Taj Associates; and (vi) risks associated with
the use of the net proceeds from the Offering, which will be used for working
capital and other general corporate purposes for Trump AC and its subsidiaries.
There can be no assurance that Trump AC's operations will be successful. See
"Risk Factors" included elsewhere in this Prospectus for a discussion of these
and other factors.
F-34
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
TRUMP ATLANTIC CITY FUNDING III, 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 III, 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 III. 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 III provide for
indemnification of the directors and officers of such entities to the full
extent permitted by the Delaware General Corporation Law.
Funding III 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(24) Certificate of Incorporation of Trump Atlantic City Funding II, Inc.
3.11(24) By-Laws of Trump Atlantic City Funding II, Inc.
3.12 Certificate of Incorporation of Trump Atlantic City Funding III, Inc.
</TABLE>
II-1
<PAGE>
<TABLE>
<S> <C>
3.13 By-Laws of Trump Atlantic City Funding III, Inc.
3.14(24) Certificate of Incorporation of Trump Atlantic City Corporation, as amended.
3.15(24) By-Laws of Trump Atlantic City Corporation.
3.16(24) Certificate of Formation of Trump Casino Services, L.L.C.
3.17(24) Operating Agreement of Trump Casino Services, L.L.C.
3.18(24) Certificate of Formation of Trump Communications, L.L.C.
3.19(24) Operating Agreement of Trump Communications, L.L.C.
3.20(24) 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(24) 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(24) 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(24) 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* 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 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(24) 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(24) 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(24) Assignment of Leases and Rents by Trump Plaza Associates as assignor and U.S.
Bank National Association (as Collateral Agent) as assignee.
4.38(24) 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(24) 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 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(24) 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.
21.1 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.
27 Financial Data Schedule of Trump Atlantic City Funding III, Inc.
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>
- ------------------------
* To be filed by amendment.
(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.
II-6
<PAGE>
(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.
(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- , of Trump
Atlantic City Associates and Trump Atlantic City Funding II, Inc.
(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.
II-7
<PAGE>
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 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 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 9th day of January, 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 III, 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
</TABLE>
II-9
<PAGE>
<TABLE>
<S> <C> <C>
TRUMP COMMUNICATIONS, L.L.C.
By: Trump Atlantic City Corporation
its General Partner
By: /s/ NICHOLAS L. RIBIS
-----------------------------------------
Name: Nicholas L. Ribis
Title: President
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
KNOW ALL MEN BY THESE PRESENTS, that each officer and director of Trump
Atlantic City Holding, Inc., General Partner of Trump Atlantic City Associates,
whose signature appears below constitutes and appoints Donald J. Trump and
Nicholas L. Ribis, and each of them, with full power to act without the other,
his true and lawful attorney-in-fact and agent, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this Registration Statement, and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Commission, granting unto said attorneys-in-fact and agents,
and each of them, full power and authority to do and perform each and every act
and thing requisite and necessary fully to all intents and purposes as he might
or could do in person thereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
/s/ DONALD J. TRUMP Chairman of the Board of
- ------------------------------ Directors (principal January 9, 1998
Donald J. Trump executive officer)
/s/ FRANCIS X. MCCARTHY, JR. Chief Financial Officer
- ------------------------------ (principal financial and January 9, 1998
Francis X. McCarthy, Jr. accounting officer)
/s/ NICHOLAS L. RIBIS
- ------------------------------ President and Director January 9, 1998
Nicholas L. Ribis
/s/ WALLACE B. ASKINS
- ------------------------------ Director January 9, 1998
Wallace B. Askins
/s/ DON M. THOMAS
- ------------------------------ Director January 9, 1998
Don M. Thomas
II-11
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each officer and director of Trump
Atlantic City Funding III, Inc., whose signature appears below constitutes and
appoints Donald J. Trump and Nicholas L. Ribis, and each of them, with full
power to act without the other, his true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments to
this Registration Statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary fully to all
intents and purposes as he might or could do in person thereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
or his substitutes or substitute, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- -------------------------- ------------------------------ -------------------
/s/ DONALD J. TRUMP
- -------------------------- Chairman of the Board of January 9, 1998
Donald J. Trump Directors
/s/ NICHOLAS L. RIBIS President, Chief Executive
- -------------------------- Officer, Chief Financial January 9, 1998
Nicholas L. Ribis Officer and Director
(principal executive and
financial officer)
/s/ ROBERT M. PICKUS
- -------------------------- Director January 9, 1998
Robert M. Pickus
/s/ R. BRUCE MCKEE Senior Vice President of
- -------------------------- Corporate Finance (principal January 9, 1998
R. Bruce McKee accounting officer)
/s/ WALLACE B. ASKINS
- -------------------------- Director January 9, 1998
Wallace B. Askins
/s/ DON M. THOMAS
- -------------------------- Director January 9, 1998
Don M. Thomas
II-12
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each officer and director of Trump
Atlantic City Corporation, member of Trump Casino Services, L.L.C. and Trump
Communications, L.L.C., and general partner of Trump Plaza Associates and Trump
Taj Mahal Associates, whose signature appears below constitutes and appoints
Donald J. Trump and Nicholas L. Ribis, and each of them, with full power to act
without the other, his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments to this
Registration Statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary fully to all
intents and purposes as he might or could do in person thereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
or his substitutes or substitute, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- -------------------------- ------------------------------ -------------------
/s/ DONALD J. TRUMP
- -------------------------- Sole Director January 9, 1998
Donald J. Trump
/s/ NICHOLAS L. RIBIS
- -------------------------- President and Chief Executive January 9, 1998
Nicholas L. Ribis Officer
/s/ ROBERT M. PICKUS
- -------------------------- Assistant Secretary January 9, 1998
Robert M. Pickus
Senior Vice President of
/s/ R. BRUCE MCKEE Corporate Finance (principal
- -------------------------- accounting and financial January 9, 1998
R. Bruce McKee officer)
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 10-K and have issued our
report thereon dated February 7, 1997. 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 7, 1997
S-1
<PAGE>
SCHEDULE II
TRUMP ATLANTIC CITY ASSOCIATES AND
SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
CHARGED
BALANCE AT TO OTHER BALANCE AT
BEGINNING COSTS AND CHANGES END OF
OF PERIOD EXPENSES (DEDUCTIONS) PERIOD
---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996:
Allowance for doubtful accountants.... $8,077,000 $8,598,000 $ 680,000(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, 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, 1994:
Allowance for doubtful accounts....... $10,616,000 $ 323,000 $(2,446,000)(A) $8,493,000
---------- --------- ---------- ----------
Valuation allowance for interest
differential on CRDA bonds.......... $2,981,000 $ 838,000 $1,645,000(B) $(2,174,000)
---------- --------- ---------- ----------
</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>
3.12 Certificate of Incorporation of Trump Atlantic City Funding III, Inc.
3.13 By-Laws of Trump Atlantic City Funding III, Inc.
4.34 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.
4.40 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.
12 Computation of Ratio of Earnings to Fixed Charges.
21.1 List of Subsidiaries of the Registrants.
23.1 Independent Auditors' Consent of Arthur Andersen LLP.
25 Statement on Form T-1 of Eligibility of Trustee.
27 Financial Data Schedule of Trump Atlantic City Funding III, Inc.
</TABLE>
<PAGE>
Exhibit 3.12
CERTIFICATE OF INCORPORATION
OF
TRUMP ATLANTIC CITY FUNDING III, INC.
* * * * * * * *
ARTICLE I
The name of the corporation (the "Corporation") is: TRUMP ATLANTIC
CITY FUNDING III, INC.
ARTICLE II
The address of the registered office of the Corporation in the State
of Delaware is 1209 Orange Street in the City of Wilmington, County of New
Castle. The name of the registered agent of the Corporation 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 1,000 shares of Common Stock, $.01 par value per share
(the "Common Stock").
ARTICLE V
A. New Jersey Shareholder Qualification. The New Jersey Casino Control
Commission shall have the prior right to approve any and all transfers of the
Corporation's securities, shares or
<PAGE>
other interests in the Corporation and in any non-publicly traded holding
company, intermediary company or Subsidiary thereof, as said terms are
defined in the New Jersey Casino Control Act, as amended or as may
hereinafter be amended. The Corporation shall have the absolute right to
repurchase at market price or the purchase price, whichever is the lesser,
any security, share or other interest in the Corporation in the event that
the Commission disapproves a transfer in accordance with the provisions of
the Casino Control Act, provided that such repurchase price shall be payable
only in cash. Every security, share or other interest (other than publicly
traded debt securities) in the Corporation and issued by the Corporation
shall bear, on both sides of the certificate evidencing same, a statement of
the foregoing restrictions and the additional restrictions imposed by
N.J.S.A. 5:12-105.
Notwithstanding anything herein to the contrary, the provisions of the
preceding paragraph shall not apply to publicly traded debt securities of the
Corporation. Such debt securities shall be held subject to the condition that
if any such holder is found disqualified by the Commission pursuant to the
provisions of the Casino Control Act, such holder shall (a) dispose of his or
her interest in the Corporation; (b) not receive any interest upon any such
securities; and (c) not receive any remuneration in any form from the casino
licensee for services rendered or otherwise. If any unsuitable or disqualified
holder fails to dispose of his securities within 180 days following such
disqualification, (i) such securities shall be subject to
2
<PAGE>
redemption by the Corporation, as provided in Section B of this Article
V, provided further that the redemption price of such securities shall be
payable only in cash and not in securities or any combination thereof, and
(ii) such unsuitable or disqualified holder shall indemnify the Corporation
for any and all direct or indirect costs, including attorneys' fees, incurred
by the Corporation as a result of such holder's continuing ownership or
failure to divest promptly.
B. Disqualified Holders. Notwithstanding any other provision of this
Certificate of Incorporation, but subject to the provisions of any resolution of
the Board of Directors creating any series of preferred stock or any other class
of stock which has a preference over Common Stock with regard to dividends or
upon liquidation, outstanding shares of Capital Stock or debt securities held by
a Disqualified Holder shall be subject to redemption at any time by the
Corporation by action of the Board of Directors, pursuant to this Article V,
Section B as follows:
(1) the redemption price of the Capital Stock or debt securities to
be redeemed pursuant to this Article V, Section B shall be equal to the lesser
of the Fair Market Value of such Capital Stock or debt securities or the price
at which such Capital Stock or debt securities were purchased, or such other
redemption price as required by pertinent state or federal law pursuant to which
the redemption is required;
(2) the redemption price of such shares or debt securities shall be
paid in cash;
3
<PAGE>
(3) if less than all the shares or debt securities held by
Disqualified Holders are to be redeemed, the shares or debt securities to be
redeemed shall be selected in such manner as shall be determined by the Board of
Directors, which may include selection first of the most recently purchased
shares or debt securities thereof, selection by lot, or selection in any other
manner determined by the Board of Directors;
(4) at least thirty (30) days' written notice of the Redemption
Date shall be given to the record holders of the shares or debt securities
selected to be redeemed (unless waived in writing by any such holder); PROVIDED,
HOWEVER, that the Redemption Date shall be deemed to be the date on which
written notice shall be given to record holders if the cash necessary to effect
the redemption shall have been deposited in trust for the benefit of such record
holders and subject to immediate withdrawal by them upon surrender of the
certificates for their shares or debt securities to be redeemed;
(5) from and after the Redemption Date or such earlier date as
mandated by pertinent state or federal law, any and all rights of whatever
nature, which may be held by the Beneficial Owners of shares selected for
redemption (including without limitation any rights to vote or participate in
dividends declared on stock of the same class or series as such shares), shall
cease and terminate and they shall thenceforth be entitled only to receive the
cash payable upon redemption; and
(6) such other terms and conditions as the Board of Directors shall
determine.
4
<PAGE>
ARTICLE VI
The name and mailing address of the incorporator is as follows:
Henry S. Smokler
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 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
A. Indemnification. The Corporation shall indemnify to the fullest
extent permitted under and in accordance with the laws of the State of Delaware
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) 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 similar capacity with another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by
5
<PAGE>
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.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in
good faith and in a manner which he reasonably believed to be in, or not
opposed to, the best interests of the Corporation, and, with respect to any
criminal action or proceeding, shall not, of itself, create a presumption
that the person had reasonable cause to believe that his conduct was unlawful.
B. Additional Indemnification. The Corporation shall indemnify to
the fullest extent permitted under and in accordance with the laws of the State
of Delaware any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit, by or in the right of
the Corporation to procure a judgment in its favor by reason of the fact that
such person is or was a director, officer, employee or agent of the Corporation,
or is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with the defense or settlement
of such action or suit if he acted in good
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faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the Corporation unless and only to the
extent that the Court of Chancery or the court in which such action or suit
was brought shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court
of Chancery or such other court shall deem proper.
C. Payment of Expenses. Expenses (including attorneys' fees)
incurred in defending any civil, criminal, administrative or investigative
action, suit or proceeding shall (in the case of any action, suit or proceeding
against a director of the Corporation) or may (in the case of any action, suit
or proceeding 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 of Directors upon receipt of an
undertaking by or on behalf of the indemnified person to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by the
Corporation as authorized in this Article IX.
D. 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
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other contract or agreement between the Corporation and any officer,
director, employee or agent of the Corporation.
E. Effect of Repeal. Neither the amendment nor repeal of this
Article IX, section A, B, C or D, nor the adoption of any provision of this
Certificate of Incorporation inconsistent with Article IX, section A, B, C or D,
shall eliminate or reduce the effect of this Article IX, section A, B, C or D,
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,
section A, B, C or D, if such provision had not been so amended or repealed or
if a provision inconsistent therewith had not been so adopted.
F. Limitation on Liability. No director or officer shall be
personally liable to the Corporation or any stockholder for monetary damages for
breach of fiduciary duty as a director or officer, except for any matter in
respect of which such director or officer (1) 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 (2) 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;
(ii) shall not have acted in good faith or, in failing to act, shall
not have acted in good faith;
(iii) shall have acted in a manner involving intentional misconduct
or a knowing violation of law or, in failing to act, shall have acted
in a manner
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involving intentional misconduct or a knowing violation of law; or
(iv) shall have derived an improper personal benefit.
If the General Corporation Law of the State of Delaware is amended
after the date hereof to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of a director
of 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.
ARTICLE X
The Corporation elects not to be governed by Section 203 of the
General Corporation Law of the State of Delaware.
ARTICLE XI
For the purpose of this Certificate of Incorporation:
A. "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 under the General Rules and Regulations
under the Exchange Act. The term "registrant" as used in said Rule 12b-2 shall
mean the Corporation.
B. "Beneficial Owner" shall mean any Person who, singly or together
with any of such Person's Affiliates or Associates, directly or indirectly, has
"beneficial ownership" of Capital Stock (as determined pursuant to Rule 13d-3 of
the Exchange Act).
C. "Board of Directors" shall mean the Board of Directors of the
Corporation.
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D. "Capital Stock" shall mean any common stock, preferred stock,
special stock, or any other class or series of stock of the Corporation.
E. "Casino Control Act" shall mean the New Jersey Casino Control Act,
N.J.S.A. 5:12-1 et seq.
F. "Closing Price" on any day shall mean the reported closing sales
price or, in case no such sale takes place, the average of the reported closing
bid and asked price on the composite tape for New York Stock Exchange-listed
stocks, or, if stock of the class or series in question is not quoted on such
composite tape on the New York Stock Exchange, or, if such stock is not listed
on such exchange, on the principal United States Securities Exchange registered
under the Exchange Act on which such stock is listed, or, if such stock is not
listed on any such exchange, the highest closing sales price or bid quotation
for such stock on the National Association of Securities Dealers, Inc.,
Automated Quotation System (including the National Market Systems) or any system
then in use, or, if no such prices or quotations are available, the fair market
value on the day in question as determined by the Board of Directors in good
faith.
G. "Commission" shall mean the New Jersey Casino Control Commission.
H. "Disqualified Holder" shall mean any Beneficial Owner of shares of
Capital Stock or debt securities of the Corporation or any of its Subsidiaries
found to be disqualified by any governmental or quasi-governmental authority
with applicable jurisdiction over the business, affairs, securities,
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or properties of the Corporation or any of its Subsidiaries, including,
without limitation, the Commission, pursuant to the provisions of the Casino
Control Act or other applicable provision or whose holding of shares of
Capital Stock or debt securities may result or, when taken together with the
holding of shares of Capital Stock or debt securities by any other Beneficial
Owner, may result, in the judgment of the Board of Directors, in the
inability to obtain, loss or non-reinstatement of any license or franchise
from any governmental agency sought or held by the Corporation or any
Subsidiary to conduct any portion of the business of the Corporation or any
Subsidiary, which license or franchise is conditioned upon some or all of the
holders of Capital Stock or debt securities meeting certain criteria.
I. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
J. "Fair Market Value" (a) in the case of shares of Capital Stock
shall mean the average Closing Price for such Capital Stock for each of the
forty-five (45) most recent days during which shares of stock of such class or
series shall have been traded preceding the day on which notice of redemption
shall have been given pursuant to Section B, Paragraph (4) of Article V;
PROVIDED, HOWEVER, that if shares of Capital Stock of such class or series are
not traded on any securities exchange or in the over-the-counter market, "Fair
Market Value" shall be determined by the Board of Directors in good faith; and
PROVIDED FURTHER, HOWEVER, that "Fair Market Value" as to any stockholder
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who purchases any stock subject to redemption within one hundred twenty (120)
days prior to a Redemption Date shall not (unless otherwise determined by the
Board of Directors) exceed the purchase price paid for such shares and (b) in
the case of property other than stock or other securities, shall mean the
fair market value of such property on the date in question as determined by
the Board of Directors in good faith.
K. "Person" shall mean any natural person, corporation, firm,
partnership, limited liability company, association, government, governmental
agency, or any other entity, whether acting in an individual, fiduciary, or any
other capacity.
L. "Redemption Date" shall mean the date fixed by the Board of
Directors for the redemption of any shares of stock of the Corporation pursuant
to Article V.
M. "Subsidiary" shall mean any company of which a majority of any
class of equity securities is beneficially owned by the Corporation and/or
another Subsidiary of the Corporation, or in the case of a partnership, in which
the Corporation or any subsidiary is a general partner.
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IN WITNESS WHEREOF, 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 of
Incorporation, hereby declaring and certifying that this is his act and deed and
the facts herein stated are true and, accordingly, has hereunto executed this
Certificate of Incorporation on this 18th day of November, 1997.
/s/ Henry S. Smokler
----------------------------
Henry S. Smokler
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Exhibit 3.13
TRUMP ATLANTIC CITY FUNDING III, INC.
Incorporated Under the Laws of
the State of Delaware
BY-LAWS
ARTICLE I
OFFICES
The registered office of Trump Atlantic City Funding III, Inc. (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 of the Corporation (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 such date, 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 of the Corporation (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.
Section 3. Notice of Meetings: Written notice of the time and place of
any meeting of stockholders, whether annual or special, shall be given to
each stockholder entitled to vote
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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 be
adjourned 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 (10) 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 (10) 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 eleven (11) months from its date, unless said proxy provides for a
longer period. Each stockholder entitled to vote shall at every meeting of
the 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 or the Certificate of
Incorporation, 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.
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Section 8. Record Date of Stockholders: The Board of Directors is
authorized to fix in advance of any meeting of stockholders a date not
exceeding sixty (60) days nor less than ten (10) 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. Conduct of Meetings: The Chairman of the Board of Directors
or, in his absence, the President, 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 governing all
aspects of the conduct of such meetings, including but not limited to, rules
respecting the time allotted to stockholders to speak. The Secretary of the
Corporation shall act as secretary of every meeting, but if the Secretary is
not present, the presiding officer of the meeting shall appoint any person
present to act as secretary of the meeting.
Section 10. 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.
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ARTICLE III
DIRECTORS
Section 1. Number and Qualifications: The Board of Directors shall
consist initially of three (3) directors, and thereafter shall consist of such
number as may be fixed from time to time by resolution of the Board of
Directors. 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.
Any person elected 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 qualified.
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
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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, shall be mailed to
each director addressed to him at his residence or usual place of business at
least five (5) 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 four (4) days before the day on which the
meeting is to be held.
Section 9. Business Transacted at Meetings: 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 of Directors shall act only as the Board of Directors
and the individual members thereof shall not have any powers as such.
Section 11. Compensation: The directors shall not receive any stated
salary for their services as directors. 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
Directors or committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of the proceedings of the
Board of Directors or committee.
Section 13. Meetings Through Use of Communications Equipment: Members
of the Board of Directors, or any committee
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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 entire Board of Directors, designate
two or more of their number to constitute an Executive Committee to hold
office at the pleasure of the Board of Directors, 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 or
limitations as the Board of Directors may from time to time specify, or as
limited by the General Corporation Law of the State of Delaware, 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.
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 entire 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
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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: 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: 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 five (5) 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 four (4) days before
the day on which the meeting is to be held.
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, a Secretary, 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. 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
vice-presidents, assistant secretaries or assistant treasurers, may from time
to time be appointed by the Board of
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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: Subject to the provisions of the
Certificate of Incorporation, any officer of the Corporation may be removed
from office, with or without cause, by a vote of a majority of the entire
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: Subject to the provisions of the
Certificate of Incorporation, 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 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.
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. The President
shall have power to call special meetings of the stockholders or of the Board
of Directors or of the Executive Committee at any time. The President shall
be the chief executive officer of the Corporation, and shall control 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. 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 11. Treasurer: The Treasurer shall perform such duties and
have powers as are incident to the office of
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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, and the Secretary or the
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, Secretary or 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, 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
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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, or his legal representatives, to give the Corporation a bond, in
such sum not exceeding two times 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 Control Act"), then the
Corporation shall take all action necessary to comply with the Casino Control
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 Control 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 and/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 is found to be
"disqualified" by the Commission pursuant to the provisions of the Casino
Control Act, such holder or owner thereof shall dispose of such interest in
the Corporation.
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(b) In order to avoid disciplinary action for the payment 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
INDEMNIFICATION
The Corporation may indemnify any director, officer, employee or
agent of the Corporation, or other person, to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware.
ARTICLE X
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
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Corporation, and in such manner, as shall from time to time be designated by
resolution of the Board of Directors.
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 or
at any meeting of the partners of a partnership of which the Corporation is a
partner 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 or partnership interest 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.
ARTICLE XI
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 the stockholders for the
election of directors shall be made except in accordance with the laws of the
State of Delaware.
Dated : November 18, 1997
* * * * * * *
End of By-laws
* * * * * * *
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Exhibit 4.34
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REGISTRATION RIGHTS AGREEMENT
Dated as of December 10, 1997
by and among
TRUMP ATLANTIC CITY ASSOCIATES
TRUMP ATLANTIC CITY FUNDING III, INC.
THE GUARANTORS NAMED HEREIN
and
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
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<PAGE>
This Registration Rights Agreement (this "Agreement") is made and
entered into as of December 10, 1997, by and among Trump Atlantic City
Associates, a New Jersey general partnership (the "Company"), Trump Atlantic
City Funding III, Inc., a Delaware corporation and a wholly owned subsidiary
of the Company ("Funding III" and, together with the Company, the "Issuers"),
the Guarantors named herein and Donaldson, Lufkin & Jenrette Securities
Corporation (the "Initial Purchaser"), who has agreed to purchase the
Issuers' 11 1/4% Series A First Mortgage Notes (TAC III) due 2006 (the
"Series A Notes") pursuant to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated
December 10, 1997 (the "Purchase Agreement"), by and among the Issuers, the
Guarantors named therein, Trump Atlantic City Funding II, Inc. and the Initial
Purchaser. In order to induce the Initial Purchaser to purchase the Series A
Notes, the Issuers and the Guarantors named herein have agreed to provide the
registration rights set forth in this Agreement. The execution and delivery of
this Agreement is a condition to the obligations of the Initial Purchaser set
forth in Sections 2 and 4 of the Purchase Agreement. Capitalized terms used
herein and not otherwise defined shall have the meaning assigned to them in the
Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
Act: The Securities Act of 1933, as amended.
Affiliate: As defined in Rule 144 of the Act.
Broker-Dealer: Any broker or dealer registered under the Exchange
Act.
Closing Date: The date hereof.
Commission: The Securities and Exchange Commission.
Consummate: An Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness
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under the Act of the Exchange Offer Registration Statement relating to the
Series B Notes to be issued in the Exchange Offer, (b) the maintenance of such
Exchange Offer Registration Statement effective and the keeping of the Exchange
Offer open for a period not less than the period required pursuant to Section
3(b) hereof, (c) the delivery by the Issuers and the Guarantors to the Trustee
under the Indenture of Series B Notes in the same aggregate principal amount as
the aggregate principal amount of Series A Notes tendered by Holders thereof
pursuant to the Exchange Offer, and (d) the authentication and delivery by the
Trustee of such Series B Notes to such tendering Holders pursuant to the
Exchange Offer.
Effectiveness Deadline: As defined in Section 3(a) and 4(a) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The exchange and issuance by the Issuers and the
Guarantors of a principal amount of Series B Notes (which shall be registered
pursuant to the Exchange Offer Registration Statement) equal to the outstanding
principal amount of Series A Notes that are tendered by Holders in connection
with such exchange and issuance.
Exchange Offer Registration Statement: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
Filing Deadline: As defined in Sections 3(a) and 4(a) hereof.
Guarantors: The Guarantors, as defined in the Indenture.
Holders: As defined in Section 2 hereof.
Indenture: The Indenture, dated as of the date hereof, by and among
the Issuers, the Guarantors named therein and U.S. Bank National Association, as
trustee, pursuant to which the Series A Notes are being issued, as amended or
supplemented from time to time in accordance with the terms thereof.
Prospectus: The prospectus included in a Registration Statement at
the time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and including all material incorporated by
reference into such Prospectus.
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Recommencement Date: As defined in Section 6(d) hereof.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Issuers and
the Guarantors relating to (a) an offering of Series B Notes pursuant to the
Exchange Offer or (b) the registration for resale of Transfer Restricted
Securities pursuant to the Shelf Registration Statement, in each case, (i) that
is filed pursuant to the provisions of this Agreement and (ii) including the
Prospectus included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.
Regulation S: Regulation S promulgated under the Act.
Restricted Broker-Dealer: Any Broker-Dealer that holds Series B Notes
that were acquired in the Exchange Offer in exchange for Series A Notes that
such Broker-Dealer acquired for its own account as a result of market making
activities or other trading activities (other than Series A Notes acquired
directly from the Issuers or any of their affiliates).
Rule 144: Rule 144 promulgated under the Act.
Series B Notes: The 11 1/4% Series B First Mortgage Notes (TAC III)
due 2006 of the Issuers and guaranteed by the Guarantors to be issued pursuant
to the Indenture: (i) in the Exchange Offer or (ii) as contemplated by Section
4 hereof.
Shelf Registration Statement: As defined in Section 4 hereof.
Suspension Notice: As defined in Section 6(d) hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb)
as in effect on the date of the Indenture.
Transfer Restricted Securities: Each Series A Note, until the earliest
to occur of (a) the date on which such Series A Note is exchanged in the
Exchange Offer and entitled to be resold to the public by the Holder thereof
without complying with the prospectus delivery requirements of the Act, (b) the
date on which such Series A Note has been disposed of in accordance with a Shelf
Registration Statement, (c) the date on which such Series A Note is disposed of
by a Broker-Dealer
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pursuant to the "Plan of Distribution" contemplated by the Exchange Offer
Registration Statement (including delivery of the Prospectus contained therein)
or (d) the date on which such Series A Note is sold pursuant to Rule 144 or is
eligible for sale under Rule 144(k).
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities
(each, a "Holder") whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable
federal law (after the procedures set forth in Section 6(a)(i) below have been
complied with), the Issuers and the Guarantors shall (i) cause the Exchange
Offer Registration Statement to be filed with the Commission as soon as
practicable after the Closing Date (the "Exchange Offer Filing Date"), but in no
event later than 45 days after the Closing Date (such 45th day being the "Filing
Deadline"), (ii) use their respective best efforts to cause such Exchange Offer
Registration Statement to become effective at the earliest possible time, but in
no event later than 150 days after the Closing Date (such 150th day being the
"Effectiveness Deadline"), (iii) in connection with the foregoing, (A) file all
pre-effective amendments to such Exchange Offer Registration Statement as may be
necessary in order to cause it to become effective, (B) file, if applicable, a
post-effective amendment to such Exchange Offer Registration Statement pursuant
to Rule 430A under the Act and (C) cause all necessary filings, if any, in
connection with the registration and qualification of the Series B Notes to be
made under the Blue Sky laws of such jurisdictions as are necessary to permit
Consummation of the Exchange Offer, and (iv) upon the effectiveness of such
Exchange Offer Registration Statement, commence and Consummate the Exchange
Offer. The Exchange Offer shall be on the appropriate form permitting
registration of the Series B Notes to be offered in exchange for the Series A
Notes that are Transfer Restricted Securities and to permit resales of Series B
Notes by each Broker-Dealer that tendered into the Exchange Offer Series A Notes
that such Broker-Dealer acquired for its own account as a result of market
making activities or other trading activities (other than Series A Notes
acquired directly from the Issuers or any of their Affiliates) as contemplated
by Section 3(c) below.
(b) The Issuers and the Guarantors shall use their respective best
efforts to cause the Exchange Offer Registration Statement to be effective
continuously, and shall keep the Exchange Offer open for a period of not less
than the minimum period
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required under applicable federal and state securities laws to Consummate the
Exchange Offer; provided, however, that in no event shall such period be less
than 30 days. The Issuers and the Guarantors shall cause the Exchange Offer to
comply with all applicable federal and state securities laws. No securities
other than the Series B Notes shall be included in the Exchange Offer
Registration Statement. The Issuers and the Guarantors shall use their
respective best efforts to cause the Exchange Offer to be Consummated on the
earliest practicable date after the Exchange Offer Registration Statement has
become effective, but in no event later than 45 days after the Effectiveness
Deadline.
(c) The Issuers and the Guarantors shall include a "Plan of
Distribution" section in the Prospectus contained in the Exchange Offer
Registration Statement and indicate therein that any Broker-Dealer who holds
Transfer Restricted Securities that were acquired for the account of such
Broker-Dealer as a result of market-making activities or other trading
activities (other than Transfer Restricted Securities acquired directly from the
Issuers or any Affiliate of the Issuers), may exchange such Transfer Restricted
Securities pursuant to the Exchange Offer; however, such Broker-Dealer may be
deemed to be an "underwriter" within the meaning of the Act and must, therefore,
deliver a prospectus meeting the requirements of the Act in connection with its
initial sale of any Series B Notes received by such Broker-Dealer in the
Exchange Offer and that the Prospectus contained in the Exchange Offer
Registration Statement may be used to satisfy such prospectus delivery
requirement. Such "Plan of Distribution" section shall also contain all other
information with respect to such sales by such Broker-Dealers that the
Commission may require in order to permit such sales pursuant thereto, but such
"Plan of Distribution" shall not name any such Broker-Dealer or disclose the
amount of Transfer Restricted Securities held by any such Broker-Dealer, except
to the extent required by the Commission as a result of a change in policy,
rules or regulations after the date of this Agreement. See the Shearman &
Sterling no-action letter (available July 2, 1993).
To the extent necessary to ensure that the Exchange Offer Registration
Statement is available for sales of Series B Notes by Broker-Dealers, the
Issuers and the Guarantors agree to use their respective best efforts to keep
the Exchange Offer Registration Statement continuously effective, supplemented
and amended as required by the provisions of Section 6(c) hereof and in
conformity with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of 180 days from the date on which the Exchange Offer is Consummated, or
such shorter period as will terminate when all Transfer Restricted Securities
covered by such Registration Statement have been sold pursuant thereto. The
Issuers and the Guarantors shall promptly provide sufficient
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copies of the latest version of such Prospectus to such Broker-Dealers promptly
upon request, and in no event later than one business day after such request, at
any time during such period.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i)(A) the Exchange Offer is not
permitted by applicable law (after the Issuers and the Guarantors have complied
with the procedures set forth in Section 6(a)(i) below) or (B) for any other
reason the Exchange Offer is not Consummated within 210 days after the Closing
Date or (ii) if any Holder of Transfer Restricted Securities shall notify the
Company within 10 Business Days following the Consummation of the Exchange Offer
that (A) such Holder was prohibited by law or Commission policy from
participating in the Exchange Offer or (B) such Holder may not resell the Series
B Notes acquired by it in the Exchange Offer to the public without delivering a
prospectus and the Prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for such resales by such Holder or (C)
such Holder is a Broker-Dealer and holds Series A Notes acquired directly from
the Issuers or any of their Affiliates, then the Company shall as promptly as
practicable deliver to the Holders and the Trustee written notice thereof (the
"Shelf Notice"), and the Issuers and the Guarantors shall:
(x) cause to be filed, on or prior to 45 days after such filing obligation
arises (the "Filing Deadline"), a shelf registration statement pursuant to Rule
415 under the Act (which may be an amendment to the Exchange Offer Registration
Statement (the "Shelf Registration Statement")), relating to all Transfer
Restricted Securities, and
(y) shall use their respective best efforts to cause such Shelf
Registration Statement to become effective on or prior to 150 days after such
filing obligation arises (such 150th day, the "Effectiveness Deadline").
If, after the Issuers and the Guarantors have filed an Exchange Offer
Registration Statement that satisfies the requirements of Section 3(a) above,
the Issuers and the Guarantors are required to file and make effective a Shelf
Registration Statement solely because the Exchange Offer is not permitted under
applicable federal law, then the filing of the Exchange Offer Registration
Statement shall be deemed to satisfy the requirements of clause (x) above;
provided that, in such event, the Issuers and the Guarantors shall remain
obligated to meet the Effectiveness Deadline set forth in clause (y).
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The Issuers and the Guarantors shall use their respective best efforts
to keep any Shelf Registration Statement required by this Section 4(a)
continuously effective, supplemented and amended as required by and subject to
the provisions of Sections 6(b) and (c) hereof to the extent necessary to ensure
that it is available for sales of Transfer Restricted Securities by the Holders
thereof entitled to the benefit of this Section 4(a), and to ensure that it
conforms with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of at least two years (as extended pursuant to Section 6(c)(i)) following
the date on which such Shelf Registration Statement first became effective under
the Act, or such shorter period as will terminate when all Transfer Restricted
Securities covered by such Shelf Registration Statement have been sold pursuant
thereto (the "Effectiveness Period"). No securities other than Transfer
Restricted Securities shall be included in any Shelf Registration Statement.
(b) Provision by Holders of Certain Information in Connection with
the Shelf Registration Statement. No Holder of Transfer Restricted Securities
may include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 10 Business Days after receipt of a request
therefor, the information specified in Item 507 or 508 of Regulation S-K, as
applicable, of the Act for use in connection with any Shelf Registration
Statement or Prospectus or preliminary Prospectus included therein. No Holder
of Transfer Restricted Securities shall be entitled to Liquidated Damages
pursuant to Section 5 hereof unless and until such Holder shall have provided
all such information. Each selling Holder agrees to promptly furnish additional
information required to be disclosed in order to make the information previously
furnished to the Company by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
The Issuers, the Guarantors and the Initial Purchaser agree that the
Holders of Transfer Restricted Securities will suffer damages if the Issuers and
the Guarantors fail to fulfill their obligations pursuant to Section 3 or
Section 4 hereof and that it would not be possible to ascertain the extent of
such damages. Accordingly, (i) if either the Exchange Offer Registration
Statement or, if applicable, the Shelf Registration Statement has not been filed
with the Commission on or prior to the applicable Filing Deadline; or (ii) if
either the Exchange Offer Registration Statement or, if applicable, the Shelf
Registration Statement is not declared effective by the Commission on or prior
to the applicable Effectiveness Deadline; or (iii) if an Exchange Offer
Registration Statement becomes effective, but the Issuers and the Guarantors
fail to
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<PAGE>
Consummate the Exchange Offer within 45 days of the earlier of the effectiveness
of such registration statement or the Effectiveness Deadline for such
registration statement; or (iv) the Shelf Registration Statement is declared
effective by the Commission but thereafter such Shelf Registration Statement
ceases to be effective or usable in connection with resales of Series A Notes
during the Effectiveness Period (each such event referred to in clauses (i)
through (iv), a "Registration Default"), then the Issuers and the Guarantors
hereby jointly and severally agree to pay to each Holder of Transfer Restricted
Securities affected thereby liquidated damages ("Liquidated Damages") in an
amount equal to $.05 per week per $1,000 in principal amount of Transfer
Restricted Securities held by such Holder for each week or portion thereof that
the Registration Default continues for the first 90-day period immediately
following the occurrence of such Registration Default. The amount of Liquidated
Damages shall increase by an additional $.05 per week per $1,000 in principal
amount of Transfer Restricted Securities 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 in principal amount of
Transfer Restricted Securities; provided that the Issuers and the Guarantors
shall in no event be required to pay Liquidated Damages for more than one
Registration Default at any given time. Following the cure of any Registration
Default relating to any Transfer Restricted Securities, the accrual of
Liquidated Damages with respect to such Registration Default will cease. A
Registration Default under clause (i) above shall be cured on the date that the
Exchange Offer Registration Statement or the Shelf Registration Statement, as
applicable, is filed with the Commission; a Registration Default under clause
(ii) above shall be cured on the date that the Exchange Offer Registration
Statement or the Shelf Registration Statement, as applicable, is declared
effective by the Commission; a Registration Default under clause (iii) above
shall be cured on the earlier of the date (A) the Exchange Offer is Consummated
or (B) the Company delivers a Shelf Notice to the Holders of Transfer Restricted
Securities; and a Registration Default under clause (iv) above shall be cured on
the earlier of (A) the date the Shelf Registration Statement is declared
effective and is usable or (B) the Effectiveness Period expires.
Notwithstanding anything to the contrary in this Section 5, no Liquidated
Damages shall accrue in connection with a Registration Default under clause (iv)
above if such Registration Default is cured within 7 days after its occurrence,
provided that such cure right may not be exercised more than once each fiscal
quarter.
All accrued Liquidated Damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture, on
each Interest Payment Date as more fully set forth in the Indenture and the
Series A Notes (whether or not any interest is then payable on the Series A
Notes) and on each
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payment date provided in the Indenture, including, without limitation,
whether upon redemption, maturity (by acceleration or otherwise), purchase
upon a change of control or purchase upon a sale of assets. Each obligation
to pay Liquidated Damages with respect to any Registration Default shall be
deemed to commence accruing on the date of such Registration Default and to
cease accruing when such Registration Default has been cured as provided in
the preceding paragraph. All obligations of the Issuers and the Guarantors
set forth in the preceding paragraph that are outstanding with respect to any
Transfer Restricted Security at the time such security ceases to be a
Transfer Restricted Security shall survive until such time as all such
obligations with respect to such security shall have been satisfied in full.
The parties hereto agree that the Liquidated Damages provided for in
this Section 5 constitute a reasonable estimate of the damages that will be
suffered by Holders by reason of the failure to file the Exchange Offer
Registration Statement or the Shelf Registration Statement, the failure of the
Exchange Offer Registration Statement or the Shelf Registration Statement to be
declared effective, the failure to Consummate the Exchange Offer or the failure
of the Shelf Registration Statement to remain effective, as the case may be, in
accordance with this Agreement. Such Liquidated Damages shall be the sole
remedy available to Holders of such Transfer Restricted Securities with respect
to a Registration Default.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
Exchange Offer, the Issuers and the Guarantors shall comply with all applicable
provisions of Section 6(c) below, shall use their respective best efforts to
effect such exchange and to permit the resale of Series B Notes by each
Broker-Dealer that tendered in the Exchange Offer Series A Notes that such
Broker-Dealer acquired for its own account as a result of its market making
activities or other trading activities (other than Series A Notes acquired
directly from the Issuers or any of their Affiliates) being sold in accordance
with the intended method or methods of distribution thereof, and shall comply
with all of the following provisions:
(i) If, following the date hereof there has been announced a
change in Commission policy with respect to exchange offers such as the
Exchange Offer, that in the reasonable opinion of counsel to the Company
raises a substantial question as to whether the Exchange Offer is permitted
by applicable federal law, the Issuers and the Guarantors hereby agree to
seek a no-action letter or other favorable decision from the Commission
allowing the Issuers and the Guarantors to Consummate an Exchange Offer for
the Transfer Restricted Securities. The
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Issuers and the Guarantors hereby agree to pursue the issuance of such a
decision to the Commission staff level. In connection with the foregoing,
the Issuers and the Guarantors hereby agree to take all such other actions
as may be reasonably requested by the Commission or otherwise required in
connection with the issuance of such decision, including without limitation
(A) participating in telephonic conferences with the Commission, (B)
delivering to the Commission staff an analysis prepared by counsel to the
Company setting forth the legal bases, if any, upon which such counsel has
concluded that such an Exchange Offer should be permitted and (C)
diligently pursuing a resolution (which need not be favorable) by the
Commission staff.
(ii) As a condition to its participation in the Exchange Offer,
each Holder of Transfer Restricted Securities (including, without
limitation, any Holder who is a Broker Dealer) shall furnish, upon the
request of the Company, prior to the Consummation of the Exchange Offer, a
written representation to the Company (which may be contained in the letter
of transmittal contemplated by the Exchange Offer Registration Statement)
to the effect that (A) it is not an Affiliate of the Company, (B) it is not
engaged in, and does not intend to engage in, and has no arrangement or
understanding with any person to participate in, a distribution of the
Series B Notes to be issued in the Exchange Offer and (C) it is acquiring
the Series B Notes in its ordinary course of business. Each Holder using
the Exchange Offer to participate in a distribution of the Series B Notes
hereby acknowledges and agrees that, if the resales are of Series B Notes
obtained by such Holder in exchange for Series A Notes acquired directly
from the Company or an Affiliate thereof, it (1) could not, under
Commission policy as in effect on the date of this Agreement, rely on the
position of the Commission enunciated in Morgan Stanley and Co., Inc.
(available June 5, 1991) and Exxon Capital Holdings Corporation (available
May 13, 1988), as interpreted in the Commission's letter to Shearman &
Sterling dated July 2, 1993, and similar no-action letters (including, if
applicable, any no-action letter obtained pursuant to clause (i) above),
and (2) must comply with the registration and prospectus delivery
requirements of the Act in connection with a secondary resale transaction
and that such a secondary resale transaction must be covered by an
effective registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation S-K.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Issuers and the Guarantors shall provide a supplemental
letter to the Commission (A) stating that the Issuers and the Guarantors
are registering the Exchange Offer in reliance on the position of the
Commission enunciated in
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Exxon Capital Holdings Corporation (available May 13, 1988) and Morgan
Stanley and Co., Inc. (available June 5, 1991), as interpreted in the
Commission's letter to Shearman & Sterling dated July 2, 1993, and, if
applicable, any no-action letter obtained pursuant to clause (i) above, (B)
including a representation that neither of the Issuers nor any Guarantor
has entered into any arrangement or understanding with any Person to
distribute the Series B Notes to be received in the Exchange Offer and
that, to the best of the Company's information and belief, each Holder
participating in the Exchange Offer is acquiring the Series B Notes in its
ordinary course of business and has no arrangement or understanding with
any Person to participate in the distribution of the Series B Notes
received in the Exchange Offer and (C) any other undertaking or
representation required by the Commission as set forth in any no-action
letter obtained pursuant to clause (i) above, if applicable.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Issuers and the Guarantors shall comply with all the
provisions of Section 6(c) below and shall use their respective best efforts to
effect such registration to permit the sale of the Transfer Restricted
Securities being sold in accordance with the intended method or methods of
distribution thereof (as indicated in the information furnished to the Company
pursuant to Section 4(b) hereof), and pursuant thereto the Issuers and the
Guarantors will prepare and file with the Commission a Shelf Registration
Statement relating to the registration on any appropriate form under the Act,
which form shall be available for the sale of the Transfer Restricted Securities
in accordance with the intended method or methods of distribution thereof within
the time periods and otherwise in accordance with the provisions hereof.
(c) General Provisions. In connection with any Registration
Statement and any related Prospectus required by this Agreement, the Issuers and
the Guarantors shall:
(i) use their respective best efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements for the period specified in Section 3 or 4 of this Agreement, as
applicable. Upon the occurrence of any event that would cause any such
Registration Statement or the Prospectus contained therein (A) to contain a
material misstatement or omission or (B) not to be effective and usable for
resale of Transfer Restricted Securities during the period required by this
Agreement, the Issuers and the Guarantors shall file promptly an
appropriate amendment to such Registration Statement curing such defect,
and, if Commission review is required, use their respective best efforts to
cause such amendment to be declared effective as soon as practicable;
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(ii) prepare and file with the Commission such amendments and
post-effective amendments to the applicable Registration Statement as may
be necessary to keep such Registration Statement effective for the
applicable period set forth in Section 3 or 4 hereof, as the case may be;
cause the Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 under
the Act, and to comply with Rules 424, 430A and 462, as applicable, under
the Act in a timely manner; and comply with the provisions of the Act with
respect to the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the intended
method or methods of distribution by the sellers thereof set forth in such
Registration Statement or supplement to the Prospectus;
(iii) advise each selling Holder known to the Company and the
Initial Purchaser promptly and, if requested by such Persons, confirm such
advice in writing, (A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any
applicable Registration Statement or any post-effective amendment thereto,
when the same has become effective, (B) of any request by the Commission
for amendments to the Registration Statement or amendments or supplements
to the Prospectus or for additional information relating thereto, (C) of
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement under the Act or of the
suspension by any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any jurisdiction, or
(to the extent known by the Company) the initiation of any proceeding for
any of the preceding purposes, (D) of the existence of any fact or the
happening of any event that makes any statement of a material fact made in
the Registration Statement, the Prospectus, any amendment or supplement
thereto or any document incorporated by reference therein untrue, or that
requires the making of any additions to or changes in the Registration
Statement in order to make the statements therein not misleading, or that
requires the making of any additions to or changes in the Prospectus in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. If at any time the Commission
shall issue any stop order suspending the effectiveness of the Registration
Statement, or any state securities commission or other regulatory authority
shall issue an order suspending the qualification or exemption from
qualification of the Transfer Restricted Securities under state securities
or Blue Sky laws, the Issuers and the Guarantors shall use their respective
best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time;
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(iv) subject to Section 6(c)(i), if any fact or event
contemplated by Section 6(c)(iii)(D) above shall exist or have occurred,
prepare a supplement or post-effective amendment to the Registration
Statement or related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchasers of Transfer Restricted Securities, the
Prospectus will not contain an untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading;
(v) furnish to the Initial Purchaser and each selling Holder
named in any Registration Statement or Prospectus in connection with such
exchange or sale, if any, before filing with the Commission, copies of any
Registration Statement or any Prospectus included therein or any amendments
or supplements to any such Registration Statement or Prospectus (including
all documents incorporated by reference after the initial filing of such
Registration Statement), which documents will be subject to the review and
comment of such Persons in connection with such sale, if any, for a period
of at least five Business Days, and the Issuers and the Guarantors will not
file any such Registration Statement or Prospectus or any amendment or
supplement to any such Registration Statement or Prospectus (including all
such documents incorporated by reference) to which such Persons shall
reasonably object within five Business Days after the receipt thereof.
Such Person shall be deemed to have reasonably objected to such filing if
such Registration Statement, amendment, Prospectus or supplement, as
applicable, as proposed to be filed, contains a material misstatement or
omission or fails to comply with the applicable requirements of the Act
(except with respect to information provided by such Person for use
therein);
(vi) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to the selling Holders and the Initial
Purchaser in connection with such exchange or sale, if any, make the
Issuers' and the Guarantors' representatives reasonably available for
discussion of such document and other customary due diligence matters, and
include such information in such document prior to the filing thereof as
such Persons may reasonably request;
(vii) make available at reasonable times for inspection by the
selling Holders participating in any disposition pursuant to such
Registration Statement, and by the Initial Purchaser and any attorney or
accountant retained by such Persons, all financial and other records,
pertinent corporate documents of the Issuers and the Guarantors and cause
the Issuers' and the Guarantors' officers,
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directors and employees to supply all information reasonably requested by
any such Persons, attorney or accountant in connection with such
Registration Statement or any post-effective amendment thereto subsequent
to the filing thereof and prior to its effectiveness;
(viii) if requested by any selling Holders in connection with
such exchange or sale, or the Initial Purchaser, in connection with market
making activities, promptly include in any Registration Statement or
Prospectus, pursuant to a supplement or post-effective amendment, if
necessary, such information as such selling Holders and the Initial
Purchaser may reasonably request to have included therein, including,
without limitation, information relating to the "Plan of Distribution" of
the Transfer Restricted Securities and the use of the Registration
Statement or Prospectus for market making activities; and make all required
filings of such Prospectus supplement or post-effective amendment as soon
as practicable after the Company is notified of the matters to be included
in such Prospectus supplement or post-effective amendment;
(ix) furnish to each selling Holder named in any Registration
Statement or Prospectus in connection with such exchange or sale, and the
Initial Purchaser, for the purposes of making a market, without charge, at
least one copy of the Registration Statement, as first filed with the
Commission, and of each amendment thereto, including all documents
incorporated by reference therein and all exhibits (including exhibits
incorporated therein by reference);
(x) deliver to each selling Holder named in any Registration
Statement or Prospectus, and the Initial Purchaser, for the purposes of
market making, without charge, as many copies of the Prospectus (including
each preliminary prospectus) and any amendment or supplement thereto as
such Persons reasonably may request; the Issuers and the Guarantors hereby
consent to the use (in accordance with law) of the Prospectus and any
amendment or supplement thereto by each of the selling Holders and such
Initial Purchasers in connection with the offering and the sale of the
Transfer Restricted Securities covered by the Prospectus or any amendment
or supplement thereto and the market making activities of such Initial
Purchaser, as the case may be;
(xi) upon the request of any selling Holder, enter into such
agreements (including underwriting agreements) and make such
representations and warranties and take all such other actions in
connection therewith in order to expedite or facilitate the disposition of
the Transfer Restricted Securities pursuant to any Shelf Registration
Statement contemplated by this Agreement as may be reason-
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ably requested by any Holder of Transfer Restricted Securities in connection
with any sale or resale pursuant to any Shelf Registration Statement. In
such connection (and in connection with market making activities by the
Initial Purchaser) the Issuers and the Guarantors shall:
(A) upon request of any such Person, furnish (or in the case of
paragraphs (2) and (3), use their respective best efforts to cause to
be furnished) to each such Person, upon the effectiveness of the Shelf
Registration Statement:
(1) certificates, dated the date of effectiveness of the
Shelf Registration Statement, of officers of the Issuers and the
Guarantors in form and substance reasonably satisfactory to such
Person, covering matters customarily covered in officers'
certificates requested in underwritten offerings and such other
similar matters as such Person may reasonably request;
(2) an opinion, dated the date of effectiveness of the
Shelf Registration Statement, of counsel for the Issuers and the
Guarantors covering the matters customarily covered in opinions
requested in underwritten offerings and such other matters as
such Person may reasonably request, and in any event including a
statement to the effect that such counsel has participated in
conferences with officers and other representatives of the
Issuers and the Guarantors, representatives of the independent
public accountants for the Issuers and the Guarantors and have
considered the matters required to be stated therein and the
statements contained therein, although such counsel has not
independently verified the accuracy, completeness or fairness of
such statements; and that such counsel advises that, on the basis
of the foregoing, no facts came to such counsel's attention that
caused such counsel to believe that the Shelf Registration
Statement, at the time such Shelf Registration Statement or any
post-effective amendment thereto became effective, contained an
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading, or that the Prospectus
contained in such Registration Statement as of its date,
contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading. Without limiting the foregoing, such
counsel may state further that such counsel assumes no
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responsibility for, and has not independently verified, the
accuracy, completeness or fairness of the financial statements,
notes and schedules and other financial and statistical data
included in any Registration Statement contemplated by this
Agreement or the related Prospectus; and
(3) a customary comfort letter, dated the date of
effectiveness of the Shelf Registration Statement, from the
Company's independent accountants, in the customary form and
covering matters of the type customarily covered in comfort
letters to underwriters in connection with underwritten
offerings, and affirming the matters set forth in the comfort
letters delivered pursuant to Section 9(j) of the Purchase
Agreement; and
(B) deliver such other documents and certificates as may be
reasonably requested by such Persons to evidence compliance with
clause (A) above and with any customary conditions contained in any
agreement entered into by the Issuers and the Guarantors pursuant to
this clause (xi);
(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders and their counsel in
connection with the registration and qualification of the Transfer
Restricted Securities under the securities or Blue Sky laws of such
jurisdictions as the selling Holders may request and do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Transfer Restricted Securities covered by the
applicable Registration Statement; provided, however, that neither Issuer
nor any Guarantor shall be required to register or qualify as a foreign
corporation where it is not now so qualified or to take any action that
would subject it to the service of process in suits or to taxation in any
jurisdiction where it is not now so subject;
(xiii) issue, upon the request of any Holder of Series A Notes
covered by any Shelf Registration Statement contemplated by this Agreement,
Series B Notes having an aggregate principal amount equal to the aggregate
principal amount of Series A Notes surrendered to the Company by such
Holder in exchange therefor or being sold by such Holder; such Series B
Notes to be registered in the name of such Holder or in the name of the
purchaser(s) of such Series B Notes, as the case may be; in return, the
Series A Notes held by such Holder shall be surrendered to the Company for
cancellation;
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(xiv) in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer being Transfer
Restricted Securities, cooperate with the selling Holders to facilitate the
timely preparation and delivery of certificates representing Transfer
Restricted Securities to be sold and not bearing any restrictive legends;
and to register such Transfer Restricted Securities in such denominations
and such names as the selling Holders may request at least two Business
Days prior to such sale of Transfer Restricted Securities;
(xv) use their respective best efforts to cause the disposition
of the Transfer Restricted Securities covered by the Registration Statement
to be registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers thereof to
consummate the disposition of such Transfer Restricted Securities, subject
to the proviso contained in clause (xii) above;
(xvi) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of a Registration Statement
covering such Transfer Restricted Securities and provide the Trustee under
the Indenture with printed certificates, if so requested, for the Transfer
Restricted Securities which are in a form eligible for deposit with the
Depository Trust Company;
(xvii) otherwise use their respective best efforts to comply
with all applicable rules and regulations of the Commission, and make
generally available to their security holders with regard to any applicable
Registration Statement, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not be audited)
covering a twelve-month period beginning after the effective date of the
Registration Statement (as such term is defined in paragraph (c) of Rule
158 under the Act);
(xviii) make appropriate officers of the Issuers and the
Guarantors reasonably available to the selling Holders for meetings with
prospective purchasers of the Transfer Restricted Securities and prepare
and present to potential investors customary "road show" material in a
manner consistent with other new issuances of other securities similar to
the Transfer Restricted Securities;
(xix) cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement required
by this Agreement and, in connection therewith, cooperate with the Trustee
and the Holders to effect such changes to the Indenture as may be required
for such Indenture to be so qualified in accordance with the terms of the
TIA; and execute, and use their
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respective best efforts to cause the Trustee to execute, all documents that
may be required to effect such changes and all other forms and documents
required to be filed with the Commission to enable such Indenture to be so
qualified in a timely manner;
(xx) use their respective best efforts to cause the Transfer
Restricted Securities or the Series B Notes, as applicable, covered by an
effective registration statement required by Section 3 or Section 4 hereof to be
rated by one or two rating agencies, if and as so requested by the Holders of a
majority in aggregate principal amount of Transfer Restricted Securities
relating to such registration statement or the managing underwriters in
connection therewith, if any;
(xxi) provide promptly to each Holder and the Initial Purchaser
upon request each document filed with the Commission pursuant to the
requirements of Section 13 or Section 15(d) of the Exchange Act; and
(xxii) use their respective best efforts to take all other steps
necessary to effect the registration of the Transfer Restricted Securities
covered by a Registration Statement contemplated hereby.
(d) Restrictions on Holders. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 6(c)(iii)(C) or any notice from the Company of the existence of any fact
of the kind described in Section 6(c)(iii)(D) hereof (in each case, a
"Suspension Notice"), such Holder will forthwith discontinue disposition of
Transfer Restricted Securities pursuant to the applicable Registration Statement
until (i) such Holder has received copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such Holder is
advised in writing by the Company that the use of the Prospectus may be resumed,
and has received copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus (in each case, the "Recommencement
Date"). Each Holder receiving a Suspension Notice hereby agrees that it will
either (i) destroy any Prospectuses, other than permanent file copies, then in
such Holder's possession which have been replaced by the Company with more
recently dated Prospectuses or (ii) deliver to the Company (at the Company's
expense) all copies, other than permanent file copies, then in such Holder's
possession of the Prospectus covering such Transfer Restricted Securities that
was current at the time of receipt of the Suspension Notice. The time period
regarding the effectiveness of such Registration Statement set forth in Section
3 or 4 hereof, as applicable, shall be extended by a number of days equal to the
number of days in the
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period from and including the date of delivery of the Suspension Notice to the
date of delivery of the Recommencement Date.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Issuers' and the Guarantors'
performance of or compliance with this Agreement will be borne by the Issuers
and the Guarantors, regardless of whether a Registration Statement becomes
effective, including, without limitation: (i) all registration and filing fees
and expenses; (ii) all fees and expenses of compliance with federal securities
and state Blue Sky or securities laws (including, without limitation, reasonable
fees and disbursements of counsel in connection with Blue Sky qualifications of
the Transfer Restricted Securities or Series B Notes); (iii) all expenses of
printing (including printing certificates for the Series B Notes to be issued in
the Exchange Offer and printing of Prospectuses (whether for exchanges,
expenses, sales, market making or otherwise), messenger and delivery services
and telephone expenses; (iv) as provided in Section 7(b) hereof, all fees and
disbursements of counsel for the Issuers and the Guarantors and the Holders of
Transfer Restricted Securities; (v) the fees and expenses of any "qualified
independent underwriter" or other independent appraiser participating in an
offering pursuant to the NASD's Rules of Fair Practice; (vi) any rating agency
fees; and (vii) all fees and disbursements of independent certified public
accountants of the Issuers and the Guarantors (including the expenses of any
special audit and comfort letters required by or incident to such performance).
Notwithstanding the foregoing or anything in this Agreement to the contrary,
each Holder of Transfer Restricted Securities being registered as provided
herein shall pay all commissions, placement agent fees and underwriting
discounts and commissions with respect to any Transfer Restricted Securities
sold by it and the fees and disbursements of any counsel, other than as set
forth in Section 7(b) hereof.
The Issuers will, in any event, bear their and the Guarantors'
internal expenses (including, without limitation, all salaries and expenses of
their officers and employees performing legal or accounting duties), the
expenses of any annual audit and the fees and expenses of any Person, including
special experts, retained by any Issuer or Guarantor.
(b) In connection with any Shelf Registration Statement required by
this Agreement, the Issuers and the Guarantors will reimburse the Initial
Purchaser and the Holders of Transfer Restricted Securities registered pursuant
to the Shelf Registration Statement for the reasonable fees and disbursements of
not more than one counsel, who shall be chosen by the Holders of a majority in
principal amount of the
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Transfer Restricted Securities for whose benefit such Registration Statement is
being prepared.
SECTION 8. INDEMNIFICATION
(a) The Issuers and the Guarantors each agree, jointly and severally,
to indemnify and hold harmless each Holder, its directors, its officers and each
Person, if any, who controls such Holder (within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act) (any such person may hereinafter be
referred to as an "Indemnified Holder"), from and against any and all losses,
claims, damages, liabilities, judgments, (including without limitation, any
legal or other expenses incurred in connection with investigating or defending
any matter, including any action that could give rise to any such losses,
claims, damages, liabilities or judgments) caused by any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement, preliminary prospectus or Prospectus (or any amendment or supplement
thereto) provided by any Issuer or Guarantor to any holder or any prospective
purchaser of Series B Notes, or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, except insofar as such losses, claims, damages,
liabilities or judgments are caused by an untrue statement or omission or
alleged untrue statement or omission that is based upon information relating to
any Holder furnished in writing to the Company by such Holder expressly for use
in any Registration Statement, preliminary prospectus or Prospectus. The
foregoing indemnity with respect to a specific untrue statement or omission or
alleged untrue statement or omission of a material fact in any preliminary
Prospectus shall not inure to the benefit of any Indemnified Holder on account
of any losses, claims, damages, liabilities or judgments arising from the sale
of Series A Notes by such Indemnified Holder to any person if a copy of the
applicable Prospectus (as supplemented or amended) shall not have been delivered
or sent to such person at or prior to the written confirmation of the sale of
such Series A Notes to such person and the untrue statement or omission
contained in the applicable preliminary Prospectus was corrected in the
applicable Prospectus (as supplemented or amended), provided that the Issuers
have delivered such Prospectus (as supplemented or amended) to such Indemnified
Holder in requisite quantity on a timely basis to permit such delivery or
sending.
(b) Each Holder of Transfer Restricted Securities agrees, severally
and not jointly, to indemnify and hold harmless the Issuers and the Guarantors,
and their respective directors and officers, and each person, if any, who
controls (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) any Issuer or
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Guarantor to the same extent as the foregoing indemnity from the Issuers and the
Guarantors to each of the Indemnified Holders, but only with reference to
information relating to such Indemnified Holder furnished in writing to the
Company by such Indemnified Holder expressly for use in any Registration
Statement, preliminary prospectus or Prospectus. In no event shall any
Indemnified Holder be liable or responsible for any amount in excess of the
amount by which the total amount received by such Indemnified Holder with
respect to its sale of Transfer Restricted Securities pursuant to a Registration
Statement exceeds (i) the amount paid by such Indemnified Holder for such
Transfer Restricted Securities and (ii) the amount of any damages that such
Indemnified Holder has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"indemnified party"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party") in writing
(provided that the failure to give such notice shall not relieve the
indemnifying party of its obligations under Section 8 (a) or (b) unless and only
to the extent that the indemnifying party is materially prejudiced by the
failure to notify) and the indemnifying party shall assume the defense of such
action, including the employment of counsel reasonably satisfactory to the
indemnified party and the payment of all fees and expenses of such counsel, as
incurred (except that in the case of any action in respect of which indemnity
may be sought pursuant to both Sections 8(a) and 8(b), an Indemnified Holder
shall not be required to assume the defense of such action pursuant to this
Section 8(c), but may employ separate counsel and participate in the defense
thereof, but the fees and expenses of such counsel, except as provided below,
shall be at the expense of the Indemnified Holder). Any indemnified party shall
have the right to employ separate counsel in any such action and participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of the indemnified party unless (i) the employment of such counsel shall
have been specifically authorized in writing by the indemnifying party, (ii) the
indemnifying party shall have failed to promptly assume the defense of such
action or employ counsel reasonably satisfactory to the indemnified party or
(iii) the named parties to any such action (including any impleaded parties)
include both the indemnified party and the indemnifying party, and the
indemnified party shall have been advised by such separate counsel that there
may be one or more legal defenses available to it which are different from or
additional to those available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the indemnified party). In any such case, the indemnifying party
shall not, in connection with any one action or separate but substantially
similar or related actions in the same jurisdiction
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arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys (in addition to
any local counsel) for all indemnified parties and all such fees and expenses
shall be reimbursed as they are incurred. Such firm shall be designated in
writing by those indemnified parties who sold a majority in outstanding
principal amount of Transfer Restricted Securities sold by all such indemnified
parties, in the case of the parties indemnified pursuant to Section 8(a), and by
the Company, in the case of parties indemnified pursuant to Section 8(b). The
indemnifying party shall indemnify and hold harmless the indemnified party from
and against any and all losses, claims, damages, liabilities and judgments by
reason of any settlement of any action (i) effected with the written consent of
the indemnifying party or (ii) effected without the written consent of the
indemnifying party if the settlement is entered into more than twenty business
days after the indemnifying party shall have received a request from the
indemnified party for reimbursement for the fees and expenses of counsel (in any
case where such fees and expenses are at the expense of the indemnifying party)
and, prior to the date of such settlement, the indemnifying party shall have
failed to comply with such reimbursement request. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement or compromise of, or consent to the entry of judgment with respect
to, any pending or threatened action in respect of which the indemnified party
is or could have been a party and indemnity or contribution may be or could have
been sought hereunder by the indemnified party, unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability on claims that are or could have been the subject
matter of such action and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of the
indemnified party.
(d) To the extent that the indemnification provided for in this
Section 8 is unavailable to an indemnified party in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or judgments (i) in such proportion
as is appropriate to reflect the relative benefits received by the Issuers and
the Guarantors, on the one hand, and each Indemnified Holder, on the other hand,
from their sale of Transfer Restricted Securities or (ii) if the allocation
provided by clause 8(d)(i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause 8(d)(i) above but also the relative fault of the Issuers and the
Guarantors, on the one hand, and such Indemnified Holder, on the other hand, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative fault of the Issuers and
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the Guarantors, on the one hand, and of such Indemnified Holder, on the other
hand, shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
any Issuer or Guarantor, on the one hand, or by such Indemnified Holder, on
the other hand, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and judgments referred to above shall be deemed to
include, subject to the limitations set forth in Section 8(c), any legal or
other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim.
The Issuers, the Guarantors and each Holder agree that it would not be
just and equitable if contribution pursuant to this Section 8(d) were determined
by pro rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any matter, including any
action that could have given rise to such losses, claims, damages, liabilities
or judgments. Notwithstanding the provisions of this Section 8, no Holder or
its related Indemnified Holders shall be required to contribute, in the
aggregate, any amount in excess of the amount by which the total received by
such Holder with respect to the sale of its Transfer Restricted Securities
pursuant to a Registration Statement exceeds the sum of (A) the amount paid by
such Holder for such Transfer Restricted Securities plus (B) the amount of any
damages which such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Holders' obligations to contribute
pursuant to this Section 8(d) are several in proportion to the respective
principal amount of Transfer Restricted Securities held by each of the Holders
hereunder and not joint.
SECTION 9. RULE 144 and RULE 144A
The Issuers and the Guarantors each agree with each Holder, for so
long as any Transfer Restricted Securities remain outstanding and during any
period in which
24
<PAGE>
the Issuers and the Guarantors (i) are not subject to Section 13 or 15(d) of the
Exchange Act, to make available, upon request of any Holder of Transfer
Restricted Securities, to any Holder or beneficial owner of Transfer Restricted
Securities in connection with any sale thereof and any prospective purchaser of
such Transfer Restricted Securities designated by such Holder or beneficial
owner, the information required by Rule 144A(d)(4) under the Act in order to
permit resales of such Transfer Restricted Securities pursuant to Rule 144A, and
(ii) are subject to Section 13 or 15(d) of the Exchange Act, to make all filings
required thereby in a timely manner in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144.
SECTION 10. MISCELLANEOUS
(a) Remedies. The Issuers and the Guarantors acknowledge and agree
that any failure by any of them to comply with their respective obligations
under Sections 3 and 4 hereof may result in material irreparable injury to the
Initial Purchaser or the Holders for which there is no adequate remedy at law,
that it will not be possible to measure damages for such injuries precisely and
that, in the event of any such failure, but subject to the last sentence of the
third paragraph of Section 5 hereof, the Initial Purchaser or any Holder may
obtain such relief as may be required to specifically enforce the Issuers' and
the Guarantors' obligations under Sections 3 and 4 hereof. The Issuers and the
Guarantors further agree to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither Issuer nor any Guarantor
will, on or after the date of this Agreement, enter into any agreement with
respect to its securities that is inconsistent with the rights granted to the
Holders in this Agreement or otherwise conflicts with the provisions hereof.
Neither Issuer nor any Guarantor has previously entered into any agreement
granting any registration rights with respect to its securities to any Person.
The rights granted to the Holders hereunder do not in any way conflict with and
are not inconsistent with the rights granted to the holders of the Issuers' and
the Guarantors' securities under any agreement in effect on the date hereof.
(c) Amendments and Waivers. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 10(c)(i), the Company has obtained the written consent
of Holders of
25
<PAGE>
all outstanding Transfer Restricted Securities and (ii) in the case of all other
provisions hereof, the Company has obtained the written consent of Holders of a
majority of the outstanding principal amount of Transfer Restricted Securities
(excluding Transfer Restricted Securities held by the Company or its
Affiliates). Notwithstanding the foregoing, a waiver or consent to departure
from the provisions hereof that relates exclusively to the rights of Holders
whose securities are being tendered pursuant to the Exchange Offer and that does
not affect directly or indirectly the rights of other Holders whose securities
are not being tendered pursuant to such Exchange Offer may be given by the
Holders of a majority of the outstanding principal amount of Transfer Restricted
Securities subject to such Exchange Offer.
(d) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder between the Issuers and the
Guarantors, on the one hand, and the Initial Purchaser, on the other hand, and
shall have the right to enforce such agreements directly to the extent they may
deem such enforcement necessary or advisable to protect its rights or the rights
of Holders hereunder.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of
the Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to any Issuer or Guarantor, to it at Mississippi Avenue
and The Boardwalk, Atlantic City, New Jersey 08401, Attention: Robert M.
Pickus, Esq., with a copy to Willkie Farr & Gallagher at One Citicorp
Center, 153 East 53rd Street, New York, New York 10022, Attention: Daniel
D. Rubino, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
26
<PAGE>
Upon the date of filing of the Exchange Offer or a Shelf Registration
Statement, as the case may be, notice shall be delivered to Donaldson, Lufkin &
Jenrette Securities Corporation (in the form attached hereto as Exhibit A) and
shall be addressed to: Attention: Louise Guarneri (Compliance Department), 277
Park Avenue, New York, New York 10172.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities; provided, that
nothing herein shall be deemed to permit any assignment, transfer or other
disposition of Transfer Restricted Securities in violation of the terms hereof
or of the Purchase Agreement or the Indenture. If any transferee of any Holder
shall acquire Transfer Restricted Securities in any manner, whether by operation
of law or otherwise, such Transfer Restricted Securities shall be held subject
to all of the terms of this Agreement, and by taking and holding such Transfer
Restricted Securities such Person shall be conclusively deemed to have agreed to
be bound by and to perform all of the terms and provisions of this Agreement,
including the restrictions on resale set forth in this Agreement and, if
applicable, the Purchase Agreement, and such Person shall be entitled to receive
the benefits hereof.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
27
<PAGE>
(k) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
28
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
TRUMP ATLANTIC CITY ASSOCIATES
By: TRUMP ATLANTIC CITY HOLDING, INC.,
its general partner
Attest: /s/ John P. Burke By: /s/ Nicholas L. Ribis
- ------------------------- -----------------------------------
Name: John P. Burke Name: Nicholas L. Ribis
Title: Vice President
TRUMP ATLANTIC CITY FUNDING III, INC.
Attest: /s/ John P. Burke By: /s/ Nicholas L. Ribis
- ------------------------- -----------------------------------
Name: John P. Burke Name: Nicholas L. Ribis
Title: Chief Executive Officer and
President
TRUMP ATLANTIC CITY CORPORATION
Attest: /s/ John P. Burke By: /s/ Nicholas L. Ribis
- ------------------------- -----------------------------------
Name: John P. Burke Name: Nicholas L. Ribis
Title: Vice President
TRUMP PLAZA ASSOCIATES
By: TRUMP ATLANTIC CITY CORPORATION,
its general partner
Attest: /s/ John P. Burke By: /s/ Nicholas L. Ribis
- ------------------------- -----------------------------------
Name: John P. Burke Name: Nicholas L. Ribis
Title: Vice President
<PAGE>
TRUMP TAJ MAHAL ASSOCIATES
By: TRUMP ATLANTIC CITY CORPORATION,
its general partner
Attest: /s/ John P. Burke By: /s/ Nicholas L. Ribis
- ------------------------- -----------------------------------
Name: John P. Burke Name: Nicholas L. Ribis
Title: Vice President
TRUMP ATLANTIC CITY CORPORATION
Attest: /s/ John P. Burke By: /s/ Nicholas L. Ribis
- ------------------------- -----------------------------------
Name: John P. Burke Name: Nicholas L. Ribis
Title: Vice President
TRUMP CASINO SERVICES, L.L.C.
By: TRUMP ATLANTIC CITY CORPORATION,
member
Attest: /s/ John P. Burke By: /s/ Nicholas L. Ribis
- ------------------------- -----------------------------------
Name: John P. Burke Name: Nicholas L. Ribis
Title: Vice President
<PAGE>
TRUMP COMMUNICATIONS, L.L.C.
By: TRUMP ATLANTIC CITY CORPORATION,
member
Attest: /s/ John P. Burke By: /s/ Nicholas L. Ribis
- ------------------------- -----------------------------------
Name: John P. Burke Name: Nicholas L. Ribis
Title: Vice President
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
By: /s/ Marc Dien
----------------------------------
Name: Marc Dien
Title: Senior Vice President
<PAGE>
EXHIBIT A
NOTICE OF FILING OF
EXCHANGE OFFER REGISTRATION STATEMENT
To: Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue
New York, New York 10172
Attention: Louise Guarneri (Compliance Department)
Fax: (212) 892-7272
From: TRUMP ATLANTIC CITY ASSOCIATES
11 1/4% Series A First Mortgage Notes (TAC III) Due 2006
Date: ___, 199_
For your information only (NO ACTION REQUIRED):
Today, ______, 199_, we filed [an Exchange Offer Registration Statement/a
Shelf Registration Statement] with the Securities and Exchange Commission. We
currently expect this registration statement to be declared effective within 150
days of the date hereof.
<PAGE>
DEBTORS' CONSENT
U.S. Bank National Association, as Collateral Agent
180 East Fifth Street
St. Paul, Minnesota 55101
Each of Trump Atlantic City Associates ("Trump AC"),Trump Atlantic
City Funding, Inc. and each Guarantor (as defined in the Collateral Agency
Agreement) hereby consents to the addition of U.S. Bank National Association (as
trustee under the Indenture, dated as of December 10, 1997, among Trump AC,
Trump Atlantic City Funding III, Inc. ("Funding III" and, together with Trump
AC, the "Issuers"), Trump Plaza Associates, Trump Taj Mahal Associates, Trump
Atlantic City Corporation, Trump Casino Services, L.L.C. and Trump
Communications, L.L.C., as guarantors, and the trustee relating to the
$25,000,000 111/4% First Mortgage Notes (TAC III) due 2006 issued by the
Issuers), as a party to the Collateral Agency Agreement dated as of April 17,
1996 among U.S. Bank National Association (formerly First Bank National
Association), as Collateral Agent, U.S. Bank National Association, as Trustee
(as defined in the Collateral Agency Agreement), of a security interest in, or
pledge or assignment of, the Collateral (as defined in the Collateral Agency
Agreement) to the Collateral Agent for the benefit of the Designed
Representatives. As used herein, Designated Representatives shall mean the
Trustee (as defined in the Collateral Agency Agreement), and any other person
who prior to the date hereof became a party to the Collateral Agency Agreement
by executing an Agency Appointment Agreement (as defined in the Collateral
Agency Agreement) prior to the date hereof.
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
for itself and its subsidiaries
BY: TRUMP ATLANTIC CITY HOLDING, INC., its general partner
By: /s/ Nicholas L. Ribis
----------------------------
Name: Nicholas L. Ribis
Title: Vice President
TRUMP ATLANTIC CITY FUNDING, INC.
By: /s/ Nicholas L. Ribis
----------------------------
Name: Nicholas L. Ribis
Title: Chief Executive Officer and President
TRUMP PLAZA ASSOCIATES, as Guarantor
BY: TRUMP ATLANTIC CITY CORPORATION, its general partner
By: /s/ Nicholas L. Ribis
----------------------------
Name: Nicholas L. Ribis
Title: Vice President
TRUMP TAJ MAHAL ASSOCIATES, as Guarantor
BY: TRUMP ATLANTIC CITY CORPORATION, its general partner
By: /s/ Nicholas L. Ribis
----------------------------
Name: Nicholas L. Ribis
Title: Vice President
<PAGE>
TRUMP ATLANTIC CITY CORPORATION, as Guarantor
By: /s/ Nicholas L. Ribis
----------------------------
Name: Nicholas L. Ribis
Title: Vice President
TRUMP CASINO SERVICES, L.L.C., as Guarantor
By: TRUMP ATLANTIC CITY CORPORATION,
member
By: /s/ Nicholas L. Ribis
----------------------------
Name: Nicholas L. Ribis
Title: Vice President
TRUMP COMMUNICATIONS, L.L.C., as Guarantor
By: TRUMP ATLANTIC CITY CORPORATION,
member
By: /s/ Nicholas L. Ribis
----------------------------
Name: Nicholas L. Ribis
Title: Vice President
<PAGE>
EXHIBIT 12
RATIO OF EARNINGS TO FIXED CHARGES
(In Thousands)
RATIO EARNINGS TO FIXED CHARGES CALCULATION:
<TABLE>
<CAPTION>
TRUMP ATLANTIC CITY ASSOCIATES (Pro Forma)
-------------------------------------------------------------------------- -------------
Nine Months Nine Months
Ended Ended
Year Ended December 31, September 30, September 30,
-------------------------------------------------------------------------- -------------
1992 1993 1994 1995 1996 1996 1997 1997
-------- -------- -------- -------- -------- -------- -------- -------------
(Unaudited) (Unaudited)
<C> <C> <C> <C> <C> <C> <C> <C>
INCOME (LOSS) before income taxes and
extraordinary items 2,185 5,878 (9,735) 10,783 10,619 35,710 3,374 (6,128)
PLUS:
FIXED CHARGES: 40,191 48,198 50,265 45,467 116,861 80,197 110,398 130,900
LESS:
CAPITALIZED INTEREST 0 0 0 0 0 0 0 0
-------- -------- -------- -------- -------- -------- -------- -------------
EARNINGS 42,376 54,076 40,530 56,250 127,480 115,907 113,772 124,772
-------- -------- -------- -------- -------- -------- -------- -------------
FIXED CHARGES:
INTEREST EXPENSE 31,843 40,435 49,061 44,264 114,461 78,077 107,657 128,159
PLUS:
CAPITALIZED INTEREST 0 0 0 0 0 0 0 0
PREFERRED PARTNERSHIP DIST. 6,894 6,317 0 0 0 0 0
INTEREST ELEMENT OF RENTAL EXPENSE 1,454 1,446 1,204 1,203 2,400 2,120 2,741 2,741
-------- -------- -------- -------- -------- -------- -------- -------------
FIXED CHARGES 40,191 48,198 50,265 45,467 116,861 80,197 110,398 130,900
-------- -------- -------- -------- -------- -------- -------- -------------
RATIO OF EARNINGS TO FIXED CHARGES
(DEFICIENCY) 1.1 1.1 (9,735) 1.2 1.1 1.4 1.0 (6,128)
-------- -------- -------- -------- -------- -------- -------- -------------
-------- -------- -------- -------- -------- -------- -------- -------------
</TABLE>
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES OF TRUMP ATLANTIC CITY ASSOCIATES:
Trump Atlantic City Funding, Inc. (Delaware corporation)
Trump Atlantic City Funding II, Inc. (Delaware corporation)
Trump Atlantic City Funding III, Inc. (Delaware corporation)
Trump Atlantic City Corporation (Delaware corporation)
Trump Casino Services, L.L.C. (New Jersey limited liability company)
Trump Communications, L.L.C. (New Jersey limited liability company)
Trump Plaza Associates (New Jersey general partnership)
Trump Taj Mahal Associates (New Jersey general partnership)
SUBSIDIARIES OF TRUMP ATLANTIC CITY FUNDING III, INC.:
None
SUBSIDIARIES OF TRUMP ATLANTIC CITY CORPORATION:
Trump Casino Services, L.L.C. (New Jersey limited liability company) - 1%
ownership
Trump Communications, L.L.C. (New Jersey limited liability company) - 1%
ownership
Trump Plaza Associates (New Jersey general partnership) - 1% ownership
Trump Taj Mahal Associates (New Jersey general partnership) - 1% ownership
SUBSIDIARIES OF TRUMP CASINO SERVICES, L.L.C.:
Trump Communications, L.L.C. (New Jersey limited liability company) - 99%
ownership
SUBSIDIARIES OF TRUMP COMMUNICATIONS, L.L.C.
None
SUBSIDIARIES OF TRUMP PLAZA ASSOCIATES:
None
SUBSIDIARIES OF TRUMP TAJ MAHAL ASSOCIATES:
None
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports on Trump Atlantic City Associates for the year ended December 31, 1996
and Trump Atlantic City Funding III, Inc. as of December 31, 1997 and to all
references to our Firm included in or made a part of this registration
statement.
ARTHUR ANDERSEN LLP
Roseland, New Jersey
January 9, 1998
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________
FORM T-1
Statement of Eligibility and Qualification Under the
Trust Indenture Act of 1939 of a Corporation
Designated to Act as Trustee
U.S. BANK NATIONAL ASSOCIATION
F.K.A. FIRST BANK NATIONAL ASSOCIATION
(Exact name of Trustee as specified in its charter)
United States 41-0417860
(State of Incorporation) (I.R.S. Employer
Identification No.)
First Trust Center
180 East Fifth Street
St. Paul, Minnesota 55101
(Address of Principal Executive Offices) (Zip Code)
TRUMP ATLANTIC CITY ASSOCIATES
(Exact name of registrant as specified in its charter)
New Jersey 22-3213714
(State of Incorporation) (I.R.S. Employer
Identification No.)
2500 Boardwalk
Atlantic City, New Jersey 08401
(Address of Principal Executive Offices) (Zip Code)
<PAGE>
TRUMP ATLANTIC CITY FUNDING III, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-3550203
(State of Incorporation) (I.R.S. Employer
Identification No.)
2500 Boardwalk
Atlantic City, New Jersey 08401
(Address of Principal Executive Offices) (Zip Code)
TRUMP ATLANTIC CITY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-3592880
(State of Incorporation) (I.R.S. Employer
Identification No.)
2500 Boardwalk
Atlantic City, New Jersey 08401
(Address of Principal Executive Offices) (Zip Code)
TRUMP CASINO SERVICES, L.L.C.
(Exact name of registrant as specified in its charter)
New Jersey 22-3446804
(State of Incorporation) (I.R.S. Employer
Identification No.)
2500 Boardwalk
Atlantic City, New Jersey 08401
(Address of Principal Executive Offices) (Zip Code)
TRUMP COMMUNICATIONS, L.L.C.
(Exact name of registrant as specified in its charter)
New Jersey 22-3526602
(State of Incorporation) (I.R.S. Employer
Identification No.)
2500 Boardwalk
Atlantic City, New Jersey 08401
(Address of Principal Executive Offices) (Zip Code)
<PAGE>
TRUMP PLAZA ASSOCIATES
(Exact name of registrant as specified in its charter)
New Jersey 22-3241643
(State of Incorporation) (I.R.S. Employer
Identification No.)
2500 Boardwalk
Atlantic City, New Jersey 08401
(Address of Principal Executive Offices) (Zip Code)
TRUMP TAJ MAHAL ASSOCIATES
(Exact name of registrant as specified in its charter)
New Jersey 13-3469507
(State of Incorporation) (I.R.S. Employer
Identification No.)
2500 Boardwalk
Atlantic City, New Jersey 08401
(Address of Principal Executive Offices) (Zip Code)
11 1/4% First Mortgage Notes (TAC III) due 2006
(Title of the Indenture Securities)
<PAGE>
GENERAL
1. General Information Furnish the following information as to the Trustee.
(a) Name and address of each examining or supervising authority to which
it is subject.
Comptroller of the Currency
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes
2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS If the obligor or any
underwriter for the obligor is an affiliate of the Trustee, describe each
such affiliation.
None
See Note following Item 16.
Items 3-15 are not applicable because to the best of the Trustee's
knowledge the obligor is not in default under any Indenture for which the
Trustee acts as Trustee.
16. LIST OF EXHIBITS List below all exhibits filed as a part of this statement
of eligibility and qualification.
1. Copy of Articles of Association. *
2. Copy of Certificate of Authority to Commence Business. *
3. Authorization of the Trustee to exercise corporate trust powers
(included in Exhibits 1 and 2; no separate instrument).*
4. Copy of existing By-Laws. *
5. Copy of each Indenture referred to in Item 4. N/A.
6. The consents of the Trustee required by Section 321(b) of the act.
7. Copy of the latest report of condition of the Trustee published
pursuant to law or the requirements of its supervising or examining
authority incorporated by reference to File Number 333-26679.
* Incorporated by reference to File Number 333-30939
<PAGE>
NOTE
The answers to this statement insofar as such answers relate to what
persons have been underwriters for any securities of the obligors within three
years prior to the date of filing this statement, or what persons are owners of
10% or more of the voting securities of the obligors, or affiliates, are based
upon information furnished to the Trustee by the obligors. While the Trustee
has no reason to doubt the accuracy of any such information, it cannot accept
any responsibility therefor.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, U.S. Bank National Association, an Association organized and existing
under the laws of the United States, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, and its seal to be hereunto affixed and attested, all
in the City of Saint Paul and State of Minnesota on the 9th day of January,
1998.
U.S. BANK NATIONAL ASSOCIATION
/s/ Sheryl A. Christopherson
-----------------------------
Sheryl A. Christopherson
Vice President
/s/ Kathe M. Barrett
- ----------------------
Kathe M. Barrett
Assistant Secretary
<PAGE>
EXHIBIT 6
CONSENT
In accordance with Section 321(b) of the Trust Indenture Act of 1939, the
undersigned, U.S. BANK NATIONAL ASSOCIATION hereby consents that reports of
examination of the undersigned by Federal, State, Territorial or District
authorities may be furnished by such authorities to the Securities and Exchange
Commission upon its request therefor.
Dated: January 9, 1998
U.S. BANK NATIONAL ASSOCIATION
/s/ Sheryl A. Christopherson
------------------------------
Sheryl A. Christopherson
Vice President
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
Financial Data Schedule
TRUMP ATLANTIC CITY FUNDING III, INC.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 10
<SECURITIES> 0
<RECEIVABLES> 23,550,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 23,550,010
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 23,550,010
<CURRENT-LIABILITIES> 0
<BONDS> 23,550,000
0
0
<COMMON> 1
<OTHER-SE> 9
<TOTAL-LIABILITY-AND-EQUITY> 23,550,010
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
