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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NO.: 333-643
TRUMP ATLANTIC CITY ASSOCIATES
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
NEW JERSEY 22-3213714
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
2500 BOARDWALK
ATLANTIC CITY, NEW JERSEY 08401
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (609) 441-6060
</TABLE>
TRUMP ATLANTIC CITY FUNDING, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 22-3418939
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
2500 BOARDWALK
ATLANTIC CITY, NEW JERSEY 08401
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (609) 441-6060
</TABLE>
TRUMP ATLANTIC CITY FUNDING II, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 22-3550202
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
2500 BOARDWALK
ATLANTIC CITY, NEW JERSEY 08401
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (609) 441-6060
</TABLE>
TRUMP ATLANTIC CITY FUNDING III, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 22-3550203
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
2500 BOARDWALK
ATLANTIC CITY, NEW JERSEY 08401
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (609) 441-6060
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrants (1) have filed all Reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes _X_ No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrants' knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. _X_
The aggregate market value of the voting stock of Trump Atlantic City
Funding, Inc. held by non-affiliates as of March 16, 1998 was _$0._
The aggregate market value of the voting stock of Trump Atlantic City
Funding II, Inc. held by non-affiliates as of March 16, 1998 was _$0._
The aggregate market value of the voting stock of Trump Atlantic City
Funding III, Inc. held by non-affiliates as of March 16, 1998 was _$0._
Indicate by check mark whether the Registrants have filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. _X_ No
As of March 16, 1998, there were 100 shares of Trump Atlantic City Funding,
Inc.'s Common Stock outstanding.
As of March 16, 1998, there were 100 shares of Trump Atlantic City Funding
II, Inc.'s Common Stock outstanding.
As of March 16, 1998, there were 100 shares of Trump Atlantic City Funding
III, Inc.'s Common Stock outstanding.
Documents Incorporated by Reference--Not applicable.
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FORM 10-K
TABLE OF CONTENTS
<TABLE>
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ITEM PAGE
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PART I................................................................................................... 1
ITEM 1. BUSINESS....................................................................................... 1
Recent Events........................................................................................ 1
General.............................................................................................. 1
Trump Plaza.......................................................................................... 2
The Taj Mahal........................................................................................ 7
TCS.................................................................................................. 11
Trademark/Licensing.................................................................................. 12
Certain Indebtedness................................................................................. 12
Atlantic City Market................................................................................. 13
Competition.......................................................................................... 14
Gaming and Other Laws and Regulations................................................................ 17
ITEM 2. PROPERTIES..................................................................................... 25
Trump Plaza.......................................................................................... 25
Taj Mahal............................................................................................ 26
ITEM 3. LEGAL PROCEEDINGS.............................................................................. 28
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............................................ 31
PART II.................................................................................................. 31
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.......................... 31
ITEM 6. SELECTED FINANCIAL DATA........................................................................ 32
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.......... 34
Results of Operations for the Years Ended December 31, 1997 and 1996................................. 34
Results of Operations for the Years Ended December 31, 1996 and 1995................................. 35
Liquidity and Capital Resources...................................................................... 37
Seasonality.......................................................................................... 38
Inflation............................................................................................ 38
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.................................... 38
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.................................................... 38
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE........... 38
PART III................................................................................................. 39
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT............................................ 39
ITEM 11. EXECUTIVE COMPENSATION........................................................................ 44
Employment Agreements................................................................................ 46
Compensation of Directors............................................................................ 49
Compensation Committee Interlocks and Insider Participation.......................................... 49
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT................................ 51
</TABLE>
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<TABLE>
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ITEM PAGE
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................................ 51
PART IV.................................................................................................. 53
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.............................. 53
IMPORTANT FACTORS RELATING TO FORWARD LOOKING STATEMENTS................................................. 59
SIGNATURES............................................................................................... 60
TRUMP ATLANTIC CITY ASSOCIATES......................................................................... 61
TRUMP ATLANTIC CITY FUNDING, INC....................................................................... 62
TRUMP ATLANTIC CITY FUNDING II, INC.................................................................... 63
TRUMP ATLANTIC CITY FUNDING III, INC................................................................... 64
</TABLE>
<PAGE>
PART I
ITEM 1. BUSINESS.
RECENT EVENTS
Management announced in the first quarter of 1998 that it had retained
Donaldson, Lufkin & Jenrette, Inc. and Bear, Stearns & Co. to explore
transactions involving Trump Hotels & Casino Resorts, Inc. ("THCR"), including
the possible sale of all or a portion of the company.
On January 9, 1998, Trump Atlantic City Associates ("Trump AC") and Trump
Atlantic City Funding II, Inc. ("Funding II") filed a Registration Statement
(the "TAC II Registration Statement") with the Securities and Exchange
Commission ("SEC") in connection with an offer to exchange $75,000,000 principal
amount of 11 1/4 First Mortgage Notes (TAC II) due 2006, Series A (the "TAC II
Notes") issued and sold in a transaction exempt from registration under the
Securities Act of 1933, as amended (the "Securities Act"), for $75,000,000 in
principal amount of 11 1/4 First Mortgage Notes (TAC II) due 2006, Series B
("TAC II Exchange Notes"). On March 16, Trump AC and Funding II filed Amendment
No. 1 to the TAC II Registration Statement with the SEC.
On January 9, 1998, Trump AC and Trump Atlantic City Funding III, Inc.
("Funding III") filed a Registration Statement (the "TAC III Registration
Statement") with the SEC in connection with an offer to exchange $25,000,000
principal amount of 11 1/4 First Mortgage Notes (TAC III) due 2006, Series A
(the "TAC III Notes") issued and sold in a transaction exempt from registration
under the Securities Act for $25,000,000 in principal amount of 11 1/4 First
Mortgage Notes (TAC III) due 2006, Series B ("TAC III Exchange Notes").
GENERAL
Trump AC, a New Jersey general partnership, was formed under the name of
Trump Plaza Holding Associates on February 17, 1993. Trump Atlantic City
Funding, Inc., a Delaware corporation ("Trump AC Funding"), was formed on
January 30, 1996. Funding II and Funding III, each a Delaware corporation, were
formed on November 18, 1997. Each of the Registrants are wholly owned
subsidiaries of Trump Hotels & Casino Resorts Holdings, L.P. ("THCR Holdings"),
of which THCR is the general partner. THCR is the exclusive vehicle through
which Donald J. Trump ("Trump") engages in new gaming activities in both
emerging and established gaming jurisdictions. Trump AC owns and operates the
Trump Plaza Hotel and Casino ("Trump Plaza"), which also includes Trump World's
Fair, and the Trump Taj Mahal Casino Resort (the "Taj Mahal"), each located on
The Boardwalk in Atlantic City, New Jersey.
- TRUMP PLAZA. In May 1996, Trump AC completed an expansion program which
further enhanced Trump Plaza's gaming space and hotel capacity (the "Trump
Plaza Expansion") while maintaining its commitment to first class customer
service. This strategy was designed to capitalize on Trump Plaza's
reputation for excellence, as well as to meet both existing and
anticipated demand for the increased number of rooms and infrastructure
improvements that are currently being implemented to enhance further the
"vacation destination appeal" of Atlantic City. As part of the Trump Plaza
Expansion, Trump AC renovated and integrated into Trump Plaza a hotel
adjacent to Trump Plaza's main tower ("Trump Plaza East") and renovated
and integrated into Trump Plaza the former Trump Regency Hotel, located on
The Boardwalk adjacent to the original Atlantic City Convention Center,
which is next to Trump Plaza and is now known as Trump World's Fair. The
renovations at Trump Plaza East were completed in February 1996 and at
Trump World's Fair in May 1996. Trump Plaza has 138,305 square feet of
gaming space, housing a total of approximately 4,090 slot machines and 117
table games, making Trump Plaza's casino the largest in Atlantic City (in
terms of square footage). Trump Plaza's hotel capacity consists of 1,404
guest rooms, making Trump Plaza's guest room inventory one of the largest
in Atlantic City.
- TAJ MAHAL. Management believes that the acquisition of the Taj Mahal on
April 17, 1996 (the "Taj Acquisition") has strengthened Trump AC's
position as a leader in the casino entertainment
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industry through its ownership of two successful land-based casino hotels
on The Boardwalk. Furthermore, the Taj Acquisition has enhanced Trump AC's
presence in the growing Atlantic City gaming market (the "Atlantic City
Market"). After giving effect to the Taj Acquisition and the Trump Plaza
Expansion, Trump AC had acquired approximately one-quarter of Atlantic
City's casino square footage, slot machines, table games and hotel room
inventory. The combination of the Taj Mahal with Trump Plaza's operations
has provided opportunities for operational efficiencies, economies of
scale and benefits from the talent, expertise and experience of management
at the operating entities. In July 1997, Trump AC completed an expansion
plan 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.
- 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.
The following table profiles Trump AC's current casino and hotel capacity:
<TABLE>
<CAPTION>
TRUMP
PLAZA TRUMP
MAIN TRUMP WORLD'S
FACILITY PLAZA EAST FAIR TAJ MAHAL TOTAL
--------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Gaming square footage................................ 74,226 14,886 49,193 147,720 286,025
Slot machines........................................ 2,201 371 1,518 4,136 8,226
Table games.......................................... 101 0 16 218 335
Hotel rooms.......................................... 555 349 500 1,250 2,654
</TABLE>
The Registrants operate in only one industry segment. See "Financial
Statements and Supplementary Data."
TRUMP PLAZA
Management believes that Trump Plaza's "Four Star" Mobil Travel Guide rating
and "Four Diamond" American Automobile Association rating reflect the high
quality amenities and services that Trump Plaza provides to its casino patrons
and hotel guests. These amenities and services include a broad selection of
dining choices, headline entertainment, deluxe accommodations, tennis courts and
swimming and health spa facilities.
Management believes that as a result of the Trump Plaza Expansion and Trump
Plaza's strategic location, Trump Plaza is one of the premier host properties in
Atlantic City. The Trump Plaza Expansion was completed in May 1996 and increased
Trump Plaza's prime central frontage on The Boardwalk to nearly a quarter of a
mile. Management believes that the construction of the new convention center and
the tourist corridor linking the new convention center with The Boardwalk
enhances the desirability of Atlantic City generally and, as a result of Trump
Plaza's central location, benefits Trump Plaza in particular. In addition,
management has taken advantage of recent gaming regulatory changes that allow
casino space to be directly visible and accessible from The Boardwalk. Trump
Plaza's location on The Boardwalk at the end of the main highway into Atlantic
City makes it highly accessible for both "drive-in" and "walk-in" patrons.
As part of the Trump Plaza Expansion, Trump Plaza opened the Ocean View
Casino and Bar and a total of 349 rooms, including nine super suites, located at
Trump Plaza East, which is fully integrated into Trump Plaza. Trump Plaza East
has approximately 15,000 square feet of casino space. Trump Plaza also completed
construction of a new entranceway to Trump Plaza to provide easier access by car
to Trump Plaza.
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In May 1996, Trump AC completed the renovations and integration of Trump
World's Fair, located on The Boardwalk adjacent to the original Atlantic City
Convention Center, into Trump Plaza. Trump World's Fair contains 49,193 square
feet of casino floor space, approximately 16,000 square feet of which is
directly accessible from The Boardwalk, and 500 hotel rooms, connected to Trump
Plaza's main tower by an enclosed walkway overlooking The Boardwalk.
Management believes the increased hotel capacity as a result of the Trump
Plaza Expansion enables Trump Plaza to better meet demand and accommodate its
casino guests, as well as to host additional and larger conventions and
corporate meetings.
The following table details Trump Plaza's current casino and hotel capacity:
<TABLE>
<CAPTION>
TRUMP TRUMP
PLAZA MAIN TRUMP 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....................................................... 101 0 16 117
Hotel rooms....................................................... 555 349 500 1,404
</TABLE>
Trump Plaza's management team has launched a variety of initiatives designed
to increase the level of casino gaming activity generally at Trump Plaza and to
attract casino patrons who tend to wager more frequently than the typical
Atlantic City patron. These initiatives include targeted marketing and
advertising campaigns directed to select groups of customers in the Boston-New
York-Washington, D.C. corridor, the introduction of new slot machines and table
games and the addition of bill acceptors on slot machines.
ATLANTIC CITY MARKETING STRATEGY
TRUMP PLAZA. Trump Plaza East has been integrated into Trump Plaza and
together the two are operated as a single casino hotel facility. Trump Plaza
presently intends to continue the marketing strategies it has found successful
in the past, including targeting lucrative high-end drive-in slot customers.
Management believes the additional hotel rooms and gaming facilities at Trump
Plaza East better enable Trump Plaza to accommodate the more profitable weekend
drive-in patron, who tends to wager more per play and per visit than the typical
walk-in or bus patron.
TRUMP WORLD'S FAIR. Trump World's Fair is seeking to attract the "middle
market" segment (primarily bus customers and Boardwalk pedestrian traffic) by
offering high value food and entertainment attractions in a festive "World's
Fair" atmosphere. The first floor of Trump World's Fair features a Boardwalk
level casino offering walk-in customers direct access from The Boardwalk to 569
slot machines. In addition, Trump World's Fair contains a new bus terminal that
has a dedicated escalator leading directly to a separate casino entertainment
area that contains a 500-seat buffet-style restaurant and a casino with
approximately 510 slot machines. The new bus terminal and dedicated casino
facilities allow Trump World's Fair to serve efficiently a high volume of bus
customers. The second floor of Trump World's Fair has approximately 439 slot
machines and 16 table games along with additional restaurants. Moreover, with
its prime location adjoining the original Atlantic City Convention Center and
near the new Atlantic City Convention Center, and its newly refurbished room
base of 500 rooms and approximately 50,000 square feet of total gaming space,
management believes that Trump World's Fair is ideally suited to attract
convention visitor traffic.
TRUMP PLAZA BUSINESS STRATEGY
GENERAL. A primary element of Trump Plaza's business strategy is to seek to
attract patrons who tend to wager more frequently and in larger denominations
than the typical Atlantic City gaming customer. Such high-end players typically
wager $5 or more per play in slots and $25 or more per play in table games. In
the fall of 1992, Trump Plaza Associates ("Plaza Associates"), the owner and
operator of Trump Plaza, decided to de-emphasize marketing efforts directed at
"high roller" patrons from the Far East, who tend to
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wager $50,000 or more per play in table games. Plaza Associates determined that
the potential benefit derived from these patrons did not outweigh the high costs
associated with attracting such players and the resultant volatility in the
results of operations of Trump Plaza. Revenues derived from high roller patrons
have declined since 1992, although management believes that such revenue loss
has not had a significant impact on profitability for the reasons discussed
above. In addition, this shift in marketing strategy has allowed Plaza
Associates to focus its efforts on attracting high-end players.
Although considered one property, Trump Plaza and Trump World's Fair have
separate marketing identities. Trump Plaza caters to the mid to high level
segment while Trump World's Fair focuses on the "middle" market. Trump Plaza's
concentration of special events, entertainment, suites and variety of gourmet
restaurants define its presence and highly perceived image. The suite renovation
and high-end slot club expansion projects indicate Plaza Associates' commitment
to this segment of the market. While Trump Plaza strives to accommodate the more
lucrative drive-in patron, Trump World's Fair offers a fun, relaxing experience
which is extremely appealing to the bus rider. A combination of lower slot
denominations, including Atlantic City's largest nickel lounge, lower table
limits, sweepstakes, bus bingo programs, on-floor tournaments and a premier
buffet make this possible.
"COMPING" STRATEGY. In order to compete effectively with other Atlantic
City casino hotels, Plaza Associates offers complimentary drinks, meals, room
accommodations and/or travel arrangements to its patrons ("complimentaries" or
"comps"). Management monitors Trump Plaza's policy so as to provide
complimentaries primarily to patrons with a demonstrated propensity to wager at
Trump Plaza. A patron's propensity to wager is determined by a review of the
patron's prior gaming history at Trump Plaza as well as other gaming
establishments in Atlantic City. Each patron is analyzed to ensure that the
patron's gaming activity, net of any complimentaries, is profitable to Plaza
Associates.
ENTERTAINMENT. Trump Plaza offers headline entertainment as part of its
strategy to attract high-end and other patrons. Trump Plaza offers headline
entertainment weekly during the summer and monthly during the off-season, and
also features other entertainment and revue shows.
PLAYER DEVELOPMENT/CASINO HOSTS. Plaza Associates currently employs gaming
representatives in New Jersey, New York and other states, as well as several
international representatives, to promote Trump Plaza to prospective gaming
patrons. Player development personnel host special events, offer incentives and
contact patrons directly in an effort to attract high-end table game patrons
from the United States, Canada and South America. Trump Plaza's casino hosts
assist patrons on the casino floor, make room and dinner reservations and
provide general assistance. They also solicit Trump Card (the frequent player
slot card) sign-ups in order to increase Plaza Associates' marketing base.
PROMOTIONAL ACTIVITIES. The Trump Card constitutes a key element in Trump
Plaza's direct marketing program. Slot machine players are encouraged to
register for and utilize their personalized Trump Card to earn various
complimentaries based upon their level of play. The Trump Card is inserted
during play into a card reader attached to the slot machine for use in
computerized rating systems. Plaza Associates' computer systems record data
about the cardholders, including playing preferences, frequency and denomination
of play and the amount of gaming revenues produced.
Trump Plaza designs promotional offers, conveyed via direct mail and
telemarketing, to patrons expected to provide revenues based upon their
historical gaming patterns. Such information is gathered on slot wagering by the
Trump Card and on table game wagering by the casino game supervisors.
Promotional activities include the mailing of vouchers for complimentary slot
play. Trump Plaza also utilizes a special events calendar (E.G., birthday
parties, sweepstakes and special competitions) to promote its gaming operations.
BUS PROGRAM. Trump Plaza has a bus program, which transports approximately
1,700 gaming patrons per day during the week and 2,400 per day on the weekends.
Trump Plaza's bus program offers incentives and discounts to certain scheduled
and chartered bus customers. Trump Plaza's Transportation Facility (as
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defined) contains 13 bus bays and is connected by an enclosed pedestrian walkway
to Trump Plaza. The Transportation Facility provides patrons with immediate
access to the casino, and contains a comfortable lounge area for patrons waiting
for return buses. Trump World's Fair has a newly constructed bus terminal with a
dedicated escalator leading directly to a casino entertainment area complete
with an international buffet. Trump World's Fair's bus terminal provides patrons
with a spacious lounge area with a view of the Atlantic Ocean and The Boardwalk.
Trump World's Fair's bus program transports approximately 1,200 gaming patrons
per day during the week and 2,100 per day on weekends.
CREDIT POLICY. Historically, Trump Plaza has extended credit on a
discretionary basis to certain qualified patrons. For the years ended December
31, 1995, 1996 and 1997 credit play as a percentage of total dollars wagered was
approximately 17.7%, 17.4% and 18.9%, respectively. As part of Trump Plaza's
business strategy, Trump Plaza has imposed stricter standards on applications
for new or additional credit. Trump Plaza bases credit limits on each individual
patron's creditworthiness, as determined by an examination of the following
criteria: (i) checking each patron's personal checking account for current and
average balances, (ii) performing a credit check on each domestic patron and
(iii) checking each patron's credit limits and indebtedness at all casinos in
the United States as well as many island casinos. The above determination of a
patron's continued creditworthiness is performed for continuing patrons on a
yearly basis or more frequently if Trump Plaza deems a re-determination of
credit worthiness is necessary. In addition, depositing of markers is regulated
by the State of New Jersey. Markers in increments of $1,000 or less are
deposited in a maximum of 7 days; markers of increments of $1,001 to $5,000 are
deposited in a maximum of 14 days; and markers in increments of over $5,001 are
deposited in a maximum of 45 days. Markers may be deposited sooner at the
request of patrons or at Trump Plaza's discretion.
FACILITIES AND AMENITIES
TRUMP PLAZA. The casino in Trump Plaza's main tower currently offers 101
table games and 2,201 slot machines. In addition to the casino, Trump Plaza's
main tower consists of a 31-story tower with 555 guest rooms, including 62
suites. Trump Plaza's main tower also offers 10 restaurants, a 750-seat cabaret
theater, four cocktail lounges, 28,000 square feet of convention, ballroom and
meeting room space, a swimming pool, tennis courts and a health spa.
The entry level of Trump Plaza's main tower includes a cocktail lounge,
three gift shops, a deli, a coffee shop, an ice cream parlor and a buffet. The
casino level houses the casino, a fast food restaurant, an exclusive slot lounge
for high-end patrons and an ocean view high-end slot area. An enclosed walkway
connects Trump Plaza at the casino level with the original Atlantic City
Convention Center and with Trump World's Fair.
On February 16, 1996, Trump Plaza opened the approximately 15,000
square-foot Ocean View Casino and Bar and 249 of its 349 hotel rooms at Trump
Plaza East. Management opened the remaining rooms and suites at Trump Plaza East
in March 1996. The Ocean View Casino and Bar is the first gaming room in
Atlantic City to combine a casino, bar and entertainment area, and features a
70-foot long bar with 27 bar-top slot machines, live entertainment and a 58
square-foot video wall, complemented by six additional television sets along the
bar. With its high ceilings and windows overlooking the Atlantic Ocean and The
Boardwalk, Trump Plaza has created a new and exciting entertainment environment
for its casino patrons.
Trump Plaza's guest rooms are located in two towers which afford most guest
rooms a view of the ocean. While rooms are of varying size, a typical guest room
consists of approximately 400 square feet. Trump Plaza's main tower also
features 16 one-bedroom suites, 28 two-bedroom suites and 18 "Super Suites." The
Super Suites are located on the top two floors of Trump Plaza's main tower and
offer luxurious accommodations and 24-hour butler and maid service. The Super
Suites and certain other suites are located on the "Club Level" which requires
guests to use a special elevator key for access, and contains a lounge area that
offers food and bar facilities.
Trump Plaza's main tower is connected by an enclosed pedestrian walkway to a
10-story parking garage, which can accommodate approximately 2,650 cars, and
contains 13 bus bays, a comfortable lounge,
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a gift shop and a waiting area (the "Transportation Facility"). The
Transportation Facility provides patrons with immediate access to the casino,
and is located directly off the Atlantic City Expressway, the main highway into
Atlantic City.
In July 1994, Time Warner Entertainment Company, L.P. ("Time Warner") opened
its second largest Warner Brothers Studio Store occupying the entire first floor
of retail space on The Boardwalk at Trump Plaza East (approximately 17,000
square feet).
TRUMP WORLD'S FAIR. Trump World's Fair is connected to Trump Plaza's main
tower by an enclosed walkway overlooking The Boardwalk and adds an additional
500 hotel rooms to Trump Plaza. In addition, Trump World's Fair is outfitted
with approximately 50,000 square feet of casino floor space housing 1,518-slot
machines and 16 table games. In addition to the casino, Trump World's Fair
features three restaurants, including a state-of-the-art buffet, a cocktail
lounge, convention and ballroom and meeting room space. The enclosed walkway
runs through a portion of the original Atlantic City Convention Center, which is
located between Trump World's Fair and Trump Plaza's main tower. Plaza
Associates has acquired an easement with regard to this walkway through the
original Atlantic City Convention Center.
EMPLOYEES AND LABOR RELATIONS
Plaza Associates has approximately 3,770 full time equivalent employees of
whom approximately 1,500 are covered by collective bargaining agreements. The
collective bargaining agreement with Local No. 54 expires on September 15, 1999.
Management believes that its relationships with its employees are satisfactory.
Certain of Plaza Associates' employees must be licensed or registered under the
Casino Control Act.
In April 1993, the National Labor Relations Board (the "NLRB") found that
Plaza Associates had violated the National Labor Relations Act (the "NLRA") in
the context of a union organizing campaign by table game dealers of Plaza
Associates in association with the Sports Arena and Casino Employees Union Local
137 ("Local 137"). In connection with such finding, Plaza Associates was ordered
to refrain from interfering with, restraining or coercing employees in the
exercise of the rights guaranteed them by Section 7 of the NLRA, to notify its
employees of such rights and to hold an election by secret ballot among its
employees regarding whether they desired to be represented for collective
bargaining by Local 137. The election was held on May 20 and 21, 1994 and the
vote, which has been certified by the NLRB, was in favor of management and
against representation by Local 137.
HISTORICAL BACKGROUND
THE 1992 EVENTS. Plaza Associates and Trump Plaza Funding ("Plaza Funding")
restructured their indebtedness through a prepackaged plan of reorganization
under Chapter 11 of the Bankruptcy Code ("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.
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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 $330 million in aggregate principal amount of 10 7/8% Mortgage Notes
due 2001 (the "Plaza Notes") and (ii) the sale by Trump AC (known prior to April
17, 1996 as Trump Plaza Holding Associates) of $60 million aggregate principal
amount of 12 1/2% Pay-In-Kind Notes due 2003 (the "Plaza PIK Notes") and
warrants to acquire an aggregate of $12 million in principal amount of
additional Plaza PIK Notes (the "Plaza PIK Note Warrants"). Upon consummation of
the refinancing, Plaza Funding held a 1% equity interest in Plaza Associates and
Trump Atlantic City Holding, Inc., known prior to April 17, 1996 as Trump Plaza
Holding, Inc. ("Trump AC Holding"), 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, Trump Hotels
& Casino Resorts Funding, Inc. ("THCR Funding"), of $155 million 15 1/2% Senior
Secured Notes due 2005 (the "Senior Notes") (the "June 1995 Note Offering" and,
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
Trump Taj Mahal Associates ("Taj Associates"), the owner and operator of the Taj
Mahal, 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 (as defined).
THE 1997 EVENTS. In December 1997, Trump AC and Funding II issued the TAC
II Notes and Trump AC and Funding III issued the TAC III Notes.
THE TAJ MAHAL
The Taj Mahal ranked first among all Atlantic City casinos in terms of total
gaming revenues for the year ended December 31, 1997. The Taj Mahal capitalizes
on the widespread recognition and marquee status of the "Trump" name and its
association with high quality amenities and first-class service as evidenced by
its "Four Star" Mobil Travel Guide rating. Management believes that the breadth
and diversity of the Taj Mahal's casino, entertainment and convention facilities
and its status as a "must see" attraction will enable the Taj Mahal to benefit
from growth of the Atlantic City market.
In recent years, Taj Associates 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
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Mahal refurbished substantially all of its hotel guest rooms and corridors and
replaced all of its existing slot machines with new, more efficient machines
with bill acceptors. Moreover, to further attract high-end players, the Taj
Mahal opened the Dragon Room, an Asian themed table gaming area with 16 table
games, and the Sultan's Palace, a separate 5,900 square-foot high-end slot
lounge. In connection with the Sultan's Palace, the Taj Mahal opened the
relocated and expanded President's Club for high-end slot players.
The Taj Mahal Expansion consisted of the construction of a new 14-bay bus
terminal, which was completed in December 1996, a 2,400 space expansion of the
existing self parking facilities, which was completed in May 1997, and an
approximately 7,000 square foot casino expansion with approximately 260 slot
machines with frontage on The Boardwalk, which was completed in July 1997. In
addition, to increase entertainment opportunities for customers, the Hard Rock
Cafe opened in November 1996, the All Star Cafe opened in March 1997 and the
Stage Deli of New York opened in October 1997. A Warner Brothers Studio Store
opened at the Taj Mahal in May 1997.
THE TAJ MAHAL OPERATIONS
GENERAL. The Taj Mahal currently has approximately 147,700 square feet of
gaming space, 218 table games and 4,136 slot machines, which includes an
approximately 12,000 square-foot poker, keno and race simulcasting room with 63
poker tables, which was added in 1993 and expanded in 1994. The casino's
offerings include blackjack, progressive blackjack, craps, roulette, baccarat,
mini baccarat, sic-bo, pai gow, pai gow poker, Caribbean stud poker, big six,
mini big six, mini dice and let it ride poker. In December 1995, the Taj Mahal
opened an Asian themed table game area which offers 16 popular Asian table games
catering to the Taj Mahal's growing Asian clientele. In May 1996, the Taj Mahal
opened the Sultan's Palace, a high-end slot lounge. In August 1996, the Taj
Mahal opened the relocated and expanded President's Club for high-end slot
players in conjunction with the Sultan's Palace.
In December 1996, the Taj Mahal opened a new bus terminal with 14 bays. In
November 1996, the Hard Rock Cafe opened at the Taj Mahal adjacent to the casino
and The Boardwalk. In March 1997, the All Star Cafe opened at the Taj Mahal. A
Warner Brothers Studio Store opened in May 1997. An additional simulcasting
facility featuring horse racing was completed in June 1997. Construction of an
approximately 7,000 square-foot casino expansion with 260 slot machines, with
Boardwalk frontage, was completed in July 1997. In October 1997, the Stage Deli
of New York opened at the Taj Mahal. In addition, as a special bonus to high-end
players, the Taj Mahal offers three clubs for the exclusive use of select
customers: the Maharajah Club for high-end table game players, the President's
Club for high-end slot players and the Bengal Club for other preferred slot
players.
The Taj Mahal currently consists of a 42-story hotel tower and contiguous
low-rise structure sited on approximately 30 acres of land. The Taj Mahal has
1,250 guest rooms (including 242 suites), 18 dining and 12 beverage locations,
parking for approximately 6,950 cars, a 14-bay bus terminal and approximately
65,000 square feet of ballroom, meeting room and pre-function area space. In
addition, the Taj Mahal features a 20,000 square-foot multi-purpose
entertainment complex known as the Xanadu Theater with seating capacity for
approximately 1,200 people which can be used as a theater, concert hall, boxing
arena or exhibition hall (the "Taj Entertainment Complex") and the Mark Etess
Arena, which comprises an approximately 63,000 square-foot exhibition hall and
entertainment facility. The Xanadu Theater and Mark Etess Arena have allowed the
Taj Mahal to offer longer running, more established productions that cater to
the tastes of the Taj Mahal's high-end international guests, and has afforded
the Taj Mahal more flexibility in the use of its facilities for sporting and
other headline programs. The Taj Mahal regularly engages well-known musicians
and entertainment personalities and will continue to emphasize weekend marquee
events such as Broadway revues, high visibility sporting events, international
festivals and contemporary concerts to maximize casino traffic and to maintain
the highest level of glamour and excitement at the Taj Mahal.
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GAMING ENVIRONMENT. The Taj Mahal's management continues to capitalize on
the Taj Mahal's status as one of the largest facilities in Atlantic City and a
"must see" attraction, while maintaining the attractiveness of the property and
providing a comfortable gaming experience. In 1994, the Taj Mahal completed a
major redecoration of the hotel lobby, a casino floor expansion and a
reconfiguration, as well as the addition of a new mid-level player slot club.
The casino floor expansion and reconfiguration accommodated the addition of
keno, poker tables and slot machines. In the period 1994 through 1996, the Taj
Mahal substantially replaced all of its existing slot machines with new, more
efficient machines with bill acceptors. In addition, in June 1993, the Taj Mahal
completed a 10,000 square-foot poker and simulcast area (which was subsequently
enlarged to 12,000 square feet), which features 63 poker tables in the largest
poker room in Atlantic City. For the year ended December 31, 1997, the Taj Mahal
captured approximately 45.3% of the total Atlantic City poker revenues. In 1996
and 1997 the Taj Mahal expanded its casino floor by approximately 6,200 and
8,600 square feet, respectively. The 1997 expansion accommodated casino space
with Boardwalk frontage and a second horserace simulcasting location.
The Taj Mahal currently intends to reconfigure its casino floor, subject to
approval by the CCC on an ongoing basis, to accommodate changes in patron
demand. Management continuously monitors the configuration of the casino floor
and the games it offers to patrons with a view towards making changes and
improvements. For example, the Taj Mahal's casino floor has clear, large signs
for the convenience of patrons. Additionally, as new games have been approved by
the CCC, management has integrated such games to the extent it deems
appropriate. In 1994, the Taj Mahal introduced the newly-approved games of keno
and Caribbean stud poker and, in 1995, introduced the games of pai gow, pai gow
poker and let it ride poker. Progressive blackjack and mini dice were also added
in 1996 and 1997, respectively.
"COMPING" STRATEGY. In order to compete effectively with other casino
hotels, the Taj Mahal offers complimentaries. Currently, the policy at the Taj
Mahal is to focus promotional activities, including complimentaries, on middle
and upper middle market "drive in" patrons who visit Atlantic City frequently
and have proven to be the most profitable market segment. A patron's propensity
to wager is determined by a review of the patron's prior gaming history at the
Taj Mahal as well as other gaming establishments in Atlantic City. Each patron
is analyzed to ensure that the patron's gaming activity, net of any
complimentaries, is profitable to Taj Associates. Additionally, as a result of
increased regulatory flexibility, the Taj Mahal has implemented a cash comping
policy to high-end players in order to compete with similar practices in Las
Vegas and to attract international business.
ENTERTAINMENT. The Taj Mahal believes headline entertainment, as well as
other entertainment and revue shows, is an effective means of attracting and
retaining gaming patrons. The Xanadu Theater allows the Taj Mahal to offer
longer running, more established productions that cater to the tastes of the Taj
Mahal's high-end international guests. The Xanadu Theater, together with the
Mark Etess Arena (an approximately 63,000 square-foot exhibition hall facility),
afford the Taj Mahal more flexibility in the use of its larger entertainment
arena for sporting and other headline programs. The Taj Mahal regularly engages
well-known musicians and entertainment personalities and will continue to
emphasize weekend "marquee" events such as Broadway revues, high visibility
sporting events, festivals and contemporary concerts to maintain the highest
level of glamour and excitement. Mid-week uses for the facilities include
convention events and casino marketing sweepstakes.
PLAYER DEVELOPMENT. The Taj Mahal employs sales representatives as a means
of attracting high-end slot and table gaming patrons to the property. The Taj
Mahal currently employs numerous gaming representatives in New Jersey, New York
and other states, as well as several international representatives, to host
special events, offer incentives and contact patrons directly in the United
States, Canada and South America. In addition, targeted marketing to
international clientele will be continued and expanded through new sales
representatives in Latin America, Mexico, Europe, the Far East and the Middle
East.
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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, 1995, 1996 and 1997, the Taj Mahal's credit play as a percentage of total
dollars wagered was approximately 24.5%, 29.7% and 31.2%, respectively. The Taj
Mahal bases credit limits on each individual patron's creditworthiness, as
determined by an examination of the following criteria: (i) checking each
patron's personal checking account for current and average balances, (ii)
performing a credit check on each domestic patron and (iii) checking each
patron's credit limits and indebtedness at all casinos in the United States as
well as many island casinos. The above determination of a patron's continued
creditworthiness is performed for continuing patrons on a yearly basis or more
frequently if the Taj Mahal deems a re-determination of credit worthiness is
necessary. In addition, depositing of markers is regulated by the State of New
Jersey. Markers in increments of $1,000 or less are deposited in a maximum of 7
days; markers of increments of $1,001 to $5,000 are deposited in a maximum of 14
days; and markers in increments of over $5,001 are deposited in a maximum of 45
days. Markers may be deposited sooner at the request of patrons or at the Taj
Mahal's discretion.
EMPLOYEES
Taj Associates has approximately 4,500 full time equivalent employees for
the operation of the Taj Mahal, of whom approximately 1,750 employees are
covered by collective bargaining agreements. The collective bargaining agreement
with Local No. 54 expires on September 15, 1999. Management believes that its
relationships with its employees are satisfactory and that its staffing levels
are sufficient to provide
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superior service. Certain of Taj Associates' employees must be licensed or
registered under the Casino Control Act.
TAJ ACQUISITION
On April 17, 1996, a subsidiary of THCR was merged (the "Taj Merger") with
and into THCR Holding Corp., known prior to April 17, 1996 as Taj Mahal Holding
Corp. As a result of the Taj Merger and the related transactions discussed
below, THCR Holdings acquired Taj Associates. The Taj Acquisition 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, Trump Casinos, Inc.
("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 11.35% Mortgage Bonds, Series A,
due 1999 issued by Trump Taj Mahal Funding, Inc. (the "Taj Bonds");
(f) the retirement of the outstanding Plaza Notes;
(g) the satisfaction of the indebtedness of Taj Associates under its
loan agreement with National Westminster Bank USA ("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 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 1,800,000 shares of
THCR Common Stock (the "Trump Warrants").
TCS
Trump Casino Services, a New Jersey limited liability company ("TCS"), 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,
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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 (the "TCS Services 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 Trump Castle Associates, L.P. ("Castle
Associates"), the owner and operator of Trump Marina Hotel Casino ("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 on January 31, 1997 for the purpose of reducing
operating costs by consolidating advertising functions of, and providing certain
services, to each of Plaza Associates, Taj Associates and Castle Associates.
TRADEMARK/LICENSING
Subject to certain restrictions, THCR has the exclusive right to use the
"Trump" name and likeness in connection with gaming and related activities
pursuant to a trademark license agreement between Trump and THCR (the "License
Agreement"). Pursuant to the License Agreement, Trump granted to THCR the
world-wide right and license to use the names "Trump," "Donald Trump" and
"Donald J. Trump" (including variations thereon, the "Trump Names") and related
intellectual property rights (collectively, 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 in an underwritten offering $1,200,000,000 aggregate principal
amount of Mortgage Notes which mature on May 1, 2006 (the "TAC I Notes"). 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. In December 1997, Trump AC and Funding II issued in a private
offering, exempt from registration under the Securities Act, $75,000,000
principal amount of the TAC II Notes which mature on May 1, 2006. 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.
TAC III NOTES. In December 1997, Trump AC and Funding III issued in a
private offering, exempt from registration under the Securities Act, $25,000,000
principal amount of the TAC III Notes which mature on May 1, 2006. The TAC III
Notes include restrictive covenants prohibiting or limiting, among other things,
the sale of assets, the making of acquisitions and other investments, capital
expenditures, the incurrence of additional debt and liens and the payment of
dividends and distributions. Non-compliance could result in the acceleration of
such indebtedness.
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PLAZA NOTES. The Plaza Notes were retired in connection with the Taj
Acquisition. The Plaza Notes were issued by Plaza Funding, with Plaza Associates
providing a full and unconditional guaranty thereof. The Plaza Notes were
retired through repurchase and defeasance and Plaza Funding and Plaza Associates
were released from their obligations under all financial and negative covenants
and certain other provisions contained in the indenture under which the Plaza
Notes were issued (the "Plaza Note Indenture"), and the Plaza Note Security (as
defined in the Plaza Note Indenture) was released against the deposit of cash or
U.S. government obligations in an amount sufficient to effect the redemption on
June 15, 1998 of all of the Plaza Notes so defeased, at a redemption price of
105% of the principal amount thereof, together with accrued and unpaid interest
to such date. Additionally, Plaza Funding irrevocably instructed the Plaza Note
Trustee (as defined in the Plaza Note Indenture) to provide notice of such
redemption not less than 30 or more than 60 days prior to June 15, 1998.
OTHER INDEBTEDNESS. In addition to the foregoing, Trump AC's long-term
indebtedness includes approximately $11.3 million of indebtedness, including, as
of December 31, 1997, approximately $3.2 million due under outstanding mortgage
notes described above.
ATLANTIC CITY MARKET
The Atlantic City market has demonstrated continued growth despite the
recent proliferation of new gaming venues across the country. The 12 casino
hotels in Atlantic City generated approximately $3.91 billion in gaming revenues
in 1997, an approximately 2.1% increase over 1996 gaming revenues of
approximately $3.83 billion. From 1992 to 1997, total gaming revenues in
Atlantic City have increased approximately 21.4%, while hotel rooms increased by
25.5% during that period. Although total visitor volume to Atlantic City
remained relatively constant in 1997, the volume of bus customers dropped to 9.4
million in 1997, continuing a decline from 11.7 million in 1991. The volume of
customers traveling by other means to Atlantic City has grown from 20.4 million
in 1992 to 34.3 million in 1997.
Casino revenue growth in Atlantic City has lagged behind that of other
traditional gaming markets, principally Las Vegas, for the last five years.
Management believes that this relatively slower growth is primarily attributable
to two key factors. First, there were no significant additions to hotel capacity
in Atlantic City until 1996. Las Vegas visitor volumes have increased, in part,
due to the continued addition of new hotel capacity. Both markets have exhibited
a strong correlation between hotel room inventory and total casino revenues.
Secondly, the regulatory environment and infrastructure problems in Atlantic
City have made it more difficult and costly to operate. Total regulatory costs
and tax levies in New Jersey have exceeded those in Nevada since inception, and
there is generally a higher level of regulatory oversight in New Jersey than in
Nevada. The infrastructure problems, manifested by impaired accessibility of the
casinos, downtown Atlantic City congestion and the condition of the areas
surrounding the casinos have made Atlantic City less attractive to the gaming
customer.
Total Atlantic City slot revenues increased 3.6% in 1997, continuing a trend
of increases over the past five years. From 1992 through 1997, slot revenue
growth in Atlantic City has averaged 5.2% per year. Total table revenue did not
increase in 1997, while table game revenue from 1992 to 1997 has increased on
average 0.8% per year. Management believes the slow growth in table revenue is
primarily attributable to two factors. First, the slot product has been
significantly improved over the last five years. Bill acceptors, new slot
machines, video poker and blackjack and other improvements have increased the
popularity of slot play among a wider universe of casino patrons. Casino
operators in Atlantic City have added slot machines in favor of table games due
to increased public acceptance of slot play and due to slot machines'
comparatively higher profitability as a result of lower labor and support costs.
Since 1992, the number of slot machines in Atlantic City has increased 54%,
while the number of table games has increased by 12.6%. Slot revenues increased
from 66% of total casino revenues in 1992 to 70% in 1997. The second reason for
historic slow growth in table revenue is that table game players are typically
higher end players and are more likely to be interested in overnight stays and
other amenities. During peak season and weekends,
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room availability in Atlantic City is currently inadequate to meet demand,
making it difficult for casino operators to aggressively promote table play.
The regulatory environment in Atlantic City has improved recently. Most
significantly, 24-hour gaming has been approved, poker and keno have been added
and regulatory burdens have been reduced. In particular, comprehensive
amendments to New Jersey gaming laws were made in January 1995, which have
eliminated duplicative regulatory oversight and channeled operator's funds from
regulatory support into uses of the CRDA. Administrative costs of regulation
will be reduced while increasing funds will be available for new development. In
addition, in 1994, legislation was enacted which eliminated the requirement that
a casino consist of a "single room" in a casino hotel. A casino may now consist
of "one or more locations or rooms" approved by the CCC for casino gaming.
Atlantic City's new convention center, with approximately 500,000 square
feet of exhibit and pre-function space, 45 meeting rooms, food-service
facilities and a 1,600-car underground parking garage, is the largest exhibition
space between New York City and Washington, D.C. It is located at the base of
the Atlantic City Expressway and opened in May 1997. The old convention center,
built in the late 1920s and located on The Boardwalk, will receive an
approximately $50 million facelift following the opening of the new convention
center and will continue to be used for special events. The State of New Jersey
has commenced a long-term capital plan to upgrade and expand the Atlantic City
International Airport. To date, approximately $18 million has been spent on
renovation of the airport terminal and upgrades of the airport's access roads
and parking facilities.
In addition to the planned casino expansions, major infrastructure
improvements have begun. The CRDA is currently overseeing the development of the
$88 million "Grand Boulevard" corridor that will link the new convention center
with The Boardwalk. The project has been substantially completed as of December
31, 1997.
Management believes that recent gaming regulatory reforms will serve to
permit future reductions in operating expenses of casinos in Atlantic City and
to increase the funds available for additional infrastructure development
through the CRDA. Due principally to an improved regulatory environment, general
improvement of economic conditions and high occupancy rates, significant
investment in the Atlantic City market has been initiated and/or announced.
Management believes that these increases in hotel capacity, together with
infrastructure improvements, will be instrumental in stimulating future revenue
growth in the Atlantic City market. See "--Competition."
COMPETITION
ATLANTIC CITY. Competition in the Atlantic City casino hotel market is
intense. Trump Plaza and the Taj Mahal (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.
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There also can be no assurance that the Atlantic City development projects which
are planned or underway will be completed.
Total Atlantic City gaming revenues have increased over the past five years,
although at varying rates. In 1993, nine casinos experienced increased gaming
revenues compared to 1992 (including the Taj Mahal), while three casinos
(including Trump Plaza) experienced decreased revenues. In 1994, ten casinos
experienced increased gaming revenues compared to 1993 (including the Taj
Mahal), while two casinos (including Trump Plaza) experienced decreased
revenues. During 1995, all 12 casinos experienced increased gaming revenues
compared to 1994. During 1996, six casinos (including Trump Plaza and the Taj
Mahal) experienced increased gaming revenues compared to 1995, while six casinos
experienced decreased revenues. In 1997, eight casinos (including Trump Plaza
and the Taj Mahal) experienced increased gaming revenues compared to 1996, while
four casinos experienced decreased revenues.
In 1992, the Atlantic City casino industry experienced an increase of 6.9%
in gaming revenues per square foot from 1991. Gaming revenues per square foot
increased by 1.4% for 1993 (excluding poker and race simulcast rooms, which were
introduced for the first time in such year), compared to 1992. In 1994, gaming
revenues per square foot decreased 2.5% (or 4.5% including square footage
devoted to poker, keno and race simulcasting). The 1994 decline was due, in
part, to the increase in casino floor space in Atlantic City as a result of
expansion of a number of casinos and to the severe weather conditions which
affected the Northeast during the winter of 1994. Between April 30, 1993 and
December 31, 1995, many operators in Atlantic City expanded their facilities in
anticipation of and in connection with the June 1993 legalization of
simulcasting and poker, increasing total gaming square footage by approximately
181,200 square feet (23.3%) of which approximately 83,700 square feet is
currently devoted to poker, keno and race simulcasting. During this same period,
172 poker tables and 5,500 slot machines were added. During 1996, a total of
approximately 65,870 square feet of casino floor space was added, an increase of
47.2%, including Trump World's Fair's 49,193 square feet. Slot machines
increased by approximately 1,911 units during 1996 and table games increased by
approximately 44 units during 1996, of which Trump World's Fair accounted for
1,518 units and 16 units, respectively. During 1997, a total of approximately
51,870 square feet of casino floor space was added. Slot machines increased by
approximately 2,153 units and table games increased by approximately 82 units
during 1997.
The Atlantic City Properties also compete, or will compete, with facilities
in the northeastern and mid-Atlantic regions of the United States at which
casino gaming or other forms of wagering are currently, or in the future may be,
authorized. To a lesser extent, the Atlantic City Properties face competition
from gaming facilities nationwide, including land-based, cruise line, riverboat
and dockside casinos located in Colorado, Illinois, Indiana, Iowa, Louisiana,
Mississippi, Missouri, Nevada, South Dakota, Ontario (Windsor and Niagara
Falls), the Bahamas, Puerto Rico and other locations inside and outside the
United States, and from other forms of legalized gaming in New Jersey and in its
surrounding states such as lotteries, horse racing (including off-track
betting), jai alai, bingo and dog racing, and from illegal wagering of various
types. New or expanded operations by other persons can be expected to increase
competition and could result in the saturation of certain gaming markets. In
September 1995, New York introduced a keno lottery game, which is played on
video terminals that have been set up in approximately 1,800 bars, restaurants
and bowling alleys across the state. In December 1996, Bay Cruises began
operation of a gambling cruise ship where patrons are taken from a pier in
Sheepshead Bay in Brooklyn, New York to international waters to gamble. Bay
Cruises temporarily ceased operations pending the outcome of its appeal of a
federal prosecutor's ruling that the ships must travel 12, rather than 3, miles
offshore to reach international waters. On December 2, 1997, a federal judge
overruled the prosecutor's ruling, and Bay Cruises announced plans to resume
operations. In September 1997, another gambling cruise ship was launched off the
coast of Montauk, New York. On January 28, 1998, Manhattan Cruises began
offering nightly gambling cruises departing from Manhattan, New York City and
five other companies are currently seeking permission to operate similar
cruises. On December 5, 1997, the mayor of New York City proposed the
construction of a casino on Governors Island, located in the middle of New York
Harbor; however the proposal would
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require an amendment to the New York State Constitution and the sale of the
island to New York by the federal government. In Delaware, a total of
approximately 2,000 slot machines were installed at 3 horse tracks in 1996, and
track owners in several other states are seeking to do the same. In December
1996, the temporary Casino Niagara opened in Niagara Falls, Ontario. Ontario
officials expect that two-thirds of Casino Niagara's patrons will come from the
United States, predominantly from western New York. In February 1998, the
Ontario Casino Commission designated a consortium whose principal investor is
Hyatt Hotels Corporation ("Hyatt") as the preferred developer of the permanent
Casino Niagara.
In addition to competing with other casino hotels in Atlantic City and
elsewhere, by virtue of their proximity to each other and the common aspects of
certain of their respective marketing efforts, including the common use of the
"Trump" name, the Atlantic City Properties compete directly with each other and
with Trump Marina for gaming patrons.
OTHER COMPETITION. In addition, the Atlantic City Properties face
competition from casino facilities in a number of states operated by federally
recognized Native American tribes. Pursuant to IGRA, which was passed by
Congress in 1988, any state which permits casino-style gaming (even if only for
limited charity purposes) is required to negotiate gaming compacts with
federally recognized Native American tribes. Under IGRA, Native American tribes
enjoy comparative freedom from regulation and taxation of gaming operations,
which provides them with an advantage over their competitors, including the
Atlantic City Properties. In March 1996, the United States Supreme Court struck
down a provision of IGRA which allowed Native American tribes to sue states in
federal court for failing to negotiate gaming compacts in good faith. Management
cannot predict the impact of this decision on the ability of Native American
tribes to negotiate compacts with states.
In 1991, the Mashantucket Pequot Nation opened Foxwoods, a casino facility
in Ledyard, Connecticut, located in the far eastern portion of such state, an
approximately three-hour drive from New York City and an approximately two and
one-half hour drive from Boston, which currently offers 24-hour gaming and
contains over 5,500 slot machines. An ongoing expansion at Foxwoods, due to be
completed in April 1998, will include additional hotel rooms, restaurants and
retail stores. A high speed ferry between New York City and Foxwoods is due to
begin service in March 1998. The Mashantucket Pequot Nation has also announced
plans for a high speed train linking Foxwoods to the interstate highway and an
airport outside Providence, Rhode Island. In addition, in October 1996, the
Mohegan Nation opened the Mohegan Sun Resort in Uncasville, Connecticut, located
10 miles from Foxwoods. Developed by Sun Hotel International, Ltd., the Mohegan
Sun Resort has 75% of the gaming capacity of Foxwoods. The Mohegan Nation has
announced plans for an expansion of the casino facilities and the construction
of a hotel, convention center and entertainment center to be completed by the
year 2000. In addition, the Eastern Pequots are seeking formal recognition as a
Native American tribe for the purpose of opening a casino in the North
Stonington area. There can be no assurance that any continued expansion of
gaming operations of the Mashantucket Pequot Nation, the gaming operations of
the Mohegan Nation or the commencement of gaming operations by the Eastern
Pequots would not have a materially adverse impact on the operations of the
Atlantic City Properties.
A group in Cumberland County, New Jersey calling itself the "Nanticoke Lenni
Lenape" tribe has filed a notice of intent with the Bureau of Indian Affairs
seeking formal federal recognition as a Native American tribe. Also, it has been
reported that a Sussex County, New Jersey businessman has offered to donate land
he owns there to the Oklahoma-based Lenape/Delaware Indian Nation which
originated in New Jersey and already has federal recognition, but does not have
a reservation in New Jersey. The Lenape/Delaware Indian Nation has signed an
agreement with the town of Wildwood, New Jersey to open a casino; however, the
plan requires federal and state approval in order to proceed. In July 1993, the
Oneida Nation opened a casino featuring 24-hour table gaming and electronic
gaming systems, but without slot machines, near Syracuse, New York. The Oneida
Nation opened a hotel in October 1997 that included expanded gaming facilities,
and has announced plans to construct a golf course and convention center.
Representatives of the St. Regis Mohawk Nation signed a gaming compact with New
York State officials
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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. Timely applications for renewal of the TCS
casino license will be made to the CCC. In June 1995, the CCC renewed Castle
Associates' casino license and approved Trump as a natural person qualifier
through May 1999. None of these licenses are transferable and their renewal will
include a financial review of the relevant operating entities as well as their
holding and intermediary companies. Upon revocation, suspension for more than
120 days or failure to renew a casino license, the Casino Control Act provides
for the appointment of a conservator to take possession of the hotel and
casino's business and property, subject to all valid liens, claims and
encumbrances.
CASINO LICENSE. No casino hotel facility may operate unless the appropriate
license and approvals are obtained from the CCC, which has broad discretion with
regard to the issuance, renewal, revocation and suspension of such licenses and
approvals, which are non-transferable. The qualification criteria with respect
to the holder of a casino license include its financial stability, integrity and
responsibility; the integrity and adequacy of its financial resources which bear
any relation to the casino project; its good character, honesty and integrity;
and the sufficiency of its business ability and casino experience to establish
the likelihood of a successful, efficient casino operation. The casino licenses
currently held by Plaza Associates, Taj Associates and Castle Associates are
renewable for periods of up to four years and the license held by TCS is
renewable for a period of up to one year. The CCC may reopen licensing hearings
at any time, and must reopen a licensing hearing at the request of the Division
of Gaming Enforcement (the "Division").
Each casino license, except the TCS license, entitles the holder to operate
one casino. Further, no person may be the holder of a casino license if the
holding of such license will result in undue economic concentration in Atlantic
City casino operations by that person. On May 17, 1995, the CCC adopted a
regulation defining the criteria for determining undue economic concentration
which outlines the content of existing CCC precedent with respect to the
subject. In its May 18, 1995 declaratory rulings with respect to Plaza
Associates' petition, the CCC, among other things, determined that Plaza
Associates' operation of Trump World's Fair casino space would not result in
undue economic concentration in Atlantic City casino operations.
To be considered financially stable, a licensee must demonstrate the
following ability: to pay winning wagers when due; to achieve an annual gross
operating profit; to pay all local, state and federal taxes when due; to make
necessary capital and maintenance expenditures to insure that it has a superior
first-class facility; and to pay, exchange, refinance or extend debts which will
mature or become due and payable during the license term.
In the event a licensee fails to demonstrate financial stability, the CCC
may take such action as it deems necessary to fulfill the purposes of the Casino
Control Act and protect the public interest, including: issuing conditional
licenses, approvals or determinations; establishing an appropriate cure period;
imposing reporting requirements; placing restrictions on the transfer of cash or
the assumption of liabilities; requiring reasonable reserves or trust accounts;
denying licensure; or appointing a conservator. See "--Conservatorship."
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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 indentures which govern the TAC I Notes (the "TAC I
Note Indenture"), the TAC II Notes (the "TAC II Note Indenture") and the TAC III
Notes (the "TAC III 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.
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APPROVED HOTEL FACILITIES. The CCC may permit an existing licensee to
increase its casino space if the licensee agrees to add a prescribed number of
qualifying sleeping units within two years after the commencement of gaming
operations in the additional casino space. However, if the casino licensee does
not fulfill such agreement due to conditions within its control, the licensee
will be required to close the additional casino space, or any portion thereof
that the CCC determines should be closed.
Persons who are parties to the lease for an approved hotel building or who
have an agreement to lease a building which may in the judgment of the CCC
become an approved hotel building are required to hold a casino license unless
the CCC, with the concurrence of the Attorney General of the State of New
Jersey, determines that such persons do not have the ability to exercise
significant control over the building or the operation of the casino therein.
Unless otherwise determined by the CCC, agreements to lease an approved
hotel building or the land under the building must be for a durational term
exceeding 30 years, must concern 100% of the entire approved hotel building or
the land upon which it is located and must include a buy-out provision
conferring upon the lessee the absolute right to purchase the lessor's entire
interest for a fixed sum in the event that the lessor is found by the CCC to be
unsuitable.
AGREEMENT FOR MANAGEMENT OF CASINO. Each party to an agreement for the
management of a casino is required to hold a casino license, and the party who
is to manage the casino must own at least 10% of all the outstanding equity
securities of the casino licensee. Such an agreement shall: (i) provide for the
complete management of the casino; (ii) provide for the unrestricted power to
direct the casino operations; and (iii) provide for a term long enough to ensure
the reasonable continuity, stability and independence and management of the
casino.
LICENSE FEES. The CCC is authorized to establish annual fees for the
renewal of casino licenses. The renewal fee is based upon the cost of
maintaining control and regulatory activities prescribed by the Casino Control
Act, and may not be less than $200,000 for a four-year casino license.
Additionally, casino licensees are subject to potential assessments to fund any
annual operating deficits incurred by the CCC or the Division. There is also an
annual license fee of $500 for each slot machine maintained for use or in use in
any casino.
GROSS REVENUE TAX. Each casino licensee is also required to pay an annual
tax of 8% on its gross casino revenues. For the years ended December 31, 1995,
1996 and 1997, Plaza Associates' gross revenue tax was approximately $24.0
million, $29.8 million and $30.1 million, respectively, and its license,
investigation and other fees and assessments totaled approximately $4.4 million,
$6.0 million and $4.9 million, respectively. For the years ended December 31,
1995, 1996 and 1997, Taj Associates' gross revenue tax was approximately $40.2
million, $40.7 million and $41.7 million, respectively, and its license,
investigation and other fees and assessments totaled approximately $5.2 million,
$5.0 million and $3.9 million, respectively.
INVESTMENT ALTERNATIVE TAX OBLIGATIONS. An investment alternative tax
imposed on the gross casino revenues of each licensee in the amount of 2.5% is
due and payable on the last day of April following the end of the calendar year.
A licensee is obligated to pay the investment alternative tax for a period of 30
years. Estimated payments of the investment alternative tax obligation must be
made quarterly in an amount equal to 1.25% of estimated gross revenues for the
preceding three-month period. Investment tax credits may be obtained by making
qualified investments or by the purchase of bonds issued by the CRDA (the "CRDA
Bonds"). CRDA Bonds may have terms as long as 50 years and bear interest at
below market rates, resulting in a value lower than the face value of such CRDA
Bonds.
For the first ten years of its tax obligation, the licensee is entitled to
an investment tax credit against the investment alternative tax in an amount
equal to twice the purchase price of the CRDA Bonds issued to the licensee.
Thereafter, the licensee (i) is entitled to an investment tax credit in an
amount equal to twice the purchase price of such CRDA Bonds or twice the amount
of its investments authorized in lieu of such bond investments or made in
projects designated as eligible by the CRDA and (ii) has the option of
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entering into a contract with the CRDA to have its tax credit comprised of
direct investments in approved eligible projects which may not comprise more
than 50% of its eligible tax credit in any one year.
From the monies made available to the CRDA, the CRDA was required to set
aside $175 million for investment in hotel development projects in Atlantic City
undertaken by a licensee which result in the construction or rehabilitation of
at least 200 hotel rooms. These monies were used to fund up to 27% of the cost
to casino licensees of expanding their hotel facilities to provide additional
hotel rooms, a portion of which has been required to be available with respect
to the new Atlantic City Convention Center.
MINIMUM CASINO PARKING CHARGES. Since July 1, 1993, each casino licensee
has been required to pay the New Jersey State Treasurer a $1.50 charge for every
use of a parking space for the purpose of parking motor vehicles in a parking
facility owned or leased by a casino licensee or by any person on behalf of a
casino licensee. This amount is paid into a special fund established and held by
the New Jersey State Treasurer for the exclusive use of the CRDA. Plaza
Associates and Taj Associates currently charge their parking patrons $2.00 in
order to make their required payments to the New Jersey State Treasurer and
cover related expenses. Amounts in the special fund will be expended by the CRDA
for eligible projects in the corridor region of Atlantic City related to
improving the highways, roads, infrastructure, traffic regulation and public
safety of Atlantic City or otherwise necessary or useful to the economic
development and redevelopment of Atlantic City in this regard.
ATLANTIC CITY FUND. On each October 31 during the years 1996 through 2003,
each casino licensee shall pay into an account established in the CRDA and known
as the Atlantic City Fund, its proportional share of an amount related to the
amount by which annual operating expenses of the CCC and the Division are less
than a certain fixed sum. Additionally, a portion of the investment alternative
tax obligation of each casino licensee for the years 1994 through 1998 allocated
for projects in northern New Jersey shall be paid into and credited to the
Atlantic City Fund. Amounts in the Atlantic City Fund will be expended by the
CRDA for economic development projects of a revenue producing nature that foster
the redevelopment of Atlantic City other than the construction and renovation of
casino hotels.
CONSERVATORSHIP. If, at any time, it is determined that Plaza Associates,
Trump AC, Trump AC Funding, Funding II, Funding III, Taj Associates or any other
entity qualifier has violated the Casino Control Act or that any of such
entities cannot meet the qualification requirements of the Casino Control Act,
such entity could be subject to fines or the suspension or revocation of its
license or qualification. If a casino license is suspended for a period in
excess of 120 days or is revoked, or if the CCC fails or refuses to renew such
casino license, the CCC could appoint a conservator to operate and dispose of
such licensee's casino hotel facilities. A conservator would be vested with
title to all property of such licensee relating to the casino and the approved
hotel subject to valid liens and/or encumbrances. The conservator would be
required to act under the direct supervision of the CCC and would be charged
with the duty of conserving, preserving and, if permitted, continuing the
operation of the casino hotel. During the period of the conservatorship, a
former or suspended casino licensee is entitled to a fair rate of return out of
net earnings, if any, on the property retained by the conservator. The CCC may
also discontinue any conservatorship action and direct the conservator to take
such steps as are necessary to effect an orderly transfer of the property of a
former or suspended casino licensee.
QUALIFICATION OF EMPLOYEES. Certain employees of Plaza Associates, Taj
Associates and TCS must be licensed by or registered with the CCC, depending on
the nature of the position held. Casino employees are subject to more stringent
requirements than non-casino employees and must meet applicable standards
pertaining to financial stability, integrity and responsibility, good character,
honesty and integrity, business ability and casino experience and New Jersey
residency. These requirements have resulted in significant competition among
Atlantic City casino operators for the services of qualified employees.
GAMING CREDIT. Plaza Associates' and Taj Associates' casino games are
conducted on a credit as well as cash basis. Gaming debts arising in Atlantic
City in accordance with applicable regulations are
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enforceable in the courts of the State of New Jersey. The extension of gaming
credit is subject to regulations that detail procedures which casinos must
follow when granting gaming credit and recording counter checks which have been
exchanged, redeemed or consolidated.
CONTROL PROCEDURES. Gaming at the Atlantic City Properties is conducted by
trained and supervised personnel. Plaza Associates and Taj Associates employ
extensive security and internal controls. Security checks are made to determine,
among other matters, that job applicants for key positions have had no criminal
history or associations. Security controls utilized by the surveillance
department include closed circuit video camera to monitor the casino floor and
money counting areas. The count of moneys from gaming also is observed daily by
representatives of the CCC.
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. As a result of Taj Associates' audit, the Treasury has notified
Taj Associates that it failed to timely file Currency Transaction Reports in
connection with certain currency transactions. In December 1997, Taj Associates
paid a fine of $477,000 in connection with 106 of these violations.
Plaza Associates and Taj Associates have adopted the following internal
control procedures to increase compliance with these Treasury regulations: (i)
computer exception reporting; (ii) establishment of a committee to review
Currency Transaction Report transactions and reporting which consists of
executives from the Casino Operations, Marketing and Administration Departments;
(iii) internal audit testing of compliance with the Treasury regulations; (iv)
training for all new and existing employees in compliance with the Treasury
regulations; and (v) a self-disciplinary program for employee violations of the
policy.
Trump AC is subject to other federal, state and local regulations and, on a
periodic basis, must obtain various licenses and permits, including those
required to sell alcoholic beverages in the State of New Jersey as well as in
other jurisdictions. Management believes all required licenses and permits
necessary to conduct the business of Trump AC has been obtained for operations
in New Jersey.
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ITEM 2. 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 TAC III
Notes (collectively, the "Plaza Mortgages") and certain other liens.
PLAZA CASINO PARCEL. Trump Plaza's main tower is located on The Boardwalk
in Atlantic City, New Jersey, next to the Atlantic City Convention Center. It
occupies the entire city block (approximately 2.38 acres) bounded by The
Boardwalk, Mississippi Avenue, Pacific Avenue and Columbia Place (the "Plaza
Casino Parcel").
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 Associates ("Seashore Four") and Trump Seashore Associates
("Trump Seashore") had leased to Plaza Associates two of the tracts which are
now owned by Plaza Associates. Trump Seashore and Seashore Four are 100%
beneficially owned by Trump and are, therefore, affiliates of THCR. Plaza
Associates purchased the tract from Seashore Four in January 1997 and the tract
from Trump Seashore in September 1996 for $10 million and $14.5 million,
respectively.
The PHMC Lease is a "net lease" pursuant to which Plaza Associates, in
addition to the payment of fixed rent, is responsible for all costs and expenses
with respect to the use, operation and ownership of the Plaza Leasehold Tract
and the improvements now, or which may in the future be, located thereon,
including, but not limited to, all maintenance and repair costs, insurance
premiums, real estate taxes, assessments and utility charges. The improvements
located on the Plaza Leasehold Tract are owned by Plaza Associates during the
term of the PHMC Lease, and upon the expiration of the term of the PHMC Lease
(for whatever reason), ownership of such improvements will vest in PHMC. The
PHMC Lease also contains an option pursuant to which Plaza Associates may
purchase the Plaza Leasehold Tract at certain times during the term of such PHMC
Lease under certain circumstances.
TRUMP PLAZA EAST. In connection with the Taj Acquisition, Plaza Associates
exercised its option to purchase certain of the fee and leasehold interests
comprising Trump Plaza East for a purchase price of $28.0 million. During the
years ended December 31, 1995 and 1996, Plaza Associates incurred approximately
$3.8 million and $1.1 million, respectively, in expenses associated with its
lease of Trump Plaza East. Plaza Associates currently leases a portion of the
land which comprises Trump Plaza East from an unrelated third party.
In September 1993, Trump (as predecessor in interest to Plaza Associates
under the lease for Trump Plaza East) entered into a sublease with Time Warner
(the "Time Warner Sublease") pursuant to which Time Warner subleased the entire
first floor of retail space for a new Warner Brothers Studio Store which opened
in July 1994. Time Warner renovated the premises in connection with opening of
the Warner Brothers Studio Store. The lease term is for ten years and gives Time
Warner the option to renew for two additional 5-year terms. Time Warner is
required to pay percentage rent monthly in an amount equal to (i) 7.5% of gross
annual sales up to $15.0 million and (ii) 10% of gross annual sales in excess of
$15 million. The terms of the Time Warner Sublease give Time Warner the right to
terminate the sublease if (i) gross annual sales are less than $5.0 million for
year two or less than $5.0 million as adjusted by CPI for years three through
nine; and (ii) Trump Plaza ceases to operate as a first class hotel.
TRUMP WORLD'S FAIR. Pursuant to the option to purchase Trump World's Fair,
on June 12, 1995, using proceeds from the June 1995 Offerings, Plaza Associates
acquired title to Trump World's Fair. Further,
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pursuant to an easement agreement with the NJSEA, Plaza Associates has an
exclusive easement over, in and through the portions of the original Atlantic
City Convention Center used as the pedestrian walkway connecting Trump Plaza's
main tower and Trump World's Fair. The easement is for a 25-year term and may be
renewed at the option of Plaza Associates for one additional 25-year period. In
consideration of the granting of the easement, Plaza Associates must pay to
NJSEA the sum of $2.0 million annually, such annual payment to be adjusted every
five years to reflect changes in the consumer price index. Plaza Associates has
the right to terminate the easement agreement at any time upon six months'
notice to NJSEA in consideration of a termination payment of $1,000,000. See
"Business--Gaming and Other Laws and Regulations--New Jersey Gaming
Regulations--Approved Hotel Facilities."
PARKING PARCELS. Plaza Associates owns a parcel of land (the "Plaza Garage
Parcel") located across the street from the Plaza Casino Parcel and along
Pacific Avenue in a portion of the block bound by Pacific Avenue, Mississippi
Avenue, Atlantic Avenue and Missouri Avenue. Plaza Associates has constructed
the Transportation Facility on the Plaza Garage Parcel. An enclosed pedestrian
walkway from the parking garage accesses Trump Plaza at the casino level.
Parking at the parking garage is available to Trump Plaza's guests, as well as
to the general public.
Plaza Associates leases, pursuant to the PHMC Lease, a parcel of land
located on the northwest corner of the intersection of Mississippi and Pacific
Avenues consisting of approximately 11,800 square feet ("Additional Parcel 1")
and owns another parcel on Mississippi Avenue adjacent to Additional Parcel 1
consisting of approximately 5,750 square feet.
Plaza Associates also owns five parcels of land, aggregating approximately
43,300 square feet, and subleases one parcel consisting of approximately 3,125
square feet. All of such parcels are contiguous and are located along Atlantic
Avenue, in the same block as the Plaza Garage Parcel. They are used for signage
and surface parking and are not encumbered by any mortgage liens other than that
of the Plaza Mortgages.
WAREHOUSE PARCEL. Plaza Associates owns a warehouse and office facility
located in Egg Harbor Township, New Jersey, containing approximately 64,000
square feet of space (the "Egg Harbor Parcel"). The Egg Harbor Parcel is
encumbered by a first mortgage having an outstanding principal balance, as of
December 31, 1997, of approximately $1.4 million and is encumbered by the Plaza
Mortgages. This facility is currently being utilized by TCS.
SUPERIOR MORTGAGES. The liens securing the indebtedness on the Plaza Garage
Parcel, the Egg Harbor Parcel and liens securing indebtedness on certain parking
facilities are each senior to the liens of the Plaza Mortgages. The principal
amount currently secured by such mortgages is, in the aggregate, approximately
$3.2 million.
Plaza Associates has financed or leased and from time to time will finance
or lease its acquisition of furniture, fixtures and equipment. The lien in favor
of any such lender or lessor may be superior to the liens of the Plaza
Mortgages.
TAJ MAHAL
Taj Associates currently owns the parcels of land which are used in
connection with the operation of the Taj Mahal. Each of these parcels is
encumbered by the mortgages securing the TAC I Notes, the TAC II Notes and the
TAC III Notes.
THE CASINO PARCEL. The land comprising the Taj Mahal site consists of
approximately 30 acres, bounded by The Boardwalk to the south, vacated former
States Avenue to the east, Pennsylvania Avenue to the west and Pacific Avenue to
the north. The Taj Mahal was opened to the public on April 2, 1990.
TAJ ENTERTAINMENT COMPLEX. In connection with the Taj Acquisition, Taj
Associates purchased the Taj Entertainment Complex from Realty Corp. The Taj
Entertainment Complex is a 20,000-square-foot
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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 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
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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 (ii) the Taj Mahal ceases to operate as a first class hotel. The Warner
Brothers Studio Store opened in May 1997.
ITEM 3. LEGAL PROCEEDINGS.
General. Trump AC, its partners, certain members of its former executive
committee, and certain of its employees, have been involved in various legal
proceedings. Such persons and entities are vigorously defending the allegations
against them and intend to contest vigorously any future proceedings. In
general, Trump AC has agreed to indemnify such persons against any and all
losses, claims, damages, expenses (including reasonable costs, disbursements and
counsel fees) and liabilities (including amounts paid or incurred in
satisfaction of settlements, judgments, fines and penalties) incurred by them in
said legal proceedings.
PLAZA ASSOCIATES. The CRDA is required to set aside funds for investment in
hotel development projects in Atlantic City undertaken by casino licensees which
result in the construction or rehabilitation of at least 200 hotel rooms. These
investments are to fund up to 27% of the cost to casino licensees of such
projects. See "Business--Gaming and Other Laws and Regulations--New Jersey
Gaming Regulations-- Investment Alternative Tax Obligations." In June 1993,
Plaza Associates made application for such funding to the CRDA with respect to
its proposed construction of the Trump Plaza East facilities, demolition of a
certain structure adjacent thereto, development of an appurtenant public park,
roadway and parking area and acquisition of the entire project site. The CRDA,
in rulings through January 10, 1995, approved the hotel development project and,
with respect to same and pursuant to a credit agreement between them, reserved
to Plaza Associates the right to take investment tax credits up to approximately
$14.2 million. Plaza Associates has, except for three small parcels discussed
below, acquired the site and had constructed and presently operates and
maintains the proposed hotel tower, public park, roadway and parking area.
As part of its approval and on the basis of its powers of eminent domain,
the CRDA, during 1994, initiated certain condemnation proceedings in the
Superior Court of New Jersey, Atlantic County, to acquire certain small parcels
of land within the project site. Plaza Associates has since acquired two of the
parcels and proceedings with respect to those parcels have been concluded. The
proceedings with respect to the remaining three parcels, which, if acquired,
will be included in the public park and parking area of the project, are
currently pending and include a claim by the defendants that the CRDA did not
properly determine that the parcels were to be used for public purposes. The
CRDA motion seeking dismissal of
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this claim has been briefed and, in February 1998, argued by the parties.
Additionally, with respect to the two parcels to be included in the public park
portion of the project, the CRDA, by a separate motion, seeks an order that the
Plaza Associates' application and credit agreement be deemed amended so as to
terminate the CRDA obligation to acquire the two parcels and enabling the CRDA
to abandon the condemnation proceedings with respect to these two parcels. This
motion, which is opposed by Plaza Associates, has been briefed and, in February
1998, argued by Plaza Associates and the CRDA.
The defendants in two of the condemnation proceedings filed a separate joint
complaint in the New Jersey Superior Court alleging, among other claims, that
the CRDA and Plaza Associates are wrongfully attempting to deprive them of
property rights in violation of their constitutional and civil rights. COKING,
ET AL. V. CASINO REINVESTMENT DEVELOPMENT AUTHORITY, ET AL., Docket No.
ATL-L-2555-97. The CRDA's motion for summary judgment on the complaint and Plaza
Associates' motion to dismiss it for failure to state a claim were granted by
the New Jersey Superior Court on October 24, 1997 and November 11, 1997.
OTHER LITIGATION. On March 13, 1997, THCR filed a lawsuit in the United
States District Court, District of New Jersey, against Mirage, the State of New
Jersey ("State"), the New Jersey Department of Transportation ("NJDOT"), the
South Jersey Transportation Authority ("SJTA"), the CRDA, the New Jersey
Transportation Trust Fund Authority and others. THCR was seeking declaratory and
injunctive relief to recognize and prevent violations by the defendants of the
casino clause of the New Jersey State Constitution and various federal
securities and environmental laws relating to proposed infrastructure
improvements in the Atlantic City marina area. While this action was pending,
defendants State and CRDA then filed an action in the New Jersey State Court
seeking declaration of the claim relating to the casino clause of the New Jersey
State Constitution. On May 1, 1997, the United States District Court dismissed
the federal claims and ruled that the State constitutional claims should be
pursued in State Court. This decision is currently being appealed. On May 14,
1997 the State Court entered a summary judgment in favor of the State and CRDA.
This decision is also being appealed.
On June 26, 1997, THCR filed an action against NJDOT, SJTA, Mirage and
others, in the Superior Court of New Jersey, Chancery Division, Atlantic County
(the "Chancery Division Action"). THCR is seeking to declare unlawful and enjoin
certain actions and omissions of the defendants arising out of and relating to a
certain Road Development Agreement dated as of January 10, 1997, by and among
NJDOT, SJTA and Mirage (the "Road Development Agreement") and the public funding
of a certain road and tunnel project to be constructed in Atlantic City, as
further described in the Road Development Agreement. THCR moved to consolidate
this action with other previously filed related actions. Defendants opposed
THCR's motion to consolidate the Chancery Division Action, initially moved to
dismiss this action on procedural grounds and subsequently moved to dismiss this
action on substantive grounds. On October 20, 1997, the Chancery Court denied
the defendants' motion to dismiss this action on procedural grounds, but granted
the motion to dismiss this action on substantive grounds. This decision is
currently being appealed.
On June 26, 1997, THCR also filed an action, in lieu of prerogative writs,
against the CRDA, in the Superior Court of New Jersey, Law Division, Atlantic
County, seeking review of the CRDA's April 15, 1997 approval of funding ($120
million principal amount plus interest) for the road and tunnel project
discussed above, a declaratory judgment that the said project is not eligible
for such CRDA funding, and an injunction prohibiting the CRDA from contributing
such funding to the said project. Defendants moved to dismiss this action on
procedural grounds and also sought to transfer this action to New Jersey's
Appellate Division. On October 3, 1997, the New Jersey Superior Court
transferred this action to the Appellate Division where it is currently pending.
On September 9, 1997, Mirage filed a complaint against Trump, THCR and
Hilton Hotels Corporation, in the United States District Court for the Southern
District of New York. The complaint seeks damages for alleged violations of
antitrust laws, tortious interference with prospective economic advantage and
tortious inducement of a breach of fiduciary duties arising out of activities
purportedly engaged in by
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defendants in furtherance of an alleged conspiracy to impede Mirage's efforts to
build a casino resort in the Marina district of Atlantic City, New Jersey. Among
other things, Mirage contends that the defendants filed several frivolous
lawsuits and funded others that challenge the proposed state funding mechanisms
for the construction of a proposed roadway and tunnel that would be paid for
chiefly through government funds and which would link the Atlantic City
Expressway with the site of Mirage's proposed new casino resort. On November 10,
1997, THCR and Trump moved to dismiss the complaint.
On August 14, 1996, certain stockholders of THCR filed two derivative
actions in the Court of Chancery in Delaware (Civil Action Nos. 15148 and 15160)
(the "Delaware cases") against each of the members of the Board of Directors of
THCR, THCR, THCR Holdings, Castle Associates and Trump Casinos II, Inc.
("TCI-II"). The plaintiffs claim that the directors of THCR breached their
fiduciary duties in connection with its acquisition of Castle Associates (the
"Castle Acquisition") by purchasing these interests at an excessive price in a
self-dealing transaction. The complaint sought to enjoin the transaction, and
also sought damages and an accounting. The injunction was never pursued. These
plaintiffs served a 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,
30
<PAGE>
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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted by the Registrants to their security holders for a
vote during the fourth quarter of 1997.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
TRUMP AC. THCR Holdings has beneficially owned 100% of the partnership
interests in Trump AC since June 12, 1995.
TRUMP AC FUNDING. Trump AC has owned 100% of the common stock of Trump AC
Funding since its formation on January 30, 1996. There is no established trading
market for Trump AC Funding's common stock.
FUNDING II. Trump AC has owned 100% of the common stock of Funding II since
its formation on November 18, 1997. There is no established trading market for
Funding II's common stock.
FUNDING III. Trump AC has owned 100% of the common stock of Funding III
since its formation on November 18, 1997. There is no established trading market
for Funding III's common stock.
31
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
The following table sets forth certain historical consolidated financial
information of Trump AC for each of the five years ended December 31, 1993
through 1997 (see Notes 1 and 2 below).
All financial information should be read in conjunction 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 Form 10-K.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993 1994 1995 1996 1997
---------- ---------- ---------- ------------ ------------
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
REVENUES:
Gaming................................................. $ 264,081 $ 261,451 $ 298,073 $ 752,228 $ 889,116
Other.................................................. 69,203 66,869 74,182 190,995 231,235
Gross revenues....................................... 333,284 328,320 372,255 943,223 1,120,351
Promotional allowances................................. 32,793 33,257 45,077 113,743 138,085
---------- ---------- ---------- ------------ ------------
Net revenues......................................... 300,491 295,063 327,178 829,480 982,266
---------- ---------- ---------- ------------ ------------
COSTS AND EXPENSES:
Gaming................................................. 136,895 139,540 164,396 453,841 555,547
Other.................................................. 24,778 23,380 21,261 54,613 65,462
General and administrative............................. 71,624 73,075 65,521 147,464 168,143
Depreciation and amortization.......................... 17,554 15,653 16,213 60,870 66,018
Preopening............................................. -- -- -- 4,145 --
---------- ---------- ---------- ------------ ------------
Total costs and expenses............................. 250,851 251,648 267,391 720,933 855,080
---------- ---------- ---------- ------------ ------------
Income from operations................................... 49,640 43,415 59,787 108,547 127,186
Interest expense, net.................................... (39,889) (48,219) (43,261) (112,122) (141,249)
Other non-operating income (expense)(a).................. (3,873) (4,931) (5,743) 14,194
Extraordinary (loss) gain(b)............................. 4,120 -- (9,250) (59,132)
(Provision) benefit for income taxes..................... (660) 865 -- -- --
---------- ---------- ---------- ------------ ------------
Net income (loss)........................................ $ 9,338 $ (8,870) $ 1,533 $ (48,513) $ (14,063)
---------- ---------- ---------- ------------ ------------
---------- ---------- ---------- ------------ ------------
BALANCE SHEET DATA (AT END OF PERIOD):
Cash and cash equivalents................................ $ 14,393 $ 11,144 $ 15,937 $ 71,320 114,879
Property and equipment, net.............................. 293,141 298,354 425,262 1,456,267 1,460,050
Total assets............................................. 374,498 375,643 480,024 1,659,006 1,739,073
Total long-term debt, net of current maturities.......... 395,948 403,214 332,721 1,207,795 1,300,027
Total capital (deficit).................................. (54,710) (63,580) 110,812 331,858 327,939
</TABLE>
- ------------------------
Note 1: On June 12, 1995, as part of the June 1995 Offerings, THCR issued $140
million of THCR Common Stock and contributed the proceeds from such
offering to THCR Holdings, the beneficial owner of 100% of Trump AC, for
an approximately 60% general partnership interest in THCR Holdings.
Note 2: On April 17, 1996, as part of the Taj Acquisition, THCR acquired Taj
Associates. In connection with the Taj Acquisition, Taj Associates
became a wholly owned subsidiary of Trump AC. Therefore, the financial
data as of December 31, 1996 and 1997 reflect the Taj Acquisition and
includes the operations of Taj Associates for the period from the date
of acquisition (April 17, 1996) through December 31, 1996.
32
<PAGE>
(a) Other non-operating expense for the years ended December 31, 1993, 1994
and 1995 includes $3.9 million, $4.9 million and $3.7 million,
respectively, of real estate taxes and leasing costs associated with
Trump Plaza East. Other non-operating expense for the year ended December
31, 1995 also includes $2.0 million in costs associated with Trump
World's Fair. Other non-operating income for the year ended December 31,
1996 includes $15.0 million license fee revenue.
(b) The excess of the carrying value of a note obligation over the amount of
the settlement payment, net of related prepaid expenses, in the amount of
$4,120,000 has been reported as an extraordinary gain for the year ended
December 31, 1993. The extraordinary loss of $9,250,000 for the period
from January 1, 1995 through June 12, 1995 relates to the redemption of
the Plaza PIK Notes and 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 the Plaza Notes and the Plaza PIK Note Warrants and the
write-off of unamortized deferred financing costs.
33
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1997
The financial information presented below reflects the results of operations
of Trump AC. Because Trump AC has no business operations other than its interest
in Plaza Associates and Taj Associates its results of operations are not
discussed below. Taj Associates was acquired on April 17, 1996.
The following table includes selected data of Plaza Associates and Taj
Associates (since April 17, 1996, date of acquisition) for the years ended
December 31, 1996 and 1997:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------
1996
1996 1997 TAJ 1997 1996 1997
PLAZA PLAZA ASSOCIATES TAJ TOTAL TOTAL
ASSOCIATES ASSOCIATES (1) ASSOCIATES TRUMP AC TRUMP AC
----------- ----------- ------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
(IN MILLIONS)
Revenues:
Gaming........................................ $ 368.9 $ 370.7 $ 383.3 $ 518.4 $ 752.2 $ 889.1
Other......................................... 105.7 108.0 85.3 123.2 191.0 231.2
----------- ----------- ------------- ----------- ----------- -----------
Gross Revenues................................ 474.6 478.7 468.6 641.6 943.2 1,120.3
Less: Promotional Allowances.................... 65.6 64.4 48.1 73.7 113.7 138.1
----------- ----------- ------------- ----------- ----------- -----------
Net Revenues.................................. 409.0 414.3 420.5 567.9 829.5 982.2
----------- ----------- ------------- ----------- ----------- -----------
Costs & Expenses:
Gaming........................................ 223.9 233.8 230.0 321.6 453.9 555.5
Pre-opening................................... 4.1 -- -- -- 4.1 --
General & Administrative...................... 83.3 80.2 64.2 88.0 147.5 168.1
Depreciation & Amortization................... 23.0 24.4 37.8 41.4 60.9 66.0
Other......................................... 28.4 32.0 26.2 33.5 54.6 65.5
----------- ----------- ------------- ----------- ----------- -----------
Total Costs and Expenses...................... 362.7 370.4 358.2 484.5 721.0 855.1
----------- ----------- ------------- ----------- ----------- -----------
Income from Operations.......................... 46.3 43.9 62.3 83.4 108.5 127.1
----------- ----------- ------------- ----------- ----------- -----------
Non-Operating Income.......................... 4.9 .6 10.7 1.1 16.6 2.9
Interest Expense.............................. (47.1) (48.6) (67.4) (94.7) (114.5) (144.1)
----------- ----------- ------------- ----------- ----------- -----------
Total Non-Operating Expense................... (42.2) 48.0 (56.7) (93.6) (97.9) (141.2)
----------- ----------- ------------- ----------- ----------- -----------
Income (loss) before extraordinary loss....... 4.1 (4.1) 5.6 (10.2) 10.6 (14.1)
Extraordinary Loss............................ (59.1) -- -- -- (59.1) --
----------- ----------- ------------- ----------- ----------- -----------
Net Income/(loss)............................. $ (55.0) $ (4.1) $ 5.6 $ (10.2) $ (48.5) $ (14.1)
----------- ----------- ------------- ----------- ----------- -----------
----------- ----------- ------------- ----------- ----------- -----------
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------
1996
1996 1997 TAJ 1997 1996 1997
PLAZA PLAZA ASSOCIATES TAJ TOTAL TOTAL
ASSOCIATES ASSOCIATES (1) ASSOCIATES TRUMP AC TRUMP AC
----------- ----------- ------------- ----------- ----------- -----------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Table Game Revenues............................. $ 104.1 $ 96.4 $ 161.9 $ 202.7 $ 266.0 $ 299.1
Incr (Decr) over Prior Period................... $ (7.7) $ 40.8 $ 33.1
Table Game Drop................................. $ 686.9 $ 654.4 $ 942.5 $ 1,279.1 $ 1,629.4 $ 1,933.5
Incr (Decr) over Prior Period................... $ (32.5) $ 336.6 $ 304.1
Table Win Percentage............................ 15.2% 14.7% 17.2% 15.9% 16.3% 15.5%
(.5) (1.3)
Incr (Decr) over Prior Period................... pts pts (.8) pts
Number of Table Games........................... 127 117 167 155 284 282
Incr (Decr) over Prior Period................... (10) (2) (12)
Slot Revenues................................... $ 264.8 $ 274.3 $ 206.2 $ 297.4 $ 471.0 $ 571.7
Incr (Decr) over Prior Period................... $ 9.5 $ 91.2 $ 100.7
Slot Handle..................................... $ 3,179.8 $ 3,381.1 $ 2,510.3 $ 3,583.7 $ 5,690.1 $ 6,964.8
Incr (Decr) over Prior Period................... $ 201.3 $ 1,073.4 $ 1,274.7
Slot Win Percentage............................. 8.3% 8.1% 8.2% 8.3% 8.3% 8.2%
(.2)
Incr (Decr) over Prior Period................... pts .1 pts (.1) pts
Number of Slot Machines......................... 3,629 4,083 3,799 4,136 7,428 8,219
Incr (Decr) over Prior Period................... 454 337 791
Poker Revenues.................................. -- -- $ 13.1 $ 16.0 $ 13.1 $ 16.0
Incr (Decr) over Prior Period................... -- $ 2.9 $ 2.9
Number of Poker Tables.......................... -- -- 64 63 64 63
Incr (Decr) over Prior Period................... -- (1) (1)
Other Gaming Revenues........................... -- -- $ 2.1 $ 2.3 $ 2.1 $ 2.3
Incr (Decr) over Prior Period................... -- $ .2 $ .2
Total Gaming Revenues........................... $ 368.9 $ 370.7 $ 383.3 $ 518.4 $ 752.2 $ 889.1
Incr (Decr) over Prior Period................... $ 1.8 $ 135.1 $ 136.9
</TABLE>
- ------------------------
(1) Since date of acquisition April 17, 1996.
Gaming revenues are the primary source of Trump AC's revenues. The increase
in gaming revenues is primarily attributable to the acquisition of Taj
Associates on April 17, 1996.
Table games revenues represent the amount retained by Trump AC from amounts
wagered at table games. The table win percentage tends to be fairly constant
over the long term, but may vary significantly in the short term, due to large
wagers by "high rollers". The Atlantic City industry table win percentages were
15.4% and 15.0% for the years December 31, 1996 and 1997, respectively.
During the second quarter of 1997, Trump AC revised its estimates of the
useful lives of buildings, building improvements, and furniture and fixtures
which were acquired in 1996. Buildings and building improvements were
reevaluated to have a new forty year life and furniture and fixtures were
determined to have a seven year life. Trump AC believes these changes more
appropriately reflect the timing of the economic benefits to be received from
these assets during their estimated useful lives. For the year ended December
31, 1997, the net effect of applying these new lives was to increase net income
by $6.0 million.
Non-operating income for the year ended December 31, 1996 included a
one-time $15.0 million non-refundable licensing fee resulting from an agreement
with Atlantic Jersey Thermal Systems, Inc.
The extraordinary loss of $59.1 million for the year ended December 31, 1996
relates to the redemption of the Plaza Notes and the write-off of unamortized
deferred financing costs on April 17, 1996.
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1996
The financial information presented below reflects the results of operations
of Trump AC. Because Trump AC has no business operations other than its interest
in Plaza Associates and Taj Associates its results of operations are not
discussed below. Taj Associates was acquired on April 17, 1996.
35
<PAGE>
The following table includes selected data of Plaza Associates and Taj
Associates (since date of acquisition) for the year ended December 31, 1996 and
of Plaza Associates for the year ended December 31, 1995:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1996
1995 1996 TAJ 1996
PLAZA PLAZA ASSOCIATES TOTAL
ASSOCIATES ASSOCIATES (1) TRUMP AC
----------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
(IN MILLIONS)
REVENUES:
Gaming....................................................... $ 298.1 $ 368.9 $ 383.3 $ 752.2
Other........................................................ 74.2 105.7 85.3 191.0
----------- ----------- ------------- -----------
Gross Revenues............................................... 372.3 474.6 468.6 943.2
Less: Promotional Allowances................................... 45.1 65.6 48.1 113.7
----------- ----------- ------------- -----------
Net Revenues................................................. 327.2 409.0 420.5 829.5
----------- ----------- ------------- -----------
Costs & Expenses:
Gaming....................................................... 164.4 223.9 230.0 453.9
Pre-opening.................................................. -- 4.1 -- 4.1
General & Administrative..................................... 65.5 83.3 64.2 147.5
Depreciation & Amortization.................................. 16.2 23.0 37.8 60.9
Other........................................................ 21.3 28.4 26.2 54.6
----------- ----------- ------------- -----------
Total Costs and Expenses..................................... 267.4 362.7 358.2 721.0
----------- ----------- ------------- -----------
Income from Operations......................................... 59.8 46.3 62.3 108.5
----------- ----------- ------------- -----------
Non-Operating Income (Expense)............................... (4.7) 4.9 10.7 16.6
Interest Expense............................................. (44.3) (47.1) (67.4) (114.5)
----------- ----------- ------------- -----------
Total Non-Operating Expense.................................. (49.0) (42.2) (56.7) (97.9)
----------- ----------- ------------- -----------
Income before extraordinary loss............................. 10.8 4.1 5.6 10.6
Extraordinary Loss........................................... (9.3) (59.1) -- (59.1)
----------- ----------- ------------- -----------
Net (Loss) Income.............................................. $ 1.5 $ (55.0) $ 5.6 $ (48.5)
----------- ----------- ------------- -----------
----------- ----------- ------------- -----------
Table Game Revenues............................................ $ 96.4 $ 104.1 $ 161.9 $ 266.0
Incr (Decr) over Prior Period.................................. $ 7.7 $ 161.9 $ 169.6
Table Game Drop................................................ $ 626.8 $ 686.9 $ 942.5 $ 1,629.4
Incr (Decr) over Prior Period.................................. $ 60.1 $ 942.5 $ 1,002.6
Table Win Percentage........................................... 15.4% 15.2% 17.2% 16.3%
(0.2)
Incr (Decr) over Prior Period.................................. pts 17.2pts .9 pts
Number of Table Games.......................................... 97 127 167 294
Incr (Decr) over Prior Period.................................. 30 167 197
Slot Revenues.................................................. $ 201.7 $ 264.8 $ 206.2 $ 471.0
Incr (Decr) over Prior Period.................................. $ 63.1 $ 206.2 $ 269.3
Slot Handle.................................................... $ 2,368.7 $ 3,179.8 $ 2,510.3 $ 5,690.1
Incr (Decr) over Prior Period.................................. $ 811.1 $ 2,510.3 $ 3,321.4
Slot Win Percentage............................................ 8.5% 8.3% 8.2% 8.3%
(0.2)
Incr (Decr) over Prior Period.................................. pts 8.2pts (.2) pts
Number of Slot Machines........................................ 2,339 3,629 3,799 7,428
Incr (Decr) over Prior Period.................................. 1,290 3,799 5,089
Poker Revenues................................................. -- -- $ 13.1 $ 13.1
Incr (Decr) over Prior Period.................................. -- $ 13.1 $ 13.1
Number of Poker Tables......................................... -- -- 64 64
Incr (Decr) over Prior Period.................................. -- 64 64
Other Gaming Revenues.......................................... -- -- $ 2.1 $ 2.1
Incr (Decr) over Prior Period.................................. -- $ 2.1 $ 2.1
Total Gaming Revenues.......................................... $ 298.1 $ 368.9 $ 383.3 $ 752.2
Incr (Decr) over Prior Period.................................. $ 70.8 $ 383.3 $ 454.1
</TABLE>
- ------------------------
(1) Since date of acquisition April 17, 1996.
36
<PAGE>
Gaming revenues are the primary source of Trump AC's revenues. The increase
in gaming revenues is primarily attributable to the acquisition of Taj
Associates on April 17, 1996.
Table games revenues represent the amount retained by Trump AC from amounts
wagered at table games. The table win percentage tends to be fairly constant
over the long term, but may vary significantly in the short term, due to large
wagers by "high rollers". The Atlantic City industry table win percentages were
15.8% and 15.4% for the year ended December 31, 1995 and 1996, respectively.
Non-operating income for the year ended December 31, 1996 included a
one-time $15.0 million non-refundable licensing fee resulting from an agreement
with Atlantic Jersey Thermal Systems, Inc.
The extraordinary loss of $59.1 million for the year ended December 31, 1996
relates to the redemption of the Plaza Notes and the write-off of unamortized
deferred financing costs on April 17, 1996. The extraordinary loss of $9.3
million for the year ended December 31, 1995 relates to the redemption and
write-off of unamortized deferred financing costs relating to the redemption of
Plaza PIK Notes and Plaza PIK Note Warrants on June 12, 1995.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows from operating activities are Trump AC's principal source of
liquidity. Proceeds from the 1997 Offerings are intended by Trump AC to provide
expansion funds and working capital for operations. Accordingly, the company
expects to have sufficient liquidity to meet its obligations. Cash flow is
managed based upon the seasonality of the operations. Any excess cash flow
achieved from operations during peak periods is utilized to subsidize non-peak
periods where necessary. With proceeds from the 1996 Offerings, Trump AC, among
other things, retired the outstanding Taj Bonds, retired the outstanding Plaza
Notes, satisfied the indebtedness of Taj Associates under its loan agreement
with Nat West, purchased certain real property used in the operation of Trump
Plaza and the Taj Mahal and paid Bankers Trust to release certain liens and
guarantees.
The indentures under which the TAC I Notes, the TAC II Notes and the TAC III
Notes were issued restrict the ability of Trump AC and its subsidiaries to make
distributions or pay dividends, as the case may be, unless certain financial
ratios are achieved. In addition, the ability of Plaza Associates and Taj
Associates to make payments of dividends or distributions (except for payment of
interest) through Trump AC to THCR Holdings may be restricted by the New Jersey
Casino Control Commission ("CCC").
Capital expenditures for Trump AC for the year's ended December 31, 1996 and
1997 were $193.0 million and $56.4 million respectively. Capital expenditures
for the year ended December 31, 1996 includes Trump Plaza East and Trump World's
Fair expansions of $35.5 million and $57.9 million respectively. Capital
expenditures for improvements to Trump Plaza's existing facilities were
approximately $8.3 million and $14.8 million for the years ended December 31,
1996 and 1997, respectively. In addition, in 1996 and 1997, Plaza Associates
exercised its option to purchase from Trump Seashore Associates and Seashore
Four Associates, both entities beneficially owned by Trump, two of the parcels
of land underlying Trump Plaza's main tower, pursuant to the terms of the
leases, the payments under which were terminated upon the exercise of such
option. The exercise price and associated closing costs were $14.5 million for
Trump Seashore Associates and $10.2 million for Seashore Four Associates.
Capital expenditures attributable to the Taj Mahal were $90.9 million for
the period from acquisition, April 17, 1996 , to December 31, 1996 and $40.8
million for the year ended December 31, 1997. Capital expenditures for
improvements to existing facilities were approximately $18.8 million for the
period from acquisition, April 17, 1996, to December 31, 1996 and $7.6 million
for the year ended December 31, 1997. Capital expenditures attributable to the
expansion of the facility were approximately $10.3 million for the period from
acquisition, April 17, 1996, to December 31, 1996 and $33.2 million for the year
ended December 31, 1997. Capital expenditures for the period from acquisition,
April 17, 1996, to December 31,
37
<PAGE>
1996 included the purchase of property previously leased upon which a portion of
the casino hotel complex is situated for $61.8 million.
The Taj Mahal Expansion consisted of the construction of a new 14-bay bus
terminal which was completed in December 1996, a 2,400 space expansion of the
existing self parking facilities, which was completed in May 1997, and an
approximate 7,000 square foot casino expansion with 260 slot machines which was
completed in July 1997. The total costs of the Taj Mahal Expansion including
amounts expended in 1996 were approximately $43.5 million and have been funded
principally out of cash from operations.
Trump AC has assessed the Year 2000 issue and has begun implementing a plan
to resolve the issue, which is expected to be completed in early 1999. Based
upon management's assessment it is anticipated that associated costs incurred to
satisfactorily complete the plan will not be material.
SEASONALITY
The gaming industry in Atlantic City is seasonal, with the heaviest activity
occurring during the period from May through September. Consequently, Trump AC's
operating results during the two quarters ending in March and December would not
likely be as profitable as the two quarters ending in June and September.
INFLATION
There was no significant impact on operations as a result of inflation
during 1995, 1996 or 1997.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Pursuant to the General Instructions to Rule 305 of Regulation S-K, the
quantitative and qualitative disclosures called for by this Item 7A and by Rule
305 of Regulation S-K are inapplicable to the Registrants at this time.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
An index to financial statements and required financial statement schedules
is set forth in Item 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
38
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
MANAGEMENT OF TRUMP AC, TRUMP AC FUNDING, FUNDING II 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. Trump
AC Funding, Funding II and Funding III are wholly owned subsidiaries of Trump
AC. Trump AC and TACC are the general partners of Plaza Associates and Taj
Associates. The Board of Directors of each of Trump AC Funding, Funding II and
Funding III consists of Messrs. Trump, Nicholas L. Ribis, Robert M. Pickus,
Wallace B. Askins and Don M. Thomas. The TAC I Note Indenture, the TAC II Note
Indenture and the TAC III Note Indenture each requires that two directors of
Trump AC Funding, Funding II and 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, Trump AC Funding, Funding II 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 Trump AC Funding, Funding II and Funding III and of the executive
officers of Trump AC, Trump AC Funding, Funding II 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.
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<PAGE>
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 Committee of Plaza Associates from April 1991 to May 29, 1992 and
was a director and Vice President of Trump Plaza GP from May 1992 until June
1993. Mr. Ribis served as Vice President of Trump AC Holding from February 1995
until December 1997. Mr. Ribis has served as President of Trump AC Holding since
December 1997. Mr. Ribis has served as a director of Trump AC Holding since June
1993. Mr. Ribis has been Chief Executive Officer, President and a director of
Trump AC Funding since its formation in January 1996 and Chief Executive
Officer, President and a director of Funding II and Funding III since their
formation in November 1997. Mr. Ribis served as Vice President of TACC until
December 1997. Mr. Ribis has served as the President of TACC since December
1997. Mr. Ribis has been the President and Chief Executive Officer of Trump
Indiana since its formation. Mr. Ribis has been a Director of THCR/LP and THCR
Holding Corp. since October 1991 and was Vice President of THCR/LP and THCR
Holding Corp. until June 1995; Chief Executive Officer of Taj Associates since
February 1991; Vice President of TCI since February 1991 and Secretary of TCI
since September 1991; Director of Realty Corp. since October 1991; and a member
of the Executive Committee of Taj Associates from April 1991 to October 1991.
Mr. Ribis has served as Vice President of THCR/LP and THCR Holding Corp. since
February 1998. He has also been Chief Executive Officer of Castle Associates
since March 1991; member of the Executive Committee of Castle Associates from
April 1991 to May 1992; member of the Board of Partner Representatives of Castle
Associates since May 1992; and has served as the Vice President and Assistant
Secretary of TCHI since December 1993 and January 1991, respectively. Mr. Ribis
is now a director of TCHI. Mr. Ribis has served as Vice President of TCI-II
since December 1993 and had served as Secretary of TCI-II from November 1991 to
May 1992. Mr. Ribis has been Vice President of Trump Corp. since September 1991.
Mr. Ribis has been the President and a director of THCR Enterprises since
January 1997. From January 1993 to January 1995 Mr. Ribis served as the Chairman
of the Casino Association of New Jersey and has been a member of the Board of
Trustees of the CRDA since October 1993. From January 1980 to January 1991, Mr.
Ribis was Senior Partner in, and from February 1991 to December 1995, was
Counsel to the law firm of Ribis, Graham & Curtin (now practicing as Graham,
Curtin & Sheridan, A Professional Association), which serves as New Jersey legal
counsel to all of the above-named companies and certain of their affiliated
entities.
ROBERT M. PICKUS--Mr. Pickus, 43 years old, has been Executive Vice
President and Secretary of THCR since its formation in 1995. He has also been
the Executive Vice President of Corporate and Legal Affairs of Plaza Associates
since February 1995. From December 1993 to February 1995, Mr. Pickus was the
Senior Vice President and General Counsel of Plaza Associates. Mr. Pickus served
as the Assistant Secretary of Trump AC Holding from April 1994 until February
1998. Since February 1998, Mr. Pickus has served as the Secretary of Trump AC
Holding. Mr. Pickus has been Secretary and a director of Trump AC Funding since
its formation in January 1996 and Secretary and a director of Funding II and
Funding III since their formation in November 1997. Mr. Pickus has been the
Executive Vice President and Secretary of Trump Indiana since its inception. Mr.
Pickus has been the Executive Vice President of Corporate and Legal Affairs of
Taj Associates since February 1995, and a Director of THCR Holding Corp. and
THCR/ LP since November 1995. He was the Senior Vice President and Secretary of
Castle Funding from June 1988 to December 1993 and General Counsel of Castle
Associates from June 1985 to December 1993. Mr. Pickus served as the Assistant
Secretary of TACC until February 1998. Since February 1998, Mr. Pickus has
served as the Secretary of TACC. Mr. Pickus was also Secretary of TCHI from
October 1991 until December 1993. Mr. Pickus is a director of TCHI, and has
served as the Assistant Secretary of TCHI since February 1998. Mr. Pickus has
been the Executive Vice President of Corporate and Legal Affairs of Castle
Associates since February 1995, Secretary of Castle Associates since February
1996 and a member of the Board of Partner Representatives of Castle Associates
since October 1995. Mr. Pickus is
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currently the Secretary of THCR Holding Corp., has been the Vice President,
Secretary and Director of THCR Enterprises since January 1997 and has been
Executive Vice President of TCS since its inception.
R. BRUCE MCKEE-- Mr. McKee, 52 years old, has served as the Senior Vice
President of Corporate Finance of THCR, Trump AC Funding and TACC since June
1997. Mr. McKee has served as the Senior Vice President of Corporate Finance of
Funding II and Funding III since December 1997. Mr. McKee served as President
and Chief Operating Officer of Castle Associates from October 1996 until June
1997. Mr. McKee was acting Chief Operating Officer of Taj Associates from
October 1995 through October 1996, Senior Vice President, Finance of Taj
Associates from July 1993 through October 1996 and Vice President, Finance of
Taj Associates from September 1990 through June 1993. Mr. McKee has been the
Assistant Treasurer of THCR/LP, Realty Corp. and TCI since September 1991 Mr.
McKee served as the Assistant Treasurer of THCR Holding Corp. from September
1991 until February 1998. Previously, Mr. McKee was Vice President of Finance of
Elsinore Shore Associates, the owner and operator of the Atlantis Casino Hotel
Atlantic City, from April 1984 to September 1990 and Treasurer of Elsinore
Finance Corp., Elsinore of Atlantic City and Elsub Corp. from June 1986 to
September 1990. The Atlantis Casino Hotel now constitutes the portion of Trump
Plaza known as Trump World's Fair.
JOHN P. BURKE--Mr. Burke, 50 years old, served as the Senior Vice President
of Corporate Finance of THCR from January 1996 until June 1997. Mr. Burke has
served as the Senior Vice President of THCR since June 1997. Mr. Burke has been
Senior Vice President of Corporate Finance of THCR Holdings and THCR Funding
since January 1996, and has been the Corporate Treasurer of THCR, THCR Holdings
and THCR Funding since their formation in 1995. He has also been Corporate
Treasurer of Plaza Associates and Taj Associates since October 1991. Mr. Burke
has been the Treasurer of Trump Indiana since its formation. Mr. Burke has been
Treasurer of Trump AC Funding since its formation in January 1996 and Treasurer
of Funding II and Funding III since their formation in November 1997 Mr. Burke
has been Treasurer of TACC since February 1998. Mr. Burke was a Director of
THCR/LP and THCR Holding Corp. from October 1991 to April 1996 and was Vice
President of THCR/LP until June 1995. Mr. Burke has served as the Assistant
Treasurer of THCR Holding Corp. and THCR/LP since February 1998. Mr. Burke has
been the Corporate Treasurer of Castle Associates since October 1991, the Vice
President of Castle Associates, Castle Funding, TCI-II and TCHI since December
1993, a member of the Board of Partner Representatives of Castle Associates
since March 1997 and the Vice President-Finance of The Trump Organization since
September 1990. Mr. Burke was an Executive Vice President and Chief
Administrative Officer of Imperial Corporation of America from April 1989
through September 1990. Mr. Burke has been the Vice President and Treasurer of
THCR Enterprises since January 1997.
WALLACE B. ASKINS--Mr. Askins, 67 years old, has been a director of THCR and
THCR Funding since June 1995. He has also been a director of Trump AC Holding
since April 11, 1994, and was a partner representative of the Board of Partner
Representatives of Castle Associates from May 1992 to June 1995. Mr. Askins has
been a director of Trump AC Funding since April 1996 and a director of Funding
II and Funding III since December 1997. Mr. Askins served as a director of
TCI-II from May 1992 to December 1993. From June 1984 to November 1992, Mr.
Askins served as Executive Vice President, Chief Financial Officer and as a
director of Armco Inc. Mr. Askins also serves as a director of EnviroSource,
Inc.
DON M. THOMAS--Mr. Thomas, 67 years old, has been a director of THCR and
THCR Funding since June 1995. Mr. Thomas has been a director of Trump AC Funding
since April 1996 and a director of Funding II and Funding III since December
1997. He has also been the Senior Vice President of Corporate Affairs of the
Pepsi-Cola Bottling Co. of New York since January 1985. Mr. Thomas was the
acting Chairman, and a Commissioner, of the CRDA from 1985 through 1987, and a
Commissioner of the CCC from 1980 through 1984 during a portion of which time
Mr. Thomas served as acting Chairman of the CCC. Mr. Thomas was a director of
Trump Plaza GP until June 1993 and has been a director of Trump AC Holding since
June 1993. Mr. Thomas is an attorney licensed to practice law in the State of
New York.
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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 TRUMP PLAZA
Trump AC is the managing general partner of Plaza Associates. Trump AC
Holding is the managing general partner of Trump AC. The Board of Directors of
Trump AC Holding consists of Messrs. Trump, Ribis, Wallace B. Askins and Don M.
Thomas.
Set forth below are the names, ages, positions and offices held with Plaza
Associates and a brief account of the business experience during the past five
years of each of the executive officers of Plaza Associates other than those who
are also directors or executive officers of Trump AC, Trump AC Funding, Funding
II 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 THE TAJ MAHAL
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, Trump AC Funding, Funding II or Funding III.
RODOLFO E. PRIETO--Mr. Prieto, 54 years old, has been Chief Operating
Officer of Taj Associates since October 1996. Mr. Prieto has been Vice President
of Trump AC Holding since February 1998. From December 1995 to October 1996, Mr.
Prieto was the Executive Vice President, Operations of Taj Associates. Prior to
joining the Taj Mahal, Mr. Prieto was Executive Vice President and Chief
Operating Officer for Elsinore Corporation from May 1995 to November 1995;
Executive Vice President in charge of the development of the Mojave Valley
Resort for Elsinore Corporation from December 1994 to April 1995 and Executive
Vice President and Assistant General Manager for the Tropicana Resort and Casino
from September 1986 to November 1994.
LARRY W. CLARK--Mr. Clark, 53 years old, has been Executive Vice President,
Casino Operations of Taj Associates since November 1991, Senior Vice President,
Casino Operations of Taj Associates from
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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
Vice President, International Marketing of Taj Associates. Prior to joining Taj
Associates, Mr. Niglio was Executive Vice President of International
Marketing/Player Development for Castle Associates from 1993 until 1995. Prior
to that, Mr. Niglio served as Senior Vice President, Marketing of Caesar's World
Marketing Corporation from 1991 until 1993.
PATRICK J. O'MALLEY--Mr. O'Malley, 43 years old, has been the Executive Vice
President of Finance of Taj Associates since October 1996. Prior to joining the
Taj Mahal, Mr. O'Malley was the Executive Vice President of Hotel Operations of
Plaza Associates from September 1995 to October 1996. Prior to joining Trump
Plaza, from September 1994 until September 1995, Mr. O'Malley was President of
The Plaza Hotel in New York City. From December 1989 until September 1994, Mr.
O'Malley was the Vice President of Finance of The Plaza Hotel in New York City.
Prior to joining The Plaza Hotel in New York City, from 1986 to 1989, Mr.
O'Malley was a Regional Financial Controller for the Four Seasons Hotel and
Resorts, Ltd. From 1979 to 1986, Mr. O'Malley worked in the Middle East and
Europe as Hotel Controller for Marriott International Hotels.
LORETTA I. VISCOUNT--Ms. Viscount, 38 years old, has been Assistant
Secretary of Trump AC Holding since February 1998, Vice President of Legal
Affairs of Taj Associates since January 1997, Executive Director of Legal
Affairs for Taj Associates from May 1996 to January 1997; and Executive Director
of Legal Affairs for Castle Associates from September 1987 to May 1996. Prior to
that, Ms. Viscount served as in-house counsel to the Claridge Hotel and Casino
and had been engaged in the private practice of law since 1982.
All of the persons listed above are citizens of the United States and are
licensed by the CCC.
Rodolfo E. Prieto was an Executive Vice President and the Chief Operating
Officer for Elsinore Corporation when it filed a petition for reorganization
under Chapter 11 of the Bankruptcy Code on October 31, 1995. Elsinore
Corporation filed a plan of reorganization on February 28, 1996, which became
effective on February 28, 1997.
MANAGEMENT OF TCS
Set forth below are the names, ages, positions and offices held with TCS and
a brief account of the business experience during the past five years of each of
the executive officers of TCS, other than those who are directors and officers
of Trump AC or Trump AC Funding.
JOSEPH A. FUSCO--Mr. Fusco, 53 years old, has been Executive Vice-President
for Government Relations & Regulatory Affairs of THCR since June 1996 and of TCS
since July 1996. From August 1985 to June 1996, he practiced law as a partner in
various Atlantic City law firms specializing in New Jersey casino regulatory,
commercial and administrative law matters, most recently from January 1994 to
June 1996 as a partner in the law firm of Sterns & Weinroth. Mr. Fusco
previously served as Atlantic County Prosecutor, a Gubernatorial appointment,
from April 1981 to July 1985 and as Special Counsel for
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Licensing for the CCC from the inception of that agency in September 1977 to
March 1981. He has been admitted to practice law in the State of New Jersey
since 1969.
FRANCIS X. MCCARTHY, JR.--Mr. McCarthy, 45 years old, has been the Executive
Vice President of Finance of TCS since October 1996. Mr. McCarthy was Vice
President of Finance and Accounting of Trump Plaza GP from October 1992 until
June 1993, Senior Vice President of Finance and Administration of Plaza
Associates from August 1990 to June 1994 and Executive Vice President of Finance
and Administration of Plaza Associates from June 1994 to October 1996. Mr.
McCarthy previously served in a variety of financial positions for Greate Bay
Hotel and Casino, Inc. from June 1980 through August 1990.
KEVIN S. SMITH--Mr. Smith, 41 years old, has been the Vice President of
Corporate Litigation of TCS since October 1996. Mr. Smith was the Vice
President, General Counsel of Plaza Associates from February 1995 to October
1996. Mr. Smith was previously associated with Cooper Perskie April Niedelman
Wagenheim & Levenson, an Atlantic City law firm specializing in trial
litigation. From 1989 until February 1992, Mr. Smith handled criminal trial
litigation for the State of New Jersey, Department of Public Defender, assigned
to the Cape May and Atlantic County Conflict Unit.
All of the persons listed above are citizens of the United States and are
licensed by the CCC.
ITEM 11. EXECUTIVE COMPENSATION
Plaza Associates and Taj Associates do not offer their executive officers
stock option or stock appreciation right plans, long-term incentive plans or
defined benefit pension plans.
The following table sets forth compensation paid or accrued during the years
ended December 31, 1997, 1996 and 1995 to the Chairman of the Board of Trump AC
Holding, the Chief Executive Officer of Plaza Associates and Taj Associates,
each of the four most highly compensated executive officers of Plaza Associates
and Taj Associates whose salary and bonuses exceeded $100,000 for the year ended
December 31, 1997.
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SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-----------------------------------------------------
NAME AND OTHER ANNUAL ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) COMPENSATION
- ---------------------------------------------- --------- ------------ ---------- ---------------- -------------
<S> <C> <C> <C> <C> <C>
Donald J. Trump............................... 1997 $ -- $ -- -- $ --
Chairman of the Board, President & Treasurer 1996 -- -- -- 1,031,000(2)
of Trump AC Holding 1995 -- -- -- 2,743,000(2)
Nicholas L. Ribis............................. 1997 $ 1,098,076 $ -- $ -- $ 2,613(3)
Chief Executive Officer of Plaza Associates 1996 998,250 -- -- 1,188(3)
and Taj Associates 1995 1,075,881 -- -- 1,294(3)
Barry J. Cregan............................... 1997 $ 766,632 $ -- $ -- $ 4,000(3)
President and Chief Operating Officer of 1996 744,813 28,500 -- 4,737(3)
Plaza Associates 1995 637,000 284,800 -- 4,576(3)
Rudolfo Prieto(4)............................. 1997 $ 459,116 $ -- $ -- $ 4,000(3)
President and Chief Operating Officer Casino 1996 316,106 -- -- 3,800(3)
Operations of Taj Associates 1995 17,673 -- -- --
Larry Clark................................... 1997 $ 340,538 $ 235,476 $ -- $ 4,000(3)
Executive V.P. Casino Operations of Taj 1996 309,400 109,700 -- 3,800(3)
Associates 1995 276,611 124,000 -- 3,696(3)
Nicholas L. Niglio(5)......................... 1997 $ 332,515 $ 287,563 $ -- $ 4,000(3)
Senior V.P. Casino Marketing of Taj 1996 278,984 186,916 $ -- 3,800(3)
Associates 1995 228,792 100,236 -- 3,696(3)
</TABLE>
- ------------------------
(1) Represents the dollar value of annual compensation not properly categorized
as salary or bonus, including amounts reimbursed for income taxes and
directors' fees. Following Commission rules, perquisites and other personal
benefits are not included in this table if the aggregate amount of that
compensation is the lesser of either $50,000 or 10% of the total of salary
and bonus for that officer.
(2) The amounts listed represent (i) amounts paid by Plaza Associates to Trump
Plaza Management Corp. ("TPM"), a corporation beneficially owned by Trump,
for services provided under a services agreement (the "TPM Services
Agreement") and (ii) amounts paid pursuant to the Taj Services Agreement. In
addition, Trump was reimbursed $483,000 and $549,000 in 1996 and 1995,
respectively, for expenses incurred pursuant to the TPM Services Agreement
and the Taj Services Agreement. The TPM Services Agreement and the Taj
Services Agreement both expired in 1996. Trump is not an employee of Plaza
Associates or Taj Associates.
(3) Represents vested and unvested contributions made by Plaza Associates, Taj
Associates and/or TCS under the Trump Plaza Hotel and Casino Retirement
Savings Plan, the Trump Taj Mahal Retirement Savings Plan and Trump Casino
Services Retirement Savings Plan, respectively. Funds accumulated for an
employee under these plans consisting of a certain percentage of the
employee's compensation plus the employer matching contributions equaling
50% of the participant's contributions, are retained until termination of
employment, attainment of age 59 1/2 or financial hardship, at which time
the employee may withdraw his or her vested funds.
(4) Mr. Prieto commenced employment with Taj Associates in December 1995.
(5) Mr. Niglio commenced employment with Taj Associates in February 1995.
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EMPLOYMENT AGREEMENTS
As a result of the June 1995 Offerings, THCR and THCR Holdings entered into
a revised employment agreement with Mr. Ribis (the "Ribis THCR Agreement"),
pursuant to which he agreed to serve as President and Chief Executive Officer of
THCR and Chief Executive Officer of THCR Holdings. The term of the Ribis THCR
Agreement is five years. Under the Ribis THCR Agreement, Mr. Ribis's annual
salary is $1,996,500. Mr. Ribis's annual salary is paid in equal parts by THCR,
Plaza Associates, Taj Associates and Castle Associates. In the event Mr. Ribis's
employment is terminated by THCR other than for "cause" or if he incurs a
"constructive termination without cause," Mr. Ribis will receive a severance
payment equal to one year's base salary, and the phantom stock units and options
will become fully vested. The Ribis THCR Agreement defines (a) "cause" as Mr.
Ribis's (i) conviction of certain crimes, (ii) gross negligence or willful
misconduct in carrying out his duties, (iii) revocation of his casino key
employee license or (iv) material breach of the agreement, and (b) "constructive
termination without cause" as the termination of Mr. Ribis's employment at his
initiative following the occurrence of certain events, including (i) a reduction
in compensation, (ii) failure to elect Mr. Ribis as Chief Executive Officer of
THCR, (iii) failure to elect Mr. Ribis a director of THCR or (iv) a material
diminution of his duties. The phantom stock units will also automatically vest
upon the death or disability of Mr. Ribis. The Ribis THCR Agreement also
provides for up to an aggregate of $2.0 million of loans to Mr. Ribis to be used
by him to pay his income tax liability in connection with stock options, phantom
stock units and stock bonus awards, which loans will be forgiven, including both
principal and interest, in the event of a "change of control." The Ribis THCR
Agreement defines "change of control" as the occurrence of any of the following
events: (i) any person (other than THCR Holdings, Trump or an affiliate of
either) becomes a beneficial owner of 50% or more of the voting stock of THCR,
(ii) the majority of the Board of Directors of THCR consists of individuals that
were not directors on June 12, 1995 (the "June 12 Directors"), PROVIDED,
HOWEVER, that any person who becomes a director subsequent to June 12, 1995,
shall be considered a June 12 Director if his election or nomination was
supported by three-quarters of the June 12 Directors, (iii) THCR adopts and
implements a plan of liquidation or (iv) all or substantially all of the assets
or business of THCR are disposed of in a sale or business combination in which
shareholders of THCR would not beneficially own the same proportion of voting
stock of the successor entity. The Ribis THCR Agreement also provides certain
demand and piggyback registration rights for THCR Common Stock issued pursuant
to the foregoing. Pursuant to the Ribis THCR Agreement, Mr. Ribis has agreed
that upon termination of his employment other than for "cause" or following a
"change of control," he would not engage in any activity competitive with THCR
for a period of up to one year.
Mr. Ribis had an employment agreement with Taj Associates pursuant to which
Mr. Ribis acted as Chief Executive Officer of Taj Associates. This agreement has
been terminated in connection with the Taj Acquisition and the Castle
Acquisition and now Mr. Ribis is compensated for his services to Taj Associates
under the Ribis THCR Agreement.
Plaza Associates had an employment agreement with Barry J. Cregan (the
"Cregan Agreement") pursuant to which Mr. Cregan acted as President and Chief
Operating Officer of Plaza Associates. The Cregan Agreement, which expired on
December 31, 1997, provided for an annual base salary of $750,000. Pursuant to
the Cregan Agreement, Mr. Cregan devoted all of his professional time to Plaza
Associates. Subsequent to the expiration of the Cregan Agreement, Mr. Cregan has
continued to act as President and Chief Operating Officer of Plaza Associates.
Plaza Associates has an employment agreement with James A. Rigot (the "Rigot
Agreement") pursuant to which Mr. Rigot acts as Executive Vice President of
Casino Operations of Plaza Associates. The Rigot Agreement, which expires on May
4, 2000, provides for an annual base salary of $300,000, with any bonus and
increases in salary provided in Plaza Associates' sole and absolute discretion,
however, at no time shall such salary be less than $300,000. Pursuant to the
Rigot Agreement, Mr. Rigot devotes all of his professional time to Plaza
Associates. In the event that Plaza Associates terminates the Rigot Agreement
(i) because Mr. Rigot's CCC license is terminated or (ii) because Mr. Rigot has
committed an act
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constituting Cause (defined as a breach by Mr. Rigot of any provision of the
Rigot Agreement or any employee conduct rules, an act of dishonesty, the
deliberate and intentional refusal by Mr. Rigot to perform his duties under the
Rigot Agreement, certain disabilities or death), Plaza Associates shall pay to
Mr. Rigot all compensation earned to the date of such termination. In the event
that Plaza Associates terminates the Rigot Agreement for any other reason, Plaza
Associates shall offer to pay Mr. Rigot an amount equal to twelve months of Mr.
Rigot's then current salary, which offer, if accepted, will constitute complete
satisfaction of all obligations and liabilities arising out of the Rigot
Agreement. So long as Plaza Associates continues to pay Mr. Rigot's salary
pursuant to the Rigot Agreement, Mr. Rigot shall not accept employment, either
as an employee, consultant or independent contractor, for or on behalf of any
other casino hotel located in Atlantic City, New Jersey.
Plaza Associates has an employment agreement with Fred Buro (the "Buro
Agreement") pursuant to which Mr. Buro acts as Executive Vice President of
Marketing of Plaza Associates. The Buro Agreement, which expires on May 11,
2000, provides for an annual base salary of $300,000, with any bonus and
increases in salary provided in Plaza Associates' sole and absolute discretion,
however, at no time shall such salary be less than $300,000. Pursuant to the
Buro Agreement, Mr. Buro devotes all of his professional time to Plaza
Associates. In the event that Plaza Associates terminates the Buro Agreement (i)
because Mr. Buro's CCC license is terminated or (ii) because Mr. Buro has
committed an act constituting Cause (defined as a breach by Mr. Buro of any
provision of the Buro Agreement or any employee conduct rules, an act of
dishonesty, the deliberate and intentional refusal by Mr. Buro to perform his
duties under the Buro Agreement, certain disabilities or death), Plaza
Associates shall pay to Mr. Buro all compensation earned to the date of such
termination. In the event that Plaza Associates terminates the Buro Agreement
for any other reason, Plaza Associates shall offer to pay Mr. Buro an amount
equal to twelve months of Mr. Buro's then current salary, which offer, if
accepted, will constitute complete satisfaction of all obligations and
liabilities arising out of the Buro Agreement. So long as Plaza Associates
continues to pay Mr. Buro's salary pursuant to the Buro Agreement, Mr. Buro
shall not accept employment, either as an employee, consultant or independent
contractor, for or on behalf of any other casino hotel located in Atlantic City,
New Jersey.
The Rigot Agreement and the Buro Agreement provide for discretionary
bonuses. Factors considered by Plaza Associates in the awarding of all
discretionary bonuses generally are the attainment by Plaza Associates of
budgeted or forecasted goals and the individual's perceived contribution to the
attainment of such goals.
TCS has an employment agreement with Kevin S. Smith, Esq. (the "Smith
Agreement") pursuant to which Mr. Smith acts as the Vice President of Corporate
Litigation & Risk Management of TCS. The Smith Agreement, which expires on
December 31, 2000, provides for a bonus of $25,000 upon signing and an annual
base salary of $160,000, with any bonus and increases in salary provided in
TCS's sole and absolute discretion. Pursuant to the Smith Agreement, Mr. Smith
devotes all of his professional time to TCS. In the event that TCS terminates
the Smith Agreement because Mr. Smith has committed an act constituting Cause
(defined as the denial or revocation of Mr. Smith's CCC license, conviction of a
disqualifying crime, breach of trust, certain disabilities or death), TCS shall
pay to Mr. Smith all compensation earned to the date of such termination.
Taj Associates has an employment agreement with Rodolfo E. Prieto (the
"Prieto Agreement") pursuant to which he serves as President and Chief Operating
Officer of Taj Associates. The Prieto Agreement, which expires December 31,
2000, provides for a bonus of $100,000 upon signing, an annual salary of
$550,000 through July 1998, $600,000 through July 1999, and $650,000 through
expiration, and, in addition, an annual bonus at the sole discretion of Taj
Associates. Pursuant to the Prieto Agreement, Mr. Prieto has agreed that in the
event the agreement is terminated by him, he would not solicit or contact,
directly or through any other casino in Atlantic City, any customers whom he
developed during his employment with Taj Associates for a period of one year.
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Taj Associates has an agreement with Patrick O'Malley (the "O'Malley
Agreement") pursuant to which Mr. O'Malley serves as Executive Vice President of
Finance and Accounting of Taj Associates. The O'Malley Agreement, which expires
on October 13, 1999, provides for an annual base salary of $250,000 per year and
an annual bonus at the sole discretion of Taj Associates. In the event Taj
Associates terminates the O'Malley Agreement because Mr. O'Malley's casino
license is revoked, terminated and/or suspended for more than 30 days or for
Cause (defined as a breach by Mr. O'Malley of the material provisions of the
O'Malley Agreement or an act of dishonesty), Taj Associates is required to pay
Mr. O'Malley an amount equal to his salary earned to the date of such
termination. In the event Mr. O'Malley terminates the O'Malley Agreement for
Good Cause (defined as the assignment to Mr. O'Malley, without his consent, of
any duties inconsistent with the position of Executive Vice President of Finance
and Accounting, a demotion or change in Mr. O'Malley's title or office, any
removal from his position or a change in control of Taj Associates, except in
connection with the termination of Mr. O'Malley's employment upon revocation of
his casino key employee license, death or disability), or if Taj Associates
terminates the O'Malley Agreement without Cause, Taj Associates shall pay Mr.
O'Malley all compensation, reimbursements and benefits provided for under the
O'Malley Agreement (i) due on the date of such termination and (ii) payable from
such date of termination through the expiration date of the O'Malley Agreement,
which amount shall not be less than one year annual base salary then payable,
and any bonuses accrued to such date of termination. Upon termination of the
O'Malley Agreement, Mr. O'Malley will not accept employment, either as an
employee, consultant or independent contractor, for or on behalf of any other
casino hotel located within a 300-mile radius of Atlantic City, New Jersey.
Taj Associates has an employment agreement with Larry W. Clark (the "Clark
Agreement") pursuant to which he serves as Executive Vice President, Casino
Operations of Taj Associates. The Clark Agreement, which expires on June 30,
2001, provides for a bonus of $50,000, net of taxes, upon signing, an annual
salary of $350,000 and, in addition, a minimum guaranteed bonus of at least
$125,000 per annum. Pursuant to the Clark Agreement, Mr. Clark has agreed that
in the event the agreement is terminated by him for any reason or by Taj
Associates for cause, he would not engage in employment for or on behalf of any
other casino hotel located in Atlantic City for a period of one year.
Taj Associates has an employment agreement with Nicholas J. Niglio (the
"Niglio Agreement") pursuant to which he serves as Executive Vice President,
International Marketing of Taj Associates. The Niglio Agreement, which expires
on June 30, 2001, provides for a bonus of $100,000, net of taxes, upon signing,
an annual salary of $350,000 and, in addition, a minimum guaranteed bonus of
$100,000, net of taxes. Pursuant to the Niglio Agreement, Mr. Niglio has agreed
that upon termination of his employment he would not solicit or contact,
directly or through any other casino in Atlantic City, any customers whom he had
developed during his employment with Taj Associates for a period of one year.
Taj Associates may terminate the employment agreements of Messrs. Clark,
Prieto and Niglio in its sole discretion, without cause. If Mr. Clark's
employment agreement is terminated without cause, Taj Associates would be
obligated to pay Mr. Clark the greater of one year's salary or his salary for
the number of months remaining in the agreement, each at his then current
salary. If Mr. Prieto's agreement is terminated without cause, Taj Associates
would be obligated to pay Mr. Prieto for the number of months remaining in the
agreement plus expenses to move to Nevada. If Mr. Niglio's employment agreement
is terminated without cause, Taj Associates would be obligated to pay Mr. Niglio
the lesser of twelve month's salary or his salary for the number of months
remaining in the agreement, each at his then current salary. Taj Associates may
also terminate the Clark Agreement, the Prieto Agreement and the Niglio
Agreement (a) in the event that the CCC license of Mr. Clark, Mr. Prieto or Mr.
Niglio, respectively, is revoked or terminated or (b) for "cause," which is
defined in each of the agreements as (i) a material breach of the agreement or
of any employee conduct rules, (ii) dishonesty, (iii) intentional refusal to
perform duties or to properly perform them upon notice, (iv) alcohol or drug
abuse or (v) disability or death.
The Prieto Agreement and the O'Malley Agreement provide for discretionary
bonuses. Factors considered by Taj Associates in the awarding of all
discretionary bonuses generally are the attainment by
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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 Trump AC Funding, Funding II and Funding III
currently serve as an officer or on the Board of Directors of THCR and receive
no additional compensation for their service with Trump AC Funding, Funding II,
and 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.
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
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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.
Taj Associates and Trump were parties to the Taj Services Agreement, which
became effective in April 1991, and which provided that Trump would render to
Taj Associates marketing, advertising, promotional and related services with
respect to the business operations of Taj Associates through December 31, 1999.
In consideration for the services to be rendered, Taj Associates paid an annual
fee (the "Annual Fee") equal to 1% of Taj Associates' earnings before interest,
taxes and depreciation less capital expenditures for such year, with a minimum
base fee of $500,000 per annum. During the year 1995, and the period from
January 1, 1996 to April 17, 1996, Trump earned approximately $1.7 million and
$0.4 million, respectively, in respect of the Annual Fee, including amounts paid
to a third party pursuant to an assignment agreement. In addition, during the
year 1995, and the period from January 1, 1996 to April 17, 1996, Taj Associates
reimbursed Trump $261,000 and $148,000, respectively, for expenses pursuant to
the Taj Services Agreement. Taj Associates agreed to indemnify Trump from and
against any licensing fees arising out of his performance of the Taj Services
Agreement, and against any liability arising out of his performance of the Taj
Services Agreement, other than that due to his gross negligence or willful
misconduct. The Taj Services Agreement was terminated upon consummation of the
Taj Acquisition on April 17, 1996.
On April 1, 1991, in connection with the Taj Services Agreement, Taj
Associates and Trump entered into an Amended and Restated License Agreement (the
"Taj License Agreement") which amended and restated an earlier license agreement
between the parties. Pursuant to the Taj License Agreement, Taj Associates had
the non-exclusive right to use the name and likeness of Trump, and the exclusive
right to use the name and related marks and designs of the Taj Mahal
(collectively, the "Taj Marks"), in its advertising, marketing and promotional
activities through December 31, 1999. Upon consummation of the Taj Acquisition,
the Taj License Agreement was terminated and the Taj Marks were licensed to THCR
under the License Agreement.
OTHER RELATIONSHIPS. The Commission requires registrants to disclose the
existence of any other corporation in which both (i) an executive officer of the
registrant serves on the board of directors and/or compensation committee, and
(ii) a director of the registrant serves as an executive officer. Messrs. Ribis,
Pickus and Burke, executive officers of THCR, have served on the boards of
directors of other entities in which members of the Board of Directors of THCR
(namely, Messrs. Trump and Ribis) served and continue to serve as executive
officers. Management believes that such relationships have not affected the
compensation decisions made by the Board of Directors of THCR in the last fiscal
year.
Trump is the sole director of TACC, a general partner of Plaza Associates,
of which Messrs. Trump, Ribis and Pickus are executive officers. Messrs. Trump
and Ribis also serve on the Board of Directors of
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Trump AC Holding, of which Messrs. Trump, Ribis and Burke are also executive
officers. Trump is not compensated by such entities for serving as an executive
officer, however, he has entered into a personal services agreement with Plaza
Associates and THCR. Messrs. Ribis and Burke are not compensated by the
foregoing entities, however, they are compensated by Plaza Associates for their
service as executive officers.
Messrs. Ribis, Pickus and Burke serve on the Board of Directors of THCR
Holding Corp., which held, prior to April 17, 1996, an indirect equity interest
in Taj Associates, of which Mr. Trump is an executive officer. Such persons also
serve on the Board of Directors of THCR/LP, the former managing general partner
of Taj Associates, of which Messrs. Trump and Ribis are executive officers. See
"--Employment Agreements."
Mr. Ribis also serves on the Board of Directors of Realty Corp., which,
prior to the Taj Acquisition, leased certain real property to Taj Associates, of
which Trump is an executive officer. Trump, however, does not receive any
compensation for serving as an executive officer of Realty Corp.
Messrs. Ribis, Pickus and Burke are members of the Board of Partner
Representatives of Castle Associates and members of the Board of Directors of
TCHI, the general partner of Castle Associates of which Messrs. Ribis, Pickus
and Burke are executive officers. In addition, Trump is the sole director and an
officer of Castle Funding. Messrs. Ribis, Pickus and Burke received no
compensation from these entities other than from Castle Associates for their
services as executive officers. Trump is not compensated by these entities other
than pursuant to the Castle Services Agreement.
Messrs. Trump and Ribis serve on the Board of Directors of THCR, of which
Trump is Chairman of the Board. Messrs. Ribis, Pickus and Burke are executive
officers of THCR and are compensated for their services by THCR.
John Barry, Trump's brother-in-law, is a partner of Barry & McMoran, a New
Jersey law firm which provides, from time to time, legal services to Plaza
Associates and Taj Associates.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
TRUMP AC FUNDING. Through its ownership of 100% of Trump AC and Trump AC
Holding, THCR Holdings has owned 100% of Trump AC Funding's common stock since
its formation on January 30, 1996.
FUNDING II. Through its ownership of 100% of Trump AC and Trump AC Holding,
THCR Holdings has owned 100% of Funding II's common stock since its formation on
November 18, 1997.
FUNDING III. Through its ownership of 100% of Trump AC and Trump AC
Holding, THCR Holdings has owned 100% of Funding II's common stock since its
formation on November 18, 1997.
TRUMP AC. Through its ownership of 100% of Trump AC Holding, THCR Holdings
currently beneficially owns 100% of Trump AC.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Affiliate party transactions are governed by the provisions of the TAC I
Note Indenture, the TAC II Note Indenture and the TAC III Note Indenture which
provisions generally require that such transactions be on terms as favorable as
would be obtainable from an unaffiliated party, and require the approval of a
majority of the independent directors of Trump AC Funding, Funding II or Funding
III, as applicable.
Trump, Ribis and certain affiliates have engaged in certain related party
transactions with respect to THCR and its subsidiaries. See "Executive
Compensation--Compensation Committee Interlocks and Insider
Participation--Certain Related Party Transactions--Plaza Associates," "--Taj
Associates" and "-- Other Relationships."
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Plaza Associates and Taj Associates have joint insurance coverage with
Castle Associates and other entities affiliated with Trump, for which the annual
premiums paid by Plaza Associates and Taj Associates were approximately $3.0
million for the year ended December 31, 1997.
Plaza Associates leased portions of its Egg Harbor Parcel to Castle
Associates. Lease payments by Castle Associates to Plaza Associates totaled
$5,000 in 1996. Castle Associates did not make any lease payments to Plaza
Associates in 1997.
INDEMNIFICATION AGREEMENTS. In addition to the indemnification provisions
in THCR's and its subsidiaries' employment agreements (see "Executive
Compensation--Employment Agreements"), certain former and current directors of
Plaza Funding entered into separate indemnification agreements in May 1992 and
June 1993 with Plaza Associates pursuant to which such persons are afforded the
full benefits of the indemnification provisions of the partnership agreement
governing Plaza Associates. Plaza Associates also entered into an
indemnification trust agreement in November 1992 with Midlantic (the
"Indemnification Trustee") pursuant to which the sum of $100,000 was deposited
by Plaza Associates with the Indemnification Trustee for the benefit of the
directors of Plaza Funding and certain former directors of Trump Plaza GP to
provide a source for indemnification for such persons if Plaza Associates, Plaza
Funding or Trump Plaza GP, as the case may be, fails to immediately honor a
demand for indemnification by such persons. The indemnification agreements with
the directors of Plaza Funding and directors of Trump Plaza GP were amended in
June 1993 to provide, among other things, that Plaza Associates would (i) not
terminate, amend or modify certain agreements in a manner which may adversely
affect the rights or interests of such directors unless an additional sum of
$600,000 was first deposited with the Indemnification Trustee, and (ii) maintain
directors' and officers' insurance covering such persons during the ten-year
term (subject to extension) of the indemnification agreements; PROVIDED,
HOWEVER, that if such insurance would not be available on a commercially
practicable basis, Plaza Associates could, in lieu of obtaining such insurance,
annually deposit an amount in a trust fund equal to $500,000 for the benefit of
such directors; PROVIDED FURTHER that deposits relating to the failure to obtain
such insurance shall not exceed $2.5 million. Such directors are covered by
directors' and officers' insurance maintained by Plaza Associates. In June 1993,
an additional sum of $600,000 was deposited with the Indemnification Trustee for
the benefit of the directors of Plaza Funding and certain former directors of
Trump Plaza GP.
In connection with the Taj Acquisition, Trump AC has agreed to provide to
the former officers and Directors of THCR Holding Corp. and THCR/LP (the "Taj
Indemnified Parties"), including Messrs. Ribis, Pickus and Burke,
indemnification as provided in the THCR's Amended and Restated Certificate of
Incorporation and Amended and Restated By-Laws until April 17, 2002. In
addition, THCR agreed, and agreed to cause THCR Holding Corp. and THCR/LP to
agree, that until April 17, 2002, unless otherwise required by law, the
Certificate of Incorporation and By-Laws of THCR Holding Corp. and THCR/LP shall
not be amended, repealed or modified to reduce or limit the rights of indemnity
afforded to the former directors, officers and employees of THCR Holding Corp.
and THCR/LP or the ability of THCR Holding Corp. or THCR/LP to indemnify such
persons, nor to hinder, delay or make more difficult the exercise of such rights
of indemnity or the ability to indemnify. In addition, Trump AC has also agreed
to purchase and maintain in effect, until April 17, 2002, directors' and
officers' liability insurance policies covering the Taj Indemnified Parties on
terms no less favorable than the terms of the then current insurance policies'
coverage or, if such directors' and officers' liability insurance is unavailable
for an amount no greater than 150% of the premium paid by THCR Holding Corp. (on
an annualized basis) for directors' and officers' liability insurance during the
period from January 1, 1996, to April 17, 1996, Trump AC has agreed to obtain as
much insurance as can be obtained for a premium not in excess (on an annualized
basis) of such amount.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(A) FINANCIAL STATEMENTS. See the index immediately following the signature
page.
(B) REPORTS ON FORM 8-K.
The Registrants did not file any reports on Form 8-K during the year ended
December 31, 1997.
(C) EXHIBITS
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<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(25) Certificate of Incorporation of Trump Atlantic City Funding II, Inc.
3.11(25) By-Laws of Trump Atlantic City Funding II, Inc.
3.12(24) Certificate of Incorporation of Trump Atlantic City Funding III, Inc.
3.13(24) By-Laws of Trump Atlantic City Funding III, Inc.
3.14(26) Certificate of Incorporation of Trump Atlantic City Corporation, as amended.
3.15(26) By-Laws of Trump Atlantic City Corporation.
3.16(25) Certificate of Formation of Trump Casino Services, L.L.C.
3.17(25) Operating Agreement of Trump Casino Services, L.L.C.
3.18(25) Certificate of Formation of Trump Communications, L.L.C.
3.19(25) Operating Agreement of Trump Communications, L.L.C.
3.20(26) 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(26) 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.).
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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.
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(26) 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.
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4.32(25) 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(24) Registration Rights Agreement, dated as of December 10, 1997, by and among Trump
Atlantic City Associates and Trump Atlantic City Funding III, as issuers, Trump
Atlantic City Corporation, Trump Casino Services, L.L.C., Trump Communications,
L.L.C., Trump Plaza Associates and Trump Taj Mahal Associates, as guarantors,
and Donaldson, Lufkin & Jenrette Securities Corporation, as initial purchaser.
4.35(25) 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(25) 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(25) Assignment of Leases and Rents by Trump Plaza Associates as assignor and U.S.
Bank National Association (as Collateral Agent) as assignee.
4.38(25) Assignment of Leases and Rents by Trump Taj Mahal Associates as assignor and
U.S. Bank National Association (as Collateral Agent) as assignee.
4.39(25) Debtors' Consent by Trump Atlantic City Associates, Trump Atlantic City Funding
II, Inc., Trump Atlantic City Corporation, Trump Plaza Associates, Trump Taj
Mahal Associates, Trump Casino Services, L.L.C. and Trump Communications, L.L.C.
4.40(24) Debtors' Consent by Trump Atlantic City Associates, Trump Atlantic City Funding
III, Inc., Trump Atlantic City Corporation, Trump Plaza Associates, Trump Taj
Mahal Associates, Trump Casino Services, L.L.C. and Trump Communications, L.L.C.
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.
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<S> <C>
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.
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(26) 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.
</TABLE>
56
<PAGE>
<TABLE>
<S> <C>
10.74(23) Employment Agreement, dated May 3, 1996, between Trump Taj Mahal Associates and
Loretta I. Viscount.
10.75 Intentionally omitted.
21.1 List of Subsidiaries of the Registrants.
23.1 Independent Auditor's Consent of Arthur Anderson LLP
27.1 Financial Data Schedule of Trump Atlantic City Associates
27.2 Financial Data Schedule for Trump Atlantic City Funding, Inc.
27.3 Financial Data Schedule for Trump Atlantic City Funding II, Inc.
27.4 Financial Data Schedule for Trump Atlantic City Funding III, Inc.
</TABLE>
- ------------------------
(1) Incorporated herein by reference to the identically numbered Exhibit to the
Quarterly Report on Form 10-Q of Trump Plaza Funding, Inc., Trump Plaza
Associates and Trump Plaza Holding Associates for the quarter ended
September 30, 1992.
(2) Incorporated herein by reference to the identically numbered Exhibit in the
Annual Report on Form 10-K of Trump Plaza Funding, Inc. for the year ended
December 31, 1992.
(3) Previously filed in the Registration Statement on Form S-1, Registration
No. 33-58608, of Trump Atlantic City Associates (formerly Trump Plaza
Holding Associates).
(4) Incorporated herein by reference to the identically numbered Exhibit in the
Registration Statement on Form S-1, Registration No. 33-58602, of Trump
Plaza Funding, Inc. and Trump Plaza Associates.
(5) Incorporated herein by reference to the identically numbered Exhibit in the
Registration Statement on Form S-1, Registration No. 33-58608, of Trump
Atlantic City Associates (formerly Trump Plaza Holding Associates).
(6) Incorporated herein by reference to the identically numbered Exhibit in the
Annual Report on Form 10-K of Trump Plaza Funding, Inc. and Trump Atlantic
City Associates (formerly Trump Plaza Holding Associates) for the year
ended December 31, 1993.
(7) Incorporated herein by reference to the identically numbered Exhibit in the
Quarterly Report on Form 10-Q of Trump Plaza Funding, Inc. and Trump
Atlantic City Associates (formerly Trump Plaza Holding Associates) for the
quarter ended September 30, 1994
(8) Incorporated herein by reference to the Exhibit in the Quarterly Report on
Form 10-Q of Trump Taj Mahal Funding, Inc. and Trump Taj Mahal Associates
for the quarter ended September 30, 1994.
(9) Incorporated herein by reference to the identically numbered Exhibit in the
Annual Report on Form 10-K of Trump Plaza Funding, Inc. and Trump Atlantic
City Associates (formerly Trump Plaza Holding Associates) for the year
ended December 31, 1994.
(10) Incorporated herein by reference to the Exhibit in the Annual Report on
Form 10-K of Trump Taj Mahal Funding, Inc. and Trump Taj Mahal Associates
for the year ended December 31, 1994.
(11) Incorporated herein by reference to the identically numbered Exhibit in the
Quarterly Report on Form 10-Q of Trump Hotels & Casino Resorts, Inc., Trump
Hotels & Casino Resorts Holdings, L.P. and Trump Hotels & Casino Resorts
Funding, Inc. for the quarter ended June 30, 1995.
(12) Incorporated herein by reference to the identically numbered Exhibit to the
Quarterly Report on Form 10-Q of Trump Plaza Funding, Inc., Trump Plaza
Associates and Trump Atlantic 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. and for the quarter ended
September 30, 1995.
57
<PAGE>
(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 in 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 31, 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 31, 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 to the
Registration Statement on Form S-4, Registration No. 333-43975, of Trump
Atlantic City Associates and Trump Atlantic City Funding III, Inc.
(25) Incorporated herein by reference to the identically numbered Exhibit to the
Registration Statement on Form S-4, Registration No. 333-43979, of Trump
Atlantic City Associates and Trump Atlantic City Funding II, Inc.
(26) Incorporated herein by reference to the identically numbered Exhibit in
Amendment No. 1 to Registration Statement on Form S-4, Registration No.
333-43979, of Trump Atlantic City Associates and Trump Atlantic City
Funding II, Inc.
(D) FINANCIAL STATEMENT SCHEDULES.
See "Financial Statements and Supplementary Date--Index to Financial
Statements and Financial Statement Schedule" for a list of the financial
statement schedule included in this Annual Report.
58
<PAGE>
IMPORTANT FACTORS RELATING TO FORWARD LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements so long as those statements are
identified as forward-looking and are accompanied by meaningful cautionary
statements identifying important factors that could cause actual results to
differ materially from those projected in such statements. In connection with
certain forward-looking statements contained in this Annual Report on Form 10-K
and those that may be made in the future by or on behalf of the Registrants, the
Registrants note that there are various factors that could cause actual results
to differ materially from those set forth in any such forward-looking
statements. The forward-looking statements contained in this Annual Report were
prepared by management and are qualified by, and subject to, significant
business, economic, competitive, regulatory and other uncertainties and
contingencies, all of which are difficult or impossible to predict and many of
which are beyond the control of the Registrants. Accordingly, there can be no
assurance that the forward-looking statements contained in this Annual Report
will be realized or that actual results will not be significantly higher or
lower. The statements have not been audited by, examined by, compiled by or
subjected to agreed-upon procedures by independent accountants, and no
third-party has independently verified or reviewed such statements. Readers of
this Annual Report should consider these facts in evaluating the information
contained herein. In addition, the business and operations of the Registrants
are subject to substantial risks which increase the uncertainty inherent in the
forward-looking statements contained in this Annual Report. The inclusion of the
forward-looking statements contained in this Annual Report should not be
regarded as a representation by the Registrants or any other person that the
forward-looking statements contained in this Annual Report will be achieved. In
light of the foregoing, readers of this Annual Report are cautioned not to place
undue reliance on the forward-looking statements contained herein.
59
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, each registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
<TABLE>
<S> <C>
TRUMP ATLANTIC CITY ASSOCIATES
By: Trump Atlantic City Holding, Inc.,
its general partner
</TABLE>
<TABLE>
<S> <C>
/s/ NICHOLAS L. RIBIS
------------------------------------------
By: Nicholas L. Ribis
Title: President
Date: March 16, 1998
TRUMP ATLANTIC CITY FUNDING, INC.
/s/ NICHOLAS L. RIBIS
------------------------------------------
By: Nicholas L. Ribis
Title: Chief Executive Officer and
President
Date: March 16, 1998
TRUMP ATLANTIC CITY FUNDING II, INC.
/s/ NICHOLAS L. RIBIS
------------------------------------------
By: Nicholas L. Ribis
Title: Chief Executive Officer and
President
Date: March 16, 1998.
TRUMP ATLANTIC CITY FUNDING III, INC.
/s/ NICHOLAS L. RIBIS
------------------------------------------
By: Nicholas L. Ribis
Title: Chief Executive Officer and
President
Date: March 16, 1998.
</TABLE>
60
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
<TABLE>
<S> <C> <C>
TRUMP ATLANTIC CITY ASSOCIATES
By: Trump Atlantic City Holding, Inc.,
its general partner
</TABLE>
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
------------------------------ -------------------------- -------------------
<S> <C> <C> <C>
/s/ DONALD J. TRUMP Chairman of the Board of
By: ------------------------------ Directors (principal March 16, 1998
Donald J. Trump executive officer)
/s/ FRANCIS X. MCCARTHY, JR. Chief Financial Officer
By: ------------------------------ (principal financial and March 16, 1998
Francis X. McCarthy, Jr. accounting officer)
/s/ NICHOLAS L. RIBIS
By: ------------------------------ Director March 16, 1998
Nicholas L. Ribis
/s/ WALLACE B. ASKINS
By: ------------------------------ Director March 16, 1998
Wallace B. Askins
/s/ DON M. THOMAS
By: ------------------------------ Director March 16, 1998
Don M. Thomas
</TABLE>
61
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
<TABLE>
<S> <C> <C>
TRUMP ATLANTIC CITY FUNDING, INC.
</TABLE>
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
------------------------------ -------------------------- -------------------
<S> <C> <C> <C>
/s/ DONALD J. TRUMP
By: ------------------------------ Chairman of the Board of March 16, 1998
Donald J. Trump Directors
President, Chief Executive
/s/ NICHOLAS L. RIBIS Officer,
By: ------------------------------ Chief Financial Officer March 16, 1998
Nicholas L. Ribis (principal executive and
financial officer)
/s/ ROBERT M. PICKUS
By: ------------------------------ Director March 16, 1998
Robert M. Pickus
Senior Vice President of
/s/ R. BRUCE MCKEE Corporate Finance
By: ------------------------------ (principal accounting March 16, 1998
R. Bruce McKee officer)
/s/ WALLACE B. ASKINS
By: ------------------------------ Director March 16, 1998
Wallace B. Askins
/s/ DON M. THOMAS
By: ------------------------------ Director March 16, 1998
Don M. Thomas
</TABLE>
62
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
<TABLE>
<S> <C> <C>
TRUMP ATLANTIC CITY FUNDING II, INC.
</TABLE>
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
------------------------------ -------------------------- -------------------
<S> <C> <C> <C>
/s/ DONALD J. TRUMP
By: ------------------------------ Chairman of the Board of March 16, 1998
Donald J. Trump Directors
President, Chief Executive
/s/ NICHOLAS L. RIBIS Officer,
By: ------------------------------ Chief Financial Officer March 16, 1998
Nicholas L. Ribis (principal executive and
financial officer)
/s/ ROBERT M. PICKUS
By: ------------------------------ Director March 16, 1998
Robert M. Pickus
Senior Vice President of
/s/ R. BRUCE MCKEE Corporate Finance
By: ------------------------------ (principal accounting March 16, 1998
R. Bruce McKee officer)
/s/ WALLACE B. ASKINS
By: ------------------------------ Director March 16, 1998
Wallace B. Askins
/s/ DON M. THOMAS
By: ------------------------------ Director March 16, 1998
Don M. Thomas
</TABLE>
63
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
<TABLE>
<S> <C> <C>
TRUMP ATLANTIC CITY FUNDING III, INC.
</TABLE>
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
------------------------------ -------------------------- -------------------
<S> <C> <C> <C>
/s/ DONALD J. TRUMP
By: ------------------------------ Chairman of the Board of March 16, 1998
Donald J. Trump Directors
President, Chief Executive
/s/ NICHOLAS L. RIBIS Officer,
By: ------------------------------ Chief Financial Officer March 16, 1998
Nicholas L. Ribis (principal executive and
financial officer)
/s/ ROBERT M. PICKUS
By: ------------------------------ Director March 16, 1998
Robert M. Pickus
Senior Vice President of
/s/ R. BRUCE MCKEE Corporate Finance
By: ------------------------------ (principal accounting March 16, 1998
R. Bruce McKee officer)
/s/ WALLACE B. ASKINS
By: ------------------------------ Director March 16, 1998
Wallace B. Askins
/s/ DON M. THOMAS
By: ------------------------------ Director March 16, 1998
Don M. Thomas
</TABLE>
64
<PAGE>
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 BY REGISTRANTS WHICH HAVE
NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT.
The Registrants have not sent (and do not intend to send) an annual report
to security holders covering the Registrants' last fiscal year and have not sent
(and do not intend to send) a proxy statement, form of proxy or other proxy
soliciting materials to security holders.
65
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Trump Atlantic City Associates and Subsidiaries
Report of Independent Public Accountants................................................................. F-2
Consolidated Balance Sheets as of December 31, 1996 and 1997............................................. F-3
Consolidated Statements of Operations for the years ended December 31, 1995, 1996 and 1997............... F-4
Consolidated Statements of Capital for the years ended December 31, 1995, 1996 and 1997.................. F-5
Consolidated Statements of Cash Flows for the years ended December 31, 1995, 1996 and 1997............... F-6
Notes to Consolidated Financial Statements............................................................... F-8
Financial Statement Schedule
Report of Independent Public Accountants................................................................. S-1
Schedule II--Valuation and Qualifying Accounts for the Years Ended December 31, 1995, 1996 and 1997...... S-2
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Trump Atlantic City Associates and Subsidiaries:
We have audited the accompanying consolidated balance sheets of Trump
Atlantic City Associates and Subsidiaries (a New Jersey general partnership) as
of December 31, 1996 and 1997, and the related consolidated statements of
operations, capital and cash flows for each of the three years in the period
ended December 31, 1997. These consolidated financial statements are the
responsibility of the management of Trump Atlantic City Associates and
Subsidiaries. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Trump Atlantic City
Associates and Subsidiaries as of December 31, 1996 and 1997, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1997, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
ROSELAND, NEW JERSEY
FEBRUARY 5, 1998
F-2
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1997
--------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................................................... $ 71,320 $ 114,879
Trade receivables, net of allowances for doubtful accounts of $17,355 and $17,095,
respectively (Note 2)................................................................. 39,087 47,417
Accounts receivable, other (Note 5)..................................................... 6,144 9,061
Inventories............................................................................. 9,393 9,880
Prepaid expenses and other current assets............................................... 6,495 7,319
Due from affiliates, net (Note 7)....................................................... 5,237 21,880
--------- ---------
Total current assets.................................................................. 137,676 210,436
--------- ---------
PROPERTY AND EQUIPMENT (Notes 2, 5 and 7):
Land and land improvements.............................................................. 159,390 171,364
Buildings and building improvements..................................................... 1,280,947 1,334,794
Furniture, fixtures and equipment....................................................... 194,050 217,623
Leasehold improvements.................................................................. 2,404 2,404
Construction in progress................................................................ 23,067 1,404
--------- ---------
1,659,858 1,727,589
Less--Accumulated depreciation and amortization......................................... (203,591) (267,539)
--------- ---------
Net property and equipment............................................................ 1,456,267 1,460,050
--------- ---------
OTHER ASSETS:
Deferred bond issuance costs, net of accumulated amortization of $5,052 and $11,613,
respectively
(Note 3).............................................................................. 39,153 36,842
Other Assets............................................................................ 25,910 31,745
--------- ---------
Total other assets.................................................................... 65,063 68,587
--------- ---------
Total assets.......................................................................... $1,659,006 $1,739,073
--------- ---------
--------- ---------
LIABILITIES AND CAPITAL
CURRENT LIABILITIES:
Current maturities of long-term debt (Note 3)........................................... $ 9,410 $ 6,964
Accounts payable........................................................................ 22,598 23,392
Accrued payroll......................................................................... 16,653 17,759
Self-insurance reserves (Note 5)........................................................ 9,911 10,508
Accrued interest payable (Note 3)....................................................... 23,160 23,850
Other accrued expenses.................................................................. 25,202 14,908
Other current liabilities............................................................... 3,578 6,911
--------- ---------
Total current liabilities............................................................. 110,512 104,292
--------- ---------
NON-CURRENT LIABILITIES:
Long-term debt, net of current maturities (Note 3)...................................... 1,207,795 1,300,027
Other long-term liabilities............................................................. 8,841 6,815
--------- ---------
Total non-current liabilities......................................................... 1,216,636 1,306,842
--------- ---------
Total liabilities..................................................................... 1,327,148 1,411,134
--------- ---------
COMMITMENTS AND CONTINGENCIES (Note 5):
CAPITAL:
Partners' Capital....................................................................... 363,646 373,790
Accumulated Deficit..................................................................... (31,788) (45,851)
--------- ---------
Total Capital........................................................................... 331,858 327,939
--------- ---------
Total liabilities and capital........................................................... $1,659,006 $1,739,073
--------- ---------
--------- ---------
</TABLE>
The accompanying notes to financial statements are an integral
part of these consolidated financial statements.
F-3
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1996 1997
---------------- ---------------- ----------------
<S> <C> <C> <C>
REVENUES:
Gaming................................................... $ 298,073 $ 752,228 $ 889,116
Rooms.................................................... 19,986 68,214 81,619
Food and Beverage........................................ 44,602 98,635 114,597
Other.................................................... 9,594 24,146 35,019
---------------- ---------------- ----------------
Gross Revenues....................................... 372,255 943,223 1,120,351
Less-Promotional allowances.............................. 45,077 113,743 138,085
---------------- ---------------- ----------------
Net Revenues......................................... 327,178 829,480 982,266
---------------- ---------------- ----------------
COSTS AND EXPENSES:
Gaming................................................... 164,396 453,841 555,457
Rooms.................................................... 8,656 22,690 28,229
Food and Beverage........................................ 12,605 31,923 37,233
General and Administrative............................... 65,521 147,464 168,143
Depreciation and Amortization............................ 16,213 60,870 66,018
Preopening............................................... -- 4,145 --
---------------- ---------------- ----------------
267,391 720,933 855,080
---------------- ---------------- ----------------
Income from operations............................... 59,787 108,547 127,186
---------------- ---------------- ----------------
NON-OPERATING INCOME (EXPENSE):
Interest income.......................................... 1,003 2,339 2,891
Interest expense (Note 3)................................ (44,264) (114,461) (144,140)
Non-operating income (expense)(Note 4)................... (5,743) 14,194 --
---------------- ---------------- ----------------
Non-operating expense, net........................... (49,004) (97,928) (141,249)
---------------- ---------------- ----------------
Income (loss) before extraordinary items................. 10,783 10,619 (14,063)
Extraordinary loss....................................... (9,250) (59,132) --
---------------- ---------------- ----------------
Net income (loss)........................................ $ 1,533 $ (48,513) $ (14,063)
---------------- ---------------- ----------------
---------------- ---------------- ----------------
</TABLE>
The accompanying notes to financial statements are an integral
part of these consolidated financial statements.
F-4
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
RETAINED
EARNINGS/
PARTNERS' (ACCUMULATED
CAPITAL DEFICIT) TOTAL
---------- ------------ ----------
<S> <C> <C> <C>
Balance, December 31, 1994................................................. $ (78,772) $ 15,192 $ (63,580)
Capital Contributed by Trump Hotels & Casino Resorts Holdings, L.P......... 172,859 -- 172,859
Net Income................................................................. -- 1,533 1,533
---------- ------------ ----------
Balance, December 31, 1995................................................. 94,087 16,725 110,812
Capital Contributed by Trump Hotels & Casino Resorts Holdings, L.P......... 269,559 -- 269,559
Net Loss................................................................... -- (48,513) (48,513)
---------- ------------ ----------
Balance, December 31, 1996................................................. 363,646 (31,788) 331,858
Capital Contributed by Trump Hotels & Casino Resorts Holdings, L.P......... 10,144 -- 10,144
Net Loss................................................................... -- (14,063) (14,063)
---------- ------------ ----------
Balance, December 31, 1997................................................. $ 373,790 $ (45,851) $ 327,939
---------- ------------ ----------
---------- ------------ ----------
</TABLE>
The accompanying notes to financial statements are an integral
part of these consolidated financial statements.
F-5
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS, EXCEPT FOR SHARE DATA)
<TABLE>
<CAPTION>
1995 1996 1997
---------------- ---------------- ----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)...................................... $ 1,533 $ (48,513) $ (14,063)
Adjustments to reconcile net income (loss) to net cash
flows provided by operating activities:
Noncash charges:
Extraordinary loss................................. 9,250 59,132 --
Depreciation and amortization...................... 16,213 60,870 66,018
Accretion of discount on indebtedness.............. 1,130 132 68
Amortization of deferred loan offering costs....... 1,791 5,588 6,561
Provision for losses on receivables................ 1,057 8,599 7,399
Utilization of CRDA credits and donations.......... 388 -- 53
Valuation allowance of CRDA investments............ (1,098) 3,013 3,762
Increase in receivables.............................. (8,318) (20,296) (20,944)
Decrease (increase) in inventories................... 371 47 (486)
Decrease (increase) in prepaid expenses and other
current assets..................................... (765) 1,495 (408)
Decrease (increase) in other assets.................. 6,283 (2,309) 97
Decrease in amounts due from affiliates.............. (1,504) (3,668) (16,643)
Increase (decrease) in accounts payable, accrued
expenses and other current liabilities............. 592 (16,153) (3,775)
Decrease in other long-term liabilities.............. -- (1,430) (2,438)
---------------- ---------------- ----------------
Net cash flows provided by operating activities...... 26,923 46,507 25,201
---------------- ---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment.................. (109,756) (193,000) (56,368)
Purchases of CRDA investments........................ (3,178) (6,725) (8,723)
Purchase of Taj Holding, net cash received........... -- 46,714 --
---------------- ---------------- ----------------
Net cash flows used in investing activities.......... (112,934) (153,011) (65,091)
---------------- ---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Cost of issuing debt................................. -- (41,042) (4,254)
Issuance of Trump AC Mortgage Notes.................. -- 1,200,000 95,605
Retirement of long-term debt......................... -- (1,156,836) --
Retirement of NatWest Loan........................... -- (36,500) --
Additional Borrowings................................ 4,218 6,170 3,440
Payments and current maturities of long-term debt.... (4,527) (14,690) (11,342)
Redemption of PIK Notes.............................. (81,746) -- --
Contributed Capital by Trump Hotel and Casino Resorts
Holdings, L.P...................................... 172,859 204,785 --
---------------- ---------------- ----------------
Net cash flows provided by financing activities...... 90,804 161,887 83,449
---------------- ---------------- ----------------
NET INCREASE IN CASH AND CASH EQUIVALENTS................ 4,793 55,383 43,559
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR........... 11,144 15,937 71,320
---------------- ---------------- ----------------
CASH AND CASH EQUIVALENTS AT END OF YEAR................. $ 15,937 $ 71,320 $ 114,879
---------------- ---------------- ----------------
---------------- ---------------- ----------------
</TABLE>
F-6
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
(IN THOUSANDS, EXCEPT FOR SHARE DATA) (CONTINUED)
<TABLE>
<CAPTION>
1995 1996 1997
---------------- ---------------- ----------------
<S> <C> <C> <C>
Supplemental Disclosures of Cash Flow Information:
- During 1996 and 1997, THCR Holdings purchased
certain parcels of land amounting to $14,455 and
$10,144, respectively and contributed the parcels to
Trump AC.
- Equipment purchased under capital leases........... $ 3,317 $ 9,994 $ 3,569
- Cash paid during the year for interest............. $ 36,936 $ 138,128 $ 128,617
---------------- ---------------- ----------------
---------------- ---------------- ----------------
Supplemental Disclosure of Noncash Activities:
- During 1996, THCR purchased all of the capital stock of Taj Holding for $31,181 in cash and 323,423
shares of its common stock valued at $9,319. In addition, the contribution by Trump of his 50% interest in
Taj Associates amounting to $40,500, net of the $10,000 payment to Bankers Trust, was recorded as minority
interest. In conjunction with the acquisition, the accumulated deficit amounting to $108,574 was recorded
as an increase to Property, Plant & Equipment.
- This transaction has been recorded by Trump AC.
Fair Value of net assets acquired.................................................... $1,005,816
Cash paid for the capital stock and payment to Bankers Trust......................... (41,181)
Minority interest of Trump........................................................... (30,500)
----------------
Liabilities assumed................................................................ $ 934,135
</TABLE>
- In connection with the purchase of the Specified Parcels, in 1996 THCR
issued 500,000 shares of its common stock valued at $10,500, and
contributed the Specified Parcels to Trump AC.
The accompanying notes to financial statements are an integral
part of these consolidated financial statements.
F-7
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) ORGANIZATION
The accompanying consolidated financial statements include those of Trump
Atlantic City Associates ("Trump AC"), a New Jersey general partnership formerly
known as Trump Plaza Holding Associates, and its subsidiaries, Trump Plaza
Associates, a New Jersey general partnership ("Plaza Associates"), which owns
and operates the Trump Plaza Hotel and Casino located in Atlantic City, New
Jersey ("Trump Plaza"), Trump Taj Mahal Associates, a New Jersey general
partnership ("Taj Associates"), which owns and operates the Trump Taj Mahal
Casino Resort located in Atlantic City, New Jersey (the "Taj Mahal"), Trump
Atlantic City Funding, Inc., a Delaware corporation ("Trump AC Funding"), Trump
Atlantic City Funding II, ("Trump AC Funding II"), Trump Atlantic City Funding
III, Inc. ("Trump AC Funding III)", Trump Atlantic City Corporation, a Delaware
Corporation ("TACC"), Trump Casino Services, L.L.C., a New Jersey limited
liability company ("Trump Services"), and Trump Communications, L.L.C., a New
Jersey limited liability company. Trump AC's sole sources of liquidity are
distributions in respect of its interests in Plaza Associates and Taj
Associates. Trump AC is owned by Trump Hotels & Casino Resorts Holdings, L.P., a
Delaware limited partnership ("THCR Holdings") (See below). Trump AC and Trump
AC Funding have no independent operations and, therefore, their ability to
service debt is dependent upon the successful operations of Plaza Associates and
Taj Associates. There are no restrictions on the ability of the guarantors (the
"Subsidiary Guarantors") of the Trump AC Mortgage Notes (as defined below) to
distribute funds to Trump AC.
The separate financial statements of the Subsidiary Guarantors have not been
included because (i) the Subsidiary Guarantors constitute all of Trump AC's
direct and indirect subsidiaries; (ii) the Subsidiary Guarantors have fully and
unconditionally guaranteed the Trump AC Mortgage Notes on a joint and several
basis; (iii) the aggregate assets, liabilities, earnings and equity of the
Subsidiary Guarantors are substantially equivalent to the assets, liabilities,
earnings and equity of Trump AC on a consolidated basis; and (iv) the separate
financial and other disclosures concerning the Subsidiary Guarantors are not
deemed material to investors. The assets and operations of the nonguarantor
subsidiaries are not significant.
All significant intercompany balances and transactions have been eliminated
in the accompanying consolidated financial statements. The minority interests in
Plaza Associates and Taj Associates have not been separately reflected in the
consolidated financial statements of Trump AC since they are not material.
Trump AC was formed in February 1993. On June 12, 1995, Trump Hotels &
Casino Resorts, Inc., ("THCR"), completed a public offering of 10,000,000 shares
of common stock (the "Common Stock"), at $14.00 per share (the "Stock Offering")
for gross proceeds of $140,000,000. Concurrently with the Stock Offering, Trump
Hotels & Casino Resorts Holdings, L.P. ("THCR Holdings"), a then 60% subsidiary
of THCR, issued 15 1/2% Senior Secured Notes (the "Senior Secured Notes") for
gross proceeds of $155,000,000 (the "Note Offering" and, together with the Stock
Offerings, the "1995 Offerings"). From the proceeds from the Stock Offering,
THCR contributed $126,848,000 to THCR Holdings. THCR Holdings subsequently
contributed $172,859,000 to Trump AC.
Prior to the 1995 Offerings, Donald J. Trump ("Trump") was the sole
stockholder of THCR and sole beneficial owner of THCR Holdings. Concurrent with
the 1995 Offerings, Trump contributed to THCR Holdings all of his beneficial
interest in Plaza Associates. Trump also contributed to THCR Holdings all of his
existing interest and rights to new gaming activities in both emerging and
established gaming jurisdictions, including Trump Indiana but excluding his
interests in the Trump Taj Mahal Casino Resort (the "Taj Mahal") and Trump's
Castle Casino Resort.
F-8
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(1) ORGANIZATION (CONTINUED)
On April 17, 1996, pursuant to the Agreement and Plan of Merger, as amended
(the "Taj Merger Agreement"), between THCR and Taj Mahal Holding Corp. ("Taj
Holding"), each outstanding share of Class A Common Stock of Taj Holding (the
"Taj Holding Class A Common Stock"), which in the aggregate represented 50% of
the economic interest in Taj Associates, was converted into the right to
receive, at each holder's election, either (a) $30 in cash or (b) that number of
shares of Common Stock having a market value equal to $30. Trump held the
remaining 50% interest in Taj Associates and contributed such interest in Taj
Associates to Trump AC in exchange for limited partnership interests in THCR
Holdings. In addition, the outstanding shares of Taj Holding's Class C Common
Stock, all of which were held by Trump, were canceled in connection with the Taj
Merger. The following transactions occurred in connection with the Taj Merger
(collectively referred to as the "Taj Merger Transaction"):
(a) the payment of an aggregate of $31,181,000 in cash and the issuance
of 323,423 shares of THCR Common Stock to the holders of Taj Holding Class A
Common Stock pursuant to the Taj Merger Agreement;
(b) the contribution by Trump to Trump AC of all of his direct and
indirect ownership interests in Taj Associates, and the contribution by THCR
to Trump AC of all of its indirect ownership interests in Taj Associates
acquired in the Taj Merger Transaction;
(c) the public offerings by (i) THCR of 12,500,000 shares of Common
Stock (plus 750,000 shares of Common Stock issued in connection with the
partial exercise of the underwriters' over-allotment option) (the "1996
Stock Offering") for net proceeds of $386,062,000 and (ii) Trump AC and
Trump Atlantic City Funding, Inc. ("Trump AC Funding"), Trump AC's wholly
owned finance subsidiary, of $1,200,000,000 aggregate principal amount of
11 1/4% First Mortgage Notes due 2006 (the "Trump AC Mortgage Notes") (the
"1996 Notes Offering" and together with the 1996 Stock Offering, the "1996
Offerings");
(d) the redemption of the outstanding shares of Taj Holding's Class B
Common Stock, par value $.01 per share, immediately prior to the Taj Merger
Transaction for $.50 per share in accordance with its terms;
(e) the redemption of the outstanding 11.35% Mortgage Bonds, Series A,
due 1999 of Trump Taj Mahal Funding, Inc. (the "Taj Bonds");
(f) the retirement of the outstanding 10 7/8% Mortgage Notes due 2001 of
Trump Plaza Funding, Inc.;
(g) the satisfaction of the indebtedness of Taj Associates under its
loan agreement with National Westminster Bank USA;
(h) the purchase of certain real property used in the operation of the
Taj Mahal that was leased from a corporation wholly owned by Trump (the
"Specified Parcels");
(i) the purchase of certain real property used in the operation of Trump
Plaza that was leased from an unaffiliated third party;
(j) the payment to Bankers Trust Company ("Bankers Trust") to obtain
releases of liens and guarantees that Bankers Trust had in connection with
indebtedness owed by Trump to Bankers Trust; and
F-9
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(1) ORGANIZATION (CONTINUED)
(k) the issuance to Trump of warrants (the "Trump Warrants") to purchase
an aggregate of 1.8 million shares of Common Stock, (i) 600,000 shares of
which may be purchased on or prior to April 17, 1999, at $30 per share, (ii)
600,000 shares of which may be purchased on or prior to April 17, 2000, at
$35 per share, and (iii) 600,000 shares of which may be purchased on or
prior to April 17, 2001, at $40 per share.
As a result of the contribution by Trump to Trump AC of his direct and
indirect ownership interests in Taj Associates and the contribution by THCR to
Trump AC of its indirect ownership interests in Taj Associates acquired in the
Taj Merger Transaction, together with THCR's contribution to THCR Holdings of
the proceeds from the 1996 Stock Offering. Trump's aggregate beneficial equity
interest in THCR Holdings decreased from approximately 40% to approximately 25%,
and THCR's aggregate beneficial equity interest in THCR Holdings increased from
approximately 60% to approximately 75%. Trump's limited partnership interest in
THCR Holdings represents his economic interest in the assets and operations of
THCR Holdings. In 1996, as a result of THCR Holdings acquisition of Castle
Associates, Trump's beneficial interest increased to 37% which is used to
calculate minority interest in 1996 and all subsequent periods. Due to the
acquisition of 1,706,500 shares of treasury stock during 1997, Trump's voting
interest in THCR increased to 38% as of December 31, 1997.
The Taj Merger Transaction has been accounted for as a "purchase" for
accounting and reporting purposes and the results of Taj Associates have been
included in the accompanying financial statements since the date of acquisition.
Accordingly, the excess of the purchase price over the fair value of the net
assets acquired ($200,782,000), which was allocated to land ($7,979,000) and
building ($192,803,000) based on an appraisal on a pro rata basis, consists of
the following:
(a) $40,500,000 representing the payment of $30.00 for each of the
1,350,000 shares of Taj Holding Class A Common Stock. Holders of 298,739
shares of Taj Holding Class A Common Stock elected to receive 323,423 shares
of THCR Common Stock and holders of 1,051,261 shares of Taj Holding Class A
Common Stock elected to receive $31,181,000 in cash;
(b) $40,500,000, representing the contribution by Trump to Trump AC (on
behalf, and at the direction, of THCR Holdings) of all direct and indirect
ownership interest in 50% of Taj Associates;
(c) $9,900,000 of fees and expenses associated with the Taj Merger
Transaction;
(d) $108,574,000, representing the negative book value of Taj Associates
at the date of the Taj Merger Transaction; and
(e) $1,308,000 of closing costs associated with the purchase of the
Specified Parcels.
In connection with the Taj Merger Transaction, THCR purchased the Specified
Parcels from Trump Taj Mahal Realty Corp., a corporation owned by Trump, and Taj
Associates was released from its guarantee to First Union National Bank (the
"Guarantee"). The aggregate cost of acquiring the Specified Parcels was
$50,600,000 in cash and 500,000 shares of THCR Common Stock valued at
$10,500,000 (an average value of $21.00 per share based on the price of the THCR
Common Stock several days before and after the date of the amended Taj Merger
Agreement). The obligation of Taj Associates which had been accrued with respect
to the Guarantee ($17,923,000) was eliminated. In addition, THCR exercised the
option to purchase a tower adjacent to Trump Plaza's main tower ("Trump Plaza
East") for $28,084,000, which amount has been included in land and building.
F-10
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(1) ORGANIZATION (CONTINUED)
Unaudited pro forma information, assuming that the Taj Merger had occurred
on January 1, 1996, is as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1996
--------------
<S> <C>
Net revenues.................................................................. $ 984,789,000
--------------
--------------
Income from operations........................................................ $ 115,504,000
--------------
--------------
Loss before extraordinary loss................................................ $ (11,906,000)
--------------
--------------
Extraordinary loss............................................................ $ (59,132,000)
--------------
--------------
Net income (loss)............................................................. $ (71,038,000)
--------------
--------------
</TABLE>
The pro forma information is presented for informational purposes only and
does not purport to present what the results of operations would have been had
the Taj Merger Transaction, in fact, occurred on January 1, 1996 or to project
the results of operations for any future period.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND BASIS OF PRESENTATION
Trump AC has no operations, except for its ownership of Plaza Associates and
Taj Associates. Through these entities, Trump AC operates luxury casino hotels,
located on The Boardwalk in Atlantic City which provide high quality amenities
and services to its casino patrons and hotel guests. A substantial portion of
Trump AC's revenues are derived from its gaming operations. Competition in the
Atlantic City casino market is intense and management believes that this
competition will continue as more casinos are opened and new entrants into the
gaming industry become operational.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
REVENUE RECOGNITION
Gaming revenues represent the net win from gaming activities which is the
difference between amounts wagered and amounts won by patrons. Revenue from
hotel and other services are recognized at the time the related service is
performed.
Trump AC provides an allowance for doubtful accounts arising from casino,
hotel and other services, which is based upon a specific review of certain
outstanding receivables as well as historical collection information. In
determining the amount of the allowance, management is required to make certain
estimates and assumptions regarding the timing and amount of collection. Actual
results could differ from those estimates and assumptions.
F-11
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROMOTIONAL ALLOWANCES
The retail value of accommodations, food, beverage and other services
provided to customers without charge is included in gross revenue and deducted
as promotional allowances. The estimated departmental costs of providing such
promotional allowances are included in gaming costs and expenses as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------------
<S> <C> <C> <C>
1995 1996 1997
------------- ------------- -------------
Rooms........................................... $ 4,836,000 $ 14,906,000 $ 19,175,000
Food and Beverage............................... 22,868,000 54,754,000 63,644,000
Other........................................... 10,240,000 4,076,000 15,783,000
------------- ------------- -------------
$ 31,780,000 $ 79,900,000 $ 98,602,000
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
INVENTORIES
Inventories of provisions and supplies are carried at the lower of cost
(weighted average) or market.
PROPERTY AND EQUIPMENT
Property and equipment is carried at cost and is depreciated on the
straight-line method using rates based on the following estimated useful lives:
<TABLE>
<S> <C>
Buildings and building improvements......................... 40 years
Furniture, fixtures and equipment........................... 3-10 years
Leasehold improvements...................................... 10-40 years
</TABLE>
During the second quarter of 1997, Trump AC revised its estimates of the
useful lives of buildings, building improvements and furniture and fixtures
which were acquired in 1996. Buildings and building improvements were
reevaluated to have a forty year life and furniture and fixtures were determined
to have a seven year life. Trump AC believes these changes more appropriately
reflect the timing of the economic benefits to be received from these assets
during their estimated useful lives. For the year ended December 31, 1997, the
net effect of applying these new lives was to increase net income by $5,995,000.
LONG-LIVED ASSETS
The provisions of Statement of Financial Accounting Standard No. 121
"Accounting for the Impairment of Long-Lived Assets" ("SFAS No. 121") requires,
among other things, that an entity review its long-lived assets and certain
related intangibles for impairment whenever changes in circumstances indicate
that the carrying amount of an asset may not be fully recoverable. Impairment of
long-lived assets exists if, at a minimum, the future expected cash flows
(undiscounted and without interest charges) from an entity's operations are less
than the carrying value of these assets. Trump AC does not believe that any such
changes have occurred.
F-12
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
State income taxes are recorded in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109").
SFAS No. 109 requires recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred tax assets and
liabilities are determined based on the difference between the financial
statement and the tax basis of assets and liabilities using enacted tax rates.
The accompanying consolidated financial statements do not include a
provision for federal income taxes since any income or losses are allocated to
the partners and are reportable for federal income tax purposes by the partners.
Under the New Jersey Casino Control Act (the "Casino Control Act"), both
Plaza Associates and Taj Associates are required to file a New Jersey
corporation business tax return. For New Jersey State Income Tax purposes, Plaza
Associates and Taj Associates have net operating loss carry-forwards of
approximately $100,000,000 and $225,000,000, respectively. No tax benefit has
been reflected in the accompanying financial statements for those losses as
utilization of such carryforwards are not considered more likely than not.
STATEMENTS OF CASH FLOWS
For purposes of the statements of cash flows, cash and cash equivalents
include hotel and casino funds, funds on deposit with banks and temporary
investments purchased with a maturity of three months or less.
RECLASSIFICATIONS
Certain reclassifications have been made to prior year financial statements
to conform to the current year presentation.
F-13
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(3) LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1996 1997
---------------- ----------------
<S> <C> <C>
Trump AC Mortgage Notes (11 1/4 First Mortgage Notes, due 2006) (a).......... $ 1,200,000,000 $ 1,200,000,000
Trump AC Mortgage Notes (11 1/4 First Mortgage Notes, due 2006), net of
unamortized discount of $2,900,000 (a)..................................... -- 72,100,000
Trump AC Mortgage Notes (11 1/4 First Mortgage Notes, due 2006), net of
unamortized discount of $1,427,000 (a)..................................... -- 23,573,000
Mortgage notes payable (b)................................................... 3,407,000 3,229,000
Capitalized lease obligations (c)............................................ 13,798,000 8,089,000
---------------- ----------------
1,217,205,000 1,306,991,000
Less--current maturities..................................................... 9,410,000 6,964,000
---------------- ----------------
$ 1,207,795,000 $ 1,300,027,000
---------------- ----------------
---------------- ----------------
</TABLE>
- ------------------------
(a) On April 17, 1996, Trump AC together with Trump AC Funding, a wholly owned
subsidiary of Trump AC, issued the Trump AC Mortgage Notes in an aggregate
principal amount of $1,200,000,000 which bear interest at 11.25% and are due
May 1, 2006. Interest on the Trump AC Mortgage Notes is due semi-annually on
each May 1 and November 1, commencing on November 1, 1996. The Trump AC
Mortgage Notes are guaranteed as to payment of principal and interest
jointly and severally by Taj Associates, Plaza Associates, Trump AC and all
future subsidiaries of Trump AC (other than Trump AC Funding). The Trump AC
Mortgage Notes are jointly and severally secured by mortgages representing a
first lien and security interest on substantially all of the assets of Taj
Associates and Plaza Associates.
The indenture pursuant to which the Trump AC Mortgage Notes were issued
restricts the ability of Trump AC and its subsidiaries to make distributions
or to pay dividends, as the case may be, unless certain financial ratios are
achieved. In addition, the ability of Plaza Associates and Taj Associates to
make payments of dividends or distributions (except for payment of interest)
through Trump AC to THCR Holdings may be restricted by the CCC.
On December 10, 1997, Trump AC together with Trump AC Funding II, a wholly
owned subsidiary of Trump AC, issued Trump AC Mortgage Notes in an aggregate
principal amount of $75,000,000 which bear interest at 11.25% and are due
May 1, 2006. Interest on the Trump AC Mortgage Notes is due semi-annually on
each May 1 and November 1. The Trump AC Mortgage Notes are guaranteed as to
payment of principal and interest jointly and severally by Taj Associates,
Plaza Associates, Trump AC and all future subsidiaries of Trump AC (other
than Trump AC Funding). The Trump AC Mortgage Notes are jointly and
severally secured by mortgages representing a first lien and security
interest on substantially all of the assets of Taj Associates and Plaza
Associates.
On December 10, 1997, Trump AC together with Trump AC Funding III, a wholly
owned subsidiary of Trump AC, issued Trump AC Mortgage Notes in an aggregate
principal amount of $25,000,000 which bear interest at 11.25% and are due
May 1, 2006. Interest on the Trump AC Mortgage Notes is due
F-14
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(3) LONG-TERM DEBT (CONTINUED)
semi-annually on each May 1 and November 1. The Trump AC Mortgage Notes are
guaranteed as to payment of principal and interest jointly and severally by
Taj Associates, Plaza Associates, Trump AC and all future subsidiaries of
Trump AC (other than Trump AC Funding). The Trump AC Mortgage Notes are
jointly and severally secured by mortgages representing a first lien and
security interest on substantially all of the assets of Taj Associates and
Plaza Associates.
Underwriting costs, legal and accounting fees, printing costs and other
expenses of $45,296,000 associated with the issuance of the Trump AC
Mortgage Notes are being amortized using the effective interest method over
the term of the Trump AC Mortgage Notes. Amortization is included in
interest expense in the accompanying statements of operations and totaled
$5,052,000 and $6,561,000 from the date of issuance through December 31,
1996 and for the year ended December 31, 1997, respectively.
(b) Interest on these notes is payable with interest rates ranging from 8.5% to
10.5%. The notes are due at various dates between 1998 and 2012 and are
secured by certain real property.
(c) Interest on these leases are payable with interest rate ranging from 7.9% to
13.5%. The leases are due at various dates between 1998 and 2000 and are
secured by equipment.
Future minimum payments under capital leases (principal portion included in
the table below of debt maturities) are as follows:
<TABLE>
<S> <C>
1998............................................................. $ 6,808,000
1999............................................................. 2,417,000
2000............................................................. 309,000
------------
Total Minimum Payments........................................... 8,806,000
Less--Amount representing interest............................... 717,000
------------
Present Value of minimum lease payments.......................... $ 8,089,000
------------
------------
</TABLE>
The aggregate maturities of long-term debt as of December 31, 1997 are as
follows:
<TABLE>
<S> <C>
1998............................................................. $ 6,964,000
1999............................................................. 2,755,000
2000............................................................. 361,000
2001............................................................. 63,000
2002............................................................. 68,000
Thereafter....................................................... 1,296,780,000
---------------
$ 1,306,991,000
---------------
---------------
</TABLE>
The ability of Trump AC to repay its long-term debt when due will depend on
the ability of Plaza Associates and Taj Associates to generate cash from
operations sufficient for such purposes or on the ability of Trump AC to
refinance such indebtedness. Cash Flow from operations may not be sufficient
to repay a substantial portion of the principal amount of the Trump AC
Mortgage Notes upon maturity in 2006. The future operating performance and
the ability to refinance such indebtedness will be subject to the then
prevailing economic conditions, industry conditions and numerous other
financial, business and other factors, many of which are beyond the control
of Trump AC. There can
F-15
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(3) LONG-TERM DEBT (CONTINUED)
be no assurance that the future operating performance of Plaza Associates
and Taj Associates will be sufficient to meet these repayment obligations or
that the general state of the economy, the status of the capital markets
generally or the receptiveness of the capital markets to the gaming industry
will be conducive to refinancing or other attempts to raise capital.
(4) NON-OPERATING INCOME (EXPENSE)
Non-operating income (expense) in 1995 and 1996 included $3,939,000 and
$806,000, respectively, of costs associated with Trump Plaza East and Trump
World's Fair (see Note 7), net of miscellaneous non-operating credits.
During 1996, Plaza Associates and Taj Associates each entered into an
agreement with Atlantic Thermal Systems, Inc. ("Atlantic Thermal") pursuant to
which Atlantic Thermal was granted an exclusive license to use, operate and
maintain certain steam and chilled water production facilities located at Plaza
Associates and Taj Associates. In consideration for the license, Atlantic
Thermal paid Plaza Associates and Taj Associates a $15,000,000 non-refundable
license fee. This amount has been included in other non-operating income in the
accompanying financial statements.
(5) COMMITMENTS AND CONTINGENCIES
LEASES AND EMPLOYMENT AGREEMENTS
Pursuant to the acquisition of Trump World's Fair described in Note 7, Plaza
Associates entered into an easement agreement with the New Jersey Sports and
Exposition Authority ("NJSEA"). Under the terms of the agreement, Plaza
Associates has an exclusive easement over, in and through portions of the old
Atlantic City Convention Center. The easement is for a 25-year term with annual
payments of $2,000,000, adjusted every five years for changes in the Consumer
Price Index.
Trump AC leases certain property (primarily land), office, warehouse space,
certain parking space, and various equipment under operating leases. Rent
expense for the years ended December 31, 1995, 1996 and 1997 was $3,609,000,
$7,200,000 and $7,129,000, respectively, of which $2,127,000, $1,981,000, and
$0, respectively, relates to affiliates.
Future minimum lease payments under the noncancelable operating leases are
as follows:
<TABLE>
<CAPTION>
TOTAL
--------------
<S> <C>
1998.......................................................................... $ 9,249,000
1999.......................................................................... 6,703,000
2000.......................................................................... 4,450,000
2001.......................................................................... 3,747,000
2002.......................................................................... 3,000,000
Thereafter.................................................................... 111,000,000
--------------
$ 138,149,000
--------------
--------------
</TABLE>
Certain of these leases contain options to purchase the leased properties at
various prices throughout the leased terms.
F-16
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(5) COMMITMENTS AND CONTINGENCIES (CONTINUED)
As of December 31, 1997, Trump AC has entered into employment agreements
with certain key employees and had approximately $9,415,000 of commitments under
employee agreements. These commitments mature at various dates through 2001.
Taj Associates received a permit under the Coastal Area Facilities Review
Act ("CAFRA") (which included a condition of Taj Associates' casino license)
that initially required Taj Associates begin construction of certain
improvements on the Steel Pier by October 1992, which improvements were to be
completed within 18 months of commencement. Taj Associates initially proposed a
concept to improve the Steel Pier, the estimated cost of which was $30,000,000.
Such concept was approved by the New Jersey Department of Environmental
Protection, the agency which administers CAFRA. In March 1993, Taj Associates
obtained a modification of its CAFRA permit providing for the extension of the
required commencement and completion dates of the improvements to the Steel Pier
for one year, which has been renewed annually based upon an interim use of the
Steel Pier for an amusement park. Taj Associates received additional one-year
extensions of the required commencement and completion dates of the improvements
of the Steel Pier based upon the same interim use of the Steel Pier as an
amusement park pursuant to a sublease ("Pier Sublease") with an amusement park
operator. The pier sublease terminates on December 31, 1998 unless extended.
CASINO LICENSE RENEWAL
The operation of an Atlantic City hotel and casino is subject to significant
regulatory controls which affect virtually all of its operations. Under the
Casino Control Act, Plaza Associates and Taj Associates are required to maintain
certain licenses. Casino licenses must be renewed periodically, are not
transferable, are dependent on the financial stability of the licensee and can
be revoked at any time.
In June 1995, the New Jersey Casino Control Commission ("CCC") renewed Plaza
Associates' and Taj Associates' licenses to operate Trump Plaza and the Taj
Mahal. The CCC renewed Plaza Associates' and Taj Associates' casino licenses for
a period of four years through 1999. In June 1996, the CCC granted TCS, an
initial casino license which, in July 1997, was renewed through July 1998. Upon
revocation, suspension for more than 120 days, or failure to renew the casino
license, the Casino Control Act provides for the mandatory appointment of a
conservator to take possession of the hotel and casino's business and property,
subject to all valid liens, claims and encumbrances.
LEGAL PROCEEDINGS
Plaza Associates, Taj Associates, its Partners, certain members of its
former Executive Committee, and certain of its employees, have been involved in
various legal proceedings. In general, Plaza Associates and Taj Associates have
agreed to indemnify such persons against any and all losses, claims, damages,
expenses (including reasonable costs, disbursements and counsel fees) and
liabilities (including amounts paid or incurred in satisfaction of settlements,
judgments, fines and penalties) incurred by them in said legal proceedings.
Various legal proceedings are now pending against Plaza Associates and Taj
Associates. Plaza Associates and Taj Associates consider all such proceedings to
be ordinary litigation incident to the character of their business. Plaza
Associates and Taj Associates believe that the resolution of these claims
F-17
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(5) COMMITMENTS AND CONTINGENCIES (CONTINUED)
will not, individually or in the aggregate, have a material adverse effect on
their financial condition or results of operations.
Plaza Associates and Taj Associates are also a party to various
administrative proceedings involving allegations that they have violated certain
provisions of the Casino Control Act. Plaza Associates and Taj Associates
believe that the final outcome of these proceedings will not, either
individually or in the aggregate, have a material adverse effect on their
financial condition, results of operations or on the ability of Plaza Associates
or Taj Associates to otherwise retain or renew any casino or other licenses
required under the Casino Control Act for the operation of the respective
properties.
SELF-INSURANCE RESERVES
Self-insurance reserves represent the estimated amounts of uninsured claims
related to employee health medical costs, workmen's compensation and personal
injury claims that have occurred in the normal course of business. These
reserves are established by management based upon specific review of open
claims, with consideration of incurred but not reported claims as of the balance
sheet date. The costs of the ultimate disposition of these claims may differ
from these reserve amounts.
FEDERAL INCOME TAX EXAMINATION
Plaza Associates and Taj Associates are currently involved in examinations
with the Internal Revenue Service ("IRS") concerning Plaza Associates' federal
partnership income tax returns for the years 1989 through 1992 and Taj
Associates' federal partnership income tax returns for the tax years 1992 and
1993. While any adjustment which results from this examination could affect
Plaza Associates' and Taj Associates' state income tax returns, Plaza Associates
and Taj Associates do not believe that adjustments, if any, will have a material
adverse effect on its financial condition or results of operations.
CASINO REINVESTMENT DEVELOPMENT AUTHORITY OBLIGATIONS
Pursuant to the provisions of the Casino Control Act, Plaza Associates and
Taj Associates, must either obtain investment tax credits (as defined in the
Casino Control Act), in an amount equivalent to 1.25% of its gross casino
revenues, or pay an alternative tax of 2.5% of its gross casino revenues (as
defined in the Casino Control Act). Investment tax credits may be obtained by
making qualified investments or by the purchase of bonds at below market
interest rates from the Casino Reinvestment Development Authority ("CRDA").
Plaza Associates and Taj Associates intend on satisfying their obligations
primarily by depositing funds to be used for the purchase of bonds. Plaza
Associates and Taj Associates are required to make quarterly deposits with the
CRDA based on 1.25% of its gross revenue. For the years ended December 31, 1995,
1996 and 1997, Trump AC charged to operations $1,141,000, $3,477,000 and
$3,789,000 respectively, to give effect to the below market interest rates
associated with CRDA bonds that have either been issued or are expected to be
issued from funds deposited. Additionally, for the years ended December 31,
1995, 1996 and 1997, Plaza Associates credited operations for $2,239,000,
$464,000 and $27,000, respectively, resulting from the recapture of the
valuation allowance on the CRDA receivable.
In connection with Trump Plaza East (see Note 7), the CRDA has approved the
refund of up to $14,135,000 of qualifying deposits made by Plaza Associates.
Included in receivables at December 31, 1997, is a receivable from the CRDA of
$5,115,000. While the receivable is fully realizable by Plaza Associates,
F-18
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(5) COMMITMENTS AND CONTINGENCIES (CONTINUED)
the amount of actual reimbursements Plaza Associates will receive in any one
year is limited to 75% and 50%, respectively, of the amount of funds Plaza
Associates deposited with the CRDA to cover its Atlantic City non-housing and
South Jersey obligations. Accordingly, Plaza Associates has recorded $2,836,000
as a current receivable and $2,279,000 as other assets in the accompanying
financial statements.
CONCENTRATIONS OF CREDIT RISKS
In accordance with casino industry practice, Plaza Associates and Taj
Associates extend credit to a limited number of casino patrons, after extensive
background checks and investigations of credit worthiness. For the years ended
December 31, 1996 and 1997, approximately 49% of Plaza Associates and Taj
Associates casino receivables (before allowances) were from customers whose
primary residence is outside the United States, of which approximately 36% and
32%, respectively, represents credit extended to patrons from the Far East.
(6) EMPLOYEE BENEFIT PLANS
Plaza Associates and Taj Associates have a retirement savings plan (the
"Plan") for its nonunion employees under Section 401(k) of the Internal Revenue
Code. Employees are eligible to contribute up to 15% of their earnings to the
Plan and Plaza Associates and Taj Associates will match 50% of the first 5% of
an eligible employee's contributions. Trump AC recorded charges of $886,000,
$1,882,000 and $2,680,000 for matching contributions for the years ended
December 31, 1995, 1996 and 1997, respectively.
Plaza Associates and Taj Associates make payments to various trusteed
multi-employer pension plans under industry-wide union agreements. The payments
are based on the hours worked by or gross wages paid to covered employees. Under
the Employee Retirement Income Security Act, Plaza Associates and Taj Associates
may be liable for their share of the plan's unfunded liabilities, if any, if the
plans are terminated. Based upon 1996 information, the most recent information
available, the combined withdrawal liability of Plaza Associates and Taj
Associates related to the most significant plan's unfunded status approximates
$3,071,000. Pension expense charged to operations for the years ended December
31, 1995, 1996 and 1997 was $423,000, $1,285,000 and $1,595,000 respectively.
F-19
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(7) TRANSACTIONS WITH AFFILIATES
Trump AC has engaged in certain transactions with Trump and entities that
are wholly or partially owned by Trump. Amounts receivable from (owed to) at
December 31 are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
---------------------------
<S> <C> <C>
1996 1997
------------ -------------
Seashore Four Associates (a)..................................... $ (571,000) $ --
Castle Associates (b)............................................ 1,689,000 20,964,000
Trump Casino Services, L.L.C. (b)................................ -- --
Trump Organization (b)........................................... 184,000 670,000
THCR Holdings (b)................................................ 3,935,000 246,000
------------ -------------
$ 5,237,000 $ 21,880,000
------------ -------------
------------ -------------
</TABLE>
- ------------------------
(a) Plaza Associates previously leased two parcels of land under long-term
ground leases from Seashore Four Associates ("Seashore Four") and Trump
Seashore Associates ("Seashore Associates"). In 1995 and 1996, Plaza
Associates paid $950,000 and $1,000,000, respectively, to Seashore Four, and
paid $1,195,000 and $981,000 in 1995 and 1996, respectively, to Seashore
Associates. Plaza Associates purchased the tract from Seashore Associates in
September 1996 and the tract from Seashore Four in January 1997 for
$14,500,000 and $10,000,000, respectively.
(b) Trump Atlantic City Associates engages in various transactions with the
other Atlantic City hotel/ casinos and related casino entities owned by
Trump. These transactions are charged at cost or normal selling price in the
case of retail items and include certain shared professional fees,
insurance, and payroll costs as well as complimentary services offered to
customers.
TCS was formed on June 27, 1996 for the purpose of realizing cost savings
and operational synergies by consolidating certain administrative functions of,
and providing certain services to, Plaza Associates, Castle Associates and Taj
Associates.
SERVICES AGREEMENT
Pursuant to the terms of a Services Agreement with Trump Plaza Management
Corp. ("TPM"), a corporation beneficially owned by Trump, in consideration for
services provided, Plaza Associates paid TPM each year an annual fee of
$1,000,000 in equal monthly installments, and reimbursed TPM on a monthly basis
for all reasonable out-of-pocket expenses incurred by TPM in performing its
obligations under such services agreement, up to certain amounts. Under such
services agreement, approximately $1,300,000 and $1,000,000 was charged to
expense for the years ended December 31, 1995 and 1996. The service agreement
was terminated in August 1996.
Taj Associates had entered into a Services Agreement which provided that
Trump render to Taj Associates marketing, advertising, promotional and related
services with respect to the business operations of Taj Associates. In
consideration for the services to be rendered, Taj Associates was to pay an
annual fee equal to 1.5% of Taj Associates earnings before interest, taxes and
depreciation, as defined, less capital expenditures and partnership
distributions for such year, with a minimum base fee of $500,000 plus expenses.
For the year ended December 31, 1995 and for the period from January 1, 1996
through
F-20
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(7) TRANSACTIONS WITH AFFILIATES (CONTINUED)
April 17, 1996, Taj Associates incurred $2,004,000 and $512,000, respectively,
under the Services Agreement.
TRUMP PLAZA EAST
Under an agreement with Midlantic National Bank, Trump had (i) an option to
acquire Trump Plaza East and (ii) had a lease agreement for Trump Plaza East
which would expire on June 30, 1998 requiring $260,000 per month in lease
payments. In October 1993, Plaza Associates assumed the option and the lease
agreement from Trump.
Until such time as the Trump Plaza East Purchase Option was exercised or
expired, Plaza Associates was obligated, from and after the date it entered into
the Trump Plaza East Purchase Option, to pay the net expenses associated with
Trump Plaza East. During 1995 and for part of 1996, Plaza Associates incurred
approximately $2,340,000 and $1,100,000, respectively, of such expenses of which
$2,045,000 and $348,000, respectively, are included in non-operating expenses in
the accompanying consolidated financial statements.
In connection with the Taj Merger Transaction described in Note 1, Plaza
Associates exercised its option to acquire Trump Plaza East. The purchase price
of $28,084,000 has been included in land and building in the accompanying
financial statements.
(8) FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of the following financial instruments approximates fair
value, as follows: (a) cash and cash equivalents, receivables and payables are
based on the short term nature of these financial instruments and (b) CRDA bonds
and deposits are based on the allowances to give effect to the below market
interest rates.
The estimated fair values of other financial instruments are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1997
----------------------------------
<S> <C> <C>
CARRYING AMOUNT FAIR VALUE
---------------- ----------------
Trump AC Mortgage Notes.................................. $ 1,200,000,000 $ 1,170,000,000
Trump AC Funding II Mortgage Notes....................... $ 72,100,000 $ 72,100,000
Trump AC Funding III Mortgage Notes...................... $ 23,573,000 $ 23,573,000
</TABLE>
The fair values of the Trump AC Mortgage Notes are based on quoted market
prices as of December 31, 1997. The fair value of the Trump AC Funding II
Mortgage Notes and the Trump AC Funding III Mortgage Notes approximate the
carrying value based upon the short term nature of the period outstanding.
There are no quoted market prices for other notes payable and a reasonable
estimate could not be made without incurring excessive costs.
F-21
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(9) COMBINED FINANCIAL INFORMATION--TRUMP AC FUNDING, TRUMP AC FUNDING II AND
TRUMP AC FUNDING III
Combined financial information relating to Trump AC Funding, Trump AC
Funding II and Trump AC Funding III as of December 31, 1997 is as follows:
<TABLE>
<S> <C>
Total Assets (including First Mortgage Notes receivable of
$1,295,673,000 and related interest receivable)............ $1,318,861,000
-------------
-------------
Total Liabilities and Capital (including First Mortgage Notes
payable of $1,295,673,000 and related interest payable).... $1,318,861,000
-------------
-------------
Interest Income.............................................. $ 135,688,000
-------------
-------------
Interest Expense............................................. $ 135,688,000
-------------
-------------
Net Income................................................... --
-------------
-------------
</TABLE>
F-22
<PAGE>
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 5, 1998. Our audit was made for the purpose of
forming an opinion on the basic financial statements taken as a whole. The
accompanying schedule is the responsibility of the Partnerships' management and
is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic consolidated financial
statements. This schedule has been subjected to the auditing procedures applied
in the audit of the basic consolidated financial statements and, in our opinion,
fairly states in all material respects the financial data required to be set
forth therein in relation to the basic consolidated financial statements taken
as a whole.
ARTHUR ANDERSEN LLP
ROSELAND, NEW JERSEY
FEBRUARY 5, 1998
S-1
<PAGE>
SCHEDULE II
TRUMP ATLANTIC CITY ASSOCIATES AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO OTHER BALANCE AT
BEGINNING COSTS AND CHANGES END OF
OF PERIOD EXPENSES (DEDUCTIONS) PERIOD
------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996:
Allowance for doubtful accounts................. $ 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
NO. DESCRIPTION OF EXHIBIT
- ---------- ------------------------------------------------------------------------------------------------------
<C> <S>
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.
21 List of Subsidiaries of Trump Atlantic City Associates.
23.1 Independent Auditor's Consent of Arthur Anderson LLP.
27.1 Financial Data Schedule of Trump Atlantic City Associates.
27.2 Financial Data Schedule of Trump Atlantic City Funding, Inc.
27.3 Financial Data Schedule of Trump Atlantic City Funding II, Inc.
27.4 Financial Data Schedule of Trump Atlantic City Funding III, Inc.
</TABLE>
S-3
<PAGE>
Exhibit 4.33
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TRUMP ATLANTIC CITY ASSOCIATES
TRUMP ATLANTIC CITY FUNDING III, INC.
Issuers
TRUMP PLAZA ASSOCIATES
TRUMP TAJ MAHAL ASSOCIATES
TRUMP ATLANTIC CITY CORPORATION
TRUMP CASINO SERVICES, L.L.C.
TRUMP COMMUNICATIONS, L.L.C.
Guarantors
and
U.S. BANK NATIONAL ASSOCIATION
Trustee
________________
INDENTURE
Dated as of December 10, 1997
________________
$25,000,000 11 1/4% First Mortgage Notes (TAC III) due 2006
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
- ------- ---------
310(a)(1).................................................... 8.10
(a)(2).................................................... 8.10
(a)(3).................................................... N.A.
(a)(4).................................................... N.A.
(a)(5).................................................... 8.10
(b) .................................................... 8.8;
8.10;
12.2
(c) .................................................... N.A.
311(a) .................................................... 8.11
(b) .................................................... 8.11
(c) .................................................... N.A.
312(a) .................................................... 2.5
(b) .................................................... 12.3
(c) .................................................... 12.3
313(a) .................................................... 8.6
(b) .................................................... 8.6
(c) .................................................... 8.6;
12.2
(d) .................................................... 8.6
314(a) .................................................... 5.7;
5.8;
12.2
(b) .................................................... 4.2
(c)(1).................................................... 2.2;
8.2;
12.4;
12.5
(c)(2).................................................... 8.2;
12.4;
12.5
i
<PAGE>
(c)(3).................................................... 4.1(c);
4.2
(d) .................................................... 4.1(c);
4.4
(e) .................................................... 12.5
(f) .................................................... N.A.
315(a) .................................................... 8.1(b)
(b) .................................................... 8.5
(c) .................................................... 8.1(a)
(d) .................................................... 2.9;
7.11;
8.1(c)
(e) .................................................... 7.13
316(a)(last sentence)........................................ 2.9
(a)(1)(A)................................................. 7.11
(a)(1)(B)................................................. 7.12
(a)(2).................................................... N.A.
(b) .................................................... 7.7;
7.12;
10.2
317(a)(1).................................................... 7.3
(a)(2).................................................... 7.4
(b) .................................................... 2.4
318(a) .................................................... 12.1
__________
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be
deemed to be a part of the Indenture.
ii
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions.................................................... 1
SECTION 1.2 Incorporation by Reference of TIA.............................. 31
SECTION 1.3 Rules of Construction.......................................... 32
ARTICLE II
THE SECURITIES
SECTION 2.1 Form and Dating................................................ 33
SECTION 2.2 Execution and Authentication................................... 33
SECTION 2.3 Registrar and Paying Agent..................................... 34
SECTION 2.4 Paying Agent to Hold Assets in Trust........................... 35
SECTION 2.5 Securityholder Lists........................................... 35
SECTION 2.6 Transfer and Exchange.......................................... 36
SECTION 2.7 Replacement Securities......................................... 43
SECTION 2.8 Outstanding Securities......................................... 43
SECTION 2.9 Treasury Securities............................................ 44
SECTION 2.10 Temporary Securities........................................... 44
SECTION 2.11 Cancellation................................................... 45
SECTION 2.12 Defaulted Interest............................................. 45
SECTION 2.13 CUSIP Numbers.................................................. 45
ARTICLE III
REDEMPTION
SECTION 3.1 Right of Redemption............................................ 46
SECTION 3.2 Redemption Pursuant to Applicable Laws......................... 46
SECTION 3.3 Notices to Trustee............................................. 47
SECTION 3.4 Selection of Securities to Be Redeemed......................... 47
SECTION 3.5 Notice of Redemption........................................... 47
SECTION 3.6 Effect of Notice of Redemption................................. 49
SECTION 3.7 Deposit of Redemption Price.................................... 49
iii
<PAGE>
Page
SECTION 3.8 Securities Redeemed in Part.................................... 50
ARTICLE IV
SECURITY
SECTION 4.1 Security Interest.............................................. 50
SECTION 4.2 Recording; Opinions of Counsel................................. 51
SECTION 4.3 Disposition of Certain Collateral.............................. 52
SECTION 4.4 Certain Releases of Collateral................................. 54
SECTION 4.5 Payment of Expenses............................................ 54
SECTION 4.6 Suits to Protect the Collateral................................ 54
SECTION 4.7 Trustee's Duties............................................... 54
SECTION 4.8 Restricted Funds Account....................................... 55
ARTICLE V
COVENANTS
SECTION 5.1 Payment of Securities.......................................... 55
SECTION 5.2 Maintenance of Office or Agency................................ 56
SECTION 5.3 Limitation on Restricted Payments.............................. 56
SECTION 5.4 Corporate and Partnership Existence............................ 58
SECTION 5.5 Payment of Taxes and Other Claims.............................. 58
SECTION 5.6 Maintenance of Insurance....................................... 58
SECTION 5.7 Compliance Certificate; Notice of Default...................... 59
SECTION 5.8 Provision of Financial Statements.............................. 60
SECTION 5.9 Waiver of Stay, Extension or Usury Laws........................ 60
SECTION 5.10 Limitation on Transactions with Affiliates..................... 61
SECTION 5.11 Limitation on Incurrence of Additional Indebtedness............ 61
SECTION 5.12 Restriction on Sale and Issuance of Subsidiary Stock........... 63
SECTION 5.13 Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries............................ 63
SECTION 5.14 Limitation on Liens............................................ 64
SECTION 5.15 Limitation on Sales of Assets and Subsidiary Stock;
Event of Loss.................................................. 64
SECTION 5.16 Future Subsidiary Guarantors................................... 68
SECTION 5.17 Limitation on Activities of Funding II......................... 68
SECTION 5.18 Rule 144A Information Requirement.............................. 68
iv
<PAGE>
Page
SECTION 5.19 Restriction on Certain Agreements.............................. 69
SECTION 5.20 Limitation on Leases........................................... 69
SECTION 5.21 Limitation on Status as Investment Company..................... 70
SECTION 5.22 Future Collateral Agreements................................... 70
SECTION 5.23 Limitations on Use of Proceeds from the Offering............... 70
ARTICLE VI
SUCCESSORS
SECTION 6.1 Limitation on Merger, Sale or Consolidation.................... 70
SECTION 6.2 Successor Substituted.......................................... 71
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.1 Events of Default.............................................. 72
SECTION 7.2 Acceleration of Maturity Date; Rescission and Annulment........ 75
SECTION 7.3 Collection of Indebtedness and Suits for Enforcement by
Trustee........................................................ 76
SECTION 7.4 Trustee May File Proofs of Claim............................... 77
SECTION 7.5 Trustee May Enforce Claims Without Possession of Securities.... 78
SECTION 7.6 Priorities..................................................... 78
SECTION 7.7 Limitation on Suits............................................ 79
SECTION 7.8 Unconditional Right of Holders to Receive Principal, Premium and
Interest....................................................... 79
SECTION 7.9 Rights and Remedies Cumulative................................. 80
SECTION 7.10 Delay or Omission Not Waiver................................... 80
SECTION 7.11 Control by Holders............................................. 80
SECTION 7.12 Waiver of Past Default......................................... 80
SECTION 7.13 Undertaking for Costs.......................................... 81
SECTION 7.14 Restoration of Rights and Remedies............................. 81
v
<PAGE>
Page
ARTICLE VIII
TRUSTEE
SECTION 8.1 Duties of Trustee.............................................. 82
SECTION 8.2 Rights of Trustee.............................................. 83
SECTION 8.3 Individual Rights of Trustee................................... 84
SECTION 8.4 Trustee's Disclaimer........................................... 84
SECTION 8.5 Notice of Default.............................................. 84
SECTION 8.6 Reports by Trustee to Holders.................................. 85
SECTION 8.7 Compensation and Indemnity..................................... 86
SECTION 8.8 Replacement of Trustee......................................... 87
SECTION 8.9 Successor Trustee by Merger, Etc............................... 88
SECTION 8.10 Eligibility; Disqualification.................................. 88
SECTION 8.11 Preferential Collection of Claims against Issuers.............. 88
ARTICLE IX
LEGAL DEFEASANCE AND COVENANT DEFEASANCE;
SATISFACTION AND DISCHARGE
SECTION 9.1 Option to Effect Legal Defeasance or Covenant Defeasance....... 88
SECTION 9.2 Legal Defeasance and Discharge................................. 89
SECTION 9.3 Covenant Defeasance............................................ 89
SECTION 9.4 Conditions to Legal or Covenant Defeasance..................... 90
SECTION 9.5 Deposited U.S. Legal Tender and U.S. Government Obligations
to Be Held in Trust; Other Miscellaneous Provisions............ 91
SECTION 9.6 Repayment to Issuers........................................... 91
SECTION 9.7 Reinstatement.................................................. 92
SECTION 9.8 Satisfaction and Discharge of Indenture........................ 92
ARTICLE X
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 10.1 Supplemental Indentures Without Consent of Holders............ 93
SECTION 10.2 Amendments, Supplemental Indentures and Waivers with
Consent of Holders............................................ 94
vi
<PAGE>
Page
SECTION 10.3 Compliance with TIA........................................... 95
SECTION 10.4 Revocation and Effect of Consents............................. 95
SECTION 10.5 Notation on or Exchange of Securities......................... 96
SECTION 10.6 Trustee to Sign Amendments, Etc............................... 96
ARTICLE XI
RIGHT TO REQUIRE REPURCHASE
SECTION 11.1 Repurchase of Securities at Option of the Holder Upon
Change of Control............................................. 97
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 TIA Controls................................................. 100
SECTION 12.2 Notices...................................................... 100
SECTION 12.3 Communications by Holders with Other Holders................. 102
SECTION 12.4 Certificate and Opinion as to Conditions Precedent........... 102
SECTION 12.5 Statements Required in Certificate or Opinion................ 102
SECTION 12.6 Rules by Trustee, Paying Agent, Registrar.................... 103
SECTION 12.7 Legal Holidays............................................... 103
SECTION 12.8 Governing Law................................................ 103
SECTION 12.9 No Interpretation of Other Agreements........................ 104
SECTION 12.10 No Recourse against Others................................... 104
SECTION 12.11 Successors................................................... 104
SECTION 12.12 Duplicate Originals.......................................... 104
SECTION 12.13 Severability................................................. 104
SECTION 12.14 Table of Contents, Headings, Etc............................. 105
SECTION 12.15 Gaming Laws.................................................. 105
SECTION 12.16 Registration Rights.......................................... 105
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Page
ARTICLE XIII
GUARANTY
SECTION 13.1 Guaranty..................................................... 105
SECTION 13.2 Execution and Delivery of Guaranty........................... 107
SECTION 13.3 Certain Bankruptcy Events.................................... 107
SECTION 13.4 Rights Under the Guaranty.................................... 107
SECTION 13.5 Severability................................................. 108
SECTION 13.6 Merger or Consolidation of Guarantors........................ 108
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Page
EXHIBITS
Exhibit A Form of First Mortgage Note (TAC III) due 2006.......... A-1
Exhibit B Form of Guaranty........................................ B-1
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INDENTURE, dated as of December 10, 1997, between Trump Atlantic
City Associates, a New Jersey 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"),
as joint and several obligors; Trump Plaza Associates, a New Jersey
partnership ("Plaza Associates"), and Trump Taj Mahal Associates, a New
Jersey partnership ("Taj Associates"), Trump Atlantic City Corporation, a
Delaware corporation and a wholly owned subsidiary of the Company ("TACC"),
Trump Casino Services, L.L.C., a New Jersey limited liability corporation and
a wholly-owned subsidiary of the Company ("TCS"), Trump Communications,
L.L.C., a New Jersey limited liability company and a wholly-owned subsidiary
of the Company ("Trump Communications" and, together with Taj Associates,
Plaza Associates, TACC, TCS and such other persons as may be required from
time to time to execute a Guaranty hereunder, the "Guarantors"); and U.S.
Bank National Association, a national banking association, as Trustee.
Each party hereto agrees as follows for the benefit of each other
party and for the equal and ratable benefit of the Holders of the Company's
11 1/4% Series A First Mortgage Notes due (TAC III) 2006 and the class of
11 1/4% Series B First Mortgage Notes (TAC III) due 2006 to be exchanged for
the 11 1/4% Series A First Mortgage Notes (TAC III) due 2006: being issued by
the Issuers and guaranteed by the Guarantors.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions.
"Acceleration Notice" shall have the meaning specified in Section
7.2.
"Acceptance Amount" shall have the meaning specified in Section 5.15.
"Acquired Indebtedness" means Indebtedness or Disqualified Capital
Stock of any Person (a) existing at the time such Person becomes a Subsidiary
of the Company, including by designation, or is merged or consolidated into
or with the Company or one of its Subsidiaries or (b) assumed in connection
with the Acquisition of assets from such Person, in each case, other than
Indebtedness incurred in connection with, or in contemplation of, such Person
becoming a Subsidiary or such acquisition, consolidation or merger.
Indebtedness shall be deemed to be incurred on the date of the related
acquisition of assets from any Person or the date the acquired Person becomes
a Subsidiary, including by designation, or the date of such merger or
consolidation, as applicable.
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"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.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Approvals" means all approvals, licenses (including Gaming
Licenses), permits, authorizations, findings and other filings necessary
under applicable gaming laws.
"Asset Sale" shall have the meaning specified in Section 5.15.
"Asset Sale Offer" shall have the meaning specified in Section 5.15.
"Asset Sale Offer Amount" shall have the meaning specified in
Section 5.15.
"Asset Sale Offer Period" shall have the meaning specified in
Section 5.15.
"Asset Sale Offer Price" shall have the meaning specified in Section
5.15.
"Asset Sale Purchase Date" shall have the meaning specified in
Section 5.15.
"Asset Sale Put Date" shall have the meaning specified in Section
5.15.
"Assignments of Leases and Rents" means collectively, those
Assignments of Leases and Rents dated the date hereof between each of Plaza
Associates and Taj Associates, respectively, and the Collateral Agent, as the
same may be amended from time to time in accordance with their terms and, to
the extent applicable, the terms of this Indenture.
"Authorized Representative" of any person shall mean (i) in the case
of the Company, (x) any person or persons that has or have been designated by
the Board of
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Directors of Trump Atlantic City Holding, Inc. ("Trump AC Holding"), as
general partner of the Company, to be an "Authorized Representative" under
this Indenture or (y) any member of the Board of Directors of Trump AC
Holding; (ii) in the case of Funding III, any Authorized Representative of
the Company (with Funding III, by its execution and delivery of this
Indenture, irrevocably appointing the Authorized Representatives from time to
time of the Company as its Authorized Representatives hereunder); and (iii)
in the case of any Guarantor or other obligor, any Officer of such party or,
if such person has no Officers, any person or persons that have been
designated by the Board of Directors of Trump AC Holding to be an "Authorized
Representative" of such person under this Indenture.
"Average Life" means, as of the date of determination, with respect
to any security or instrument, the quotient obtained by dividing (i) the sum
of (a) the product of the number of years from the date of determination to
the date or dates of each successive scheduled principal (or redemption)
payment of such security or instrument and (b) the amount of each such
respective principal (or redemption) payment by (ii) the sum of all such
principal (or redemption) payments.
"Bankruptcy Law" means Title 11, United States Code, as amended, or
any similar United States federal or state law relating to bankruptcy,
insolvency, receivership, winding-up, liquidation, reorganization or relief
of debtors or any amendment to, succession to or change in any such law.
"Beneficial Owner" or "beneficial owner" for purposes of the
definition of Change of Control has the meaning attributed to it in Rules
13d-3 and 13d-5 under the Exchange Act (as in effect on the Issue Date),
whether or not applicable, except that a "person" shall be deemed to have
"beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time.
"Board of Directors" means, with respect to any Person, the Board of
Directors of such person or any committee of the Board of Directors of such
Person authorized, with respect to any particular matter, to exercise the
power of the Board of Directors of such Person.
"Board Resolution" means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York, New York
are authorized or obligated by law or executive order to close.
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"Capital Contribution" shall mean, with respect to any Person, that
amount of money or the Fair Market Value of any Property (net of liabilities
to which such Property is subject) irrevocably and unconditionally
contributed to such Person in exchange for Qualified Equity Interests of such
Person; provided, however, that such term shall not include any contribution
of funds obtained from the proceeds of the equity offering by THCR prior to
or substantially concurrent with the issuance of the Existing Notes on April
17, 1996 (including proceeds from the exercise of the underwriters' over
allotment option) except for such contributions of proceeds therefrom in
excess of $270 million, less amounts received therefrom by the Company from
the sale of its Qualified Capital Stock to THCR Holdings.
"Capitalized Lease Obligation" of any Person means any obligation of
such Person or its Subsidiaries on a Consolidated basis under a lease that is
required to be capitalized for financial reporting purposes in accordance
with GAAP, and the amount of Indebtedness represented by such obligation
shall be the capitalized amount of such obligations, as determined in
accordance with GAAP.
"Capital Stock" means, with respect to any corporation, any and all
shares, interests, rights to purchase (other than convertible or exchangeable
Indebtedness), warrants, options, participations or other equivalents of or
interests (however designated) in stock issued by that corporation.
"Cash Collateral" means Collateral in the form of U.S. Legal Tender
to be deposited in the Restricted Funds Account.
"Cash Equivalent" means (a) any evidence of Indebtedness, maturing
not more than one year after the date of acquisition, issued by the United
States of America, or an instrumentality or agency thereof and guaranteed
fully as to principal, premium, if any, and interest by the United States of
America, (b) any certificate of deposit, maturing not more than one year
after the date of acquisition, issued by, or time deposit of, a commercial
banking institution that is a member of the Federal Reserve System and that
has combined capital and surplus and undivided profits of not less than
$300.0 million and whose debt has a rating, at the time as of which any
investment therein is made, of "P-1" (or higher) according to Moody's
Investors Service, Inc. or any successor rating agency, or "A-1" (or higher)
according to Standard & Poor's Ratings Service, a division of McGraw-Hill,
Inc., or any successor rating agency, (c) commercial paper, maturing not more
than one year after the date of acquisition, issued by a corporation (other
than an Affiliate or Subsidiary of the Company) organized and existing under
the laws of the United States of America with a rating, at the time as of
which any investment therein is made, of "P-1" (or higher) according to
Moody's Investors Service, Inc. or any successor rating agency, or "A-1" (or
higher) according to Standard & Poor's Ratings Service, a division of
McGraw-Hill, Inc., or any successor rating
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agency and (d) any money market deposit accounts issued or offered by a
domestic commercial bank having capital and surplus in excess of $300.0
million.
"Casino Control Act" shall mean the New Jersey Casino Control Act.
"Casino Hotels" means collectively (i) the casino and hotel complex
currently known as the "Trump Plaza Hotel and Casino" in Atlantic City, New
Jersey and ancillary structures and facilities located on the premises and
all furniture, fixtures and equipment at any time contained therein in each
case owned by or leased to Plaza Associates which are covered by the Lien of
the Mortgage Documents and (ii) the casino and hotel complex currently known
as the "Trump Taj Mahal Casino Resort" in Atlantic City, New Jersey and
ancillary structures and facilities located on the premises and all
furniture, fixtures and equipment at any time contained therein in each case
owned by or leased to Taj Associates which are covered by the Lien of the
Mortgage Documents.
"Casino Sale" shall have the meaning specified in Section 5.15
hereof.
"Change of Control" means any of the following events:
(i) THCR Holdings ceases to be the "beneficial owner," directly or
indirectly, of 100% of the Equity Interests of the Company;
(ii) any sale, transfer or other conveyance, whether direct or
indirect, of all or substantially all of the assets of THCR Holdings or
THCR, on a Consolidated basis, in one transaction or a series of related
transactions, if, immediately after giving effect to such transaction,
any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable),
other than the Permitted Holder, or if applicable in the case of THCR
Holdings, THCR, becomes the "beneficial owner" (as defined), directly or
indirectly, of more than 35% of the total voting power of the Voting
Stock of the transferee unless the Permitted Holder "beneficially owns"
(as so defined), directly or indirectly, in the aggregate a greater
percentage of the total voting power of the Voting Stock of the
transferee than such other person or group and has the right or ability
by voting power, contract or otherwise to elect or designate a majority
of the Board of Directors of THCR;
(iii) any "person" or "group" (as such terms are used for purposes
of Sections 13(d) and 14(d) of the Exchange Act, whether or not
applicable), other than the Permitted Holder, is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act), directly or indirectly, of more than 35% of the total
voting power of the Voting Stock of THCR, or any successor thereto by
merger, consolidation or otherwise, unless the Permitted Holder
"beneficially owns" (as so
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defined), directly or indirectly, in the aggregate a greater percentage
of the total voting power of the Voting Stock of THCR than such other person
or group and has the right or ability by voting power, contract or otherwise
to elect or designate for election a majority of the Board of Directors of
THCR (for purposes of this definition, such other person shall be deemed to
beneficially own any Voting Stock of a specified corporation held by a
parent corporation, if such other person "beneficially owns" (as so
defined), directly or indirectly, more than 35% of the voting power of
the Voting Stock of such parent corporation and the Permitted Holder
"beneficially owns" (as so defined), directly or indirectly, in the
aggregate, a lesser percentage of the voting power of the Voting Stock of
such parent corporation and does not have the right or ability by voting
power, contract or otherwise to elect or designate for election a
majority of the Board of Directors of such parent corporation); or
(iv) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of THCR
or Funding 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 III, 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 III, as applicable,
then in office.
"Change of Control Date" shall have the meaning specified in Section
11.1.
"Change of Control Offer" shall have the meaning specified in
Section 11.1.
"Change of Control Offer Period" shall have the meaning specified in
Section 11.1.
"Change of Control Purchase Date" shall have the meaning specified
in Section 11.1.
"Change of Control Purchase Price" shall have the meaning specified
in Section 11.1.
"Change of Control Put Date" shall have the meaning specified in
Section 11.1.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Collateral" means the Property and assets of the Issuers or the
Guarantors which, at the time in question, is subject to the Liens created by
the Mortgage Documents or this Indenture.
"Collateral Agency Agreement" means that agreement dated April 17,
1996 by and among the Issuers, Funding, the Guarantors, the Collateral Agent,
the Guarantors and the Trustee, as well as such other persons as may be
permitted to become parties thereunder pursuant to the terms thereof, as it
may be amended from time to time in accordance with its terms.
"Collateral Agent" shall mean U.S. Bank National Association
(formerly First Bank National Association), as collateral agent under the
Collateral Agency Agreement.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means such
successor.
"Company Request" means a written request of the Issuers in the form
of an Officers' Certificate.
"Consolidated Coverage Ratio" of any person on any date of
determination (the "Transaction Date") means the ratio, on a pro forma basis,
of (a) the aggregate amount of Consolidated EBITDA of such person
attributable to continuing operations and businesses (exclusive of amounts
attributable to operations and businesses permanently discontinued or
disposed of) for the Reference Period to (b) the aggregate Consolidated Fixed
Charges of such person (exclusive of amounts attributable to operations and
businesses permanently discontinued or disposed of, but only to the extent
that the obligations giving rise to such Consolidated Fixed Charges would no
longer be obligations contributing to such person's Consolidated Fixed
Charges subsequent to the Transaction Date) during the Reference Period;
provided, that for purposes of such calculation, (i) Acquisitions which
occurred during the Reference Period or subsequent to the Reference Period
and on or prior to the Transaction Date shall be assumed to have occurred on
the first day of the Reference Period, (ii) transactions giving rise to the
need to calculate the Consolidated Coverage Ratio shall be assumed to have
occurred on the first day of the Reference Period, (iii) the incurrence of
any Indebtedness or issuance of any Disqualified Capital Stock during the
Reference Period or subsequent to the Reference Period and on or prior to the
Transaction Date (and the application of the proceeds therefrom to the extent
used to refinance or retire other Indebtedness) shall be assumed to have
occurred on the first day of such Reference Period, and (iv) the Consolidated
Fixed Charges of such person attributable to interest on any Indebtedness or
dividends on any Disqualified Capital Stock bearing a floating interest (or
dividend) rate shall be computed on a pro forma basis as if the average rate
in effect from the beginning of the Reference Period to the Transaction Date
had been the applicable rate for the entire period, unless such Person or any
of its Subsidiaries
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is a party to an Interest Swap and Hedging Obligation (which shall remain in
effect for the 12-month period immediately following the Transaction Date)
that has the effect of fixing the interest rate on the date of computation,
in which case such rate (whether higher or lower) shall be used.
"Consolidated EBITDA" means, with respect to any person, for any
period, the Consolidated Net Income of such person for such period
(determined, for purposes of this definition only, without taking into effect
clause (x) of the last sentence of the definition thereof) adjusted to add
thereto (to the extent deducted from net revenues in determining Consolidated
Net Income), without duplication, the sum of (i) Consolidated income tax
expense, (ii) Consolidated depreciation and amortization expense, provided,
that consolidated depreciation and amortization of a Subsidiary that is a
less than Wholly-owned Subsidiary shall only be added to the extent of the
equity interest of such person in such Subsidiary and (iii) Consolidated
Fixed Charges, less the amount of all cash payments made by such person or
any of its Subsidiaries during such period to the extent such payments relate
to non-cash charges that were added back in determining Consolidated EBITDA
for such period or any prior period.
"Consolidated Fixed Charges" of any person means, for any period,
the aggregate amount (without duplication and determined in each case in
accordance with GAAP) of (a) interest expensed or capitalized, paid, accrued,
or scheduled to be paid or accrued (including, in accordance with the
following sentence, interest attributable to Capitalized Lease Obligations)
of such person and its Consolidated Subsidiaries during such period,
including (i) original issue discount and non-cash interest payments or
accruals on any Indebtedness, (ii) the interest portion of all deferred
payment obligations and (iii) all commissions, discounts and other fees and
charges owed with respect to bankers' acceptances and letters of credit
financings and currency and Interest Swap and Hedging Obligations, in each
case to the extent attributable to such period, (b) one-third of Consolidated
Rental Payments for such period attributable to operating leases of such
person and its Consolidated Subsidiaries, and (c) the amount of dividends
accrued or payable by such person or any of its Consolidated Subsidiaries in
respect of Preferred Stock (other than by Subsidiaries of such 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
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extent included in computing such net income (or loss) and without
duplication): (a) all gains (but not losses) which are either extraordinary
(as determined in accordance with GAAP) or are either unusual or nonrecurring
(including any gain from the sale or other disposition of assets outside the
ordinary course of business or from the issuance or sale of any capital
stock), less all fees and expenses relating thereto, (b) the net income, if
positive, of any person, other than a Consolidated Wholly-owned Subsidiary,
in which such person or any of its Consolidated Subsidiaries has an interest,
except to the extent of the amount of any dividends or distributions actually
paid in cash to such person or a Consolidated Wholly-owned Subsidiary of such
person during such period, but in any case not in excess of such person's pro
rata share of such person's net income for such period, (c) the net income or
loss of any person acquired in a pooling of interests transaction for any
period prior to the date of such acquisition, (d) the net income, if
positive, of any of such person's Consolidated Subsidiaries to the extent
that the declaration or payment of dividends or similar distributions is not
at the time permitted by operation of the terms of its charter or bylaws or
any other agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Consolidated Subsidiary and (e)
net gains or losses in respect of the redemption or repurchase of (i) the
11.35% Mortgage Bonds Series A, due 1999 of Trump Taj Mahal Funding, Inc.,
(ii) the 10 7/8% First Mortgage Notes due 2001 of Trump Plaza Funding, Inc.
pursuant to the retirement thereof (and, in respect of the defeased portion
thereof, net losses relating to unamortized loan costs) or (iii) the 12 1/2%
Pay-in-Kind Notes due 2003 of the Company. To the extent not already reduced
thereby, Consolidated Net Income of the Company for any period shall be
reduced by the aggregate amount of (x) all Permitted Tax Distributions made
during, or distributable in respect of, such period and (y) all payments made
during such period pursuant to the TPM Services Agreement.
"Consolidated Net Worth" of any person at any date means, in the
case of a partnership, such person's partners' capital and, in the case of a
corporation, the aggregate Consolidated stockholders' equity of such person
(plus amounts attributable to preferred stock) and its Consolidated
Subsidiaries, as would be shown on the consolidated balance sheet of such
person prepared in accordance with GAAP, adjusted to exclude (to the extent
included in calculating such equity), (a) the amount of any such
stockholders' equity attributable to Disqualified Capital Stock or treasury
stock of such person and its Consolidated Subsidiaries, (b) all upward
revaluations and other write-ups in the book value of any asset of such
person or a Consolidated Subsidiary of such person subsequent to the Issue
Date, and (c) all investments in Subsidiaries that are not Consolidated
Subsidiaries and in persons that are not Subsidiaries.
"Consolidated Rental Payments" of any Person means the aggregate
rental obligations of such Person and its Consolidated Subsidiaries (not
including taxes, insurance, maintenance and similar expenses that the lessee
is obligated to pay under the terms of the relevant leases), determined on a
Consolidated basis in conformity with GAAP, payable in
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respect of such period under leases of real or personal property (net of
income from subleases thereof, not including taxes, insurance, maintenance
and similar expenses that the sublessee is obligated to pay under the terms
of such sublease), whether or not such obligations are reflected as
liabilities or commitments on a Consolidated balance sheet of such Person and
its Subsidiaries or in the notes thereto, excluding, however, in any event,
that portion of Consolidated Fixed Charges of such Person representing
payments by such Person or any of its Consolidated Subsidiaries in respect of
Capitalized Lease Obligations.
"Consolidated Subsidiary" means, for any person, each Subsidiary of
such person (whether now existing or hereafter created or acquired), the
financial statements of which are consolidated for financial statement
reporting purposes with the financial statements of such person in accordance
with GAAP.
"Consolidation" means, with respect to any Person, the consolidation
of the accounts of such Person and each of its Subsidiaries if and to the
extent the accounts of such Person and each of its Subsidiaries would
normally be consolidated with those of such Person, all in accordance with
GAAP consistently applied. The term "Consolidated" shall have a similar
meaning.
"Corporate Trust Office" means the office of the Trustee in the
Borough of Manhattan, The City of New York and 180 East Fifth Street, St.
Paul, Minnesota, 55101.
"CRDA" means the New Jersey Casino Reinvestment Development
Authority or any successor entity thereto.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Defaulted Interest" shall have the meaning specified in Section
2.12.
"Definitive Securities" mean Securities that are in the form of
security attached hereto as Exhibit A but do not include the information
called for by footnotes 3 and 6 thereof.
"Depositary" means, with respect to the Securities issuable or
issued in whole or in part in global form, the person specified in Section
2.3 as the Depositary with respect to the Securities, until a successor shall
have been appointed and become such pursuant to the applicable provision of
this Indenture, and, thereafter, "Depositary" shall mean or include such
successor.
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"Disqualified Capital Stock" means, with respect to any person, an
Equity Interest of such person that, by its terms or by the terms of any
security into which it is convertible, exercisable or exchangeable, is, or
upon the happening of an event (other than the disqualification of the holder
thereof by a Gaming Authority) or the passage of time would be, required to
be redeemed or repurchased (including at the option of the holder thereof) in
whole or in part, on or prior to the final Stated Maturity of the Securities.
"Egg Harbor Mortgage" shall have the meaning given to it in the
Plaza Mortgage.
"Egg Harbor Parcel" means that warehouse and office facility owned
by Plaza Associates and located on the premises known as Block 404 Lots 13
and 14 of the official tax map of Egg Harbor Township, New Jersey, containing
approximately 64,000 square feet of space.
"Equity Interest" of any Person means any shares, interests,
participations or other equivalents (however designated) in such Person's
equity, and shall in any event include any Capital Stock issued by, or
partnership interests in, such Person.
"Event of Default" shall have the meaning specified in Section 7.1.
"Event of Loss" means, with respect to any property or asset, any
(i) loss, destruction or damage of such property or asset, or (ii) any
condemnation, seizure or taking, by exercise of the power of eminent domain
or otherwise, of such property or asset, or confiscation or requisition of
the use of such property or asset.
"Excepted Property" shall have the meaning given to it in each of
the Mortgages.
"Excess Proceeds" shall have the meaning specified in Section 5.15.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Securities" means the 11 1/4% Series B First Mortgage Notes
(TAC III) due 2006, as supplemented from time to time in accordance with the
terms hereof, to be issued pursuant to this Indenture in connection with the
offer to exchange Exchange Securities for the Initial Securities that may be
made by the Company pursuant to the Registration Rights Agreement that
contain the information referred to in footnotes 1, 2 and 8 to the form of
Security attached hereto as Exhibit A.
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"Existing Notes" means the 11 1/4% First Mortgage Notes due 2006
issued by the Company and Funding pursuant to the Existing Note Indenture.
"Existing Note Indenture" means the indenture dated April 17, 1996
between the Company, Funding, the guarantors named therein and First Bank
National Association (now known as U.S. Bank National Association) pursuant
to which the Existing Notes were issued.
"F, F&E Financing Agreement" means an agreement which creates a Lien
upon any after-acquired tangible personal property and/or other items
constituting operating assets, which are financed, purchased or leased for
the purpose of engaging in or developing a Related Business.
"Facility Lease" shall have the meaning given to it in each of the
Mortgages.
"Fair Market Value" means, with respect to any asset or property,
the sale value that would be obtained in an arm's-length transaction between
an informed and willing seller under no compulsion to sell and an informed
and willing buyer under no compulsion to buy and, with respect to any
redemption of Securities pursuant to the Gaming Laws means (a) the last sales
price regular way on the last trading day prior to the date of determination
of such value on the largest national securities exchange (or, if said
security is not listed on a national securities exchange, on the National
Market System of the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ")) on which such Securities shall have
traded on such trading day, or (b) if no such sales of such Securities
occurred on such trading day, the mean between the "bid" and "asked" prices
on such national securities exchange or as quoted on the National Market
System of NASDAQ, as the case may be, on such last trading day, or (c) if the
Securities are not listed or quoted on any national securities exchange or
the Nasdaq National Market, the average of the closing bid and asked prices
on such day in the over-the-counter market as reported by NASDAQ or, if bid
and asked prices for the Securities have not been reported through NASDAQ,
the average of the bid and asked prices on such day as furnished by any New
York Stock Exchange member firm regularly making a market in the Securities,
selected for such purpose by Funding III, or (d) if none of clauses (a)
through (c) are applicable, the fair market value of such Securities as of
the date of determination as determined in such manner as shall be
satisfactory to Funding 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 Securities.
"Funding" means Trump Atlantic City Funding, Inc., a co-issuer of
the Existing Notes.
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"Funding II" means Trump Atlantic City Funding II, Inc., a co-issuer
of the TAC II Notes.
"Funding III" means Trump Atlantic City Funding III, Inc. until a
successor replaces it as an Issuer pursuant to this Indenture, and thereafter
means such successor.
"Future Collateral Agreements" means collectively those collateral
agreements in favor of the Collateral Agent for the benefit of the Holders
and the other lenders secured thereby pursuant to the Collateral Agency
Agreement, by the Company or any of its Subsidiaries, as the case may be,
including, without limitation, those which are required to be executed and
delivered under Section 5.22.
"Gaming Authority" means the New Jersey Casino Control Commission,
the New Jersey Division of Gaming Enforcement or any other governmental
agency which regulates gaming in a jurisdiction in which the Company or any
of the Subsidiaries conducts gaming activities.
"Gaming Law" means any law, rule, regulation or ordinance governing
gaming activities and any administrative rules or regulations promulgated
thereunder, and any other corresponding statutes, rules and regulations.
"Gaming Licenses" means every material license, material franchise,
or other material authorization required to own, lease, operate or otherwise
conduct or manage gaming in any state or jurisdiction where the Company or
its Subsidiaries conduct business, and any applicable liquor licenses.
"Generally Accepted Accounting Principles" or "GAAP" means United
States generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting
profession as in effect on the Issue Date.
"Global Security" means a Security that contains the information
referred to in footnotes 3 and 6 to the form of Security attached hereto as
Exhibit A.
"Governmental Authority" means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
the United States or foreign government, any state, province or any city or
other political subdivision and whether now or hereafter in existence, or any
officer or official thereof, and any maritime authority.
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"Ground Lease" means the ground lease, as amended or supplemented in
accordance with the Mortgage Documents, which expires on December 31, 2078,
pursuant to which Plaza Associates is the current lessee, and Plaza Hotel
Management Company (the "PHMC Lease") is the current lessor.
"Guaranteed Debt" of any Person means, without duplication, all
indebtedness of any other Person referred to in the definition of
Indebtedness contained in this section guaranteed directly or indirectly in
any manner by such Person, or in effect guaranteed directly or indirectly by
such Person through an agreement (a) to pay or purchase such Indebtedness or
to advance or supply funds for the payment or purchase of such Indebtedness,
(b) to purchase, sell or lease (as lessee or lessor) property, or to purchase
or sell services, primarily for the purpose of enabling the debtor to make
payment of such Indebtedness or to assure the holder of such Indebtedness
against loss, (c) to supply funds to, or in any other manner invest in, the
debtor (including any agreement to pay for property or services without
requiring that such property be received or such services be rendered), (d)
to maintain working capital or equity capital of the debtor, or otherwise to
maintain the net worth, solvency or other financial condition of the debtor
or (e) otherwise to assure a creditor against loss; provided, that the term
"guarantee" shall not include endorsements for collection or deposit, in
either case in the ordinary course of business; and provided, further, that
the obligations of Plaza Associates pursuant to the TPM Services Agreement or
the Ground Lease, in each case in effect on the Issue Date or as amended
pursuant to terms substantially similar to the terms in effect on the Issue
Date, shall not be deemed to be Guaranteed Debt of Plaza Associates.
"Guarantors" means Plaza Associates, Taj Associates, TACC, TCS,
Trump Communications and each existing or future Subsidiary of the Company
(other than Funding, Funding II and Funding III).
"Guaranty" shall have the meaning provided in Section 13.1.
"Holder" or "Securityholder" means the person in whose name a
Security is registered on the Registrar's books.
"Improvements" shall mean, with respect to either or both of the
Casino Hotels, all improvements thereto, including any alteration thereof and
the acquisition, construction of any additions related thereto (including
adjacent property) or renovations thereof, including without limitation the
construction or renovation of additional gaming space or facilities, hotel
and restaurant facilities and parking facilities, with all landscaping and
other off- and on-site work related thereto.
"incurrence" shall have the meaning specified in Section 5.11.
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"Incurrence Date" shall have the meaning specified in Section 5.11.
"Indebtedness" means, with respect to any Person, without
duplication, (a) all liabilities and obligations, contingent and otherwise,
of such Person for borrowed money or representing the balance deferred and
unpaid of the purchase price of property or services, excluding any trade
payables and other accrued current liabilities arising in the ordinary course
of business, but including, without limitation, all obligations, contingent
or otherwise, of such Person in connection with any letters of credit issued
under letter of credit facilities, acceptance facilities or other similar
facilities or in connection with any agreement to purchase, redeem, exchange,
convert or otherwise acquire for value any Equity Interest of such Person, or
any warrants, rights or options to acquire such Equity Interest, now or
hereafter outstanding, (b) all obligations of such Person evidenced by bonds,
notes, debentures or other similar instruments, (c) every obligation of such
Person issued as payment in consideration of the purchase by such Person or
an Affiliate of such Person of the Equity Interest or all or substantially
all of the assets of another Person or in consideration for the merger or
consolidation with respect to which such Person or an Affiliate of such
Person was a party, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even if the rights and remedies of the seller or
lender under such agreement in the event of default are limited to
repossession or sale of such property), but excluding trade payables and
other accrued current liabilities arising in the ordinary course of business,
(e) all obligations under Interest Swap and Hedging Obligations of such
Person, (f) all Capitalized Lease Obligations of such Person, (g) all
Indebtedness referred to in clauses (a) through (f) above of other Persons
and all dividends of other Persons, the payment of which are secured by (or
for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien, upon or in property (including,
without limitation, accounts and contract rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of such
Indebtedness, (h) all Guaranteed Debt of such Person and (i) all Disqualified
Capital Stock of such Person (valued at the greater of its voluntary or
involuntary maximum fixed repurchase price plus accrued and unpaid
dividends). For purposes hereof, the "maximum fixed repurchase price" of any
Disqualified Capital Stock which does not have a fixed repurchase price shall
be calculated in accordance with the terms of such Disqualified Capital Stock
as if such Disqualified Capital Stock were purchased on any date on which
Indebtedness shall be required to be determined pursuant to this Indenture,
and if such price is based upon, or measured by, the Fair Market Value of
such Disqualified Capital Stock, such Fair Market Value to be determined in
good faith by the Board of Directors of the issuer (or managing general
partner of the issuer) of such Disqualified Capital Stock.
"Indenture" means this Indenture, as amended or supplemented from
time to time in accordance with the terms hereof.
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"Indenture Obligations" means the obligations of the Issuers and the
Guarantors pursuant to this Indenture and the Securities (and any other
obligor hereunder or under the Securities) now or hereafter existing, to pay
principal, premium, if any, and interest and Liquidated Damages, if any, on
the Securities when due and payable, whether on Maturity or an Interest
Payment Date, by acceleration, call for redemption, acceptance of any Asset
Sale Offer, Change of Control Offer, or otherwise, and interest on the
overdue principal of, and (to the extent lawful) interest, if any, on, the
Securities and all other amounts due or to become due in connection with this
Indenture, the Securities and the Mortgage Documents, including any and all
extensions, renewals or other modifications thereof, in whole or in part, and
the performance of all other obligations of the Issuers and the Guarantors
(and any other obligor hereunder or under the Securities), including all
costs and expenses incurred by the Trustee or the Holders in the collection
or enforcement of any such obligations or realization upon the Mortgage or
the security of any Mortgage Documents.
"Initial Purchaser" means Donaldson Lufkin & Jenrette Securities
Corporation.
"Initial Securities" means the 11 1/4% First Mortgage Notes (TAC III)
due 2006, as supplemented from time to time in accordance with the terms
hereof, issued under this Indenture that contain the information referred to
in footnotes 4, 5 and 7 to the form of Security attached hereto as Exhibit A.
"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 Payment Date" means the stated due date of an installment
of interest on the Securities.
"Interest Swap and Hedging Obligation" means any obligation of any
person pursuant to any interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate exchange agreement,
currency exchange agreement or any other agreement or arrangement designed to
protect against fluctuations in interest rates or currency values, including,
without limitation, any arrangement whereby, directly or indirectly, such
person is entitled to receive from time to time periodic payments calculated
by applying either a fixed or floating rate of interest on a stated notional
amount in exchange for periodic payments made by such person calculated by
applying a fixed or floating rate of interest on the same notional amount.
"Investment" means, with respect to any Person, directly or
indirectly, (a) any advance, loan or other extension of credit or capital
contribution to any other Person (by means of any transfer of cash or other
property to others or any payment for property or
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services for the account or use of others), (b) any purchase or other
acquisition by such Person of any Equity Interest, bonds, notes, debentures
or other securities issued or owned by, any other Person or (c) other than
guarantees of Indebtedness of the Issuers or any Subsidiary to the extent
permitted by Section 5.11, the entering into by such Person of any guarantee
of, or other credit support or contingent obligation with respect to,
Indebtedness or other liability of such other Person.
"Issue Date" means the date of first issuance of the Securities
under this Indenture.
"Issuers" shall mean, collectively, the Company and Funding III.
"Legal Requirements" means all applicable laws, statutes, codes,
acts, ordinances, orders, judgments, decrees, injunctions, rules,
regulations, permits, licenses, authorizations, directions and requirements
of all governments, departments, commissions, boards, courts, authorities,
agencies, officials and officers, of governments, federal, state and
municipal.
"Legal Holiday" shall have the meaning provided in Section 12.7.
"Lien" means any mortgage, charge, pledge, lien (statutory or
otherwise), privilege, security interest, hypothecation or other encumbrance
upon or with respect to any property of any kind, real or personal, movable
or immovable, now owned or hereafter acquired by an Issuer or Guarantor.
"Liquidated Damages" shall have the meaning specified in the
Registration Rights Agreement.
"Maturity" when used with respect to any Security means the date on
which the principal of such Security becomes due and payable as therein
provided or as provided in this Indenture, whether at final Stated Maturity,
Change of Control Purchase Date, Asset Sale Offer Purchase Date or the
redemption date and whether by declaration of acceleration, call for
redemption or otherwise.
"Mortgages" means collectively, the Taj Mortgage and the Plaza
Mortgage.
"Mortgage Documents" means the Mortgages, the Assignments of Leases
and Rents, the Security Agreement, the Trademark Security Agreements, any
Future Collateral Agreements and any UCC-1 financing statements which may be
filed in connection therewith.
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"Net Cash Proceeds" (x) of an issuance of Indebtedness or Equity
Interests means the cash proceeds of such issuance, net of attorneys' fees,
accountants' fees, brokerage, consultant, underwriting and other fees and
expenses actually incurred in connection with such issuance, sale, conversion
or exchange and net of any taxes paid or payable as a result thereof by the
entity making such sale and (y) of an Asset Sale (including for this purpose
an Event of Loss) means the aggregate amount of cash and Cash Equivalents
received by the Company and its Subsidiaries in respect of such Asset Sale
less the sum of all fees, commissions and other expenses incurred in
connection with such Asset Sale less, in the case of an Asset Sale only, the
amount (estimated reasonably and in good faith by the Company) of income,
franchise, sales and other applicable taxes required to be paid by the
Company or any of its Subsidiaries or distributable by the Company as a
Permitted Tax Distribution, in each case, within 12 months of consummating
the Asset Sale, in connection with such Asset Sale.
"Net Proceeds" means the aggregate Net Cash Proceeds and fair market
value of property and assets (valued at the fair market value thereof at the
time of receipt in good faith by the Company).
"Notes" means, collectively, the Initial Securities and, when and if
issued as provided in the Registration Rights Agreement, the Exchange
Securities, which together with the Guaranty, form the Securities.
"Note Register" means the list of names and addresses of Holders
held by the Registrar of the Securities.
"Obligation" means any principal, premium or interest payment, or
Liquidated Damages or monetary penalty, or damages, due by the Issuers or the
Guarantors under the terms of the Securities or this Indenture.
"Offer to Purchase" means any Change of Control Offer or Asset Sale
Offer.
"Offer to Purchase Price" means any Change of Control Offer Price or
Asset Sale Offer Price.
"Offering" means the Notes being offered and issued by the Issuers
pursuant to this Indenture.
"Offering Memorandum" means the final Offering Memorandum of the
Issuers dated December 5, 1997, relating to the offering of the Initial
Securities in a transaction exempt from the requirements of Section 5 of the
Securities Act.
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"Officer" means, with respect to any Person, the Chairman of the
Board, the President, any Vice President, the Chief Financial Officer, the
Treasurer or Assistant Treasurer, the Controller, or the Secretary or
Assistant Secretary of such Person.
"Officers' Certificate" means, with respect to the Issuers or any
Guarantor, a certificate signed by two Authorized Representatives of the
Issuers or such Guarantor and otherwise complying with the requirements of
Sections 12.4(1) and 12.5.
"Operating Assets" shall have the meaning given to it in each of the
Mortgages.
"Opinion of Counsel" means a written opinion from legal counsel to
the Issuers or the Guarantors reasonably acceptable to the Trustee and which
complies with the requirements of Sections 12.4 and 12.5. Unless otherwise
required by this Indenture, the counsel may be in-house counsel to the
Issuers or the Guarantors.
"Original Policy" shall have the meaning given to it in each of the
Mortgages.
"Parking Parcel Mortgage" shall have the meaning given to it in the
Plaza Mortgage.
"Partners" means each of THCR Holdings and Trump AC Holding or any
additional or substitute partners admitted under the Partnership Agreement so
long as (i) each is a partner under the Partnership Agreement, unless removed
as a partner in accordance with the Partnership Agreement and (ii) no Default
or Event of Default occurs as a result thereof.
"Partnership Agreement" means the Amended and Restated Partnership
Agreement of the Company, dated April 17, 1996, as amended from time to time
in accordance with its terms.
"Paying Agent" shall have the meaning specified in Section 2.3.
"Permit" means any license (including, without limitation, all
Gaming Licenses), franchise, authorization, statement of compliance,
certificate of operation, certificate of occupancy and permit required for
the lawful ownership, occupancy, operation and use of all or a material
portion of either of the Casino Hotels, whether held by Plaza Associates, Taj
Associates or any other Person (which may be temporary or permanent)
(including, without limitation, those required for the use of either of the
Casino Hotels as a licensed casino facility), in accordance with all
applicable Legal Requirements.
"Permitted Holder" means Trump and the spouse and descendants of
Trump (including any related grantor trusts controlled by, and established
and maintained for the sole
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benefit of, Trump or such spouse or descendants), and the estate of any of the
foregoing, but no other Person.
"Permitted Indebtedness" means the following:
(a) the Company may incur Indebtedness to any Wholly-owned
Subsidiary Guarantor, and any Wholly-owned Subsidiary Guarantor may incur
Indebtedness to any other Wholly-owned Subsidiary Guarantor or to the
Company, provided, that, in the case of Indebtedness of the Company such
obligations shall be unsecured and expressly subordinated in right of payment
to the Company's Obligations pursuant to the Securities, and that the date of
any event that causes such Subsidiary Guarantor to no longer be a
Wholly-owned Subsidiary Guarantor shall be an Incurrence Date;
(b) the Super Puma Helicopter Lease, but only to the extent no
Services Fees are thereafter paid under the TPM Services Agreement; and
(c) Indebtedness existing on the Issue Date.
"Permitted Investment" means (a) Investments in any of the
Securities; (b) Cash Equivalents; (c) intercompany notes to the extent
permitted under clause (a) of the definition of "Permitted Indebtedness"; (d)
loans, advances or investments existing on the Issue Date; (e) any Investment
in any Wholly-owned Subsidiary of the Company; and (f) any Investment
consisting of the extension of gaming credit to customers consistent with
industry practice in the ordinary course of business.
"Permitted Leases" means the following:
(a) any Capitalized Lease Obligation of the Company or any of its
Subsidiaries incurred in accordance with Section 5.11;
(b) any lease of Plaza Associates or Taj Associates, as tenant or
subtenant, existing on the date of this Indenture and listed on a schedule
hereto or referred to in the Mortgages (including schedules thereto),
including any modifications, amendments, renewals or supplements thereof,
provided, that the aggregate annual rent and other costs thereunder are not
increased thereby, except as such rent or costs may be increased during any
renewed lease term pursuant to the terms of such leases as they exist on the
date of this Indenture; and
(c) any operating leases of the Company or any of its Subsidiaries
other than the leases set forth above, provided that the aggregate average
annual rent and other payments required thereunder over the terms of such
leases shall not exceed $10.0 million.
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"Permitted Liens" means:
(a) Liens existing on the Issue Date, and Liens securing
Refinancing Indebtedness in respect of secured Indebtedness (including the
Securities, provided, that the Securities are secured by the assets securing
such Refinancing Indebtedness in respect of the Securities on a senior or an
equal and ratable basis pursuant to the terms of the Collateral Agency
Agreement) existing on the Issue Date;
(b) the Lien of the Trustee and the Collateral Agent as provided
for in this Indenture and in the Mortgage Documents and the Lien of the
trustee under the TAC 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 Section
5.11 may be secured by the assets acquired pursuant to the respective capital
lease (in the case of Capitalized Lease Obligations) or with the proceeds of
the respective F, F&E Financing Agreements, so long as such Liens do not
extend to any other assets;
(d) INTENTIONALLY LEFT BLANK
(e) INTENTIONALLY LEFT BLANK
(f) any Lien arising by reason of (i) any judgment, decree or order
of any court, so long as such Lien is adequately bonded and any appropriate
legal proceedings which may have been duly initiated for the review of such
judgment, decree or order shall not have been finally terminated or the
period within which such proceedings may be initiated shall not have expired;
(ii) security for payment of workmen's compensation or other insurance; (iii)
good faith deposits in connection with tenders, leases and contracts (other
than contracts for the payment of money); and (iv) deposits to secure public
or statutory obligations, or in lieu of surety or appeal bonds;
(g) Liens for taxes, assessments or other governmental charges not
yet due or which are being contested in good faith and by appropriate
proceedings by the Company or any of its Subsidiaries if adequate reserves
with respect thereto are maintained on the books of the Company or any of its
Subsidiaries, as the case may be, in accordance with GAAP;
(h) statutory Liens of carriers, warehousemen, mechanics,
landlords, laborers, materialmen, repairmen or other like Liens arising by
operation of law in the ordinary course of business and consistent with
industry practices and Liens on deposits made to obtain the release of such
Liens if (i) the underlying obligations are not overdue for a period of more
than 60 days or (ii) such Liens are being contested in good faith and by
appropriate proceedings
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by the Company or any of its Subsidiaries and adequate reserves with respect
thereto are maintained on the books of the Company or any of its
Subsidiaries, as the case may be, in accordance with GAAP;
(i) easements, rights-of-way, zoning and similar restrictions and
other similar encumbrances or title defects, which, if they are incurred by
the Company or any of its Subsidiaries after it acquires the property subject
thereto, are incurred in the ordinary course of business and consistent with
industry practices which, individually or in the aggregate, do not materially
detract from the value of the property subject thereto (as such property is
used or proposed to be used by the Company or any of its Subsidiaries) or
interfere with the ordinary conduct of the business of the Company or any of
its Subsidiaries, provided, that any such Liens are not incurred in
connection with any borrowing of money or any commitment to loan any money or
to extend any credit;
(j) Liens that secure Acquired Indebtedness (and refinancings
thereof pursuant to clause (f) of Section 5.11), provided, in each case, that
such Liens do not secure any property or assets other than the property or
asset so acquired and were not put in place in connection with or in
anticipation of such acquisition, merger or consolidation;
(k) leases or subleases granted to other persons in the ordinary
course of business not materially interfering with the conduct of the
business of the Company or any of its Subsidiaries or materially detracting
from the value of the relative assets of the Company or such Subsidiary;
(l) Liens arising from precautionary Uniform Commercial Code
financing statement filings regarding operating leases entered into by the
Company or any of its Subsidiaries in the ordinary course of business;
(m) Liens on the Equity Interests of the Company or any of its
Subsidiaries in favor of or to the extent required to be pledged for the
benefit of holders of the Senior Notes or of any Refinancing Indebtedness in
respect thereof; and
(n) a notice of intention filed by a mechanic, materialman or
laborer under the New Jersey mechanic's lien law, or a building contract
filed by a contractor or subcontractor thereunder.
"Permitted Tax Distributions" means for each tax year that the
Company qualifies as a partnership or substantially similar pass-through
entity under the Code or any similar provision of state or local law,
distributions of Tax Amounts in respect of the jurisdictions in which the
Company so qualifies as a partnership or substantially similar pass-through
entity; provided, that (A) prior to any Permitted Tax Distribution a
knowledgeable and duly authorized
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officer of Funding III shall certify, and counsel reasonably acceptable to
the Trustee shall opine, that the Company qualifies as a partnership or
substantially similar pass-through entity for federal income tax purposes and
under similar laws of the states in respect of which such distributions are
being made and (B) at the time of such distributions, the most recent audited
financial statements of the Company provide that the Company was treated as a
partnership for federal income tax purposes for the period of such financial
statements. Distributions of Tax Amounts may be made between the tenth and
twentieth day of each January (provided that payments in respect of estimated
state or local taxes due in January may instead, at the option of the
Company, be paid during the last five days of the immediately preceding
December), April, June and September, based upon the minimum estimated tax
payments in respect of Tax Amounts which would then be due and payable, and
during the tenth through twentieth day of April or within ten days of the
reconciliation described in the immediately succeeding sentence, with respect
to any additional tax payments owing in respect of the prior fiscal year.
Within sixty days of the Company's filing of the Internal Revenue Service
Form 1065 for the applicable tax year, a reconciliation shall be made of the
Permitted Tax Distributions actually paid versus the amount permitted to be
paid as Permitted Tax Distributions based upon the final results of the
applicable tax year. In addition, prior to any Permitted Tax Distributions,
each Partner shall have entered into a binding agreement promptly to
reimburse the Company for any positive difference between the distributed
amount and the Tax Amount as finally determined; provided, however, that, if
the Partners of the Company do not promptly reimburse the Company for any
positive difference between the distributed amount and the Tax Amount, then
the Permitted Tax Distributions during the year in which such reimbursement
should have been made shall be reduced by the unreimbursed amount until the
Permitted Tax Distributions for such year are zero and, thereafter, Permitted
Tax Distributions shall be reduced in the succeeding years until the
unreimbursed amount not used to reduce Permitted Tax Distributions is zero.
"Person" or "person" means any individual, corporation, limited or
general partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Plaza Associates" means Trump Plaza Associates, a Wholly-owned
Subsidiary of the Company.
"Plaza Mortgage" means that certain Indenture of Mortgage and
Security Agreement by Plaza Associates and the Collateral Agent dated the
date hereof in favor of the Holders and the other lenders secured thereby
pursuant to the Collateral Agency Agreement as the same may be amended from
time to time in accordance with its terms.
"Pleasantville Warehouse" means that warehouse and office facility
owned by Taj Associates and located on the premises known as Lot 15 Block 190
on the official tax maps of
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Pleasantville, New Jersey and Lot 9 Block 801 of the official tax maps of the
Township of Egg Harbor, New Jersey, containing approximately 23,000 square
feet of space.
"Principal" or "principal" of any Indebtedness (including the
Securities) means the principal of such Indebtedness plus any applicable
premium, if any, on such Indebtedness.
"Property" or "property" means any right or interest in or to
property or assets of any kind whatsoever, whether real, personal or mixed
and whether tangible, intangible, contingent, indirect or direct.
"Purchase Price" means any Change of Control Purchase Price or Asset
Sale Offer Price.
"Qualified Capital Stock" means any Equity Interest of the Company
that is not Disqualified Capital Stock.
"Qualified Exchange" means (a) any repurchase, redemption or other
acquisition or retirement of any shares of any class of Equity Interests of
the Company on or after April 17, 1996 in exchange for (including any such
exchange pursuant to the exercise of a conversion right or privilege in
connection with which cash is paid in lieu of the issuance of fractional
shares, interests or scrip), or out of the Net Cash Proceeds of a
substantially concurrent issuance and sale (other than to a Subsidiary of the
Company) of, Qualified Capital Stock of the Company; or (b) the redemption,
repayment, defeasance, repurchase or other acquisition or retirement for
value of any Indebtedness of, or guaranteed by, the Company on or after April
17, 1996 in exchange for, or out of the Net Cash Proceeds of a substantially
concurrent issuance and sale of, Qualified Equity Interests of the Company.
"Realty Warehouse" means that warehouse facility owned by Taj
Associates located on the premises known as Lots 6, 22, 39, 58, 68, 85 in
Block 119 and Lots 23, 33, 44, 58, 65 and 66 in Block 120, on the official
tax maps of Atlantic City, New Jersey, containing approximately 34,500 square
feet of space.
"Record Date" means a Record Date specified in the Securities
whether or not such Record Date is a Business Day.
"Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to Article III of
this Indenture and Paragraph 5 in the applicable form of Security.
"Redemption Price,"when used with respect to any Security to be
redeemed, means the redemption price for such redemption pursuant to
Paragraph 5 in the form of Security
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attached hereto as Exhibit A, which shall include, without duplication, in
each case, accrued and unpaid interest and Liquidated Damages, if any, to the
Redemption Date.
"Reference Period" with regard to any person means the four full
fiscal quarters (or such lesser period during which such person has been in
existence) ended immediately preceding any date upon which any determination
is to be made pursuant to the terms of the Securities or this Indenture.
"Refinancing Indebtedness" means the Indebtedness or Disqualified
Capital Stock issued in exchange for, or the proceeds from the issuance and
sale of which are used substantially concurrently to repay, redeem, defease,
refund, refinance, discharge or otherwise retire for value, in whole or in
part, or constituting an amendment, modification or supplement to, or a
deferral or renewal of (collectively, a "Refinancing"), any Indebtedness or
Disqualified Capital Stock in a principal amount or, in the case of
Disqualified Capital Stock, liquidation preference, not to exceed (after
deduction of reasonable and customary fees and expenses incurred in
connection with the Refinancing) the lesser of (i) the principal amount or,
in the case of Disqualified Capital Stock, liquidation preference, of the
Indebtedness or Disqualified Capital Stock so Refinanced and (ii) if such
Indebtedness being Refinanced was issued with an original issue discount, the
accreted value thereof (as determined in accordance with GAAP) at the time of
such Refinancing; provided, that (A) such Refinancing Indebtedness of any
Subsidiary shall only be used to Refinance outstanding Indebtedness or
Disqualified Capital Stock of such Subsidiary, (B) Refinancing Indebtedness
shall (x) not have an Average Life shorter than the Indebtedness or
Disqualified Capital Stock to be so refinanced at the time of such
Refinancing and (y) in all respects, be no less subordinated or junior, if
applicable, to the rights of Holders than was the Indebtedness or
Disqualified Capital Stock to be so refinanced, (C) such Refinancing
Indebtedness shall be secured only by the assets (if any) securing the
Indebtedness to be so refinanced and (D) such Refinancing Indebtedness shall
have no installment of principal (or redemption payment) scheduled to come
due earlier than the scheduled maturity of the corresponding installment of
principal of the Indebtedness or Disqualified Capital Stock to be so
refinanced which was scheduled to come due prior to the Stated Maturity.
"Registrar" shall have the meaning specified in Section 2.3.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of the date hereof by and between the Initial Purchasers,
the Issuers and the Guarantors as such agreement may be amended, modified or
supplemented from time to time in accordance with the terms thereof.
"Related Business" means the business conducted (or proposed to be
conducted) by Plaza Associates or Taj Associates as of the Issue Date and any
and all businesses that in
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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 Holder's Securities pursuant to, and in accordance with, any order of
any Governmental Authority with appropriate jurisdiction and authority
relating to a Gaming License, or to the extent necessary in the reasonable,
good faith judgment of the Issuers to prevent the loss, failure to obtain or
material impairment or to secure the reinstatement of, any material Gaming
License, where such redemption or acquisition is required because the Holder
or beneficial owner of such Security is required to be found suitable or to
otherwise qualify under any gaming laws and is not found suitable or so
qualified within a reasonable period of time.
"Restricted Funds Account" means a segregated bank account of the
Company or any of its Subsidiaries subject to the Lien of the Collateral
Agent pursuant to the Security Agreement, the proceeds of which are invested
in cash or Cash Equivalents pending any use permitted by Section 5.15.
"Restricted Investment" means, in one or a series of related
transactions, any Investment, other than investments in Cash Equivalents.
"Restricted Payment" means, with respect to any person, (a) the
declaration or payment of any dividend or other distribution in respect of
Equity Interests of such person or any Subsidiary or parent of such person,
(b) any payment on account of the purchase, redemption or other acquisition
or retirement for value of Equity Interests of such person or any Subsidiary
or parent of such person, (c) any purchase, redemption, or other acquisition
or retirement for value of, any payment in respect of any amendment of the
terms of or any defeasance of, any Indebtedness of, or guaranteed by, such
Person, any parent of such Person or any Subsidiary prior to the scheduled
maturity, any scheduled repayment of principal, or scheduled sinking fund
payment, as the case may be, of such Indebtedness (including any payment in
respect of any amendment of the terms of any such Indebtedness, which
amendment is sought in connection with any such acquisition of such
Indebtedness or seeks to shorten any such due date), (d) in connection with
the designation of a Person as an Unrestricted Subsidiary, a Restricted
Payment shall be deemed to exist in the amount provided in the definition of
Unrestricted Subsidiary contained herein and (e) any Restricted Investment by
such person; provided, that the term "Restricted Payment" does not include
(i) any dividend, distribution or other payment on or with respect to Equity
Interests of an issuer to the extent payable solely in shares of Qualified
Capital Stock of such issuer, or (ii) any dividend, distribution or other
payment to the Company or to any of its Wholly-owned Subsidiaries or any
Subsidiary Guarantor.
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"SEC" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or if at any time after the
execution of this Indenture such SEC is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Securities" means, collectively the initial Securities and, when
and if issued as provided in the Registration Rights Agreement, the Exchange
Securities.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the Trustee, as custodian with respect
to the Securities in global form, or any successor entity thereto.
"Security Agreement" means the security agreement dated April 17,
1996 between the Collateral Agent, the Issuers and the Guarantors, as it may
be amended or supplemented from time to time in accordance with its terms.
"Securityholder." See "Holder."
"Senior Notes" means the 15 1/2% Senior Secured Notes due 2005 of
THCR Holdings and Trump Hotels & Casino Resorts Funding, Inc.
"Services Fee" means, for any period, the amount of the fee payable
by Plaza Associates under the TPM Services Agreement for such period.
"Significant Subsidiary" shall have the meaning provided under
Regulation S-X of the Securities Act, as in effect on the Issue Date.
"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 2.12.
"Stated Maturity" when used with respect to any Security means May
1, 2006 and when used with respect to any other Indebtedness means the dates
specified in such other Indebtedness as the fixed date on which the principal
of such Indebtedness is due and payable.
"Subsidiary" of any Person means (i) a corporation a majority of
whose Voting Stock is at the time, directly or indirectly, owned by such
Person, by such Person and one or more Subsidiaries of such Person or by one
or more Subsidiaries of such Person, (ii) any other Person (other than a
corporation) in which such Person, one or more Subsidiaries of such Person,
or such Person and one or more Subsidiaries of such Person, directly or
indirectly, at the date of determination thereof has a majority ownership
interest, or (iii) a partnership in
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which such Person or a Subsidiary of such Person is, at the time, a general
partner and has a majority ownership interest. Notwithstanding the
foregoing, no Unrestricted Subsidiary shall be considered a Subsidiary of the
Company or any of its other Subsidiaries for purposes of the Securities and
this Indenture. Unless the context otherwise requires, all references herein
to "Subsidiaries" shall be to the direct and indirect to Subsidiaries of the
Company for purposes of the Securities and this Indenture.
"Super Puma Helicopter Lease" means that certain Aircraft Lease
Agreement, dated as of March 9, 1992, between The CIT/Group Equipment
Financing, Inc., as Lessor, and Trump Plaza Management Corp., as Lessee, as
it may be amended to modify the expiration date to the end of the last
renewal period currently contained therein, together with all the obligations
of the parties thereunder and related thereto.
"Superior Mortgages" means those certain mortgages, each as in
effect on the Issue Date, known as the "Rothenberg," "CFS," "Wozo" and
"Arbor" mortgages, securing the Plaza Garage Parcel, the Egg Harbor Parcel
and certain property used or to be used for surface parking, as more fully
described in the Mortgage Documents.
"TAC II Notes" means the 11 1/4% First Mortgage Notes (TAC II) due
2006 issued by the Company and Funding II pursuant to the TAC II Notes
Indenture, contemporaneously with the issue of the Notes.
"TAC II Notes Indenture" means the indenture dated the date hereof
between the Company, Funding II, the guarantors named therein and U.S. Bank
National Association pursuant to which the TAC II Notes were issued.
"TACC" means Trump Atlantic City Corporation, a Wholly-owned
Subsidiary of the Company.
"Taj Associates" means Trump Taj Mahal Associates, a Wholly-owned
Subsidiary of the Company.
"Taj Mortgage" means that certain Indenture of Mortgage and
Security Agreement dated the date hereof between Taj Associates and the
Collateral Agent, for the benefit of the Holders and the other lenders
secured thereby pursuant to the terms of the Collateral Agency Agreement as
it may be amended from time to time in accordance with its terms.
"Tangible Personal Property" shall have the meaning given to it in
the Mortgages.
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"Tax Amounts" with respect to any year means an amount no greater
than (a) the higher of (i) the product of (A) the taxable income of the
Company (treating the Company as if it were an individual) for such year as
determined in good faith by the Board of Directors of Funding and (B) the Tax
Percentage and (ii) the product of (A) the alternative minimum taxable income
attributable to the Company (treating the Company as if it were an
individual) for such year as determined in good faith by the Board of
Directors of Funding and (B) the Tax Percentage, reduced by (b) to the extent
not previously taken into account, any income tax benefit attributable to the
Company which could be realized (without regard to the actual realization) by
its Partners in the current or any prior taxable year, or portion thereof,
commencing on or after the Issue Date (including any tax losses or tax
credits), computed at the applicable Tax Percentage for the year that such
benefit is taken into account for purposes of this computation. Any part of
the Tax Amount not distributed in respect of a tax period for which it is
calculated shall be available for distribution in subsequent tax periods.
"Tax Percentage" means the highest, aggregate effective marginal
rate of federal, state and local income tax or, when applicable, alternative
minimum tax, to which any Partner of the Company would be subject in the
relevant year of determination (as certified to the Trustee by a nationally
recognized tax accounting firm); provided, that in no event shall the Tax
Percentage be greater than the sum of (x) the highest, aggregate effective
marginal rate of federal, state, and local income tax or, when applicable,
alternative minimum tax, to which the Company would have been subject if it
were a C corporation, for federal income tax purposes, and (y) 5 percentage
points. If any Partner or Upper Tier Owner of the Company is an S
corporation, partnership or similar pass-through entity for federal income
tax purposes, the Tax Percentage shall be computed based upon the tax rates
applicable to the shareholder or partner of such Partner or Upper Tier Owner,
as the case may be.
"TCS" means Trump Casino Services L.L.C., a Wholly-owned Subsidiary
of the Company.
"THCR" means Trump Hotels & Casino Resorts, Inc., a Delaware
corporation.
"THCR Holdings" means Trump Hotels & Casino Resorts Holdings, L.P.,
a Delaware limited partnership.
"TPM Services Agreement" means the Amended and Restated Services
Agreement, dated June 24, 1993, between Plaza Associates and Trump Plaza
Management Corp.
"Trademark Security Agreements" means the trademark security
agreements dated April 17, 1996 between Plaza Associates and Taj Associates,
respectively, and the Collateral Agent, as they may be amended or
supplemented from time to time in accordance with the terms thereof.
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"Transfer Restricted Securities" means Securities that bear or are
required to bear the legend set forth in Section 2.6.
"Trump" means Donald J. Trump.
"Trump AC Holding" means Trump Atlantic City Holding, Inc., a
Delaware corporation.
"Trump Communications" means Trump Communications, L.L.C., a
wholly-owned Subsidiary of the Company.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of
1939, as amended.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"Trust Officer" means any officer within the corporate trust
department (or any successor group) of the Trustee including any vice
president, assistant vice president, secretary, assistant secretary or any
other officer or assistant officer of the Trustee customarily performing
functions similar to those performed by the persons who at that time shall be
such officers, and also means, with respect to a particular corporate trust
matter, any other officer of the corporate trust department (or any successor
group) of the Trustee to whom such trust matter is referred because of his
knowledge of and familiarity with the particular subject.
"Unrestricted Subsidiary" means any Subsidiary of the Company that,
at the time of determination, shall be an Unrestricted Subsidiary (as
designated by the Company, as provided below) provided that such Subsidiary
does not and shall not engage, to any substantial extent, in any line or
lines of business activity other than a Related Business. The Company may
designate any Person (other than Plaza Associates, Taj Associates, TACC, TCS,
Trump Communications, Funding III and any direct or indirect holder of
Equity Interest therein) to be an Unrestricted Subsidiary if (a) no Default
or Event of Default is existing or will occur as a consequence thereof, (b)
either (x) such Subsidiary, at the time of designation thereof, has no
assets, (y) such Subsidiary is designated an "Unrestricted Subsidiary" at the
time of Acquisition by the Company, in the case of Subsidiaries acquired
after the Issue Date or (z) immediately after giving effect to such
designation, on a pro forma basis, the Company could incur at least $1.00 of
additional Indebtedness pursuant to the Debt Incurrence Ratio in paragraph
(a) of Section 5.11, and (c) such Subsidiary does not own any Equity
Interests in, or own or hold any Lien on any property of, the Company or any
other Subsidiary (excluding other Unrestricted Subsidiaries). Any such
designation also constitutes a Restricted Payment (to the extent such
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amount is in excess of $0.00) in an amount equal to the sum of (x) net assets
of such Subsidiary at the time of the designation, unless in the case of this
clause (x) the designation is made pursuant to clause (b)(y) of the first
sentence of this definition, in which case the amount of consideration paid
by the Company and its Subsidiaries to effect such Acquisition (excluding
Qualified Equity Interests of THCR issued in connection therewith) shall be
the amount for purpose of this clause (x), and (y) the maximum amount of
Guaranteed Debt of the Company and its Subsidiaries in respect of the
designated Subsidiary which is to be outstanding immediately after such
designation, in each case for purposes of Section 5.3. Subject to the
foregoing, the Company may designate any Unrestricted Subsidiary to be a
Subsidiary, provided, that (i) no Default or Event of Default is existing or
will occur as a consequence thereof and (ii) immediately after giving effect
to such designation, on a pro forma basis, the Company could incur at least
$1.00 of Indebtedness pursuant to the Debt Incurrence Ratio test in paragraph
(a) of Section 5.11. Each such designation shall be evidenced by filing with
the Trustee a certified copy of the resolution giving effect to such
designation and an officers' certificate certifying that such designation
complied with the foregoing conditions.
"Upper Tier Owner" means (i) if a Partner is an S corporation,
partnership or similar pass-through entity for federal income tax purposes,
any shareholder or partner of such Partner and (ii) if any such shareholder
or partner referred to in (i) above is an S corporation, partnership or
similar pass-though entity for federal income tax purposes, any shareholder
or partner of such person.
"U.S. Government Obligations" means direct non-callable obligations
of, or noncallable obligations guaranteed by, the United States of America
for the payment of which obligation or guarantee the full faith and credit of
the United States of America is pledged.
"U.S. Legal Tender" means such coin or currency of the United States
of America as at the time of payment is legal tender for the payment of
public and private debts.
"Voting Stock" with respect to any Person means all classes of
Equity Interests of such Person then outstanding and normally entitled to
vote in elections of directors of such Person.
"Wholly-owned Subsidiary" means a Subsidiary all the Equity
Interests of which are owned by the Company or another Wholly-owned
Subsidiary of the Company.
SECTION 1.2 Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
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"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture securityholder" means a Holder or a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Issuers, each
Guarantor and any other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and
not otherwise defined herein, have the meanings assigned to them thereby.
SECTION 1.3 Rules of Construction.
Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and words in the
plural include the singular;
(v) provisions apply to successive events and transactions;
(vi) "herein," "hereof" and other words of similar import refer
to this Indenture as a whole and not to any particular Article,
Section or other subdivision; and
(vii) references to Sections or Articles means reference to
such Section or Article in this Indenture, unless stated otherwise.
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ARTICLE II
THE SECURITIES
SECTION 2.1 Form and Dating.
The Securities and the Trustee's certificate of authentication, in
respect thereof, shall be substantially in the form of Exhibit A hereto, and
each Note shall be endorsed with the Guaranty substantially in the form of
Exhibit B hereto, each of which Exhibits is incorporated into and made a part
of this Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage. The Issuers
shall approve the form of the Securities and any notation, legend or
endorsement on them. Any such notations, legends or endorsements not
contained in the form of Note attached as Exhibit A hereto or the form of
Guaranty attached as Exhibit B hereto shall be delivered in writing to the
Trustee. Each Security shall be dated the date of its authentication.
The terms and provisions contained in the form of Securities shall
constitute, and are hereby expressly made, a part of this Indenture and, to
the extent applicable, the Issuers, the Guarantors and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
Each Global Security shall represent such of the outstanding
Securities as shall be specified therein and each shall represent the
aggregate amount of outstanding Securities that may from time to time be
reduced or increased, as appropriate, to reflect exchanges, repurchases and
redemptions. Any endorsement of a Global Security to reflect the amount of
any increase or decrease in the amount of outstanding Securities represented
thereby shall be made by the Trustee or the Securities Custodian, at the
direction of the Trustee, in accordance with instructions given by the Holder
thereof as required by Section 2.6.
SECTION 2.2 Execution and Authentication.
Two Authorized Representatives shall sign, or one Authorized
Representative shall sign and one Authorized Representative shall attest to,
the Securities for the Issuers by manual or facsimile signature. The
Issuers' seals shall be impressed, affixed, imprinted, or reproduced on the
Securities and may be in facsimile form.
If an Authorized Representative whose signature is on a Security was
an Authorized Representative at the time of such execution but no longer
holds that office at the time the Trustee authenticates the Security, the
Security shall be valid nevertheless and the Issuers shall nevertheless be
bound by the terms of the Securities and this Indenture.
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A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security, but
such signature shall be conclusive evidence that the Security has been
authenticated pursuant to the terms of this Indenture.
The Trustee shall authenticate Initial Securities for original issue
in the aggregate principal amount of up to $25,000,000 and shall authenticate
Exchange Securities for original issue in the aggregate principal amount of
up to $25,000,000, in each case upon a written order of the Issuers in the
form of an Officers' Certificate; provided that such Exchange Securities
shall be issuable only upon the valid surrender for cancellation of Initial
Securities of a like aggregate principal amount in accordance with the
Registration Rights Agreement. The Officers' Certificate shall specify the
amount of Securities to be authenticated and the date on which the Securities
are to be authenticated. The aggregate principal amount of Securities
outstanding at any time may not exceed $25,000,000, except as provided in
Section 2.7. Upon the written order of the Issuers in the form of an
Officers' Certificate, the Trustee shall authenticate Securities in
substitution of Securities originally issued to reflect any name change of
the Issuers.
The Trustee may appoint an authenticating agent acceptable to the
Issuers to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has
the same rights as an Agent to deal with the Issuers, any Affiliate of the
Issuers or any of their respective Subsidiaries.
Securities shall be issuable only in registered form without coupons
in denominations of $1,000 and any integral multiple thereof.
SECTION 2.3 Registrar and Paying Agent.
The Issuers shall maintain an office or agency in the Borough of
Manhattan, The City of New York, where Securities may be presented for
registration of transfer or for exchange ("Registrar") and an office or
agency in the Borough of Manhattan, The City of New York where Securities may
be presented for payment ("Paying Agent") and an office or agency where
notices and demands to or upon the Issuers in respect of the Securities may
be served. Unless a Default or Event of Default has occurred and is
continuing, the Issuers or any of their Subsidiaries may act as Registrar or
Paying Agent, except that, for the purposes of Articles III, IX, XI and
Section 5.15 and as otherwise specified in this Indenture, neither the
Issuers, any Guarantor nor any other obligor on the Securities nor any
Affiliate of the Issuers, any Guarantor or such other obligor shall act as
Paying Agent. The Registrar shall keep a register of the Securities and of
their transfer and exchange. The Issuers may have one or more co-Registrars
and one or more additional Paying Agents. The term "Paying Agent" includes
any additional
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Paying Agent. The Issuers hereby initially appoint the Trustee as Registrar
and Paying Agent, and the Trustee hereby initially agrees so to act until
such time as the Trustee has resigned or a successor has been appointed. The
Company may change any Registrar, Paying Agent or co-Registrar without notice
to any Holder.
The Issuers shall enter into an appropriate written agency agreement
with any Agent not a party to this Indenture, which agreement shall implement
the provisions of this Indenture that relate to such Agent. The Issuers
shall promptly notify the Trustee in writing of the name and address of any
such Agent. If the Issuers fail to maintain a Registrar or Paying Agent, the
Trustee shall act as such.
The Issuers initially appoint The Depositary Trust Company ("DTC"),
to act as Depositary with respect to the Global Securities.
The Issuers initially appoint the Trustee to act as Securities
Custodian with respect to the Global Securities.
SECTION 2.4 Paying Agent to Hold Assets in Trust.
The Issuers shall require each Paying Agent other than the Trustee
to agree in writing that each Paying Agent shall hold in trust for the
benefit of Holders or the Trustee all assets held by the Paying Agent for the
payment of principal of, premium, if any, or interest (or Liquidated Damages,
if any) on, the Securities (whether such assets have been distributed to it
by the Issuers, a Guarantor or any other obligor on the Securities), and
shall notify the Trustee in writing of any Default by the Issuers, a
Guarantor or any other obligor on the Securities in making any such payment.
If the Issuers, a Guarantor, any other obligor on the Securities or a
Subsidiary of the Issuers acts as Paying Agent, it shall segregate such
assets and hold them as a separate trust fund for the benefit of the Holders
or the Trustee. The Issuers at any time may require a Paying Agent to
distribute all assets held by it to the Trustee and account for any assets
disbursed and the Trustee may at any time during the continuance of any
payment Default, upon written request to a Paying Agent, require such Paying
Agent to distribute all assets held by it to the Trustee and to account for
any assets distributed. Upon distribution to the Trustee of all assets that
shall have been delivered by the Issuers or any Guarantor to the Paying
Agent, the Paying Agent (if other than the Issuers, a Guarantor or any other
obligor on the Securities) shall have no further liability for such assets.
SECTION 2.5 Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses
of Holders. If the Trustee is not the Registrar, the Issuers shall furnish
to the Trustee on or before the third Business Day preceding
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each Interest Payment Date and at such other times as the Trustee may request
in writing a list in such form and as of such date as the Trustee reasonably
may require of the names and addresses of Holders. The Trustee, the
Registrar and the Issuers shall provide a current securityholder list to any
Gaming Authority upon demand.
SECTION 2.6 Transfer and Exchange.
(a) Transfer and Exchange of Definitive Securities. When
Definitive Securities are presented to the Registrar with
a request:
(x) to register the transfer of such Definitive
Securities; or
(y) to exchange such Definitive Securities for an equal
principal amount of Definitive Securities of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
its reasonable requirements for such transaction are met; provided, however,
that the Definitive Securities surrendered for registration of transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Issuers
and the Registrar, duly executed by the Holder thereof or his attorney
duly authorized in writing; and
(ii) in the case of Transfer Restricted Securities that are
Definitive Securities, shall be accompanied by the following additional
information and documents, as applicable:
(A) if such Transfer Restricted Security is being
delivered to the Registrar by a Holder for registration in the name
of such Holder, without transfer, a certification from such Holder
to that effect (in substantially the form set forth on the reverse
of the Security); or
(B) if such Transfer Restricted Security is being
transferred to a "qualified institutional buyer" (within the meaning
of Rule 144A promulgated under the Securities Act) that is aware
that any sale of Securities to it will be made in reliance on Rule
144A under the Securities Act and that is acquiring such Transfer
Restricted Security for its own account or for the account of
another such "qualified institutional buyer," a certification from
such Holder to that effect (in substantially the form set forth on
the reverse of the Security); or
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(C) if such Transfer Restricted Security is being
transferred pursuant to an exemption from registration in accordance
with Rule 144, or outside the United States in an offshore
transaction in compliance with Rule 904 under the Securities Act, or
pursuant to an effective registration statement under the Securities
Act, a certification from such Holder to that effect (in
substantially the form set forth on the reverse of the Security); or
(D) if such Transfer Restricted Security is being
transferred in reliance on another exemption from the registration
requirements of the Securities Act and with all applicable
securities laws of the States of the United States, a certification
from such Holder to that effect (in substantially the form set forth
on the reverse of the Security) and an Opinion of Counsel reasonably
acceptable to the Issuers and to the Registrar to the effect that
such transfer is in compliance with the Securities Act.
(b) Restrictions on Transfer of a Definitive Security for a
Beneficial Interest in a Global Security. A Definitive Security may not be
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Trustee
of a Definitive Security, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Trustee, together with:
(i) if such Definitive Security is a Transfer Restricted
Security, certification, substantially in the form set forth on the
reverse of the Security, that such Definitive Security is being
transferred to a "qualified institutional buyer" (as defined in Rule
144A under the Securities Act) in accordance with Rule 144A under the
Securities Act; and
(ii) whether or not such Definitive Security is a Transfer
Restricted Security, written instructions directing the Trustee to
make, or to direct the Securities Custodian to make, an endorsement
on the Global Security to reflect an increase in the aggregate
principal amount of the Securities represented by the Global Security,
then the Trustee shall cancel such Definitive Security and cause, or direct
the Securities Custodian to cause, in accordance with the standing
instructions and procedures existing between the Depositary and the Securities
Custodian, the aggregate principal amount of Securities represented by the
Global Security to be increased accordingly. If no Global Securities are then
outstanding, the Issuers shall issue and the Trustee shall authenticate a new
Global Security in the appropriate principal amount.
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(c) Transfer and Exchange of Global Securities. The transfer and
exchange of Global Securities or beneficial interests therein shall be
effected through the Depositary, in accordance with this Indenture (including
applicable restrictions on transfer set forth herein, if any) and the
procedures of the Depositary therefor.
(d) Transfer of a Beneficial Interest in a Global Security for a
Definitive Security.
(i) Any Person having a beneficial interest in a Global Security
may upon request exchange such beneficial interest for a Definitive Security.
Upon receipt by the Trustee of written instructions or such other form of
instructions as is customary for the Depositary, from the Depositary or its
nominee on behalf of any Person having a beneficial interest in a Global
Security, and upon receipt by the Trustee of a written instruction or such
other form of instructions as is customary for the Depositary or the Person
designated by the Depositary as having such a beneficial interest in a
Transfer Restricted Security only, the following additional information and
documents (all of which may be submitted by facsimile):
(A) if such beneficial interest is being transferred to
the Person designated by the Depositary as being the beneficial
owner, a certification from the transferor to that effect (in
substantially the form set forth on the reverse of the Security); or
(B) if such beneficial interest is being transferred to a
"qualified institutional buyer" (within the meaning of Rule 144A
promulgated under the Securities Act), that is aware that any sale
of Securities to it will be made in reliance on Rule 144A under the
Securities Act and that is acquiring such beneficial interest in the
Transfer Restricted Security for its own account or the account of
another such "qualified institutional buyer", a certification to
that effect from the transferor (in substantially the form set forth
on the reverse of the Security); or
(C) if such beneficial interest is being transferred
pursuant to an exemption from registration in accordance with Rule
144, or outside the United States in an offshore transaction in
compliance with Rule 904 under the Securities Act, or pursuant to an
effective registration statement under the Securities Act, a
certification from the transferor to that effect (in substantially
the form set forth on the reverse of the Security); or
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(D) if such beneficial interest is being transferred in
reliance on another exemption from the registration requirements of
the Securities Act and in accordance with all applicable securities
laws of the States of the United States, a certification to that
effect from the transferor (in substantially the form set forth on
the reverse of the Security) and an Opinion of Counsel from the
transferee or transferor reasonably acceptable to the Issuers and to
the Registrar to the effect that such transfer is in compliance with
the Securities Act,
then the Trustee or the Securities Custodian, at the direction of the
Trustee, will cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Securities Custodian,
the aggregate principal amount of the Global Security to be reduced and,
following such reduction, the Issuers will execute and, upon receipt of
an authentication order in the form of an Officers' Certificate, the
Trustee's authenticating agent will authenticate and deliver to the
transferee a Definitive Security in the appropriate principal amount.
(ii) Definitive Securities issued in exchange for a
beneficial interest in a Global Security pursuant to this Section 2.6(d)
shall be registered in such names and in such authorized denominations
as the Depositary, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee
shall deliver such Definitive Securities to the persons in whose names
such Securities are so registered.
(e) Restrictions on Transfer and Exchange of Global Securities.
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.6), a Global Security
may not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) Authentication of Definitive Securities in Absence of
Depositary. If at any time:
(i) the Depositary for the Securities notifies the Issuers
that the Depositary is unwilling or unable to continue as Depositary
for the Global Securities and a successor Depositary for the Global
Securities is not appointed by the Issuers within ninety days after
delivery of such notice; or
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(ii) the Issuers, in its sole discretion, notifies the
Trustee in writing that it elects to cause the issuance of Definitive
Securities under this Indenture, then the Issuers will execute, and the
Trustee, upon receipt of an Officers' Certificate requesting the
authentication and delivery of Definitive Securities, will, or its
authenticating agent will, authenticate and deliver Definitive
Securities, in an aggregate principal amount equal to the principal
amount of the Global Securities, in exchange for such Global
Securities.
(g) Legends.
(i) Except as permitted by the following paragraphs (ii)
and (iii) each Security certificate evidencing the Global Securities
and the Definitive Securities (and all Securities issued in exchange
therefor or substitution thereof) shall bear a legend in substantially
the following form:
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF U.S. PERSONS EXCEPT AS SET FORTH IN THE THIRD SENTENCE
HEREOF BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN,
THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"),
(B) IT IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS
AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT)
(AN "IAI"), (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER
THIS NOTE EXCEPT (A) TO THE ISSUERS OR ANY OF THEIR SUBSIDIARIES,
(B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUIB
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUIB IN A
TRANSACTION METING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE
TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR RULE 904 OF THE
SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144 UNDER THE SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH
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TRANSFER, FURNISHES THE TRUSTEE WITH A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF
THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND,
IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF
NOTES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE
ISSUERS THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT,
(F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL ACCEPTABLE TO THE ISSUERS) OR (G) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND (3) AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN,
THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE
MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE
SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION
OF THE FOREGOING. "
(ii) Upon any sale or transfer of a Transfer
Restricted Security (including any Transfer Restricted Security
represented by a Global Security) pursuant to Rule 144 under the Act
or an effective registration statement under the Securities Act:
(A) in the case of any Transfer Restricted Security that
is a Definitive Security, the Registrar shall permit the Holder
thereof to exchange such Transfer Restricted Security for a
Definitive Security that does not bear the legend set forth above
and rescind any restriction on the transfer of such Transfer
Restricted Security; and
(B) any such Transfer Restricted Security represented by
a Global Security shall not be subject to the provisions set forth
in (i) above (such sales or transfers being subject only to the
provisions of Section 2.6(c) hereof); provided, however, that with
respect to any request for an exchange of a Transfer Restricted
Security that is represented by a Global Security for a Definitive
Security that does not bear a legend, which request is made in
reliance upon Rule 144, the Holder thereof shall certify in writing
to the Registrar that such request is being
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made pursuant to Rule 144 (such certification to be substantially in
the form set forth on the reverse of the Security).
(iii) Any Exchange Securities issued in connection
with the Exchange Offer shall not bear the legend set forth in (i)
above and the Trustee shall rescind any restriction on the transfer
of such Exchange Securities.
(h) Cancellation and/or Adjustment of Global Security. At such
time as all beneficial interests in a Global Security have either been
exchanged for Definitive Securities, redeemed, repurchased or cancelled, such
Global Security shall be returned to or retained and cancelled by the Trustee.
At any time prior to such cancellation, if any beneficial interest in a Global
Security is exchanged for Definitive Securities, redeemed, repurchased or
cancelled, the principal amount of Securities represented by such Global
Security shall be reduced and an endorsement shall be made on such Global
Security, by the Trustee or the Securities Custodian, at the direction of the
Trustee, to reflect such reduction.
(i) Obligations with respect to Transfers and Exchanges of
Definitive Securities.
(i) To permit registrations of transfers and
exchanges, the Company shall execute and the Trustee or any
authenticating agent of the Trustee shall authenticate Definitive
Securities and Global Securities at the Registrar's request.
(ii) No service charge shall be made to a Holder for
any registration of transfer or exchange, but the Issuers may require
payment of a sum sufficient to cover any transfer tax, assessments, or
similar governmental charge payable in connection therewith (other than
any such transfer taxes, assessments, or similar governmental charge
payable upon exchanges or transfers pursuant to Section 2.2 (fourth
paragraph), 2.10, 3.7, 4.14 (clause 8 of the fifth paragraph), 9.5, or
10.1 hereof).
(iii) The Registrar shall not be required to register
the transfer of or exchange of (a) any Definitive Security selected for
redemption in whole or in part pursuant to Article III, except the
unredeemed portion of any Definitive Security being redeemed in part,
or (b) any Security for a period beginning 15 Business Days before the
mailing of a notice of an offer to repurchase pursuant to Article X or
Section 4.14 hereof or redemption of
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Securities pursuant to Article III hereof and ending at the close of
business on the day of such mailing.
(iv) The Trustee shall have no obligation or duty to
monitor, determine or inquire as to compliance with any restrictions on
transfer imposed under this Indenture or under applicable law with
respect to any transfer of any interest in any Security (including any
transfers between or among Depositary participants or beneficial owners
of interests in any Global Security) other than to require delivery of
such certificates and other documentation or evidence as are expressly
required by, and to do so if and when expressly required by the terms
of, this Indenture, and to examine the same to determine substantial
compliance as to form with the express requirements thereof.
(j) Prior to due presentment for the registration of a
transfer of any Security, the Trustee, any Agent and the Issuers may deem and
treat the Person in whose name any Security is registered as the absolute
owner of such Security for all purposes, and none of the Trustee, any Agent or
the Issuers shall be affected by notice to the contrary.
SECTION 2.7 Replacement Securities.
If a mutilated Security is surrendered to the Trustee or if the
Holder of a Security claims and submits an affidavit or other evidence,
satisfactory to the Trustee, to the Trustee to the effect that the Security
has been lost, destroyed or wrongfully taken, the Issuers shall issue, the
Guarantors shall endorse, and the Trustee shall authenticate a replacement
Security if the Trustee's requirements are met. If required by the Trustee or
the Issuers, such Holder must provide an indemnity bond or other indemnity,
sufficient in the judgment of both the Issuers and the Trustee, to protect the
Issuers, the Guarantors, the Trustee or any Agent from any loss which any of
them may suffer if a Security is replaced. The Issuers may charge such Holder
for its reasonable, out-of-pocket expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Issuers, and, to the extent of the Guaranty, the Guarantors.
SECTION 2.8 Outstanding Securities.
Securities outstanding at any time are all the Securities that have
been authenticated by the Trustee except, including any Security represented
by a Global Security, those cancelled by it, those delivered to it for
cancellation and those described in this Section 2.8 as
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not outstanding. A Security does not cease to be outstanding because an
obligor or an Affiliate of the Issuers holds the Security, except as provided
in Section 2.9.
If a Security is replaced pursuant to Section 2.7 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced
Security is held by a bona fide purchaser. A mutilated Security ceases to be
outstanding upon surrender of such Security and replacement thereof pursuant
to Section 2.7.
If on a Redemption Date or the Maturity Date the Paying Agent (other
than the Issuers, the Guarantors (or any other obligor on the Securities) or
an Affiliate of the Issuers or any Guarantor (or such other obligor)) holds
U.S. Legal Tender or U.S. Government Obligations sufficient to pay all of the
principal and interest (and Liquidated Damages, if any) due on the Securities
payable on that date and payment of the Securities called for redemption is
not otherwise prohibited, then on and after that date such Securities cease to
be outstanding and interest on them ceases to accrue unless any such obligor
defaults in its obligations with respect thereto.
SECTION 2.9 Treasury Securities.
In determining whether the Holders of the required principal amount
of Securities have concurred in any direction, amendment, supplement, waiver
or consent, Securities owned by the Issuers, any Guarantor or any other
obligor on the Securities and Affiliates of the Issuers, shall be disregarded,
except that, for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, amendment, supplement, waiver or
consent, only Securities that the Trustee knows or has reason to know are so
owned shall be disregarded.
SECTION 2.10 Temporary Securities.
Until Definitive Securities are ready for delivery, the Issuers may
prepare, the Guarantors shall endorse and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form
of Definitive Securities but may have variations that the Issuers reasonably
and in good faith consider appropriate for temporary Securities. Without
unreasonable delay, the Issuers shall prepare, the Guarantors shall endorse
and the Trustee shall authenticate Definitive Securities in exchange for
temporary Securities. Until so exchanged, the temporary Securities shall in
all respects be entitled to the same benefits under this Indenture as
permanent Securities authenticated and delivered hereunder.
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SECTION 2.11 Cancellation.
The Issuers at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent
(other than the Issuers or any Guarantor (or any other obligor on the
Securities) or an Affiliate of the Issuers or any Guarantor (or such other
obligor)), and no one else, shall cancel and, at the written direction of the
Issuers, shall dispose of all Securities surrendered for transfer, exchange,
payment or cancellation. Subject to Section 2.7, the Issuers may not issue
new Securities to replace Securities they have paid or delivered to the
Trustee for cancellation. No Securities shall be authenticated in lieu of or
in exchange for any Securities cancelled as provided in this Section 2.11,
except as expressly permitted in the form of Securities and as permitted by
this Indenture.
SECTION 2.12 Defaulted Interest.
If the Issuers default in a payment of interest on the Securities,
they shall pay the defaulted interest, plus (to the extent lawful) interest on
the defaulted interest, to the persons who are Holders on a Record Date (or at
the Issuers' option a subsequent special record date) which date shall be the
fifteenth day next preceding the date fixed by the Issuers for the payment of
defaulted interest, whether or not such day is a Business Day, unless the
Trustee fixes another record date. At least 15 days before the subsequent
special record date, the Issuers shall mail to each Holder with a copy to the
Trustee a notice that states the subsequent special record date, the payment
date and the amount of defaulted interest, and interest payable on such
defaulted interest, if any, to be paid.
SECTION 2.13 CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers (if
then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Holders; provided that any such
notice may state that no representation is made as to the correctness of such
numbers either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be
affected by any defect in or
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omission of such numbers. The Company will promptly notify the Trustee of any
change in the "CUSIP" numbers.
ARTICLE III
REDEMPTION
SECTION 3.1 Right of Redemption.
Redemption of Securities shall be made only in accordance with this
Article III. At their election, the Issuers may redeem the Securities in
whole or in part, at any time on or after May 1, 2001, at the Redemption
Prices specified under the caption "Redemption" in the Form of Security
attached as Exhibit A hereto, plus accrued and unpaid interest and Liquidated
Damages, if any, to the applicable Redemption Date. Except as provided in
this paragraph, Section 3.2 and paragraph 5 of the Securities, the Securities
may not otherwise be redeemed at the option of the Issuers.
SECTION 3.2 Redemption Pursuant to Applicable Laws.
Notwithstanding the provisions of this Indenture, if the CCC does
not waive the qualification requirements as to any Securityholder (whether the
record owner or beneficial owner) and requires that such Securityholder be
qualified under the Casino Control Act, then, in such event, such
Securityholder must qualify under the Casino Control Act. If a Securityholder
does not so qualify, the Securityholder must dispose of its interest in the
Securities, within 30 days after the Issuers' receipt of notice of such
finding (or within such earlier date as the CCC may require), or the Issuers
may redeem the Securities of such Holder, in whole or in part, pursuant to,
and in accordance with, a Required Regulatory Redemption. Notwithstanding any
other provision of this Indenture, the Securities of such Holder shall also be
redeemable at any time pursuant to, and in accordance with, a Required
Regulatory Redemption. If the Issuers require the redemption of any Security
pursuant to this Section 3.2, then the Redemption Price shall be the principal
amount thereof, plus accrued and unpaid interest and Liquidated Damages, if
any, to the Redemption Date (or such lesser amount as may be required by
applicable law or by order of any Gaming Authority). The Issuers shall tender
the Redemption Price, plus accrued and unpaid interest and Liquidated Damages,
if any, to the Redemption Date, to the Trustee no less than 30 and no more
than 60 days after the Issuers give the Securityholder or owner of a
beneficial or voting interest written notice of redemption or such earlier
date as may be required by applicable law. The Issuers shall notify the
Trustee of any disposition or redemption required under this Section 3.2, and
upon receipt of such notice, the Trustee shall not accord any rights or
privileges under this Indenture or any Security to any Securityholder or owner
of a beneficial or voting interest who is required to dispose of any Security
or tender it
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for redemption, except to pay the Redemption Price, plus accrued and unpaid
interest and Liquidated Damages, if any, to the Redemption Date, upon tender
of such Security.
SECTION 3.3 Notices to Trustee.
If the Issuers elect to redeem Securities pursuant to Article III
(including, without limitation, Section 3.2), they shall notify the Trustee in
writing of the date on which the applicable Securities are to be redeemed
("Redemption Date") and the principal amount thereof to be redeemed and
whether they want the Trustee to give notice of redemption to the Holders.
The Company shall give each notice to the Trustee provided for in
this Section 3.3 at least 30 days before the Redemption Date (unless a shorter
notice shall be required by applicable law or by order of any Gaming
Authority). Any such notice may be cancelled at any time prior to notice of
such redemption being mailed to any Securityholder and shall thereby be void
and of no effect.
SECTION 3.4 Selection of Securities to Be Redeemed.
If less than all of the Securities are to be redeemed pursuant to
the first paragraph of Paragraph 5 thereof, the Trustee shall, if applicable,
select from among such Securities to be redeemed pro rata or by lot or by such
other method as the Trustee shall determine to be fair and appropriate and in
such manner as complies with any applicable Depositary legal and stock
exchange requirements.
The Trustee shall make the selection from the Securities outstanding
and not previously called for redemption and shall promptly notify the Issuers
in writing of the Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount thereof to be
redeemed. Securities in denominations of $1,000 may be redeemed only in
whole. The Trustee may select for redemption portions (equal to $1,000 or any
integral multiple thereof) of the principal of Securities that have
denominations larger than $1,000. Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called
for redemption.
SECTION 3.5 Notice of Redemption.
At least 30 days but not more than 60 days before each Redemption
Date (unless another notice period shall be required by applicable law or by
order of any Gaming Authority), the Issuers shall mail a notice of redemption
by first class mail, postage prepaid, to each Holder whose Securities are to
be redeemed (unless a shorter notice period shall be required by applicable
law) to such Holder's last address as then shown upon the First Mortgage Note
Register. At the Issuers' request, the Trustee shall give the notice of
redemption in the Issuers'
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name and at the Issuers' expense. Each notice for redemption shall identify
the Securities to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price, plus the amount of accrued and unpaid
interest to be paid upon such redemption;
(3) the name, address and telephone number of the Paying Agent;
(4) that Securities called for redemption must be surrendered to
the Paying Agent at the address specified in such notice to collect the
Redemption Price;
(5) that, unless (a) the Issuers default in their obligation to
deposit U.S. Legal Tender with the Paying Agent in accordance with Section 3.7
or (b) such redemption payment is prevented for any reason, interest on
Securities called for redemption ceases to accrue on and after the Redemption
Date and the only remaining right of the Holders of such Securities is to
receive payment of the Redemption Price, plus accrued and unpaid interest and
Liquidated Damages, if any, to the Redemption Date, upon surrender to the
Paying Agent of the Securities called for redemption and to be redeemed;
(6) if any Security is being redeemed in part, the portion of the
principal amount, equal to $1,000 or any integral multiple thereof, of such
Security to be redeemed and that, after the Redemption Date, and upon
surrender of such Security, a new Security or Securities in aggregate
principal amount equal to the unredeemed portion thereof will be issued;
(7) if less than all the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount of such Securities to be
redeemed;
(8) the CUSIP number of the Securities to be redeemed;
(9) in the case of a Required Regulatory Redemption, the
circumstances pursuant to which such Required Regulatory Redemption is being
effected; and
(10) that the notice is being sent pursuant to this Section 3.5 and
pursuant to the redemption provisions of Paragraph 5 of the Securities.
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SECTION 3.6 Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.5,
Securities called for redemption become due and payable on the Redemption Date
and at the Redemption Price, plus accrued and unpaid interest (and Liquidated
Damages, if any) to the Redemption Date. Upon surrender to the Trustee or
Paying Agent, such Securities called for redemption shall be paid at the
Redemption Price, plus accrued and unpaid interest and Liquidated Damages, if
any, to the Redemption Date; provided that if the Redemption Date is after a
regular Record Date and on or prior to the corresponding Interest Payment
Date, the accrued interest constituting part of the Redemption Price shall be
payable to the Holder of the redeemed Securities registered on the relevant
Record Date; and provided, further, that if a Redemption Date is a Legal
Holiday, payment shall be made on the next succeeding Business Day and no
interest shall accrue for the period from such Redemption Date to such
succeeding Business Day.
SECTION 3.7 Deposit of Redemption Price.
On or before the Redemption Date, the Issuers shall deposit with the
Paying Agent (other than the Issuers, any of the Guarantors (or any other
obligor on the Securities) or an Affiliate of the Issuers or any of the
Guarantors or any other obligor on the Securities), U.S. Legal Tender
sufficient to pay the Redemption Price, plus accrued and unpaid interest and
Liquidated Damages, if any, to the Redemption Date, of all Securities to be
redeemed on such Redemption Date (other than Securities or portions thereof
called for redemption on that date that have been delivered by the Company to
the Trustee for cancellation). The Paying Agent shall promptly return to the
Issuers any U.S. Legal Tender so deposited which is not required for that
purpose upon the written request of the Issuers.
If the Issuers comply with the preceding paragraph and the other
provisions of this Article III and payment of the Securities called for
redemption is not prevented for any reason, interest on the Securities to be
redeemed will cease to accrue on the applicable Redemption Date, whether or
not such Securities are presented for payment. Notwithstanding anything
herein to the contrary, if any Security surrendered for redemption in the
manner provided in the Securities shall not be so paid upon surrender for
redemption because of the failure of the Issuers to comply with the preceding
paragraph and the other provisions of this Article III, interest shall
continue to accrue and be paid from and including the Redemption Date until
such payment is made on the unpaid principal, and, to the extent lawful, on
any interest not paid on such unpaid principal, in each case at the rate and
in the manner provided in Section 5.1 hereof and the Securities.
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SECTION 3.8 Securities Redeemed in Part.
Upon surrender of a Security that is to be redeemed in part, the
Issuers shall execute and the Trustee shall authenticate and deliver to the
Holder, without service charge, a new Security or Securities equal in
principal amount to the unredeemed portion of the Security surrendered.
ARTICLE IV
SECURITY
SECTION 4.1 Security Interest.
(a) In order to secure the prompt and complete payment and
performance in full of the Indenture Obligations, the Issuers, the Guarantors,
the Trustee and the Collateral Agent have entered into this Indenture and the
Mortgage Documents, as applicable, required to be entered into on the Issue
Date. Each Holder, by accepting a Security, agrees to all of the terms and
provisions of this Indenture, the Mortgage Documents and the Collateral Agency
Agreement, and the Trustee and the Collateral Agent agree to all of the terms
and provisions of this Indenture, the Mortgage Documents and the Collateral
Agency Agreement, as applicable, as this Indenture, the Mortgage Documents and
the Collateral Agency Agreement may be amended from time to time pursuant to
the provisions thereof and hereof.
(b) Subject to the terms of the Collateral Agency Agreement,
the Collateral as now or hereafter constituted shall be held for the equal and
ratable benefit of the Holders without preference, priority or distinction of
any thereof over any other by reason of difference in time of issuance, sale
or otherwise, as the only security for the Indenture Obligations and other
lenders secured thereby pursuant to the Collateral Agency Agreement. The
Collateral is to be held by the Collateral Agent for the benefit of the
Trustee acting for the equal and ratable benefit of the Holders and for the
benefit of any other Designated Representative, subject to the terms of the
Collateral Agency Agreement.
(c) The provisions of TIA Section 314(d), and the provisions
of TIA Section 314(c)(3) to the extent applicable by specific reference in
this Article IV, are hereby incorporated by reference herein as if set forth
in their entirety, except that, as set forth in Section 4.4, TIA Section
314(d) need not be complied with in certain respects.
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SECTION 4.2 Recording; Opinions of Counsel.
(a) Each of the Issuers and the Guarantors warrants and
represents that it has caused to be executed and delivered and covenants that
it will promptly cause to be executed and delivered, filed and recorded, all
instruments and documents, and has done and will do or will cause to be done
all such acts and other things, at the Issuers' expense, as are necessary to
effect and maintain valid and perfected security interests in the Collateral
as required under the Mortgage Documents. Each of the Issuers and the
Guarantors shall, as promptly as practicable, cause to be executed and
delivered, filed and recorded all instruments and do all acts and other things
as may be required by law to perfect, maintain and protect the Liens under the
Mortgage Documents, the Collateral Agency Agreement and herein. Each of the
Guarantors warrants and represents that it has caused to be executed and
delivered, and covenants that it will promptly cause to be executed and
delivered, filed and recorded all instruments and documents, and has done and
will do or will cause to be done all such acts and other things, at such
Guarantor's expense, as are necessary to effect and maintain valid and
perfected Liens in the Collateral as required under the Mortgage Documents.
Each of the Guarantors shall, as promptly as practicable, cause to be executed
and delivered, filed and recorded, all instruments and do all acts and other
things as may be required by law to perfect, maintain and protect the security
interests under the Mortgage Documents and herein.
(b) The Issuers shall furnish to the Trustee and the
Collateral Agent, concurrently with or promptly after the execution and
delivery of this Indenture and the Mortgage Documents and promptly after the
execution and delivery of any amendment thereto or any other instrument of
further assurance, an Opinion(s) of Counsel stating that, in the opinion of
such counsel, subject to customary exclusions and exceptions reasonably
acceptable to the Trustee and the Collateral Agent, either (i) this Indenture,
the Mortgage Documents, any such amendment and all other instruments of
further assurance have been properly recorded, registered and filed and all
such other action has been taken to the extent necessary to make effective
such valid Liens and to perfect such Liens intended to be created by this
Indenture, the Mortgage Documents and the Collateral Agency Agreement, and
reciting the details of such action, or (ii) no such action is necessary to
effect and maintain in full force and effect the validity and perfection of
the Liens under the Mortgage Documents, the Collateral Agency Agreement and
hereunder.
(c) The Issuers shall furnish to the Trustee, on or prior to
May 1, of each year commencing in 1998, an Opinion(s) of Counsel, dated as of
such date, stating that, in the opinion of such counsel, subject to customary
exclusions and exceptions reasonably acceptable to the Trustee, either (A) all
such action has been taken with respect to the recording, registering, filing,
rerecording and refiling of the Mortgage Documents, financing statements,
continuation statements and all other instruments of further assurance as is
necessary to maintain the validity and perfection of Liens under the Mortgage
Documents, the Collateral Agency
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Agreement and hereunder in full force and effect and reciting the details of
such action, and stating that all financing statements and continuation
statements have been executed and filed and such other actions taken that are
necessary fully to preserve and protect the rights of the Holders and the
Trustee hereunder and under the Mortgage Documents and the Collateral Agency
Agreement, or (B) no such action is necessary to maintain in full force and
effect the validity and perfection of the Liens under the Mortgage Documents
and hereunder.
SECTION 4.3 Disposition of Certain Collateral.
(a) The Company and its Subsidiaries may, without requesting
the release or consent of the Trustee and the Collateral Agent, but otherwise
subject to the requirements of this Indenture and the Mortgage Documents:
(i) in the ordinary course of business for the casino industry,
convey, sell, lease, transfer, assign, or otherwise dispose of, free from the
Liens under the Mortgage Documents and hereunder, assets acquired and held for
resale in the ordinary course of business;
(ii) other than a Casino Sale, convey, sell, lease, transfer or
otherwise dispose of, free from the Liens under the Mortgage Documents and
hereunder, assets pursuant to and in accordance with Section 6.1 of this
Indenture;
(iii) convey, sell, lease, transfer, assign or otherwise dispose
of, free from the Liens under the Mortgage Documents and hereunder, three
warehouses and related facilities (the Egg Harbor Parcel, the Pleasantville
Warehouse and the Realty Warehouse) in exchange for any type of consideration
so long as the Company determines in good faith that the Company or such
Subsidiary, as applicable, receives fair market value;
(iv) convey, sell, transfer, assign or otherwise dispose of assets
to the Company or any Wholly-owned Subsidiaries of the Company so long as they
continue to be subject to a Lien under the Mortgage Documents; and
(v) subject to the provisions of the Mortgage Documents pertaining
to disposal of real property, sell, assign, transfer, license or otherwise
dispose of, free from the Liens under the Mortgage Documents and hereunder,
any assets or property in accordance with Section 5.15 (including, without
limitation, pursuant to Section 5.15(a)); provided that the proceeds of such
sale, assignment, transfer, license or other disposition are applied in the
manner set forth in Section 5.15.
(vi) sell or dispose of, free from the Liens under the Mortgage
Documents, any Tangible Personal Property which, in the Company's reasonable
opinion, may have become obsolete or unfit for use or which is no longer
necessary in the conduct of its businesses, and no
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purchaser of any such property shall be bound to inquire into any question
affecting the Company's or any of its Subsidiaries' rights to sell or
otherwise dispose of the same free from the Liens under the Mortgage
Documents;
(vii) alter, repair, replace, change shall the location or position
of and add to any Property; provided, however, that no change shall be made in
the location of any such property subject to the Liens under the Mortgage
Documents which would in any respect impair the security of the Liens under
the Mortgage Documents upon such property; or
(viii) renew, extend, surrender, terminate, modify or amend any
leases of Tangible Personal Property, when, in the Company's or any of its
Subsidiaries' reasonable opinion, it is prudent to do so.
Notwithstanding the provisions of subsection (a) above, the Net Cash
Proceeds from any disposition described in clauses (ii) through (viii) above
shall be held in a Restricted Funds Account, pending application (which shall
be restricted only as provided in Section 5.15).
(b) Notwithstanding the provisions of subsection (a) above,
the Issuers shall not dispose of or transfer (by lease, assignment, license,
sale or otherwise) or pledge, mortgage or otherwise encumber Collateral
pursuant to the provisions of Section 4.3(a) with a fair value of 10% or
more of the aggregate fair value of all Collateral then existing in any calendar
year.
(c) In the event that the Issuers or any Guarantor have sold,
exchanged, or otherwise disposed of or propose to sell, exchange or otherwise
dispose of any portion of the Collateral which under the provisions of this
Section 4.3 may be sold, exchanged or otherwise disposed of by the Issuers or
any Guarantor without consent of the Trustee, and the Issuers request the
Trustee to furnish a written disclaimer, release or quitclaim of any interest
in such property under the Mortgage Documents, the Trustee shall execute (or
if appropriate, request the Collateral Agent to execute) such an instrument
prepared by the Issuers or a Guarantor, upon delivery to the Trustee of an
Officers' Certificate by the Issuers reciting the sale, exchange or other
disposition made or proposed to be made and describing in reasonable detail
the property affected thereby, and certifying that such property is property
which by the provisions of this Section 4.3 may be sold, exchanged or
otherwise disposed of or dealt with by the Issuers or the Guarantors without
any release or consent of the Trustee or the Holders; provided, that the
Trustee shall have no liability thereunder (except for its gross negligence or
willful misconduct) and all costs and expenses (including, without limitation,
reasonable attorneys' fees and disbursements) shall be paid by the Company.
The Trustee and the Collateral Agent shall be authorized to conclusively rely
on such certification.
(d) Any disposition of Collateral made in compliance with the
provisions of this Section 4.3 shall be deemed not to impair the Liens under
the Mortgage Documents and hereunder in contravention of the provisions of
this Indenture.
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SECTION 4.4 Certain Releases of Collateral.
Subject to applicable law, the release of any Collateral from Liens
created by the Mortgage Documents or the release of, in whole or in part, the
Liens created by the Mortgage Documents, will not be deemed to impair the
Mortgage Documents in contravention of the provisions of this Indenture if
and to the extent the Collateral or Liens are released pursuant to, and in
accordance with, the applicable Mortgage Documents and pursuant to, and in
accordance with, the terms hereof. To the extent applicable, without
limitation, the Issuers, each Guarantor and each other obligor, if any, on
the Securities shall cause TIA Section 314(d), relating to the release of
property or securities from the Liens of the Mortgage Documents, to be
complied with. Any certificate or opinion required by TIA Section 314(d) may
be made by two Authorized Representatives, except in cases in which TIA
Section 314(d) requires that such certificate or opinion be made by an
independent person. The Issuers shall not be required under this Indenture
to deliver to the Trustee any certificates or opinions required to be
delivered pursuant to Section 314(d) of the TIA in connection with releases
of Collateral in accordance with Section 4.3(a) (ii) hereunder, unless TIA
Section 314(d) would require such certificate or opinion to be made by an
independent person.
SECTION 4.5 Payment of Expenses.
On demand of the Trustee, the Issuers forthwith shall pay or
satisfactorily provide for all reasonable expenditures incurred by the
Trustee under this Article IV, including the reasonable fees and expenses of
counsel and all such sums shall be a Lien upon the Collateral and shall be
secured thereby.
SECTION 4.6 Suits to Protect the Collateral.
Subject to Section 4.1 of this Indenture and to the provisions of
the Mortgage Documents, the Trustee (to the extent not granted to the
Collateral Agent pursuant to the Collateral Agency Agreement) shall have
power to institute and to maintain such suits and proceedings as it may deem
expedient to prevent any impairment of the Collateral by any acts which may
be unlawful or in violation of the Mortgage Documents or this Indenture,
including the power to institute and maintain suits or proceedings to
restrain the enforcement of or compliance with any legislative or other
governmental enactment, rule or order that may be unconstitutional or
otherwise invalid or if the enforcement of, or compliance with, such
enactment, rule or order would impair the security interests in contravention
of this Indenture or be prejudicial to the interests of the Holders or the
Trustee. The Trustee shall give notice to the Issuers promptly following the
institution of any such suit or proceeding.
SECTION 4.7 Trustee's Duties.
The powers and duties conferred upon the Trustee by this Article IV
are solely to protect the Liens and shall not impose any duty upon the
Trustee to exercise any such powers and duties, except as expressly provided
in this Indenture, the Mortgage Documents or the TIA. The Trustee shall not
be under any duty to the Issuers or any Guarantor whatsoever to make or
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give any presentment, demand for performance, notice of nonperformance,
protest, notice of protest, notice of dishonor, or other notice or demand in
connection with any Collateral, or to take any steps necessary to preserve any
rights against prior parties except as expressly provided in this Indenture or
the Mortgage Documents. The Trustee shall not be liable to the Issuers or any
Guarantor for failure to collect or realize upon any or all of the Collateral,
or for any delay in so doing, nor shall the Trustee be under any duty to the
Issuers or any Guarantor to take any action whatsoever with regard thereto.
The Trustee shall have no duty to the Issuers or any Guarantor to comply with
any recording, filing, or other legal requirements necessary to establish or
maintain the validity, priority or enforceability of the security interests
in, or the Trustee's rights in or to, any of the Collateral.
SECTION 4.8 Restricted Funds Account.
The Company or any of its Subsidiaries shall maintain and establish
a Restricted Funds Account as provided in the Security Agreement, which,
subject to the terms of the Collateral Agency Agreement, shall hold Cash
Collateral for the equal and ratable benefit of the Holders (without
preference, priority or distinction of any thereof over any other by reason
of difference in time of issuance, sale or otherwise, as security for the
Indenture Obligations) and the other lenders secured thereby pursuant to the
Collateral Agency Agreement. Upon delivery of an Officers' Certificate from
the Company or any of its Subsidiaries notifying the Trustee and the
Collateral Agent of the release of funds from the Restricted Funds Account
and certifying that such funds will be used in compliance with Section 5.15
within the time provided by Section 5.15, but not later than 30 days after
the transfer of such funds, the Company or its Subsidiary, as the case may
be, may transfer such funds from the Restricted Funds Account.
The Issuers or any Guarantor may invest Cash Collateral in the
Restricted Funds Account only in Cash Equivalents. Interest and other amounts
earned on such Cash Collateral shall be held by the Collateral Agent in the
Restricted Funds Account as additional Collateral.
ARTICLE V
COVENANTS
SECTION 5.1 Payment of Securities.
The Issuers shall pay the principal of and interest (and Liquidated
Damages, if any) on the Securities on the dates and in the manner provided in
the Securities and this Indenture. An installment of principal of or
interest (and Liquidated Damages, if any) on the Securities shall be
considered paid on the date it is due if the Trustee or Paying Agent (other
than the Issuers, any of the Guarantors (or any other obligor on the
Securities) or an Affiliate of either of the Issuers or any of the Guarantors
(or such other obligor)) holds for the benefit of the Holders, on or before
10:00 a.m. New York City time to the extent necessary to provide the
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funds to the Depositary in accordance with the Depositary's procedures on that
date, U.S. Legal Tender deposited and designated for and sufficient to pay the
installment.
The Issuers shall pay interest (and Liquidated Damages, if any) on
overdue principal and on overdue installments of interest at the rate
specified in the Securities compounded semi-annually, to the extent lawful.
SECTION 5.2 Maintenance of Office or Agency.
The Issuers shall maintain in the Borough of Manhattan, The City of
New York, an office or agency where Securities may be presented or surrendered
for payment, where Securities may be surrendered for registration of transfer
or exchange and where notices and demands to or upon the Issuers in respect of
the Securities and this Indenture may be served. No service charge will be
made for any registration of transfer, exchange or redemption of Securities,
but the Issuers may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith. The Issuers shall
give prompt written notice to the Trustee of the location, and any change in
the location, of such office or agency. If at any time the Issuers shall fail
to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the address of the Trustee set forth in
Section 12.2.
The Issuers may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or recession shall in any manner
relieve the Issuers of their obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York, for such purposes. The Issuers
shall give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or
agency. The Issuers hereby initially designate the Corporate Trust Office of
the Trustee as such office.
SECTION 5.3 Limitation on Restricted Payments.
The Company will not, and will not permit any of its Subsidiaries
to, directly or indirectly, make any Restricted Payment if, after giving
effect to such Restricted Payment on a pro forma basis, (1) a Default or an
Event of Default shall have occurred and be continuing, (2) the Company is not
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Debt Incurrence Ratio in paragraph (a) of Section 5.11, or (3) the aggregate
amount of all Restricted Payments made by the Company and its Subsidiaries,
including after giving effect to such proposed Restricted Payment, from and
after April 17, 1996, would exceed the sum of (a) 50% of the aggregate
Consolidated Net Income of the Company and its Consolidated Subsidiaries for
the period (taken as one accounting period) commencing on the first day of the
first fiscal quarter commencing prior to April 17, 1996, to and including the
last day of the fiscal quarter ended immediately prior to the date of each
such calculation (or, in the event Consolidated Net Income for such period is
a deficit, then minus 100% of such deficit), plus (b) the aggregate Net
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Cash Proceeds received by the Company after April 17, 1996 and on or prior to
the date of such proposed Restricted Payment from (i) the sale of its
Qualified Capital Stock (other than (x) to a Subsidiary of the Company, (y) to
the extent applied in connection with a Qualified Exchange and (z) in
connection with the equity offering by THCR prior to or substantially
concurrent with the issuance of the Existing Notes on April 17, 1996,
including the exercise of the underwriters' over allotment option, except for
amounts the Company received therefrom (including by Capital Contribution) in
excess of $270 million) or (ii) (without duplication) other Capital
Contributions.
The foregoing clauses (2) and (3) of the immediately preceding
paragraph, however, will not prohibit (v) (I) distributions by the Company
pursuant to the terms of the Partnership Agreement as in effect on the Issue
Date to THCR Holdings to the extent promptly distributed to and/or applied by
THCR Holdings or THCR (A) to pay reasonable general and administrative
expenses of such persons, including directors' fees and premiums for
directors' and officers' liability insurance, which distributions shall not
exceed $10.0 million in any consecutive four-quarter period, (B) to make
indemnification payments as required by the Certificate of Incorporation of
THCR as in effect on April 17, 1996 or (C) to effect redemption of any Equity
Interest of THCR if (x) counsel to THCR delivers an opinion that failure to so
redeem would subject THCR to an adverse action by a Gaming Authority (or, if
applicable, a failure to act by a Gaming Authority that is adverse to THCR)
and (y) THCR determines (as evidenced by a resolution of its Board of
Directors delivered to the Trustee) that such adverse action (or, if
applicable, such failure to act) would be likely to have a material adverse
effect on THCR, and (II) distributions by the Company to THCR Holdings to the
extent promptly distributed to and applied by THCR to pay any tax liability
resulting from the distributions provided for in (I) above, as required by the
Partnership Agreement, (w) distributions by the Company to THCR Holdings in an
amount not to exceed (I) $50.0 million in the aggregate minus (II) the
aggregate amount of any Restricted Payments made pursuant to clause (w) of the
second paragraph of Section 5.3 contained in the Existing Note Indenture on or
prior to the Issue Date, to the extent applied by THCR Holdings, within 20
Business Days of receiving such distribution, to the next scheduled interest
payment on the Senior Notes or any Refinancing Indebtedness with respect
thereto (provided, that solely in the case of this clause (w), clause (1) of
the immediately preceding paragraph will not prohibit a distribution hereunder
except in the case of an Event of Default under clause (a) or (b) of Section
7.1 hereof), (x) a Qualified Exchange, (y) for so long as the Company is a
partnership or substantially similar pass-through entity for Federal income
tax purposes, cash distributions made by the Company to its Partners from time
to time in amounts not to exceed the Permitted Tax Distributions, so long as
the payments are made at the time permitted by the second sentence of the
definition of Permitted Tax Distributions contained herein, or (z) the payment
of any dividend within 60 days after the date of its declaration if such
dividend could have been made on the date of such declaration in compliance
with the foregoing provisions. In addition, the immediately preceding
paragraph will not prohibit the purchase by the Company of Existing Notes
substantially concurrently with a purchase by the Company of TAC II Notes
pursuant to a Change of Control Offer or an Asset Sale Offer in accordance
with the TAC II Notes Indenture and the Existing 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
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preceding sentence or to clause (x) of the second preceding sentence),
however, will be deducted in the calculation of the aggregate amount of
Restricted Payments available to be made referred to in clause (3) of the
immediately preceding paragraph.
SECTION 5.4 Corporate and Partnership Existence.
Subject to Article VI, each of the Issuers shall do or cause to be
done all things necessary to preserve and keep in full force and effect their
corporate or partnership existence, as the case may be, and the corporate or
other existence of each of their Subsidiaries in accordance with the
respective organizational documents of each of them and the rights (charter
and statutory) and corporate or partnership franchises of the Issuers and each
of their Subsidiaries; provided, however, that neither of the Issuers shall be
required to preserve, with respect to itself or any of its Subsidiaries, any
right or franchise if (a) the Board of Directors of Funding III shall
determine reasonably and in good faith that the preservation thereof is no
longer desirable in the conduct of the business of the Issuers and (b) the
loss thereof is not disadvantageous in any material respect to the Holders;
and provided further, that the Company may change from a partnership to a
corporation, in which case it must thereafter maintain its corporate existence
in accordance with this Section 5.4.
SECTION 5.5 Payment of Taxes and Other Claims.
Each of the Issuers shall, and shall cause each of their
Subsidiaries to, pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, (i) all taxes, assessments and governmental
charges (including withholding taxes and any penalties, interest and additions
to taxes) levied or imposed upon either of the Issuers or any of their
Subsidiaries or properties and assets of the Issuers or any of their
Subsidiaries and (ii) all lawful claims, whether for labor, materials,
supplies, services or anything else, which have become due and payable and
which by law have or may become a Lien upon the property and assets of either
of the Issuers or any of their Subsidiaries; provided, however, that neither
the Issuers nor their Subsidiaries shall be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings and for which disputed amounts adequate reserves have
been established in accordance with GAAP.
SECTION 5.6 Maintenance of Insurance.
The Company will, and will cause its Subsidiaries to, (a) obtain,
prior to the Issue Date, mortgagee title insurance policies insuring a first
mortgage lien on the land, leaseholds and the other portions of the Collateral
deemed real estate under applicable law, as constituted on the Issue Date,
subject to certain exceptions, in an amount not less than the principal amount
of the Securities (for the benefit of all holders of Indebtedness secured
pursuant to the Collateral Agency Agreement) and (b) from and at all times
after the Issue Date until the Securities have been paid in full, have and
maintain in effect insurance with responsible carriers against such risks and
in such amounts as is customarily carried by similar businesses with such
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deductibles, retentions, self insured amounts and coinsurance provisions as
are customarily carried by similar businesses of similar size, including,
without limitation, property and casualty, and, with respect to insurance on
the Collateral, shall have provided insurance certificates evidencing such
insurance to the Trustee prior to the Issue Date and shall thereafter provide
such certificates prior to the anniversary or renewal date of each such policy
referred to in this clause (b), which certificate shall expressly state the
expiration date for each policy listed. All insurance with respect to the
Collateral required under the Indenture (except worker's compensation) shall
name the Issuers, Taj Associates, Plaza Associates, and the Collateral Agent
as additional insureds or loss payees, as the case may be, with losses in
excess of $10.0 million payable jointly to the Issuers, Taj Associates, Plaza
Associates and the Collateral Agent (unless a Default or Event of Default has
occurred and is then continuing, in which case all losses are payable solely
to the Collateral Agent subject to the Material Instrument Requirement), with
no recourse against the Trustee for the payment of premiums, deductibles,
commissions or club calls, and for at least 30 days notice of cancellation.
All such insurance policies will be issued by carriers having an A.M. Best &
Company, Inc. rating of A- or higher and a financial size category of not less
than X, or if such carrier is not rated by A.M. Best & Company, Inc., having
the financial stability and size deemed appropriate by an opinion from a
reputable insurance broker. The Company may effect the insurance required
under this Section 5.6 under blanket and/or umbrella policies covering
properties owned or leased by Affiliates of the Company; provided, that such
policies otherwise comply with this Indenture and the Mortgages.
SECTION 5.7 Compliance Certificate; Notice of Default.
(a) The Issuers shall deliver to the Trustee, within 120 days
after the end of each of their fiscal years, an Officers' Certificate
complying (whether or not required) with Section 314(a)(4) of the TIA and
stating that a review of their activities and the activities of their
Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Authorized Representatives with a view to
determining whether each of the Issuers has or has caused to be, kept,
observed, performed and fulfilled its obligations under this Indenture and
further stating, as to each such Authorized Representative signing such
certificate, whether or not the signer knows of any failure by either of the
Issuers or any Subsidiary of either of the Issuers to comply with any
conditions or covenants in this Indenture and, if such signer does know of
such a failure to comply, the certificate shall describe such failure with
particularity. The Officers' Certificate shall also notify the Trustee should
the relevant fiscal year end on any date other than the current fiscal year
end date.
(b) So long as not contrary to the then current recommendation
of the American Institute of Certified Public Accountants, the Issuers shall
deliver to the Trustee within 120 days after the end of each of their fiscal
years a written report of a firm of independent certified public accountants
with an established national reputation stating that in conducting their audit
for such fiscal year, nothing has come to their attention that caused them to
believe that either of the Issuers or any Subsidiary of either of the Issuers
was not in compliance with the provisions set forth in Section 5.3, 5.11,
5.15, 5.19, or 5.20 of this Indenture or any of the provisions of the Mortgage
Documents.
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(c) Each of the Issuers shall, so long as any of the
Securities are outstanding, deliver to the Trustee, immediately upon becoming
aware of any Default or Event of Default under this Indenture, an Officers'
Certificate specifying such Default or Event of Default and what action the
Issuers are taking or propose to take with respect thereto. The Trustee shall
not be deemed to have knowledge of a Default or an Event of Default unless one
of its trust officers receives notice of the Default or Event of Default
giving rise thereto from either of the Issuers or any of the Holders.
SECTION 5.8 Provision of Financial Statements.
Whether or not either of the Issuers is subject to Section 13(a) or
15(d) of the Exchange Act, each such Person will file with the SEC the annual
reports, quarterly reports and other documents which each such Person would
have been required to file with the SEC (to the extent permitted by applicable
law) pursuant to such Section 13(a) or 15(d) if such Person were so subject,
such documents to be filed with the SEC on or prior to the respective dates
(the "Required Filing Dates") by which such Person would have been required so
to file such documents if such Person were so subject. Each such Person will
also in any event within 15 days of each Required Filing Date (i) transmit by
mail to all Holders, as their names and addresses appear in the Note Register,
without cost to such Holders and (ii) file with the Trustee copies of the
annual reports, quarterly reports and other documents which each such Person
would have been required to file with the SEC pursuant to Section 13(a) or
15(d) of the Exchange Act if such Person were subject to such Sections,
together with supplemental information in respect of summary financial data
for each of the Casino Hotels at the Issuers' cost. Notwithstanding anything
contrary herein the Trustee shall have no duty to review such documents for
purposes of determining compliance with any provisions of this Indenture.
SECTION 5.9 Waiver of Stay, Extension or Usury Laws.
Each of the Issuers and each of the Guarantors covenant (to the
extent that it may lawfully do so) that it will not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law or any usury law or other law wherever enacted which
would prohibit or forgive either of the Issuers or any Guarantor from paying
all or any portion of the principal of or interest (and Liquidated Damages, if
any) on the Securities as contemplated herein, wherever enacted, now or at any
time hereafter in force, or which may affect the covenants or the performance
of this Indenture; and (to the extent that they may lawfully do so) each of
the Issuers or any Guarantor hereby expressly waives all benefit or advantage
of any such law insofar as such law applies to the Securities, and covenants
that it shall not hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
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SECTION 5.10 Limitation on Transactions with Affiliates.
The Company will not, nor will any of the Subsidiaries be permitted
to, directly or indirectly, enter into or suffer to exist any contract,
arrangement, understanding or transaction or series of related transactions
(including, without limitation, the sale, purchase, exchange or lease of
assets, property or services) with any Affiliate of the Company (other than a
Wholly-owned Subsidiary of the Company) unless (a) such transaction or series
of related transactions is on terms that are no less favorable to the Company
or such Subsidiary, as the case may be, than would be available at the time of
such transaction or transactions in a comparable transaction in arm's-length
dealings with an unaffiliated third party and, with respect to a transaction
or series of related transactions involving aggregate payments equal to or
greater than (x) $2.0 million, such transaction or series of related
transactions is approved by a majority of the Independent Directors of the
Board of Directors of Funding III, or (y) $10.0 million, prior to the
consummation of such transaction or series of related transactions, the
Company also obtains a written favorable opinion as to the fairness thereof to
the Company from a financial point of view from an independent investment
banking firm of national reputation, and (b) the Company delivers an Officers'
Certificate to the Trustee certifying that such transaction or transactions
comply with clause (a) above. The foregoing restriction will not apply to (1)
pro rata dividends or distributions paid in cash of any class of Equity
Interests and not prohibited under Section 5.3, (2) the Partnership Agreement
as in effect on April 17, 1996, or (3) certain existing arrangements as in
effect on April 17, 1996 which are described under the caption "Certain
Transactions" in the prospectus dated April 11, 1996 in connection with the
offering of the Existing Notes.
Funding III will maintain at least two Independent Directors on its
Board of Directors.
SECTION 5.11 Limitation on Incurrence of Additional Indebtedness.
Except as set forth below in this Section 5.11, the Company will
not, nor will any of its Subsidiaries be permitted to, directly or indirectly,
create, issue, assume, guaranty, incur, become directly or indirectly liable
with respect to (including as a result of an Acquisition), or otherwise become
responsible for, contingently or otherwise (individually and collectively, to
"incur" or, as appropriate, an "incurrence"), any Indebtedness or any
Disqualified Capital Stock (including Acquired Indebtedness). Notwithstanding
the foregoing:
(a) if (i) no Default or Event of Default shall have occurred and
be continuing at the time of, or would occur after giving effect on a pro
forma basis to, such incurrence of Indebtedness or Disqualified Capital Stock
and (ii) on the date of such incurrence (the "Incurrence Date"), the
Consolidated Coverage Ratio of the Company for the Reference Period
immediately preceding the Incurrence Date, after giving effect on a pro forma
basis to such incurrence of such Indebtedness or Disqualified Capital Stock
and, to the extent set forth in the definition of Consolidated Coverage
Ratio, the use of proceeds thereof, would be at least 2.0 to 1 for
incurrences on or prior to November 1, 1998 and at least 2.25 to 1 for
incurrences thereafter (the "Debt Incurrence Ratio"), then the Company may
incur such Indebtedness
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or Disqualified Capital Stock, provided, that except in the case of Acquired
Indebtedness, such Indebtedness incurred pursuant to this clause (a) has an
Average Life to Stated Maturity that exceeds the remaining Average Life to
Stated Maturity of the Securities and has a Stated Maturity for its final
scheduled principal or (in the case of Disqualified Capital Stock) redemption
payment, as applicable, later than the Stated Maturity for the final
scheduled principal payment of the Securities;
(b) the Company, Funding III and the Guarantors may incur
Indebtedness evidenced by the Securities and represented by this Indenture and
the Company and Funding II and the Guarantors may incur Indebtedness evidenced
by the TAC II Notes, the guarantees in favor of such TAC II Notes and
represented by the TAC II Notes Indenture;
(c) INTENTIONALLY LEFT BLANK;
(d) Plaza Associates and Taj Associates may incur Indebtedness
represented by F, F&E Financing Agreements and/or Capitalized Lease
Obligations relating to after-acquired gaming or related equipment (or other
after-acquired equipment necessary to conduct a Related Business and
consistent in amount and nature with industry practices) of (or, in the case
of Capitalized Lease Obligations, leased by) Plaza Associates or Taj
Associates, as applicable, not to exceed (for Plaza Associates and Taj
Associates, collectively) $50.0 million in aggregate principal amount
outstanding at any time pursuant to this clause (d) (including, as if incurred
hereunder, any Indebtedness outstanding under Section 5.11(d) of the Existing
Note Indenture as of the Issue Date and any Indebtedness issued to refinance,
refund or replace such Indebtedness or any Indebtedness incurred under this
Section 5.11(d));
(e) INTENTIONALLY LEFT BLANK;
(f) the Company, Plaza Associates and Taj Associates, as
applicable, may incur Refinancing Indebtedness with respect to any
Indebtedness or Disqualified Capital Stock, as applicable, described in
clauses (a) and (b) of this Section or (except with respect to any
Indebtedness incurred under Section 5.11(d) or 5.11(h) of the Existing Note
Indenture) which is outstanding on the Issue Date so long a such Refinancing
Indebtedness is secured only by the assets (if any) that secured the
Indebtedness so refinanced;
(g) the Company, Plaza Associates, Taj Associates and their
Subsidiaries may incur Permitted Indebtedness; and
(h) the Company may incur Indebtedness in an aggregate amount
outstanding at any time pursuant to this clause (h) (including, as if incurred
hereunder, any Indebtedness outstanding under Section 5.11(h) of the Existing
Note Indenture as of the Issue Date and any Indebtedness issued to refinance,
replace, or refund such Indebtedness or any Indebtedness incurred under this
clause (h)) of up to $30.0 million.
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Indebtedness of any Person which is outstanding at the time such
Person becomes a Subsidiary of the Company, including by designation, or is
merged with or into or consolidated with the Company or a Subsidiary of the
Company shall be deemed to have been incurred at the time such Person becomes
such a Subsidiary of the Company or is merged with or into or consolidated
with the Company or a Subsidiary of the Company, as applicable. Except to the
extent provided otherwise in the definition of Permitted Indebtedness, any
Guarantor may guarantee Indebtedness of the Company or another Guarantor to
the extent and at the time the Company or such other Guarantor incurs such
Indebtedness in compliance with this Section 5.11.
SECTION 5.12 Restriction on Sale and Issuance of Subsidiary Stock.
The Company will not sell, and will not permit any of its
Subsidiaries to issue or sell, any shares of Equity Interests of any
Subsidiary of the Company to any Person other than the Company or a
Wholly-owned Subsidiary of the Company, except that all of the Equity
Interests of a Subsidiary may be sold if such Asset Sale complies with the
other provisions of this Indenture, including Sections 5.15 and 6.1.
SECTION 5.13 Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries.
The Company will not, nor will any of its Subsidiaries be permitted
to, directly or indirectly, create, assume or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction of any
kind on the ability of any Subsidiary of the Company to pay dividends or make
any other distributions to or on behalf of, or to pay any obligation to or on
behalf of, or otherwise to transfer assets or property to or on behalf of, or
make or pay loans or advances to or on behalf of, the Company or any
Subsidiary of the Company, except (a) any restrictions, with respect to a
Subsidiary that is not a Subsidiary on the date of this Indenture, in
existence at the time such Person becomes a Subsidiary of the Company (but not
created in connection with or contemplation of such Person becoming a
Subsidiary and not applicable to any Person, or property, asset or business,
other than the Person, or property, asset or business so acquired), (b) any
restrictions with respect to a Subsidiary imposed pursuant to an agreement
which has been entered into for the sale or disposition of all or
substantially all of the Equity Interests or assets of such Subsidiary (which
restrictions shall be for the benefit of the purchaser thereof and no other
Person and apply only to the assets of the Subsidiary to be sold), (c)
restrictions imposed by a Permitted Lien on the transfer of the respective
assets subject thereto, (d) restrictions contained in this Indenture, the
Existing Note Indenture, the TAC 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 the restrictions in clause (a) or clause (d), provided that the
terms and conditions of any such agreement are not more restrictive than those
under or pursuant to the agreement evidencing the Indebtedness refinanced.
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SECTION 5.14 Limitation on Liens.
The Company will not, nor will any of its Subsidiaries be permitted
to, directly or indirectly, create, incur, assume or suffer to exist any Lien
of any kind, other than Permitted Liens, upon any of their respective assets
now owned or acquired after the date of this Indenture or upon any income or
profits therefrom.
SECTION 5.15 Limitation on Sales of Assets and Subsidiary Stock;
Event of Loss.
Neither the Company nor any of its Subsidiaries will, in one or a
series of related transactions, convey, sell, transfer, assign or otherwise
dispose of, directly or indirectly, any of its property, business or assets,
including, without limitation, upon any sale or other transfer or issuance of
any Equity Interests of any Subsidiary or any sale and leaseback transaction,
whether by the Company or a Subsidiary of the Company or through the issuance,
sale or transfer of Equity Interests by a Subsidiary of the Company (an "Asset
Sale"), unless:
(1) (a) within 210 days after the date of such Asset Sale, the
Net Cash Proceeds therefrom (the "Asset Sale Offer Amount") are applied to the
optional redemption of the Securities in accordance with the terms of this
Indenture or to the repurchase of the Securities pursuant to an irrevocable,
unconditional cash offer by the Company (the "Asset Sale Offer") to repurchase
the Securities at a purchase price (the "Asset Sale Offer Price") of 100% of
principal amount, plus accrued interest to the date of payment, made within
180 days of such Asset Sale and/or (b) within 180 days following such Asset
Sale, the Asset Sale Offer Amount (less that portion of the Asset Sale Offer
Amount applied as provided in clause (a) above or clause (c) below) is
reinvested by the Company or its Subsidiaries to make replacements,
improvements or additions to existing properties or new properties directly
related to a Related Business and such reinvestment is made or committed to be
made (such commitment to be established by (A) the purchase of a new property,
the ground-breaking or the commencement of construction, in each case within
180 days of such Asset Sale or (B) promptly placing the Net Cash Proceeds in a
Restricted Funds Account, provided, that such Net Cash Proceeds are invested
as aforesaid in existing properties or new properties within 365 days of being
placed in such Restricted Funds Account) and provided further, that in the
case of any Asset Sale involving all or substantially all of (x) the Capital
Stock of a Subsidiary, the assets of which constitute all or substantially all
of either Casino Hotel (or both) or (y) the assets of either Casino Hotel (or
both) (a "Casino Sale"), such Net Cash Proceeds must be used to make an Asset
Sale Offer in accordance with clause 1(a), and not reinvested under clause
1(b), 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 Existing Notes and/or the TAC II Notes in accordance with
the Existing 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
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million, at least 75% (or 90%, in the case of a Casino Sale) of the
consideration for such Asset Sale or series of related Asset Sales consists of
cash or Cash Equivalents (treating for this purpose as cash or Cash
Equivalents (A) property that promptly after such Asset Sale is converted into
cash or Cash Equivalents and (B) except in the case of a Casino Sale, any
senior Indebtedness that secured the subject assets that is assumed by the
transferee in such Asset Sale),
(3) no Default or Event of Default shall have occurred and be
continuing at the time of, or would occur after giving effect, on a pro forma
basis, to, such Asset Sale, and
(4) the Company determines in good faith that the Company or
such Subsidiary, as applicable, receives fair market value for such Asset
Sale.
For purposes of this Section 5.15 with respect to the application of
the Net Cash Proceeds thereof, the receipt by the Company or any of its
Subsidiaries of proceeds due to an Event of Loss shall constitute an Asset
Sale, which Asset Sale shall be deemed to occur upon receipt of such proceeds.
All Net Cash Proceeds from an Event of Loss shall be reinvested or used to
repurchase the Securities, all within the applicable periods and as otherwise
provided above in clause (1) of the first paragraph of this Section 5.15.
An Asset Sale Offer need not be made until the accumulated Net Cash
Proceeds from Asset Sales not applied in accordance with (1) above (the
"Excess Proceeds") exceeds $15.0 million. Each Asset Sale Offer shall remain
open for 20 Business Days following its commencement and no longer, except to
the extent that a longer period is required by applicable law (the "Asset Sale
Offer Period"). Upon expiration of the Asset Sale Offer Period, the Company
shall apply the Asset Sale Offer Amount, plus an amount equal to accrued
interest, to the purchase of all Securities tendered (on a pro rata basis if
the Asset Sale Offer Amount is insufficient to purchase all such Securities so
tendered) at the Asset Sale Offer Price (together with accrued interest).
Notwithstanding 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 Existing 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 Existing Note Indenture and the TAC II Note
Indenture.
Subject to Article IV hereof, notwithstanding the foregoing
provisions of the prior paragraphs:
(i) the Company and its Subsidiaries may, without
complying with the foregoing, in the ordinary course of business for
the casino industry, convey, sell, lease, transfer, assign, or
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otherwise dispose of assets acquired and held for resale in the
ordinary course of business;
(ii) other than a Casino Sale, the Company and its
Subsidiaries may, without complying with the foregoing, convey,
sell, lease, transfer or otherwise dispose of assets pursuant to and
in accordance with Section 6.1 of this Indenture;
(iii) the Company and its Subsidiaries may, without
complying with the foregoing, convey, sell, lease, transfer, assign
or otherwise dispose of three warehouses and related facilities (the
Egg Harbor Parcel, the Pleasantville Warehouse and the Realty
Warehouse) in exchange for any type of consideration so long as the
Company determines in good faith that the Company or such
Subsidiary, as applicable, receives fair market value;
(iv) the Company and its Subsidiaries may, without
complying with the foregoing, convey, sell, transfer, assign or
otherwise dispose of assets to the Company or any Subsidiaries of
the Company; and
(v) the Company and its Subsidiaries may, without
complying with the foregoing, sell or dispose of, free from the
Liens under the Mortgage Documents, any Tangible Personal Property
which, in the Company's reasonable opinion, may have become obsolete
or unfit for use or which is no longer necessary in the conduct of
its businesses.
Notwithstanding the foregoing, the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly make any Asset Sale of any of
the Equity Interests of such Subsidiary except pursuant to an Asset Sale of
all the Equity Interests of such Subsidiary.
In addition, if the amount required to acquire all Securities
tendered by Holders pursuant to the Asset Sale Offer (the "Acceptance Amount")
is less than the Asset Sale Offer Amount, the excess of the Asset Sale Offer
Amount over the Acceptance Amount may be used by the Company and its
Subsidiaries for general corporate or partnership purposes without
restriction, other than dividends, repurchases or other distributions in
respect of Equity Interests, and unless otherwise restricted by the other
provisions of the Indenture. Upon consummation of any Asset Sale Offer, the
Asset Sale Offer Amount will be reduced to zero.
Notice of an Asset Sale Offer shall be sent, not later than 20
Business Days prior to the close of business on the Asset Sale Put Date (as
defined below), by first-class mail, by the Issuers to each Holder at its
registered address, with a copy to the Trustee. The notice to the Holders
shall contain all information, instructions and materials required by
applicable law or
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otherwise material to such Holders' decision to tender Securities pursuant to
the Asset Sale Offer. The notice, which (to the extent consistent with this
Indenture) shall govern the terms of the Asset Sale Offer, shall state:
(l) that the Asset Sale Offer is being made pursuant to
such notice and this Section 5.15;
(2) the Asset Sale Offer Amount, the Accumulated Amount,
the Asset Sale Offer Price (including the amount of accrued and unpaid
interest and Liquidated Damages, if any), the Asset Sale Put Date, and the
"Asset Sale Purchase Date," which Asset Sale Purchase Date shall be on or
prior to 30 Business Days (or later, if required by law) following the date
the Accumulated Amount was greater than $5.0 million;
(3) that any Security or portion thereof not tendered or
accepted for payment will continue to accrue interest if interest is then
accruing;
(4) that, unless the Issuers default in depositing U.S.
Legal Tender with the Paying Agent (which may not for purposes of this Section
5.15, notwithstanding anything in this Indenture to the contrary, be the
Issuers or any Affiliate of the Issuers) in accordance with the last paragraph
of this clause (b), any Security, or portion thereof, accepted for payment
pursuant to the Asset Sale Offer shall cease to accrue interest after the
Asset Sale Purchase Date;
(5) that Holders electing to have a Security, or portion
thereof, purchased pursuant to an Asset Sale Offer will be required to
surrender their Security, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Security completed, to the Paying Agent (which
may not for purposes of this Section 5.15, notwithstanding any other provision
of this Indenture, be the Issuers or any Affiliate of the Issuers) at the
address specified in the notice prior to the close of business on the third
Business Day prior to the Asset Sale Purchase Date (the "Asset Sale Put
Date");
(6) that Holders will be entitled to withdraw their
elections, in whole or in part, if the Paying Agent (which may not for
purposes of this Section 5.15, notwithstanding any other provision of this
Indenture, be the Issuers or any Affiliate of the Issuers) receives, up to the
close of business on the Asset Sale Put Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Securities the Holder is withdrawing and a statement that such
Holder is withdrawing his election to have such principal amount of Securities
purchased;
(7) that if Securities in a principal amount in excess of
the principal amount of Securities to be acquired pursuant to the Asset Sale
Offer are tendered and not withdrawn, the Issuers shall purchase Securities on
a pro rata basis (with such adjustments as may be deemed appropriate by the
Issuers so that only Securities in denominations of $1,000 or integral
multiples of $1,000 shall be acquired);
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(8) that Holders whose Securities were purchased only in
part will be issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered; and
(9) the circumstances and relevant facts regarding such
Asset Sales.
No later than 12:00 noon New York City time on an Asset Sale
Purchase Date, the Issuers shall (i) accept for payment Securities or portions
thereof properly tendered pursuant to the Asset Sale Offer (on a pro rata
basis if required pursuant to paragraph (7) above), (ii) deposit with the
Paying Agent U.S. Legal Tender sufficient to pay the Asset Sale Offer Price
(plus accrued interest) for all Securities or portions thereof so accepted and
(iii) deliver to the Trustee Securities so accepted together with an Officers'
Certificate setting forth the Securities or portions thereof being purchased
by the Issuers. The Paying Agent shall promptly mail or deliver to Holders of
Securities so accepted payment in an amount equal to the Asset Sale Offer
Price for such Securities, and the Trustee shall promptly authenticate and
mail or deliver to such Holders a new Security equal in principal amount to
any unpurchased portion of the Security surrendered. Any Securities not so
accepted shall be promptly mailed or delivered by the Issuers to the Holder
thereof.
SECTION 5.16 Future Subsidiary Guarantors.
The Company and the Guarantors covenant and agree that they shall
cause each person that is or becomes a Subsidiary of the Company (other than
Funding, Funding II and Funding III) to execute a Guaranty in the form of
Exhibit B hereto and will cause such Subsidiary to enter into a supplemental
indenture for the purpose of jointly and severally guaranteeing, on a senior
basis, the Indenture Obligations.
SECTION 5.17 Limitation on Activities of Funding III.
Funding III will not conduct any business (including having any
Subsidiary) whatsoever, other than to comply with its obligations under this
Indenture, the Securities and its obligations as a guarantor of the Existing
Notes under the Existing Note Indenture. Funding III will not incur or
otherwise become liable for any Indebtedness (other than the Securities, the
Existing Notes and any renewal, extension, substitution, refunding,
refinancing or replacement thereof in accordance with this Indenture or the
Existing Note Indenture, as applicable) or make any Restricted Payments.
SECTION 5.18 Rule 144A Information Requirement.
The Company shall furnish to the Holders of the Securities and
prospective purchasers of Securities designated by the Holders of Transfer
Restricted Securities, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act until such time
as either the Company has concluded an offer to exchange the
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Exchange Securities for the Initial Securities or a registration statement
relating to resales of the Securities has become effective under the
Securities Act. The Company shall also furnish such information during the
pendency of any suspension of effectiveness of such resale registration
statement.
SECTION 5.19 Restriction on Certain Agreements.
Other than employment agreements in the ordinary course of business
consistent with industry practice and approved by the compensation committee
of Funding III, the Company will not, and will not permit any of its
Subsidiaries to, enter into any management, services or consulting agreement
with Trump or any Affiliate of Trump, other than the TPM Services Agreement;
provided, that no Services Fee thereunder shall be paid (i) to any person
other than the Company or a Subsidiary of the Company if the TPM Services
Agreement is assigned or transferred by Trump Plaza Management Corp. and (ii)
to Trump Plaza Management Corp. after expiration of the Super Puma Helicopter
Lease. The Company will not, and will not permit the Subsidiaries to, pay any
Services Fee under the TPM Services Agreement to Trump Plaza Management Corp.
or pay or reimburse any expenses relating thereto if a Default or Event of
Default has occurred and is continuing. The terms of the TPM Services
Agreement shall not be amended to increase the amounts to be paid thereunder
in the aggregate or on any particular date, or in any other manner which would
be adverse to the Company or its Subsidiaries.
SECTION 5.20 Limitation on Leases.
The Company will not, nor will any of its Subsidiaries, be permitted
to, lease as tenant or subtenant real or personal property (except Permitted
Leases), unless the Company's Consolidated Coverage Ratio for the four full
fiscal quarters immediately preceding such event, taken as one period (and
after also giving pro forma effect to any such lease as if such lease was
entered into at the beginning of such four-quarter period), would have been at
least equal to the ratios set forth below for the applicable period during
which such determination is being made:
Period Ratio
------ ---------
First 24 months from and including April 17, 1996......... 2.00 to 1
Thereafter................................................ 2.25 to 1
In giving effect to the lease as of such four full fiscal quarters, it will
be assumed that the rent for such prior four fiscal quarters was the greater
of the (i) average annualized rent over the term of such lease and (ii) rent
payable for the first four fiscal quarters of such lease.
SECTION 5.21 Limitation on Status as Investment Company.
None of the Company and its Subsidiaries shall become required to
register as an "investment company" (as that term is defined in the
Investment Company Act of 1940, as amended), or otherwise become subject to
regulation under the Investment Company Act.
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SECTION 5.22 Future Collateral Agreements.
The Company and the Guarantors hereby agree and consent that all
property, real, personal or mixed or any interest therein (other than
Excepted Property), of every kind and description and wheresoever situate,
which may be hereafter acquired by the Company, any of its Subsidiaries or
any Guarantor (including, without limitation, fee title to any Leased Land)
shall immediately upon the acquisition thereof by the Company, any of its
Subsidiaries or any Guarantor, and without any further mortgage, conveyance
or assignment, become subject to the Liens under the Mortgage Documents as
fully as though now owned by the Company, any of its Subsidiaries or any
Guarantor. Nevertheless, the Company, any of its Subsidiaries or any
Guarantor shall do, execute, acknowledge and deliver all and every such
further acts, conveyances, mortgages, financing statements and assurances
necessary, including as the Collateral Agent shall reasonably require, for
accomplishing the express purposes of the Indenture and the Mortgage
Documents (including the preceding sentence).
SECTION 5.23 Limitations on Use of Proceeds from the Offering
The Company and its Subsidiaries shall use the proceeds from the
Offering (after deducting discounts and commissions and reasonable expenses
of the Offering) only for working capital and other general corporate
purposes at the Company and its Subsidiaries, and for no other purpose.
ARTICLE VI
SUCCESSORS
SECTION 6.1 Limitation on Merger, Sale or Consolidation.
Neither of the Issuers may consolidate with, merge with or into any
other Person or sell, assign, convey, transfer, lease or otherwise dispose of
all or substantially all of its properties and assets (as an entirety or
substantially as an entirety in one transaction or series of related
transactions) to any Person or group of affiliated Persons or permit any of
the Company's Subsidiaries to enter into any such transaction or transactions
if such transaction or transactions, in the aggregate, would result in a
transfer of all or substantially all of the assets of the Company and the
Subsidiaries on a Consolidated basis or Funding III, as applicable, to any
other Person, unless:
(a) such Issuer shall be the continuing Person,
or the Person (if other than such Issuer) formed by such
consolidation or into which such Issuer is merged or to which the
properties and assets of such Issuer are transferred (the
"Surviving Entity") shall be a partnership or corporation, in the
case of the Company, and a corporation, in the case of Funding
III, duly organized and validly existing under the laws of the
United States or any state thereof or the District of Columbia
and shall
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expressly assume, by a supplemental indenture, all of the
obligations of such Issuer under the Securities and this
Indenture, and this Indenture shall remain in full force and
effect;
(b) immediately before and immediately after
giving effect to such transaction on a pro forma basis, no Event
of Default or Default shall have occurred and be continuing;
(c) immediately after giving effect to such
transaction on a pro forma basis, the Consolidated Net Worth of
the Company or the Surviving Entity, as applicable, is at least
equal to the Consolidated Net Worth of the Company immediately
prior to such transaction or series of transactions;
(d) immediately before and after giving effect to
such transaction on a pro forma basis, the Company or the
Surviving Entity, as applicable, could incur at least $1.00 of
additional Indebtedness pursuant to the Debt Incurrence Ratio set
forth in paragraph (a) of Section 5.11; and
(e) immediately after such transaction, such
Issuer or the Surviving Entity, as applicable, holds all Permits
required for operation of the business of, and such entity is
controlled by a Person or entity (or has retained a Person or
entity which is) experienced in, operating casino hotels or
otherwise holds all Permits (including those required from Gaming
Authorities) to operate its business.
Funding 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 this Indenture and
(b) this transaction shall not impair the rights and powers of the Trustee
and Holders of the Securities thereunder.
For purposes of the first sentence of this Section 6.1, the sale,
lease, conveyance or transfer of all or substantially all of the properties
and assets of one or more Subsidiaries of the Issuers, which properties and
assets, if held by the Issuers instead of such Subsidiaries, would constitute
all or substantially all of the properties and assets of the Issuers on a
consolidated basis, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Issuers.
SECTION 6.2 Successor Substituted.
In the event of any transaction (other than a lease) described in
and complying with the conditions listed in Section 6.1 in which the Company
or Funding III, as applicable, is not the continuing Person, the successor
Person formed or remaining shall succeed to, and be
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substituted for, and may exercise every right and power of, provisions of the
Company or Funding III, as applicable, and the Company or Funding III shall
in such case be discharged from all obligations and covenants under this
Indenture, the Securities and the Mortgage Documents.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.1 Events of Default.
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether
it shall be caused voluntarily or involuntarily or effected, without
limitation, by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body):
(a) the failure by the Issuers to pay any installment of
interest (including any defaulted interest) or Liquidated Damages, if any, on
the Securities as and when the same becomes due and payable and the
continuance of any such failure for 30 days;
(b) the failure by the Issuers to pay all or any part of the
principal, or premium, if any, on the Securities when and as the same becomes
due and payable at maturity, at redemption, by acceleration or otherwise,
including, without limitation, payment of the Change of Control Purchase
Price or the Asset Sale Offer Price, or otherwise;
(c)(i) the failure by the Company or any of its Subsidiaries
to observe or perform any other covenant or agreement contained in the
Securities or this Indenture and (other than a default in the performance, or
breach of a covenant that is specifically dealt with elsewhere in this
section) the continuance of such failure for a period of 30 days after
written notice is given to the Issuers by the Trustee or to the Issuers and
the Trustee by the Holders of at least 25% in aggregate principal amount of
the Securities outstanding, specifying such default and requiring that it be
remedied; (ii) default in the performance or breach of the provisions of
Article VI; (iii) Funding III or the Company shall have failed to make or
consummate a Change of Control Offer in accordance with provisions of Section
11.1; and (iv) Funding III or the Company shall have failed to make or
consummate an Asset Sale Offer in accordance with the provisions of Section
5.15;
(d) a default in Indebtedness of either of the Issuers or any
of the Subsidiaries with an aggregate outstanding principal amount in excess
of $20.0 million;
(e) one or more judgments, orders or decrees for the payment
of money in excess of $20.0 million, either individually or in the aggregate,
shall be rendered
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against either of the Issuers or any of the Subsidiaries or any of their
respective properties and shall not be discharged and either (i) an
enforcement proceeding shall have been commenced by any creditor upon such
judgment, order or decree or (ii) there shall be any period of 60 days during
which a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect;
(f) there shall have been the entry by a court having
jurisdiction in the premises of (i) a decree or order for relief in respect
of either of the Issuers or any of the Significant Subsidiaries in an
involuntary case or proceeding under any applicable Bankruptcy Law or (ii) a
decree or order adjudging either of the Issuers or any of the Significant
Subsidiaries bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment or composition of or in respect of either of the Issuers or any of
the Significant Subsidiaries under any applicable federal or state law, or
appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator
(or other similar official) of either of the Issuers or any of the
Significant Subsidiaries or of any substantial part of their property, or
ordering the winding-up or liquidation of their affairs, and the continuance
of any such decree or order for relief or any such other decree or order
unstayed and in effect for a period of 60 consecutive days;
(g)(i) either of the Issuers or any of the Significant
Subsidiaries commences a voluntary case or proceeding under any applicable
Bankruptcy Law or any other case or proceeding to be adjudicated bankrupt or
insolvent, or (ii) either of the Issuers or any of the Significant
Subsidiaries consents to the entry of a decree or order for relief in respect
of either of the Issuers or such Significant Subsidiary in an involuntary
case or proceeding under any applicable Bankruptcy Law or to the commencement
of any bankruptcy or insolvency case or proceeding against it, or (iii)
either of the Issuers or any of the Significant Subsidiaries files a petition
or answer or consent seeking reorganization or relief under any applicable
federal or state law, or either of the Issuers or any of the Significant
Subsidiaries consents to (1) the filing of such petition or the appointment
of or taking possession by a custodian, receiver, liquidator, assignee,
trustee, sequestrator or similar official of either of the Issuers or such
Significant Subsidiary or of any substantial part of its property, (2) the
making by it of an assignment for the benefit of creditors or (3) the
admission by it in writing of its inability to pay its debts generally as
they become due, or (iv) the taking of corporate or partnership action by
either of the Issuers or any of the Significant Subsidiaries in furtherance
of any such action in this paragraph (g);
(h) the revocation, suspension or involuntary loss of any
Permit which results in the cessation of all or a substantial portion of the
operations of either Casino Hotel for a period of more than 90 consecutive
days;
(i) except as permitted by this Indenture and the Securities,
the cessation of effectiveness of any Guaranty of the Obligations in any
material respect or the finding by any judicial proceeding that any such
Guaranty is unenforceable or invalid in any material respect or the denial or
disaffirmation by any Guarantor in writing of its obligations under its
Guaranty; or
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(j) default in the payment of any sum due under the Taj
Mortgage or the Plaza Mortgage, and the continuance of such default for a
period of 30 days after there has been given to the Issuers and respective
Mortgagor a notice specifying such default and requiring it to be remedied
and stating that such notice is a "Notice of Default" under the respective
Mortgage; or
(k) default in the performance, or breach, of any covenant of
Taj Associates or Plaza Associates in the Taj Mortgage or the Plaza Mortgage,
as applicable (other than a covenant, a default in the performance or breach
of which is elsewhere in the applicable Mortgage specifically dealt with) in
any material respect, and continuance of such default or breach for a period
of 30 days after there has been given to Taj Associates or Plaza Associates,
as applicable, a notice specifying such default or breach and requiring it to
be remedied and stating that such notice is a "Notice of Default" under the
Taj Mortgage or the Plaza Mortgage, as applicable, unless (i) the default or
breach is of such a nature that is curable but not susceptible of being cured
with due diligence within such 30-day period (for reasons other than the lack
of funds), (ii) Taj Associates or Plaza Associates, as applicable, delivers
an Officers' Certificate to the Collateral Agent within such 30-day period
stating (A) the applicability of the provisions of clause (i) to such default
or breach, (B) Taj Associates' or Plaza Associates', as applicable, intention
to remedy such default or breach with reasonable diligence and (C) the steps
which Taj Associates or Plaza Associates, as applicable, has undertaken or
intends to undertake to remedy such default or breach and (iii) Taj
Associates or Plaza Associates, as applicable, delivers to the Collateral
Agent additional Officers' Certificates every 30 days thereafter updating the
information contained in the certificate described in clause (ii), in which
case such 30-day period shall be extended for such further period of time
(but in no event more than 60 days after the last day of such 30-day period)
as may reasonably be required to cure the same, provided that Taj Associates
or Plaza Associates, as applicable, is then proceeding and thereafter
continues to proceed to cure the same with reasonable diligence; or
(l) default by Taj Associates or Plaza Associates under any of
the terms of any Facility Lease forming a portion of the Collateral other
than the Rothenberg Lease (as defined therein) which shall not be fully cured
or waived prior to the expiration of any grace period (as such grace period
may be extended) contained in such Facility Lease; or
(m) default by Taj Associates or Plaza Associates under any of
the terms of the Egg Harbor Mortgage or the Parking Parcel Mortgage (i) at
the Stated Maturity of the Indebtedness secured by such mortgage or (ii)
which default results in the acceleration of the Stated Maturity of the
Indebtedness secured by such mortgage and, in the case of (i) or (ii), which
default shall not be fully cured, waived or rescinded, as the case may be,
prior to the expiration of any grace period (as such grace period may be
extended) contained in such mortgage; or
(n) if any representation or warranty of Taj Associates or
Plaza Associates, as applicable, set forth in the respective Mortgage or in
any notice, certificate, demand or request delivered to the Collateral Agent
pursuant to the respective Mortgage shall
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prove to be incorrect as of the time when made and which has or could
reasonably be expected to have a material adverse effect on the business,
financial condition or operations of the Company or its Subsidiaries, taken
as a whole; or
(o) the declaration or payment of any dividend or other
distribution in respect of Equity Interests of any Guarantor in the event
that there shall exist a "default" or "event of default" (as defined therein)
under the Indenture governing the Senior Notes or any Refinancing
Indebtedness in respect thereof; or
(p) an event of default under any of the Mortgage Documents
(without duplication of those items otherwise recited in this Section 7).
An Event of Default shall not be deemed to exist by reason of any
event under paragraph (j) or (l) through (n) above which Taj Associates or
Plaza Associates, as applicable, is contesting in compliance with the
provisions of Section 5.09 of the respective Mortgage.
Notwithstanding the 30-day period and notice requirement contained
in Section 7.1(c) above, (i) with respect to a default under Article XI, the
30-day period referred to in Section 7.1(c) shall be deemed to have begun as
of the date the Change of Control notice is required to be sent in the event
that the Company has not complied with the provisions of Section 11.1, and
the Trustee or Holders of at least 25% in principal amount of the outstanding
Securities thereafter give the notice of default referred to in Section
7.1(c) to the Company and, if applicable, the Trustee; provided, however,
that if the breach or default is a result of a default in the payment when
due of the Change of Control Purchase Price, such default shall be deemed,
for purposes of this Section 7.1, to arise no later than on such due date;
and (ii) with respect to a default under Section 5.15, the 30-day period
referred to in Section 7.1(c) shall be deemed to have begun as of the date
the notice of an Offer to Purchase is required to be sent in the event that
the Company has not complied with the provisions of Section 5.15 requiring
the giving of such notice, and the Trustee or Holders of at least 25% in
principal amount of the outstanding Securities thereafter give the notice of
default referred to in Section 7.1(c) to the Company and, if applicable, the
Trustee; provided, however, that if the breach or default is a result of a
default in the payment when due of the Offer to Purchase Price, such default
shall be deemed, for purposes of this Section 7.1, to arise no later than on
such due date.
SECTION 7.2 Acceleration of Maturity Date; Rescission and
Annulment.
If an Event of Default (other than as specified in clauses (f) and
(g) of Section 7.1) occurs and is continuing, then in every such case, unless
the principal of all the Securities shall have already become due and
payable, either the Trustee or the Holders of at least 25% of the principal
amount of the Securities then outstanding, by written notice to the Issuers
(and to the Trustee if such notice is given by such Holders) (an
"Acceleration Notice"), may, and the Trustee at the request of such Holders
shall, declare all unpaid principal of, premium, if any, and accrued interest
(and Liquidated Damages, if any) on all Securities to be due and payable and
thereupon the Trustee may, at its discretion, proceed to protect and enforce
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the rights of the Holders of the Securities by appropriate judicial
proceeding. If an Event of Default specified in clause (f) or (g) occurs and
is continuing, then the principal of all Securities shall ipso facto become
and be immediately due and payable without any declaration or other act of
the Trustee or any Holder.
After a declaration of acceleration, but before a judgment or decree
for payment of the money due has been obtained by the Trustee, the Holders of
a majority in aggregate principal amount of Securities outstanding, by
written notice to the Issuers and the Trustee, may annul such declaration if:
(a) the Issuers have paid or deposited with the
Trustee a sum sufficient to pay:
(i) all sums paid or advanced by the Trustee
under this Indenture and the reasonable compensation,
expenses, disbursements and advances of the Trustee, its
agents and counsel,
(ii) all overdue interest and Liquidated Damages,
if any, on all Securities,
(iii) the principal of and premium, if any, on any
Securities which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate
borne by the Securities, and
(iv) to the extent that payment of such interest
is lawful, interest upon overdue interest at the rate borne
by the Securities; and
(b) all Events of Default, other than the non-payment
of principal of the Securities which have become due solely by
such declaration of acceleration, have been cured or waived.
Notwithstanding the previous sentence of this Section 7.2, no
annulment of a declaration of acceleration shall be effective for any Event
of Default with respect to any covenant or provision which cannot be modified
or amended without the consent of the Holder of greater than a simple
majority of the outstanding principal amount of the Securities, unless such
specified percentage of affected Holders agree, in writing, to annul such
declaration of acceleration. No such annulment shall cure or waive any
subsequent default or impair any right consequent thereon.
SECTION 7.3 Collection of Indebtedness and Suits for Enforcement
by Trustee.
The Issuers covenant that if an Event of Default in payment of
principal, premium, or interest specified in Section 7.1(a) and (b) occurs
and is continuing, the Issuers shall, upon demand of the Trustee, pay to it,
for the benefit of the Holders of such Securities, the whole amount then due
and payable on such Securities for principal, premium (if any and
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Liquidated Damages, if any) and interest and, to the extent that payment of
such interest shall be legally enforceable, interest on any overdue principal
(premium, if any) and on any overdue interest, at the rate borne by the
Securities, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including
compensation to, and expenses, disbursements and advances of the Trustee, its
agents and counsel.
If the Issuers fail to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust in favor of
the Holders, may institute a judicial proceeding for the collection of the
sums so due and unpaid, may prosecute such proceeding to judgment or final
decree and may enforce the same against the Issuers or any other obligor upon
the Securities and collect the moneys adjudged or decreed to be payable in
the manner provided by law out of the property of the Issuers or any other
obligor upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of
the Holders by such appropriate judicial proceedings as the Trustee shall
deem most effective to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid
of the exercise of any power granted herein, or to enforce any other proper
remedy.
SECTION 7.4 Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition
or other judicial proceeding relative to the Issuers or any other obligor
upon the Securities or the property of the Issuers or of such other obligor
or their creditors, the Trustee (irrespective of whether the principal of the
Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have
made any demand on the Issuers for the payment of overdue principal or
interest and Liquidated Damages, if any) shall be entitled and empowered, by
intervention in such proceeding or otherwise to take any and all actions
under the TIA, including
(i) to file and prove a claim for the whole
amount of principal (and premium, if any) and interest (and
Liquidated Damages, if any) owing and unpaid in respect of
the Securities and to file such other papers or documents as
may be necessary or advisable in order to have the claims of
the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agent and counsel) and of the Holders allowed
in such judicial proceeding, and
(ii) to collect and receive any moneys or other
property payable or deliverable on any such claims and to
distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the
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Trustee and, in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due
it for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, and any other amounts due the Trustee
under Section 8.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment, or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
SECTION 7.5 Trustee May Enforce Claims Without Possession of
Securities.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express trust in
favor of the Holders, and any recovery of judgment shall, after provision for
the payment of compensation to, and expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit of the
Holders of the Securities in respect of which such judgment has been
recovered.
SECTION 7.6 Priorities.
Any money collected by the Trustee pursuant to this Article VII
shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of
principal, premium (if any) or interest (and Liquidated Damages, if any),
upon presentation of the Securities and the notation thereon of the payment
if only partially paid and upon surrender thereof if fully paid:
FIRST: To the Trustee in payment of all amounts due
pursuant to Section 8.7;
SECOND: To the Holders in payment of the amounts then
due and unpaid for principal of, premium (if any) and interest
(and Liquidated Damages, if any) on, the Securities in respect of
which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to
the amounts due and payable on such Securities for principal,
premium (if any) and interest (and Liquidated Damages, if any),
respectively; and
THIRD: To whomsoever may be lawfully entitled thereto,
the remainder, if any.
The Trustee may, but shall not be obligated to, fix a record
date and payment date for any payment to the Holders under this
Section 7.6.
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SECTION 7.7 Limitation on Suits.
No Holder of any Security shall have any right to order or direct
the Trustee to institute any proceeding, judicial or otherwise, with respect
to this Indenture, or for the appointment of a receiver or trustee, or for
any other remedy hereunder, unless
(A) such Holder has previously given written
notice to the Trustee of a continuing Event of Default;
(B) the Holders of not less than 25% in principal
amount of then outstanding Securities shall have made
written request to the Trustee to institute proceedings in
respect of such Event of Default in its own name as Trustee
hereunder;
(C) such Holder or Holders have offered to the
Trustee reasonable security or indemnity against the costs,
expenses and liabilities to be incurred or reasonably
probable to be incurred in compliance with such request;
(D) the Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed to
institute any such proceeding; and
(E) no direction inconsistent with such written
request has been given to the Trustee during such 60-day
period by the Holders of a majority in principal amount of
the outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders, or to obtain or to seek to obtain priority or preference over any
other Holders or to enforce any right under this Indenture, except in the
manner herein provided and for the equal and ratable benefit of all the
Holders.
SECTION 7.8 Unconditional Right of Holders to Receive Principal,
Premium and Interest.
Notwithstanding any other provision of this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of, and interest (and Liquidated Damages, if
any) on, such Security on the Maturity dates of such payments as expressed in
such Security (in the case of redemption, the Redemption Price on the
applicable Redemption Date, in the case of a Change of Control, the Change of
Control Purchase Price on the applicable Change of Control Purchase Date,
and, in the case of an Asset Sale, the Asset Sale Offer Price on the Asset
Sale Purchase Date) and to institute suit for the enforcement of any such
payment, and such rights shall not be impaired without the consent of such
Holder.
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SECTION 7.9 Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in Section 2.7, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of
any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 7.10 Delay or Omission Not Waiver.
No delay or omission by the Trustee or by any Holder of any Security
to exercise any right or remedy arising upon any Event of Default shall
impair the exercise of any such right or remedy or constitute a waiver of any
such Event of Default. Every right and remedy given by this Article VII or
by law to the Trustee or to the Holders may be exercised from time to time,
and as often as may be deemed expedient, by the Trustee or by the Holders, as
the case may be.
SECTION 7.11 Control by Holders.
The Holder or Holders of a majority in aggregate principal amount of
then outstanding Securities shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred upon the Trustee,
provided, that
(1) such direction shall not be in conflict
with any rule of law or with this Indenture,
(2) the Trustee shall not determine that the
action so directed would be unjustly prejudicial to the
Holders not taking part in such direction, and
(3) the Trustee may take any other action
deemed proper by the Trustee which is not inconsistent with
such direction.
SECTION 7.12 Waiver of Past Default.
Subject to Section 7.8, the Holder or Holders of not less than a
majority in aggregate principal amount of the outstanding Securities may, by
written notice to the Trustee on behalf of all Holders, prior to the
declaration of acceleration of the maturity of the Securities, waive any past
default hereunder and its consequences, except a default
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(A) in the payment of the principal of,
premium, if any, or interest (and Liquidated Damages, if
any) on, any Security as specified in clauses (a) and (b) of
Section 7.1, or
(B) in respect of a covenant or
provision hereof which, under Article X, cannot be modified
or amended without the consent of the Holder of each
outstanding Security affected or Holders of more than a
simple majority in principal amount of the Securities, as
applicable; provided, however, that such a default may be
waived upon the affirmative vote of the requisite principal
amount of the Securities.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair the exercise of any right arising
therefrom.
SECTION 7.13 Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security
by its acceptance thereof shall be deemed to have agreed, that any court may
in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Trustee for any
action taken, suffered or omitted to be taken by it as Trustee, the filing by
any party litigant in such suit of an undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or
defenses made by such party litigant; but the provisions of this Section 7.13
shall not apply to any suit instituted by the Issuers, to any suit instituted
by the Trustee, to any suit instituted by any Holder, or group of Holders,
holding in the aggregate more than 10% in aggregate principal amount of the
outstanding Securities, or to any suit instituted by any Holder for
enforcement of the payment of principal of, or premium (if any) or interest
(and Liquidated Damages, if any) on, any Security on or after the Maturity of
such Security.
SECTION 7.14 Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every case, subject to any
determination in such proceeding, the Issuers, the Trustee and the Holders
shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and the
Holders shall continue as though no such proceeding had been instituted.
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ARTICLE VIII
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this
Indenture and covenants and agrees to perform the same, as herein
expressed.
SECTION 8.1 Duties of Trustee.
(a) If a Default or an Event of Default has occurred
and is continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture and use the same degree of care
and skill in their exercise as a prudent person would exercise or use
under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of a Default or an
Event of Default:
(1) The Trustee need perform only those
duties as are specifically set forth in this Indenture and
no others, and no covenants or obligations shall be implied
in or read into this Indenture which are adverse to the
Trustee.
(2) In the absence of bad faith on its part,
the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this
Indenture. However, the Trustee shall examine the
certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect
of paragraph (b) of this Section 8.1.
(2) The Trustee shall comply with any order
or directive of a Gaming Authority that the Trustee submit
an application for any license, finding of suitability or
other approval pursuant to any Gaming Law and will cooperate
fully and completely in any proceeding related to such
application.
(3) The Trustee shall not be liable for any
error of judgment made in good faith by a Trust Officer,
unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts.
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(4) The Trustee shall not be liable with
respect to any action it takes or omits to take in good
faith in accordance with a direction received by it pursuant
to Section 7.11.
(d) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or to take or omit to take any
action under this Indenture or at the request, order or direction of the
Holders or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b), (c), (d) and (f) of this
Section 8.1.
(f) The Trustee shall not be liable for interest on any assets
received by it except as the Trustee may agree in writing with the Issuers.
Assets held in trust by the Trustee need not be segregated from other assets
except to the extent required by law.
SECTION 8.2 Rights of Trustee.
Subject to Section 8.1:
(a) The Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
consult with counsel and may require an Officers' Certificate or an Opinion
of Counsel, which shall conform to Sections 12.4 and 12.5. The Trustee shall
not be liable for any action it takes or omits to take in good faith in
reliance on such certificate or opinion.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent
appointed with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers conferred upon it by this Indenture or the TIA.
(e) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond,
debenture, or other paper or document, but the Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters as
it may see fit.
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(f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request, order
or direction of any of the Holders, pursuant to the provisions of this
Indenture, unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may
be incurred therein or thereby.
(g) Except with respect to Section 5.1, the Trustee shall have
no duty to inquire as to the performance of the Issuers' covenants in Article
V. In addition, the Trustee shall not be deemed to have knowledge of any
Default or Event of Default except (i) any Event of Default occurring
pursuant to Sections 7.1(a), 7.1(b) and 5.1, or (ii) any Default or Event of
Default of which the Trustee shall have received written notification or
obtained actual knowledge.
SECTION 8.3 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of any of the Securities, may make loans to, accept deposits
from, and perform services for the Issuers or their Affiliates, and may
otherwise deal with the Issuers, any of their respective Subsidiaries, or
their respective Affiliates with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee
must comply with Sections 8.10 and 8.11.
SECTION 8.4 Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy
of this Indenture or the Securities and it shall not be responsible for any
statement in the Securities, other than the Trustee's certificate of
authentication, or the use or application of any funds received by a Paying
Agent other than the Trustee.
SECTION 8.5 Notice of Default.
If a Default or an Event of Default occurs and is continuing and if
it is known to the Trustee, the Trustee shall mail to each Securityholder
notice of the uncured Default or Event of Default within 90 days after such
Default or Event of Default occurs. Except in the case of a Default or an
Event of Default in payment of principal (or premium, if any) of, or interest
(and Liquidated Damages, if any) on, any Security (including the payment of
the Change of Control Purchase Price on the Change of Control Purchase Date,
the Redemption Price on the Redemption Date and the Asset Sale Offer Amount
on the Asset Sale Purchase Date, as the case may be), the Trustee may
withhold the notice if and so long as a Trust Officer in good faith
determines that withholding the notice is in the interest of the
Securityholders.
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SECTION 8.6 Reports by Trustee to Holders.
(a) Securities Law Requirements. If required by law, within
60 days after each May 15, beginning with the May 15 following the date of
this Indenture, the Trustee shall mail to each Securityholder a brief report
dated as of such May 15 that complies with TIA Section 313(a). If required
by law, the Trustee also shall comply with TIA Sections 313(b) and 313(c).
The Issuers shall promptly notify the Trustee in writing if the
Securities become listed on any stock exchange or automatic quotation system.
A copy of each report at the time of its mailing to Securityholders
shall be mailed to the Issuers and filed with the SEC and each stock
exchange, if any, on which the Securities are listed.
(b) Gaming License Requirements. The Trustee will provide any
applicable Gaming Authority with:
(1) copies of all notices, reports and other written
communications which the Trustee gives to Holders;
(2) a list of Holders promptly after the original
issuance of the Securities and a list of Holders eight months and two months
prior to the expiration date of each then-current Gaming License held by the
Company or its Subsidiaries;
(3) notice of any Event of Default under this Indenture
or of any Default, any acceleration of the Indebtedness evidenced or secured
hereby, the institution of any legal actions or proceedings before any court
or governmental authority in respect of this Indenture or the Collateral
Documents, the entering into or taking possession of any property
constituting the Collateral and any rescission, annulment or waiver in
respect of an Event of Default;
(4) notice of the removal or resignation of the Trustee
within five Business Days thereof;
(5) notice of any transfer or assignment of rights under
this Indenture (but no transfers or assignments of the Securities) or the
Collateral Documents within five Business Days thereof; and
(6) a copy of any amendment to the Securities, this
Indenture or the Collateral Documents within five Business Days of the
effectiveness thereof.
The notice specified in clause (3) above shall be in writing and, except as
set forth below, shall be given within five Business Days after the Trustee
has transmitted the notice required by Section 8.5. In the case of any notice
in respect of any Event of Default, such notice shall be
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accompanied by a copy of any notice from the Holders, or a representative
thereof or the Trustee, to the defaulting Person and, if accompanied by any
such notice to the defaulting Person, shall be given simultaneously with the
giving of any such notice to the defaulting Person. In the case of any legal
actions or proceedings, such notice shall be accompanied by a copy of the
complaint or other initial pleading or document.
The Trustee shall in accordance with the limitations set forth
herein cooperate with any applicable Gaming Authority in order to provide
such Gaming Authority with information and documentation relevant to
compliance with clause (3) above and as otherwise required by any applicable
gaming law.
The Issuers will advise the Trustee of the expiration date of any
then-current Gaming License held by the Partnership at least nine months
prior to the expiration thereof and the Trustee until so advised may assume
that such Gaming License has not expired.
SECTION 8.7 Compensation and Indemnity.
Each of the Issuers shall pay to the Trustee from time to time
reasonable compensation for its services. The Trustee's compensation shall
not be limited by any law on compensation of a trustee of an express trust.
Each of the Issuers shall reimburse the Trustee upon request for all
reasonable disbursements, expenses and advances incurred or made by it. Such
expenses shall include the reasonable compensation, disbursements and
expenses of the Trustee's agents, accountants, experts and counsel.
Each of the Issuers shall indemnify the Trustee (in its capacity as
Trustee) and each of its officers, directors, attorneys-in-fact and agents
for, and hold it harmless against, any claim, demand, expense (including but
not limited to reasonable compensation, disbursements and expenses of the
Trustee's agents and counsel), loss or liability incurred by them without
negligence, bad faith or willful misconduct on its part, arising out of or in
connection with the administration of this trust and their rights or duties
hereunder including the reasonable costs and expenses of defending themselves
against any claim or liability in connection with the exercise or performance
of any of its powers or duties hereunder. The Trustee shall notify the
Issuers promptly of any claim asserted against the Trustee for which it may
seek indemnity. The Issuers shall defend the claim and the Trustee shall
provide reasonable cooperation at the Issuers' expense in the defense. The
Trustee may have separate counsel and the Issuers shall pay the reasonable
fees and expenses of such counsel; provided, that the Issuers will not be
required to pay such fees and expenses if it assumes the Trustee's defense
and there is no conflict of interest between the Issuers and the Trustee in
connection with such defense. The Issuers need not pay for any settlement
made without their written consent. The Issuers need not reimburse any
expense or indemnify against any loss or liability to the extent incurred by
the Trustee through its negligence, bad faith or willful misconduct.
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To secure the Issuers' payment obligations in this Section 8.7, the
Trustee shall have a lien prior to the Securities on all assets held or
collected by the Trustee, in its capacity as Trustee, except assets held in
trust to pay principal of or interest on particular Securities.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 7.1 (f) or (g) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The Issuers' obligations under this Section 8.7 and any lien arising
hereunder shall survive the resignation or removal of the Trustee, the
discharge of the Issuers' obligations pursuant to Article IX and any
rejection or termination of this Indenture under any Bankruptcy Law.
SECTION 8.8 Replacement of Trustee.
The Trustee may resign by so notifying the Issuers in writing. The
Holder or Holders of a majority in principal amount of the outstanding
Securities may remove the Trustee by so notifying the Issuers and the Trustee
in writing and may appoint a successor trustee with the Issuers' consent.
The Issuers may remove the Trustee if:
(1) the Trustee fails to comply with Section 8.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver, Custodian, or other public officer takes
charge of the Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Issuers shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holder or Holders of a majority in principal amount of the Securities may
appoint a successor Trustee to replace the successor Trustee appointed by the
Issuers.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuers. Immediately after
that and provided that all sums owing to the Trustee provided for in Section
8.7 have been paid, the retiring Trustee shall transfer all property held by
it as Trustee to the successor Trustee, subject to the lien provided in
Section 8.7, the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Holder.
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If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuers or
the Holder or Holders of at least 10% in principal amount of the outstanding
Securities may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 8.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section
8.8, the Issuers' obligations under Section 8.7 shall continue for the
benefit of the retiring Trustee.
SECTION 8.9 Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to,
another corporation, the resulting, surviving or transferee corporation
without any further act shall, if such resulting, surviving or transferee
corporation is otherwise eligible hereunder, be the successor Trustee.
SECTION 8.10 Eligibility; Disqualification.
The Trustee shall at all times satisfy the requirements of TIA
Section 310(a)(1) and TIA Section 310(a)(5). The Trustee shall have a
combined capital and surplus of at least $25,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with
TIA Section 310(b).
SECTION 8.11 Preferential Collection of Claims against Issuers.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated.
ARTICLE IX
LEGAL DEFEASANCE AND COVENANT DEFEASANCE;
SATISFACTION AND DISCHARGE
SECTION 9.1 Option to Effect Legal Defeasance or Covenant
Defeasance.
The Issuers may elect to have either Section 9.2 or 9.3 be applied
to all outstanding Securities upon compliance with the conditions set forth
below in this Article IX.
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SECTION 9.2 Legal Defeasance and Discharge.
The Issuers may at their option, within one year of the final Stated
Maturity of the Securities and upon the Issuers' exercise under Section 9.1
of the option applicable to this Section 9.2, elect to have their obligations
and the obligations of the Guarantors discharged with respect to all
outstanding Securities on the date the conditions set forth below are
satisfied (hereinafter, "Legal Defeasance"). For this purpose, such Legal
Defeasance means that the Issuers shall be deemed to have paid and discharged
the entire Indebtedness represented by the outstanding Securities, which
shall thereafter be deemed to be "outstanding" only for the purposes of
Section 9.5 and the other Sections of this Indenture referred to in (a) and
(b) below, and to have satisfied all their, and the Guarantors', other
obligations under such Securities and this Indenture and the Mortgage
Documents (insofar as they relate to the Securities or the Guaranties) and
the Liens of the Collateral Agent thereunder shall be deemed to have been
paid and discharged, except for the following which shall survive until
otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Securities to receive solely from the trust fund described in
Section 9.4, and as more fully set forth in such section, payments in respect
of the principal of, premium, if any, and interest (and Liquidated Damages,
if any) on such Securities when such payments are due, (b) the Issuers'
obligations with respect to such Securities under Sections 2.4, 2.6, 2.7,
2.10 and 5.2, (c) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and the Issuers' obligations in connection therewith and
(d) this Article IX. Subject to compliance with this Article IX, the Issuers
may exercise their option under this Section 9.2 notwithstanding the prior
exercise of its option under Section 9.3 with respect to the Securities.
SECTION 9.3 Covenant Defeasance.
Upon the Issuers' exercise under Section 9.1 of the option
applicable to this Section 9.3, the Issuers and the Guarantors shall be
released from their respective obligations under the covenants contained in
Sections 5.3, 5.6, 5.7, 5.8, 5.10, 5.11, 5.12, 5.13, 5.14, 5.15, 5.18, 5.19,
5.20, 5.22, 5.23 and Article VI with respect to the outstanding Securities on
and after the date the conditions set forth below are satisfied (hereinafter,
"Covenant Defeasance"), and the Securities shall thereafter be deemed not
"outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder. For this purpose, such Covenant Defeasance
means that, with respect to the outstanding Securities, the Issuers and the
Guarantors need not comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any
such covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and the Liens of the Collateral
Agent under the Mortgage Documents (insofar as they relate to the Securities
or the Guaranties) shall be deemed to have been paid and discharged, but,
except as specified above, the remainder of this Indenture and such
Securities shall be unaffected thereby. In addition, upon the Issuers'
exercise under Section 9.1 of the option applicable to this
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Section 9.3, Sections 7.1(c), 7.1(d), 7.1(e), 7.1(h), 7.1(i) and 7.1(j) shall
not constitute Events of Default.
SECTION 9.4 Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either
Section 9.2 or Section 9.3 to the outstanding Securities, unless otherwise
specified herein:
(a) the Issuers must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders of the Securities, U.S. Legal Tender,
U.S. Government Obligations or a combination thereof, in such amounts as will
be sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, premium, if any, and interest on
such Securities on the stated date for payment thereof or on the redemption
date of such principal or installment of principal of, premium, if any, or
interest (and Liquidated Damages, if any) on such Securities, and the Holders
of Securities must have a valid, perfected, exclusive security interest in
such trust;
(b) in the case of the Legal Defeasance, the Issuers shall
have delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to Trustee confirming that (A) the Issuers have
received from, or there has been published by the Internal Revenue Service, a
ruling or (B) since the date of this Indenture, there has been a change in
the applicable Federal income tax law, in either case to the effect that, and
based thereon, such opinion of counsel shall confirm that, the Holders of
such Securities will not recognize income, gain or loss for Federal income
tax purposes as a result of such Legal Defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Legal Defeasance had not occurred;
(c) in the case of the Covenant Defeasance, the Issuers shall
have delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to such Trustee confirming that the Holders of such
Securities will not recognize income, gain or loss for Federal income tax
purposes as a result of such Covenant Defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the period
ending on the 91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under, this
Indenture or any other material agreement or instrument to which the Company
or any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
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(f) the Issuers shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the Issuers
with the intent of preferring the Holders of such Securities over any other
creditors of the Company or any of its Subsidiaries or with the intent of
defeating, hindering, delaying or defrauding any other creditors of the
Company, its Subsidiaries or others; and
(g) the Issuers shall have delivered to the Trustee an
Officers' Certificate and an opinion of counsel, each stating that the
conditions precedent provided for in, in the case of the Officers'
Certificate, (a) through (f) and, in the case of the opinion of counsel,
clauses (a) (with respect to the validity and perfection of the security
interest), (b), (c) and (e) of this Section have been complied with.
SECTION 9.5 Deposited U.S. Legal Tender and U.S. Government
Obligations to Be Held in Trust; Other Miscellaneous Provisions.
Subject to Section 9.6, all money and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 9.5, the
"Trustee") pursuant to Section 9.4 in respect of the outstanding Securities
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Securities and this Indenture, to the payment, either
directly or through any Paying Agent as the Trustee may determine, to the
Holders of such Securities of all sums due and to become due thereon in
respect of principal, premium, if any, and interest (and Liquidated Damages,
if any), but such money need not be segregated from other funds except to the
extent required by law.
The Issuers jointly and severally agree to pay and indemnify the
Trustee against any tax, fee or other charge imposed on or assessed against
the U.S. Legal Tender or U.S. Government Obligations deposited pursuant to
Section 9.4 or the principal and interest received in respect thereof other
than any such tax, fee or other charge which by law is for the account of the
Holders of the outstanding Securities.
Anything in this Article IX to the contrary notwithstanding, the
Trustee shall deliver or pay to the Issuers from time to time upon the
request of the Issuers any U.S. Legal Tender or U.S. Government Obligations
held by it as provided in Section 9.4 which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 9.4(a)), are in excess of the amount thereof which
would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.
SECTION 9.6 Repayment to Issuers.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Issuers, in trust for the payment of the principal of or interest
(and Liquidated Damages, if any) on any Security and remaining unclaimed for
two years after such principal or interest (and
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Liquidated Damages, if any) has become due and payable shall be paid to the
Issuers on their request; and the Holder of such Security shall thereafter
look only to the Issuers for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Issuers cause
to be published once, in the New York Times and The Wall Street Journal
(national edition), notice that such money remains unclaimed and that, after
a date specified therein, which shall not be less than 30 days from the date
of such notification or publication, any unclaimed balance of such money then
remaining will be repaid to the Issuers.
SECTION 9.7 Reinstatement.
If the Trustee or Paying Agent is unable to apply any U.S. Legal
Tender or U.S. Government Obligations in accordance with Section 9.2 or 9.3,
as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Issuers' obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to Section 9.2 or 9.3 until such time as the Trustee or Paying Agent
is permitted to apply such money in accordance with Section 9.2 and 9.3, as
the case may be; provided, however, that, if the Issuers make any payment of
principal of or interest on any Security following the reinstatement of its
obligations, the Issuers shall be subrogated to the rights of the Holders of
such Securities to receive such payment from the money held by the Trustee or
Paying Agent.
SECTION 9.8 Satisfaction and Discharge of Indenture.
This Indenture shall, upon Company Request, cease to be of further
effect (except as to surviving rights of registration of transfer or exchange
of Securities herein expressly provided for) and the Trustee, on demand of
and at the expense of the Company and the Guarantors, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture when
all Securities theretofore authenticated and delivered (other than (i)
Securities which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 2.7 and (ii) Securities for whose
payment money has theretofore been deposited in trust or segregated and held
in trust by the Company and thereafter repaid to the Company or discharged
from such trust, as provided in Section 9.6) have been delivered to the
Trustee for cancellation; the Issuers and the Guarantors have paid or caused
to be paid all other sums payable hereunder by the Issuers and the
Guarantors; and the Issuers and the Guarantors have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel each stating that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Issuers and the Guarantors to the Trustee under
Section 7.6 shall survive.
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ARTICLE X
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 10.1 Supplemental Indentures Without Consent of
Holders.
Without the consent of any Holder, the Issuers, when authorized by
Board Resolutions, and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto, or may amend, modify
or supplement the Securities, this Indenture, or any of the Mortgage
Documents, in form satisfactory to the Trustee and the Issuers, for any of
the following purposes:
(1) to cure any ambiguity, defect, or inconsistency, or to
make any other provisions with respect to matters or questions arising
under this Indenture which shall not be inconsistent with the provisions
of this Indenture, provided such action pursuant to this clause (1) shall
not adversely affect the interests of any Holder in any respect;
(2) to add to the covenants of the Issuers for the benefit
of the Holders, or to surrender any right or power herein conferred upon
the Issuers or to make any other change that does not adversely affect the
rights of any Holder; provided, that the Issuers have delivered to the
Trustee an Opinion of Counsel stating that such change does not adversely
affect the rights of any Holder;
(3) to provide for additional collateral for or for
guarantors of the Securities;
(4) to provide for uncertificated Securities in addition to
or in place of certificated Securities;
(5) to evidence the succession of another person to the
Issuers, and the assumption by any such successor of the obligations of
the Issuers, herein and in the Securities in accordance with Article VI;
(6) to comply with the TIA; or
(7) to provide for the issuance and authorization of the
Exchange Securities.
The terms of any document entered into pursuant to this Section
shall be subject to prior approval, if required, of any applicable Gaming
Authority.
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SECTION 10.2 Amendments, Supplemental Indentures and Waivers with
Consent of Holders.
Subject to Section 7.8 and the last sentence of this paragraph, with
the consent of the Holders of not less than a majority in aggregate principal
amount of then outstanding Securities, by written act of said Holders
delivered to the Issuers and the Trustee, the Issuers, when authorized by
Board Resolutions, and the Trustee may amend or supplement any of the
Mortgage Documents, this Indenture or the Securities or enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of the Mortgage Documents, this Indenture or the Securities or of modifying
in any manner the rights of the Holders under any of the Mortgage Documents,
this Indenture or the Securities. Subject to Section 7.8 and the last
sentence of this paragraph, the Holder or Holders of a majority in aggregate
principal amount of then outstanding Securities may waive compliance by the
Issuers with any provision of the Mortgage Documents, this Indenture or the
Securities. Notwithstanding the foregoing provisions of this Section 10.2,
no such amendment, supplemental indenture or waiver shall,
(a) without the consent of the Holder of each outstanding
Security affected thereby:
(i) change the Stated Maturity on any Security,
or reduce the principal amount thereof or the rate (or
extend the time for payment) of interest thereon, or change
the place of payment where, or the coin or currency in
which, any Security or any premium or the interest thereon
is payable, or impair the right to institute suit for the
enforcement of any such payment on or after the Stated
Maturity thereof (or, in the case of redemption, on or after
the Redemption Date), or reduce the Change of Control
Purchase Price or the Asset Sale Offer Price or alter the
provisions of Article III in a manner adverse to the
Holders;
(ii) reduce the percentage in principal amount of
outstanding Securities, the consent of whose Holders is
required for any such amendment, supplemental indenture or
waiver provided for in this Indenture; or
(iii) release any Collateral from the Liens
created by the Mortgage Documents, except in accordance with
this Indenture and such documents, or modify any of the
waiver provisions (except to increase any required
percentage or to provide that certain other provisions of
this Indenture cannot be modified or waived).
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(b) without the consent of the Holders of not less than
two-thirds in aggregate principal amount of the then outstanding Securities
affected thereby (except as set forth in clause (a) of this sentence), modify
the obligations of the Issuers to make and consummate a Change of Control
Offer or modify any of the provisions or definitions with respect thereto.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, supplement
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Issuers shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Issuers to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture or
waiver.
After an amendment, supplement or waiver under this Section 10.2 or
10.4 becomes effective, it shall bind each Holder, subject to the limitations
set forth above.
In connection with any amendment, supplement or waiver under this
Article X, the Issuers may, but shall not be obligated to, offer to any
Holder who consents to such amendment, supplement or waiver, or to all
Holders, consideration for such Holder's consent to such amendment,
supplement or waiver.
The terms of any document entered into pursuant to this Section
shall be subject to prior approval, if required, of any applicable Gaming
Authority.
SECTION 10.3 Compliance with TIA.
Every amendment, waiver or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
SECTION 10.4 Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the
same debt as the consenting Holder's Security, even if notation of the
consent is not made on any Security. However, any such Holder or subsequent
Holder may revoke the consent as to his Security or portion of his Security
by written notice to the Issuers or the person designated by the Issuers as
the person to whom consents should be sent if such revocation is received by
the Issuers or such person before the date on which the Trustee receives an
Officers' Certificate certifying that the Holders of the requisite principal
amount of Securities have consented (and not theretofore revoked such
consent) to the amendment, supplement or waiver.
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The Issuers may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to consent to any
amendment, supplement or waiver, which record date shall be the date so fixed
by the Issuers notwithstanding the provisions of the TIA. If a record date
is fixed, then notwithstanding the last sentence of the immediately preceding
paragraph, those persons who were Holders at such record date, and only those
persons (or their duly designated proxies), shall be entitled to revoke any
consent previously given, whether or not such persons continue to be Holders
after such record date. No such consent shall be valid or effective for more
than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder; provided, that any such waiver shall not impair or
affect the right of any Holder to receive payment of principal and premium of
and interest (and Liquidated Damages, if any) on a Security, on or after the
respective dates set for such amounts to become due and payable expressed in
such Security, or to bring suit for the enforcement of any such payment on or
after such respective dates.
SECTION 10.5 Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee may require the Holder of the Security to deliver it to
the Trustee or require the Holder to put an appropriate notation on the
Security. The Trustee may place an appropriate notation on the Security
about the changed terms and return it to the Holder. Alternatively, if the
Issuers or the Trustee so determine, the Issuers in exchange for the Security
shall issue, the Guarantors shall endorse and the Trustee shall authenticate
a new Security that reflects the changed terms. Any failure to make the
appropriate notation or to issue a new Security shall not affect the validity
of such amendment, supplement or waiver.
SECTION 10.6 Trustee to Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article X, provided, that the Trustee may, but
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution
of any amendment, supplement or waiver authorized pursuant to this Article X
is authorized or permitted by this Indenture.
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ARTICLE XI
RIGHT TO REQUIRE REPURCHASE
SECTION 11.1 Repurchase of Securities at Option of the Holder Upon
Change of Control.
(a) In the event that a Change of Control (the date on which
such event occurs being referred to as the "Change of Control Date") occurs,
each Holder of Securities shall have the right, at such Holder's option,
subject to the terms and conditions hereof, to require the Issuers to
repurchase all or any part of such Holder's Securities (provided, that the
principal amount of such Securities at maturity must be $1,000 or an integral
multiple thereof) on a date (the "Change of Control Purchase Date") that is
no later than 75 days after the occurrence of such Change of Control, at a
cash price (the "Change of Control Purchase Price") equal to 101% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, to the Change of Control Purchase Date.
(b) In the event that, pursuant to this Section 11.1, the
Company shall be required to commence an offer to purchase Securities (a
"Change of Control Offer"), the Company shall follow the procedures set forth
in this Section 11.1 as follows:
(1) within 30 days following any Change of Control, the
Company or the Trustee (upon the request and at the expense of the
Company) shall send, by first-class mail, a notice to each of the
Securityholders, at his address appearing in the Note Register, which (to
the extent consistent with this Indenture) shall govern the terms of
the Change of Control Offer and shall state:
(i) that the Change of Control Offer is being made pursuant
to this Section 11.1;
(ii) the Change of Control Purchase Price together with
accrued and unpaid interest;
(iii) the purchase date for such validly tendered Securities,
which date shall be a business day no earlier than 45 days nor later
than 60 days from the date such notice is mailed;
(iv) the Change of Control Put Date (as defined below);
(v) that any Security or portion thereof not tendered or
accepted for payment will continue to accrue interest;
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(vi) that, unless (a) the Company default in depositing U.S.
Legal Tender with the Paying Agent (which may not for purposes of this
Section 11.1, notwithstanding anything in this Indenture to the
contrary, be the Issuers or any of the Guarantors or any Affiliate of
any of the Guarantors (or any other obligor on the Securities) or any
Affiliate of the Issuers (or such other obligor)) in accordance with
the last paragraph of this clause (b) or (b) such Change of Control
payment is prevented for any reason, any Security or portion thereof
accepted for payment pursuant to the Change of Control Offer shall
cease to accrue interest after the Change of Control Purchase Date;
(vii) that Holders electing to have a Security, or portion
thereof, purchased pursuant to a Change of Control Offer will be
required to surrender the Security, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Security completed,
to the Paying Agent (which may not for purposes of this Section 11.1,
notwithstanding anything in this Indenture to the contrary, be the
Issuers or any of the Guarantors or any Affiliate of any of the
Guarantors (or any other obligor on the Securities) or any Affiliate
of the Issuers (or such other obligor)) at the address specified in
the notice prior to the close of business on the fifth Business Day
prior to the Change of Control Purchase Date (the "Change of Control
Put Date");
(viii) that Holders will be entitled to withdraw their
elections, in whole or in part, if the Paying Agent (which, for
purposes of this Section 11.1, notwithstanding any other provision
of this Indenture, may not be the Issuers or an Affiliate of the
Issuers or any of the Guarantors or any Affiliate of any of the
Guarantors) receives, up to the close of business on the Change of
Control Put Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the
Securities the Holder is withdrawing and a statement that such Holder
is withdrawing his election to have such principal amount of
Securities purchased; and
(ix) a brief description of the events resulting in such
Change of Control.
(2) the Change of Control Offer shall commence within 30
days following the Change of Control Date;
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(3) the Change of Control Offer shall remain open for 20
Business Days and no longer, except to the extent that a longer period is
required by applicable law (the "Change of Control Offer Period");
(4) within 5 Business Days following the expiration of a
Change of Control Offer (and in any event not earlier than 45 days nor
later than 60 days following the mailing of the notice described above),
the Company shall purchase all of the tendered Securities at the Change
of Control Purchase Price together with accrued interest to the Change of
Control Purchase Date;
(5) if the Change of Control Purchase Date is on or after
an interest payment record date and on or before the related interest
payment date, any accrued interest (and Liquidated Damages, if applicable)
will be paid to the Person in whose name a Security is registered at the
close of business on such record date, and no additional interest (and
Liquidated Damages, if applicable) will be payable to Securityholders who
tender Securities pursuant to the Change of Control Offer and who are paid
on the Change of Control Purchase Date; and
(6) the Company shall provide the Trustee with notice of
the Change of Control Offer at least 5 Business Days before the
commencement of any Change of Control Offer.
On or before the Change of Control Purchase Date, the Company shall
(i) accept for payment Securities or portions thereof properly tendered
pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent
U.S. Legal Tender sufficient to pay the Change of Control Purchase Price
(including accrued and unpaid interest and Liquidated Damages, if any) of all
Securities so tendered and (iii) deliver to the Trustee Securities so
accepted together with an Officers' Certificate listing the Securities or
portions thereof being purchased. The Paying Agent will promptly mail to the
Holders of Securities so accepted payment in an amount equal to the Change of
Control Purchase Price (together with accrued and unpaid interest and
Liquidated Damages, if any), and the Trustee shall promptly authenticate and
mail or deliver to such Holders a new Security equal in principal amount to
any unpurchased portion of the Security surrendered. Any Securities not so
accepted shall be promptly mailed or delivered to the Holder thereof. The
Company will publicly announce the results of the Change of Control Offer on
or as soon as practicable after the Change of Control Purchase Date.
Notwithstanding anything herein to the contrary, the obligations of
the Company to repurchase Notes pursuant to this Section 11.1 shall be
subject to and conditional upon (i) the Company's prior and complete
compliance with the provisions of the Existing Note Indenture and the TAC II
Note Indenture pursuant to which holders of Existing Notes and TAC II Notes
may require the Company 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 Section 11.1, there shall
be no violation of Section 5.3 of the Existing Note Indenture and the TAC II
Note Indenture.
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ARTICLE XII
MISCELLANEOUS
SECTION 12.1 TIA Controls.
If any provision of this Indenture limits, qualifies, or conflicts
with the duties imposed by operation of the TIA, the imposed duties, upon
qualification of this Indenture under the TIA, shall control.
SECTION 12.2 Notices.
Any notices or other communications to the Issuers or the Trustee
required or permitted hereunder shall be in writing, and shall be
sufficiently given if made by hand delivery, by telex, by telecopier or
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
if to Trump Atlantic City Associates:
Trump Atlantic City Associates
Mississippi Avenue and The Boardwalk
Atlantic City, New Jersey 08401
Attention: Corporate Secretary
Telephone: (609) 441-6000
if to Trump Atlantic City Funding III, Inc.:
Trump Atlantic City Funding III, Inc.
2500 Boardwalk
Atlantic City, New Jersey 08401
Attention: Corporate Secretary
Telephone: (609) 441-6000
if to Trump Plaza Associates:
Trump Plaza Associates
2500 Boardwalk
Atlantic City, New Jersey 08401
Attention: Corporate Secretary
Telephone: (609) 441-6000
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if to Trump Taj Mahal Associates:
Trump Taj Mahal Associates
1000 Boardwalk
Atlantic City, New Jersey 08401
Attention: Corporate Secretary
Telephone: (609) 449-1000
if to Trump Atlantic City Corporation:
Trump Atlantic City Corporation
1000 Boardwalk
Atlantic City, New Jersey 08401
Attention: Corporate Secretary
Telephone: (609) 449-1000
if to Trump Casino Services, L.L.C.:
Trump Casino Services, L.L.C.
1000 Boardwalk
Atlantic City, New Jersey 08401
Attention: Corporate Secretary
Telephone: (609) 449-1000
if to Trump Communications, L.L.C.:
Trump Communications, L.L.C.
1000 Boardwalk
Atlantic City, New Jersey 08401
Attention: Corporate Secretary
Telephone: (609) 449-1000
if to the Trustee:
U.S. Bank National Association
180 E. 5th Street
St. Paul, Minnesota 55101
Attention: Richard Prokosch
Telephone: (612) 244-0721
The Issuers, the Guarantors or the Trustee by notice to each other
party may designate additional or different addresses as shall be furnished
in writing by such party. Any notice or communication to the Issuers, the
Guarantors or the Trustee shall be deemed to have been given or made as of
the date so delivered, if personally delivered; when answered back, if
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telexed; when receipt is acknowledged, if telecopied; and 5 Business Days
after mailing if sent by registered or certified mail, postage prepaid
(except that a notice of change of address shall not be deemed to have been
given until actually received by the addressee).
Any notice or communication mailed to a Securityholder shall be
mailed to him by first class mail or other equivalent means at his address as
it appears on the registration books of the Registrar and shall be deemed to
have been given upon the date so mailed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner
provided above, it is duly given, whether or not the addressee receives it.
SECTION 12.3 Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with
other Securityholders with respect to their rights under this Indenture or
the Securities. The Issuers, the Trustee, the Registrar and any other person
shall have the protection of TIA Section 312(c).
SECTION 12.4 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Issuers to the Trustee to
take any action under this Indenture, the Issuers shall furnish to the
Trustee:
(1) an Officers' Certificate (in form and
substance reasonably satisfactory to the Trustee) stating
that, in the opinion of the signers, all conditions
precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel (in form and
substance reasonably satisfactory to the Trustee) stating
that, in the opinion of such counsel, all such conditions
precedent have been complied with.
SECTION 12.5 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with
a condition or covenant provided for in this Indenture shall include:
(1) a statement that the person making such
certificate or opinion has read such covenant or condition;
(2) a brief statement as to the nature and
scope of the examination or investigation upon which the
statements or opinions contained in such certificate or
opinion are based;
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(3) a statement that, in the opinion of such
person, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to
whether or not such covenant or condition has been complied
with; and
(4) a statement as to whether or not, in the
opinion of each such person, such condition or covenant has
been complied with; provided, however, that with respect to
matters of fact an Opinion of Counsel may rely on an
Officers' Certificate or certificates of public officials.
SECTION 12.6 Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by or at a meeting
of Securityholders. The Paying Agent or Registrar may make reasonable rules
for its functions.
SECTION 12.7 Legal Holidays.
A "Legal Holiday" used with respect to a particular place of payment
is a Saturday, a Sunday or a day on which banking institutions in New York,
New York are not required to be open. If a payment date is a Legal Holiday
in New York, New York, payment may be made at such place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for
the intervening period.
SECTION 12.8 Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW. EACH OF THE ISSUERS AND THE GUARANTORS HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING
IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT
SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE AND
THE SECURITIES, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID
COURTS. THE ISSUERS AND THE GUARANTORS IRREVOCABLY WAIVE, TO THE FULLEST
EXTENT THEY MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY
OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM
THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
THE TRUSTEE OR ANY
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SECURITYHOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY OF THE ISSUERS OR
THE GUARANTORS IN ANY OTHER JURISDICTION.
SECTION 12.9 No Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan
or debt agreement of any of the Issuers or any of their Subsidiaries. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 12.10 No Recourse against Others.
A direct or indirect partner, director, officer, employee or
stockholder, as such, past, present or future of either of the Issuers, the
Guarantors or any successor entity shall not have any personal liability in
respect of the obligations of the Issuers or the Guarantors under the
Securities or this Indenture by reason of his or its status as such partner,
director, officer, employee or stockholder, except to the extent such is an
Issuer or a Guarantor. Each Securityholder by accepting a Security waives and
releases all such liability. Such waiver and release are part of the
consideration for the issuance of the Securities.
SECTION 12.11 Successors.
All agreements of the Issuers or the Guarantors in this Indenture
and the Securities shall bind their successors. All agreements of the
Trustee in this Indenture shall bind its successor.
SECTION 12.12 Duplicate Originals.
All parties may sign any number of copies or counterparts of this
Indenture. Each signed copy or counterpart shall be an original, but all of
them together shall represent the same agreement.
SECTION 12.13 Severability.
In case any one or more of the provisions in this Indenture or in
the Securities shall be held invalid, illegal or unenforceable, in any
respect for any reason, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions shall not in
any way be affected or impaired thereby, it being intended that all of the
provisions hereof shall be enforceable to the full extent permitted by law.
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SECTION 12.14 Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table and headings of the
Articles and the Sections of this Indenture have been inserted for
convenience of reference only, are not to be considered a part hereof and
shall in no way modify or restrict any of the terms or provisions hereof.
SECTION 12.15 Gaming Laws.
This Indenture, the Mortgage Documents, the Securities and the
security interests thereunder are subject to the Casino Control Act of the
State of New Jersey and the rules and regulations thereunder (the "Gaming
Regulations") (and each Issuer represents and warrants that all requisite
approvals thereunder have been obtained), and the exercise of remedies under
the Mortgage Documents and the Collateral Agency Agreement with respect to
the Collateral will be subject to the Gaming Regulations.
SECTION 12.16 Registration Rights.
Certain Holders of the Securities may be entitled to certain
registration rights with respect to such Securities pursuant to, and subject
to the terms of, the Registration Rights Agreement.
ARTICLE XIII
GUARANTY
SECTION 13.1 Guaranty.
(a) In consideration of good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, each of the
Guarantors, jointly and severally, hereby irrevocably and unconditionally
guarantees on a senior basis, which guarantee shall be secured by a perfected
security interest in all of the Collateral owned by such Guarantors pursuant
to the Mortgage Documents (collectively, the "Guaranty"), to each Holder of a
Security authenticated and delivered by the Trustee and to the Trustee and
its successors and assigns, irrespective of the validity and enforceability
of this Indenture, the Securities or the obligations of the Issuers under
this Indenture or the Securities, that: (w) the principal and premium (if
any) of and interest (and Liquidated Damages, if any) on the Securities will
be paid in full when due, whether at the maturity or interest payment date,
by acceleration, call for redemption, upon an Offer to Purchase, or
otherwise, and interest on the overdue principal and interest, if any (and
Liquidated Damages, if any), of the Securities, if lawful, and all other
obligations of the Company to the Holders or the Trustee under this Indenture
or the Securities will be promptly paid in full or performed, all in
accordance with the terms of this Indenture and the Securities; (x) all other
obligations of the Company to the Holders or the Trustee under this Indenture
or the Securities will be promptly paid in full or performed, all in
accordance with the terms of this
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Indenture and the Securities; and (y) in case of any extension of time of
payment or renewal of any Securities or any of such other obligations, they
will be paid in full when due or performed in accordance with the terms of
the extension or renewal, whether at maturity, by acceleration, call for
redemption, upon an Offer to Purchase or otherwise. Failing payment when due
of any amount so guaranteed for whatever reason, each Guarantor shall be
obligated to pay the same before failure so to pay becomes an Event of
Default. This Guaranty is a guarantee of payment and not of collection.
Failing payment when due of any amount so guaranteed for whatever reason, the
Guarantors shall be jointly and severally obligated to pay the same before
failure to so pay becomes an Event of Default.
(b) Each Guarantor hereby agrees that its obligations with
regard to this Guaranty shall be unconditional, irrespective of the validity,
regularity or enforceability of the Securities or this Indenture, the absence
of any action to enforce the same, any delays in obtaining or realizing upon
or failures to obtain or realize upon collateral, the recovery of any
judgment against the Issuers, any action to enforce the same or any other
circumstances that might otherwise constitute a legal or equitable discharge
or defense of a Guarantor. Each Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of either of the Issuers, any right to require a
proceeding first against either of the Issuers or right to require the prior
disposition of the assets of either of the Issuers to meet its obligations,
protest, notice and all demands whatsoever and covenants that this Guaranty
will not be discharged except by complete performance of the obligations
contained in the Securities and this Indenture.
(c) If any Holder or the Trustee is required by any court or
otherwise to return to either of the Issuers or any Guarantor, or any
Custodian, Trustee, or similar official acting in relation to either of the
Issuers or such Guarantor, any amount paid by either of the Issuers or such
Guarantor to the Trustee or such Holder, this Guaranty, to the extent
theretofore discharged, shall be reinstated in full force and effect. Each
Guarantor agrees that it will not be entitled to any right of subrogation in
relation to the Holders in respect of any obligations guaranteed hereby until
payment in full of all obligations guaranteed hereby. Each Guarantor further
agrees that, as between such Guarantor, on the one hand, and the Holders and
the Trustee, on the other hand, (i) the maturity of the obligations
guaranteed hereby may be accelerated as provided in Section 7.2 for the
purposes of this Guaranty, notwithstanding any stay, injunction or other
prohibition preventing such acceleration as to the Issuers of the obligations
guaranteed hereby, and (ii) in the event of any declaration of acceleration
of those obligations as provided in Section 7.2, those obligations (whether
or not due and payable) will forthwith become due and payable by each of the
Guarantors for the purpose of this Guaranty.
(d) It is the intention of each Guarantor and the Issuers that
the obligations of each Guarantor hereunder shall be in, but not in excess
of, the maximum amount permitted by applicable law. Accordingly, if the
obligations in respect of the Guaranty would be annulled, avoided or
subordinated to the creditors of any Guarantor by a court of competent
jurisdiction in a proceeding actually pending before such court as a result
of a determination both that such Guaranty was made without fair
consideration and, immediately after giving effect
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thereto, such Guarantor was insolvent or unable to pay its debts as they
mature or left with an unreasonably small capital, then the obligations of
such Guarantor under such Guaranty shall be reduced by such court if and to
the extent such reduction would result in the avoidance of such annulment,
avoidance or subordination; provided, however, that any reduction pursuant to
this paragraph shall be made in the smallest amount as is strictly necessary
to reach such result. For purposes of this paragraph, "fair consideration",
"insolvency", "unable to pay its debts as they mature", "unreasonably small
capital" and the effective times of reductions, if any, required by this
paragraph shall be determined in accordance with applicable law. The
provisions of this Section 13.1(d) shall survive until the Securities are no
longer outstanding.
SECTION 13.2 Execution and Delivery of Guaranty.
To evidence its Guaranty set forth in Section 13.1, each Guarantor
agrees to execute a Guaranty substantially in the form annexed hereto as
Exhibit B and that this Indenture shall be executed on behalf of such
Guarantor by two Officers or an Officer and an Assistant Secretary by manual
or facsimile signature.
Each Guarantor agrees that its Guaranty set forth in Section 13.1
shall remain in full force and effect and apply to all the Securities
notwithstanding any failure to endorse on each Security a notation of such
Guaranty.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security to which a Guaranty
relates, the Guaranty shall be valid nevertheless.
The delivery of any Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the
Guaranty set forth in this Indenture on behalf of each Guarantor.
SECTION 13.3 Certain Bankruptcy Events.
Each Guarantor hereby covenants and agrees that in the event of the
insolvency, bankruptcy, dissolution, liquidation or reorganization of either
of the Issuers, such Guarantor shall not file (or join in any filing of), or
otherwise seek to participate in the filing of, any motion or request seeking
to stay or to prohibit (even temporarily) execution on the Guaranty and
hereby waives and agrees not to take the benefit of any such stay of
execution, whether under Section 362 or 105 of the United States Bankruptcy
Code or otherwise.
SECTION 13.4 Rights Under the Guaranty.
No payment by any Guarantor pursuant to the provisions hereof to the
Trustee shall entitle such Guarantor to any payment out of any Collateral
held by the Trustee under this Indenture or any Mortgage Documents.
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(a) Each of the Guarantors waives notice of the issuance, sale
and purchase of the Securities and notice from the Trustee or the holders
from time to time of any of the Securities of their acceptance and reliance
on this Guaranty.
(b) Notwithstanding any payment or payments made by the
Guarantors by reason of this Guaranty, the Guarantors shall not be subrogated
to any rights of the Trustee or any Holder of the Securities against the
Issuers until all the Securities shall have been paid or deemed to have been
paid within the meaning of this Indenture. Any payment made by the
Guarantors by reason of this Guaranty shall be in all respects subordinated
to the full and complete payment or discharge under this Indenture of all
obligations guaranteed hereby, and no payment by the Guarantors by reason of
this Guaranty shall give rise to any claim of the Guarantors against the
Trustee or any Holder of the Securities. Unless and until the Securities
shall have been paid or deemed to have been paid within the meaning of this
Indenture, none of the Guarantors will assign or otherwise transfer any such
claim against the Issuers to any other person.
(c) No set-off, counterclaim, reduction or diminution of any
obligation or any defense of any kind or nature (other than performance by
the Guarantor of its obligation hereunder) which the Guarantor may have or
assert against the Trustee or any holder of any Securities shall be available
hereunder to the Guarantor against the Trustee.
(d) Each Guarantor agrees to pay all costs, expense and fees,
including all reasonable attorneys' fees, which may be incurred by the
Trustee in enforcing or attempting to enforce the Guaranty or protecting the
rights of the Trustee or the Holders of Securities, if any, in accordance
with this Indenture.
SECTION 13.5 Severability.
In case any provision of this Guaranty shall be invalid, illegal or
unenforceable, that portion of such provision that is not invalid, illegal or
unenforceable shall remain in effect, and the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 13.6 Merger or Consolidation of Guarantors.
No Guarantor shall consolidate or merge with or into (whether or not
such Guarantor is the surviving Person) another Person unless (i) subject to
the provisions of the following paragraph, the Person formed by or surviving
any such consolidation or merger (if other than such Guarantor) assumes all
the obligations of such Guarantor pursuant to a supplemental indenture and
supplemental Mortgage Documents in form reasonably satisfactory to the
Trustee, pursuant to which such Person shall unconditionally guarantee, on a
senior secured basis, all of such Guarantor's obligations under such
Guarantor's guarantee, this Indenture and the Mortgage Documents on the terms
set forth in this Indenture; (ii) immediately before and immediately after
giving effect to such transaction on a pro forma basis, no Default or Event
of
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Default shall have occurred or be continuing; and (iii) immediately after
such transaction, the surviving Person holds all Permits required for
operation of the business of, and such entity is controlled by a Person or
entity (or has retained a Person or entity which is) experienced in,
operating casino hotels or otherwise holds all Permits (including those
required from Gaming Authorities) to operate its business.
In the event of a sale or other disposition of all of the Equity
Interests of any Guarantor (including pursuant to a merger or consolidation)
to any person other than a Subsidiary Guarantor, then such Guarantor may be
released and relieved of any obligation under its Guaranty; provided, that
(x) immediately after giving effect to such transaction, no Default or Event
of Default shall have occurred and be continuing and (y) such Asset Sale and
the application of the Net Cash Proceeds therefrom are in accordance with the
applicable provisions of this Indenture, including without limitation Section
5.15 and Article VI.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the date first written above.
TRUMP ATLANTIC CITY ASSOCIATES
By: TRUMP ATLANTIC CITY HOLDING,
INC.,
its general partner
By: /s/ Nicholas L. Ribis
-------------------------------
Name: Nicholas L. Ribis
Title: Vice President
Attest: /s/ John P. Burke
------------------------
John P. Burke
TRUMP ATLANTIC CITY FUNDING III, INC.
By: /s/ Nicholas L. Ribis
---------------------------------
Name: Nicholas L. Ribis
Title: Chief Executive Officer and President
Attest: /s/ John P. Burke
------------------------
John P. Burke
<PAGE>
U.S. BANK NATIONAL
ASSOCIATION, as Trustee
By: /s/ S. Christopherson
---------------------------------
Name: S. Christopherson
Title: Vice President
<PAGE>
GUARANTORS
TRUMP PLAZA ASSOCIATES
By: TRUMP ATLANTIC CITY CORPORATION,
its general partner
By: /s/ Nicholas L. Ribis
-------------------------------
Name: Nicholas L. Ribis
Title: Vice President
Attest: /s/ John P. Burke
------------------------
John P. Burke
TRUMP TAJ MAHAL ASSOCIATES
By: TRUMP ATLANTIC CITY CORPORATION,
its general partner
By: /s/ Nicholas L. Ribis
-------------------------------
Name: Nicholas L. Ribis
Title: Vice President
Attest: /s/ John P. Burke
------------------------
John P. Burke
TRUMP ATLANTIC CITY CORPORATION
By: /s/ Nicholas L. Ribis
-------------------------------
Name: Nicholas L. Ribis
Title: Vice President
Attest: /s/ John P. Burke
------------------------
John P. Burke
TRUMP CASINO SERVICES, L.L.C.
By: TRUMP ATLANTIC CITY CORPORATION
member
By: /s/ Nicholas L. Ribis
-------------------------------
Name: Nicholas L. Ribis
Title: Vice President
Attest: /s/ John P. Burke
------------------------
John P. Burke
<PAGE>
TRUMP COMMUNICATIONS, L.L.C.
By: TRUMP ATLANTIC CITY CORPORATION
member
By: /s/ Nicholas L. Ribis
-------------------------------
Name: Nicholas L. Ribis
Title: Vice President
Attest: /s/ John P. Burke
------------------------
John P. Burke
<PAGE>
EXHIBIT A
[FORM OF SECURITY]
TRUMP ATLANTIC CITY ASSOCIATES
TRUMP ATLANTIC CITY FUNDING III, INC.
11 1/4% SERIES A (1) FIRST MORTGAGE NOTES (TAC III) DUE 2006
CUSIP No.
--------------
No. $
Trump Atlantic City Associates, a New Jersey partnership, and Trump
Atlantic City Funding III, Inc., a Delaware corporation (hereinafter
collectively called the "Issuers," which term includes any successors under
the Indenture hereinafter referred to), for value received, hereby promises
to pay to _____, or registered assigns, the principal sum of _____ Dollars,
on May 1, 2006.
Interest Payment Dates: May 1 and November 1
Record Dates: April 15 and October 15
Reference is made to the further provisions of this Security on the
reverse side, which will, for all purposes, have the same effect as if set
forth at this place.
IN WITNESS WHEREOF, the Issuers has caused this Instrument to be
duly executed under their respective corporate seals .
Dated:
TRUMP ATLANTIC CITY ASSOCIATES
Attest: By: TRUMP ATLANTIC CITY HOLDING,
INC.
By:
- -------------------------------- ---------------------------------
Secretary Name:
Title:
TRUMP ATLANTIC CITY FUNDING III, INC.
Attest: By:
---------------------------------
Name:
Title:
Attest:
------------------------
Name:
Title:
- ---------------
(1) Series A should be replaced with Series B in the Exchange Securities.
<PAGE>
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the within-mentioned
Indenture.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By
--------------------------------------
Authorized Signatory
Dated:
<PAGE>
TRUMP ATLANTIC CITY ASSOCIATES
TRUMP ATLANTIC CITY FUNDING III, INC.
11 1/4% Series A (2)First Mortgage Notes (TAC III)
due 2006
Unless and until it is exchanged in whole or in part for Securities
in definitive form, this Security may not be transferred except as a whole by
the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary. Unless this certificate is presented by an authorized
representative of The Depositary Trust Company (55 Water Street, New York,
New York) ("DTC"), to the Company or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of
Cede & Co. or such other name as requested by an authorized representative of
DTC (and any payment is made to Cede & Co. or such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.(3)
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF U.S. PERSONS
EXCEPT AS SET FORTH IN THE THIRD SENTENCE HEREOF BY ITS
ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) (A "QIB"), (B) IT IS ACQUIRING THIS NOTE IN
AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S
UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2),
(3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"IAI"), (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE
TRANSFER THIS NOTE EXCEPT (A) TO THE ISSUERS OR ANY OF THEIR
SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUIB PURCHASING FOR ITS OWN
- ---------------
(2) Series A should be replaced with Series B in the Exchange Securities.
(3) This paragraph should only be added if the Security is issued in
global form.
<PAGE>
ACCOUNT OR FOR THE ACCOUNT OF A QUIB IN A TRANSACTION METING
THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE
TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR RULE 904
OF THE SECURITIES ACT, (D) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) TO AN
IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE WITH
A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE (THE FORM
OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH
TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF
NOTES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE
TO THE ISSUERS THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE
ISSUERS) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION AND (3) AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST
HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION" AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO
THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT.
THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO
REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF
THE FOREGOING."
1. Interest.
Trump Atlantic City Associates, a New Jersey partnership, and Trump
Atlantic City Funding III, Inc., a Delaware corporation (collectively, the
"Issuers"), jointly and severally promise to pay interest on the principal
amount of this Security at the rate of 11 1/4% per annum from the date of
issuance or from the most recent Interest Payment Date to which interest has
been paid or provided for. Interest on this Security will be payable
semiannually on May 1 and November 1, commencing May 1, 1998, to the person
in whose name this Security is registered at the close of business on April
15 or October 15, preceding such Interest Payment Date (each, a "Record
Date"). Interest on this Security will be computed on the basis of a 360-day
year, consisting of twelve 30-day months.
<PAGE>
2. Method of Payment.
The Issuers shall pay interest (and Liquidated Damages, if any) on
the Securities (except defaulted interest) to the persons who are the
registered Holders at the close of business on the Record Date immediately
preceding the Interest Payment Date. Holders must surrender Securities to a
Paying Agent to collect principal payments. Except as provided below, the
Issuers shall pay principal and interest (and Liquidated Damages, if any) in
such coin or currency of the United States of America as at the time of
payment shall be legal tender for payment of public and private debts ("U.S.
Legal Tender"). The Issuers may deliver any such interest payment to the
Paying Agent or the Issuers may mail any such interest payment to a Holder at
the Holder's registered address. Notwithstanding the preceding two
sentences, in the case of Securities of which The Depository Trust Company or
its nominee is the Holder, such payments must be made by wire transfer of
Federal funds.
3. Paying Agent and Registrar.
Initially, U.S. Bank National Association, a national banking
association (the "Trustee"), will act as Paying Agent and Registrar. The
Issuers may change any Paying Agent, Registrar or Co-registrar without notice
to the Holders. The Issuers or any of their Subsidiaries may, subject to
certain exceptions, act as Paying Agent, Registrar or Co-registrar.
4. Indenture.
The Issuers issued the Securities under an Indenture, dated as of
December 10, 1997 (the "Indenture"), between the Issuers, the Guarantors
named therein and the Trustee. Capitalized terms herein are used as defined
in the Indenture unless otherwise defined herein. The terms of the Securities
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act, as in effect on the date of the
Indenture. The Securities are subject to all such terms, and Holders of
Securities are referred to the Indenture and said Act for a statement of
them. The Securities are senior, secured obligations of each of the Issuers
limited in aggregate principal amount to $25,000,000.
5. Redemption.
The Securities are redeemable in whole or from time to time in part
at any time on and after May 1, 2001, at the option of the Issuers, at the
Redemption Price (expressed as a percentage of principal amount) set forth
below, if redeemed during the 12-month period commencing May 1 of each of the
years indicated below, in each case, together with any accrued but unpaid
interest to the Redemption Date. Except as provided in the next paragraph,
the Securities may not otherwise be redeemed at the option of the Issuers.
<PAGE>
12-Month
Period Beginning Redemption Price
---------------- ----------------
May 1, 2001................... 105.625%
May 1, 2002................... 103.750%
May 1, 2003................... 101.875%
May 1, 2004 and thereafter.... 100.000%
Any Governmental Authority with appropriate jurisdiction and
authority relating to a Gaming License held by an Issuer or an Affiliate or
wholly owned Subsidiary of an Issuer may require a Holder to be qualified
under any applicable law administered by such Governmental Authority. If a
Holder does not qualify under the Casino Control Act, the Holder must dispose
of its interest in the Securities, within 30 days after an Issuer's notice of
such finding (or within such earlier date as the CCC may require), or the
Issuers may redeem such Securities to the extent necessary in the reasonable,
good faith judgment of a general partner of the Company, to prevent the loss,
failure to obtain or material impairment or to secure the reinstatement of
any material Gaming License. If a Holder does not qualify under any
applicable law administered by a Governmental Authority other than the Casino
Control Act, the Issuers may redeem such Securities to the extent necessary
in the reasonable, good faith judgment of a general partner of the Company,
to prevent the loss, failure to obtain or material impairment or to secure
the reinstatement of any material Gaming License. In such event, the
Redemption Price shall be the principal amount thereof, plus accrued and
unpaid interest to the date of redemption (or such lesser amount as may be
required by applicable law or by order of any Gaming Authority).
Any redemption of the Securities shall comply with Article III of
the Indenture.
6. Notice of Redemption.
Notice of redemption will be mailed by first class mail at least 30
days but not more than 60 days before the Redemption Date (unless another
notice period shall be required by applicable law or by order of any Gaming
Authority) to each Holder of Securities to be redeemed at his registered
address. Securities in denominations larger than $1,000 may be redeemed in
part, but only in $1,000 integrals.
Except as set forth in the Indenture, from and after any Redemption
Date, if monies for the redemption of the Securities called for redemption
shall have been deposited with the Paying Agent (other than either of the
Issuers or an Affiliate of either of the Issuers) on such Redemption Date,
the Securities called for redemption will cease to bear interest and the only
right of the Holders of such Securities will be to receive payment of the
Redemption Price, including any accrued and unpaid interest to the Redemption
Date, unless the Issuers default on such payment.
<PAGE>
7. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder may
register the transfer of, or exchange Securities in accordance with, the
Indenture. The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay any taxes
and fees required by law or permitted by the Indenture. The Registrar need
not register the transfer of or exchange any Securities selected for
redemption.
8. Persons Deemed Owners.
The registered Holder of a Security may be treated as the owner of
it for all purposes.
9. Unclaimed Money.
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee and the Paying Agent(s) will pay the money back to
the Issuers at their written request. After that, all liability of the
Trustee and such Paying Agent(s) with respect to such money shall cease.
10. Legal Defeasance or Covenant Defeasance Prior to Redemption or Maturity.
If the Issuers, within one year of the final Stated Maturity of the
Securities in the case of Legal Defeasance, or at any time in the case of
Covenant Defeasance, deposit with the Trustee, in trust, for the benefit of
the Holders, U.S. Legal Tender, non-callable government securities or a
combination thereof, in such amounts as will be sufficient, in the opinion of
a nationally recognized firm of independent public accountants selected by
the Trustee, to pay the principal of, premium, if any and interest on the
Securities to redemption or maturity and comply with the other provisions of
the Indenture relating thereto, the Issuers may elect to have their
obligations discharged, in the case of a Legal Defeasance (in which case the
Indenture would cease to be of further effect, except as to certain limited
obligations and to the rights of Holders to receive payments when due from
the trust funds therefor), or, in the case of a Covenant Defeasance, to be
discharged from certain provisions of the Indenture and the Securities
(including the financial covenants, but excluding their obligation to pay the
principal of and interest on the Securities).
11. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities may
be amended or supplemented with the written consent of the Holders of a
simple majority, 66 2/3% or 100% in aggregate principal amount of the
Securities then outstanding, as applicable, and any existing Default or Event
of Default or compliance with any provision
<PAGE>
may be waived with the consent of the Holders of the same specified
percentage of aggregate principal amount of the Securities then outstanding.
Without notice to or consent of any Holder, the parties thereto may amend or
supplement the Indenture, the Mortgage Documents or the Securities to, among
other things, cure any ambiguity, defect or inconsistency, provide for
uncertificated Securities in addition to or in place of certificated
Securities, or make any other change that does not adversely affect the
rights of any Holder of a Security.
12. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the
Issuers and their Subsidiaries to, among other things, incur additional
Indebtedness and Disqualified Capital Stock, make payments in respect of its
Equity Interests, enter into transactions with Affiliates, incur Liens, sell
assets, merge or consolidate with any other person and sell, lease, transfer
or otherwise dispose of substantially all of its properties or assets. The
limitations are subject to a number of important qualifications and
exceptions. The Issuers must annually report to the Trustee on compliance
with such limitations.
13. Change of Control.
In the event there shall occur any Change of Control, each Holder of
Securities shall have the right, at such Holder's option but subject to the
limitations and conditions set forth in the Indenture, to require the Issuers
to purchase on the Change of Control Purchase Date in the manner specified in
the Indenture, all or any part (in integral multiples of $1,000) of such
Holder's Securities at a Change of Control Purchase Price equal to 101% of
the principal amount thereof, together with accrued and unpaid interest, if
any, to the Change of Control Purchase Date.
14. Security.
In order to secure the obligations under the Indenture, the Issuers,
the Guarantors and the Trustee have entered into the Mortgage Documents and
the Collateral Agency Agreement in order to create and govern security
interests in certain assets of the Issuers, the Guarantors and their
Subsidiaries.
15. Sale of Assets.
The Indenture imposes certain limitations on the ability of the
Issuers or any of their Subsidiaries to sell assets. In the event the
proceeds from a permitted Asset Sale exceed certain amounts, as specified in
the Indenture, the Issuers and the Guarantors will be required either to
reinvest the proceeds of such Asset Sale in their business or to repay
certain indebtedness and to make an offer to purchase each Holder's
Securities at 100% of the principal amount thereof, together with accrued and
unpaid interest, if any, (and Liquidated Damages, if any) to the Asset Sale
Purchase Date.
<PAGE>
The ability of Holders to require the Issuers to purchase their
Securities in the event of a Change of Control Offer or an Asset Sale Offer
will be subject to and conditioned on (i) the prior rights of holders of
Existing Notes and TAC II Notes, to require such repurchase of their
securities and (ii) compliance with Section 5.3 of the Existing Note
Indenture and the TAC II Note Indenture.
16. Gaming Laws.
The rights of the Holder of this Security and any owner of any
beneficial interest in this Security are subject to the gaming laws,
regulations and the jurisdiction and requirements of the Gaming Authorities
and the further limitations and requirements set forth in the Indenture.
17. Successors.
When a successor assumes all the obligations of its predecessor
under the Securities and the Indenture, the predecessor will be released from
those obligations.
18. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately
in the manner and with the effect provided in the Indenture. Holders of
Securities may not enforce the Indenture or the Securities except as provided
in the Indenture. The Trustee may require reasonable security or indemnity
satisfactory to it before it enforces the Indenture or the Securities.
Subject to certain limitations, Holders of a majority in aggregate principal
amount of the Securities then outstanding may direct the Trustee in its
exercise of any trust or power.
19. Trustee Dealings with Issuers.
The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of any of the Securities, make
loans to, accept deposits from, and perform services for the Issuers or their
Affiliates, and may otherwise deal with the Issuers or their respective
Affiliates with the same rights it would have if it were not the Trustee.
20. No Recourse Against Others.
No direct or indirect partner, director, officer, employee or
stockholder, as such, past, present or future of either of the Company or
Funding III, any Guarantor or any successor entity shall have any personal
liability in respect of the obligations of the Issuers or any Guarantor under
the Indenture or the Securities or the guarantees thereof by reason of his or
its status as such partner, director, officer, employee or stockholder,
except to the extent such is an Issuer or a Guarantor. Each Holder of a
Security by
<PAGE>
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities.
21. Authentication.
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this
Security.
22. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).
23. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Issuers will cause CUSIP numbers to
be printed on the Securities as a convenience to the Holders of the
Securities. No representation is made as to the accuracy of such numbers as
printed on the Securities and reliance may be placed only on the other
identification numbers printed hereon.
<PAGE>
[FORM OF ASSIGNMENT]
I or we assign this Security to
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
Please insert Social Security or other identifying number of
assignee
and irrevocably appoint __________ agent to transfer this Security on
the books of the Issuers. The agent may substitute another to act for
him.
Dated: Signed:
---------------- -----------------------------------------------
- ------------------------------------------------------------------------------
(Sign exactly as name appears on
the other side of this Security)
Signature Guarantee (*)
- ---------------
NOTICE: The Signature must be guaranteed by an Institution which is a
member of one of the following recognized signature Guarantee
Programs: (i) The Securities Transfer Agent Medallion Program
(STAMP); (ii) The New York Stock Exchange Medallion Program (MNSP);
(iii) The Stock Exchange Medallion Program (SEMP); or (iv) in such
other guarantee program acceptable to the Trustee.
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Issuers
pursuant to Section 4.14 or Article X of the Indenture, check the appropriate
box: / / Section 4.14 / / Article X.
If you want to elect to have only part of this Security purchased by
the Issuers pursuant to Section 4.14 or Article X of the Indenture, as the
case may be, state the amount you want to be purchased: $________.
Date: Signature:
------------------- ----------------------------------------
(Sign exactly as your name appears
on the other side of this Security)
Signature Guarantee (**)
- ---------------
NOTICE: The Signature must be guaranteed by an Institution which is a
member of one of the following recognized signature Guarantee
Programs: (i) The Securities Transfer Agent Medallion Program
(STAMP); (ii) The New York Stock Exchange Medallion Program (MNSP);
(iii) The Stock Exchange Medallion Program (SEMP); or (iv) in such
other guarantee program acceptable to the Trustee.
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES (6)
The following exchanges of a part of this Global Security for
Definitive Securities have been made:
<TABLE>
<CAPTION>
Amount of Amount of Principal Amount Signature of
decrease in increase in of this Global authorized officer of
Principal Amount Principal Amount Security following Trustee or
Date of of this Global of this Global such decrease (or Securities
Exchange Security Security increase) Custodian
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(6) This schedule should only be added if the Security is issued in
global form.
<PAGE>
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF
TRANSFER RESTRICTED SECURITIES (7)
Re: 11 1/4% SERIES A FIRST MORTGAGE NOTES (TAC III) DUE 2006 OF TRUMP
ATLANTIC CITY ASSOCIATES AND TRUMP ATLANTIC CITY FUNDING III, INC.
This Certificate relates to $______ principal amount of Securities held
in (check applicable space) _____ book-entry or ______ definitive form by
_________________ (the "Transferor").
The Transferor (check applicable box):
/ / has requested the Trustee by written order to deliver in exchange
for its beneficial interest in the Global Security held by the Depositary a
Security or Securities in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its beneficial
interest in such Global Security (or the portion thereof indicated above); or
/ / has requested the Trustee by written order to exchange or register
the transfer of a Security or Securities.
In connection with such request and in respect of each such
Security, the Transferor does hereby certify that Transferor is familiar with
the Indenture relating to the above-captioned Securities and as provided in
Section 2.6 of such Indenture, the transfer of this Security does not require
registration under the Securities Act (as defined below) because:
/ / Such Security is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.6(a)(ii)(A) or Section
2.6(d)(i)(A) of the Indenture).
/ / Such Security is being transferred to a "qualified institutional
buyer" (within the meaning of Rule 144A promulgated under the Securities
Act), that is aware that any sale of Securities to it will be made in
reliance on Rule 144A under the Securities Act and that is acquiring such
Transfer Restricted Security for its own account, or for the account of
another such "qualified institutional buyer" (in satisfaction of Section
2.06(a)(ii)(B) or Section 2.06(d)(i)(B) of the Indenture).
/ / Such Security is being transferred pursuant to an exemption from
registration in accordance with Rule 144, or outside the United States in an
Offshore Transaction in compliance with Rule 904 under the Securities Act, or
pursuant to an effective registration statement under the Securities Act (in
satisfaction of Section 2.6(a)(ii)(C) or Section 2.6(d)(i)(C) of the
Indenture).
- ---------------
(7) This Certificate shall be included only for Initial Securities.
<PAGE>
/ / Such Security is being transferred in reliance on and in
compliance with an exemption from the registration requirements of the
Securities Act and in accordance with applicable securities laws of the
states of the United States, other than as provided in the immediately
preceding paragraph. An Opinion of Counsel to the effect that such transfer
does not require registration under the Securities Act accompanies this
Certificate (in satisfaction of Section 2.6(a)(ii)(D) or Section 2.6(d)(i)(D)
of the Indenture).
------------------------------------
[INSERT NAME OF TRANSFEROR]
By:
---------------------------------
Date:
---------------------------
<PAGE>
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF
SECURITIES (8)
Re: 11 1/4% SERIES B FIRST MORTGAGE NOTES (TAC III) DUE 2006.
This Certificate relates to $______ principal amount of Securities
held in (check applicable box) _____ book-entry or ______ definitive form by
_____ (the "Transferor").
The Transferor (check applicable box):
/ / has requested the Trustee by written order to deliver in
exchange for its beneficial interest in the Global Security held by the
Depositary a Security or Securities in definitive, registered form of
authorized denominations and an aggregate principal amount equal to its
beneficial interest in such Global Security (or the portion thereof indicated
above); or
/ / has requested the Registrar by written order to exchange or
register the transfer of a Security or Securities.
- ---------------
(8) This certificate shall be included only for the Exchange Securities.
<PAGE>
EXHIBIT B
FORM OF GUARANTY
For value received, __________________, a __________________
corporation/partnership, hereby irrevocably, unconditionally guarantees, on a
senior basis, to the Holder of any 11 1/4% First Mortgage Note (TAC III) due
2006 (the "Security") of Trump Atlantic City Associates and Trump Atlantic
City Funding III, Inc. (collectively, the "Issuers") upon which this Guaranty
is endorsed, the due and punctual payment, as set forth in the Indenture (the
"Indenture") among the Issuers, the guarantors named therein and U.S. Bank
National Association, as trustee (the "Trustee") pursuant to which such
Security and this Guaranty were issued, of the principal of, premium (if any)
and interest on such Security when and as the same shall become due and
payable for any reason according to the terms of such Security and Article
XIII of the Indenture. The guaranty of the Security upon which this Guaranty
is endorsed will not become effective until the Trustee signs the certificate
of authentication on such Security.
------------------------------------
By:
---------------------------------
Attest:
-----------------------------
<PAGE>
EXHIBIT 21
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 II, 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 COMMUNICAITONS, L.L.C.:
None
SUBSIDIARIES OF TRUMP PLAZA ASSOCIATES:
None
SUBSIDIARIES OF TRUMP TAJ MAHAL ASSOCIATES:
None
<PAGE>
EXHIBIT 23.1
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Trump Atlantic City Associates and Subsidiaries:
As independent public accountants, we hereby consent to the use of our reports
(and to all references to our Firm) included in or made a part of this
registration statement.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Roseland, New Jersey
March 13, 1998
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 114,879
<SECURITIES> 0
<RECEIVABLES> 73,573
<ALLOWANCES> 17,095
<INVENTORY> 9,880
<CURRENT-ASSETS> 210,436
<PP&E> 1,727,589
<DEPRECIATION> 267,539
<TOTAL-ASSETS> 1,739,073
<CURRENT-LIABILITIES> 104,292
<BONDS> 1,295,673
0
0
<COMMON> 0
<OTHER-SE> 327,939
<TOTAL-LIABILITY-AND-EQUITY> 1,739,073
<SALES> 982,266
<TOTAL-REVENUES> 1,120,351
<CGS> 0
<TOTAL-COSTS> 620,919<F1>
<OTHER-EXPENSES> 234,161<F2>
<LOSS-PROVISION> 7,399
<INTEREST-EXPENSE> 144,140
<INCOME-PRETAX> (14,063)
<INCOME-TAX> 0
<INCOME-CONTINUING> (14,063)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (14,063)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>INCLUDES GAMING, LODGING, FOOD & BEVERAGE AND OTHER
<F2>INCLUDES GENERAL & ADMINISTRATION AND DEPRECIATION & AMORTIZATION EXPENSES.
</FN>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 22,500
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 22,500
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,222,500
<CURRENT-LIABILITIES> 22,500
<BONDS> 1,200,000
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,222,500
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 135,000
<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>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 516
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 516
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 72,616
<CURRENT-LIABILITIES> 516
<BONDS> 72,100
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 72,616
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 516
<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>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 172
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 172
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 23,745
<CURRENT-LIABILITIES> 172
<BONDS> 23,573
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 23,745
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 172
<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>
