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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 1996
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
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Commission file number: 33-90786
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3818407
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2500 Boardwalk
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
(609) 441-6060
(Registrant's telephone number, including area code)
Commission file number: 33-90786
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3818405
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2500 Boardwalk
Atlantic City, New Jersey 08401
(Address of principal executive offices) (Zip Code)
(609) 441-6060
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
----------
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
----- -----
The number of outstanding shares of Common Stock, par value $.01 per share,
of Trump Hotels & Casino Resorts Funding, Inc. as of November 14, 1996 was 100.
Trump Hotels & Casino Resorts Funding, Inc. meets the conditions set forth
in General Instruction (H)(1)(a) and (b) of Form 10-Q and is therefore filing
this Form with the reduced disclosure format.
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<PAGE>
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
AND
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
----------
INDEX TO FORM 10-Q
Page No.
--------
PART I -- FINANCIAL INFORMATION
ITEM 1 -- Financial Statements
Condensed Consolidated Balance Sheets of Trump Hotels & Casino
Resorts Holdings, L.P. and Trump Hotels & Casino Resorts
Funding, Inc. as of September 30, 1996 (unaudited) and
December 31, 1995 ................................................. 1
Condensed Consolidated Statement of Operations of Trump Hotels
& Casino Resorts Holdings, L.P. and Trump Hotels & Casino
Resorts Funding, Inc. for the Three Months and Nine Months
Ended September 30, 1996, the Three Months Ended September 30,
1995 and Period from Inception (June 12, 1995) through
September 30, 1995 (unaudited) .................................... 2
Condensed Consolidated Statement of Capital (Deficit) of Trump
Hotels & Casino Resorts Holdings, L.P. and Trump Hotels &
Casino Resorts Funding, Inc. for the Nine Months Ended
September 30, 1996 (unaudited) .................................... 3
Condensed Consolidated Statements of Cash Flows of Trump Hotels
& Casino Resorts Holdings, L.P. and Trump Hotels & Casino
Resorts Funding, Inc. for the Nine Months Ended September 30,
1996 and Period from Inception (June 12, 1995) through
September 30, 1995 (unaudited) .................................... 4
Notes to Condensed Consolidated Financial Statements of Trump
Hotels & Casino Resorts Holdings, L.P. and Trump Hotels &
Casino Resorts Funding, Inc. (unaudited) .......................... 5-12
ITEM 2 -- Management's Discussion and Analysis of Financial Condition
and Results of Operations ....................................13-19
PART II -- OTHER INFORMATION
ITEM 1 -- Legal Proceedings ............................................. 21
ITEM 2 -- Changes in Securities ......................................... 21
ITEM 3 -- Defaults Upon Senior Securities ............................... 21
ITEM 4 -- Submission of Matters to a Vote of Security Holders ........... 21
ITEM 5 -- Other Information ............................................. 21
ITEM 6 -- Exhibits and Reports on Form 8-K .............................. 22
SIGNATURES
Signature -- Trump Hotels & Casino Resorts Holdings, L.P. ............... 23
Signature -- Trump Hotels & Casino Resorts Funding, Inc. ................ 24
i
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
AND
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
ASSETS
September 30, December 31,
1996 1995
----------- -----------
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents .................. $ 219,671 $ 19,199
Restricted cash ............................ -- 12,013
Receivables, net ........................... 62,149 14,460
Inventories ................................ 9,537 2,609
Other current assets ....................... 13,686 5,108
Advances to affiliates, net ................ 215 --
----------- -----------
Total Current Assets ..................... 305,258 53,389
INVESTMENT IN TRUMP'S CASTLE ................. 41,991 --
INVESTMENT IN BUFFINGTON HARBOR .............. 44,060 21,823
PROPERTY AND EQUIPMENT, NET .................. 1,475,062 408,231
LAND RIGHTS .................................. 29,043 29,320
RESTRICTED CASH .............................. 25,119 40,030
NOTE RECEIVABLE .............................. -- 3,000
DEFERRED LOAN COSTS, NET ..................... 50,652 20,026
DEFERRED INCOME TAXES ........................ 1,867 --
OTHER ASSETS ................................. 30,864 8,654
----------- -----------
Total Assets ............................. $ 2,003,916 $ 584,473
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt ....... $ 15,253 $ 2,901
Accounts payable and accrued expenses ...... 79,944 29,625
Accrued interest payable ................... 69,034 2,498
Due to affiliates, net ..................... -- 68
----------- -----------
Total Current Liabilities ................ 164,231 35,092
LONG-TERM DEBT, net of discount and
current maturities ......................... 1,389,114 494,471
DEFERRED INCOME TAXES PAYABLE ................ 4,209 4,181
OTHER LONG TERM LIABILITIES .................. 5,190 --
----------- -----------
Total Liabilities ........................ 1,562,744 533,744
----------- -----------
CAPITAL:
Partners' Capital .......................... 484,377 51,305
Accumulated Deficit ........................ (43,205) (576)
----------- -----------
Total Capital ............................ 441,172 50,729
----------- -----------
Total Liabilities and Capital ............ $ 2,003,916 $ 584,473
=========== ===========
The accompanying notes are an integral part of these condensed
consolidated balance sheets.
1
<PAGE>
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
AND
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1996,
THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND PERIOD FROM INCEPTION
(JUNE 12, 1995) THROUGH SEPTEMBER 30, 1995
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Period from
Inception
Three Months Nine Months (June 12, 1995)
Ended Ended Through
September 30, September 30, September 30,
------------------------ ------------- -------------
1996 1995 1996 1995
-------- -------- -------- -------
<S> <C> <C> <C> <C>
REVENUES:
Gaming ................................. $298,414 $ 85,188 $586,775 $101,634
Rooms .................................. 24,310 5,865 48,464 6,995
Food and Beverage ...................... 33,108 12,514 71,631 14,866
Other .................................. 9,073 3,422 17,426 3,877
-------- -------- -------- -------
Gross Revenues ........................ 364,905 106,989 724,296 127,372
Less -- Promotional allowances ........... 36,251 12,094 74,636 14,071
-------- -------- -------- -------
Net Revenues .......................... 328,654 94,895 649,660 113,301
-------- -------- -------- -------
COSTS AND EXPENSES:
Gaming ................................. 167,899 45,296 337,510 52,681
Rooms .................................. 4,872 431 9,767 783
Food and Beverage ...................... 14,186 4,777 30,310 6,654
General and Administrative ............. 54,612 18,592 120,031 22,597
Depreciation and Amortization .......... 21,937 4,212 43,559 5,091
Pre-Opening ............................ 3,561 -- 13,527 --
Other .................................. 2,087 935 3,948 1,159
-------- -------- -------- -------
269,154 74,243 558,652 88,965
-------- -------- -------- -------
Income from operations ................ 59,500 20,652 91,008 24,336
-------- -------- -------- -------
NON-OPERATING INCOME AND (EXPENSES):
Interest income ........................ 4,787 1,965 8,508 2,361
Interest expense ....................... (43,697) (15,850) (97,844) (19,177)
Other non-operating income (expense) ... 5,691 (2,005) 14,873 (2,198)
-------- -------- -------- -------
(33,219) (15,890) (74,463) (19,014)
-------- -------- -------- -------
Income before provision for state
income taxes and extraordinary loss ..... 26,281 4,762 16,545 5,322
Provision for state income taxes ......... 42 993 42 1,153
-------- -------- -------- -------
Income before extraordinary loss ......... 26,239 3,769 16,503 4,169
Extraordinary Loss ....................... -- -- (59,132) --
-------- -------- -------- -------
NET INCOME (LOSS) ........................ $ 26,239 $ 3,769 $(42,629) $ 4,169
======== ======== ======== =======
</TABLE>
The accompanying notes are an integral part of this condensed
consolidated financial statement.
2
<PAGE>
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
AND
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
CONDENSED CONSOLIDATED STATEMENT OF CAPITAL (DEFICIT)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(unaudited)
(in thousands)
Partners' Accumulated
Capital Deficit Total
--------- ------------ ---------
Balance, December 31, 1995 ...... $ 51,305 $ (576) $ 50,729
Cancellation of Trump Note ...... (3,167) -- (3,167)
Contributed Capital--Taj Merger . 436,381 -- 436,381
Distributions to THCR ........... (142) -- (142)
Net Loss ........................ -- (42,629) (42,629)
-------- -------- --------
Balance, September 30, 1996 ..... $484,377 $(43,205) $441,172
======== ======== ========
The accompanying notes are an integral part of this condensed
consolidated financial statement.
3
<PAGE>
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
AND
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND PERIOD FROM INCEPTION
(JUNE 12, 1995) THROUGH SEPTEMBER 30, 1995
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Period from
Inception
Nine Months (June 12, 1995)
Ended Through
September 30, September 30,
1996 1995
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) ...................................... $ (42,629) $ 4,169
Adjustments to reconcile net income to
net cash flows from operating activities:
Extraordinary loss ................................... 59,132 --
Depreciation and amortization ........................ 43,559 5,091
Accretion of discounts on mortgage notes ............. 132 127
Amortization of deferred loan costs .................. 4,684 --
Deferred income taxes ................................ (1,839) 1,153
Provision for losses on receivables .................. 3,213 236
Valuation allowance of CRDA investments
and utilization of credits, net ..................... 2,098 (528)
----------- -----------
68,350 10,248
Change in assets and liabilities, net of
effects from purchase of Taj Mahal:
Increase in receivables .............................. (31,300) (6,015)
(Increase) decrease in inventories ................... (97) 826
(Increase) decrease in other current assets .......... (5,493) 6,298
(Increase) decrease in advances from affiliates ...... (1,963) 492
(Increase) decrease in other assets .................. (5,042) 5,742
Increase (decrease) in accounts payable &
accrued expenses .................................... 2,274 (2,802)
Increase in income taxes payable ..................... 1,867 --
Increase (decrease) in accrued interest payable ...... 20,560 (4,289)
Decrease in other long-term liabilities .............. (900) --
----------- -----------
Net cash flows provided by operating activities .... 48,256 10,500
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net .............. (228,318) (102,555)
Restricted cash for short-term operating needs ....... 12,013 (24,225)
Cash restricted for future construction .............. 14,911 (71,750)
Investment in Buffington Harbor ...................... (22,237) --
Investment in Trump's Castle ......................... (41,991) --
Distributions to THCR ................................ -- (194)
CRDA Investments ..................................... (4,493) --
Purchase of Taj Holding, net of cash required ........ 46,714 --
----------- -----------
Net cash flows used in investing activities ........ (223,401) (198,724)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Contributed Capital .................................. 385,920 126,848
Retirement of Plaza PIK Notes ........................ -- (81,746)
Issuance of long-term debt-other ..................... 40,231 144,849
Retirement of long-term debt ......................... (1,156,836) --
Issuance of note receivable .......................... -- (3,000)
Issuance of Trump AC Mortgage Notes .................. 1,200,000 --
Retirement of Nat West loan .......................... (36,500) --
Payment of long-term debt-other ...................... (15,721) (3,565)
Cost of issuing debt ................................. (41,477) --
----------- -----------
Net cash flows provided by financing activities .... 375,617 183,386
----------- -----------
Net increase (decrease) in cash and cash equivalents 200,472 (4,838)
----------- -----------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ....... $ 19,199 $ 28,186
=========== ===========
CASH AND CASH EQUIVALENTS AT END OF PERIOD ............. $ 219,671 $ 23,348
=========== ===========
CASH INTEREST PAID ..................................... $ 28,186 $ 22,848
=========== ===========
Supplemental Disclosure of Non-Cash Activities:
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
Fair value of net assets acquired .............. 1,005,816
Cash paid for the capital stock and payment to
Bankers Trust ................................ (41,181)
Minority interest of Trump ..................... (30,500)
-----------
Liabilities assumed .......................... 934,135
===========
In connection with the purchase of the Specified
Parcels, THCR issued 500,000 shares of Common Stock
valued at $10,500.
A note receivable from Trump in the amount of $3,167
was forgiven.
</TABLE>
The accompanying notes are an integral part of this condensed
consolidated financial statement.
4
<PAGE>
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
AND
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(unaudited)
(1) Organization and Operations
The accompanying condensed consolidated financial statements include those
of Trump Hotels & Casino Resorts Holdings, L.P., a Delaware limited partnership
("THCR Holdings"), an entity which is currently owned approximately 75% by Trump
Hotels & Casino Resorts, Inc. ("THCR"), and its subsidiaries: Trump Hotels &
Casino Resorts Funding, Inc., a Delaware corporation ("THCR Funding"), Trump
Atlantic City Associates, a New Jersey general partnership formerly known as
Trump Plaza Holding Associates ("Trump AC"), and Trump Indiana, Inc., a Delaware
corporation ("Trump Indiana"). Trump AC, through its subsidiaries, Trump Plaza
Associates, a New Jersey general partnership ("Plaza Associates"), and Trump Taj
Mahal Associates, a New Jersey general partnership ("Taj Associates"), owns and
operates the Trump Plaza Hotel and Casino ("Trump Plaza") and the Trump Taj
Mahal Casino Resort (the "Taj Mahal"), respectively, located on The Boardwalk in
Atlantic City, New Jersey. Trump AC also wholly owns a finance subsidiary, Trump
Atlantic City Funding, Inc. ("Trump AC Funding"). THCR, THCR Holdings and THCR
Funding commenced operations on June 12, 1995. Trump Indiana, which commenced
operations on June 8, 1996, owns and operates a riverboat gaming facility at
Buffington Harbor, on Lake Michigan, Indiana. THCR Holdings and THCR Funding
have no operations other than to raise funds through the issuance and sale of
debt securities. The ability of THCR Holdings and THCR Funding to service their
debt is dependent on the successful operations of Trump AC and Trump Indiana.
THCR, through THCR Holdings and its subsidiaries, is the exclusive vehicle
through which Donald J. Trump ("Trump") engages in new gaming activities in
emerging or established gaming jurisdictions.
All significant intercompany balances and transactions have been eliminated
in the accompanying condensed consolidated financial statements.
The accompanying condensed consolidated financial statements have been
prepared without audit. In the opinion of management, all adjustments,
consisting of only normal recurring adjustments, necessary to present fairly the
financial position, the results of operations and cash flows for the periods
presented, have been made.
The accompanying condensed consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. Accordingly, certain information and note disclosures normally
included in financial statements prepared in conformity with generally accepted
accounting principles have been condensed or omitted.
The casino industry in Atlantic City is seasonal in nature; accordingly,
results of operations for the period ended September 30, 1996 are not
necessarily indicative of the operating results for a full year.
(2) Public Offerings and Merger
On June 12, 1995, THCR completed a public offering of 10,000,000 shares of
its common stock, par value $.01 per share (the "Common Stock"), at $14.00 per
share (the "1995 Stock Offering") for gross proceeds of $140,000,000. Concurrent
with the 1995 Stock Offering, THCR Holdings and THCR Funding issued 151 @ 2%
Senior Secured Notes due 2005 (the "THCR Senior Notes") for gross proceeds of
$155,000,000 (the "1995 Note Offering" and, together with the 1995 Stock
Offering, the "1995 Offerings"). THCR contributed $126,848,000 of the 1995 Stock
Offering to THCR Holdings in exchange for an approximately 60% general
partnership interest in THCR Holdings.
Prior to the 1995 Offerings, Trump was the sole stockholder of THCR and the
sole beneficial owner of THCR Holdings. Concurrent with the 1995 Offerings,
Trump contributed to THCR Holdings 100% of his interests in Plaza Associates.
Trump also contributed all of his existing interests and rights to new gaming
activities in both emerging and established gaming jurisdictions, including
Trump Indiana but excluding his interests in the Taj Mahal (see
5
<PAGE>
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
AND
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
SEPTEMBER 30, 1996
(unaudited)
below) and Trump's Castle Casino Resort ("Trump's Castle"), to THCR Holdings. In
exchange for Trump's contributions to THCR Holdings, Trump received an
approximately 40% limited partnership interest in THCR Holdings.
On April 17, 1996, pursuant to the Agreement and Plan of Merger, as amended
(the "Taj Merger Agreement"), among THCR, Taj Mahal Holding Corp., a Delaware
corporation now known as THCR Holding Corp. ("Taj Holding"), and THCR Merger
Corp., a wholly owned subsidiary of THCR ("Taj Merger Sub"), Taj Merger Sub was
merged with and into Taj Holding (the "Taj Merger"), and each outstanding share
of Class A Common Stock of Taj Holding, par value $.01 per share (the "Taj
Holding Class A Common Stock"), which in the aggregate represented 50% of the
economic interest in Taj Associates, was converted into the right to receive, at
each holder's election, either (a) $30 in cash or (b) that number of shares of
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, par
value $.01 per share, all of which were held by Trump, were canceled in
connection with the Taj Merger. The following transactions occurred in
connection with the Taj Merger (collectively referred to as the "Taj Merger
Transaction"):
(a) the payment of an aggregate of $31,181,000 in cash and the
issuance of 323,423 shares of 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;
(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 opinion) (the "1996
Stock Offering") for net proceeds of $386,062,000 and (ii) Trump AC and
Trump AC Funding of $1,200,000,000 aggregate principal amount of 11-1/4%
First Mortgage Notes due 2006 (the "Trump AC Mortgage Notes") (together
with the 1996 Stock Offering, the "1996 Offerings");
(d) the redemption of the outstanding shares of Taj Holding's Class B
Common Stock, par value $.01 per share, immediately prior to the Taj Merger
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 107 @ 8% Mortgage Notes due 2001
(the "Plaza Notes") of Trump Plaza Funding, Inc. ( "Plaza Funding");
(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 that was leased from a corporation wholly owned by Trump (the
"Specified Parcels");
(i) the purchase of certain real property used in the operation of
Trump Plaza that was leased from an unaffiliated third party;
(j) the payment to Bankers Trust Company ("Bankers Trust") to obtain
releases of liens and guarantees that Bankers Trust had in connection with
indebtedness owed by Trump to Bankers Trust; and
(k) the issuance to Trump of warrants to purchase an aggregate of 1.8
million shares of 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.
6
<PAGE>
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
AND
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
SEPTEMBER 30, 1996
(unaudited)
As a result of the contribution by Trump to Trump AC (on behalf, and at the
direction, of THCR Holdings) of his direct and indirect ownership interests in
Taj Associates and the contribution by THCR to Trump AC (on behalf, and at the
direction, of THCR Holdings) of its indirect ownership interests in Taj
Associates acquired in the Taj Merger, 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. Accordingly, as of June 30, 1996, such
limited partnership interest was convertible at Trump's option into 8,081,023
shares of Common Stock (subject to certain adjustments), representing
approximately 25.1% of the outstanding shares of Common Stock.
In addition, in connection with the 1995 Offerings and the Taj Merger
Transaction, Trump received shares of Class B Common Stock, par value $.01 per
share, of THCR (the "Class B Common Stock"). Generally, the Class B Common Stock
votes together with the Common Stock as a single class on all matters submitted
to stockholders of THCR for a vote or in respect of which consents are
solicited. The Class B Common Stock has voting power equivalent to the voting
power of the Common Stock into which a THCR Holdings limited partnership
interest is convertible. Upon conversion of all or any portion of a THCR
Holdings limited partnership interest into shares of Common Stock, the
corresponding voting power of the Class B Common Stock will be proportionately
diminished. The Class B Common Stock provides a THCR Holdings limited partner
with a voting interest in THCR which is proportionate to such holder's equity
interest in THCR Holdings' assets represented by such limited partnership
interest. Except for the right to receive par value upon liquidation, the Class
B Common Stock has no right to receive any dividend or other distribution in
respect of the equity of THCR. In addition, Trump has agreed to waive certain
state law rights to vote the Class B Common Stock as a separate class in the
event of a merger or sale of substantial assets.
The Taj Merger Transaction has been accounted for as a "purchase" for
accounting and reporting purposes. Accordingly, the excess of the purchase price
over the fair value of the net assets acquired ($200,782,000), which was
allocated to land ($7,979,000) and building ($192,803,000) based on an appraisal
on a pro rata basis, consists of the following:
a) $40,500,000, representing the payment of $30.00 for each of the
1,350,000 outstanding shares of Taj Holding Class A Common Stock. Holders
of 298,739 shares of Taj Holding Class A Common Stock elected to receive
323,423 shares of Common Stock and holders of 1,051,261 shares of Taj
Holding Class A Common Stock elected to receive $31,181,000 in cash;
b) $40,500,000, representing the contribution by Trump to Trump AC (on
behalf, and at the direction, of THCR Holdings) of all of his direct and
indirect ownership interest in 50% of Taj Associates;
c) $9,900 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 Common Stock valued at $10,500,000 (an
average value of $21.00 per share based on the price of the 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.
7
<PAGE>
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
AND
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
SEPTEMBER 30, 1996
(unaudited)
Assuming that the Taj Merger Transaction had occurred on January 1, 1996,
unaudited pro forma information is as follows (in thousands):
Nine Months Ended
September 30, 1996
------------------
Revenues ..................................... $795,626
Income from operations ....................... 100,780
Loss before extraordinary loss ............... (3,207)
Extraordinary loss ........................... (59,132)
Net loss ..................................... (62,339)
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. As THCR commenced operations on
June 12, 1995, pro forma information for the nine months ended September 30,
1995 would not be meaningful.
(3) License Revenue
On June 30, 1996, Taj Associates entered into a Thermal Energy Service
Agreement with Atlantic Jersey Thermal Systems, Inc. ("Atlantic Thermal")
pursuant to which Atlantic Thermal was granted an exclusive license for a period
of 20 years to use, operate and maintain certain steam and chilled water
production facilities at the Taj Mahal (the "Taj Thermal Agreement"). In
consideration of the license, Atlantic Thermal paid Taj Associates $10,000,000,
which amount has been included in other non-operating income during the nine
months ended September 30, 1996.
On September 26, 1996, Plaza Associates entered into a similar service
agreement with respect to Trump Plaza with Atlantic Thermal (the "Plaza Thermal
Agreement") in which Atlantic Thermal paid Plaza Associates $5,000,000 on
September 30, 1996. This amount has been included in other non-operating income
during the three month and nine month periods ended September 30, 1996.
(4) Long Term Debt
Long-term debt consists of the following:
September 30, 1996 December 31, 1995
------------------ -----------------
Trump AC Mortgage Notes (A) ....... $1,200,000,000 $ --
Plaza Notes net of unamortized
discount of $3,348,000 (B) ....... -- 326,652,000
THCR Senior Notes (C) ............ 155,000,000 155,000,000
Other mortgage notes payable ...... 3,521,000 2,953,000
Other ............................. 45,846,000 12,767,000
-------------- ------------
1,404,367,000 497,372,000
Less -- Current maturities ........ 15,253,000 2,901,000
-------------- ------------
$1,389,114,000 $494,471,000
============== ============
(A) In connection with the Taj Merger Transaction, $1,200,000,000 of Trump AC
Mortgage Notes were issued by Trump AC and Trump AC Funding. The proceeds
of the offering of Trump AC Mortgage Notes were used to complete the Taj
Merger Transaction, as discussed in Note 2. Costs associated with the
issuance of the Trump AC Mortgage Notes, totalling approximately
$44,200,000, have been deferred and are being amortized over the life of
the Trump AC Mortgage Notes.
(B) On June 24, 1993, Plaza Funding issued $330,000,000 principal amount of
Plaza Notes net of discount of $4,313,000, and loaned the proceeds to
Plaza Associates. The Plaza Notes were subsequently retired with the
8
<PAGE>
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
AND
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
SEPTEMBER 30, 1996
(unaudited)
proceeds of the offering of Trump AC Mortgage Notes (See Note 2). The
retirement of the Plaza Notes and the write-off of related unamortized
deferred financing costs of $9,325,000 resulted in an extraordinary loss of
$59,132,000.
(C) On June 12, 1995, THCR Holdings and THCR Funding issued $155,000,000
principal amount of THCR Senior Notes. The THCR Senior Notes are redeemable
in cash at the option of THCR Holdings and THCR Funding, in whole or in
part, at any time on or after June 15, 2000 at redemption prices specified
in the indenture governing the THCR Senior Notes (the "THCR Senior Note
Indenture "). Interest on these notes is payable semi-annually in arrears
on June 15 and December 15 of each year, commencing December 15, 1995, and
is secured by substantially all of the assets of THCR Holdings. Costs
associated with the issuance of these notes, totaling approximately
$10,742,000, have been deferred and are being amortized over the life of
the THCR Senior Notes.
(5) Trump World's Fair
Under an Option Agreement with Chemical Bank ("Chemical"), Trump had an
option to purchase (i) the former Trump Regency Hotel ("Trump World's Fair")
(including the land, improvements and personal property used in the operation of
the hotel) and (ii) certain promissory notes made by Trump and/or certain of his
affiliates and payable to Chemical which are secured by certain real estate
assets located in New York, unrelated to Plaza Associates or THCR Holdings. In
connection with such Option Agreement, Trump assigned his rights to Plaza
Associates. On June 12, 1995, the option to purchase Trump World's Fair (the
"Trump World's Fair Purchase Option") was exercised. The option price of
$60,000,000 was funded with $58,150,000 from the capital contributed by THCR
Holdings (see Note 2), and $1,850,000 of option payments made by Plaza
Associates. In May 1996, Trump World's Fair was opened and integrated into Trump
Plaza.
(6) Investment in Buffington Harbor
Trump Indiana and The Majestic Star Casino, LLC ("Barden") entered into an
agreement relating to the joint ownership, development and operation of all
common land-based and waterside operations in support of each of their separate
riverboat casinos at Buffington Harbor. Each of Trump Indiana and Barden are
equally responsible for the development and operating expenses at Buffington
Harbor, and THCR is dependent on the ability of Barden to pay for its share of
all future expenses. As of September 30, 1996, Trump Indiana had incurred
approximately $3.3 million of expenses resulting from fees paid to Buffington
Harbor. For the three and nine months ended September 30, 1996, $2,414,000 was
charged to pre-opening expenses and $882,000 was charged to other operating
expense by Trump Indiana.
(7) Note Receivable from Trump
Prior to consummation of the 1995 Offerings, Trump incurred $3,000,000
relating to expenditures for the development of Trump Indiana and other gaming
ventures. Concurrent with the 1995 Offerings, THCR Holdings loaned Trump
$3,000,000 and Trump issued to THCR Holdings a five-year promissory note (the
"Trump Note") bearing interest at a fixed rate of 10% per annum, payable
annually. Under its terms, the Trump Note would be automatically canceled in the
event that at any time during the periods defined in the Trump Note, the Common
Stock traded at a price per share equal to or greater than the prices set forth
in the Trump Note (subject to adjustment in certain circumstances). The Trump
Note was canceled on March 27, 1996 in accordance with its terms.
9
<PAGE>
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
AND
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
SEPTEMBER 30, 1996
(unaudited)
(8) Note Receivable from Officer
Included in other assets is a loan amounting to approximately $344,000 due
from Nicholas L. Ribis, the Chief Executive Officer of THCR, in accordance with
the terms of his employment agreement, which provides for up to an aggregate of
$2,000,000 in loans to be used by him to pay his income tax liability in
connection with the stock bonus award, which loan, including interest, will be
forgiven in the event of a change in control, as defined in such employment
agreement.
(9) Commitments and Contingencies
Casino Licenses. The operation of an Atlantic City casino hotel is subject
to significant regulatory controls which affect virtually all of its operations.
Under the New Jersey Casino Control Act (the "Casino Control Act"), Plaza
Associates, Taj Associates and Trump Casino Services, L.L.C., a New Jersey
limited liability company and a subsidiary of Trump AC ("Trump Services"), are
required to maintain certain licenses.
In June 1995, the New Jersey Casino Control Commission (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 June 1995, the CCC renewed Taj Associates' license to operate the
Taj Mahal through June 1999. In June 1996, the CCC also granted Trump Services a
license through July 1997. All these licenses are not transferable and their
renewal will include a financial review of the relevant operating entities. 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.
The operation of a gaming riverboat in Indiana is subject to Indiana's
Riverboat Gambling Act and the administrative rules promulgated thereunder. In
June 1996, the Indiana Gaming Commission (the "IGC") granted Trump Indiana a
riverboat owner's license, which must be renewed by June 2001.
Restricted Cash. As a condition to the 1995 Note Offering, THCR Holdings
and THCR Funding entered into a Cash Collateral and Disbursement Agreement (the
"Cash Collateral Agreement") with First Bank National Association, in its
respective capacities as Trustee and Disbursement Agent (each as defined in the
Cash Collateral Agreement). The Cash Collateral Agreement called for initial
deposits to custodial accounts which are restricted in use for (a) Trump Indiana
for the ship and land projects, (b) Trump Plaza for construction projects,
including the exercise of the Trump World's Fair Purchase Option and
construction projects at a hotel located at Trump Plaza East which has been
integrated into Trump Plaza and Trump World's Fair and (c) the first two
interest payments on the THCR Senior Notes. As of June 30, 1996, all funds were
disbursed in accordance with the Cash Collateral Agreement.
As of September 30, 1996, Trump Indiana has a $25,000,000 surety bond
outstanding which guarantees state mandated municipal infrastructure
improvements. The surety bond is secured by a $25,000,000 cash deposit with the
surety. The surety bond expires on April 19, 1997, but will automatically be
renewed on an annual basis unless notice is given sixty days in advance.
10
<PAGE>
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
AND
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
SEPTEMBER 30, 1996
(unaudited)
(10) THCR Funding Financial Information
Financial information relating to THCR Funding is as follows (in
thousands):
September 30, 1996
------------------
Total Assets (including THCR Senior Note Receivable
of $155,000 and related interest receivable) ............... $162,007
========
Total Liabilities and Capital (including THCR Senior
Note payable of $155,000 and related interest payable) ..... $162,007
========
Nine Months Ended
September 30, 1996
------------------
Interest Income ............................................. $ 18,019
========
Interest Expense ............................................ $ 18,019
========
Net Income .................................................. --
========
(11) Subsequent Event--Acquisition of Trump's Castle Associates
On October 7, 1996, THCR Holdings acquired from Trump all of the
outstanding equity of Trump's Castle Associates, L.P. ("Castle Associates"), the
owner and operator of Trump's Castle in Atlantic City, New Jersey (the
"Acquisition").
Pursuant to the terms of the Agreement, dated as of June 24, 1996, as
amended (the "Agreement"), by and among THCR, THCR Holdings, Trump Casinos II,
Inc., formerly known as TC/GP, Inc. ("TCI-II"), Trump's Castle Hotel & Casino,
Inc. ("TCHI") and Trump, the aggregate consideration payable for all of the
outstanding equity interests of Castle Associates (assuming, as of the date of
the Agreement, a value of $30 per share for the Common Stock) was $176.9
million, payable in limited partnership interests in THCR Holdings (exchangeable
into shares of Common Stock) and cash as set forth below. The consideration
represented, as of the date of the Agreement, (A) $525.0 million (the
agreed-upon value for the business and operations of Castle Associates) minus
(B) $314.0 million (the sum of all the aggregate principal amounts of (i) Castle
Associates' capital lease obligations and indebtedness under the loan with PNC
Bank, N.A. (as successor to Midlantic Bank, N.A.), (ii) Increasing Rate
Subordinated Pay-in -Kind Notes due 2005 (the "Castle PIK Notes") of Trump's
Castle Funding, Inc. ("Castle Funding") not held by THCR Holdings, (iii) 111 @
2% Senior Secured Notes due 2000 of Castle Funding and (iv) 113 @ 4% Mortgage
Notes due 2003 of Castle Funding (the "Castle Mortgage Notes") outstanding as of
the date of the Agreement) minus (C) $40.8 million (the aggregate principal
amount of all the Castle PIK Notes held by THCR Holdings estimated (on the date
of the Agreement) to be outstanding as of the closing date of the Acquisition
(the "Closing Date") less the aggregate discount at which Trump could have
repurchased the Castle PIK Notes held by THCR Holdings) plus (D) $6.7 million
(the estimated (as of the date of the Agreement) excess cash over the operating
needs of Castle Associates on the Closing Date).
As contemplated in the Agreement, on October 7, 1996, the Closing Date, the
following transactions were effected:
(i) Trump contributed to THCR Holdings his 61.5% equity interest in
Castle Associates, in consideration of which he received a 9.52854% limited
partnership interest in THCR Holdings, exchangeable into 3,626,450 shares
of Common Stock (valuing each such share at $30.00 (the "THCR Stock
Contribution Value"));
11
<PAGE>
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
AND
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
SEPTEMBER 30, 1996
(unaudited)
(ii) TCI-II contributed to THCR Holdings its 37.5% equity interest in
Castle Associates, in consideration of which it received a 5.81009% limited
partnership interest in THCR Holdings, exchangeable into 2,211,250 shares
of Common Stock (valuing each such share at the THCR Stock Contribution
Value); and
(iii) THCR-TCHI Merger Corp., a Delaware corporation and a wholly
owned subsidiary of THCR Holdings ("Merger Sub"), merged (the "TCHI
Merger") with and into TCHI (holder of a 1% equity interest in Castle
Associates) whereupon (x) each share of common stock of TCHI, par value
$.01 per share (the "TCHI Common Stock"), outstanding immediately prior to
the TCHI Merger was converted into the right to receive $.8845 in cash (the
"TCHI Consideration") and each share of common stock of Merger Sub was
converted into the right to receive one share of common stock of the
surviving corporation of the TCHI Merger and (y) each holder of the
outstanding warrants (the "Castle Warrants") issued under the Warrant
Agreement, dated as of December 30, 1993, between TCHI and First Bank
National Association, as warrant agent, became entitled to receive, for
each former share of TCHI Common Stock for which each Castle Warrant was
exercisable, an amount in cash equal to the TCHI Consideration.
In the aggregate, Trump received (i) a limited partnership interest in THCR
Holdings convertible into 5, 837,700 shares of Common Stock and (ii) $884,550 in
cash. On October 7, 1996, the closing sale price of the Common Stock on the New
York Stock Exchange was $22.625 per share.
In connection with the Acquisition, Castle Associates was converted to a
limited partnership with THCR Holdings as a 99% limited partner and TCHI, as the
surviving corporation of the TCHI Merger, as a 1% general partner. The business
and operations of Castle Associates will be managed by its sole general partner,
TCHI. TCHI's Board of Directors includes, as of October 7, 1996, the three
members appointed by the holders of the Castle Mortgage Notes and the Castle PIK
Notes, as well as four other members appointed by THCR Holdings.
As a result of the Acquisition, on October 7, 1996, THCR's and Trump's
beneficial equity interest in THCR Holdings was approximately 63.4% and 36.6%,
respectively, and Trump's beneficial equity interest in THCR Holdings was
exchangeable into 13,918,723 shares of Common Stock. The Acquisition was
approved by the stockholders of THCR on September 30, 1996.
Castle Associates and TCHI have been designated unrestricted subsidiaries
under the THCR Senior Note Indenture. All of THCR Holding's direct and indirect
equity interests in Castle Associates were pledged to the trustee under the THCR
Senior Note Indenture for the benefit of the holders of the THCR Senior Notes.
The Acquisition was accounted as a purchase.
Reference is made to the Quarterly Report on Form 10-Q of Castle Associates
and Castle Funding for the quarterly period ended September 30, 1996, attached
as an Exhibit hereto and incorporated herein by reference.
12
<PAGE>
ITEM 2--MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Capital Resources and Liquidity
On June 12, 1995, THCR consummated the 1995 Stock Offering, resulting in
aggregate gross proceeds of $140,000,000. Concurrent with the 1995 Stock
Offering, THCR Holdings and THCR Funding completed the 1995 Note Offering,
resulting in aggregate gross proceeds of $155,000,000. The proceeds to THCR from
the 1995 Stock Offering were contributed by THCR to THCR Holdings for an
approximately 60% general partnership interest in THCR Holdings. THCR Holdings,
in turn, used the net proceeds from the 1995 Offerings, through June 30, 1996,
for the following purposes: (a) repurchase and redemption of the 121 @ 2%
Pay-In-Kind Notes due 2003 of Trump AC (the "Plaza PIK Notes") (including
accrued interest payable) for $86,209,000, (b) exercise of the Trump World's
Fair Purchase Option for $58,150,000, (c) construction costs for Trump World's
Fair of $43,850,000, (d) construction costs for Trump Plaza East of $15,150,000,
(e) construction and land acquisition costs of $34,762,000 for the riverboat at
Buffington Harbor on Lake Michigan, Indiana (the "Indiana Riverboat"), (f)
$5,688,000 for pre-opening costs at Trump Indiana and (g) payment of $24,225,000
for the first year of interest payments on the THCR Senior Notes. The balance of
the proceeds were for general corporate purposes.
The THCR Senior Note Indenture restricts the ability of THCR Holdings and
its subsidiaries, as the case may be, to make distributions to partners or pay
dividends, as the case may be, unless certain financial ratios are achieved.
Further, given the rapidly changing competitive environment and the risks
associated with THCR's proposed expansion plan, THCR's future operating results
are highly conditional and could fluctuate significantly. Moreover, as a
condition to the 1995 Note Offering, THCR Holdings and THCR Funding entered into
the Cash Collateral Agreement, which called for initial deposits to custodial
accounts which were restricted in use for (a) Trump Indiana for the ship and
land projects, (b) Trump Plaza for construction projects, including the exercise
of the Trump World's Fair Purchase Option and construction projects at Trump
Plaza East and the Trump World's Fair, and (c) the first two interest payments
on the THCR Senior Notes. As of June 30, 1996, all funds were disbursed in
accordance with the Cash Collateral Agreement.
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. Similarly, the ability
of Trump Indiana to make payments of dividends or distributions to THCR Holdings
may be restricted by the IGC.
Cash flows from operating activities are THCR Holdings' principal source of
liquidity. With the proceeds from the 1996 Offerings, THCR Holdings, among other
things, retired the outstanding Taj Bonds, redeemed 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.
With proceeds from the 1995 Offerings, THCR Holdings made a capital
contribution of $146,859,000 to Trump AC and Plaza Associates. This contribution
was used to repurchase and redeem the Plaza PIK Notes and warrants thereto
(together with related accrued interest), exercise the Trump World's Fair
Purchase Option and purchase Trump World's Fair and fund construction costs
incurred in the renovation and integration of Trump Plaza East. During the nine
months ended September 30, 1996, THCR Holdings made additional capital
contributions of $35,500,000 to Plaza Associates to fund such construction
costs. The renovations of Trump Plaza East were completed in February 1996 and
of Trump World's Fair in May 1996. Capital expenditures for Trump AC were
$186,502,000 for the nine months ended September 30, 1996, an increase of
approximately $99,890,000 or 115.3% from the comparable period in 1995. Capital
expenditures attributable to Trump Plaza East were approximately $36,877,000 and
$14,296,000 for the nine months ended September 30, 1996 and 1995. Capital
expenditures attributable to Trump World's Fair were approximately $56,007,000
and $64,685,000 for the nine months ended September 30, 1996 and 1995,
respectively. Capital expenditures for improvements to Trump Plaza's existing
facilities were $2,769,000 and $7,631,000 for the nine months ended September
30, 1996 and 1995.
On September 30, 1996, Plaza Associates exercised its option to purchase
from Trump Seashore Associates, an entity beneficially owned by Trump, one of
the parcels of land underlying Trump Plaza's main tower pursuant to the terms of
a lease, the payments under which were terminated upon the exercise of such
option. The exercise price of $14,500,000 was contributed by THCR.
13
<PAGE>
Capital expenditures attributable to the Taj Mahal were approximately
$76,160,000 for the period April 17, 1996 through September 30, 1996. Capital
expenditures for improvements to existing facilities were approximately
$9,675,000 for the period April 17, 1996 through September 30, 1996. Capital
expenditures for the purchase of property previously leased upon which a portion
of the Taj Mahal is situated and Taj Merger closing costs amounted to
approximately $61,808,000. Capital expenditures attributable to the expansion of
the facility were approximately $4,677,000 for the period April 17, 1996 through
September 30, 1996.
Taj Associates has begun an expansion plan of its existing operations
involving the construction of an approximately 800 room hotel tower adjacent to
the existing hotel tower, a 2,000 space expansion of the existing self-parking
facilities and related hotel infrastructure improvements. It is expected that
the expansion budget of approximately $129,300,000 will be funded principally
out of cash from operations of the Taj Mahal and Trump Plaza and is scheduled to
be completed in phases from mid-1997 through the latter part of 1998.
In addition to the approximately $96 million spent prior to commencing the
operation of the Indiana Riverboat on June 8, 1996, during its initial five-year
license term, an additional $57 million of funds (consisting of approximately
$40 million for the construction of a hotel and other amenities and $17 million
for infrastructure improvements and other municipal uses) will be required to be
spent by Trump Indiana in connection with the Indiana Riverboat facility and
related commitments, including commitments required in connection with the
licensure process. The sources of the initial $96 million included: $62 million
from the proceeds of the 1995 Offerings and the 1996 Offerings, $17.5 million
from vessel financing, $14.2 million from equipment financing (including
approximately $9 million for slot machines) and $1.9 million from operating
leases. The remaining $57 million required to be spent over the initial
five-year license term is expected to be funded with cash from operations and/or
proceeds from the 1996 Offerings.
Trump Indiana is a party to a loan and security agreement, as amended, with
debis Financial Services, Inc. ("dFS") pursuant to which dFS provided, subject
to the terms and conditions thereof, $17.5 million in financing for the gaming
vessel.
At September 30, 1996, THCR Holdings had combined working capital of
$141,027,000. The combined working capital included a receivable from the New
Jersey Casino Reinvestment Development Authority (the "CRDA") of approximately
$7,400,000 for reimbursable improvements made to Trump Plaza East, which
receivable is currently the subject of litigation.
As a result of the Acquisition and Castle Associates' designation as an
unrestricted subsidiary under the THCR Senior Note Indenture, THCR Holdings has
the ability to advance funds, subject to the limitations and restrictions set
forth in the THCR Senior Note Indenture, to Castle Associates for working
capital, debt service and other purposes. It is contemplated that THCR Holdings
may fund up to $5 million to Castle Associates for such purposes.
Important Factors Relating to Forward Looking Statements
In connection with certain forward-looking statements contained in this
Quarterly Report on Form 10-Q and those that may be made in the future by or on
behalf of THCR Holdings and THCR Funding, THCR Holdings and THCR Funding note
that there are various factors that could cause actual results to differ
materially from those set forth in any such forward-looking statements. The
forward-looking statements contained in this Quarterly Report were prepared by
management and are qualified by, and subject to, significant business, economic,
competitive, regulatory and other uncertainties and contingencies, all of which
are difficult or impossible to predict and many of which are beyond the control
of THCR Holdings and THCR Funding. Accordingly, there can be no assurance that
the
14
<PAGE>
forward-looking statements contained in this Quarterly Report will be
realized or that actual results will not be significantly higher or lower. The
statements have not been audited by, examined by, compiled by or subjected to
agreed-upon procedures by independent accountants, and no third-party has
independently verified or reviewed such statements. Readers of this Quarterly
Report should consider these facts in evaluating the information contained
herein. In addition, the business and operations of THCR Holdings and THCR
Funding are subject to substantial risks which increase the uncertainty inherent
in the forward-looking statements contained in this Quarterly Report. The
inclusion of the forward-looking statements contained in this Quarterly Report
should not be regarded as a representation by THCR Holdings and THCR Funding or
any other person that the forward-looking statements contained in this Quarterly
Report will be achieved. In light of the foregoing, readers of this Quarterly
Report are cautioned not to place undue reliance on the forward-looking
statements contained herein.
Results of Operations: Operating Revenues and Expenses
THCR Holdings' partnership agreement provides that all business activities
of THCR must be conducted by THCR Holdings or subsidiary partnerships or
corporations. As a result of the 1995 Offerings, the Taj Merger Transaction and
the acquisition of Plaza Associates and Taj Associates by THCR Holdings in
connection therewith, THCR Holdings' results of operations are primarily those
of Plaza Associates, Taj Associates and Trump Indiana, and the results of
operations included in the Statement of Operations reflect Plaza Associates'
results of operations for the three and nine month period ended September 30,
1996, Taj Associates' results of operations for the period April 17, 1996 to
September 30, 1996, and Trump Indiana's results of operations from June 8, 1996
to September 30, 1996.
As previously discussed, THCR and THCR Holdings commenced operations on
June 12, 1995 and, therefore, there are no comparable results. Neither THCR
Holdings nor any of its subsidiaries had any significant operating history,
other than Plaza Associates, although THCR Holdings has incurred certain
expenses including interest on the THCR Senior Notes, and Trump Indiana has
incurred significant expenses relating to the development of the Indiana
Riverboat. In addition, THCR Holdings acquired Taj Associates on April 17, 1996.
Comparison of Three-Month Periods Ended September 30, 1996 and 1995. The
following table includes selected data of Plaza Associates, Taj Associates and
Trump Indiana for the three months ended September 30, 1996 and of Plaza
Associates for the three months ended September 30, 1995:
<TABLE>
<CAPTION>
Three Months Ended September 30,
-----------------------------------------------------------------------------
1996
1995 1996 1996 1996 1996 THCR
Plaza Plaza Taj Trump AC Trump Holdings
Associates Associates Associates Consolidated* Indiana Consolidated*
---------- ---------- ---------- ------------- ------- -------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Gaming ........................... $ 85,188 $111,165 $150,816 $261,981 $36,433 $298,414
Other ............................ 21,801 33,230 32,341 65,571 920 66,491
-------- -------- -------- -------- ------- --------
Gross Revenue ................... 106,989 144,395 183,157 327,552 37,353 364,905
Less: Promotional Allowances ...... 12,094 18,029 18,222 36,251 -- 36,251
-------- -------- -------- -------- ------- --------
Net Revenue ..................... 94,895 126,366 164,935 291,301 37,353 328,654
-------- -------- -------- -------- ------- --------
Costs & Expenses:
Gaming ........................... 45,296 66,745 83,582 150,327 17,572 167,899
Pre-opening ...................... -- 501 -- 501 3,060 3,561
General & Admin. ................. 17,080 24,157 19,972 44,129 7,043 54,612
Depreciation & Amortization ...... 3,956 6,206 14,049 20,255 1,458 21,937
Other ............................ 6,143 10,269 9,420 19,711 1,434 21,145
-------- -------- -------- -------- ------- --------
Total Costs and Expenses ........ 72,475 107,878 127,023 234,923 30,567 269,154
-------- -------- -------- -------- ------- --------
Income from Operations ............ 22,420 18,488 37,912 56,378 6,786 59,500
Non-operating Expenses ............ (11,630) (7,470) (23,576) (30,630) (2,845) (33,219)
Provision for Income Taxes ........ (993) (42) -- (42) -- (42)
-------- -------- -------- -------- ------- --------
Net Income (Loss) ................. $ 9,797 $ 10,976 $ 14,336 $ 25,706 $ 3,941 $ 26,239
======== ======== ======== ======== ======= ========
</TABLE>
- ----------
* Intercompany eliminations and expenses of THCR Holdings are not separately
shown.
15
<PAGE>
Gaming revenues were $298,414,000 for the three months ended September 30,
1996, an increase of $213,226,000 or 250.3% from gaming revenues of $85,188,000
for the comparable period in 1995. The increase in gaming revenues consists of
$150,816,000 from Taj Associates since the date of acquisition, April 17, 1996,
and $36,433,000 from Trump Indiana, in addition to an increase in Plaza
Associates' table games and slot revenues. Management believes that Plaza
Associates' increase in gaming revenues is primarily due to the May 1996 opening
of Trump World's Fair, the February 1996 opening of Trump Plaza East, the
availability of additional hotel rooms at both Trump World's Fair and Trump
Plaza East, as well as marketing initiatives.
Slot revenues were $187,358,000 for the three months ended September 30,
1996, an increase of $128,459,000 or 218.1% from slot revenues of $58,899,000
for the comparable period in 1995. This increase is directly attributable to the
acquisition of Taj Associates, which contributed $78,832,000 in slot revenues,
and Trump Indiana, which contributed $26,411,000 in slot revenues. Plaza
Associates' slot revenues were $82,115,000 for the three months ended September
30, 1996, an increase of $23,216,000 or 39.4% from slot revenues of $58,899,000
for the three months ended September 30, 1995. Plaza Associates' increase is due
to the addition of 1,924 slot machines at Trump World's Fair and Trump Plaza
East, as well as management's marketing programs.
Table games revenues were $105,521,000 for the three months ended September
30, 1996, an increase of $79,232,000 or 301.4% from $26,289,000 for the
comparable period in 1995. This increase is attributable to the acquisition of
Taj Associates, which contributed $66,449,000 in table games revenues with a
corresponding $384,966,000 in table games drop (i.e., the dollar value of chips
purchased). Trump Indiana contributed $10,022,000 to the increase in table games
revenues. Plaza Associates' table games revenues of $29,050,000 for the three
months ended September 30, 1996 increased by $2,761,000 or 10.5% from the
comparable period in 1995. Plaza Associates' increase is primarily due to an
increase in table games drop by 9.8% for the three months ended September 30,
1996.
In addition to table games and slot revenues, Taj Associates' poker/race
simulcasting/keno operations generated approximately $4,713,000 in poker
revenue, $400,000 in race simulcasting revenue and $422,000 in keno revenue for
the three months ended September 30, 1996.
Other revenues were $66,491,000 for the three months ended September 30,
1996, an increase of $44,690,000 or 205% from other revenues of $21,801,000 for
the comparable period in 1995. Other revenues include revenues from rooms, food
and beverage, entertainment and miscellaneous items. The increase is directly
attributable to the acquisition of Taj Associates, which generated $32,341,000
in other revenue for the three months ended September 30, 1996 and $920,000,
primarily beverage revenue from Trump Indiana. Plaza Associates' other revenue
was $33,230,000 for the three months ended September 30, 1996, an increase of
$11,429,000 or 52.4% from the comparable period in 1995. Plaza Associates'
increase reflects the additional rooms at Trump Plaza East and Trump World's
Fair as well as increases in rooms and food and beverage revenues attendant to
increased levels of gaming activity due in part to increased promotional
activities.
Promotional allowances were $36,251,000 for the three months ended
September 30, 1996, an increase of $24,157,000 or 199.7% from promotional
allowances of $12,094,000 for the three months ended September 30, 1995. Taj
Associates generated $18,222,000 in promotional allowances for the three months
ended September 30, 1996. Plaza Associates experienced an increase in
promotional allowances to $18,029,000 or 49.1% from promotional allowances of
$12,094,000 in the comparable period in 1995. Plaza Associates' increase is
primarily attributable to the additional rooms at Trump World's Fair and Trump
Plaza East as well as increases in marketing initiatives during the three months
ended September 30, 1996.
Gaming costs and expenses were $167,899,000 for the three months ended
September 30, 1996, an increase of $122,603,000 or 271% from $45,296,000 for the
comparable period in 1995. This increase was primarily attributable to Taj
Associates' gaming costs and expenses of $83,582,000 for the three months ended
September 30, 1996 as well as $17,572,000 from Trump Indiana. Gaming costs and
expenses for Plaza Associates were $66,745,000, an increase of $21,449,000 or
47.4% from $45,296,000 for the comparable period in 1995. Plaza Associates'
increase is primarily due to increased promotional and operational expenses
resulting from operating Trump World's Fair and Trump Plaza East, both with
opening dates in 1996, as well as taxes associated with increased levels of
gaming during the comparable period in 1995.
General and administrative expenses were $54,612,000 for the three months
ended September 30, 1996, an increase of $36,020,000 or 193.7% from general and
administrative expenses of $18,592,000 for the comparable
16
<PAGE>
period in 1995. This increase is primarily due to the acquisition of Taj
Associates, which incurred $19,972,000 in general and administrative expenses
and an increase of $6,686,000 from Trump Indiana. Plaza Associates' increase of
$7,077,000 over the comparable period is due in part to expenses associated with
Trump Plaza East and Trump World's Fair. General and administrative expenses for
THCR Holdings (unconsolidated) were $3,440,000 for the three months ended
September 30, 1996, an increase of $2,285,000 from the comparable period in
1995. This increase is primarily attributable to compensation awards.
Pre-opening expenses of $501,000 were incurred by Plaza Associates for the
three months ended September 30, 1996 and reflect the costs associated with
opening Trump World's Fair in May 1996. Trump Indiana incurred $3,060,000 in
pre-opening expenses for the three months ended September 30, 1996, of which
$2,414,000 is related to the joint venture with Barden.
Other expenses were $21,145,000 for the three months ended September 30,
1996, an increase of $15,002,000 or 244.2% from the comparable period in 1995.
Other expenses include costs associated with operatingTrump Plaza's and the Taj
Mahal's hotels. The increase over the comparable period reflects Taj Associates'
$9,420,000 of other expenses and $1,434,000 from Trump Indiana. Plaza
Associates' other expenses increased by $4,126,000 or 67.2% from the comparable
period. This increase is due to operating Trump World's Fair and Trump Plaza
East, both having opening dates in 1996.
Income from operations was $59,500,000 for the three months ended September
30, 1996, an increase of $38,848,000 or 188.1% from income from operations of
$20,652,000 for the comparable period in 1995. Taj Associates contributed
$37,912,000 of income from operations which was partially offset by an increase
in operating losses of $2,253,000 for the three months ended September 30, 1996
from THCR Holdings (unconsolidated). Plaza Associates contributed $18,488,000
during the three months ended September 30, 1996, a decrease of $3,932,000 or
17.5% from the comparable period in 1995. Trump Indiana contributed $6,786,000
during the three months ended September 30, 1996, an increase of $7,143,000 from
the comparable period in 1995.
Interest expense was $43,697,000 for the three months ended September 30,
1996, an increase of $27,847,000 or 175.7% from interest expense of $15,850,000
for the comparable period in 1995. This increase is attributable to the
acquisition of Taj Associates, which has incurred $23,828,000 of interest
expense for the three months ended September 30, 1996. Plaza Associates reflects
an increase of $2,823,000 in interest expense due in part to the issuance of the
Trump AC Mortgage Notes. Trump Indiana incurred $929,000 in interest expense for
the three months ended September 30, 1996, primarily due to lease financing.
Other non-operating income was $5,691,000 for the three months ended
September 30, 1996, an increase of $7,696,000 from the comparable period in
1995. Non-operating income consists of a one-time $5,000,000 non-refundable
licensing fee recorded by Plaza Associates resulting from the Plaza Thermal
Agreement. Plaza Associates also reflects a decrease in non-operating expense of
$2,016,000 or from $2,005,000 for the comparable period in 1995. This decrease
is attributable to a decrease in non-operating expenses associated with Trump
Plaza East.
17
<PAGE>
Comparison of Nine-Month Periods Ended September 30, 1996 and 1995. The
following table includes selected data of Plaza Associates, Taj Associates
(since the date of acquisition, April 17, 1996) and Trump Indiana (since the
opening date of the Indiana Riverboat, June 8, 1996) for the nine months ended
September 30, 1996 and of Plaza Associates for the nine months ended September
30, 1995:
<TABLE>
<CAPTION>
Nine Months Ended September 30,
----------------------------------------------------------------------------
1995 1996 1996 1996 1996 1996
Plaza Plaza Taj Trump AC Trump THCR Holdings
Associates Associates Associates Consolidated* Indiana Consolidated*
---------- ---------- ---------- ------------- ------- -------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Gaming ........................... $224,499 $281,511 $260,500 $542,011 $ 44,764 $586,775
Other ............................ 55,261 79,655 56,698 136,353 1,168 137,521
-------- -------- -------- -------- -------- --------
Gross Revenue ................... 279,760 361,166 317,198 678,364 45,932 724,296
Less: Promotional Allowances ...... 28,611 42,549 32,087 74,636 -- 74,636
-------- -------- -------- ---------- -------- --------
Net Revenue ..................... 251,149 318,617 285,111 603,728 45,932 649,660
-------- -------- -------- ---------- -------- --------
Costs & Expenses:
Gaming ........................... 121,987 168,466 147,438 315,904 21,606 337,510
Pre-opening ...................... -- 3,833 -- 3,833 9,694 13,527
General & Admin. ................. 51,073 62,388 39,509 101,897 8,944 120,031
Depreciation & Amortization ...... 11,792 16,652 24,805 41,457 1,814 43,559
Other ............................ 18,080 25,200 17,262 42,484 1,541 44,025
-------- -------- -------- ---------- -------- --------
Total Costs and Expenses ........ 202,932 276,539 229,014 505,575 43,599 558,652
-------- -------- -------- ---------- -------- --------
Income from Operations ............ 48,217 42,078 56,097 98,153 2,333 91,008
Non-operating Income Expenses ..... (37,577) (29,641) (33,210) (62,401) (5,234) (74,463)
Extraordinary Loss ................ (9,250) (59,132) -- (59,132) -- (59,132)
Provision for Income Taxes ........ (993) (42) -- (42) -- (42)
-------- -------- -------- ---------- -------- --------
Net Income (Loss) ................. $ 397 $(46,737) $ 22,887 $ (23,422) $ (2,901) $(42,629)
======== ======== ======== ========== ======== ========
</TABLE>
- ----------
* Intercompany eliminations and expenses of THCR Holdings are not separately
shown.
Gaming revenues were $586,775,000 for the nine months ended September 30,
1996, an increase of $362,276,000 or 161.4% from gaming revenues of $224,499,000
for the comparable period in 1995. The increase in gaming revenues consists of
$260,500,000 from Taj Associates since the date of acquisition and $44,764,000
from Trump Indiana since the opening of the Indiana Riverboat on June 8, 1996,
in addition to an increase in Plaza Associates' table games and slot revenues.
Management believes that Plaza Associates' increase in gaming revenues is
primarily due to the May 1996 opening of Trump World's Fair, the February 1996
opening of Trump Plaza East, the availability of additional hotel rooms at both
Trump World's Fair and Trump Plaza East, as well as marketing initiatives.
Slot revenues were $376,273,000 for the nine months ended September 30,
1996, an increase of $223,955,000 or 147.0% from slot revenues of $152,318,000
for the comparable period in 1995. This increase is directly attributable to the
acquisition of Taj Associates, which contributed $140,093,000 in slot revenues,
and Trump Indiana, which contributed $33,034,000 in slot revenues. Plaza
Associates' slot revenues were $203,146,000 for the nine months ended September
30, 1996, an increase of $50,828,000 or 33.4% from slot revenues of $152,318,000
for the nine months ended September 30, 1995. Plaza Associates' increase is due
to the addition of 1,924 slot machines at Trump World's Fair and Trump Plaza
East, as well as management's marketing programs.
Table games revenues were $200,701,000 for the nine months ended September
30, 1996, an increase of $128,520,000 or 178.1% from $72,181,000 for the
comparable period in 1995. This increase is attributable to the acquisition of
Taj Associates which contributed $110,606,000 in table games revenue with a
corresponding $645,990,000 in table games drop (i.e., the dollar value of chips
purchased). Trump Indiana contributed $11,730,000 to the increase in table game
revenues. Plaza Associates' table games revenues of $78,365,000 for the nine
months
18
<PAGE>
ended September 30, 1996 increased by $6,184,000 or 8.6% from the comparable
period in 1995. Plaza Associates' increase is primarily due to an increase in
table games drop by 9.8% for the nine months ended September 30, 1996.
In addition to table games and slot revenues, Taj Associates' poker/race
simulcasting/keno operations generated approximately $8,360,000 in poker
revenues, $722,000 in race simulcasting revenues and $719,000 in keno revenues
since its acquisition date.
Other revenues were $137,521,000 for the nine months ended September 30,
1996, an increase of $82,260,000 or 148.9% from other revenues of $55,261,000
for the comparable period in 1995. Other revenues include revenues from rooms,
food and beverage, entertainment and miscellaneous items. The increase is
directly attributable to the acquisition of Taj Associates, which generated
$56,698,000 in other revenues since its acquisition date, and $1,168,000
primarily beverage revenues, from Trump Indiana. Plaza Associates' other
revenues were $79,655,000 for the nine months ended September 30, 1996, an
increase of $24,394,000 or 44.1% from the comparable period in 1995. Plaza
Associates' increase reflects the additional rooms at Trump Plaza East and Trump
World's Fair as well as increases in rooms and food and beverage revenues
attendant to increased levels of gaming activity due in part to increased
promotional activities.
Promotional allowances were $74,636,000 for the nine months ended September
30, 1996, an increase of $46,025,000 or 160.9% from promotional allowances of
$28,611,000 for the nine months ended September 30, 1995. Taj Associates
generated $32,087,000 in promotional allowances since its acquisition date.
Plaza Associates experienced an increase in promotional allowances to
$42,549,000 or 48.7% from promotional allowances of $28,611,000 in the
comparable period in 1995. Plaza Associates' increase is primarily attributable
to the additional rooms at Trump World's Fair and Trump Plaza East as well as
increases in marketing initiatives during the nine months ended September 30,
1996.
Gaming costs and expenses were $337,510,000 for the nine months ended
September 30, 1996, an increase of $215,523,000 or 176.7% from $121,987,000 for
the comparable period in 1995. This increase was primarily attributable to Taj
Associates' gaming costs and expenses of $147,438,000 since its acquisition as
well as $21,606,000 from Trump Indiana. Gaming costs and expenses for Plaza
Associates were $168,466,000, an increase of $46,479,000 or 38.1% from
$121,987,000 for the comparable period in 1995. Plaza Associates' increase is
primarily due to increased promotional and operational expenses resulting from
operating Trump World's Fair and Trump Plaza East, both with opening dates in
1996, as well as taxes associated with increased levels of gaming during the
comparable period in 1995.
General and administrative expenses were $120,031,000 for the nine months
ended September 30, 1996, an increase of $67,194,000 or 127.2% from general and
administrative expenses of $52,837,000 for the comparable period in 1995. This
increase is primarily due to the acquisition of Taj Associates, which incurred
$39,509,000 in general and administrative expenses since its acquisition, and an
increase of $8,551,000 to $8,944,000 from the comparable period in 1995 from
Trump Indiana. Plaza Associates' increase of $11,315,000 over the comparable
period is due in part to expenses associated with Trump Plaza East and Trump
World's Fair. THCR Holdings (unconsolidated) had general and administrative
expenses of $9,190,000 for the nine months ended September 30, 1996, an increase
of $7,819,000 from the period since inception, June 12, 1995, to September 30,
1995. This increase is primarily attributable to compensation awards.
Pre-opening expenses of $3,833,000 were incurred by Plaza Associates and
reflect the costs associated with opening Trump World's Fair in May 1996. Trump
Indiana incurred $9,694,000 of pre-opening expenses for the nine months ended
September 30, 1996.
Other expenses were $44,025,000 for the nine months ended September 30,
1996, an increase of $25,945,000 or 143.5% from the comparable period in 1995.
Other expenses include costs associated with operating Trump Plaza's and the Taj
Mahal's hotels. The increase over the comparable period reflects Taj Associates'
$17,262,000 of other expenses since its date of acquisition and $1,541,000 from
Trump Indiana. Plaza Associates' other expenses increased by $7,120,000 or 39.4%
from the comparable period. This increase is due to operating Trump World's Fair
and Trump Plaza East, both having opening dates in 1996.
Income from operations was $91,008,000 for the nine months ended September
30, 1996, an increase of $44,853,000 or 97.2% from income from operations of
$46,155,000 for the comparable period in 1995. Taj
19
<PAGE>
Associates contributed $56,097,000 of income from operations since its
acquisition which was partially offset by an increase in operating losses of
7,809,000 for the nine months ended September 30, 1996 from THCR Holdings
(unconsolidated). Plaza Associates contributed $42,078,000 during the nine
months ended September 30, 1996, a decrease of $6,139,000 or 12.7% from the
comparable period in 1995. Trump Indiana contributed an increase of $2,726,000
to income from operations from the comparable period in 1995.
Interest expense was $97,844,000 for the nine months ended September 30,
1996, an increase of $56,151,000 or 134.7% from interest expense of $41,693,000
for the comparable period in 1995. This increase is attributable to the
acquisition of Taj Associates, which has incurred $43,668,000 of interest
expense since its date of acquisition. Plaza Associates reflects $34,409,000 of
interest expense at September 30, 1996. THCR Holdings incurred an increase of
$11,569,000, primarily due to the issuance of the THCR Senior Notes in June
1995. Trump Indiana incurred $924,000 in interest expenses at September 30,
1996.
Other non-operating income was $14,873,000 for the nine months ended
September 30, 1996, an increase of $17,071,000 from the comparable period in
1995. Non-operating income includes $15,000,000 of non-refundable licensing fees
resulting from the Plaza Thermal Agreement and the Taj Thermal Agreement. Plaza
Associates reflects a decrease in non-operating expense of $1,391,000 from the
comparable period in 1995. This decrease is attributable to a decrease in
non-operating expenses associated with Trump Plaza East.
The extraordinary loss of $59,132,000 for the nine months ended September
30, 1996 is related to the redemption of the Plaza Notes and the write-off of
unamortized deferred financing costs on April 17, 1996. The extraordinary loss
of $9,250,000 for the nine months ended September 30, 1995 relates to the
redemption and write-off of unamortized deferred financing costs relating to the
redemption of the Plaza PIK Notes and the warrants issued in connection with the
Plaza PIK Notes on June 12, 1995.
20
<PAGE>
PART II -- OTHER INFORMATION
ITEM 1 -- LEGAL PROCEEDINGS
THCR Holdings and certain of its employees have been involved in various
legal proceedings. In general, THCR Holdings 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. Such persons and entities
are vigorously defending the allegations against them and intend to vigorously
contest any future proceedings.
Various legal proceedings are now pending against THCR Holdings. THCR
Holdings considers all such proceedings to be ordinary litigation incident to
the character of its business and not material to its business or financial
condition. THCR Holdings believes that the resolution of these claims, to the
extent not covered by insurance, will not, individually or in the aggregate,
have a material adverse effect on its financial condition or results of
operations of THCR Holdings.
On August 14, 1996, certain stockholders of THCR filed two derivative
actions in the Court of Chancery in Delaware (Civil Action Nos. 15148 and 15160)
against each of the members of the Board of Directors of THCR, THCR, THCR
Holdings, Castle Associates and TCI-II. The plaintiffs claim that the directors
of THCR breached their fiduciary duties in connection with the Acquisition and
seek an injunction, damages and an accounting.
On October 16, 1996, a stockholder of THCR filed a derivative action in the
United States District Court, Southern District of New York (96 Civ. 7820)
against each member of the Board of Directors of THCR, THCR, THCR Holdings,
Castle Associates, Trump Casinos, Inc., TCI-II, TCHI and Salomon Brothers Inc
("Salomon"). The Plaintiff claims that the defendants breached their fiduciary
duties and engaged in ultra vires acts in connection with the Acquisition and
that Salomon was negligent in the issuance of its fairness opinion with respect
to the Acquisition. The Plaintiff also alleges violations of the federal
securities laws for alleged omissions and misrepresentations in THCR's proxies,
and that Trump, TCI-II and TCHI breached that Agreement by supplying THCR with
untrue information for inclusion in the proxy statement delivered to THCR's
stockholders in connection with the Acquisition. The plaintiff seeks removal of
the directors of THCR, an injunction, rescission and damages.
THCR Holdings and the other defendants in the foregoing actions believe
that the suits are without merit and intend to contest vigorously the
allegations against them.
ITEM 2 -- CHANGES IN SECURITIES
None.
ITEM 3 -- DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5 -- OTHER INFORMATION
21
<PAGE>
On October 23, 1996, Trump Services, Plaza Associates, Taj Associates and
Castle Associates entered into an Amended and Restated Services Agreement (the
"Services Agreement"), pursuant to which Trump Services, in order to generate
efficiencies and realize synergies through consolidation of operations, will
provide certain management, financial and other functions necessary and
incidental to the operations of each of Trump Plaza, the Taj Mahal and Trump's
Castle. Trump Services, a wholly owned subsidiary of Trump AC, will receive no
compensation for providing the services, other than payments to fund the costs
and expenses incurred in connection therewith.
Reference is made to the Services Agreement, attached as an Exhibit hereto
and incorporated herein by reference.
ITEM 6 --EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
Exhibit No. Description of Exhibit
----------- ----------------------
3.9.2 Third Amended and Restated Agreement of Limited Partnership
of Trump Hotels & Casino Resorts Holdings, L.P., dated as of
October 7, 1996.
4.20 Pledge Agreement, dated as of October 7, 1996, by and
between Trump Hotels & Casino Resorts Holdings, L.P. and
First Bank National Association, as trustee.
4.21 Pledge Agreement, dated as of October 7, 1996, by and
between Trump's Castle Hotel & Casino, Inc. and First Bank
National Association, as trustee.
10.65.1 Amended and Restated Services, 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.
10.67 Amendment to the Second Amended and Restated Partnership
Agreement of Trump's Castle Associates, dated as of October
7, 1996.
10.67.1 Third Amended and Restated Partnership Agreement of Trump's
Castle Associates, L.P., dated as of October 7, 1996.
10.68 Thermal Energy Service Agreement, dated as of September 26,
1996, by and between Atlantic Jersey Thermal Systems, Inc.
and Trump Plaza Associates.
27.1 Financial Data Schedule of Trump Hotels & Casino Resorts
Holdings, L.P.
27.2 Financial Data Schedule of Trump Hotels & Casino Resorts
Funding, Inc.
99.1 Quarterly Report on Form 10-Q of Trump's Castle Associates,
L.P. and Trump's Castle Funding, Inc. for the quarterly
period ended September 30, 1996.
b. Current Reports on Form 8-K:
The Registrants did not file any Current Reports on Form 8-K during the
period beginning July 1, 1996 and ending September 30, 1996.
22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
(Registrant)
By: Trump Hotels & Casino Resorts, Inc.,
its general partner
Date: November 14, 1996
By: /s/ NICHOLAS L. RIBIS
------------------------------------------
Nicholas L. Ribis
President, Chief Executive Officer,
Chief Financial Officer and Director
(Duly Authorized Officer and
Principal Financial Officer)
23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
(Registrant)
Date: November 14, 1996
By: /s/ NICHOLAS L. RIBIS
------------------------------------------
Nicholas L. Ribis
President, Chief Executive Officer,
Chief Financial Officer and Director
(Duly Authorized Officer and
Principal Financial Officer)
24
================================================================================
THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS......................................................2
Section 1.1. Definitions..............................................2
Section 1.2. Accounting Terms and Determinations.....................17
ARTICLE II. CONTINUATION OF PARTNERSHIP; BUSINESS OF PARTNERSHIP............17
Section 2.1. Continuation............................................17
Section 2.2. Name....................................................17
Section 2.3. Character of the Business...............................18
Section 2.4. Location of Principal Place of Business.................18
Section 2.5. Registered Agent and Registered Office..................18
ARTICLE III. TERM...........................................................18
Section 3.1. Commencement............................................18
Section 3.2. Termination.............................................18
ARTICLE IV. CAPITAL CONTRIBUTIONS...........................................19
Section 4.1. Capital Contributions; Partnership Interests and
Percentage Interests of the Partners................19
Section 4.2. Issuance of Additional Partnership Interests and
Shares..............................................20
Section 4.3. Adjustment of Partnership Interests.....................22
Section 4.4. No Interest on or Return of Capital Contribution........22
Section 4.5. Adjustment for Castle Acquisition.......................22
ARTICLE V. ALLOCATIONS AND OTHER TAX AND ACCOUNTING MATTERS.................23
Section 5.1. Allocations of Net Income and Net Loss..................23
Section 5.2. Special Allocations.....................................23
Section 5.3. Tax Allocations.........................................25
Section 5.4. Books of Account........................................28
Section 5.5. Tax Matters Partner.....................................28
Section 5.6. Tax Elections and Returns...............................29
Section 5.7. Tax Certifications......................................30
ARTICLE VI. DISTRIBUTIONS...................................................30
Section 6.1. General.................................................30
Section 6.2. Distributions for Taxes.................................30
Section 6.3. Other Distributions.....................................32
Section 6.4. Withholding Payments Required By Law....................32
Section 6.5. Non-Recourse............................................33
ARTICLE VII. RIGHTS, DUTIES AND RESTRICTIONS OF THE GENERAL PARTNER.........33
Section 7.1. Powers and Duties of General Partner....................33
Section 7.2. Major Decisions.........................................36
Section 7.3. Reimbursement of the General Partner....................36
<PAGE>
Section 7.4. Outside Activities of the General Partner...............37
Section 7.5. Contracts with Affiliates...............................37
Section 7.6. Title to Partnership Assets.............................38
Section 7.7. Reliance by Third Parties...............................38
Section 7.8. Liability of the General Partner........................39
Section 7.9. Officers of the Partnership.............................39
Section 7.10. Covenants of THCR Regarding the Issuance of New
Securities..........................................39
Section 7.11. Other Matters Concerning the General Partner............40
ARTICLE VIII. DISSOLUTION, LIQUIDATION AND WINDING-UP......................41
Section 8.1. Accounting..............................................41
Section 8.2. Distribution on Dissolution.............................41
Section 8.3. Timing Requirements.....................................41
Section 8.4. Documentation of Liquidation............................42
Section 8.5. Dissolution.............................................42
Section 8.6. Continuation of the Partnership.........................43
ARTICLE IX. TRANSFER AND REDEMPTION OF PARTNERSHIP INTERESTS; CERTAIN
CONSENT RIGHTS................................................43
Section 9.1. General Partner Transfer................................43
Section 9.2. Transfers by Limited Partners...........................44
Section 9.3. Certain Additional Restrictions on Transfer.............47
Section 9.4. Effective Dates of Transfers............................47
Section 9.5. Transfer................................................48
Section 9.6. Redemption of Partnership Interest......................49
Section 9.7. Certain Consent Rights..................................49
ARTICLE X. RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS...................49
Section 10.1. No Participation in Management.........................49
Section 10.2. Bankruptcy of a Limited Partner........................50
Section 10.3. No Withdrawal..........................................50
Section 10.4. Conflicts..............................................50
Section 10.5. Provision of Information...............................51
Section 10.6. Limited Partner Representative.........................52
Section 10.7. Power of Attorney......................................52
ARTICLE XI. INDEMNIFICATION; EXCULPATION....................................54
Section 11.1. Indemnification........................................54
Section 11.2. Indemnification Procedures.............................55
Section 11.3. Exculpation............................................56
Section 11.4. No Liability of Directors and Others...................56
ARTICLE XII. RIGHTS UNDER THE EXCHANGE RIGHTS AGREEMENT.....................57
Section 12.1. Transfer Pursuant to Exchange Rights Agreement.........57
Section 12.2. Subject to the Exchange Rights Agreement...............57
ARTICLE XIII. AMENDMENT OF PARTNERSHIP AGREEMENT, MEETINGS..................57
Section 13.1. Amendments.............................................57
Section 13.2. Meetings of the Partners; Notices to Partners..........59
(ii)
<PAGE>
ARTICLE XIV. CERTIFICATE OF INTEREST........................................60
Section 14.1. Form of Certificate of Interest........................60
Section 14.2. Transfers of Certificates of Interest..................60
Section 14.3. Lost, Stolen, Destroyed or Mutilated Certificates
of Interest.........................................61
Section 14.4. Inspection of Certificate Transfer Ledger..............61
ARTICLE XV. REGULATORY REQUIREMENTS.........................................61
Section 15.1. Applicable Regulatory Authority and CCC Regulation.....61
Section 15.2. Additional Applicable Regulatory Authority
Regulation..........................................62
Section 15.3. Disqualified Holders...................................62
ARTICLE XVI. GENERAL PROVISIONS.............................................63
Section 16.1. Notices................................................63
Section 16.2. Controlling Law........................................64
Section 16.3. No Third Party Beneficiaries...........................64
Section 16.4. Execution in Counterparts..............................64
Section 16.5. Provisions Separable...................................64
Section 16.6. Entire Agreement.......................................64
Section 16.7. Paragraph Headings.....................................65
Section 16.8. Gender, Etc............................................65
Section 16.9. Number of Days.........................................65
Section 16.10. Partners Not Agents....................................65
Section 16.11. Assurances.............................................65
Section 16.12. Successors and Assigns.................................65
Section 16.13. Waiver.................................................65
Schedules
SCHEDULE I -- Aggregate Capital Contributions
SCHEDULE II -- Capital Contributions Prior to April 17, 1996
SCHEDULE III -- Capital Contributions in connection with the Taj Mahal Merger
Transaction
SCHEDULE IV -- Capital Contributions in connection with the Castle Acquisition
Exhibits
EXHIBIT A -- Form of Second Amended and Restated Exchange and Registration
Rights Agreement
(iii)
<PAGE>
THE LIMITED PARTNERSHIP INTERESTS REFERRED TO IN THIS AGREEMENT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. REFERENCE IS MADE TO ARTICLE IX OF THIS AGREEMENT FOR
PROVISIONS RELATING TO VARIOUS RESTRICTIONS ON THE SALE OR OTHER TRANSFER
OF THESE INTERESTS.
THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.
THIS THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP is
made and entered into this 7th day of October, 1996, by and among Trump Hotels &
Casino Resorts, Inc., a Delaware corporation ("THCR"), Donald J. Trump ("Trump"
or the "Initial Limited Partner"), THCR/LP Corporation, a New Jersey corporation
("THCR/LP"), Trump Casinos, Inc., a New Jersey corporation ("TCI"), Trump
Casinos II, Inc., a Delaware Corporation, formerly known as TC/GP, Inc.
("TCI-II"), and the Persons who may become party hereto from time to time
pursuant to the terms of this Agreement.
W I T N E S S E T H:
WHEREAS, THCR and Trump formed the Partnership on March 28, 1995 by
the filing of a Certificate of Limited Partnership with the Secretary of State
of the State of Delaware;
WHEREAS, THCR and Trump entered into an Amended and Restated Agreement
of Limited Partnership on June 12, 1995;
WHEREAS, in connection with the acquisition by the Partnership of
Trump Taj Mahal Associates ("Taj Associates") and the other transactions related
thereto (the "Taj Mahal Merger Transaction"), THCR, Trump, THCR/LP and TCI
entered into a Second Amended and Restated Agreement of Limited Partnership,
dated as of April 17, 1996, which provided for the capital contributions as set
forth on Schedule III hereto and the admission of THCR/LP and TCI as Limited
Partners of the Partnership;
WHEREAS, effective as of the date hereof, the General Partner and
Trump desire to cause certain capital contributions to the Partnership, as set
forth on Schedule IV hereto, in connection with the acquisition (the "Castle
Acquisition") by the Partnership of the equity interests of Trump's Castle
Associates, L.P., a New Jersey limited partnership ("Castle Associates");
<PAGE>
WHEREAS, in exchange for its capital contribution as set forth in
Schedule IV, effective as of the date hereof, TCI-II is being admitted to the
Partnership as a Limited Partner; and
WHEREAS, the parties hereto desire to continue the Partnership as a
limited partnership under the Delaware Revised Uniform Limited Partnership Act
in accordance with the provisions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1. Definitions. Except as otherwise herein expressly
provided, the following terms and phrases shall have the meanings as set forth
below:
"Accountants" shall mean the national firm or firms of
independent certified public accountants selected by the General Partner on
behalf of the Partnership to audit the books and records of the Partnership and
to prepare statements and reports in connection therewith, which initially shall
be Arthur Andersen LLP.
"Act" shall mean the Delaware Revised Uniform Limited Partnership
Act, as the same may hereafter be amended from time to time.
"Action" shall mean any and all claims, demands, actions, suits
or proceedings, civil, criminal, administrative or investigative, that give rise
to a claim for indemnification pursuant to Article XI hereof.
"Additional Distributions" shall mean distributions by the
Partnership pursuant to Section 6.3 hereof.
"Additional Partnership Interests" shall have the meaning set
forth in Section 4.2(a).
"Adjusted Capital Account Deficit" shall mean, with respect to
any Limited Partner, the deficit balance, if any, in such Partner's Capital
Account as of the end of any relevant fiscal year and after giving effect to the
following adjustments:
(a) credit to such Capital Account any amounts which such
Partner is obligated or treated as obligated
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to restore with respect to any deficit balance in such Capital Account pursuant
to Section 1.704-1(b)(2)(ii)(c) of the Regulations, or is deemed to be obligated
to restore with respect to any deficit balance pursuant to the penultimate
sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the Regulations; and
(b) debit to such Capital Account the items described in
Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the requirements of the alternate test for economic effect contained
in Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted
consistently therewith.
"Adjustment Date" shall have the meaning set forth in Section 4.3
hereof.
"Affiliate" shall mean, with respect to any specified Person, any
other Person directly or indirectly controlling, controlled by, or under common
control with, such specified Person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by agreement or otherwise.
"Agreement" shall mean this Third Amended and Restated Agreement
of Limited Partnership, as originally executed and as amended, modified,
supplemented or restated from time to time, as the context requires.
"Applicable Regulatory Authority" shall mean any governmental or
quasi-governmental authority with applicable jurisdiction over the business,
affairs, securities, or properties of the Partnership or any of its
Subsidiaries, including, without limitation, the CCC, the IGC, and the MGC.
"Audited Financial Statements" shall mean financial statements
(balance sheet, statement of income, statement of partners' equity and statement
of cash flows) prepared in accordance with GAAP and accompanied by an
independent auditor's report containing an opinion thereon.
"Bankruptcy" shall mean, with respect to any Person, (i) the
commencement by such Person of any petition, case or proceeding seeking relief
under any provision or chapter of the federal bankruptcy code or any other
federal or state law relating to insolvency, bankruptcy or reorganization, (ii)
an adjudication that such Person is insolvent or bankrupt, (iii) the entry of an
order for relief under the federal bankruptcy code with respect to such Person,
(iv) the filing of any such petition
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<PAGE>
or the commencement of any such case or proceeding against such Person, unless
such petition and the case or proceeding initiated thereby are dismissed within
ninety (90) days from the date of such filing or (v) the filing of an answer by
such Person admitting the allegations of any such petition.
"Beneficial Owner" shall mean any Person who, singly or together
with any of such Person's Affiliates, directly or indirectly, has "beneficial
ownership" of Partnership Interests (as determined pursuant to Rule 13d-3 of the
Securities Exchange Act of 1934, as amended).
"Business Day" shall mean any day that is not a Saturday, Sunday
or a day on which banking institutions in the State of New York are authorized
or obligated by law or executive order to close.
"Capital Account" shall mean, with respect to any Partner, the
separate "book" account which the Partnership shall establish and maintain for
such Partner in accordance with Section 704(b) of the Code and the Regulations
promulgated thereunder. In the event that a Partnership Interest is transferred
in accordance with the terms of this Agreement, the Capital Account, at the time
of the transfer, of the transferor attributable to the transferred interest
shall carry over to the transferee.
"Capital Contribution" shall mean, with respect to any Partner,
the amount of money and the initial Gross Asset Value of any Contributed
Property (net of liabilities to which such property is subject) set forth on
Schedule I, as such exhibit will be amended by the General Partner from time to
time to reflect the amount of money and the Gross Asset Value of any Contributed
Property received by the Partnership pursuant to any additional Capital
Contribution or deemed contributed pursuant to Sections 4.2 or 7.10.
"Casino Control Act" shall mean the New Jersey Casino Control
Act, N.J.S.A. 5:12-1 et seq.
"Castle Acquisition" shall have the meaning set forth in the
Recitals to this Agreement.
"Castle Acquisition Agreement" shall mean the Agreement, dated as
of June 24, 1996, by and among THCR, the Partnership, TCI-II, TCHI and Trump, as
amended as of August 27, 1996.
"Castle Associates" shall have the meaning set forth in the
Recitals to this Agreement.
"CCC" shall mean the New Jersey Casino Control Commission and any
successor agency.
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"Certificate" shall mean the Certificate of Limited Partnership
establishing the Partnership, as filed with the office of the Delaware Secretary
of State on March 28, 1995, as it may be amended from time to time in accordance
with the terms of this Agreement and the Act.
"Class B Stock" shall mean Class B Common Stock, par value $.01
per share, of THCR, and any class of securities into which the Class B Stock has
been converted, other than Common Stock.
"Code" shall mean the Internal Revenue Code of 1986, as amended
and in effect from time to time, as interpreted by the applicable regulations
thereunder. Any reference herein to a specific section or sections of the Code
shall be deemed to include a reference to any corresponding provision of future
law.
"Common Stock" shall mean the common stock, par value $.01 per
share, of THCR, other than the Class B Stock.
"Consent of the Limited Partners" shall mean the written consent
of a Majority-In-Interest of the Limited Partners given in accordance with
Section 13.2 hereof, which consent shall be obtained prior to the taking of any
action for which it is required by this Agreement and may be given or withheld
by a Majority-In-Interest of the Limited Partners, unless otherwise expressly
provided herein, in their sole and absolute discretion.
"Contributed Property" shall mean any property or asset, in such
form as may be permitted by the Act, but excluding cash, contributed or deemed
contributed to the Partnership with respect to the Partnership Interest held by
each Partner.
"Current Market Price" shall mean, with respect to any security
on any Valuation Date specified herein, the arithmetic mean over a period of
twenty consecutive trading days ending the second trading day prior to such date
(a) if the security is listed or admitted to trading on any national securities
exchange, of the high and low sale price of the security or if no such sale
takes place on such date, the average of the highest closing bid and lowest
closing asked prices thereof on such date, in each case as officially reported
on all national securities exchanges on which the security is then listed or
admitted to trading, (b) if the security is not then listed or admitted to
trading on any national securities exchange, the highest closing price thereof
on such date in the over-the-counter market as shown by the NASDAQ National
Market System, or (c) if the security is not then quoted in such system, as
published by the National Quotation Bureau, Incorporated or any similar
successor organization, and in any case as reported by any member firm of the
New York Stock Exchange selected by the General Partner. If the security is not
then listed or admitted to trading on any national securities exchange and if no
closing bid and ask prices therefor are then quoted or published in the
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<PAGE>
over-the-counter market, "Current Market Price" shall mean the value of the
security as of a date which is 15 days preceding the date as of which the
determination is to be made, as determined in good faith by an investment
banking firm of national reputation (which firm may have provided other services
to the General Partner or the Partnership) selected by the Board of Directors of
the General Partner, and, in connection with a Capital Contribution by the
Initial Limited Partner or his Permitted Holders, which selection shall be
approved by a majority of the Special Committee. Notwithstanding the foregoing,
if a determination of Current Market Price is being made in connection with an
arms length underwritten public offering, such value shall be the public
offering price of the Common Stock in such offering.
"Damages" shall have the meaning set forth in Section 11.1(a)
hereof.
"Deemed Partnership Interest Value" as of any date, shall mean
with respect to a Partner, the Deemed Value of the Partnership (as of the day
preceding such date) multiplied by such Partner's Percentage Interest (expressed
as a decimal carried to four places, e.g., .1234 or 12.34%).
"Deemed Value of the Partnership" shall mean, as of the Valuation
Date, (a) the sum of (i) the product of (A) the Current Market Price per share
of Common Stock, (B) the number of shares of outstanding Common Stock, and (C) a
fraction, the numerator of which is one, and the denominator of which is the
Percentage Interest (expressed as a decimal) of the General Partner, (ii) the
aggregate Fair Market Value of the outstanding capital stock of THCR, other than
the Common Stock or the Class B Stock, and (iii) the Fair Market Value of the
outstanding Indebtedness of THCR appearing on the balance sheet of THCR,
prepared in accordance with GAAP, as of the Valuation Date, which Indebtedness
(the "Included Indebtedness") shall exclude (A) the Indebtedness of the
Partnership and its consolidated and combined Subsidiaries, appearing on the
balance sheet of the Partnership and its consolidated and combined Subsidiaries,
prepared in accordance with GAAP as of the Valuation Date, and (B) any other
Indebtedness appearing on the balance sheet of THCR, prepared in accordance with
GAAP, as of the Valuation Date, the proceeds of which were not used to purchase
additional Partnership Interests, reduced by (b) the amount, if any, by which
the consolidated net worth of the General Partner exceeds its pro rata share of
the consolidated net worth of the Partnership; provided, however, that if the
General Partner shall have material amounts of liabilities (other than Included
Indebtedness) or material assets other than cash and Partnership Interests, the
General Partner may seek the advice of an investment banking firm of national
reputation as to the appropriate modification of the Deemed Value of the
Partnership formula set forth herein to take into account such liabilities or
assets.
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<PAGE>
"Depreciation" shall mean, with respect to any asset of the
Partnership for any fiscal year or other period, the depreciation or
amortization, as the case may be, allowed or allowable for federal income tax
purposes in respect of such asset for such fiscal year or other period;
provided, however, that if there is a difference between the Gross Asset Value
and the adjusted tax basis of such asset, Depreciation shall mean "book
depreciation, depletion or amortization" as determined under Section
1.704-1(b)(2)(iv)(g)(3) of the Regulations.
"Disabling Event" shall have the meaning set forth in Section 8.6
hereof.
"Disqualified Holder" shall mean any Beneficial Owner of
Partnership Interests or Equity Interests of the General Partner, the
Partnership or any of its Subsidiaries (a) who is found to be disqualified by
any Applicable Regulatory Authority, or (b) whose holding of such Partnership
Interests or Equity Interests may result or, when taken together with the
holding of such Partnership Interests or Equity Interests by any other
Beneficial Owner, may result, in the judgment of the General Partner, in the
inability to obtain, loss or non-reinstatement of any license or franchise from
any Applicable Regulatory Authority sought or held by the Partnership or any
Subsidiary to conduct any portion of the business of the Partnership or any
Subsidiary, which license or franchise is conditioned upon some or all of the
holders of Partnership Interests and such Equity Interests meeting certain
criteria.
"Entity" shall mean any general partnership, limited partnership,
limited liability company, corporation, joint venture, trust, business trust,
real estate investment trust, association or other entity.
"Equity Interest" of any Person shall mean any shares, interests,
participations or other equivalents (however designated) of such Person in
equity.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time (or any corresponding provisions of
succeeding laws).
"Exchange Rights Agreement" shall mean the Second Amended and
Restated Exchange and Registration Rights Agreement, dated as of October 7,
1996, substantially in the form of Exhibit A hereto, entered into by and among
Trump, TCI, TCI-II and THCR, providing certain rights to exchange Limited
Partnership Interests for Common Stock on the terms and conditions set forth
therein, as the same may be amended from time to time in accordance with the
terms thereof.
"Executive Agreement" shall mean the Trump Executive Agreement,
by and among Trump, THCR and the
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<PAGE>
Partnership, dated as of June 12, 1995, as the same may be amended from time to
time in accordance with the terms thereof.
"Fair Market Value" shall mean (i) in the case of any security,
its Current Market Price and (ii) in the case of any property or Indebtedness
that is not a security, the fair market value of such property or Indebtedness
as determined in good faith by a majority of the Board of Directors of the
General Partner and, in connection with a Capital Contribution by the Initial
Limited Partner or his Permitted Holders, by a majority of the Special
Committee.
"Foreclosure Sale" shall mean any judicial sale or any sale of
collateral conducted by a pledgee in exercising its rights under the Uniform
Commercial Code.
"General Partner" shall mean THCR, its duly admitted successors
and assigns and any other Person who is a general partner of the Partnership at
the time of reference thereto.
"General Partner Expenses" shall mean all organization,
formation, administrative and operating costs and expenses of the General
Partner, including, but not limited to, (a) salaries paid to officers of the
General Partner, and insurance, accounting, legal, and other professional fees
and expenses incurred by the General Partner, (b) costs and expenses relating to
the organization, formation and continuity of existence of the Partnership and
the General Partner, including franchise taxes, fees and assessments associated
therewith, any and all costs, expenses or fees payable or reimbursable to, or in
respect of, any director or officer of the General Partner, (c) costs and
expenses relating to any offer or registration of securities by the General
Partner or the Partnership and all statements, reports, fees and expenses
incidental thereto, including Issuance Costs applicable to any such offer of
securities, (d) costs and expenses associated with compliance by the General
Partner with laws, rules and regulations promulgated by any Applicable
Regulatory Authority, including the SEC, and (e) any costs and expenses incurred
in connection with any matter for which the General Partner may seek
indemnification from the Partnership pursuant to the provisions of this
Agreement; provided, however, that "General Partner Expenses" shall not include,
(i) any taxes taken into account in calculating Tax Amounts, and (ii) any
administrative and operating costs and expenses of the General Partner to the
extent arising out of any Outside Business Activities.
"Gross Asset Value" shall mean, with respect to any asset of the
Partnership, such asset's adjusted basis for federal income tax purposes, except
as follows:
(a) the initial Gross Asset Value of any asset contributed
by a Partner to the Partnership shall be
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(i) in the case of any asset described on attached
Schedule I, the gross fair market value ascribed thereto on such
Schedule and (ii) in the case of any other asset hereafter contributed
by a Partner, the gross Fair Market Value of such asset at the time of
its contribution, which determination, in the case of the Initial
Limited Partner and his Permitted Holders, shall be made by a majority
of the Special Committee;
(b) the Gross Asset Values of all Partnership assets shall
be adjusted to equal their respective gross Fair Market Values:
(i) immediately prior to a Capital Contribution (other
than a de minimis Capital Contribution) to the Partnership by a new or
existing Partner as consideration for a Partnership Interest;
(ii) immediately prior to the distribution by the
Partnership to a Partner of more than a de minimis amount of
Partnership property as consideration for the redemption of a
Partnership Interest;
(iii) immediately prior to the liquidation of the
Partnership within the meaning of Section 1.704-1(b)(2)(ii)(g) of the
Regulations; and
(iv) upon any other event as to which the General
Partner reasonably determines that an adjustment is necessary or
appropriate to reflect the relative economic interests of the
Partners;
(c) the Gross Asset Values of Partnership assets distributed
to any Partner shall be the gross Fair Market Values of such assets as of
the date of distribution; and
(d) the Gross Asset Values of Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted basis
of such assets pursuant to Sections 734(b) or 743(b) of the Code, but only
to the extent that such adjustments are taken into account in determining
Capital Accounts pursuant to Section 1.704-1(b)(2)(iv)(m) of the
Regulations; provided, however, that Gross Asset Values shall not be
adjusted pursuant to this paragraph to the extent that the General Partner
reasonably determines that an adjustment pursuant to paragraph (b) above is
necessary or appropriate in connection with a transaction that would
otherwise result in an adjustment pursuant to this paragraph (d).
At all times, Gross Asset Values shall be adjusted by any Depreciation taken
into account with respect to the Partnership's
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<PAGE>
assets for purposes of computing Net Income and Net Loss. Any adjustment to the
Gross Asset Values of Partnership property shall require an adjustment to the
Partners' Capital Accounts; as for the manner in which such adjustments are
allocated to the Capital Accounts, see clause (c) of the definition of Net
Income and Net Loss in the case of adjustment by Depreciation, and clause (d) of
said definition in all other cases.
"IGC" shall mean the Indiana Gaming Commission and any successor
agency.
"Indebtedness" shall mean any obligation, whether or not
contingent, (i) in respect of borrowed money or evidenced by bonds, notes,
debentures or similar instruments, (ii) representing the balance deferred and
unpaid of the purchase price of any property (including pursuant to capital
leases), except any such balance that constitutes an accrued expense or a trade
payable, if and to the extent any of the foregoing indebtedness would appear as
a liability upon a balance sheet prepared on a consolidated basis in accordance
with GAAP, (iii) to the extent not otherwise included, obligations under
interest rate exchange, currency exchange, swaps, futures or similar agreements,
and (iv) guaranties (other than endorsements for collection or deposit in the
ordinary course of business), direct or indirect, in any manner (including,
without limitation, reimbursement agreements in respect of letters of credit),
of all or any part of any Indebtedness of any third party.
"Indemnitee" shall mean any Person made or threatened to be made
a party to a proceeding by reason of its status as a Partner or a trustee,
director, officer, employee, agent, stockholder or Liquidating Trustee of the
Partnership, a Partner or an Affiliate of a Partner.
"Indiana Riverboat" shall mean a riverboat or dockside gaming
facility and the ancillary structures and other facilities used in connection
with the operation thereof located in Buffington Harbor, Indiana.
"Indiana Riverboat Act" shall mean the Indiana Riverboat Gambling
Act, Ind. Code ss. 4-33-1-1 et seq.
"Initial Limited Partner" shall have the meaning set forth in the
Preamble to this Agreement.
"Issuance Costs" shall mean the underwriter's discount, placement
fees, commissions or other expenses relating to the issuance of New Securities
by the General Partner.
"Lien" shall mean any liens, security interests, mortgages, deeds
of trust, pledges, options, escrows, collateral assignments, rights of first
offer or first refusal, preemptive rights and any other similar encumbrances of
any nature whatsoever.
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"Limited Partner Representative" shall have the meaning set forth
in Section 10.6 hereof.
"Limited Partners" shall mean the Initial Limited Partner, those
Persons listed under the heading "Limited Partners" on the signature page hereto
in their respective capacities as limited partners of the Partnership, their
permitted successors or assigns as limited partners hereof, and any Person who,
at the time of reference thereto, is a limited partner of the Partnership.
"Liquidating Trustee" shall mean such individual or Entity which
is selected as the Liquidating Trustee hereunder by the General Partner, which
individual or Entity may include the General Partner or an Affiliate of the
General Partner; provided that, such Liquidating Trustee agrees in writing to be
bound by the terms of this Agreement. The Liquidating Trustee shall be empowered
to give and receive notices, reports and payments in connection with the
dissolution, liquidation and/or winding up of the Partnership and shall hold and
exercise such other rights and powers granted to the General Partner herein or
under the Act as are necessary or required to conduct the winding-up and
liquidation of the Partnership's affairs and to authorize all parties to deal
with the Liquidating Trustee in connection with the dissolution, liquidation
and/or winding-up of the Partnership.
"Major Decisions" shall have the meaning set forth in Section 7.2
hereof.
"Majority-In-Interest of the Limited Partners" shall mean Limited
Partner(s) (excluding the General Partner to the extent it Beneficially Owns any
limited Partnership Interest) who hold in the aggregate more than fifty (50)
percent of the Percentage Interests then allocable to and held by the Limited
Partners (excluding the General Partner to the extent it Beneficially Owns any
limited Partnership Interest), as a class.
"MGC" shall mean the Mississippi Gaming Commission and any
successor agency.
"Minimum Gain Attributable to Partner Nonrecourse Debt" shall
mean "partner nonrecourse debt minimum gain" as determined in accordance with
Regulation Section 1.704-2(i)(3).
"Mississippi Gaming Control Act" shall mean the Gaming Control
Act of Mississippi, Miss. Code ss. 75-76-1 et seq.
"Net Income" or "Net Loss" shall mean, for each fiscal year or
other applicable period, an amount equal to the Partnership's net income or loss
for such year or period as determined for federal income tax purposes by the
Accountants, determined in accordance with Section 703(a) of the Code (for
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this purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Section 703(a) of the Code shall be included in taxable
income or loss), with the following adjustments: (a) by including as an item of
gross income any tax-exempt income received by the Partnership; (b) by treating
as a deductible expense any expenditure of the Partnership described in Section
705(a)(2)(B) of the Code (including amounts paid or incurred to organize the
Partnership (unless an election is made pursuant to Code Section 709(b)) or to
promote the sale of interests in the Partnership and by treating deductions for
any losses incurred in connection with the sale or exchange of Partnership
property disallowed pursuant to Section 267(a)(1) or Section 707(b) of the Code
as expenditures described in Section 705(a)(2)(B) of the Code); (c) in lieu of
depreciation, depletion, amortization and other cost recovery deductions taken
into account in computing total income or loss, there shall be taken into
account Depreciation; (d) gain or loss resulting from any disposition of
Partnership property with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to the Gross Asset
Value of such property rather than its adjusted tax basis; (e) in the event of
an adjustment of the Gross Asset Value of any Partnership asset which requires
that the Capital Accounts of the Partnership be adjusted pursuant to Regulation
Section 1.704-1(b)(2)(iv)(e), (f) and (m), the amount of such adjustment is to
be taken into account as additional Net Income or Net Loss pursuant to Section
5.1; and (f) excluding any items specially allocated pursuant to Section 5.2.
Once an item of income, gain, loss or deduction has been included in the initial
computation of Net Income or Net Loss and is subjected to the special allocation
rules in Section 5.2, Net Income and Net Loss shall be computed without regard
to such item.
"New Securities" means Indebtedness or Equity Interests of the
General Partner and any of its Subsidiaries other than the Partnership and its
Subsidiaries; provided that, New Securities shall not include Class B Stock and
Common Stock issued by THCR prior to the date of this Agreement.
"Nonrecourse Deductions" shall have the meaning set forth in
Sections 1.704-2(b)(1) and (c) of the Regulations.
"Nonrecourse Liabilities" shall have the meaning set forth in
Section 1.704-2(b)(3) of the Regulations.
"Outside Business Activity" shall mean any business other than
(i) the ownership, acquisition and disposition of Partnership Interests as a
General Partner or Limited Partner and (ii) the management of the business of
the Partnership, and such activities as are incidental thereto, including,
without limitation, the issuance of New Securities and the application of the
proceeds thereof in compliance with the provisions of Section 7.10 of this
Agreement.
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"Partner Nonrecourse Debt" shall have the meaning set forth in
Section 1.704-2(b)(4) of the Regulations.
"Partner Nonrecourse Deductions" shall have the meaning set forth
in Section 1.704-2(i)(2) of the Regulations.
"Partners" shall mean the General Partner and the Limited
Partners, their duly admitted successors or assigns or any Person who is a
partner of the Partnership at the time of reference thereto.
"Partnership" shall mean the limited partnership formed under the
Act pursuant to this Agreement, and any successor thereto.
"Partnership Interest" shall mean the ownership interest of a
Partner in the Partnership from time to time, including each Partner's
Percentage Interest and such Partner's Capital Account. Wherever in this
Agreement reference is made to a particular Partner's Partnership Interest it
shall be deemed to refer to such Partner's Percentage Interest and shall include
the proportionate amount of such Partner's other interests in the Partnership
which are attributable to or based upon the Partner's Partnership Interest.
"Partnership Minimum Gain" shall have the meaning set forth in
Section 1.704-2(b)(2) of the Regulations.
"Percentage Interest" shall mean, with respect to any Partner,
the percentage ownership interest of such Partner in such items of the
Partnership as to which the term "Percentage Interests" is applied in this
Agreement, as specified in Schedule I hereto, as such Schedule may be amended
from time to time.
"Permitted Holder" with respect to any Partner shall mean (i)
such Partner and (ii) if a natural person, the spouse and descendants of such
Partner (including any related trusts controlled by, and established and
maintained for the sole benefit of, such Partner or such spouse or descendants)
and the estate of any of the foregoing. In addition, (x) TCI and Trump and (y)
TCI-II and Trump shall each be Permitted Holders in respect of each other.
"Permitted Limited Partnership Interest Lien" shall mean any Lien
to which the limited Partnership Interest of a Limited Partner is subject;
provided that, the terms of such Lien (other than a Lien on the proceeds (as
defined in Section 9-306 of the Uniform Commercial Code) of, or right to receive
distributions or payments with respect to, a limited Partnership Interest) must
expressly acknowledge that the rights of the holder of such Lien, upon
foreclosure, will be subject to the terms of the Exchange Rights Agreement.
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"Permitted Partners" shall have the meaning set forth in Section
5.1(b)(ii) hereof.
"Person" shall mean any natural person or Entity.
"Plaza Associates" shall mean Trump Plaza Associates, a New
Jersey general partnership.
"Redemption Date" shall mean the date fixed by the General
Partner for the redemption of any Partnership Interests pursuant to Article XV
hereof.
"Redemption Securities" shall mean any debt or equity securities
of the Partnership, any Subsidiary or any other corporation, or any combination
thereof, having such terms and conditions as shall be approved by the General
Partner and which, together with any cash to be paid as part of the redemption
price, in the opinion of any nationally recognized investment banking firm
selected by the General Partner (which may be a firm which provides other
investment banking, brokerage or other services to the Partnership), has a
value, at the time notice of redemption is given pursuant to Section 15.3, at
least equal to the Fair Market Value of the Partnership Interests to be redeemed
pursuant to Article XV (assuming, in the case of Redemption Securities to be
publicly traded, such Redemption Securities were fully distributed and subject
only to normal trading activity).
"Regulations" shall mean the income tax regulations promulgated
under the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Restricted Partner" shall have the meaning set forth in Section
5.1(b)(ii) hereof.
"Rights" shall mean the exchange rights as provided in the
Exchange Rights Agreement.
"SEC" shall mean the United States Securities and Exchange
Commission.
"Special Committee" shall mean a committee of at least two (2) of
the members of the board of directors of the General Partner, composed solely of
directors who are not officers or employees of the General Partner and who are
not Affiliates of Trump or any of his Affiliates; provided that, a director
shall not be deemed to be an Affiliate of either Trump or his Affiliates solely
by reason of his or her being a member of the board of directors of the General
Partner or its Subsidiaries.
"Stock Incentive Plan" shall mean the General Partner's 1995
Stock Option Plan and such successor or additional plan as the General Partner
may adopt.
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"Stock Option" shall mean an option to purchase Shares granted
under the Stock Incentive Plan.
"Subsidiary" with respect to any Person shall mean a "subsidiary"
as defined in Section 1-02 of Regulation S-X promulgated under the Securities
Act of 1933, as amended.
"Taj Associates" shall have the meaning set forth in the Recitals
to this Agreement.
"Taj Mahal" shall mean the Trump Taj Mahal Casino Resort and the
ancillary structures and other facilities used in connection with the operation
thereof located in Atlantic City, New Jersey.
"Taj Mahal Merger Transaction" shall have the meaning set forth
in the Recitals to this Agreement.
"Tax Amounts" with respect to any year shall not exceed an amount
equal to (a) the higher of (i) the product of (A) the taxable income of the
Partnership (computed as if the Partnership were an individual) for such year as
determined in good faith by the board of directors of the General Partner and
(B) the Tax Percentage and (ii) the product of (A) the alternative minimum
taxable income attributable to the Partnership (computed as if the Partnership
were an individual) for such year as determined in good faith by the board of
directors of the General Partner and (B) the Tax Percentage, reduced by (b) to
the extent not previously taken into account, any income tax benefit
attributable to the Partnership which could be realized (without regard to the
actual realization) by its Partners in the current or any prior taxable year, or
portion thereof, commencing on the date of this Agreement (including any tax
losses or tax credits), computed at the applicable Tax Percentage for the year
that such benefit is taken into account for purposes of this computation. Any
part of the Tax Amount not distributed in respect of a tax period for which it
is calculated shall be available for distribution in subsequent tax periods.
"Tax Distribution" shall mean distributions by the Partnership
pursuant to Section 6.2 hereof.
"Tax Items" shall have the meaning set forth in Section 5.3(a).
"Tax Payment Loan" shall have the meaning set forth in Section
6.4(a) hereof.
"Tax Percentage" shall mean the highest, aggregate effective
marginal rate of Federal, state and local income tax or, when applicable,
alternative minimum tax, to which any Partner would be subject in the relevant
year of determination (as certified to the General Partner by the Accountants);
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provided, however, that in no event shall the Tax Percentage be greater than the
sum of (x) the highest, aggregate effective marginal rate of Federal, state, and
local income tax, or when applicable, alternative minimum tax, to which the
Partnership would have been subject if it were a C corporation for Federal
income tax purposes, and (y) 5 percentage points. If any Partner is an S
corporation, partnership, or similar pass-through entity for Federal income tax
purposes, the Tax Percentage shall be computed based upon the tax rates
applicable to the shareholder or partner of such Partner, as the case may be.
"TCHI" shall mean Trump's Castle Hotel & Casino, Inc., a New
Jersey corporation.
"TCI" shall mean Trump Casinos, Inc., a New Jersey corporation.
"TCI-II" shall have the meaning set forth in the Preamble to this
Agreement.
"THCR" shall mean Trump Hotels & Casino Resorts, Inc., a Delaware
corporation.
"THCR/LP" shall mean THCR/LP Corporation, a New Jersey
corporation.
"Trading Day" shall mean a day on which the principal national
securities exchange on which the Common Stock is listed or admitted to trading
is open for the transaction of business or, if the Common Stock is are not
listed or admitted to trading on any national securities exchange, shall mean a
Business Day.
"Transfer" shall have the meaning set forth in Section 9.5.
"Transfer Determination" shall have the meaning set forth in
Section 9.2(c).
"Trump" shall have the meaning set forth in the Preamble to this
Agreement.
"Trump AC" shall mean Trump Atlantic City Associates, a New
Jersey general partnership.
"Trump Plaza" shall mean the Trump Plaza Hotel and Casino and the
ancillary structures and other facilities used in connection with the operation
thereof located in Atlantic City, New Jersey.
"Trump's Castle" shall mean Trump's Castle Casino Resort and the
ancillary structures and other facilities used in connection with the operation
thereof located in Atlantic City, New Jersey.
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"Trump's Castle Property" shall have the meaning set forth in
Section 5.3(c) hereof.
"Valuation Date" shall mean any date as of which the value of New
Securities, the Partnership, or any other property is to be determined for
purposes of this Agreement.
"Withholding Tax Act" shall have the meaning set forth in Section
6.6(a) hereof.
Section 1.2. Accounting Terms and Determinations. All references in
this Agreement to "generally accepted accounting principles" or "GAAP" shall
mean generally accepted accounting principles in effect in the United States of
America at the time of application thereof. Unless otherwise specified herein,
all accounting terms used herein shall be interpreted, all determinations with
respect to accounting matters hereunder shall be made, and all financial
statements and certificates and reports as to financial matters required to be
furnished hereunder shall be prepared, in accordance with generally accepted
accounting principles, applied on a consistent basis.
ARTICLE II.
CONTINUATION OF PARTNERSHIP; BUSINESS OF PARTNERSHIP
Section 2.1. Continuation. The parties hereto do hereby agree to
continue the Partnership as a limited partnership pursuant to the provisions of
the Act, for the purposes and upon the terms and conditions hereinafter set
forth. The Partners agree that the rights and liabilities of the Partners shall
be as provided in the Act, except as otherwise herein expressly provided.
Section 2.2. Name.
(a) Subject to the provisions of paragraph (b) below, the name of
the Partnership shall be Trump Hotels & Casino Resorts Holdings, L.P. or
such other name as shall be chosen from time to time by the General Partner
in its sole and absolute discretion. The inclusion of Trump's name in the
name of the Partnership shall not be deemed to be evidence that Trump
participates in the control of the business within the meaning of Section
17-303 of the Act or any comparable provision.
(b) The Partnership shall conduct business and qualify as a
foreign limited partnership under an assumed name, which shall not include
the name of any Limited Partner, in any jurisdiction where the inclusion of
a Limited Partner's name in the name of the Partnership would subject such
Limited Partner to general liability for the Partnership's debts.
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Section 2.3. Character of the Business. The purpose and business of
the Partnership is through its Affiliates and Subsidiaries (a) to conduct casino
gaming and to own and/or operate (i) Trump Plaza, (ii) the Taj Mahal, (iii) the
Indiana Riverboat, (iv) Trump's Castle and (v) such other gaming properties and
facilities as the Partnership may acquire in the future; (b) to do all things
necessary, incidental, desirable or appropriate in connection with the
foregoing; and (c) to otherwise engage in any enterprise or business in which a
limited partnership may engage or conduct under the Act.
Section 2.4. Location of Principal Place of Business. The location of
the principal place of business of the Partnership shall be at 2500 Boardwalk,
Atlantic City, New Jersey 08401, or such other location as shall be selected
from time to time by the General Partner in its sole and absolute discretion.
Section 2.5. Registered Agent and Registered Office. The registered
agent of the Partnership shall be The Corporation Trust Company, or such other
Person as the General Partner may select in its sole and absolute discretion.
The registered office of the Partnership in the State of Delaware shall be 1209
Orange Street, Wilmington, Delaware or such other location as the General
Partner may from time to time select in its sole discretion.
ARTICLE III.
TERM
Section 3.1. Commencement. The Partnership's term commenced upon the
filing of the Certificate with the Secretary of State of Delaware on March 28,
1995.
Section 3.2. Termination. The Partnership shall terminate on the close
of business on the 31st day of December 2035, unless sooner terminated pursuant
to Article VIII hereof.
ARTICLE IV.
CAPITAL CONTRIBUTIONS
Section 4.1. Capital Contributions; Partnership Interests and
Percentage Interests of the Partners.
(a) Prior to the date hereof, (I) the General Partner and the
Initial Limited Partner made or caused to be made the Capital Contributions
set forth opposite their respective names on Schedule II hereto and (II)
the General Partner, the Initial Limited Partner, THCR/LP and TCI made the
Capital Contributions set forth opposite their
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respective names on Schedule III hereto, and THCR/LP and TCI became Limited
Partners of the Partnership. Effective as of the date hereof, the Initial
Limited Partner and TCI-II shall make or cause to be made the Capital
Contributions set forth opposite their respective names on Schedule IV
hereto, and TCI-II shall become a Limited Partner of the Partnership. The
General Partner, the Initial Limited Partner, THCR/LP and TCI hereby
consent to the admission of TCI-II as a Limited Partner of the Partnership.
As of the date hereof, each Partner shall have made or caused to be made
the Capital Contributions set forth opposite such Partner's name on
Schedule I hereto (which shall reflect the aggregate of such Partner's
Capital Contributions as set forth on Schedules II, III and IV), and each
Partner shall have the Percentage Interests in the Partnership set forth
opposite such Partner's name in Schedule I, which Percentage Interests
shall be adjusted as provided in Schedule I as amended by the General
Partner from time to time after the date hereof to the extent necessary to
reflect properly redemptions or conversions of Partnership Interests,
Capital Contributions, the issuance of Additional Partnership Interests or
any other event having an effect on a Partner's Percentage Interest, in
each case to the extent permitted by and in accordance with this Agreement.
Except to the extent specifically set forth in this Agreement with respect
to the General Partner, the Partners shall have no obligation to make any
additional Capital Contributions or loans to the Partnership, even if the
failure to do so could result in the Bankruptcy or insolvency of the
Partnership or any other adverse consequence to the Partnership. All
surtax, documentary stamp tax or other transfer tax that may be imposed as
a result of the foregoing Capital Contributions shall be paid by the
Partnership.
(b) Except as provided by law, (i) no Limited Partner shall be
liable for any deficit in its Capital Account or (ii) except as provided in
Section 6.2(b), be obligated to return any distributions of any kind
received from the Partnership.
(c) So long as the Initial Limited Partner and his Permitted
Holders collectively beneficially own more than 10% of the issued and
outstanding Partnership Interests, the General Partner shall notify such
Partners no less than 60 days prior to any reduction of nonrecourse
indebtedness or other indebtedness which such Partner may include in the
basis of its interest in the Partnership (other than scheduled repayments
of principal) in an amount greater than $10 million during any fiscal year.
Upon receipt of such notice, such Partners shall be permitted, at their own
expense, to undertake any action they desire to increase the "economic risk
of loss," within the meaning of Regulation section 1.752-2, that the
Initial Limited Partner and his Permitted Holders have with respect to the
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liabilities of the Partnership; provided, however, that the Initial Limited
Partner and his Permitted Holders may not undertake any action that would
have, in the reasonable judgment of a majority of the Special Committee, a
material adverse tax impact on the Partnership, the General Partner or
other Limited Partners. If the Initial Limited Partner or his Permitted
Holders wish to undertake any action permitted pursuant to this section
4.1(c), the General Partner shall endeavor to cooperate with such Partners,
provided that, such Partners shall promptly reimburse the General Partner
for any reasonable costs incurred in providing such cooperation.
Section 4.2. Issuance of Additional Partnership Interests and Shares.
(a) The General Partner is authorized to cause the Partnership
from time to time to issue to the General Partner, THCR/LP, the Initial
Limited Partner and his Permitted Holders, TCI, and TCI-II, Partnership
Interests ("Additional Partnership Interests") in one or more classes, or
one or more series of any of such classes, with such designations,
preferences and participating, optional or other special rights, powers and
duties, including rights, powers and duties which may be senior to
interests in the Partnership theretofore issued, for consideration not less
than the Fair Market Value thereof, and on such terms and conditions as
shall be determined by the General Partner and, which special rights,
powers and duties, without limitation, may relate to (i) the allocations of
items of Partnership income, gain, loss, deduction and credit to each such
class or series of Partnership Interests; (ii) the right of each such class
or series of Partnership Interests to share in Partnership distributions;
and (iii) the rights of each such class or series of Partnership Interests
upon dissolution and liquidation of the Partnership.
(b) No Additional Partnership Interests shall be issued to the
General Partner or any Subsidiary or nominee of the General Partner, unless
either
(i) the Additional Partnership Interests are issued in
connection with an issuance of New Securities, the General Partner
complies with all of the provisions of this Agreement, including,
without limitation, Section 7.10(b) and (A) if such New Securities are
Common Stock, such Additional Partnership Interests have terms
equivalent to the Partnership Interest originally issued to the
General Partner hereunder; provided, however, in the case of the
issuance of Common Stock as compensation for services rendered, the
General Partner shall be deemed to have contributed to the Partnership
as a Capital Contribution pursuant to Section 4.3 hereof an amount
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equal to the product of (x) the Fair Market Value of the Common Stock
(as of the Trading Day immediately preceding the date of issue of the
deferred stock to such recipient), times (y) the number of shares of
deferred Common Stock issued by the General Partner to such recipient;
(B) if such New Securities are Stock Options, no Additional
Partnership Interests shall be issued at the time of the issuance of
such Stock Options; provided that, upon the exercise of such Stock
Options, the General Partner shall contribute to the capital of the
Partnership an amount equal to the exercise price of such Stock
Options and shall be deemed to have contributed to the Partnership as
a Capital Contribution pursuant to Section 4.3 hereof an amount equal
to the product of (x) the Fair Market Value of the Common Stock (as of
the Valuation Day immediately preceding the date on which the Stock
Options are exercised), and (y) the number of shares of Common Stock
issued upon the exercise of such Stock Options, and (C) if such New
Securities are other than Common Stock or Stock Options, such
Additional Partnership Interests have conversion, subscription,
purchase and other terms equivalent to the terms of such New
Securities;
(ii) the Additional Partnership Interests are issued to all
Partners in proportion to their respective Percentage Interests;
(iii) Additional Partnership Interests are issued in
connection with any other contribution of value made by the General
Partner to the Partnership not otherwise described in clauses (i) and
(ii) of this Section 4.2(b); or
(iv) the Additional Partnership Interests are issued with
the written consent of all of the Limited Partners given in accordance
with Section 13.2 hereof.
(c) No Person shall have any preemptive, preferential or other
similar right with respect to (i) additional Capital Contributions or loans
to the Partnership; or (ii) issuance or sale of any Partnership Interests.
(d) The General Partner is hereby authorized on behalf of each of
the Partners to amend this Agreement solely to reflect any increase in the
Percentage Interests of any Partner and the corresponding reduction of the
Percentage Interests of the other Partners in accordance with the
provisions of this Section 4.2, and the General Partner shall promptly send
a copy of such amendment to each Limited Partner.
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Section 4.3. Adjustment of Partnership Interests. Except with respect
to a Capital Contribution described in Section 4.2(b)(i)(C), effective on each
date on which a Partner has made a Capital Contribution to the Partnership (each
an "Adjustment Date"), the Percentage Interest of each Partner shall be
adjusted, which adjustment in the case of a Capital Contribution by the Initial
Limited Partner or his Permitted Holders shall be subject to the approval of a
majority of the Special Committee, such that the Percentage Interest of the
Partner shall be equal to a fraction, (a) the numerator of which is equal to the
sum of (i) the Deemed Partnership Interest Value of such Partner (computed as of
the Trading Day immediately preceding the Adjustment Date) and (ii) the amount
of the Capital Contribution contributed by such Partner on such Adjustment Date,
and (b) the denominator of which is equal to the sum of (i) the Deemed Value of
the Partnership (computed as of the Trading Day immediately preceding the
Adjustment Date) and (ii) the amount of the Capital Contribution contributed by
all Partners on such Adjustment Date. The General Partner shall promptly give
each Limited Partner written notice of its Percentage Interest, as adjusted, and
the Gross Asset Value shall be adjusted.
Section 4.4. No Interest on or Return of Capital Contribution. No
Partner shall be entitled to interest on its Capital Contribution or Capital
Account. Except as provided herein or by law, no Partner shall have any right to
demand or receive the return of its Capital Contribution.
Section 4.5. Adjustment for Castle Acquisition. Notwithstanding
anything to the contrary contained in this Agreement, the adjustments to the
Partnership Interest of each Partner with respect to the Castle Acquisition
shall be as set forth in Schedule I and Schedule IV hereof.
ARTICLE V.
ALLOCATIONS AND OTHER TAX AND ACCOUNTING MATTERS
The Net Income, Net Loss and/or other Partnership items shall be
allocated as follows:
Section 5.1. Allocations of Net Income and Net Loss.
(a) Net Income. Except as otherwise provided herein, Net Income
for any fiscal year or other applicable period shall be allocated in the
following order and priority:
(i) First, to the Partners, until the cumulative Net Income
allocated pursuant to this subparagraph (a)(i) for the current and all
prior periods equals the cumulative Net Loss allocated pursuant to
subparagraph (b)(ii) hereof for all prior
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periods, among the Partners in the reverse order that such Net Loss
was allocated to the Permitted Partners pursuant to subparagraph
(b)(ii) hereof.
(ii) Thereafter, the balance of the Net Income, if any,
shall be allocated to the Partners in accordance with their respective
Percentage Interests.
(b) Net Loss. Except as otherwise provided herein, Net Loss of
the Partnership for each fiscal year or other applicable period shall be
allocated as follows:
(i) To the Partners in accordance with their respective
Percentage Interests.
(ii) Notwithstanding subparagraph (b)(i) hereof, to the
extent any Net Loss allocated to a Partner under subparagraph (b)(i)
hereof or this subparagraph (b)(ii) would cause such Partner (a
"Restricted Partner") to have an Adjusted Capital Account Deficit as
of the end of the fiscal year to which such Net Loss relates, such Net
Loss shall not be allocated to such Restricted Partner and instead
shall be allocated to the other Partner(s) (the "Permitted Partners")
pro rata in accordance with their relative Percentage Interests.
Section 5.2. Special Allocations. Notwithstanding any provisions of
Section 5.1, the following special allocations shall be made, to the least
extent necessary to satisfy section 704(b) of the Code and the Regulations
promulgated thereunder, in the following order:
(a) Minimum Gain Chargeback (Nonrecourse Liabilities). If there
is a net decrease in Partnership Minimum Gain for any Partnership fiscal
year (except as a result of conversion or refinancing of Partnership
indebtedness, certain capital contributions or revaluation of the
Partnership property as further outlined in Regulation Sections
1.704-2(d)(4), (f)(2) or (f)(3)), each Partner shall be specially allocated
items of Partnership income and gain for such year (and, if necessary,
subsequent years) in an amount equal to that Partner's share of the net
decrease in Partnership Minimum Gain. The items to be so allocated shall be
determined in accordance with Regulation Section 1.704-2(f)(6). This
paragraph (a) is intended to comply with the minimum gain chargeback
requirement in said section of the Regulations and shall be interpreted
consistently therewith. Allocations pursuant to this paragraph (a) shall be
made in proportion to the respective amounts required to be allocated to
each Partner pursuant hereto.
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(b) Minimum Gain Attributable to Partner Nonrecourse Debt. If
there is a net decrease in Minimum Gain Attributable to Partner Nonrecourse
Debt during any fiscal year (other than due to the conversion, refinancing
or other change in the debt instrument causing it to become partially or
wholly nonrecourse, certain capital contributions, or certain revaluations
of Partnership property (as further outlined in Regulation Section
1.704-2(i)(4))), each Partner shall be specially allocated items of
Partnership income and gain for such year (and, if necessary, subsequent
years) in an amount equal to the Partner's share of the net decrease in the
Minimum Gain Attributable to Partner Nonrecourse Debt. The items to be so
allocated shall be determined in accordance with Regulation Section
1.704-2(i)(4) and (j)(2). This paragraph (b) is intended to comply with the
minimum gain chargeback requirement with respect to Partner Nonrecourse
Debt contained in said section of the Regulations and shall be interpreted
consistently therewith. Allocations pursuant to this paragraph (b) shall be
made in proportion to the respective amounts required to be allocated to
each Partner pursuant hereto.
(c) Qualified Income Offset. In the event a Limited Partner
unexpectedly receives any adjustments, allocations or distributions
described in Regulation Section 1.704-1(b)(2)(ii) (d)(4), (5), or (6), and
such Limited Partner has an Adjusted Capital Account Deficit, items of
Partnership income and gain shall be specially allocated to such Partner in
an amount and manner sufficient to eliminate the Adjusted Capital Account
Deficit as quickly as possible. This paragraph (c) is intended to
constitute a "qualified income offset" under Regulation Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
(d) Nonrecourse Deductions. Nonrecourse Deductions for any fiscal
year or other applicable period shall be allocated to the Partners in
accordance with their respective Percentage Interests. For purposes of
Regulation Section 1.752-3(a)(3), "excess nonrecourse liabilities" shall be
allocated among the Partners in proportion to their respective Percentage
Interests.
(e) Partner Nonrecourse Deductions. Partner Nonrecourse
Deductions for any fiscal year or other applicable period shall be
specially allocated to the Partner that bears the economic risk of loss for
the debt (i.e., the Partner Nonrecourse Debt) in respect of which such
Partner Nonrecourse Deductions are attributable (as determined under
Regulation Section 1.704-2(b) (4) and (i) (1)).
(f) Additional Allocations. Notwithstanding the foregoing, if,
upon final dissolution and termination of the
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Partnership and after taking into account all allocations of Net Income and
Net Loss (and other Tax Items) under this Article V, the distributions to
be made in accordance with the positive Capital Account balances would
result in a distribution that would be different from a distribution under
Section 6.3 hereof, then gross items of income and gain (and other Tax
Items) for the taxable year of the final dissolution and termination (and,
to the extent permitted under section 761(c) of the Code, gross items of
income and gain (and other Tax Items) for the immediately preceding taxable
year) shall be allocated to the Partners to increase or decrease their
Capital Account balances, as the case may be, so that the final
distribution will occur in the same manner as a distribution under Section
6.3 hereof.
Section 5.3. Tax Allocations.
(a) Generally. Subject to paragraphs (b) and (c) hereof, items of
income, gain, loss, deduction and credit to be allocated for income tax
purposes (collectively, "Tax Items") shall be allocated among the Partners
on the same basis as their respective book items.
(b) Sections 1245/1250 Recapture. If any portion of gain from the
sale of property is treated as gain which is ordinary income by virtue of
the application of Code Sections 1245 or 1250 ("Affected Gain"), except to
the extent that the tax treatment of such sale is governed by section
704(c) of the Code as provided under Section 5.3(c) hereof, then (i) such
Affected Gain, to the extent attributable to depreciation or amortization
allowed or allowable for any taxable period subsequent to the date hereof,
shall be allocated among the Partners in the same proportion that the
depreciation and amortization deductions giving rise to the Affected Gain
were allocated and (ii) other Tax Items of gain of the same character that
would have been recognized, but for the application of Code Sections 1245
and/or 1250, shall be allocated away from those Partners who are allocated
Affected Gain pursuant to clause (i) so that, to the extent possible, the
other Partners are allocated the same amount, and type, of capital gain
that would have been allocated to them had Code Sections 1245 and/or 1250
not applied. For purposes hereof, in order to determine the proportionate
allocations of depreciation and amortization deductions for each fiscal
year or other applicable period, such deductions shall be deemed allocated
on the same basis as Net Income or Net Loss for such respective period.
(c) Allocations Respecting Section 704(c).
(i) Property contributed to the Partnership shall be subject
to Section 704(c) of the Code and Regulation Section 1.704-3 so that
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notwithstanding Section 5.2 hereof, taxable gain and loss from
disposition of such property contributed to the Partnership that is
subject to section 704(c) of the Code shall be allocated on a property
by property basis in accordance with the Regulations promulgated
thereunder. Notwithstanding the foregoing, tax depreciation and
amortization with respect to Partnership property contributed by a
Partner (x) pursuant to the Contribution Agreement between the
Partnership and the Initial Limited Partner, dated as of June 12,
1995, (y) pursuant to the 1996 Contribution Agreement among Trump,
TCI, THCR/LP and the Partnership, dated as of April 17, 1996, and (z)
pursuant to the Castle Acquisition Agreement and the documents of
transfer executed in connection therewith, dated as of the date
hereof, shall be allocated on an aggregate basis for purposes of
complying with the requirements of Section 704(c) of the Code, taking
into account, for any particular taxable year for which such
allocation is made, the aggregate amount of depreciation and
amortization allowable with respect to the aggregate basis of such
Partnership properties determined as of the respective date of
contribution (and not taking into account (i) any increase in the
basis of such properties resulting from improvements thereon made by
the Partnership subsequent to the respective date of contribution or
(ii) any additional basis resulting from any new property purchased by
the Partnership in a taxable transaction subsequent to the respective
date of contribution); provided that, the General Partner shall not
specially allocate any Tax Items other than items of depreciation and
amortization referred to in this Section 5.3 (c) (i) to cure for the
effect of the ceiling rule set forth in Regulation Section 1.704-3(b),
except as specifically provided in subparagraph (c) (ii) hereof. The
Partnership shall allocate items of income, gain, loss and deduction
allocated to it by a partnership to the Partner or Partners
contributing the interest or interests in such partnership, so that,
to the greatest extent possible and consistent with the foregoing,
such contributing Partner or Partners are allocated the same amount
and character of items of income, gain, loss and deduction with
respect to such partnership that they would have been allocated had
they contributed undivided interests in the assets owned by such
partnership to the Partnership in lieu of contributing the interest or
interests in the partnership to the Partnership.
(ii) Notwithstanding subparagraph (c)(i) hereof, the
Partnership shall make reasonable curative allocations in accordance
with Regulations Section 1.704-3(c): (A) first, to THCR, THCR/LP and
TCI of Tax Items consisting of depreciation, amortization or other
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cost-recovery deductions that would have been otherwise allocable to
Trump pursuant to subparagraph (c)(i) hereof and the provisions of
Regulations Section 1.704-3 without any curative or remedial
allocations, and then (B) second, to Trump of Tax Items of gross
income as provided below. These reasonable curative allocations shall
be made solely for the purpose of providing THCR, THCR/LP and TCI with
the tax equivalent of the depreciation and amortization deductions
that would have been allocated annually to THCR, THCR/LP and TCI
pursuant to subparagraph (c)(i) hereof had the basis of the interest
held by Trump in Castle Associates as of the date hereof been equal to
$100,294,369, as such amount would have been adjusted to reflect
deductions for the portion of 1996 ending immediately prior to the
date hereof. The Tax Items that shall be allocated pursuant to this
subparagraph are limited to, first, to the extent available, tax
depreciation, amortization and other cost-recovery deductions, and,
second, to the extent necessary to satisfy the purpose described in
the preceding sentence, items of gross income (y) the allocation of
which is expected to have substantially the same effect to THCR,
THCR/LP and TCI as would an allocation to THCR, THCR/LP and TCI of
depreciation and amortization deductions with respect to the property
contributed by Trump pursuant to the Castle Acquisition Agreement and
the documents of transfer executed in connection therewith ("Trump's
Castle Property"), or (z) from the disposition of Trump's Castle
Property.
(iii) The tax allocations made pursuant to this paragraph
(c) shall be reflected only in the tax capital accounts of the
Partners and shall have no effect on their Capital Accounts.
Section 5.4. Books of Account. At all times during the continuance of
the Partnership, the General Partner shall maintain or cause to be maintained
full, true, complete and correct books of account in accordance with GAAP, using
the calendar year as the fiscal and taxable year of the Partnership. In
addition, the Partnership shall keep all records required to be kept pursuant to
the Act.
Section 5.5. Tax Matters Partner. The General Partner is hereby
designated as the Tax Matters Partner within the meaning of Section 6231(a)(7)
of the Code for the Partnership; provided, however, that (i) in exercising its
authority as Tax Matters Partner, the General Partner shall be limited by the
provisions of this Agreement affecting tax aspects of the Partnership; (ii) the
General Partner shall consult in good faith with the Limited Partner
Representative regarding the filing of a Code Section 6227(b) administrative
adjustment request with respect to the Partnership or a Contributed Property
before
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filing such request, it being understood, however, that the provisions hereof
shall not be construed to limit the ability of any Partner, including the
General Partner, to file an administrative adjustment request on its own behalf
pursuant to Section 6227(a) of the Code; (iii) the General Partner shall consult
in good faith with the Limited Partner Representative regarding the filing of a
petition for judicial review of an administrative adjustment request under
Section 6228 of the Code, or a petition for judicial review of a final
partnership administrative judgment under Section 6226 of the Code relating to
the Partnership before filing such petition; (iv) the General Partner shall give
prompt notice to the Limited Partner Representative and any notice partners
under Section 6231 of the Code of the receipt of any written notice that the
Internal Revenue Service or any state or local taxing authority intends to
examine or audit Partnership income tax returns for any year, receipt of written
notice of the beginning of an administrative proceeding at the Partnership level
relating to the Partnership under Section 6223 of the Code, receipt of written
notice of the final Partnership administrative adjustment relating to the
Partnership pursuant to Section 6223 of the Code, and receipt of any request
from the Internal Revenue Service for waiver of any applicable statute of
limitations with respect to the filing of any tax return by the Partnership and
(v) the General Partner shall promptly notify the Limited Partner Representative
if the General Partner does not intend to file for judicial review with respect
to the Partnership.
Section 5.6. Tax Elections and Returns. All elections required or
permitted to be made by the Partnership under any applicable tax law shall be
made by the General Partner in its sole and absolute discretion, except that the
General Partner shall, if requested by a Limited Partner or a transferee, file
an election on behalf of the Partnership pursuant to Section 754 of the Code to
adjust the basis of the Partnership property in the case of a transfer of a
Partnership Interest or distribution from the Partnership, including transfers
made in connection with the exercise of the Rights, made in accordance with the
provisions of this Agreement. The General Partner shall cause the Accountants to
prepare and submit to the Limited Partner Representative on or before March 31st
of each year for review drafts of all federal and state income tax returns of
the Partnership. If the Limited Partner Representative determines that any
modifications to the tax returns of the Partnership should be considered, the
Limited Partner Representative shall, within fifteen (15) days following receipt
of such tax returns from the Accountants or the General Partner, indicate to the
Accountants or to the General Partner the suggested revisions to the tax
returns, which returns shall be resubmitted to the Limited Partner
Representative for its review and approval. The Limited Partner Representative
shall complete its review of the resubmitted returns within ten (10) days after
receipt thereof from the Accountants or the General Partner. The General Partner
shall consult in good faith with the Limited Partner Representative regarding
any proposed
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modifications to the tax returns of the Partnership, provided that, (i) a
majority of the Special Committee shall make the final decision, in light of the
best interest of all Partners, of whether to accept or reject any such proposed
modifications, which decision shall be binding upon the Partnership and all of
the Partners and (ii) no Partner shall, unless otherwise required by applicable
law, take any position for income tax purposes or otherwise that is inconsistent
with such final decision of the majority of the Special Committee. A statement
of the allocation of Net Income or Net Loss of the Partnership shown on the
annual income tax returns prepared by the Accountants shall be transmitted and
delivered to the Limited Partner Representative within ten (10) days of the
receipt thereof by the Partnership. The General Partner shall be responsible for
preparing and filing all federal and state tax returns for the Partnership and
furnishing copies thereof to the Partners, together with required Partnership
schedules showing allocations of tax items, all within the period of time
prescribed by law. The General Partner shall use reasonable efforts to make
available to the Limited Partners final Forms K-1 not later than March 31 of
each year. Notwithstanding the foregoing, (x) Trump shall have the right to
control the resolution of tax matters affecting or relating to Taj Associates in
respect of periods ending on or prior to April 17, 1996, including requiring the
Partnership, Trump AC and Taj Associates to adjust the tax basis of assets held
by Taj Associates in connection with the resolution of such tax matters to the
extent such basis adjustments shall not reduce THCR's share of federal income
tax depreciation and cost recovery deductions in respect of assets held by Taj
Associates as of the date hereof and contributions of the interests in Taj
Associates to Trump AC and (y) Trump shall have the right to control the
resolution of tax matters affecting or relating to Castle Associates in respect
of periods ending on or prior to the date hereof, including requiring the
Partnership, TCHI and Castle Associates to adjust the tax basis of assets held
by Castle Associates in connection with the resolution of such tax matters to
the extent such basis adjustments shall not reduce THCR's share of federal
income tax depreciation and cost recovery deductions in respect of assets held
by Castle Associates as of the date hereof and contributions of the interests in
Castle Associates to the Partnership.
Section 5.7. Tax Certifications.
(a) The Partnership shall deliver to each partner in the manner
provided in Section 16.1, from time to time as necessary to implement
timely the provisions of this Agreement, certificates executed by its chief
financial officers and the Accountants indicating the respective
calculations with respect to, and the amounts of, a Partner's share of Tax
Distributions and the amount of any repayments to the Partnership called
for thereunder, together with supporting schedules in reasonable detail all
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as of each pertinent date and delivered at least 15 business days prior to
the date payment is due.
(b) The certificates delivered pursuant to paragraph (a) hereof
shall be deemed approved by all parties and the Partnership shall act upon
such certificates as provided in this Agreement unless within five business
days of delivery of such certificate a Partner objects to the contents of
any certificate by written notice in detail sufficient to state the basis
for the objection. The Partners shall negotiate in good faith to resolve
such objection.
ARTICLE VI.
DISTRIBUTIONS
Section 6.1. General. Distributions of cash or property may be made in
accordance herewith at such times as the General Partner deems appropriate in
the order provided in this Article VI, subject to the limitations, if any, set
forth in the agreements governing the Partnership's Indebtedness.
Section 6.2. Distributions for Taxes.
(a) The Partnership shall distribute to each Partner in one or
more payments, including payments described in paragraph (b) from time to
time during each year, but in no event later than March 1 of the year
immediately following such year, an aggregate cash sum equal to the product
of (i) Tax Amounts in respect of the taxable year, or portion thereof, for
which such distribution is being made and (ii) the Partner's Percentage
Interest. In addition, the Partnership shall make additional pro rata
distributions as are necessary to reflect adjustments, as determined in
good faith by the board of directors of the General Partner, to any item
affecting Tax Amounts, as reflected on the Partnership's tax return, as it
may be amended from time to time, or as a result of a concluded tax audit.
(b) In addition to the certificates required by Section 5.7, the
Partnership shall furnish the Partners with such information as they shall
reasonably request from time to time respecting estimates of the
Partnership's taxable income or loss (and items thereof) for any fiscal
year or portion thereof. If, in any year, any Partner shall be required to
make federal, state or local estimated income tax payments under applicable
law and regulations, then, at least thirty (30) days prior to the date (the
"Estimated Payment Date") upon which any such payments are due, the
Partnership shall deliver to each Partner the certificates required by
Section 5.7, indicating the amount (the
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"Estimated Payment") of the tax in respect of the respective Tax Amounts
due on the Estimated Payment Date, and not later than fifteen (15) days
prior to such Estimated Payment Date, the Partnership shall pay to such
Partner an amount equal to such Estimated Payment. The amount of each
Estimated Payment received by such Partner shall be treated as a
non-interest bearing advance against the amounts distributable in respect
of such Partner's pro rata share of Tax Amounts to such Partner for such
year. If the aggregate amount of the Estimated Payments received by a
Partner for any year shall exceed the distribution to which such Partner
actually is entitled under paragraph (a) above, such Partner shall
forthwith repay such excess to the Partnership on or before the date set
forth in paragraph (a) above, unless such excess shall have been paid to
taxing authorities in which event such excess shall be applied to reduce
the amount otherwise distributable pursuant to this Section 6.2 in respect
of the Partnership's next succeeding fiscal year or years. Each Partner
shall seek, to the extent entitled thereto, and contribute to the
Partnership any refund of taxes paid by such Partner out of amounts
distributed pursuant to this Section 6.2 promptly after receipt of such
refund.
Section 6.3. Other Distributions. After payments and distributions,
if any, of the amounts set forth in Section 6.2 above, the Partnership may
distribute, in the discretion of a majority of the board of directors of the
General Partner, cash or other property, valued at its Fair Market Value, to the
Partners. Any such distributions shall be made pro rata in accordance with their
Percentage Interests.
Section 6.4. Withholding Payments Required By Law.
(a) Unless treated as a Tax Payment Loan (as hereinafter
defined), any amount paid by the Partnership for or with respect to any
Partner on account of any withholding tax or other tax payable with respect
to the income, profits or distributions of the Partnership pursuant to the
Code, the Regulations, or any state or local statute, regulation or
ordinance requiring such payment (a "Withholding Tax Act") shall be treated
as a distribution to such Partner for all purposes of this Agreement,
consistent with the character or source of the income, profits or cash
which gave rise to the payment or withholding obligation. To the extent
that the amount required to be remitted by the Partnership under the
Withholding Tax Act exceeds the amount then otherwise distributable to such
Partner, unless and to the extent that funds shall have been provided by
such Partner pursuant to the last sentence of this Section 6.4(a), the
excess shall constitute a loan from the Partnership to such Partner (a "Tax
Payment Loan") which shall be payable upon demand and shall bear interest,
from the date that the Partnership makes the payment to the
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relevant taxing authority, at the rate announced from time to time by
Citibank, N.A. (or any successor thereto) as its "prime rate", compounded
monthly (but in no event higher than the highest interest rate permitted by
applicable law). So long as any Tax Payment Loan to any Partner or the
interest thereon remains unpaid, the Partnership shall make future
distributions due to such Partner under this Agreement by applying the
amount of any such distributions first to the payment of any unpaid
interest on such Tax Payment Loan and then to the repayment of the
principal thereof, and no such future distributions shall be paid to such
Partner until all of such principal and interest has been paid in full. If
the amount required to be remitted by the Partnership under the Withholding
Tax Act exceeds the amount then otherwise distributable to a Partner, the
Partnership shall notify such Partner at least five (5) Business Days in
advance of the date upon which the Partnership would be required to make a
Tax Payment Loan under this Section 6.4(a) (the "Tax Payment Loan Date")
and provide such Partner the opportunity to pay to the Partnership, on or
before the Tax Payment Loan Date, all or a portion of such deficit.
(b) The General Partner shall have the authority to take all
actions necessary to enable the Partnership to comply with the provisions
of any Withholding Tax Act applicable to the Partnership and to carry out
the provisions of this Section 6.4. Nothing in this Section 6.4 shall
create any obligation on the General Partner to advance funds to the
Partnership or to borrow funds from third parties in order to make any
payments on account of any liability of the Partnership under a
Withholding Tax Act.
(c) In the event that a Tax Payment Loan is not paid by a
Limited Partner within thirty (30) days after written demand therefor is
made by the General Partner, the General Partner may cause all
distributions that would otherwise be made to such Limited Partner to be
retained by the Partnership, up to the amount necessary to repay such Tax
Payment Loan, including all accrued and unpaid interest thereon, and such
retained distributions shall be applied against, first, the accrued
interest on and, second, the principal of, such Tax Payment Loan.
Section 6.5. Non-Recourse. Notwithstanding any other provisions of
this Agreement, the obligations to make distributions contemplated hereby shall
be limited to the assets of the Partnership and shall be non-recourse with
respect to the Partners and any of their assets.
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ARTICLE VII.
RIGHTS, DUTIES AND RESTRICTIONS OF THE GENERAL PARTNER
Section 7.1. Powers and Duties of General Partner.
(a) The General Partner shall be responsible for the management
of the Partnership's business and affairs. Except as otherwise expressly
provided in this Agreement, and subject to the limitations contained in
Section 7.2 hereof with respect to Major Decisions, the General Partner
shall have, and is hereby granted, full and complete power, authority and
discretion to take such action for and on behalf of the Partnership and in
its name as the General Partner shall, in its sole and absolute discretion,
deem necessary or appropriate to carry out the Partnership's business and
the purposes for which the Partnership was organized. Except as otherwise
expressly provided herein, and subject to Section 7.2 hereof, the General
Partner shall, on behalf of, and at the expense of, the Partnership, have
the right, power and authority:
(i) to manage, control, invest, reinvest, acquire by
purchase, lease or otherwise, sell, contract to purchase or sell,
grant, obtain, or exercise options to purchase, options to sell or
conversion rights, assign, transfer, convey, deliver, endorse,
exchange, pledge, mortgage, abandon, improve, repair, maintain,
insure, lease for any term and otherwise deal with any and all
property of whatsoever kind and nature, and wheresoever situated, in
furtherance of the business or purposes of the Partnership;
(ii) to acquire, directly or indirectly, interests in gaming
ventures of any kind and of any type, and any and all kinds of
interests therein (including, without limitation, Entities investing
therein), and to determine the manner in which title thereto is to be
held; to manage (directly or through management agreements), insure
against loss, protect and subdivide any of such gaming ventures,
interests therein or parts thereof; and to participate in the
ownership, management and operation of any gaming venture;
(iii) to employ, engage, indemnify or contract with or
dismiss from employment or engagement Persons to the extent deemed
necessary or appropriate by the General Partner for the operation and
management of the Partnership's business, including but not limited to
contractors, subcontractors, engineers, architects, surveyors,
mechanics, consultants, accountants, attorneys, insurance brokers and
others;
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(iv) to enter into contracts on behalf of the Partnership,
and to cause all General Partner Expenses to be paid;
(v) to borrow or loan money, obtain or make loans and
advances from and to any Person for Partnership purposes and to apply
for and secure from or accept and grant to any Person credit or
accommodations; to contract liabilities and obligations (including
interest rate swaps, caps and hedges) of every kind and nature with or
without security; and to repay, collect, discharge, settle, adjust,
compromise or liquidate any such loan, advance, obligation or
liability;
(vi) to grant security interests, mortgage, assign, deposit,
deliver, enter into sale and leaseback arrangements or otherwise give
as security or as additional or substitute security or for sale or
other disposition any and all Partnership property, tangible or
intangible, including, but not limited to, personal property and real
estate and interests in land trusts, and to make substitutions
thereof, and to receive any proceeds thereof upon the release or
surrender thereof; to sign, execute and deliver any and all
assignments, deeds, bills of sale and contracts and instruments in
writing; to authorize, give, make, procure, accept and receive moneys,
payments, property notices, demands, protests and authorize and
execute waivers of every kind and nature; to enter into, make,
execute, deliver and receive agreements, undertakings and instruments
of every kind and nature; and generally to do any and all other acts
and things incidental to any of the foregoing or with reference to any
dealings or transactions which the General Partner may deem necessary,
proper or advisable to effect or accomplish any of the foregoing or to
carry out the business and purposes of the Partnership;
(vii) to acquire and enter into any contract of insurance
(including, without limitation, general partner liability and
partnership reimbursement insurance policies) which the General
Partner may deem necessary or appropriate;
(viii) to conduct any and all banking transactions on behalf
of the Partnership; to adjust and settle checking, savings and other
accounts with such institutions as the General Partner shall deem
appropriate; to draw, sign, execute, accept, endorse, guarantee,
deliver, receive and pay any checks, drafts, bills of exchange,
acceptances, notes, obligations, undertakings and other instruments
for or relating to the payment of money in, into or from any account
in
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the Partnership's name; to make deposits into and withdrawals from the
Partnership's bank accounts and to negotiate or discount commercial
paper, acceptances, negotiable instruments, bills of exchange and
dollar drafts;
(ix) to demand, sue for, receive and otherwise take steps to
collect or recover all debts, rents, proceeds, interests, dividends,
goods, chattels, income from property, damages and all other property,
to which the Partnership may be entitled or which are or may become
due the Partnership from any Person; to commence, prosecute or
enforce, or to defend, answer or oppose, contest and abandon all legal
proceedings in which the Partnership is or may hereafter be
interested; and to settle, compromise or submit to arbitration any
accounts, debts, claims, disputes and matters which may arise between
the Partnership and any other Person and to grant an extension of time
for the payment or satisfaction thereof on any terms, with or without
security;
(x) to acquire interests in and contribute money or property
to any limited or general partnerships, joint ventures, Subsidiaries
or other Entities as the General Partner deems desirable and to
conduct the Partnership's business through such Entities;
(xi) to maintain or cause to be maintained the Partnership's
books and records;
(xii) to prepare and deliver, or cause to be prepared and
delivered, all financial and other reports with respect to the
operations of the Partnership, and preparation and filing of all tax
returns and reports;
(xiii) to do all things which are necessary or advisable for
the protection and preservation of the Partnership's business and
assets, and to execute and deliver such further instruments and
undertake such further acts as may be necessary or desirable to carry
out the intent and purposes of this Agreement and as are not
inconsistent with the terms hereof; and
(xiv) in general, to exercise all of the general rights,
privileges and powers permitted to be had and exercised under the Act.
(b) Except as otherwise provided in this Agreement, to the extent
the duties of the General Partner require expenditures of funds to be paid
to third parties, the General Partner shall not have any obligations
hereunder except to the extent that Partnership funds are reasonably
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available to it for the performance of such duties, and nothing herein
contained shall be deemed to require the General Partner, in its capacity
as such, to expend its individual funds for payment to third parties or to
undertake any specific liability or litigation on behalf of the
Partnership.
(c) Notwithstanding the provisions of Section 7.1(a), the
Partnership shall not commingle its funds with those of any Affiliate or
other Entity; funds and other assets of the Partnership shall be separately
identified and segregated; all of the Partnership's assets shall at all
times be held by or on behalf of the Partnership, and, if held on behalf of
the Partnership by another Entity, shall at all times be kept identifiable
(in accordance with customary usages) as assets owned by the Partnership;
and the Partnership shall maintain its own separate bank accounts, payroll
and books of account.
(d) Notwithstanding the provisions of Section 7.1(a), the
Partnership shall pay from its own assets all obligations of any kind
incurred by the Partnership.
Section 7.2. Major Decisions. The General Partner shall not, without
the prior Consent of the Limited Partners undertake, on behalf of the
Partnership, any of the following actions at any time that the Limited Partners
(not including the General Partner) own in the aggregate more than ten percent
(10%) of the issued and outstanding Partnership Interests (the "Major
Decisions"):
(a) make a general assignment for the benefit of creditors or
appoint or acquiesce in the appointment of a custodian, receiver or trustee
for all or any part of the assets of the Partnership;
(b) institute any proceedings for Bankruptcy on behalf of the
Partnership; or
(c) dissolve the Partnership.
Without the consent of all the Limited Partners, the General Partner
shall have no power to do any act in contravention of this Agreement or possess
any Partnership property for other than a Partnership purpose. In addition, the
General Partner shall have no power to do any act in contravention of applicable
law.
Section 7.3. Reimbursement of the General Partner.
(a) Except as provided in this Section 7.3 and elsewhere in this
Agreement (including the provisions of Articles VI and VIII), the General
Partner shall not receive
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payments from, or be compensated for its services as general partner of,
the Partnership.
(b) The General Partner shall be reimbursed on a monthly basis,
or such other basis as the General Partner may determine in its sole and
absolute discretion, for all General Partner Expenses. The Partners agree
that the General Partner Expenses shall be deemed to be incurred on behalf
of the Partnership. The General Partner represents that, except as
permitted by Section 7.4, its sole business is the ownership of direct and
indirect interests in and operation of the Partnership and as such all of
the General Partner Expenses will be incurred for the benefit of the
Partnership.
Section 7.4. Outside Activities of the General Partner. Without the
Consent of the Limited Partners, the General Partner shall not directly or
indirectly enter into or conduct any Outside Business Activity.
Section 7.5. Contracts with Affiliates.
(a) The Partnership may engage in transactions and enter into
contracts with Affiliates which are on terms that are no less favorable to
the Partnership than would be available at the time of such transaction or
transactions in a comparable transaction in arm's-length dealings with an
unaffiliated third party; provided that, the foregoing shall not limit any
of the transactions relating to the Taj Mahal Merger Transaction or the
Castle Acquisition.
(b) Notwithstanding the foregoing:
(i) No compensation shall be paid directly or indirectly to
the Initial Limited Partner by the Partnership or any of its
Subsidiaries, except (A) as set forth in the Executive Agreement, as
in effect on the date of this Agreement, (B) the Services Agreement
between Plaza Associates and the Initial Limited Partner, as in effect
on the date of this Agreement, (C) the Services Agreement between
Castle Associates and TCI-II, as in effect on the date of this
Agreement, or (D) with the approval of the Compensation Committee of
the board of directors of the General Partner; and
(ii) The Partnership and its Subsidiaries shall not enter
into any management, services, consulting or similar agreements with
the Initial Limited Partner or any of his Affiliates, except (A) the
Executive Agreement, as in effect on the date of this Agreement, (B)
the Services Agreement between Plaza Associates and the Initial
Limited Partner, as in effect on the date of this Agreement, (C) the
Services Agreement between Castle Associates and TCI-II, as in
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effect on the date of this Agreement, or (D) employment agreements in
the ordinary course of business, consistent with industry practice,
which are approved by the Compensation Committee of the board of
directors of the General Partner.
Section 7.6. Title to Partnership Assets. Title to Partnership assets,
whether real, personal or mixed and whether tangible or intangible, shall be
deemed to be owned by the Partnership as an Entity, and no Partner, individually
or collectively, shall have any ownership interest in such Partnership assets or
any portion thereof. Title to any or all of the Partnership assets may be held
in the name of the Partnership, the General Partner or one or more nominees, as
the General Partner may determine, including Affiliates of the General Partner.
The General Partner hereby acknowledges and confirms that any Partnership assets
for which legal title is held in the name of the General Partner or any nominee
or Affiliate of the General Partner shall be held by the General Partner for the
use and benefit of the Partnership in accordance with the provisions of this
Agreement; provided, however, that the General Partner shall use its best
efforts to cause beneficial and record title to such assets to be vested in the
Partnership as soon as reasonably practicable. All Partnership assets shall be
recorded as the property of the Partnership in its books and records,
irrespective of the name in which legal title to such Partnership assets is
held.
Section 7.7. Reliance by Third Parties. Notwithstanding anything to
the contrary in this Agreement, any Person dealing with the Partnership shall be
entitled to assume that the General Partner has full power and authority to
encumber, sell or otherwise use in any manner any and all assets of the
Partnership and to enter into any contracts on behalf of the Partnership, and
such Person shall be entitled to deal with the General Partner as if it were the
Partnership's sole party in interest, both legally and beneficially. In no event
shall any Person dealing with the General Partner or its representatives be
obligated to ascertain that the terms of this Agreement have been complied with
or to inquire into the necessity or expedience of any act or action of the
General Partner or its representatives. Each and every certificate, document or
other instrument executed on behalf of the Partnership by the General Partner
shall be conclusive evidence in favor of any and every Person relying thereon or
claiming thereunder that (i) at the time of the execution and delivery of such
certificate, document or instrument, this Agreement was in full force and
effect, (ii) the Person executing and delivering such certificate, document or
instrument was duly authorized and empowered to do so for and on behalf of the
Partnership and (iii) such certificate, document or instrument was duly executed
and delivered in accordance with the terms and provisions of this Agreement and
is binding upon the Partnership.
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Section 7.8. Liability of the General Partner.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, the General Partner shall not be liable for monetary or other
damages to the Partnership, any of the Partners or any assignee of any
interest of any Partner for losses sustained or liabilities incurred as a
result of errors in judgment or of any act or omission if the General
Partner acted in good faith without fraud, gross negligence, willful
misconduct or a breach of the General Partner's fiduciary duties to the
Limited Partners. The General Partner shall not be obligated to make any
additional payments from its own funds or Capital Contributions for the
purpose of returning any capital of the Limited Partners.
(b) Subject to its obligations and duties as General Partner set
forth in Section 7.1 hereof, the General Partner may exercise any of the
powers granted to it by this Agreement and perform any of the duties
imposed upon it hereunder either directly or by or through its agents. The
General Partner shall not be responsible for any act of any such agent
appointed by it in good faith and without gross negligence including,
without limitation, any willful misconduct or gross negligence on the part
of any such agent.
Section 7.9. Officers of the Partnership. The Partnership shall have
such officers, if any, as the General Partner from time to time may in its
discretion elect or appoint. The Partnership may also have such agents, if any,
as the General Partner from time to time may in its discretion choose. Each
officer shall have such duties and powers as are commonly incident to his or her
office and such additional duties and powers as the General Partner may from
time to time designate. Each officer and agent shall retain his or her authority
at the pleasure of the General Partner.
Section 7.10. Covenants of THCR Regarding the Issuance of New
Securities. THCR hereby covenants and agrees that so long as it is a General
Partner:
(a) THCR shall not issue any additional shares of Class B Stock,
except to the Initial Limited Partner and his Permitted Holders.
(b) THCR shall not issue any additional New Securities, other
than pro rata to all holders of Common Stock unless (x) the General Partner
shall cause the Partnership to issue to THCR (or, in the absence of such
issuance, there shall be deemed to have been issued to THCR) Additional
Partnership Interests, as provided in Section 4.2(b)(i) and (y) THCR
contributes the gross proceeds (net of any Issuance Costs not paid by the
Partnership, which
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Issuance Costs shall be deemed to have been contributed to the Partnership
as a Capital Contribution for purposes of Section 4.3), if any, from the
issuance of such New Securities and from the exercise of rights contained
in such New Securities to the Partnership.
(c) In connection with any issuance of New Securities pursuant to
paragraph (b) of this Section 7.10, THCR shall make a Capital Contribution
to the Partnership of the gross proceeds (net of any Issuance Costs not
paid by the Partnership) raised in connection with such issuance (and any
proceeds paid upon conversion or exchange of the New Securities) and the
Partnership shall, as agent for THCR, simultaneously pay the Issuance Costs
to the extent included in General Partner Expenses, and credit such
contribution to the capital account of THCR.
Section 7.11. Other Matters Concerning the General Partner.
(a) The General Partner may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, or other document reasonably believed by it to
be genuine and to have been signed or presented by the proper party or
parties.
(b) The General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers and
other consultants and advisers selected by it, and any act taken or omitted
to be taken in reliance upon the advice or opinion of such Persons as to
matters which the General Partner reasonably believes to be within such
Person's professional or expert competence and in accordance with such
advice or opinion shall be prima facie evidence that such actions have been
done or omitted in good faith.
(c) The General Partner shall have the right, in respect of any
of its powers or obligations hereunder, to act through any of its duly
authorized officers and any attorney or attorneys-in-fact duly appointed by
the General Partner. Each such attorney shall, to the extent provided by
the General Partner in the power of attorney, have full power and authority
to do and perform all and every act and duty which is permitted or required
to be done by the General Partner hereunder.
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ARTICLE VIII.
DISSOLUTION, LIQUIDATION AND WINDING-UP
Section 8.1. Accounting. In the event of the dissolution, liquidation
and winding-up of the Partnership, a proper accounting shall be made of the
Capital Account of each Partner and of the Net Income or Net Loss of the
Partnership from the date of the last previous accounting to the date of
dissolution.
Section 8.2. Distribution on Dissolution. In the event of the
dissolution and liquidation of the Partnership for any reason, the assets of the
Partnership shall be liquidated for distribution in the following rank and
order:
(a) Payment of creditors of the Partnership, including creditors
who are Partners or former Partners;
(b) Establishment of reserves as provided by the Liquidating
Trustee to provide for contingent liabilities, if any; and
(c) To the Partners in accordance with the positive balances in
their Capital Accounts after giving effect to all contributions,
distributions and allocations for all periods.
Whenever the Liquidating Trustee reasonably determines that any reserves
established pursuant to paragraph (b) above are in excess of the reasonable
requirements of the Partnership, the amount determined to be excess shall be
distributed to the Partners in accordance with the provisions of this Section
8.2.
Section 8.3. Timing Requirements.
(a) In the event that the Partnership is "liquidated" within the
meaning of Section 1.704-1(b)(2)(ii)(g) of the Regulations, any and all
distributions to the Partners pursuant to Section 8.2(c) hereof shall be
made no later than the later to occur of (i) the last day of the taxable
year of the Partnership in which such liquidation occurs or (ii) ninety
(90) days after the date of such liquidation.
(b) Notwithstanding the provisions of Section 8.2 hereof which
require liquidation of the assets of the Partnership, but subject to the
order of priorities set forth therein, if prior to or upon dissolution of
the Partnership the Liquidating Trustee determines that an immediate sale
of part or all of the Partnership's assets would be impractical or would
cause undue loss to the Partners, the Liquidating Trustee may, in its sole
and absolute discretion, defer for a reasonable time the
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liquidation of any assets except those necessary to satisfy liabilities of
the Partnership (including to those Partners which are creditors of the
Partnership) and/or, with the Consent of the Limited Partners, distribute
to the Partners, in lieu of cash, as tenants in common and in accordance
with the provisions of Section 8.2 hereof, undivided interests in such
Partnership assets as the Liquidating Trustee deems not suitable for
liquidation. Any such distributions in kind shall be made only if, in the
good faith judgment of the Liquidating Trustee, such distributions in kind
are in the best interest of the Partners, and shall be subject to such
conditions relating to the disposition and management of such properties as
the Liquidating Trustee deems reasonable and equitable and to any
agreements governing the operation of such properties at such time. The
Liquidating Trustee shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as it may
adopt.
Section 8.4. Documentation of Liquidation. Upon the completion of the
dissolution and liquidation of the Partnership, the Partnership shall terminate
and the Liquidating Trustee shall have the authority to execute and record any
and all documents or instruments required to effect the dissolution, liquidation
and termination of the Partnership.
Section 8.5. Dissolution. The Partnership shall be dissolved upon the
occurrence of any of the following events:
(a) the dissolution, liquidation, termination, withdrawal, death,
insanity, retirement or Bankruptcy of the last remaining General Partner or
other event causing dissolution under the Act;
(b) the election to dissolve the Partnership made in writing by
the General Partner with the Consent of the Limited Partners;
(c) the sale or other disposition of all or substantially all of
the assets of the Partnership unless the General Partner elects to continue
the Partnership business for the purpose of the receipt and the collection
of indebtedness or the collection of any other consideration to be received
in exchange for the assets of the Partnership (which activities shall be
deemed to be part of the winding up of the affairs of the Partnership); or
(d) the entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act, which decree is final
and not subject to appeal.
Following an event causing a dissolution of the Partnership, the
Partnership shall be wound-up and terminated
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unless the business of the Partnership is continued by the Partnership in
reconstituted form pursuant to Section 8.6.
Section 8.6. Continuation of the Partnership. The Partners hereby
waive their right of partition and agree, that except as provided in Section
9.7, they shall not do anything that would terminate the Partnership prior to
the expiration of its term without the prior Consent of the Limited Partners.
Upon the bankruptcy, dissolution, liquidation, withdrawal, death, retirement or
insanity of any General Partner (a "Disabling Event"), or any other event of
dissolution under the Act, within 90 days thereafter, all of the remaining
Partners (or, to the extent permitted under the Act, such lesser number or
percentage of the Partners, but in no event less than a majority-in-interest of
the remaining Partners) may (a) elect to reconstitute the Partnership and
continue its business, and (b) in the case of an event as a result of which
there is no longer a party serving as general partner of the Partnership, select
a substitute General Partner, which substitute General Partner accepts such
election and agrees to serve as General Partner. Such successor General Partner
shall thereupon succeed to the rights and obligations of the General Partner as
provided in Section 9.1. A General Partner which has suffered a Disabling Event
shall automatically be converted to a Limited Partner having none of the voting
rights or privileges provided hereunder for the election to reconstitute the
Partnership as provided above.
ARTICLE IX.
TRANSFER AND REDEMPTION OF PARTNERSHIP INTERESTS;
CERTAIN CONSENT RIGHTS
Section 9.1. General Partner Transfer.
(a) Except as set forth in Section 9.7, during such time as the
Limited Partners (not including the General Partner) own in the aggregate
more than ten percent (10%) of the issued and outstanding Partnership
Interests, the General Partner shall not withdraw from the Partnership and
shall not Transfer all or any portion of its interest in the Partnership
without the Consent of the Limited Partners.
(b) Upon any Transfer of a Partnership Interest by the General
Partner in accordance with the provisions of this Section 9.1 (other than
in connection with the granting of a Lien), the transferee General Partner
shall become vested with the powers and rights of the transferor General
Partner, and shall be liable for all obligations and responsible for all
duties of the General Partner, once such transferee has executed such
instruments as may be necessary to effectuate such admission and to confirm
the agreement of such transferee to be bound by all the terms and
provisions of this Agreement with respect to the Partnership Interest
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so acquired. It shall be a further condition to any Transfer otherwise
permitted hereunder (other than in connection with the granting of a Lien)
that the transferee assumes by express agreement (or pursuant to a
statutory merger or consolidation wherein all obligations and liabilities
of the General Partner are assumed by a successor corporation by operation
of law) all of the obligations of the transferor General Partner under this
Agreement with respect to such transferred Partnership Interest and no such
Transfer (other than pursuant to a statutory merger or consolidation
wherein all obligations and liabilities of the transferor General Partner
are assumed by a successor corporation by operation of law) shall relieve
the transferor General Partner of its obligations under this Agreement
without the Consent of the Limited Partners. In connection with any such
permitted Transfer (other than in connection with the granting of a Lien),
the successor General Partner shall be deemed admitted as such immediately
prior to the effective time of the Transfer from the transferor General
Partner and shall continue the business of the Partnership without
dissolution.
(c) If the General Partner withdraws or retires from the
Partnership, in violation of this Agreement, (i) any remaining general
partner may continue the Partnership business or (ii) within 90 days
thereafter, all of the remaining Partners (or, to the extent permitted
under the Act, such lesser number or percentage of the Partners, but in no
event less than a majority-in-interest of the remaining Partners) may elect
to continue the Partnership business pursuant to Section 8.6.
Section 9.2. Transfers by Limited Partners.
(a) No Limited Partner shall have the right, directly or
indirectly, to Transfer all or any part of its Partnership Interest to any
Person without the prior written consent of the General Partner, including
a majority of the Special Committee, which consent shall not be
unreasonably withheld or delayed; provided, however, that no such consent
shall be required for (i) a Transfer of Partnership Interests pursuant to
Article XII hereof, (ii) a Transfer of Partnership Interests to a Permitted
Holder, (iii) the subjecting of a Limited Partnership Interest to a
Permitted Limited Partnership Interest Lien or (iv) the subsequent
foreclosure on such a Permitted Limited Partnership Interest Lien.
(b) It shall be a further condition to any Transfer (other than
the granting of a Permitted Limited Partnership Interest Lien) otherwise
permitted hereunder (including upon the foreclosure of any Lien) that the
transferee assume by operation of law or express agreement
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all of the obligations of the transferor Limited Partner under this
Agreement (including, without limitation, under Article IX) with respect to
such transferred Partnership Interest and no such Transfer (other than
pursuant to a statutory merger or consolidation wherein all obligations and
liabilities of the transferor Partner are assumed by a successor
corporation by operation of law) shall relieve the transferor Partner of
its obligations under this Agreement without the approval of the General
Partner, in its reasonable discretion (it being understood that, without
limiting the generality of Section 9.5, a transferor Partner shall be
deemed relieved from such obligations, without the necessity of any such
approval, in respect of Partnership Interests transferred to the General
Partner pursuant to Article XII hereof). Upon such Transfer, the transferee
shall, subject to Section 9.2(d), be admitted as a substituted Limited
Partner and shall succeed to all of the rights, including rights with
respect to Article XII hereof, of the transferor Limited Partner under this
Agreement in the place and stead of such transferor Limited Partner (which
succession, in the event of a pledge, may be entered into and become
effective at the time of foreclosure or other realization of such pledge).
Any transferee, whether or not admitted as a substituted Limited Partner,
shall succeed to the obligations of the transferor hereunder (unless such
transfer is a pledge, encumbrance, hypothecation or mortgage or except as
otherwise provided herein). Unless admitted as a Limited Partner pursuant
to, and in accordance with, the terms hereof, no transferee, whether by a
voluntary Transfer, by operation of law or otherwise, shall have rights
hereunder, other than (i) to receive such portion of the distributions made
by the Partnership as are allocable to the Percentage Interest transferred
and (ii) under Article XII hereof.
(c) In addition to any other restrictions on transfer provided
herein, no Partnership Interest of a Limited Partner shall be transferable
unless the General Partner has determined by written notification (a
"Transfer Determination") to the transferring Limited Partner, which
Transfer Determination shall not be unreasonably withheld and shall be
deemed given if not refused within ten Business Days of the notice to the
Partnership of a proposed transfer; provided that, the proposed transferor
and transferee have promptly responded in writing to the reasonable
requests, if any, of the General Partner for additional information
sufficient for the General Partner to determine the matters set forth in
this Section 9.2(c), that either (i) such transfer will not cause (x) any
lender to the Partnership to hold in excess of ten (10) percent of the
aggregate Partnership Interests or any other percentage of the Partnership
Interest that would, pursuant to the Regulations under Section 752 of the
Code or any successor provision, cause a loan by such lender to constitute
Partner
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Nonrecourse Debt, (y) a transfer of a Partnership Interest the value of
which would have been less than $20,000 when issued, or (z) a prohibited
transaction (as defined in section 4975(c) of the Code or Section 406 of
ERISA) to occur, or the Partnership to become, with respect to any employee
benefit plan subject to Title 1 of ERISA, a "party in interest" (as defined
in Section 3(14) of ERISA) or a "disqualified person" (as defined in
Section 4975(e)(2) of the Code), or the Partnership to be deemed to hold
"plan assets" (as defined in regulations promulgated by the Department of
Labor) of any employee benefit plan subject to Title I of ERISA, or (ii)
the General Partner has determined to waive one or more of such
requirements as of the date of this Agreement, and may, after the date of
this Agreement, waive one or more of such requirements in its reasonable
discretion after having determined that the transfer will not materially
adversely affect the Partnership, its assets or any Partner, or constitute
a violation of law.
(d) Any transferee of the interest of a Limited Partner pursuant
to this Section 9.2 shall, upon the written request of such transferee and
the transferring Limited Partner and the consent of the General Partner,
including a majority of the Special Committee, which consent shall not be
unreasonably withheld or delayed, be admitted as a Limited Partner under
this Article IX, and the transferring Limited Partner shall, if all of its
Partnership Interests have been Transferred, withdraw from the Partnership.
The Partnership shall not be required in any way to determine the validity
of any written instrument referred to in the immediately preceding
sentence, and shall be authorized to rely upon any such written instrument
signed by the necessary parties.
(e) Any permitted transferee under Section 9.2 who is not
admitted as a substituted Limited Partner in accordance with this Article
IX (including, without limitation, Sections 9.2(b) and 9.2(d)) shall be
considered an assignee for purposes of this Agreement. An assignee shall be
deemed to have had assigned to it, and shall be entitled to receive,
distributions from the Partnership and the share of Net Income, Net Losses,
and any other items of income, gain, loss, deduction and credit of the
Partnership and rights attributable to the Partnership Interests assigned
to such transferee, and shall have the rights of the transferor under
Article XII hereof, but shall not be deemed to be a holder of Partnership
Interests for any other purpose under this Agreement, and shall not be
entitled to vote such Partnership Interests in any matter presented to the
Limited Partners for a vote or consent. In the event any such transferee
desires to make a further assignment of any such Partnership Interests,
such transferee shall be subject to all the provisions of this Article IX
to the same
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extent and in the same manner as any Limited Partner desiring to make an
assignment of Partnership Interests.
(f) The Limited Partners acknowledge that the Partnership
Interests have not been registered under any federal or state securities
laws and, as a result thereof, they may not be sold or otherwise
transferred, except in compliance with such laws. Notwithstanding anything
to the contrary contained in this Agreement, no Partnership Interest may be
sold or otherwise transferred unless such transfer is exempt from
registration under any applicable securities laws or such transfer is
registered under such laws, it being acknowledged that the Partnership has
no obligation to take any action which would cause any such Partnership
Interests to be registered.
(g) Any transferee of ownership of the Partnership Interests
originally held by the Initial Limited Partner shall have the right to
purchase from the transferor of such Partnership Interests a pro rata
portion of the Class B Stock held by such transferor at a purchase price
equal to its par value.
Section 9.3. Certain Additional Restrictions on Transfer. In addition
to any other restrictions on Transfer herein contained, in no event may any
Transfer of a Partnership Interest by any Partner be made (i) to any person or
Entity that lacks the legal right, power or capacity to own a Partnership
Interest; (ii) if such Transfer would cause a termination of the Partnership for
federal income tax purposes, except with the Consent of the Limited Partners,
subject to the provisions of Section 9.7; (iii) if such Transfer would, in the
opinion of counsel to the Partnership, cause the Partnership to cease to be
classified as a partnership for Federal income tax purposes; (iv) if such
Transfer is effectuated through an "established securities market" or a
"secondary market (or the substantial equivalent thereof)" within the meaning of
Section 7704(b) of the Code; (v) if such Transfer would cause the Partnership to
become, with respect to any employee benefit plan subject to Title 1 of ERISA, a
"party-in-interest" (as defined in Section 3(14) of ERISA) or a "disqualified
person" (as defined in Section 4975(e)(2) of the Code); (vi) in violation of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976; or (vii) if such transfer
would, in the opinion of counsel to the Partnership, cause any portion of the
assets of the Partnership to constitute assets of any employee benefit plan
pursuant to Department of Labor Regulations Section 2510.3-101.
Section 9.4. Effective Dates of Transfers.
(a) Transfers pursuant to this Article IX may be made on any day,
but for purposes of this Agreement, the effective date of any such Transfer
shall be (i) the first day of the month in which such Transfer occurred if
such
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Transfer occurred on or prior to the fifteenth calendar day of a month, or
(ii) the first day of the month immediately following the month in which
such transfer occurred, if such Transfer occurred after the fifteenth
calendar day of a month, or such other date determined by the General
Partner pursuant to such convention as may be administratively feasible and
consistent with applicable law.
(b) If any Partnership Interest is Transferred (other than the
granting of a Permitted Limited Partnership Interest Lien) in compliance
with the provisions of this Article IX, on any day other than the first day
of a calendar year, then Net Income, Net Loss, each item thereof and all
other items attributable to such Partnership Interest for such year shall
be allocated to the transferor Partner, or the redeemed or selling
Partners, as the case may be, and, in the case of a Transfer other than a
redemption or the granting of a Permitted Limited Partnership Interest
Lien, to the transferee Partner, by taking into account their varying
interests during such year in accordance with Section 706(d) of the Code,
using the interim closing of the books method. Solely for purposes of
making such allocations, each of such items for the calendar month in which
the effective date of a Transfer (other than the granting of a Lien) occurs
shall be allocated to the transferor or transferee Partner as provided in
Section 9.4(a), and for purposes of Section 9.4(a), the transferee shall be
the owner of the Partnership Interest at the close of business on any day
on which a Transfer takes place.
Section 9.5. Transfer.
(a) The term "Transfer," when used in this Article IX with
respect to a Partnership Interest, shall be deemed to refer to a
transaction by which a Partner purports to assign its Partnership Interest
or any portion thereof to another Person, and includes a sale, assignment,
gift, pledge, encumbrance, hypothecation, mortgage, exchange, granting of a
Lien or any other disposition by law or otherwise; provided, however, that
the term "Transfer", when used in this Article IX (except when such term is
used in Section 9.4) does not include any acquisition of Partnership
Interests from a Limited Partner by the General Partner or the Partnership
pursuant to Article XII.
(b) The Limited Partner has consented, in Section 4.1, to certain
issuances of Partnership Interests, and the foregoing provisions of this
Article IX, to the extent that they would, but for such Section or this
subsection (b), be applicable to such Transfers, are hereby deemed
satisfied or waived.
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(c) The General Partner is hereby authorized on behalf of each of
the Partners to amend this Agreement (including the schedules hereto) to
reflect the admission of any transferee of a Partnership Interest as a
substituted Limited Partner in accordance with the provisions of this
Article IX.
(d) No Partnership Interest shall be Transferred, in whole or in
part, except in accordance with the terms and conditions set forth in this
Article IX. Any Transfer or purported Transfer of a Partnership Interest
not made in accordance with this Article IX shall be null and void.
Section 9.6. Redemption of Partnership Interest. The Partnership shall
not redeem, repurchase, or otherwise acquire Partnership Interests from the
Partners, except (i) for redemptions of Partnership Interests pro rata based on
the Partners' Percentage Interests, (ii) for redemptions of Partnership
Interests as provided in Article XV, and (iii) with the Consent of the Limited
Partners.
Section 9.7. Certain Consent Rights. Notwithstanding any other
provision of this Agreement to the contrary, (A) the General Partner shall have
the right to enter into, effect, and/or consummate, and, (B) the Limited
Partners, as such, shall not have the right to approve, consent, or vote with
respect to: (x) any merger, consolidation, combination, sale of all or
substantially all of the assets or stock of the General Partner, the sale of all
of the General Partner's interest in the Partnership, or any similar
transaction, which, in the case of this clause (x), if and only to the extent
required by applicable law, has been approved by the stockholders of the General
Partner, or (y) any merger, consolidation, combination, sale of all or
substantially all of the assets of the Partnership, or any similar transaction,
which in the case of this clause (y) has been approved by the stockholders of
the General Partner; provided, however, that if any transaction is determined to
be described in both clauses (x) and (y) immediately above, the imposition of
any requirement that the stockholders of the General Partnership approve such
transaction shall be governed solely by clause (x) and not by clause (y).
ARTICLE X.
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS
Section 10.1. No Participation in Management. No Limited Partner, in
its capacity as such, shall take part in the management of the Partnership's
business, transact any business in the Partnership's name or have the power to
sign documents for or otherwise bind the Partnership. Any rights expressly
granted to the Limited Partners in this Agreement shall not be deemed to
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be rights relating to the management of the Partnership's business.
Section 10.2. Bankruptcy of a Limited Partner. The Bankruptcy of any
Limited Partner shall not cause a dissolution of the Partnership, but the rights
of such Limited Partner to share in the Net Profits or Net Losses of the
Partnership and to receive distributions of Partnership funds shall, on the
happening of such event, devolve on its successors or assigns, subject to the
terms and conditions of this Agreement, and the Partnership shall continue as a
limited partnership. In no event, however, shall such assignee(s) become a
substituted Limited Partner except in accordance with Article IX hereof.
Section 10.3. No Withdrawal. No Limited Partner may withdraw from the
Partnership without the prior written consent of the General Partner, other than
as provided in Article IX of this Agreement; provided that, the foregoing
provisions of this Section 10.3 shall not apply to a withdrawal from the
Partnership upon a Transfer pursuant to Article XII hereof, such withdrawal to
be effective immediately without any requirement for consent thereto by the
General Partner.
Section 10.4. Conflicts. The Partners recognize that the Limited
Partners and their Affiliates have or may have other business interests,
activities and investments, some of which may be in conflict or competition with
the business of the Partnership, and that such Persons are entitled to carry on
such other business interests, activities and investments. Without limiting the
foregoing in deciding whether to take any actions in such capacity, such Limited
Partners and their Affiliates shall be under no obligation to consider the
separate interests of the Partnership and shall have no fiduciary obligations to
the Partnership and shall not be liable for monetary damages for losses
sustained, liabilities incurred or benefits not derived by the other Partners in
connection with such actions. The Limited Partners and their Affiliates may
engage in or possess an interest in any other business or venture of any kind,
independently or with others, on their own behalf or on behalf of other entities
with which they are affiliated or associated, and such persons may engage in any
activities, whether or not competitive with the Partnership, without any
obligation to offer any interest in such activities to the Partnership or to any
Partner. Neither the Partnership nor any Partner shall have any right, by virtue
of this Agreement, in or to such activities, or the income or profits derived
therefrom, and the pursuit of such activities, even if competitive with the
business of the Partnership, shall not be deemed wrongful or improper.
Notwithstanding the foregoing, (i) the provisions of this Section 10.4 shall not
negate or impair any other agreement between one or more of the Limited Partners
and the General Partner, the Partnership, or any of their respective
Subsidiaries, and (ii) in conducting an Outside Business Activity, a Limited
Partner will to the best of its ability and consistent with its fiduciary duty
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to such Outside Business Activity, conduct such Outside Business Activity in a
commercially reasonable manner so that on an annual overall basis the
Partnership is not discriminated against.
Section 10.5. Provision of Information.
(a) Annual and Periodic Reports.
(i) Annual Statement. The General Partner shall, as soon as
practicable, but in no event later than 105 days after the close of
each fiscal year, cause to be furnished to each Partner Audited
Financial Statements for the Partnership, or of the General Partner if
such statements are prepared solely on a consolidated basis with the
General Partner, for the immediately preceding fiscal year of the
Partnership.
(ii) Quarterly Reports. The General Partner shall, as soon
as available and, in any event, within 45 days after the end of each
of the first three fiscal quarters of the Partnership's fiscal year,
furnish to each Partner the internally prepared unaudited combined
balance sheet of the Partnership and its combined Subsidiaries as of
the end of such quarter and the combined statements of profit and
loss, partners' capital and cash flow for such quarter and for the
portion of the fiscal year then ending (all in reasonable detail),
accompanied by a certificate of the General Partner or of the chief
financial officer of the Partnership to the effect that, except for
the lack of required footnotes, such balance sheets and statements
have been properly prepared in accordance with GAAP and fairly present
the financial condition of the Partnership and its combined
Subsidiaries as of the date thereof and the results of their
operations for the period covered thereby, subject only to normal
year-end audit adjustments. In lieu of the foregoing, the General
Partner may furnish to each Partner a copy of the Partnership's
quarterly report on Form 10-Q, if the Partnership is then obligated to
file such report with the SEC pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended.
(b) In addition to other rights provided by this Agreement or by
the Act, each Limited Partner shall have the right, for a purpose
reasonably related to such Limited Partner's interest as a limited partner
in the Partnership (the interests of a lender to such Limited Partner
having a Permitted Limited Partnership Interest Lien on its Partnership
Interests being so related), upon written demand with a statement of the
purpose of such demand:
(i) to obtain a copy of the most recent annual and quarterly
reports and current reports on
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Form 8-K filed with the SEC by the General Partner pursuant to the
Securities Exchange Act of 1934, as amended;
(ii) to obtain a copy of the Partnership's federal, state
and local income tax returns for each fiscal year of the Partnership;
(iii) to obtain a current list of the name and last known
business, residence or mailing address of each Partner;
(iv) to obtain a copy of this Agreement and the Certificate
and all amendments thereto, together with executed copies of all
powers of attorney pursuant to which this Agreement, the Certificate
and all amendments thereto have been executed; and
(v) such other information regarding the business, affairs
and condition, financial or otherwise, of the Partnership and its
Subsidiaries as such Partner may reasonably request.
(c) Notwithstanding any other provision of this Section 10.5, the
General Partner may keep confidential from the Limited Partners, for such
period of time as the General Partner determines in its sole and absolute
discretion to be reasonable, any information that the Partnership is
required by law or by agreements with an unaffiliated third party to keep
confidential.
Section 10.6. Limited Partner Representative. The Initial Limited
Partner is hereby appointed as the Limited Partner Representative. A
Majority-in-Interest of the Limited Partners shall have the right, at any time,
within their sole discretion, to replace the Limited Partner Representative, or
to appoint a temporary substitute to act for a Limited Partner Representative
unable to act. Any appointment of a Limited Partner Representative made
hereunder shall remain effective until rescinded in a writing delivered to the
General Partner via certified mail, registered overnight express mail or
telecopy, and the General Partner shall have the right and authority to rely
(and shall be fully protected in so doing) on the actions taken and directions
given by such Limited Partner Representative, without any further evidence of
their authority or further action by the Limited Partners. The General Partner
shall send copies of all notices received by it pursuant to Section 5.6 to each
Limited Partner requesting the same.
Section 10.7. Power of Attorney.
(a) Each Limited Partner constitutes and appoints the General
Partner, any Liquidating Trustee and authorized officers and
attorneys-in-fact of each, and each of those
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acting singly, in each case with full power of substitution, as its true
and lawful agent and attorney-in-fact, with full power and authority in its
name, place and stead to: execute, swear to, acknowledge, deliver, file and
record in the appropriate public offices (i) all certificates, documents
and other instruments (including, without limitation, this Agreement and
the Certificate and all amendments or restatements thereof) that the
General Partner or the Liquidating Trustee deems appropriate or necessary
to form, qualify or continue the existence or qualification of the
Partnership as a limited partnership (or a partnership in which the limited
partners have limited liability) in the State of Delaware and in all other
jurisdictions in which the Partnership may conduct business or own
property; (ii) all instruments that the General Partner deems appropriate
or necessary to reflect any amendment, change, modification or restatement
of this Agreement in accordance with its terms; (iii) all conveyances and
other instruments or documents that the General Partner deems appropriate
or necessary to reflect the dissolution and liquidation of the Partnership
pursuant to the terms of this Agreement, including, without limitation, a
certificate of cancellation; and (iv) all instruments relating to the
admission, withdrawal, removal or substitution of any Partner pursuant to
the provisions of this Agreement or the Capital Contribution of any
Partner.
(b) The foregoing power of attorney is irrevocable and a power
coupled with an interest, in recognition of the fact that each of the
Partners will be relying upon the power of the General Partner to act as
contemplated by this Agreement in any filing or other action by it on
behalf of the Partnership, and it shall survive the death or incompetency
of a Limited Partner to the effect and extent permitted by law, subsequent
incapacity of any Limited Partner and the transfer of all or any portion of
such Limited Partner's Partnership Interests and shall extend to such
Limited Partner's heirs, successors, assigns and personal representatives.
(c) Nothing contained in this Section 10.7 shall be construed as
authorizing the General Partner to amend this Agreement except in
accordance with Article XIII hereof.
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ARTICLE XI.
INDEMNIFICATION; EXCULPATION
Section 11.1. Indemnification.
(a) To the fullest extent permitted by law, the Partnership shall
and does hereby indemnify an Indemnitee from and against any and all
losses, claims, damages, liabilities, joint or several, expenses (including
reasonable legal fees and expenses), judgments, fines, settlements, and
other amounts (collectively "Damages") arising from any and all claims,
demands, actions, suits or proceedings, civil, criminal, administrative or
investigative, that relate to the operations of the Partnership as set
forth in this Agreement in which any Indemnitee may be involved, or is
threatened to be involved, as a party or otherwise, unless it is
established that: (i) the act or omission of the Indemnitee was material to
the matter giving rise to the proceeding and was committed with fraud,
gross negligence, willful misconduct or in breach of the General Partner's
fiduciary duties to the Limited Partners; (ii) the Indemnitee actually
received an improper personal benefit in money, property or services; or
(iii) in the case of any criminal proceeding, the Indemnitee had reasonable
cause to believe that the act or omission was unlawful. The termination of
any proceeding by judgment, order or settlement shall not create a
presumption that the Indemnitee did not meet the requisite standard of
conduct set forth in this Section 11.1(a). Any indemnification pursuant to
this Section 11.1 shall be made only out of the assets of the Partnership
and no Partner shall have any personal liability therefor.
(b) Reasonable expenses incurred by an Indemnitee may be paid or
reimbursed by the Partnership in advance of the final disposition of the
proceeding upon receipt by the Partnership of (i) a written affirmation by
the Indemnitee of the Indemnitee's good faith belief that the standard of
conduct necessary for indemnification by the Partnership, as authorized in
this Section 11.1, has been met, and (ii) a written undertaking by or on
behalf of the Indemnitee to repay the amount paid or reimbursed if it shall
ultimately be determined that such standard of conduct has not been met.
(c) The indemnification provided by this Section 11.1 shall be in
addition to any other rights to which an Indemnitee may be entitled under
any agreement, as a matter of law or otherwise, and shall continue as to an
Indemnitee who has ceased to serve in such capacity.
(d) The Partnership may purchase and maintain insurance, on
behalf of the Indemnitees, against any
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liability that may be asserted against or expenses that may be incurred by
such Person in connection with the Partnership's activities, regardless of
whether the Partnership would have the power to indemnify such Person
against such liability under the provisions of this Agreement.
(e) For purposes of this Section 11.1, the Partnership shall be
deemed to have requested an Indemnitee to serve as fiduciary of an employee
benefit plan whenever the performance by it of its duties to the
Partnership also imposes duties on, or otherwise involves services by, it
to the plan or participants or beneficiaries of the plan; excise taxes
assessed on an Indemnitee with respect to an employee benefit plan pursuant
to applicable law shall constitute fines within the meaning of this Section
11.1; and actions taken or omitted by the Indemnitee with respect to an
employee benefit plan in the performance of its duties for a purpose
reasonably believed by it to be in the interest of the participants and
beneficiaries of the plan shall be deemed to be for a purpose which is not
opposed to the best interests of the Partnership.
(f) An Indemnitee shall not be denied indemnification in whole or
in part under this Section 11.1 solely because the Indemnitee had an
interest in the transaction with respect to which the indemnification
applies.
(g) The provisions of this Section 11.1 are for the benefit of
the Indemnitees, their heirs, successors, assigns personal representatives
and administrators, and shall not be deemed to create any rights for the
benefit of any other Persons.
Section 11.2. Indemnification Procedures.
(a) If a claim for indemnification is asserted against the
Partnership under Article XI, the Partnership shall have the right, at its
own expense, (i) subject to the Partnership's obligations to pay all
amounts under Section 11.1(a) to participate in the defense of any Action
which resulted in the claim for indemnification or (ii) to assume at any
time the defense of any Action which resulted in the claim for
indemnification. Such assumption of the defense by the Partnership shall be
an admission that the Action is a proper subject of indemnification
pursuant to this Article XI. The Indemnitee at any time may elect to
participate in (but not conduct or control) such defense at its expense,
and the Partnership shall not be responsible for the Indemnitee's costs of
participation (including attorneys, accountants, and in-house counsel
fees). In either event, the parties shall cooperate in the defense of such
Action. The Partnership in the defense of any Action shall not,
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except with the consent of the Indemnitee claiming indemnification under
Article XI, cause to be entered any judgment or enter into any settlement
which provides for the release of the Partnership or any other Partner but
does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnitee of a release equivalent to that
provided to the Partnership or any other Partner.
(b) The Indemnitee claiming indemnification under Article XI may,
at any time upon written notice to the Partnership, elect to conduct or
control its own defense in such Action (as opposed to merely participating
in the defense with counsel for the Partnership), but in such event,
provided that the Partnership has theretofore undertaken the defense of the
Indemnitee pursuant to Section 11.2(a) and subject to Section 11.2(c), such
Indemnitee shall cease to have the indemnification rights under Article XI,
and the Partnership shall no longer be obligated to continue the defense of
the Limited Partner, with respect to such Action.
(c) If the Partnership has assumed the defense of any Action
under clause (ii) of the first sentence of Section 11.2(a), and if at any
time there exists a conflict of interest in defending both the Partnership
and the Indemnitee, as determined in the reasonable judgment of counsel to
the Indemnitee, the Indemnitee shall so notify the Partnership and the
Indemnitee may, upon written notice to the Partnership delivered promptly
thereafter, elect to defend itself in such Action with counsel selected by
the Indemnitee, but reasonably acceptable to the Partnership, at the
expense of the Partnership. Following the assumption of defense by an
Indemnitee under this Section 11.2(c), an Indemnitee may not enter into any
settlement without the prior written consent of the Partnership, which
consent shall not be unreasonably withheld.
Section 11.3. Exculpation. No officer, employee or agent shall have
any liability to the Partnership or any Partner for monetary damages for any
action taken, or any failure to take any action, in such capacity, except
liability for (a) any improper financial benefit received by such Person; (b) an
intentional infliction of harm on the Partnership or any Partner; (c) acts or
omissions not in good faith or which involve intentional misconduct; and (d) any
knowing violation of law.
Section 11.4. No Liability of Directors and Others. Notwithstanding
anything to the contrary contained herein, no recourse shall be had by the
Partnership or any Partner against any director, shareholder, officer, employee,
agent or attorney of the General Partner for any act or omission of the General
Partner or any obligation or liability of the General Partner under this
Agreement, and none of the foregoing shall have any
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personal liability for or with respect to any of the foregoing; provided that,
the foregoing shall not relieve any officer or director of the General Partner
of any liability in his capacity as such.
ARTICLE XII.
RIGHTS UNDER THE EXCHANGE RIGHTS AGREEMENT
THCR, the Initial Limited Partner, TCI and TCI-II have entered into
the Exchange Rights Agreement, substantially in the form of Exhibit A to this
Agreement.
Section 12.1. Transfer Pursuant to Exchange Rights Agreement.
Notwithstanding anything to the contrary contained in this Agreement, the
Partners hereby consent to the Transfer of Partnership Interests pursuant to the
terms of such Exchange Rights Agreement, without compliance with any of the
other provisions of this Agreement.
Section 12.2. Subject to the Exchange Rights Agreement. The Initial
Limited Partner, TCI, TCI-II and all their respective subsequent transferees
shall be entitled to the benefits of, and subject to the burdens of, the
Exchange Rights Agreement, including, but not limited to, the "Conversion Right"
of the Company to require any such transferee (other than the Initial Limited
Partner and his Permitted Holders) to exchange its Partnership Interests for
shares of Common Stock on the terms and subject to the conditions set forth
therein.
ARTICLE XIII.
AMENDMENT OF PARTNERSHIP AGREEMENT, MEETINGS
Section 13.1. Amendments.
(a) This Agreement may not be amended unless such amendment is
approved by the General Partner, with the consent of a majority of the
Special Committee, and by the Consent of the Limited Partners, except as
provided below in this Section 13.1.
(b) Notwithstanding Section 13.1(a), the General Partner, with
the consent of a majority of the Special Committee, shall have the power,
without the Consent of the Limited Partners but after five Business Days
notice to the Limited Partners, to amend this Agreement as may be required
to facilitate or implement any of the following purposes:
(i) to add to the obligations of the General Partner or
surrender any right or power granted
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to the General Partner for the benefit of the Limited Partners;
(ii) to reflect the admission, substitution, termination, or
withdrawal of Partners after the date hereof in accordance with
Article IX or XII of this Agreement; provided that, the General
Partner shall not be required to give the notice referred to in the
first paragraph of this subsection (b) in respect of a transfer of
Partnership Interests pursuant to Article XII hereof;
(iii) to reflect a change that is of an inconsequential
nature and does not adversely affect the Limited Partners, or to cure
any ambiguity, correct or supplement any provision in this Agreement
not inconsistent with law or with other provisions, or make other
changes with respect to matters arising under this Agreement that will
not be inconsistent with law or with the provisions of this Agreement;
and
(iv) to satisfy any requirements, conditions, or guidelines
contained in any order, directive, opinion, ruling or regulation of a
federal or state agency or contained in federal or state law.
The General Partner will provide notice to the Limited Partners
promptly after any action under this Section 13.1(b) is taken.
(c) Notwithstanding Sections 13.1(a) and (b) hereof, this
Agreement shall not be amended without the prior written consent of each
Partner adversely affected if such amendment would (i) convert a Limited
Partner's interest in the Partnership into a general partner's interest,
(ii) modify the limited liability of a Limited Partner, (iii) alter rights
of the Partners to receive allocations and distributions pursuant to
Articles V and VI hereof, (iv) alter or modify the Rights set forth in
Article XII except in compliance therewith, (v) amend this Section 13.1(c),
(vi) alter such Partner's rights to transfer its Partnership Interests, or
(vii) amend Section 4.1(c), 7.8, 10.8, Article XI or 13.2(d). Further, no
amendment may alter the restrictions on the General Partner's authority set
forth in Section 7.2 without the Consent specified in that section.
(d) Notwithstanding Section 13.1(a) hereof, no amendment of
Section 7.4 shall be effective unless appropriate corresponding
modifications are made to Article XII and the Registration Rights Agreement
to preserve the financial terms of the Limited Partners' rights thereunder.
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(e) Any amendment, modification or repeal of Section 7.8 or
Article XI or any provision thereof shall be prospective only and shall not
in any way affect the rights to indemnification and limitations on the
General Partner's liability to the Partnership and the Limited Partners as
in effect immediately prior to such amendment, modification or repeal with
respect to claims arising from or relating to matters occurring, in whole
or in part, prior to such amendment, modification or repeal, regardless of
when such claims may arise or be asserted.
Section 13.2. Meetings of the Partners; Notices to Partners.
(a) Meetings of the Partners may be called by the General Partner
or by any Limited Partner to act on any matter specified herein or in the
Act to be voted on or consented to by the Partners. The call shall state
the nature of the business to be transacted. Notice of any such meeting
shall be given to all Partners not less than seven (7) Business Days prior
to the date of such meeting. Partners may vote in person or by proxy at
such meeting. Whenever the vote or Consent of the Limited Partners is
permitted or required under this Agreement, such vote or Consent may be
given at a meeting of Partners or may be given in accordance with the
procedure prescribed in Section 13.2(b) hereof. Except as otherwise
expressly provided in this Agreement, the consent of holders of a majority
of the Partnership Interests shall control.
(b) Any action required or permitted to be taken at a meeting of
the Partners may be taken without a meeting if a written consent setting
forth the action so taken is (i) signed by Partners holding a majority of
the Partnership Interests of the Partners (or such other percentage as is
expressly required by this Agreement) and (ii) in the case of any matter
that would otherwise require the approval of a majority of the Special
Committee, such consent is approved by a majority of the Special Committee.
Such consent may be in one instrument or in several instruments, and shall
have the same force and effect as a vote of a majority of the Partnership
Interests of the Partners (or such other percentage as is expressly
required by this Agreement). Such consent shall be filed with the General
Partner and copies thereof delivered to all Partners. An action so taken
shall be deemed to have been taken at a meeting held on the effective date
so certified.
(c) Each Limited Partner may authorize any Person or Persons to
act for him by proxy on all matters in which a Limited Partner is entitled
to participate, including waiving notice of any meeting, or voting or
participating at a meeting. Every proxy must be signed by the Limited
Partner or his attorney-in-fact. No proxy shall be valid
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after the expiration of 11 months from the date thereof unless otherwise
provided in the proxy. Every proxy shall be revocable at the pleasure of
the Limited Partner executing it. No such proxy and no such revocation
shall be effective unless a copy thereof has been delivered to the General
Partner.
(d) Whenever the Consent of the Limited Partners is required
hereunder, the General Partner shall provide a notice to each Partner who
is a Limited Partner on the date the notice is given setting forth the
matter(s) as to which it proposes to seek such Consent at least five (5)
Business Days in advance of the date upon which such Consent is sought.
ARTICLE XIV.
CERTIFICATE OF INTEREST
Section 14.1. Form of Certificate of Interest. The interest of each
Partner in the Partnership shall be evidenced by a Certificate of Interest (each
a "Certificate of Interest"). A certificate transfer ledger (the "Certificate
Transfer Ledger") recording the issue and transfer of Certificates of Interest
in the Partnership shall be maintained at the principal office of the
Partnership. Each such Certificate of Interest shall be serially numbered and
shall be issued by the General Partner to the lawful holder of an interest in
the Partnership, upon payment of the full amount of the Capital Contributions
then due with respect to the Partnership Interest represented by such
Certificate of Interest. All Certificates of Interest shall be executed in the
name of the Partnership by the General Partner. Each Certificate of Interest
shall state on its face the name of the registered holder thereof, and shall
bear, on both sides thereof, a statement of the restrictions imposed by Section
105 of the Casino Control Act. Effective on the date hereof, the General
Partner, the Initial Limited Partner, THCR/LP and TCI shall tender their
respective Certificates of Interest (which shall be canceled) for new
Certificates of Interest evidencing, as of the date hereof, their respective
interests in the Partnership.
Section 14.2. Transfers of Certificates of Interest. Certificates of
Interest in the Partnership may be transferred by the lawful holders thereof
only in connection with the pledge or transfer of all or part of the interest of
such holder in the Partnership, and only in accordance with the provisions of
this Agreement. All such transfers shall be effected by duly executed and
acknowledged instruments of assignment, each of which shall be duly recorded on
the Certificate Transfer Ledger. No effect shall be given to any purported
assignment of a Certificate of Interest, or transfer of the interest in the
Partnership evidenced thereby, unless such assignment and transfer shall be
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in compliance with the terms and provisions of this Agreement, and any attempted
assignment or transfer in contravention hereof shall be ineffectual.
Section 14.3. Lost, Stolen, Destroyed or Mutilated Certificates of
Interest. In the event that a Certificate of Interest shall be lost, stolen,
destroyed or mutilated, the Partnership may cause a replacement Certificate of
Interest to be issued upon such terms and conditions as shall be fixed by the
General Partner, including, without limitation, provision for indemnity and the
posting of a bond or other adequate security as security therefor. No
replacement Certificate of Interest shall be issued to any person unless such
person has surrendered the Certificate of Interest to be replaced, or has
complied with the terms of this Section 14.3.
Section 14.4. Inspection of Certificate Transfer Ledger. The
Certificate Transfer Ledger containing the names and addresses of all Partners
and the interest of each Partner in the Partnership shall be open to the
inspection of the Partners at the principal office of the Partnership during
usual business hours upon request of any Partner. Such Certificate Transfer
Ledger shall, in addition, be available for inspection by the CCC and the
Division of Gaming Enforcement of the State of New Jersey and each of their
respective authorized agents at all reasonable times without notice.
ARTICLE XV.
REGULATORY REQUIREMENTS
Section 15.1. Applicable Regulatory Authority and CCC Regulation.
Notwithstanding anything to the contrary in this Agreement:
(a) This Agreement will be deemed to include all provisions
required by the Casino Control Act, the Indiana Riverboat Act, and the
Mississippi Gaming Control Act and to the extent that anything contained in
this Agreement is inconsistent with such acts, the provisions of such acts
shall govern. All provisions of the Casino Control Act, the Indiana
Riverboat Act, and the Mississippi Gaming Control Act to the extent
required by law to be included in this Agreement, are incorporated herein
by reference as if fully restated in this Agreement.
(b) If the continued holding of a Partnership Interest by any
Partner will disqualify the Partnership to continue as the owner and
operator of a casino licensed in the State of New Jersey under the
provisions of the Casino Control Act, such Partner shall enter into such
escrow, trust or similar arrangement as may be required by the CCC under
the circumstances. It is the intent of this Section
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15.1 to set forth procedures to permit the Partnership to continue, on an
uninterrupted basis, as the owner and operator of a casino licensed under
the provisions of the Casino Control Act.
(c) All transfers (as defined by the Casino Control Act and the
governing laws, statutes rules and regulations of any Applicable Regulatory
Authority) of securities (as defined by the Casino Control Act and the
governing laws, statutes rules and regulations of any Applicable Regulatory
Authority), shares and other interests in the Partnership shall be subject
to the right of prior approval by the Applicable Regulatory Authority; and
(b) the Partnership shall have the absolute right to repurchase in
accordance with Section 15.3, any security, share or other interest in the
Partnership in the event that the Applicable Regulatory Authority
disapproves a transfer in accordance with the provisions of the Casino
Control Act.
(d) Each Partner hereby agrees to cooperate reasonably and
promptly with the others in obtaining any and all licenses, permits or
approvals required by any Applicable Regulatory Authority or deemed
expedient by the Partners.
Section 15.2. Additional Applicable Regulatory Authority Regulation.
No Person may become the Beneficial Owner of five percent (5%) or more of any
class or series of Partnership Interests unless such Person agrees in writing
to: (i) provide to the Applicable Regulatory Authorities information regarding
such Person, including without limitation thereto, information regarding other
gaming-related activities of such Person and financial statements, in such form,
and with such updates, as may be required by the Applicable Regulatory
Authorities; (ii) respond to written or oral questions that may be propounded by
the Applicable Regulatory Authorities and (iii) consent to the performance of
any background investigation that may be required by the IGC, including without
limitation thereto, an investigation of any criminal record of such Person.
Section 15.3. Disqualified Holders. Notwithstanding any other
provision of this Agreement, Partnership Interests held by a Disqualified Holder
(or in the case of a Disqualified Holder of securities of the General Partner,
the corresponding Partnership Interest of the General Partner) shall be subject
to redemption at any time by the Partnership by action of the General Partner,
pursuant to this Section 15.3 as follows:
(a) the redemption price of the Partnership Interest to be
redeemed pursuant to this Section 15.3 shall be equal to the Fair Market
Value of such Partnership Interest or such other redemption price as
required by pertinent state or federal law pursuant to which the redemption
is required;
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(b) the redemption price of such shares may be paid in cash,
Redemption Securities or any combination thereof; provided, however, in the
case of a redemption mandated by the CCC, the redemption price shall be
paid in cash;
(c) if less than all the Partnership Interest held by
Disqualified Holders are to be redeemed, the Partnership Interest to be
redeemed shall be selected in such manner as shall be determined by the
General Partner, which may include selection first of the most recently
purchased portion thereof, selection by lot, or selection in any other
manner determined by the General Partner;
(d) at least thirty (30) days' written notice of the Redemption
Date shall be given to the record holders of the Partnership Interest
selected to be redeemed (unless waived in writing by any such holder);
provided, however, that the Redemption Date shall be deemed to be the date
on which written notice shall be given to record holders if the cash or
Redemption Securities necessary to effect the redemption shall have been
deposited in trust for the benefit of such record holders and subject to
immediate withdrawal by them upon surrender of the Certificates of
Interests for their Partnership Interests to be redeemed;
(e) from and after the Redemption Date or such earlier date as
mandated by pertinent state or federal law, any and all rights of whatever
nature, which may be held by the Beneficial Owners of Partnership Interests
selected for redemption (including without limitation any rights to vote or
participate in distribution) shall cease and terminate and they shall
thenceforth be entitled only to receive the cash or Redemption Securities
payable upon redemption; and
(f) such other terms and conditions as the General Partner shall
determine.
ARTICLE XVI.
GENERAL PROVISIONS
Section 16.1. Notices. All notices, offers or other communications
required or permitted to be given pursuant to this Agreement shall be in writing
and may be personally served or sent by United States mail and shall be deemed
to have been given when delivered in person or three business days after deposit
in United States mail, registered or certified, postage prepaid, and properly
addressed, by or to the appropriate party. For purposes of this Section 16.1,
the addresses of the parties hereto shall be as set forth below their name on
the signature page hereof.
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The address of any party hereto may be changed by a notice in writing given
in accordance with the provisions hereof.
Section 16.2. Controlling Law. This Agreement and all questions
relating to its validity, interpretation, performance and enforcement
(including, without limitation, provisions concerning limitations of actions),
shall be governed by and construed in accordance with the laws of the State of
Delaware, notwithstanding any conflict-of-laws doctrines of such state or other
jurisdiction to the contrary.
Section 16.3. No Third Party Beneficiaries. No creditor or other third
party shall have the right to enforce any right or obligation of any Partner to
make Capital Contributions or to pursue any other right or remedy hereunder or
at law or in equity, it being understood and agreed that the provisions of this
Agreement shall be solely for the benefit of, and may be enforced solely by, the
parties hereto and their respective successors and assigns. None of the rights
or obligations of the Partners herein set forth to make Capital Contributions to
the Partnership shall be deemed an asset of the Partnership for any purpose by
any creditor or other third party, nor may such rights or obligations be sold,
transferred or assigned by the Partnership or pledged or encumbered by the
Partnership to secure any debt or other obligation of the Partnership or of any
of the Partners.
Section 16.4. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original as against any party whose signature appears thereon, and all of which
shall together constitute one and the same instrument. This Agreement shall
become binding when one or more counterparts hereof, individually or taken
together, shall bear the signatures of all of the parties reflected hereon as
the signatories.
Section 16.5. Provisions Separable. The provisions of this Agreement
are independent of and separable from each other, and no provision shall be
affected or rendered invalid or unenforceable by virtue of the fact that for any
reason any other or others of them may be invalid or unenforceable in whole or
in part.
Section 16.6. Entire Agreement. This Agreement (together with the
Exhibit and Schedules hereto) contains the entire understanding among the
parties hereto with respect to the subject matter hereof, and supersedes all
prior and contemporaneous agreements and understandings, inducements or
conditions, express or implied, oral or written, except as herein contained. The
express terms hereof control and supersede any course of performance and/or
usage of the trade inconsistent with any of the terms hereof. This Agreement may
not be modified or amended other than by an agreement in writing.
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Section 16.7. Paragraph Headings. The paragraph headings in this
Agreement are for convenience only; they form no part of this Agreement and
shall not affect its interpretation.
Section 16.8. Gender, Etc. Words used herein, regardless of the number
and gender specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine or neuter,
as the context indicates is appropriate.
Section 16.9. Number of Days. In computing the number of days (other
than Business Days) for purposes of this Agreement, all days shall be counted,
including Saturdays, Sundays and holidays; provided, however, that if the final
day of any time period falls on a date which is not a Business Day, then the
final day shall be deemed to be the next Business Day.
Section 16.10. Partners Not Agents. Nothing contained herein shall be
construed to constitute any Partner the agent of another Partner, except as
specifically provided herein, or in any manner to limit the Limited Partners in
the carrying on of their own respective businesses or activities.
Section 16.11. Assurances. Each of the Partners shall hereafter
execute and deliver such further instruments and do such further acts and things
as may be reasonably required or useful to carry out the intent and purpose of
this Agreement and as are not inconsistent with the terms hereof.
Section 16.12. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their heirs, executors,
administrators, successors, legal representatives and permitted assigns,
including any pledgee upon the foreclosure of any pledge of a Partner's
Partnership Interest in the Partnership.
Section 16.13. Waiver. No failure by any party to insist upon the
strict performance of any covenant, duty, agreement or condition of this
Agreement or to exercise any right or remedy consequent upon a breach thereof
shall constitute waiver of any such breach or any other covenant, duty,
agreement or condition.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused this Agreement to be executed on their behalf as of the date first above
written.
GENERAL PARTNER:
TRUMP HOTELS & CASINO RESORTS, INC.
By: /s/ Robert M. Pickus
-------------------------------------
Name: Robert M. Pickus
Title: Executive Vice President
and Secretary
Address: 2500 Boardwalk
Atlantic City,
New Jersey 08401
LIMITED PARTNERS: (Addresses
are as set forth on Schedule I):
DONALD J. TRUMP
By: /s/ Donald J. Trump
-------------------------------------
Donald J. Trump
TRUMP CASINOS, INC.
By: /s/ Donald J. Trump
-------------------------------------
Donald J. Trump
President
TRUMP CASINOS II, INC.
By: /s/ Donald J. Trump
-------------------------------------
Donald J. Trump
President
THCR/LP CORPORATION
By: /s/ James L. Wright III
-------------------------------------
Name: James L. Wright III
Title: Assistant Treasurer
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STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on October 7, 1996, before me, the subscriber,
personally appeared Donald J. Trump, an individual, who, I am satisfied, is the
person who has signed the within instrument on his own behalf, and I having
first made known to him the contents thereof he thereupon acknowledged that he
signed and delivered the said instrument in his personal capacity as an
individual, and that the within instrument is his voluntary act and deed.
/s/
------------------------------------
Notary Public
<PAGE>
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on October 7, 1996, before me, the subscriber,
personally appeared Robert M. Pickus, the Executive Vice President and Secretary
of Trump Hotels & Casino Resorts, Inc., a Delaware corporation, who, I am
satisfied, is the person who has signed the within instrument on behalf of such
corporation, and I having first made known to him the contents thereof he
thereupon acknowledged that he signed and delivered the said instrument in his
capacity as such officer aforesaid, and that the within instrument is the
voluntary act and deed of said corporation, made by virtue of authority from its
Board of Directors.
/s/
------------------------------------
Notary Public
<PAGE>
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on October 7, 1996, before me, the subscriber,
personally appeared Donald J. Trump, the President of Trump Casinos, Inc., a New
Jersey corporation, who, I am satisfied, is the person who has signed the within
instrument on behalf of such corporation, and I having first made known to him
the contents thereof he thereupon acknowledged that he signed and delivered the
said instrument in his capacity as such officer aforesaid, and that the within
instrument is the voluntary act and deed of said corporation, made by virtue of
authority from its Board of Directors.
/s/
------------------------------------
Notary Public
<PAGE>
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on October 7, 1996, before me, the subscriber,
personally appeared James L. Wright III, the Assistant Treasurer of THCR/LP
Corporation, a New Jersey corporation, who, I am satisfied, is the person who
has signed the within instrument on behalf of such corporation, and I having
first made known to him the contents thereof he thereupon acknowledged that he
signed and delivered the said instrument in his capacity as such officer
aforesaid, and that the within instrument is the voluntary act and deed of said
corporation, made by virtue of authority from its Board of Directors.
/s/
------------------------------------
Notary Public
<PAGE>
STATE OF NEW YORK )
ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on October 7, 1996, before me, the subscriber,
personally appeared Donald J. Trump, the President of Trump Casinos II, Inc., a
New Jersey corporation, who, I am satisfied, is the person who has signed the
within instrument on behalf of such corporation, and I having first made known
to him the contents thereof he thereupon acknowledged that he signed and
delivered the said instrument in his capacity as such officer aforesaid, and
that the within instrument is the voluntary act and deed of said corporation,
made by virtue of authority from its Board of Directors.
/s/
------------------------------------
Notary Public
<PAGE>
SCHEDULE I
AGGREGATE CAPITAL CONTRIBUTIONS*
Partner Contribution Percentage Interest
- ------- ------------ -------------------
Trump Hotels & Casino Resorts, $ 683,659,153.00 59.87743% general
Inc. partner
Donald J. Trump*** $ 309,013,680.00 27.06458%** limited
725 Fifth Avenue partner
New York, N.Y. 10022
Trump Casinos, Inc.*** $ 42,210,510.00 3.69695% limited partner
2500 Boardwalk
Atlantic City, NJ 08401
THCR/LP Corporation $ 40,543,547.00 3.55096% limited partner
2500 Boardwalk
Atlantic City, N.J. 08401
Trump Casinos II, Inc.*** $ 66,337,500.00 5.81009% limited partner
2500 Boardwalk
Atlantic City, NJ 08401
- ----------
* Aggregate contributions are based on a Common Stock market value of $30.00
per share, the value ascribed to the Common Stock pursuant to the terms of
the Castle Acquisition Agreement.
** Certificate No. 4 , 4-A and 4-B represent a 17.51675%, 0.01928% and 9.52854
percentage interest in the Partnership, respectively.
*** Notwithstanding anything to the contrary in this Agreement, for the
purposes of determining the voting power in THCR of the Class B Stock, (a)
Trump's Percentage Interest evidenced by certificates 4 and 4A and by
certificate 4B shall be evidenced by 800 shares and 50 shares of Class B
Stock, respectively, (b) TCI's Percentage Interest shall be evidenced by 50
shares of Class B Stock and (c) TCI-II's Percentage Interest shall be
evidenced by 100 shares of Class B Stock.
Dated: October 7, 1996
<PAGE>
SCHEDULE II
CAPITAL CONTRIBUTIONS PRIOR TO APRIL 17, 1996
Partner Contribution Percentage Interest
- ------- ------------ -------------------
Trump Hotels & Casino $ 140,933,338 60.15936% general
Resorts, Inc. partner
Donald J. Trump $ 93,333,333 39.84064% limited
partner
Dated: October 7, 1996
<PAGE>
SCHEDULE III
CAPITAL CONTRIBUTIONS IN CONNECTION WITH THE
TAJ MAHAL MERGER TRANSACTION
Partner Contribution
- ------- ------------
Trump Hotels & Casino Resorts, $375,068,151.00
Inc.
Donald J. Trump $ 4,392.62
Trump Casinos, Inc. $ 43,921,854.66
THCR/LP Corporation $ 40,499,609.57
Dated: October 7, 1996
<PAGE>
SCHEDULE IV
CAPITAL CONTRIBUTIONS IN CONNECTION WITH THE
CASTLE ACQUISITION*
Partner Contribution
- ------- ------------
Donald J. Trump $ 108,793,500.00
Trump Casinos II, Inc. $ 66,337,500.00
* Capital contributions are based on a Common Stock market value of $30.00
per share, the value ascribed to the Common Stock pursuant to the terms of
the Castle Acquisition Agreement.
Dated: October 7, 1996
PLEDGE AGREEMENT
from
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.,
as Pledgor,
to
FIRST BANK NATIONAL ASSOCIATION,
as Trustee
<PAGE>
PLEDGE AGREEMENT
PLEDGE AGREEMENT, together with any amendments, replacements and
supplements hereafter entered into (the "Pledge Agreement"), dated as of October
7, 1996, between Trump Hotels & Casino Resorts Holdings, L.P. (together with its
successors and assigns, the "Pledgor") and First Bank National Association, as
trustee (the "Senior Note Trustee") under the indenture (as supplemented and
amended, the "Senior Note Indenture") relating to the 15 1/2% Senior Secured
Notes due 2005 (the "Senior Notes") of the Pledgor and Trump Hotels & Casino
Resorts Funding, Inc., as joint obligors, is made for the equal and ratable
benefit of the holders of the Senior Notes (the "Holders"). As used herein, all
capitalized terms not otherwise defined herein shall have the meanings set forth
in the Senior Note Indenture.
W I T N E S S E T H:
WHEREAS, the Issuers have issued $155,000,000 aggregate principal amount of
Senior Notes pursuant to the Senior Note Indenture;
WHEREAS, in consideration of the waivers of certain provisions of the
Senior Note Indenture set forth in that certain Solicitation of Waivers of the
Issuers, dated May 13, 1996, as supplemented and amended by that certain
Supplement to Solicitation of Waivers of the Issuers, dated May 15, 1996, the
Issuers agreed, among other things, to pledge (or cause to be pledged), in the
event that the Pledgor acquired ownership of Trump's Castle Casino and Resort
("Trump's Castle"), any and all direct or indirect equity interests of THCR
Holdings in Trump's Castle Associates, L.P. ("Castle Associates"), the owner and
operator of Trump's Castle, to the Senior Note Trustee for the benefit of the
Holders;
WHEREAS, on the date hereof, the Pledgor has become the owner of Trump's
Castle as a result of the acquisition (the "Acquisition") of all the outstanding
equity interests of Castle Associates pursuant to that certain Agreement, dated
as of June 24, 1996, as amended (the "Acquisition Agreement"), by and among
Trump Hotels & Casino Resorts, Inc., the Pledgor, Trump Casinos II, Inc.
(formerly known as TC/GP, Inc.), Trump's Castle Hotel & Casino, Inc. ("TCHI")
and Trump;
WHEREAS, as of the date hereof, as a result of the consummation of the
transactions contemplated in the Acquisition Agreement, (i) TCHI has become a
wholly owned subsidiary of the Pledgor and (ii) Castle Associates has become a
New Jersey limited partnership with the Pledgor as a 99% limited partner and
TCHI as a 1% general partner;
WHEREAS, the Pledgor desires to pledge the Pledged Collateral (as defined
below) to the Senior Note Trustee for the
<PAGE>
benefit of the Holders to secure the prompt payment and full and complete
performance of the Issuers obligations under the Senior Note Indenture (the
"Indenture Obligations"); and
WHEREAS, concurrently with the execution of this Pledge Agreement, the
Pledgor has caused TCHI to pledge all of its equity interests in Castle
Associates to the Senior Note Trustee for the benefit of the Holders (the "TCHI
Pledge").
NOW, THEREFORE, in consideration of the premises and other benefits to the
Pledgor, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
Section 1. Pledge. As collateral security for the due and prompt payment in
full and complete performance of the Indenture Obligations, and all indebtedness
and other liabilities and obligations, whether now existing or hereafter
arising, under, or arising out of, the Senior Note Indenture, the Pledgor hereby
pledges, assigns, transfers, sets over and delivers unto the Senior Note Trustee
and hereby grants unto the Senior Note Trustee for the benefit of the Holders
and unto their respective successors and assigns, a first priority security
interest in all of the right, title and interest of the Pledgor in, to and under
any and all of the following described property, rights and interests
(collectively, the "Pledged Collateral"):
(a) all of the issued and outstanding Equity Interests directly owned
by the Pledgor of the subsidiaries identified on Schedule A attached hereto (the
"Pledged Subsidiaries"), subject to obtaining the Approvals (as defined);
(b) all other Equity Interests, now or hereafter owned or acquired by
the Pledgor and wherever located, of the Pledged Subsidiaries and the
certificates representing such securities, and any present or future options,
warrants or other rights to subscribe for or purchase any of the foregoing
described in subsections 1(a) or 1(b) hereof or any notes, bonds, debentures or
other evidences of indebtedness that (i) are at any time convertible,
exchangeable or exercisable into Equity Interests of the Pledged Subsidiaries or
(ii) have or at any time could by their terms have voting rights with respect to
any matter affecting the Pledged Subsidiaries and all securities, certificates
and instruments representing or evidencing ownership of any of the foregoing
(the property described in subsections 1(a) and 1(b) hereof, being referred to
herein collectively as the "Pledged Securities");
(c) to the extent not included in the foregoing, all of Pledgor's
rights, claims or other general intangibles constituting, or arising out of or
relating to, its rights as a general partner, limited partner or managing
general partner of
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any Pledged Subsidiary, including, without limitation, its share in the profits
and losses of any such Pledged Subsidiary and its right as such partner to
receive distributions of the Pledged Subsidiary's assets or income, in each case
whether arising under a partnership agreement or applicable law, created by
operation of law, or otherwise;
(d) to the extent not included in the foregoing, all rights, claims
and other general intangibles of such Pledged Subsidiary against any third
party, to the extent the same may be asserted or realized upon by Pledgor; and
(e) subject to the provisions of Section 6 hereof, all dividends,
distributions, cash, instruments and other property or securities (including,
without limitation, any security as such term is defined in Article 8 of the
Uniform Commercial Code as in effect in the applicable jurisdiction at such time
(the "UCC")), now or hereafter at any time or from time to time received or
receivable or otherwise distributed or distributable in respect of or in
exchange for any or all of the Pledged Collateral and all proceeds of the
Pledged Collateral.
TO HAVE AND TO HOLD the Pledged Collateral, together with all rights, titles,
interests, powers, privileges and preferences pertaining or incidental thereto,
unto the Senior Note Trustee for the benefit of the Holders and unto its
respective successors and assigns.
Section 2. Gaming Approvals.
(a) No Pledged Securities shall be sold, assigned, transferred,
pledged or otherwise disposed of, whether pursuant to the Pledge Agreement or
the exercise of any right, power or remedy provided for herein or otherwise,
unless the grant of the security interest or such other disposition as the case
may be, has received in advance any necessary approvals (the "Approvals") by the
gaming authorities with jurisdiction over the issuer of such Pledged Securities
(the "Gaming Authorities"), and unless the transferee of such Pledged Securities
shall have first obtained any and all licenses, findings of suitability or
Approvals required by such Gaming Authorities, or shall have been found to be
individually qualified to be licensed, as appropriate. Without limiting the
generality of the foregoing, the Approval by such Gaming Authorities shall not
constitute permission to foreclose on the same or make any other disposition of
the Pledged Securities.
(b) The Senior Note Trustee agrees to comply with any order or
directive of applicable Gaming Authorities requiring such person or persons to
submit an application for any license, finding of suitability or other approval.
(c) The provisions of Section 2 of this Pledge Agreement shall not
modify or restrict the rights and remedies of
3
<PAGE>
the Senior Note Trustee under the Pledge Agreement in any other Pledged
Collateral except as provided in Section 2(a) or (b); provided that, the Senior
Note Trustee acknowledges, understands and agrees that certain Gaming Laws and
the regulations thereunder may impose certain licensing or transaction approval
requirements prior to the exercise of such rights and remedies under the Pledge
Agreement with respect to the Pledged Securities and other pledged collateral
subject to such Gaming Laws and the regulations thereunder.
(d) Notwithstanding any provision contained in this Pledge Agreement
to the contrary, if the granting of a security interest in the capital stock of
any Subsidiary shall conflict with any Gaming Laws, the Senior Note Trustee
agrees to (i) release such capital stock from the pledge of this Pledge
Agreement to the extent necessary to avoid such conflict or violation, or (ii)
take any other action, including filing for applicable Approvals, sufficient to
avoid such conflict or violation. The Senior Note Trustee further acknowledges
and agrees that, prior to exercising any remedies set forth in the Pledge
Agreement with respect to the Equity Interests of any of the Pledged
Subsidiaries subject to or affected by any Gaming Laws, the Senior Note Trustee
shall obtain any and all Approvals as may be required by applicable Gaming Laws.
(e) If the consent of any Gaming Authority is required in connection
with any of the actions which may be taken by the Senior Note Trustee in the
exercise of its rights hereunder, then the Pledgor agrees to use its reasonable
efforts to secure such consent and to cooperate with the Senior Note Trustee in
obtaining any such consent. Upon the occurrence and during the continuation of
any Event of Default, Pledgor shall promptly execute and/or cause the execution
of all applications, certificates, instruments, and other documents and papers
that the Senior Note Trustee may be required to file in order to obtain any
necessary Gaming Authority approvals, and if Pledgor fails or refuses to execute
such documents, the clerk of the court with jurisdiction may execute such
documents on behalf of Pledgor.
Section 3. Representations, Warranties and Covenants of the Pledgor. The
Pledgor hereby represents and warrants, covenants and agrees that:
(a) The Pledgor is, and as to Pledged Collateral acquired by it from
time to time after the date hereof, will be, the sole legal and beneficial owner
of the Pledged Collateral, and holds, or will hold, the Pledged Collateral free
and clear of all Liens (except for the security interest granted hereunder to
the Senior Note Trustee for the benefit of Holders), and has not made and will
not make any other pledge, assignment, mortgage, hypothecation or transfer of
the Pledged Collateral. The Pledged Securities are not subject to any put, call,
option or other right in favor of any other person whatsoever.
4
<PAGE>
(b) The Pledged Securities which are shares of stock have been duly
authorized and validly issued and are fully paid and nonassessable.
(c) Except as set forth below, upon delivery of the certificates
evidencing the Pledged Securities to the Senior Note Trustee and so long as the
Senior Note Trustee maintains possession of such certificates pursuant to this
Pledge Agreement, the Senior Note Trustee will have a valid and perfected first
priority security interest in the Pledged Securities. In the case of a Pledged
Security which represents an interest in a partnership, upon filing of a UCC-1
financing statement in the appropriate jurisdiction in connection with such
interest, upon delivery of the certificate evidencing such interest and so long
as the Senior Note Trustee maintains possession of such certificate, the Senior
Note Trustee will have a valid and perfected first priority security interest in
such Pledged Security, which together with the security interest in the other
Pledged Securities will secure the payment and performance in full of the
Indenture Obligations.
(d) The Pledgor has the valid right and legal authority to pledge the
Pledged Collateral in the manner hereby done or contemplated and will defend its
title thereto against the claims of all persons whomsoever and shall maintain
and preserve the security interest granted hereunder with respect to the Pledged
Collateral as long as this Pledge Agreement shall remain in full force and
effect.
(e) Neither the execution and delivery of this Pledge Agreement by the
Pledgor nor the consummation of the transactions herein contemplated nor the
fulfillment of the terms hereof (i) violate the Pledgor's, or any of its
Subsidiary's, charter or by-laws, (ii) violate the terms of any agreement,
indenture, mortgage, deed of trust, equipment lease, instrument or other
document to which the Pledgor, or any of its Subsidiaries, is a party, or by
which any of them may be bound or to which any of their properties or assets may
be subject, which violation or conflict would have a material adverse effect on
the financial condition, business, assets or liabilities of the Pledgor and its
Subsidiaries taken as a whole, or on the value of the Pledged Collateral or a
material adverse effect on the security interests hereunder, or (iii) conflict
with any law, order, rule or regulation applicable to the Pledgor, or any of its
Subsidiaries, of any court or any government, regulatory body or administrative
agency or other governmental body having jurisdiction over the Pledgor, or any
of its Subsidiaries, or their Properties, or (iv) result in or require the
creation or imposition of any Lien (other than the Lien contemplated hereby),
upon or with respect to any of the property now owned or hereafter acquired by
the Pledgor, or any of its Subsidiaries, which violation or conflict would have
a material adverse effect on the financial condition, business, assets or
liabilities of
5
<PAGE>
the Pledgor and its Subsidiaries taken as a whole, or on the value of the
Pledged Collateral or a material adverse effect on the security interests
hereunder.
(f) The Pledged Securities as described in Schedule A attached hereto,
include all of the issued and outstanding Equity Interests of the Pledged
Subsidiaries as of the date hereof (except for the Equity Interests pledged in
the TCHI Pledge), and all outstanding options, warrants, calls, commitments of
any character whatsoever or other rights to subscribe for or purchase any
property described in subsection 1(a) or any notes, bonds, debentures or other
evidences of indebtedness that (i) are at any time convertible into Equity
Interests of such Pledged Subsidiary or (ii) have or at any time could by its
terms have voting rights with respect to any matters affecting the Pledged
Subsidiary.
(g) Except for the Approvals referred to in Section 2, no consent or
approval which has not been obtained prior to the date hereof of any other
person or entity and no authorization, approval or other action by, and no
notice to or filing with any governmental body, regulatory authority or
securities exchange, was or is necessary as a condition to the validity of the
pledge hereunder of the Pledged Collateral, and subject to receipt of all
applicable Approvals with respect to the exercise of remedies by the Senior Note
Trustee hereunder, such pledge is effective to vest in the Senior Note Trustee
the rights of the Senior Note Trustee in the Pledged Collateral as set forth
herein.
(h) The Pledgor shall deliver to the Senior Note Trustee concurrently
with the execution of this Pledge Agreement: (i) all certificates and
instruments representing the Pledged Securities described in Schedule A, and
(ii) each other item of Pledged Collateral (including all certificates,
instruments, notes and writings representing or evidencing any such Pledged
Collateral) immediately upon the Pledgor's acquisition thereof, and in addition,
with respect to Pledged Securities, immediately upon receipt of applicable
Approvals. Any and all Pledged Securities delivered to the Senior Note Trustee
shall be accompanied by undated duly executed stock powers in blank and by such
other instruments of transfer or documents as the Senior Note Trustee may
reasonably request. Subject to the provisions of Section 2, the Senior Note
Trustee shall have the right (in its discretion) to hold the certificates
representing the Pledged Securities in its own name or in the name of its
nominee, all in form and substance sufficient to make effective the pledge
hereunder and otherwise satisfactory to the Senior Note Trustee.
(i) Upon reasonable request to the Pledgor, the Senior Note Trustee
shall have full and free access during normal business hours to all of the
books, correspondence and records of the Pledgor relating to the Pledged
Collateral, and the Senior Note Trustee and its representatives may examine the
same, take
6
<PAGE>
extracts therefrom and make photocopies thereof, and the Pledgor agrees to
render to the Senior Note Trustee, at the Pledgor's cost and expense, such
clerical and other assistance as may be reasonably requested by the Senior Note
Trustee with regard thereto.
(j) The Pledgor will comply in all material respects with all
requirements of law applicable to the Pledged Collateral or any part thereof and
use its best efforts to obtain all Approvals as may be required to effect any of
the granting clauses of this Pledge Agreement.
(k) The Pledgor shall not permit any of the Pledged Subsidiaries to
issue any securities of the type required to be pledged hereunder unless such
securities are promptly pledged and delivered hereunder to the Senior Note
Trustee in accordance with Section 1(b).
(l) If, while this Pledge Agreement is in effect, any stock dividend,
stock split, reclassification, readjustment, reorganization, merger,
consolidation, exchange offer, tender offer or other change in the capital
structure, including the creation of any subscription or other rights or other
Pledged Securities, is declared or made, or proposed to be declared or made, by
any of the Pledged Subsidiaries or any other issuer of Pledged Collateral, all
substituted and additional securities or interest issued with respect to the
Pledged Collateral and evidenced by certificates shall, subject to receipt of
all applicable Approvals, be endorsed in blank by the Pledgor promptly upon
receipt thereof or otherwise appropriately transferred to the Senior Note
Trustee in negotiable form, and all certificates or instruments evidencing such
securities shall be delivered to the Senior Note Trustee to be held under the
terms of this Pledge Agreement in the same manner as, and as a part of, the
Pledged Collateral. All Pledged Securities shall be evidenced by one or more
certificates. Any securities that may be issued upon exercise of any
subscription or other rights relating to the Pledged Securities shall, subject
to receipt of all applicable Approvals, be endorsed in blank and delivered to
the Senior Note Trustee with any necessary powers.
(m) The Pledgor shall pay and discharge all taxes, assessments and
governmental charges or levies against any Pledged Collateral prior to
delinquency thereof and shall keep all Pledged Collateral free of all unpaid
charges whatsoever, unless contested in good faith and appropriate reserves have
been set aside in accordance with GAAP.
(n) The Pledgor has, independently and without reliance on the Senior
Note Trustee and/or any Holder and based on such documents and information as it
deemed appropriate, made its own credit analysis and decision to enter into this
Pledge Agreement.
7
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(o) In the event that the Senior Note Trustee desires to exercise any
remedies, voting or consensual rights or attorney-in-fact powers set forth in
this Pledge Agreement and determines it necessary to obtain any Approvals
therefor, then, upon the reasonable request of the Senior Note Trustee, the
Pledgor agrees to use its best efforts to assist and aid the Senior Note Trustee
to obtain as soon as practicable any necessary Approvals for the exercise of any
such remedies, rights and powers.
(p) The Pledgor has delivered to the Senior Note Trustee a duly
executed acknowledgment from the respective issuers of the Pledged Securities
acknowledging the registration on its books and records of the pledge of the
Pledged Securities pursuant to this Agreement.
(q) There are no voting trusts or other agreements or understandings
to which Pledgor is a party or by which it may be bound with respect to voting,
managerial consent, election or other rights of Pledgor relating to the Pledged
Securities.
(r) The principal place of business and chief executive office of
Pledgor and the office where Pledgor keeps its records concerning the Pledged
Collateral is 2500 Boardwalk, Atlantic City, New Jersey 08401.
Section 4. Administration of the Pledged Collateral. Subject to the terms
of any applicable Approvals, the Senior Note Trustee shall administer the
Pledged Collateral in accordance with the provisions hereof and of the Senior
Note Indenture.
Section 5. Release and Substitution of Pledged Collateral. The Pledged
Collateral shall not be released from the security interest created hereunder
and no property shall be substituted for any of the Pledged Collateral, except
(i) in accordance with the provisions of Article IV of the Senior Note
Indenture, (ii) in the case of the release of Pledged Securities of Unrestricted
Subsidiaries designated as such in accordance with the provisions of the Senior
Note Indenture, all of which provisions are hereby incorporated herein by
reference, (iii) in accordance with the provisions of Sections 5 and 19 hereof
and (iv) pursuant to any requirements of any order, decree, rule or judgment of
any Gaming Authority applicable to Pledgor or any of the Pledged Subsidiaries.
Section 6. Voting Rights, Dividends, Etc.
(a) So long as no Event of Default (as defined below) shall have
occurred and be continuing and notwithstanding any other section hereof:
(i) the Pledgor shall be entitled to exercise any and all
voting or consensual rights
8
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and powers, including subscription rights, accruing to an owner of the
Pledged Collateral or any part thereof for any purpose not inconsistent
with the terms of this Pledge Agreement or any agreement giving rise to any
of the Indenture Obligations;
(ii) the Pledgor shall be entitled to receive, retain and
use any and all dividends, distributions or other payments which are
permitted by the Senior Note Indenture and paid on the Pledged Collateral
in cash or property (other than securities which are subject to this
Agreement); and
(iii) the Senior Note Trustee shall execute and deliver to
the Pledgor or cause to be executed and delivered to the Pledgor, all such
proxies, powers of attorney, dividend orders and other instruments as the
Pledgor may reasonably request for the purpose of enabling it to exercise
the voting or consensual rights and powers which the Pledgor is entitled to
exercise pursuant to the foregoing subparagraph (i) or to receive the
dividends, distributions or other payments which the Pledgor is authorized
to retain pursuant to the foregoing subparagraph (ii).
(b) Upon the occurrence of an Event of Default, but prior to the
receipt of all applicable Approvals by the Senior Note Trustee or the Holders,
the Pledgor shall be entitled to exercise the rights provided in Section 6(a)(i)
hereof.
(c) Upon the occurrence and during the continuance of an Event of
Default and in the case of voting and consensual rights, upon receipt of all
applicable Approvals, all rights of the Pledgor to exercise the voting or
consensual rights and powers which the Pledgor would otherwise be entitled to
exercise pursuant to subparagraph (i) of Section 6(a) and Section 6(b) hereof
and to receive the dividends, distributions and other payments which the Pledgor
would otherwise be authorized to receive and retain pursuant to subsection (ii)
of Section 6(a) shall automatically cease, and all such rights shall thereupon
become vested in the Senior Note Trustee, which shall then have the sole and
exclusive right and authority to exercise all such voting and consensual rights
and powers and to receive and retain as Pledged Collateral all such dividends,
distributions and other payments. Any and all money and other property paid over
to or received by the Senior Note Trustee pursuant to the provisions of this
Section 6(c) shall be retained by the Senior Note Trustee as Pledged Collateral
hereunder and shall be administered and applied in accordance with the
provisions of this Pledge Agreement and the Senior Note Indenture. All dividends
and interest payments which are received by the Pledgor contrary to the
provisions of this subsection (c) shall be received in trust for the benefit of
the Senior Note Trustee, shall be segregated
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from other funds of the Pledgor and shall be forthwith paid over to the Senior
Note Trustee as Pledged Collateral in the same form as so received (with any
necessary endorsement).
Section 7. Default; Remedies.
(a) Defined. For purposes of this Pledge Agreement, the term "Event of
Default" shall have the meaning provided in the Senior Note Indenture.
(b) Exercise of Remedies Under the Pledge Agreement. If an Event of
Default shall have occurred and be continuing, the Senior Note Trustee shall,
subject to obtaining all applicable Approvals, commence the taking of such
actions (or refrain from taking actions) toward collection or enforcement of
this Pledge Agreement and the Pledged Collateral (or any portion thereof),
including, without limitation, action toward foreclosure upon any Pledged
Collateral, as it deems appropriate in its sole discretion.
(c) Remedies Generally. If an Event of Default shall have occurred and
be continuing, the Senior Note Trustee itself or by its agents or attorneys may,
subject to obtaining all applicable Approvals, (i) exercise any or all of its
rights and remedies hereunder, under the Senior Note Indenture or any other
instrument or agreement securing, evidencing or relating to the Indenture
Obligations or under applicable laws (including all of the rights and remedies
of a secured creditor under the Uniform Commercial Code then in effect in the
State of New York; the "NUCC"), (ii) retain the Pledged Collateral or (iii)
sell, assign, transfer, or dispose of, endorse and deliver the whole or, from
time to time, any part of the Pledged Collateral at public or private sale or
sales, at any exchanges, brokers board or at any of the Senior Note Trustee's
offices or elsewhere, for cash, upon credit or for other property, for immediate
or future delivery, and for such price or prices and on such other terms that
the Senior Note Trustee may deem commercially reasonable (in its liability for
loss or damage). Upon consummation of any such sale, the Senior Note Trustee
shall have the right to assign, transfer, endorse and deliver to the purchaser
or purchasers thereof the Pledged Collateral so sold. Each such purchaser at any
such sale shall hold the property sold absolutely free from any claim or right
on the part of the Pledgor, and the Pledgor hereby waives (to the full extent
permitted by law) all rights of redemption, stay or appraisal which the Pledgor
now has or may at any time in the future have under any rule of law or statute
now existing or hereafter enacted. The Senior Note Trustee shall give the
Pledgor at least 10 Business Days' written notice (which the Pledgor agrees
shall be deemed to be reasonable notification within the meaning of Section
9-504(3) of the NUCC) of the Senior Note Trustee's intention to make any such
public or private sale. Any such sale shall be held at such time or times and at
such place or places as the Senior Note Trustee may deem commercially
reasonable. At any such sale, the Pledged Collateral, or portion
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thereof to be sold, may be sold as an entirety or in separate portions, as the
Senior Note Trustee may deem commercially reasonable. The Senior Note Trustee
shall not be obligated to make any sale of the Pledged Collateral if it shall
determine not to do so, regardless of the fact that notice of sale of the
Pledged Collateral may have been given. The Senior Note Trustee may adjourn any
public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned. In case sale of all or any part of the Pledged Collateral is made on
credit for future delivery, the Pledged Collateral so sold may be retained by
the Senior Note Trustee until the sale price is paid by the purchaser or
purchasers thereof, but the Senior Note Trustee shall not incur any liability in
case any such purchaser or purchasers shall fail to take up and pay for the
Pledged Collateral so sold and, in case of any such failure, such Pledged
Collateral may be sold again upon like notice and upon receipt of all applicable
Approvals. As an alternative to exercising the power of sale herein conferred
upon it, the Senior Note Trustee may proceed by suit or suits at law or in
equity to exercise its remedies regarding the Pledged Collateral and sell the
Pledged Collateral or any portion thereof pursuant to judgment or decree of a
court or courts having competent jurisdiction. If under mandatory requirements
of applicable law, the Senior Note Trustee shall be required to make disposition
of the Pledged Collateral within a period of time that does not permit the
giving of notice to the Pledgor as herein before provided, the Senior Note
Trustee need give the Pledgor only such notice of disposition as shall be
reasonably practicable in view of such mandatory requirements of law.
(d) Preventing Impairment of the Pledged Collateral. Regardless of
whether or not there shall have occurred any Event of Default, the Senior Note
Trustee may institute and maintain or cause in its name of the Pledgor or in the
name to be instituted and maintained, such suits and proceedings as the Senior
Note Trustee may be advised by counsel shall be necessary or expedient to
prevent any impairment of the security interest in or perfection of the Pledged
Collateral in contravention of the terms of the Senior Note Indenture. The
Pledgor agrees not to knowingly take or permit to be taken any action which
would impair the Pledged Collateral or the Senior Note Trustee's rights in the
Pledged Collateral.
Section 8. Senior Note Trustee Appointed Attorney-in-Fact. The Pledgor
hereby constitutes and appoints the Senior Note Trustee its attorney-in-fact,
during the occurrence and continuance of an Event of Default, for the purpose of
carrying out the provisions, but subject to the terms and conditions, of this
Pledge Agreement and taking any action and executing any instrument, including,
without limitation, any financing statement or continuation statement, and
taking any other action to maintain the validity, perfection, priority and
enforcement of
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<PAGE>
the security interest intended to be created hereunder, that the Senior Note
Trustee may deem necessary or advisable to accomplish the purposes hereof, which
appointment is irrevocable and coupled with an interest; provided, however, that
nothing herein contained shall be construed as requiring or obligating the
Senior Note Trustee to make any commitment or to make any inquiry as to the
nature or sufficiency of any payment received by it, or to present or file any
claim or notice, or to take any action with respect to the Pledged Collateral or
any part thereof or the monies due or to become due in respect thereof or any
property covered thereby, and no action taken or omitted or any part thereof
shall give rise to any defense, counterclaim or right of action against the
Senior Note Trustee, unless the Senior Note Trustee's actions are taken or
omitted to be taken with gross negligence or bad faith or constitute willful
misconduct.
Section 9. Purchase of Pledged Collateral by Senior Note Trustee or
Holders. At any sale of the Pledged Collateral, whether pursuant to power of
sale or otherwise hereunder, Senior Note Trustee or any Holder may, to the
extent permitted by applicable law and subject to obtaining all applicable
Approvals, bid for and purchase, free from any right of redemption (all such
rights being hereby waived and released by the Pledgor to the extent permitted
by law), the Pledged Collateral or any part thereof or an interest therein and
upon compliance with the terms of such sale may hold, retain, exploit, resell or
otherwise dispose of such property without further accountability to the Pledgor
for the proceeds of such sale. The Pledgor will execute and deliver or cause to
be executed and delivered, such instruments, endorsements, assignments, waivers,
certificates and other documents and take such further action as the Senior Note
Trustee shall reasonably request in connection with any such sale.
Section 10. Payments and Proceeds.
In the event that the Senior Note Trustee ever receives any amounts
pursuant to this Pledge Agreement, or otherwise receives any amounts with
respect to the Pledged Collateral following the occurrence of an Event of
Default, such amounts shall first be applied to the reasonable costs and
expenses, including attorneys' fees, incurred by the Senior Note Trustee in
taking such action and thereafter shall be applied by the Senior Note Trustee as
provided in the Senior Note Indenture. After payment in full of all Indenture
Obligations, the remaining proceeds from any foreclosure hereunder shall be paid
to the Pledgor, or its successors or assigns, or to whomsoever may be lawfully
entitled to receive the same or as a court of competent jurisdiction may direct,
any surplus then remaining from such Proceeds.
Section 11. Waiver of Claims. Except as otherwise provided in this Pledge
Agreement, THE PLEDGOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
NOTICE OF JUDICIAL
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HEARING IN CONNECTION WITH THE SENIOR NOTE TRUSTEE'S TAKING POSSESSION OR THE
SENIOR NOTE TRUSTEE'S DISPOSITION OF ANY OF THE PLEDGED COLLATERAL, INCLUDING,
WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICES AND HEARINGS FOR ANY PREJUDGMENT
REMEDY OR REMEDIES AND ANY SUCH RIGHT THAT THE PLEDGOR WOULD OTHERWISE HAVE
UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES OR OF ANY STATE, and,
to the full extent permitted by applicable law, the Pledgor hereby further
waives:
(a) all damages occasioned by such taking of possession except any
damages which are the direct result of the Senior Note Trustee's gross
negligence, bad faith or willful misconduct;
(b) all other requirements as to the time, place and terms of sale or
other requirements, with respect to the enforcement of the Senior Note Trustee's
rights and powers hereunder; and
(c) except as provided in Section 7(c) hereof, all rights of
redemption, appraisal, valuation, stay, marshaling of assets, extension or
moratorium, existing at law or in equity, by statute or otherwise, now or
hereafter in force, in order to prevent or delay the enforcement of this Pledge
Agreement or the sale or other disposition of the Pledged Collateral or any
portion thereof, and the Pledgor, for itself and all who may claim under it,
insofar as it now or hereafter lawfully may, hereby waives all such rights.
Any sale of, or the exercise of any options to purchase, or any other
realization upon, any Pledged Collateral shall operate to divest all right,
title, interest, claim and demand, at law or in equity, of the Pledgor therein
and thereto, and shall be a perpetual bar both at law and in equity against the
Pledgor and against any and all persons claiming or attempting to claim the
Pledged Collateral so sold, optioned or realized upon, or any part thereof,
through and under the Pledgor.
Section 12. Remedies Cumulative; No Waiver. Each right, power and remedy of
the Senior Note Trustee provided for herein or in another agreement pursuant to
which a Lien is created in favor of the Senior Note Trustee for the benefit of
any Holder, or now or hereafter existing at law or in equity, by statute or
otherwise, shall be cumulative and concurrent and shall be in addition to every
other right, power or remedy of the Senior Note Trustee or any Holder provided
for herein or in another agreement pursuant to which a Lien is created in favor
of the Senior Note Trustee for the benefit of any Holder or now or hereafter
existing at law or in equity, by statute or otherwise. No failure on the part of
the Senior Note Trustee or any Holder to exercise, and no delay in exercising,
any right, power or remedy hereunder, or in another agreement pursuant to which
a Lien is created in favor of the Senior Note Trustee for the
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<PAGE>
benefit or any Holder or now or hereafter existing at law or in equity, by
statute or otherwise, shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy. No
notice to or demand on the Pledgor hereunder shall, of itself, entitle the
Pledgor to any other or further notice or demand in the same, similar or other
circumstances.
Section 13. Additional Collateral. Without notice or consent of any Pledgor
and without impairment of the security interests and rights created by this
Pledge Agreement, the Senior Note Trustee may accept from any person or persons
additional collateral or other security for the Indenture Obligations. Neither
the creation of the security interests created hereunder nor the acceptance of
any such additional collateral or security shall prevent the Senior Note Trustee
from resorting to such additional collateral or security or to the Pledged
Collateral, in any order without affecting the Senior Note Trustee's rights
hereunder.
Section 14. Further Assurances. The Pledgor agrees (i) that it shall, at
its own expense, promptly file or record such notices, financing statements,
continuation statements or other documents and take all further action as may be
necessary to perfect, maintain and protect the validity, perfection and priority
of the security interests of the Senior Note Trustee hereunder or to enable the
Senior Note Trustee to exercise and enforce its rights and remedies hereunder
with respect to the Pledged Collateral, and as the Senior Note Trustee may
reasonably request, such instruments to be in form and substance satisfactory to
the Senior Note Trustee, and (ii) that it shall, at its own expense, do such
further acts and things and execute and deliver to the Senior Note Trustee such
additional conveyances, assignments, agreements and instruments as the Senior
Note Trustee may at any time reasonably request in connection with the
administration and enforcement of this Pledge Agreement or relative to the
Pledged Collateral or any part thereof or in order to assure and confirm unto
the Senior Note Trustee its rights, powers and remedies hereunder.
The Pledgor agrees that it will notify the Senior Note Trustee in writing
not less than 30 days prior to any change in location and the creation of a new
location of (a) the principal place of business or chief executive office and
(b) the offices where the Pledgor's books and records and related information
concerning the Pledged Collateral are kept; provided, however, that no such
change may be effected before all filings required to be made and all other
necessary action to preserve the perfection of the first priority security
interest of the Senior Note Trustee in the Pledged Collateral shall have been
made or taken.
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<PAGE>
The Pledgor will not change its name, identity or structure in any manner
which might make any financing statement filed hereunder incorrect or misleading
unless Pledgor shall have given the Senior Note Trustee at least 30 days' prior
written notice thereof and shall have properly amended all financing statements
and properly filed all additional financing statements necessary to maintain the
perfection of the security interest granted hereunder at all times and shall
have provided the Senior Note Trustee with an Officers' Certificate certifying
that the above steps have been taken.
Section 15. Indemnification. The Senior Note Trustee shall have such
indemnity as is provided under Section 8.7 of the Senior Note Indenture.
Section 16. Registration Rights, etc.
(a) If the Senior Note Trustee determines that the registration of any
of the securities included in the Pledged Collateral under, or other compliance
with, the Securities Act or any similar federal or state law is desirable, upon
or at any time after an Event of Default and acceleration of either issue of the
Notes, subject to any applicable Approvals, the Pledgor will use its best
efforts to cause such registration or compliance to be effectively made, at no
expense to the Senior Note Trustee or to the Holders, and to continue any such
registration effective for such time as may be reasonably necessary in the
opinion of the Senior Note Trustee. The Pledgor will reimburse the Senior Note
Trustee upon demand for any expenses incurred by the Senior Note
Trustee(including reasonable attorneys' fees) incurred in connection therewith,
which obligation to pay such expenses shall be secured hereunder.
(b) If the Pledgor is unable to effect a public sale of any or all of
the Pledged Collateral or if the Senior Note Trustee determines that it is
desirable to sell the Pledged Collateral in one or more private sales, subject
to any applicable Approvals, the Senior Note Trustee may limit such sales to a
restricted group of purchasers who will be obliged to agree, among other things,
to acquire such securities for its own account for investment and not with a
view to distribution or resale. The Pledgor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable to the
seller than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner. The Senior Note Trustee shall be under
no obligation to delay a sale of any of the Pledged Collateral for the period of
time necessary to permit the issuer of such securities to register such
securities for public sale under the Securities Act or under applicable state
securities laws even if such issuer would agree to do so.
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<PAGE>
(c) The Pledgor further agrees to do or cause to be done all such
other acts and things as may be necessary to make such sale or sales of all or
any part of the Pledged Collateral valid and binding and in compliance with any
and all applicable law, rules, regulations, orders or decrees, all at the
Pledgor's expense. The Pledgor further agrees that a breach of any of the
covenants contained in this Pledge Agreement will cause irreparable injury to
the Senior Note Trustee, as secured party, for which the Senior Note Trustee
would have no adequate remedy at law in respect of such breach and, as a
consequence, agrees that each and every covenant contained in this Section 16
shall be specifically enforceable against the Pledgor and the Pledgor waives and
agrees not to assert any defenses against an action for specific performance of
such covenants.
Section 17. Pledgor's Indenture Obligations Absolute. The liability of the
Pledgor under this Pledge Agreement shall remain in full force and effect
without regard to, and shall not be released, suspended, discharged, terminated
or otherwise affected by (a) any change in the time, place or manner of payment
of all or any of the Indenture Obligations, or in any other term of the Senior
Note Indenture, the Senior Notes, any waiver, indulgence, renewal, extension,
amendment or modification of or addition, consent or supplement to or deletion
from or any other action or inaction under or in respect of the Senior Note
Indenture, the Senior Notes or any assignment or transfer thereof; (b) any lack
of validity or enforceability, in whole or in part, of the Senior Note Indenture
or the Senior Notes; (c) any furnishing of any additional security for the
Indenture Obligations or any acceptance thereof or any release or non-perfection
of any security interest in the Pledged Collateral; (d) any limitation on any
party's liability or obligations under the Senior Note Indenture or the Senior
Notes; (e) any bankruptcy, insolvency, reorganization, composition, adjustment,
dissolution, liquidation or other like proceeding relating to a Pledgor, or any
action taken with respect to this Pledge Agreement by any trustee or receiver,
or by any court, in any such proceeding, whether or not the Pledgor shall have
notice or knowledge of any of the foregoing; (f) any exchange, release or
amendment or waiver of or consent to departure from any agreement pursuant to
which a Lien is created in favor of the Senior Note Trustee for the benefit of
the Holders, pursuant to which a person other than the Pledgor has granted a
security interest; or (g) any other circumstance that might otherwise constitute
a defense available to, or a discharge of the Pledgor.
Section 18. Waiver. To the extent permitted by applicable law, the Pledgor
hereby waives promptness, diligence, notice of acceptance and any other notice
with respect to any of the Indenture Obligations and this Pledge Agreement and
any requirement that the Senior Note Trustee protect, secure, perfect or insure
any security interest or any property subject thereto or exhaust any right or
take any action against the Pledgor or any other person or entity; provided,
however, that the Senior
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Note Trustee shall in any event take such care in the handling of any Pledged
Collateral in its possession as it takes with respect to Property of a similar
nature in its possession.
Section 19. Termination. Upon payment and performance in full and
satisfaction of all of the obligations of the Issuers or their successors or
assigns under the Senior Note Indenture and all other amounts payable under this
Pledge Agreement, this Pledge Agreement shall terminate and the Senior Note
Trustee shall assign and redeliver to the Pledgor all of the Pledged Collateral
hereunder that has not been sold, disposed of, retained or applied by the Senior
Note Trustee in accordance with the terms hereof. Such reassignment and
redelivery shall be without warranty by or recourse to the Senior Note Trustee,
and shall be at the expense of the Pledgor. At such time, this Pledge Agreement
shall no longer constitute a Lien upon or grant any security interest in any of
the Pledged Collateral, and the Senior Note Trustee shall, at the Pledgor's
expense deliver to the Pledgor written acknowledgment thereof and of
cancellation of this Pledge Agreement in a form reasonably requested by the
Pledgor; provided, however, that this Pledge Agreement shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the Indenture Obligations is rescinded or must otherwise be returned upon
the insolvency, bankruptcy or reorganization of the Pledgor or any of its
Subsidiaries all as though such payment had not been made.
Section 20. Notices. Any notices or other communications required or
permitted hereunder shall be in writing, and shall be sufficiently given if made
by hand delivery, by telex, by facsimile or registered or certified mail,
postage prepaid, return receipt requested, addressed as provided in Section 12.2
of the Senior Note Indenture.
Any party hereto may by notice to the other party designate such additional
or different addresses as shall be furnished in writing by such party. Any
notice or communication to any party shall be deemed to have been given or made
as of the date so delivered, if personally delivered; when answered back, if
telexed; when receipt is acknowledged, if faxed; and five calendar days after
mailing, if sent by registered or certified mail (except that a notice of change
of address shall not be deemed to have been given until actually received by the
addressee). The Pledgor may give notice to the Holders at the addresses set
forth for them in the register kept by the Registrar under the Senior Note
Indenture or may request that the Senior Note Trustee notify the Holders at such
addresses.
Section 21. Binding Agreement; Assignment. This Pledge Agreement shall be
binding upon and inure to the benefit the Senior Note Trustee, the Pledgor and
its respective successors and permitted assigns. Neither this Pledge Agreement
nor any interest herein or in the Pledged Collateral, or any part thereof, may
be assigned by the Pledgor without the prior written
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consent of the Senior Note Trustee (which consent shall not be unreasonably
withheld). This Pledge Agreement shall be deemed to be automatically assigned by
the Senior Note Trustee to any person who succeeds such Senior Note Trustee in
accordance with Article VIII of the Senior Note Indenture, and its assignee
shall have all rights and powers of, and act as, such Senior Note Trustee
hereunder.
Section 22. Governing Law. THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF.
Section 23. Amendments. This Pledge Agreement may not be amended or
modified, except with the consent of the Pledgor and the Senior Note Trustee in
accordance with Article X of the Senior Note Indenture.
Section 24. Severability. In the event that any provision contained in this
Pledge Agreement shall for any reason be held to be illegal or invalid under the
laws of any jurisdiction, such illegality or invalidity shall in no way impair
the effectiveness of any other provision hereof, or of such provision under the
laws of any other jurisdiction; provided, that in the construction and
enforcement of such provision under the laws of the jurisdiction in which such
holding of illegality or invalidity exists, and to the extent only of such
illegality or invalidity, this Pledge Agreement shall be construed and enforced
as though such illegal or invalid provision had not been contained herein.
Section 25. Headings. Section headings used herein are inserted for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Pledge Agreement.
Section 26. Counterparts. This Pledge Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be an
original, and all of which shall together constitute but one and the same
instrument. A complete set of counterparts shall be lodged with the Senior Note
Trustee.
Section 27. Expenses. The Pledgor will upon demand pay to the Senior Note
Trustee the amount of any and all reasonable expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, which the Senior
Note Trustee may incur in connection with (i) the administration of this Pledge
Agreement, (ii) the custody or presentation of, or the sale of, collection from,
or other realization upon, any of the Pledged Collateral, (iii) the exercise or
enforcement of any of the rights of the Senior Note Trustee hereunder or (iv)
the failure by the Pledgor to perform or observe any of the provisions hereof.
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Section 28. Gaming Laws. This Agreement is subject to any applicable Gaming
Law.
Section 29. No Recourse Against Others. A direct or indirect partner,
director, officer, employee or stockholder, as such, past, present or future of
the Pledgor or any successor entity shall not have any personal liability in
respect of the obligations of the Pledgor under this Agreement by reason of its
status as such partner, stockholder, employee, officer or director, to the
extent such liabilities may be waived under applicable law.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to
be duly executed and delivered as of the day and year first written above.
TRUMP HOTELS & CASINO RESORTS HOLDINGS, L.P.,
as Pledgor
By: TRUMP HOTELS & CASINO RESORTS, INC.
its general partner
By: /s/ Robert M. Pickus
------------------------------------
Name: Robert M. Pickus
Title: Executive Vice President
and Secretary
FIRST BANK NATIONAL ASSOCIATION,
as Senior Note Trustee
By: /s/ Richard Prokosch
------------------------------------
Name: Richard Prokosch
Title: Trust Officer
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SCHEDULE A
Pledged Securities
================================================================================
Percentage
Issuer Class of Number of
(Pledged Equity Certificate Par of Outstanding
Subsidiary) Interest No.(s) Value Shares Equity
================================================================================
Trump's Castle limited 103 N/A N/A 99%
Associates, L.P. partnership
interest
================================================================================
Trump's Castle common 101 $.01 100 100%
Hotel & Casino, stock
Inc.
================================================================================
PLEDGE AGREEMENT
from
TRUMP'S CASTLE HOTEL & CASINO, INC.,
as Pledgor,
to
FIRST BANK NATIONAL ASSOCIATION,
as Trustee
<PAGE>
PLEDGE AGREEMENT
PLEDGE AGREEMENT, together with any amendments, replacements and
supplements hereafter entered into (the "Pledge Agreement"), dated as of October
7, 1996, between Trump's Castle Hotel & Casino, Inc. (together with its
successors and assigns, the "Pledgor") and First Bank National Association, as
trustee (the "Senior Note Trustee") under the indenture (as supplemented and
amended, the "Senior Note Indenture") relating to the 15 1/2% Senior Secured
Notes due 2005 (the "Senior Notes") of Trump Hotels & Casino Resorts Holdings,
L.P. ("THCR Holdings") and Trump Hotels & Casino Resorts Funding, Inc., as joint
obligors, is made for the equal and ratable benefit of the holders of the Senior
Notes (the "Holders"). As used herein, all capitalized terms not otherwise
defined herein shall have the meanings set forth in the Senior Note Indenture.
W I T N E S S E T H:
WHEREAS, the Issuers have issued $155,000,000 aggregate principal amount of
Senior Notes pursuant to the Senior Note Indenture;
WHEREAS, in consideration of the waivers of certain provisions of the
Senior Note Indenture set forth in that certain Solicitation of Waivers of the
Issuers, dated May 13, 1996, as supplemented and amended by that certain
Supplement to Solicitation of Waivers of the Issuers, dated May 15, 1996, the
Issuers agreed, among other things, to pledge (or cause to be pledged), in the
event that THCR Holdings acquired ownership of Trump's Castle Casino and Resort
("Trump's Castle"), any and all direct or indirect equity interests of THCR
Holdings in Trump's Castle Associates, L.P. ("Castle Associates"), the owner and
operator of Trump's Castle, to the Senior Note Trustee for the benefit of the
Holders;
WHEREAS, on the date hereof, THCR Holdings has become the owner of Trump's
Castle as a result of the acquisition (the "Acquisition") of all the outstanding
equity interests of Castle Associates pursuant to that certain Agreement, dated
as of June 24, 1996, as amended (the "Acquisition Agreement"), by and among
Trump Hotels & Casino Resorts, Inc., THCR Holdings, Trump Casinos II, Inc.
(formerly known as TC/GP, Inc.), the Pledgor and Trump;
WHEREAS, as of the date hereof, as the result of the consummation of the
transactions contemplated in the Acquisition Agreement, (i) the Pledgor has
become a wholly owned subsidiary of THCR Holdings and (ii) Castle Associates has
become a New Jersey limited partnership with THCR Holdings as a 99% limited
partner and the Pledgor as a 1% general partner;
WHEREAS, the Pledgor desires to pledge the Pledged Collateral (as defined
below) to the Senior Note Trustee for the
<PAGE>
benefit of the Holders to secure the prompt payment and full and complete
performance of the Issuers obligations under the Senior Note Indenture (the
"Indenture Obligations"); and
WHEREAS, concurrently with the execution of this Pledge Agreement, THCR
Holdings has pledged all of its equity interests in Castle Associates and the
Pledgor to the Senior Note Trustee for the benefit of the Holders (the "THCR
Pledge").
NOW, THEREFORE, in consideration of the premises and other benefits to the
Pledgor, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
Section 1. Pledge. As collateral security for the due and prompt payment in
full and complete performance of the Indenture Obligations, and all indebtedness
and other liabilities and obligations, whether now existing or hereafter
arising, under, or arising out of, the Senior Note Indenture, the Pledgor hereby
pledges, assigns, transfers, sets over and delivers unto the Senior Note Trustee
and hereby grants unto the Senior Note Trustee for the benefit of the Holders
and unto their respective successors and assigns, a first priority security
interest in all of the right, title and interest of the Pledgor in, to and under
any and all of the following described property, rights and interests
(collectively, the "Pledged Collateral"):
(a) all of the issued and outstanding Equity Interests directly owned
by the Pledgor of the subsidiaries identified on Schedule A attached hereto (the
"Pledged Subsidiaries"), subject to obtaining the Approvals (as defined);
(b) all other Equity Interests, now or hereafter owned or acquired by
the Pledgor and wherever located, of the Pledged Subsidiaries and the
certificates representing such securities, and any present or future options,
warrants or other rights to subscribe for or purchase any of the foregoing
described in subsections 1(a) or 1(b) hereof or any notes, bonds, debentures or
other evidences of indebtedness that (i) are at any time convertible,
exchangeable or exercisable into Equity Interests of the Pledged Subsidiaries or
(ii) have or at any time could by their terms have voting rights with respect to
any matter affecting the Pledged Subsidiaries and all securities, certificates
and instruments representing or evidencing ownership of any of the foregoing
(the property described in subsections 1(a) and 1(b) hereof, being referred to
herein collectively as the "Pledged Securities");
(c) to the extent not included in the foregoing, all of Pledgor's
rights, claims or other general intangibles constituting, or arising out of or
relating to, its rights as a general partner, limited partner or managing
general partner of
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<PAGE>
any Pledged Subsidiary, including, without limitation, its share in the profits
and losses of any such Pledged Subsidiary and its right as such partner to
receive distributions of the Pledged Subsidiary's assets or income, in each case
whether arising under a partnership agreement or applicable law, created by
operation of law, or otherwise;
(d) to the extent not included in the foregoing, all rights, claims
and other general intangibles of such Pledged Subsidiary against any third
party, to the extent the same may be asserted or realized upon by Pledgor; and
(e) subject to the provisions of Section 6 hereof, all dividends,
distributions, cash, instruments and other property or securities (including,
without limitation, any security as such term is defined in Article 8 of the
Uniform Commercial Code as in effect in the applicable jurisdiction at such time
(the "UCC")), now or hereafter at any time or from time to time received or
receivable or otherwise distributed or distributable in respect of or in
exchange for any or all of the Pledged Collateral and all proceeds of the
Pledged Collateral.
TO HAVE AND TO HOLD the Pledged Collateral, together with all rights, titles,
interests, powers, privileges and preferences pertaining or incidental thereto,
unto the Senior Note Trustee for the benefit of the Holders and unto its
respective successors and assigns.
Section 2. Gaming Approvals.
(a) No Pledged Securities shall be sold, assigned, transferred,
pledged or otherwise disposed of, whether pursuant to the Pledge Agreement or
the exercise of any right, power or remedy provided for herein or otherwise,
unless the grant of the security interest or such other disposition as the case
may be, has received in advance any necessary approvals (the "Approvals") by the
gaming authorities with jurisdiction over the issuer of such Pledged Securities
(the "Gaming Authorities"), and unless the transferee of such Pledged Securities
shall have first obtained any and all licenses, findings of suitability or
Approvals required by such Gaming Authorities, or shall have been found to be
individually qualified to be licensed, as appropriate. Without limiting the
generality of the foregoing, the Approval by such Gaming Authorities shall not
constitute permission to foreclose on the same or make any other disposition of
the Pledged Securities.
(b) The Senior Note Trustee agrees to comply with any order or
directive of applicable Gaming Authorities requiring such person or persons to
submit an application for any license, finding of suitability or other approval.
(c) The provisions of Section 2 of this Pledge Agreement shall not
modify or restrict the rights and remedies of
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<PAGE>
the Senior Note Trustee under the Pledge Agreement in any other Pledged
Collateral except as provided in Section 2(a) or (b); provided that, the Senior
Note Trustee acknowledges, understands and agrees that certain Gaming Laws and
the regulations thereunder may impose certain licensing or transaction approval
requirements prior to the exercise of such rights and remedies under the Pledge
Agreement with respect to the Pledged Securities and other pledged collateral
subject to such Gaming Laws and the regulations thereunder.
(d) Notwithstanding any provision contained in this Pledge Agreement
to the contrary, if the granting of a security interest in the capital stock of
any Subsidiary shall conflict with any Gaming Laws, the Senior Note Trustee
agrees to (i) release such capital stock from the pledge of this Pledge
Agreement to the extent necessary to avoid such conflict or violation, or (ii)
take any other action, including filing for applicable Approvals, sufficient to
avoid such conflict or violation. The Senior Note Trustee further acknowledges
and agrees that, prior to exercising any remedies set forth in the Pledge
Agreement with respect to the Equity Interests of any of the Pledged
Subsidiaries subject to or affected by any Gaming Laws, the Senior Note Trustee
shall obtain any and all Approvals as may be required by applicable Gaming Laws.
(e) If the consent of any Gaming Authority is required in connection
with any of the actions which may be taken by the Senior Note Trustee in the
exercise of its rights hereunder, then the Pledgor agrees to use its reasonable
efforts to secure such consent and to cooperate with the Senior Note Trustee in
obtaining any such consent. Upon the occurrence and during the continuation of
any Event of Default, Pledgor shall promptly execute and/or cause the execution
of all applications, certificates, instruments, and other documents and papers
that the Senior Note Trustee may be required to file in order to obtain any
necessary Gaming Authority approvals, and if Pledgor fails or refuses to execute
such documents, the clerk of the court with jurisdiction may execute such
documents on behalf of Pledgor.
Section 3. Representations, Warranties and Covenants of the Pledgor. The
Pledgor hereby represents and warrants, covenants and agrees that:
(a) The Pledgor is, and as to Pledged Collateral acquired by it from
time to time after the date hereof, will be, the sole legal and beneficial owner
of the Pledged Collateral, and holds, or will hold, the Pledged Collateral free
and clear of all Liens (except for the security interest granted hereunder to
the Senior Note Trustee for the benefit of Holders), and has not made and will
not make any other pledge, assignment, mortgage, hypothecation or transfer of
the Pledged Collateral. The Pledged Securities are not subject to any put, call,
option or other right in favor of any other person whatsoever.
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(b) The Pledged Securities which are shares of stock have been duly
authorized and validly issued and are fully paid and nonassessable.
(c) Except as set forth below, upon delivery of the certificates
evidencing the Pledged Securities to the Senior Note Trustee and so long as the
Senior Note Trustee maintains possession of such certificates pursuant to this
Pledge Agreement, the Senior Note Trustee will have a valid and perfected first
priority security interest in the Pledged Securities. In the case of a Pledged
Security which represents an interest in a partnership, upon filing of a UCC-1
financing statement in the appropriate jurisdiction in connection with such
interest, upon delivery of the certificate evidencing such interest and so long
as the Senior Note Trustee maintains possession of such certificate, the Senior
Note Trustee will have a valid and perfected first priority security interest in
such Pledged Security, which together with the security interest in the other
Pledged Securities will secure the payment and performance in full of the
Indenture Obligations.
(d) The Pledgor has the valid right and legal authority to pledge the
Pledged Collateral in the manner hereby done or contemplated and will defend its
title thereto against the claims of all persons whomsoever and shall maintain
and preserve the security interest granted hereunder with respect to the Pledged
Collateral as long as this Pledge Agreement shall remain in full force and
effect.
(e) Neither the execution and delivery of this Pledge Agreement by the
Pledgor nor the consummation of the transactions herein contemplated nor the
fulfillment of the terms hereof (i) violate the Pledgor's, or any of its
Subsidiary's, charter or by-laws, (ii) violate the terms of any agreement,
indenture, mortgage, deed of trust, equipment lease, instrument or other
document to which the Pledgor, or any of its Subsidiaries, is a party, or by
which any of them may be bound or to which any of their properties or assets may
be subject, which violation or conflict would have a material adverse effect on
the financial condition, business, assets or liabilities of the Pledgor and its
Subsidiaries taken as a whole, or on the value of the Pledged Collateral or a
material adverse effect on the security interests hereunder, or (iii) conflict
with any law, order, rule or regulation applicable to the Pledgor, or any of its
Subsidiaries, of any court or any government, regulatory body or administrative
agency or other governmental body having jurisdiction over the Pledgor, or any
of its Subsidiaries, or their Properties, or (iv) result in or require the
creation or imposition of any Lien (other than the Lien contemplated hereby),
upon or with respect to any of the property now owned or hereafter acquired by
the Pledgor, or any of its Subsidiaries, which violation or conflict would have
a material adverse effect on the financial condition, business, assets or
liabilities of
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the Pledgor and its Subsidiaries taken as a whole, or on the value of the
Pledged Collateral or a material adverse effect on the security interests
hereunder.
(f) The Pledged Securities as described in Schedule A attached hereto,
include all of the issued and outstanding Equity Interests of the Pledged
Subsidiaries as of the date hereof (except for the Equity Interests pledged in
the THCR Pledge), and all outstanding options, warrants, calls, commitments of
any character whatsoever or other rights to subscribe for or purchase any
property described in subsection 1(a) or any notes, bonds, debentures or other
evidences of indebtedness that (i) are at any time convertible into Equity
Interests of such Pledged Subsidiary or (ii) have or at any time could by its
terms have voting rights with respect to any matters affecting the Pledged
Subsidiary.
(g) Except for the Approvals referred to in Section 2, no consent or
approval which has not been obtained prior to the date hereof of any other
person or entity and no authorization, approval or other action by, and no
notice to or filing with any governmental body, regulatory authority or
securities exchange, was or is necessary as a condition to the validity of the
pledge hereunder of the Pledged Collateral, and subject to receipt of all
applicable Approvals with respect to the exercise of remedies by the Senior Note
Trustee hereunder, such pledge is effective to vest in the Senior Note Trustee
the rights of the Senior Note Trustee in the Pledged Collateral as set forth
herein.
(h) The Pledgor shall deliver to the Senior Note Trustee concurrently
with the execution of this Pledge Agreement: (i) all certificates and
instruments representing the Pledged Securities described in Schedule A, and
(ii) each other item of Pledged Collateral (including all certificates,
instruments, notes and writings representing or evidencing any such Pledged
Collateral) immediately upon the Pledgor's acquisition thereof, and in addition,
with respect to Pledged Securities, immediately upon receipt of applicable
Approvals. Any and all Pledged Securities delivered to the Senior Note Trustee
shall be accompanied by undated duly executed stock powers in blank and by such
other instruments of transfer or documents as the Senior Note Trustee may
reasonably request. Subject to the provisions of Section 2, the Senior Note
Trustee shall have the right (in its discretion) to hold the certificates
representing the Pledged Securities in its own name or in the name of its
nominee, all in form and substance sufficient to make effective the pledge
hereunder and otherwise satisfactory to the Senior Note Trustee.
(i) Upon reasonable request to the Pledgor, the Senior Note Trustee
shall have full and free access during normal business hours to all of the
books, correspondence and records of the Pledgor relating to the Pledged
Collateral, and the Senior Note Trustee and its representatives may examine the
same, take
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extracts therefrom and make photocopies thereof, and the Pledgor agrees to
render to the Senior Note Trustee, at the Pledgor's cost and expense, such
clerical and other assistance as may be reasonably requested by the Senior Note
Trustee with regard thereto.
(j) The Pledgor will comply in all material respects with all
requirements of law applicable to the Pledged Collateral or any part thereof and
use its best efforts to obtain all Approvals as may be required to effect any of
the granting clauses of this Pledge Agreement.
(k) The Pledgor shall not permit any of the Pledged Subsidiaries to
issue any securities of the type required to be pledged hereunder unless such
securities are promptly pledged and delivered hereunder to the Senior Note
Trustee in accordance with Section 1(b).
(l) If, while this Pledge Agreement is in effect, any stock dividend,
stock split, reclassification, readjustment, reorganization, merger,
consolidation, exchange offer, tender offer or other change in the capital
structure, including the creation of any subscription or other rights or other
Pledged Securities, is declared or made, or proposed to be declared or made, by
any of the Pledged Subsidiaries or any other issuer of Pledged Collateral, all
substituted and additional securities or interest issued with respect to the
Pledged Collateral and evidenced by certificates shall, subject to receipt of
all applicable Approvals, be endorsed in blank by the Pledgor promptly upon
receipt thereof or otherwise appropriately transferred to the Senior Note
Trustee in negotiable form, and all certificates or instruments evidencing such
securities shall be delivered to the Senior Note Trustee to be held under the
terms of this Pledge Agreement in the same manner as, and as a part of, the
Pledged Collateral. All Pledged Securities shall be evidenced by one or more
certificates. Any securities that may be issued upon exercise of any
subscription or other rights relating to the Pledged Securities shall, subject
to receipt of all applicable Approvals, be endorsed in blank and delivered to
the Senior Note Trustee with any necessary powers.
(m) The Pledgor shall pay and discharge all taxes, assessments and
governmental charges or levies against any Pledged Collateral prior to
delinquency thereof and shall keep all Pledged Collateral free of all unpaid
charges whatsoever, unless contested in good faith and appropriate reserves have
been set aside in accordance with GAAP.
(n) The Pledgor has, independently and without reliance on the Senior
Note Trustee and/or any Holder and based on such documents and information as it
deemed appropriate, made its own credit analysis and decision to enter into this
Pledge Agreement.
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(o) In the event that the Senior Note Trustee desires to exercise any
remedies, voting or consensual rights or attorney-in-fact powers set forth in
this Pledge Agreement and determines it necessary to obtain any Approvals
therefor, then, upon the reasonable request of the Senior Note Trustee, the
Pledgor agrees to use its best efforts to assist and aid the Senior Note Trustee
to obtain as soon as practicable any necessary Approvals for the exercise of any
such remedies, rights and powers.
(p) The Pledgor has delivered to the Senior Note Trustee a duly
executed acknowledgment from the respective issuers of the Pledged Securities
acknowledging the registration on its books and records of the pledge of the
Pledged Securities pursuant to this Agreement.
(q) There are no voting trusts or other agreements or understandings
to which Pledgor is a party or by which it may be bound with respect to voting,
managerial consent, election or other rights of Pledgor relating to the Pledged
Securities.
(r) The principal place of business and chief executive office of
Pledgor and the office where Pledgor keeps its records concerning the Pledged
Collateral is 2500 Boardwalk, Atlantic City, New Jersey 08401.
Section 4. Administration of the Pledged Collateral. Subject to the terms
of any applicable Approvals, the Senior Note Trustee shall administer the
Pledged Collateral in accordance with the provisions hereof and of the Senior
Note Indenture.
Section 5. Release and Substitution of Pledged Collateral. The Pledged
Collateral shall not be released from the security interest created hereunder
and no property shall be substituted for any of the Pledged Collateral, except
(i) in accordance with the provisions of Article IV of the Senior Note
Indenture, (ii) in the case of the release of Pledged Securities of Unrestricted
Subsidiaries designated as such in accordance with the provisions of the Senior
Note Indenture, all of which provisions are hereby incorporated herein by
reference, (iii) in accordance with the provisions of Sections 5 and 19 hereof
and (iv) pursuant to any requirements of any order, decree, rule or judgment of
any Gaming Authority applicable to Pledgor or any of the Pledged Subsidiaries.
Section 6. Voting Rights, Dividends, Etc.
(a) So long as no Event of Default (as defined below) shall have
occurred and be continuing and notwithstanding any other section hereof:
(i) the Pledgor shall be entitled to exercise any and all voting
or consensual rights and
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powers, including subscription rights, accruing to an owner of the Pledged
Collateral or any part thereof for any purpose not inconsistent with the
terms of this Pledge Agreement or any agreement giving rise to any of the
Indenture Obligations;
(ii) the Pledgor shall be entitled to receive, retain and use any
and all dividends, distributions or other payments which are permitted by
the Senior Note Indenture and paid on the Pledged Collateral in cash or
property (other than securities which are subject to this Agreement); and
(iii) the Senior Note Trustee shall execute and deliver to the
Pledgor or cause to be executed and delivered to the Pledgor, all such
proxies, powers of attorney, dividend orders and other instruments as the
Pledgor may reasonably request for the purpose of enabling it to exercise
the voting or consensual rights and powers which the Pledgor is entitled to
exercise pursuant to the foregoing subparagraph (i) or to receive the
dividends, distributions or other payments which the Pledgor is authorized
to retain pursuant to the foregoing subparagraph (ii).
(b) Upon the occurrence of an Event of Default, but prior to the
receipt of all applicable Approvals by the Senior Note Trustee or the Holders,
the Pledgor shall be entitled to exercise the rights provided in Section 6(a)(i)
hereof.
(c) Upon the occurrence and during the continuance of an Event of
Default and in the case of voting and consensual rights, upon receipt of all
applicable Approvals, all rights of the Pledgor to exercise the voting or
consensual rights and powers which the Pledgor would otherwise be entitled to
exercise pursuant to subparagraph (i) of Section 6(a) and Section 6(b) hereof
and to receive the dividends, distributions and other payments which the Pledgor
would otherwise be authorized to receive and retain pursuant to subsection (ii)
of Section 6(a) shall automatically cease, and all such rights shall thereupon
become vested in the Senior Note Trustee, which shall then have the sole and
exclusive right and authority to exercise all such voting and consensual rights
and powers and to receive and retain as Pledged Collateral all such dividends,
distributions and other payments. Any and all money and other property paid over
to or received by the Senior Note Trustee pursuant to the provisions of this
Section 6(c) shall be retained by the Senior Note Trustee as Pledged Collateral
hereunder and shall be administered and applied in accordance with the
provisions of this Pledge Agreement and the Senior Note Indenture. All dividends
and interest payments which are received by the Pledgor contrary to the
provisions of this subsection (c) shall be received in trust for the benefit of
the Senior Note Trustee, shall be segregated
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from other funds of the Pledgor and shall be forthwith paid over to the Senior
Note Trustee as Pledged Collateral in the same form as so received (with any
necessary endorsement).
Section 7. Default; Remedies.
(a) Defined. For purposes of this Pledge Agreement, the term "Event of
Default" shall have the meaning provided in the Senior Note Indenture.
(b) Exercise of Remedies Under the Pledge Agreement. If an Event of
Default shall have occurred and be continuing, the Senior Note Trustee shall,
subject to obtaining all applicable Approvals, commence the taking of such
actions (or refrain from taking actions) toward collection or enforcement of
this Pledge Agreement and the Pledged Collateral (or any portion thereof),
including, without limitation, action toward foreclosure upon any Pledged
Collateral, as it deems appropriate in its sole discretion.
(c) Remedies Generally. If an Event of Default shall have occurred and
be continuing, the Senior Note Trustee itself or by its agents or attorneys may,
subject to obtaining all applicable Approvals, (i) exercise any or all of its
rights and remedies hereunder, under the Senior Note Indenture or any other
instrument or agreement securing, evidencing or relating to the Indenture
Obligations or under applicable laws (including all of the rights and remedies
of a secured creditor under the Uniform Commercial Code then in effect in the
State of New York; the "NUCC"), (ii) retain the Pledged Collateral or (iii)
sell, assign, transfer, or dispose of, endorse and deliver the whole or, from
time to time, any part of the Pledged Collateral at public or private sale or
sales, at any exchanges, brokers board or at any of the Senior Note Trustee's
offices or elsewhere, for cash, upon credit or for other property, for immediate
or future delivery, and for such price or prices and on such other terms that
the Senior Note Trustee may deem commercially reasonable (in its liability for
loss or damage). Upon consummation of any such sale, the Senior Note Trustee
shall have the right to assign, transfer, endorse and deliver to the purchaser
or purchasers thereof the Pledged Collateral so sold. Each such purchaser at any
such sale shall hold the property sold absolutely free from any claim or right
on the part of the Pledgor, and the Pledgor hereby waives (to the full extent
permitted by law) all rights of redemption, stay or appraisal which the Pledgor
now has or may at any time in the future have under any rule of law or statute
now existing or hereafter enacted. The Senior Note Trustee shall give the
Pledgor at least 10 Business Days' written notice (which the Pledgor agrees
shall be deemed to be reasonable notification within the meaning of Section
9-504(3) of the NUCC) of the Senior Note Trustee's intention to make any such
public or private sale. Any such sale shall be held at such time or times and at
such place or places as the Senior Note Trustee may deem commercially
reasonable. At any such sale, the Pledged Collateral, or portion
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thereof to be sold, may be sold as an entirety or in separate portions, as the
Senior Note Trustee may deem commercially reasonable. The Senior Note Trustee
shall not be obligated to make any sale of the Pledged Collateral if it shall
determine not to do so, regardless of the fact that notice of sale of the
Pledged Collateral may have been given. The Senior Note Trustee may adjourn any
public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned. In case sale of all or any part of the Pledged Collateral is made on
credit for future delivery, the Pledged Collateral so sold may be retained by
the Senior Note Trustee until the sale price is paid by the purchaser or
purchasers thereof, but the Senior Note Trustee shall not incur any liability in
case any such purchaser or purchasers shall fail to take up and pay for the
Pledged Collateral so sold and, in case of any such failure, such Pledged
Collateral may be sold again upon like notice and upon receipt of all applicable
Approvals. As an alternative to exercising the power of sale herein conferred
upon it, the Senior Note Trustee may proceed by suit or suits at law or in
equity to exercise its remedies regarding the Pledged Collateral and sell the
Pledged Collateral or any portion thereof pursuant to judgment or decree of a
court or courts having competent jurisdiction. If under mandatory requirements
of applicable law, the Senior Note Trustee shall be required to make disposition
of the Pledged Collateral within a period of time that does not permit the
giving of notice to the Pledgor as herein before provided, the Senior Note
Trustee need give the Pledgor only such notice of disposition as shall be
reasonably practicable in view of such mandatory requirements of law.
(d) Preventing Impairment of the Pledged Collateral. Regardless of
whether or not there shall have occurred any Event of Default, the Senior Note
Trustee may institute and maintain or cause in its name of the Pledgor or in the
name to be instituted and maintained, such suits and proceedings as the Senior
Note Trustee may be advised by counsel shall be necessary or expedient to
prevent any impairment of the security interest in or perfection of the Pledged
Collateral in contravention of the terms of the Senior Note Indenture. The
Pledgor agrees not to knowingly take or permit to be taken any action which
would impair the Pledged Collateral or the Senior Note Trustee's rights in the
Pledged Collateral.
Section 8. Senior Note Trustee Appointed Attorney-in-Fact. The Pledgor
hereby constitutes and appoints the Senior Note Trustee its attorney-in-fact,
during the occurrence and continuance of an Event of Default, for the purpose of
carrying out the provisions, but subject to the terms and conditions, of this
Pledge Agreement and taking any action and executing any instrument, including,
without limitation, any financing statement or continuation statement, and
taking any other action to maintain the validity, perfection, priority and
enforcement of
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the security interest intended to be created hereunder, that the Senior Note
Trustee may deem necessary or advisable to accomplish the purposes hereof, which
appointment is irrevocable and coupled with an interest; provided, however, that
nothing herein contained shall be construed as requiring or obligating the
Senior Note Trustee to make any commitment or to make any inquiry as to the
nature or sufficiency of any payment received by it, or to present or file any
claim or notice, or to take any action with respect to the Pledged Collateral or
any part thereof or the monies due or to become due in respect thereof or any
property covered thereby, and no action taken or omitted or any part thereof
shall give rise to any defense, counterclaim or right of action against the
Senior Note Trustee, unless the Senior Note Trustee's actions are taken or
omitted to be taken with gross negligence or bad faith or constitute willful
misconduct.
Section 9. Purchase of Pledged Collateral by Senior Note Trustee or
Holders. At any sale of the Pledged Collateral, whether pursuant to power of
sale or otherwise hereunder, Senior Note Trustee or any Holder may, to the
extent permitted by applicable law and subject to obtaining all applicable
Approvals, bid for and purchase, free from any right of redemption (all such
rights being hereby waived and released by the Pledgor to the extent permitted
by law), the Pledged Collateral or any part thereof or an interest therein and
upon compliance with the terms of such sale may hold, retain, exploit, resell or
otherwise dispose of such property without further accountability to the Pledgor
for the proceeds of such sale. The Pledgor will execute and deliver or cause to
be executed and delivered, such instruments, endorsements, assignments, waivers,
certificates and other documents and take such further action as the Senior Note
Trustee shall reasonably request in connection with any such sale.
Section 10. Payments and Proceeds.
In the event that the Senior Note Trustee ever receives any amounts
pursuant to this Pledge Agreement, or otherwise receives any amounts with
respect to the Pledged Collateral following the occurrence of an Event of
Default, such amounts shall first be applied to the reasonable costs and
expenses, including attorneys' fees, incurred by the Senior Note Trustee in
taking such action and thereafter shall be applied by the Senior Note Trustee as
provided in the Senior Note Indenture. After payment in full of all Indenture
Obligations, the remaining proceeds from any foreclosure hereunder shall be paid
to the Pledgor, or its successors or assigns, or to whomsoever may be lawfully
entitled to receive the same or as a court of competent jurisdiction may direct,
any surplus then remaining from such Proceeds.
Section 11. Waiver of Claims. Except as otherwise provided in this Pledge
Agreement, THE PLEDGOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
NOTICE OF JUDICIAL
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HEARING IN CONNECTION WITH THE SENIOR NOTE TRUSTEE'S TAKING POSSESSION OR THE
SENIOR NOTE TRUSTEE'S DISPOSITION OF ANY OF THE PLEDGED COLLATERAL, INCLUDING,
WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICES AND HEARINGS FOR ANY PREJUDGMENT
REMEDY OR REMEDIES AND ANY SUCH RIGHT THAT THE PLEDGOR WOULD OTHERWISE HAVE
UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES OR OF ANY STATE, and,
to the full extent permitted by applicable law, the Pledgor hereby further
waives:
(a) all damages occasioned by such taking of possession except any
damages which are the direct result of the Senior Note Trustee's gross
negligence, bad faith or willful misconduct;
(b) all other requirements as to the time, place and terms of sale or
other requirements, with respect to the enforcement of the Senior Note Trustee's
rights and powers hereunder; and
(c) except as provided in Section 7(c) hereof, all rights of
redemption, appraisal, valuation, stay, marshaling of assets, extension or
moratorium, existing at law or in equity, by statute or otherwise, now or
hereafter in force, in order to prevent or delay the enforcement of this Pledge
Agreement or the sale or other disposition of the Pledged Collateral or any
portion thereof, and the Pledgor, for itself and all who may claim under it,
insofar as it now or hereafter lawfully may, hereby waives all such rights.
Any sale of, or the exercise of any options to purchase, or any other
realization upon, any Pledged Collateral shall operate to divest all right,
title, interest, claim and demand, at law or in equity, of the Pledgor therein
and thereto, and shall be a perpetual bar both at law and in equity against the
Pledgor and against any and all persons claiming or attempting to claim the
Pledged Collateral so sold, optioned or realized upon, or any part thereof,
through and under the Pledgor.
Section 12. Remedies Cumulative; No Waiver. Each right, power and remedy of
the Senior Note Trustee provided for herein or in another agreement pursuant to
which a Lien is created in favor of the Senior Note Trustee for the benefit of
any Holder, or now or hereafter existing at law or in equity, by statute or
otherwise, shall be cumulative and concurrent and shall be in addition to every
other right, power or remedy of the Senior Note Trustee or any Holder provided
for herein or in another agreement pursuant to which a Lien is created in favor
of the Senior Note Trustee for the
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benefit of any Holder or now or hereafter existing at law or in equity, by
statute or otherwise. No failure on the part of the Senior Note Trustee or any
Holder to exercise, and no delay in exercising, any right, power or remedy
hereunder, or in another agreement pursuant to which a Lien is created in favor
of the Senior Note Trustee for the benefit or any Holder or now or hereafter
existing at law or in equity, by statute or otherwise, shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. No notice to or demand on the Pledgor hereunder
shall, of itself, entitle the Pledgor to any other or further notice or demand
in the same, similar or other circumstances.
Section 13. Additional Collateral. Without notice or consent of any Pledgor
and without impairment of the security interests and rights created by this
Pledge Agreement, the Senior Note Trustee may accept from any person or persons
additional collateral or other security for the Indenture Obligations. Neither
the creation of the security interests created hereunder nor the acceptance of
any such additional collateral or security shall prevent the Senior Note Trustee
from resorting to such additional collateral or security or to the Pledged
Collateral, in any order without affecting the Senior Note Trustee's rights
hereunder.
Section 14. Further Assurances. The Pledgor agrees (i) that it shall, at
its own expense, promptly file or record such notices, financing statements,
continuation statements or other documents and take all further action as may be
necessary to perfect, maintain and protect the validity, perfection and priority
of the security interests of the Senior Note Trustee hereunder or to enable the
Senior Note Trustee to exercise and enforce its rights and remedies hereunder
with respect to the Pledged Collateral, and as the Senior Note Trustee may
reasonably request, such instruments to be in form and substance satisfactory to
the Senior Note Trustee, and (ii) that it shall, at its own expense, do such
further acts and things and execute and deliver to the Senior Note Trustee such
additional conveyances, assignments, agreements and instruments as the Senior
Note Trustee may at any time reasonably request in connection with the
administration and enforcement of this Pledge Agreement or relative to the
Pledged Collateral or any part thereof or in order to assure and confirm unto
the Senior Note Trustee its rights, powers and remedies hereunder.
The Pledgor agrees that it will notify the Senior Note Trustee in writing
not less than 30 days prior to any change in location and the creation of a new
location of (a) the principal place of business or chief executive office and
(b) the offices where the Pledgor's books and records and related information
concerning the Pledged Collateral are kept; provided, however, that no such
change may be effected before all filings required to be made and all other
necessary action to preserve the perfection of the first priority security
interest of the Senior Note Trustee in the Pledged Collateral shall have been
made or taken.
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The Pledgor will not change its name, identity or structure in any manner
which might make any financing statement filed hereunder incorrect or misleading
unless Pledgor shall have given the Senior Note Trustee at least 30 days' prior
written notice thereof and shall have properly amended all financing statements
and properly filed all additional financing statements necessary to maintain the
perfection of the security interest granted hereunder at all times and shall
have provided the Senior Note Trustee with an Officers' Certificate certifying
that the above steps have been taken.
Section 15. Indemnification. The Senior Note Trustee shall have such
indemnity as is provided under Section 8.7 of the Senior Note Indenture.
Section 16. Registration Rights, etc.
(a) If the Senior Note Trustee determines that the registration of any
of the securities included in the Pledged Collateral under, or other compliance
with, the Securities Act or any similar federal or state law is desirable, upon
or at any time after an Event of Default and acceleration of either issue of the
Notes, subject to any applicable Approvals, the Pledgor will use its best
efforts to cause such registration or compliance to be effectively made, at no
expense to the Senior Note Trustee or to the Holders, and to continue any such
registration effective for such time as may be reasonably necessary in the
opinion of the Senior Note Trustee. The Pledgor will reimburse the Senior Note
Trustee upon demand for any expenses incurred by the Senior Note
Trustee(including reasonable attorneys' fees) incurred in connection therewith,
which obligation to pay such expenses shall be secured hereunder.
(b) If the Pledgor is unable to effect a public sale of any or all of
the Pledged Collateral or if the Senior Note Trustee determines that it is
desirable to sell the Pledged Collateral in one or more private sales, subject
to any applicable Approvals, the Senior Note Trustee may limit such sales to a
restricted group of purchasers who will be obliged to agree, among other things,
to acquire such securities for its own account for investment and not with a
view to distribution or resale. The Pledgor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable to the
seller than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner. The Senior Note Trustee shall be under
no obligation to delay a sale of any of the Pledged Collateral for the period of
time necessary to permit the issuer of such securities to register such
securities for public sale under the Securities Act or under applicable state
securities laws even if such issuer would agree to do so.
15
<PAGE>
(c) The Pledgor further agrees to do or cause to be done all such
other acts and things as may be necessary to make such sale or sales of all or
any part of the Pledged Collateral valid and binding and in compliance with any
and all applicable law, rules, regulations, orders or decrees, all at the
Pledgor's expense. The Pledgor further agrees that a breach of any of the
covenants contained in this Pledge Agreement will cause irreparable injury to
the Senior Note Trustee, as secured party, for which the Senior Note Trustee
would have no adequate remedy at law in respect of such breach and, as a
consequence, agrees that each and every covenant contained in this Section 16
shall be specifically enforceable against the Pledgor and the Pledgor waives and
agrees not to assert any defenses against an action for specific performance of
such covenants.
Section 17. Pledgor's Indenture Obligations Absolute. The liability of the
Pledgor under this Pledge Agreement shall remain in full force and effect
without regard to, and shall not be released, suspended, discharged, terminated
or otherwise affected by (a) any change in the time, place or manner of payment
of all or any of the Indenture Obligations, or in any other term of the Senior
Note Indenture, the Senior Notes, any waiver, indulgence, renewal, extension,
amendment or modification of or addition, consent or supplement to or deletion
from or any other action or inaction under or in respect of the Senior Note
Indenture, the Senior Notes or any assignment or transfer thereof; (b) any lack
of validity or enforceability, in whole or in part, of the Senior Note Indenture
or the Senior Notes; (c) any furnishing of any additional security for the
Indenture Obligations or any acceptance thereof or any release or non-perfection
of any security interest in the Pledged Collateral; (d) any limitation on any
party's liability or obligations under the Senior Note Indenture or the Senior
Notes; (e) any bankruptcy, insolvency, reorganization, composition, adjustment,
dissolution, liquidation or other like proceeding relating to a Pledgor, or any
action taken with respect to this Pledge Agreement by any trustee or receiver,
or by any court, in any such proceeding, whether or not the Pledgor shall have
notice or knowledge of any of the foregoing; (f) any exchange, release or
amendment or waiver of or consent to departure from any agreement pursuant to
which a Lien is created in favor of the Senior Note Trustee for the benefit of
the Holders, pursuant to which a person other than the Pledgor has granted a
security interest; or (g) any other circumstance that might otherwise constitute
a defense available to, or a discharge of the Pledgor.
Section 18. Waiver. To the extent permitted by applicable law, the Pledgor
hereby waives promptness, diligence, notice of acceptance and any other notice
with respect to any of the Indenture Obligations and this Pledge Agreement and
any requirement that the Senior Note Trustee protect, secure, perfect or insure
any security interest or any property subject thereto or exhaust any right or
take any action against the Pledgor or any other person or entity; provided,
however, that the Senior
16
<PAGE>
Note Trustee shall in any event take such care in the handling of any Pledged
Collateral in its possession as it takes with respect to Property of a similar
nature in its possession.
Section 19. Termination. Upon payment and performance in full and
satisfaction of all of the obligations of the Issuers or their successors or
assigns under the Senior Note Indenture and all other amounts payable under this
Pledge Agreement, this Pledge Agreement shall terminate and the Senior Note
Trustee shall assign and redeliver to the Pledgor all of the Pledged Collateral
hereunder that has not been sold, disposed of, retained or applied by the Senior
Note Trustee in accordance with the terms hereof. Such reassignment and
redelivery shall be without warranty by or recourse to the Senior Note Trustee,
and shall be at the expense of the Pledgor. At such time, this Pledge Agreement
shall no longer constitute a Lien upon or grant any security interest in any of
the Pledged Collateral, and the Senior Note Trustee shall, at the Pledgor's
expense deliver to the Pledgor written acknowledgment thereof and of
cancellation of this Pledge Agreement in a form reasonably requested by the
Pledgor; provided, however, that this Pledge Agreement shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the Indenture Obligations is rescinded or must otherwise be returned upon
the insolvency, bankruptcy or reorganization of the Pledgor or any of its
Subsidiaries all as though such payment had not been made.
Section 20. Notices. Any notices or other communications required or
permitted hereunder shall be in writing, and shall be sufficiently given if made
by hand delivery, by telex, by facsimile or registered or certified mail,
postage prepaid, return receipt requested, addressed as provided in Section 12.2
of the Senior Note Indenture.
Any party hereto may by notice to the other party designate such additional
or different addresses as shall be furnished in writing by such party. Any
notice or communication to any party shall be deemed to have been given or made
as of the date so delivered, if personally delivered; when answered back, if
telexed; when receipt is acknowledged, if faxed; and five calendar days after
mailing, if sent by registered or certified mail (except that a notice of change
of address shall not be deemed to have been given until actually received by the
addressee). The Pledgor may give notice to the Holders at the addresses set
forth for them in the register kept by the Registrar under the Senior Note
Indenture or may request that the Senior Note Trustee notify the Holders at such
addresses.
Section 21. Binding Agreement; Assignment. This Pledge Agreement shall be
binding upon and inure to the benefit the Senior Note Trustee, the Pledgor and
its respective successors and permitted assigns. Neither this Pledge Agreement
nor any interest herein or in the Pledged Collateral, or any part thereof, may
be assigned by the Pledgor without the prior written
17
<PAGE>
consent of the Senior Note Trustee (which consent shall not be unreasonably
withheld). This Pledge Agreement shall be deemed to be automatically assigned by
the Senior Note Trustee to any person who succeeds such Senior Note Trustee in
accordance with Article VIII of the Senior Note Indenture, and its assignee
shall have all rights and powers of, and act as, such Senior Note Trustee
hereunder.
Section 22. Governing Law. THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF.
Section 23. Amendments. This Pledge Agreement may not be amended or
modified, except with the consent of the Pledgor and the Senior Note Trustee in
accordance with Article X of the Senior Note Indenture.
Section 24. Severability. In the event that any provision contained in this
Pledge Agreement shall for any reason be held to be illegal or invalid under the
laws of any jurisdiction, such illegality or invalidity shall in no way impair
the effectiveness of any other provision hereof, or of such provision under the
laws of any other jurisdiction; provided, that in the construction and
enforcement of such provision under the laws of the jurisdiction in which such
holding of illegality or invalidity exists, and to the extent only of such
illegality or invalidity, this Pledge Agreement shall be construed and enforced
as though such illegal or invalid provision had not been contained herein.
Section 25. Headings. Section headings used herein are inserted for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Pledge Agreement.
Section 26. Counterparts. This Pledge Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be an
original, and all of which shall together constitute but one and the same
instrument. A complete set of counterparts shall be lodged with the Senior Note
Trustee.
Section 27. Expenses. The Pledgor will upon demand pay to the Senior Note
Trustee the amount of any and all reasonable expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, which the Senior
Note Trustee may incur in connection with (i) the administration of this Pledge
Agreement, (ii) the custody or presentation of, or the sale of, collection from,
or other realization upon, any of the Pledged Collateral, (iii) the exercise or
enforcement of any of the rights of the Senior Note Trustee hereunder or (iv)
the failure by the Pledgor to perform or observe any of the provisions hereof.
18
<PAGE>
Section 28. Gaming Laws. This Agreement is subject to any applicable Gaming
Law.
Section 29. No Recourse Against Others. A direct or indirect partner,
director, officer, employee or stockholder, as such, past, present or future of
the Pledgor or any successor entity shall not have any personal liability in
respect of the obligations of the Pledgor under this Agreement by reason of its
status as such partner, stockholder, employee, officer or director, to the
extent such liabilities may be waived under applicable law.
19
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to
be duly executed and delivered as of the day and year first written above.
TRUMP'S CASTLE HOTEL & CASINO, INC.,
as Pledgor
By: /s/ Nicholas L. Ribis
---------------------
Name: Nicholas L. Ribis
Title: Vice President and
and Assistant Secretary
FIRST BANK NATIONAL ASSOCIATION,
as Senior Note Trustee
By: /s/ Richard Prokosch
---------------------
Name: Richard Prokosch
Title: Trust Officer
20
<PAGE>
SCHEDULE A
Pledged Securities
================================================================================
Percentage
Issuer Class of Number of
(Pledged Equity Certificate Par of Outstanding
Subsidiary) Interest No.(s) Value Shares Equity
- --------------------------------------------------------------------------------
Trump's Castle general 104 N/A N/A 1%
Associates, L.P. partnership
interest
================================================================================
AMENDED AND RESTATED SERVICES AGREEMENT
SERVICES AGREEMENT (the "Agreement") made as of the 23rd day of October,
1996, by and among TRUMP CASINO SERVICES, L.L.C., a New Jersey limited liability
company ("TCS"), TRUMP PLAZA ASSOCIATES, a New Jersey general partnership
("Plaza Associates"), TRUMP TAJ MAHAL ASSOCIATES, a New Jersey general
partnership ("Taj Associates") and TRUMP'S CASTLE ASSOCIATES, L.P., a New Jersey
limited partnership ("Castle Associates").
W I T N E S S E T H:
WHEREAS, TCS, Plaza Associates and Taj Associates entered into that certain
Services Agreement, dated as of July 8, 1996 (the "Original Agreement"),
pursuant to which TCS has provided certain management, financial and other
functions necessary and incidental to the operations of each of Plaza
Associates' and Taj Associates' respective casino hotels, together with all
other activities and services reasonably necessary to carry out any of the
foregoing (the "Services");
WHEREAS, as of October 7, 1996, Trump Hotels & Casino Resorts Holdings,
L.P., a Delaware limited partnership that wholly owns Plaza Associates and Taj
Associates ("THCR Holdings"), acquired 100% of the outstanding equity interests
of Castle Associates (the "Castle Acquisition");
WHEREAS, TCS desires to provide the Services to Plaza Associates, Taj
Associates and Castle Associates, and Plaza Associates, Taj Associates and
Castle Associates desire to receive the Services and to reimburse TCS for its
expenses as set forth herein; and
WHEREAS, TCS, Plaza Associates and Taj Associates desire to amend and
restate the Original Agreement in order to, among other things, include Castle
Associates as a party.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
Section 1. Appointment. Plaza Associates, the owner and operator of the
Trump Plaza Hotel and Casino and Trump World's Fair Casino at Trump Plaza
(collectively, "Trump Plaza"); Taj Associates, the owner and operator of the
Trump Taj Mahal Casino Resort (the "Taj Mahal"); and Castle Associates, the
owner and operator of Trump's Castle Casino Resort ("Trump's Castle") each
hereby appoint TCS to act as provider of the Services to Plaza Associates, Taj
Associates and Castle Associates, respectively. TCS hereby accepts such
appointment and agrees to furnish the Services in accordance with the terms of
this Agreement.
Section 2. Services to be Provided. (a) TCS hereby agrees to render such
Services to Plaza Associates, Taj Associates and/or Castle Associates as may be
reasonably requested from time to time by Plaza Associates, Taj Associates
and/or Castle Associates, as the case
<PAGE>
may be. TCS shall provide the Services in the manner and at a level of
service consistent in all material respects with those furnished by TCS to Plaza
Associates and Taj Associates, and by Castle Associates on its own behalf,
immediately prior to the date hereof and in conformance with all applicable
statutes and regulatory requirements. TCS shall provide the Services in such a
manner that (i) neither Plaza Associates, Taj Associates nor Castle Associates
is unfairly advantaged or discriminated against and (ii) neither Plaza
Associates, Taj Associates nor Castle Associates realizes a competitive
advantage over the other.
(b) In providing the Services hereunder, the management of TCS shall be
directed by its Chief Executive Officer and its Operating Committee regarding
matters of policy, purpose, responsibility and authority. The Operating
Committee of TCS shall be comprised of the Executive Vice President of TCS and
the Chief Operating Officers of Plaza Associates, Taj Associates and Castle
Associates, each of whom shall retain the ability to direct management and
employees of TCS regarding administrative matters and daily operations with
respect to each of their respective casino hotel operations.
Section 3. Compensation. Except for payments made in accordance with
Section 4 of this Agreement, TCS shall receive no compensation for providing the
Services to Plaza Associates, Taj Associates and/or Castle Associates.
Section 4. Payment of Expenses. (a) With respect to the Services provided,
Plaza Associates, Taj Associates and/or Castle Associates, as the case may be,
shall pay to TCS an amount sufficient to fund all of the costs and expenses
incurred by TCS in providing such Services to Plaza Associates, Taj Associates
and/or Castle Associates, as the case may be ("Services Expenses"), including,
without limitation, the following:
(i) all payroll and employee benefits and related costs associated with the
employees utilized by TCS in providing the Services;
(ii) all secretarial, photocopying, telecommunications, office supplies and
other support services utilized by TCS in providing the Services;
(iii) all reasonable travel, food and lodging expenses incurred by TCS in
connection with providing the Services;
(iv) all fees and expenses of outside vendors and consultants utilized by
TCS in providing the Services;
(v) all overhead and other expenses incurred in the ordinary course of
providing the Services to Plaza Associates, Taj Associates and/or Castle
Associates; and
(vi) all insurance premiums and all expenses for legal and independent
accountants' services utilized by TCS in providing the Services.
(b) In the event that Services are provided to more than one of Plaza
Associates, Taj Associates and/or Castle Associates, Services Expenses shall be
apportioned
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<PAGE>
among Plaza Associates, Taj Associates and/or Castle Associates in
accordance with their respective use of such Services.
(c) Services Expenses and Organizational Expenses (as defined) shall be
invoiced by TCS to Plaza Associates, Taj Associates and/or Castle Associates, as
the case may be, in such manner and at such times as determined by mutual
agreement of the parties hereto. Plaza Associates, Taj Associates and/or Castle
Associates, as the case may be, shall pay such Services Expenses and
Organizational Expenses as invoiced promptly upon receipt thereof.
Alternatively, accounts may be established with TCS in the name of Plaza
Associates, Taj Associates and/or Castle Associates, as the case may be, for
payment in respect of Services Expenses and Organizational Expenses incurred by
them.
(d) All organizational expenses incurred by TCS following the date of this
Agreement, including, without limitation, fees of the Secretary of State of the
State of New Jersey, the Casino Control Commission of the State of New Jersey
(the "CCC"), the New Jersey Division of Gaming Enforcement (the "NJDGE") and any
other fees or expenses that are or may be required to be paid or incurred in
order for TCS to preserve and keep in full force its existence as a limited
liability company ("Organizational Expenses") shall be paid by Plaza Associates,
Taj Associates and Castle Associates, each being individually responsible for
33-1/3% of the Organizational Expenses.
(e) At the end of each calendar year, TCS, Plaza Associates, Taj Associates
and Castle Associates shall, based upon the audited financial statements for
such prior calendar year, reconcile any overpayments or underpayments which may
have occurred during such prior calendar year.
Section 5. Independent Contractor Status. (a) For all purposes herein, TCS
shall be deemed to be an independent contractor of Plaza Associates, Taj
Associates and/or Castle Associates, as the case may be, and none of the parties
hereto shall act, represent or hold itself out as having authority to act as an
agent or partner of either of the other parties hereto. Nothing contained in
this Agreement shall be construed as creating a partnership, joint venture,
agency, trust or other association of any kind, each party to this Agreement
being individually responsible only for its own obligations as set forth in this
Agreement.
(b) Nothing in this Agreement shall in any way limit Plaza Associates, Taj
Associates or Castle Associates in the ownership and operation of Trump Plaza,
the Taj Mahal or Trump's Castle, respectively, it being hereby acknowledged and
agreed that Plaza Associates, Taj Associates and Castle Associates are
responsible for the entire operation of Trump Plaza, the Taj Mahal and Trump's
Castle, respectively.
Section 6. Term. This Agreement shall be deemed to have commenced on the
date hereof and shall continue for a term of ten years unless terminated earlier
by any party hereto upon ninety (90) days prior written notice to each of the
other parties hereto.
Section 7. Miscellaneous.
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<PAGE>
(a) Waiver, Amendment. Neither this Agreement nor any provision hereof
shall be waived, amended, modified, changed, discharged or terminated except by
an instrument in writing executed by TCS, Plaza Associates, Taj Associates and
Castle Associates.
(b) Assignment. Neither this Agreement nor any right, remedy, obligation or
liability arising hereunder or by reason hereof shall be assignable by TCS,
Plaza Associates, Taj Associates or Castle Associates, without the prior written
consent of each of the other parties hereto. Any such attempted assignment
without such prior written consent shall be void and of no force or effect.
(c) Entire Agreement. This Agreement sets forth the entire agreement and
understanding of the parties hereto with respect to the transactions
contemplated hereby and supersedes any and all prior and contemporaneous
agreements and understandings relating to the subject matter hereof. No
representation, promise or statement of intention has been made by any party
hereto which is not embodied in this Agreement and no party hereto shall be
bound by or liable for any alleged representation, promise or statement of
intention not set forth herein.
(d) Severability. If any one or more of the provisions of this Agreement or
the application of any such provision or provisions to any person or
circumstance shall be held invalid, illegal or unenforceable in any respect for
any reason, the validity, legality and enforceability of any such provision or
provisions in every other respect and of the remaining provisions shall not in
any way be affected or impaired thereby, it being understood that all of the
provisions of this Agreement shall be enforceable to the full extent permitted
by law.
(e) Section Headings. The section headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW JERSEY, WITHOUT GIVING EFFECT TO
THE CONFLICTS OF LAWS PRINCIPLES THEREOF. TCS, PLAZA ASSOCIATES, TAJ ASSOCIATES
AND CASTLE ASSOCIATES HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY NEW
JERSEY STATE COURT SITTING IN ATLANTIC CITY, NEW JERSEY OR ANY FEDERAL COURT
SITTING IN CAMDEN, NEW JERSEY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY ACCEPT FOR
THEMSELVES AND IN RESPECT OF THEIR PROPERTY, GENERALLY AND UNCONDITIONALLY,
JURISDICTION OF THE AFORESAID COURTS. TCS, PLAZA ASSOCIATES, TAJ ASSOCIATES AND
CASTLE ASSOCIATES IRREVOCABLY WAIVE, TO THE FULLEST EXTENT THEY MAY EFFECTIVELY
DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE
TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN ANY INCONVENIENT FORUM.
-4-
<PAGE>
(g) Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed to be
an original as against any party whose signature appears thereon and all of
which shall together constitute one and the same instrument.
(h) Gaming Laws. Each of the provisions of this Agreement is subject to and
shall be enforced in compliance with the provisions, regulations or approvals
required by any state gaming authority, including, without limitation, the CCC
and the NJDGE.
(i) Third Party Rights. Nothing in this Agreement is intended or shall be
construed to confer upon or give any person, other than the parties hereto,
Trump Atlantic City Associates, Trump Hotels & Casino Resorts, Inc. and THCR
Holdings and each of their respective successors and permitted assigns, any
rights or remedies under or by reason of this Agreement or any transaction
contemplated hereby.
(j) Limitation on Damages. No party shall be liable to the other parties
for any consequential damages resulting from a breach of this Agreement.
(k) No Adverse Interpretation of Other Agreements. This Agreement may not
be used to interpret any other agreement of the parties hereto, and no such
agreement may be used to interpret this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first written above.
TRUMP CASINO SERVICES, L.L.C.
By: Trump Atlantic City Corporation
member
By: /s/ NICHOLAS L. RIBIS
-------------------------------------
Name: Nicholas L. Ribis
Title: Vice President
TRUMP PLAZA ASSOCIATES
By: /s/ BARRY J. CREGAN
-------------------------------------
Name: Barry J. Cregan
Title: Chief Operating Officer
TRUMP TAJ MAHAL ASSOCIATES
By: /s/ RUDOLF E. PRIETO
-------------------------------------
Name: Rudolf E. Prieto
Title: Chief Operating Officer
TRUMP'S CASTLE ASSOCIATES, L.P.
By: Trump's Castle Hotel & Casino, Inc.
its general partner
By: /s/ R. BRUCE MCKEE
-------------------------------------
Name: R. Bruce McKee
Title: Chief Operating Officer
AMENDMENT
TO
SECOND AMENDED AND RESTATED
PARTNERSHIP AGREEMENT
OF
TRUMP'S CASTLE ASSOCIATES
Amendment to the Second Amended and Restated Partnership Agreement, made
this 7th day of October 1996, by and among DONALD J. TRUMP ("Trump"), an
individual having an address at 725 Fifth Avenue, New York, New York 10022,
TC/GP, INC., a Delaware Corporation ("TC/GP"), and TRUMP'S CASTLE HOTEL &
CASINO, INC., a New Jersey Corporation ("TCHI").
W I T N E S S E T H:
WHEREAS, TCHI and Trump, as general partners and Trump as limited partner,
formed a partnership (the "Partnership") by entering into an Agreement of
Limited Partnership under the laws of the State of New Jersey on May 24, 1985,
and amended such agreement on December 14, 1988, August 8, 1990, February 7,
1992 and February 10, 1992 and further amended and restated such agreement as
set forth in an Amended and Restated Partnership Agreement dated May 29, 1992
and a Second Amended and Restated Partnership Agreement dated December 30, 1993
(said Second Amended and Restated Partnership Agreement as in effect on the date
hereof is referred to herein as the "Partnership Agreement"); and
WHEREAS, Trump, TCHI and TC/GP desire to amend the Agreement to convert the
Partnership from a general partnership to a limited partnership under the laws
of the State of New Jersey effective on the date hereof and to continue the
Partnership as a limited partnership under the New Jersey Uniform Limited
Partnership Law; and
WHEREAS, in conjunction with the conversion of the Partnership to a limited
partnership, Trump, TCHI and TC/GP desire to add the designation "L.P." to the
name of the Partnership.
NOW THEREFORE, it is agreed that:
1. Effective on or after the date hereof, paragraph 1.1 of the Partnership
Agreement is hereby amended in its entirety to read as follows:
"1.1 Name. The name of the Partnership shall be, and the business of the
Partnership shall be conducted under the name of, "Trump's
<PAGE>
Castle Associates, L.P.". All contracts of the Partnership shall be made,
all instruments and documents executed, and all acts of the Partnership
done, in the name of the Partnership; and all properties of the Partnership
shall be acquired, held and disposed of in the name of the Partnership or
in a designated nominee."
2. The following definitions are added to Article 2 of the Partnership
Agreement:
"General Partners" shall mean Trump, TC/GP and TCHI, their duly admitted
successors and assigns as general partners hereof, and any other Person who is a
general partner of the Partnership at the time of reference thereto.
"Limited Partners" shall mean Trump and TC/GP, their permitted successors
or assigns as limited partners hereof, and any Person who is a limited partner
of the Partnership at the time of reference thereto.
3. The definition of "Partner" under Article 2 of the Partnership Agreement
is hereby amended in its entirety to read as follows:
"Partners" shall mean the General Partners and the Limited Partners, their
duly admitted successors or assigns or any Person who is a partner of the
Partnership at the time of reference thereto.
4. Effective on and after the date hereof, Paragraph 4.5 of the Partnership
Agreement is hereby amended in its entirety to read as follows:
"As at any date, each Partner's "Partnership Percentage" shall mean such
Partner's cumulative General Partner and Limited Partner percentage interest in
the Profits and Losses of the Partnership determined in accordance with this
Section 4.5. As at the date of this Agreement the Partnership Percentage of each
Partner is as follows:
Limited General
Partnership Partnership Partnership
Partner Interest Interest Percentage
------- ----------- ----------- -----------
Trump 60.5% 1.0% 61.5%
TC/GP 36.5% 1.0% 37.5%
TCHI -- 1.0% 1.0%
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<PAGE>
5. Effective on and after the date hereof, Paragraph 6.2 of the Partnership
Agreement is amended in its entirety to read as follows:
6.2. Partners. The day-to-day control of the business, operations and
activities of the Partnership shall be vested in and conducted by the General
Partners which shall be responsible for supervising the activities of the
Partnership's officers, employees and agents. Except as otherwise provided
expressly in this Agreement, and subject to the provisions of Section 6.1 and
Article 7, the General Partners shall have full authority in the name and on
behalf of the Partnership to do all things deemed necessary or desirable by them
in the conduct of the business of the Partnership, including, without
limitation, the right to enter into and perform contracts of all kinds, to bring
and defend actions at law or in equity, to buy, own, manage, sell, lease or
otherwise acquire or dispose of Partnership assets, to pay all expenses incurred
by or on behalf of the Partnership, and to cause the Partnership to enter into
partnerships, joint ventures and similar arrangements; provided, however, that
no action that would, if the Partnership were a corporation incorporated under
the laws of the State of New Jersey, require the authorization of the board of
directors of such corporation, shall be deemed authorized or be undertaken by
the General Partners without the prior approval of the Board of Partner
Representatives in accordance with Article 7 hereof. The General Partners may
delegate matters within the authority of the General Partners hereunder to a
General Partner who shall be the managing partner or to a third party, acting as
agent for the Partners, pursuant to a management or similar agreement.
6. Effective on and after the date hereof, Paragraph 13.1 of the
Partnership Agreement is amended in its entirety to read as follows:
13.1 Termination. The Partners hereby waive their right of partition and
agree not to do anything that would terminate the Partnership prior to the
expiration of its term without the prior written consent of the other Partners.
No Partner may voluntarily withdraw from the Partnership without the prior
written consent of all other Partners. Upon the withdrawal, death, retirement or
insanity of the General Partner, or any other event of dissolution under the New
Jersey Uniform Limited Partnership Law, the business of the Partnership shall be
wound-up and terminated unless all remaining Partners, within 90 days
thereafter, agree in writing that the Partnership shall be reconstituted and its
business continued.
7. On and after the date hereof, each reference in the Partnership
Agreement to "this Partnership Agreement", "hereof", "hereunder" or words of
like import referring to the Agreement shall mean and be a reference to the
Partnership Agreement as
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<PAGE>
amended by this Amendment. The Partnership Agreement, as amended by this
Amendment, shall continue in full force and effect and is hereby in all respects
ratified and confirmed.
8. From time to time upon request and without further consideration, each
of the parties hereto shall, and shall cause its subsidiaries and affiliates to,
execute, deliver and acknowledge all such further instruments, including a
Certificate of Limited Partnership, and do such further acts as any other party
hereto may reasonably require to evidence or implement the conversion of the
Partnership to a Limited Partnership pursuant to this Amendment.
9. This Amendment shall be governed by, and construed in accordance with,
the laws of the State of New Jersey.
10. Notwithstanding anything to the contrary contained in this Amendment,
this Amendment will be deemed to include all provisions required by the New
Jersey Casino Control Act and the regulations promulgated thereunder ("Casino
Control Act") and to the extent that anything contained in this Amendment is
inconsistent with the Casino Control Act, the provisions of the Casino Control
Act shall govern and all provisions of the Casino Control Act, to the extent
required by law to be included in this Amendment, are incorporated herein by
reference as if fully restated in this Amendment.
IN WITNESS WHEREOF, this Amendment has been executed as of the 7th day of
October 1996.
/s/ DONALD J. TRUMP
--------------------------------------
Donald J. Trump
TC/GP, INC.
By: /s/ DONALD J. TRUMP
--------------------------------------
Donald J. Trump, President
TRUMP'S CASTLE HOTEL & CASINO, INC.
By: NICHOLAS L. RIBIS
--------------------------------------
Nicholas L. Ribis
Vice President
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TRUMP'S CASTLE ASSOCIATES, L.P.
a New Jersey limited partnership
Third Amended and Restated Partnership Agreement
October 7, 1996
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TRUMP'S CASTLE ASSOCIATES, L.P.
a New Jersey limited partnership
THIRD AMENDED AND RESTATED PARTNERSHIP AGREEMENT
THIS THIRD AMENDED AND RESTATED PARTNERSHIP AGREEMENT is entered into by
and among Donald J. Trump ("Trump"), an individual whose principal residence is
725 Fifth Avenue, New York, New York 10022, Trump Casinos II, Inc. (formerly
known as TC/GP, Inc.), a Delaware corporation ("TC/GP"), as Withdrawing Limited
Partners, Trump's Castle Hotel & Casino, Inc., a New Jersey corporation
("TCHI"), as general partner, and Trump Hotels & Casino Resorts Holdings, L.P.,
a Delaware limited partnership ("THCR Holdings"), as limited partner. Each of
TCHI and THCR Holdings is referred to herein as a "Partner" and collectively
they are the "Partners."
PRELIMINARY STATEMENT
Terms defined in this Preliminary Statement which are not defined
herein have the respective meanings set forth in Article 2 of this Agreement.
WHEREAS, TCHI and Trump, as general partners, and Donald J. Trump as
limited partner, formed a partnership (the "Partnership") by entering into an
Agreement of Limited Partnership under the laws of the State of New Jersey on
May 24, 1985, and amended such agreement on December 14, 1988, August 8, 1990,
February 7, 1992 and February 10, 1992, and further amended and restated such
agreement as set forth in an Amended and Restated Partnership Agreement dated
May 29, 1992 (said Amended and Restated Partnership Agreement, as in effect on
the date hereof, is referred to herein as the "Prior Agreement"); and
WHEREAS, in connection with the consummation of an exchange offer and
recapitalization of certain outstanding indebtedness of the Partnership, Trump,
TCHI and TC/GP amended and restated in its entirety the Prior Agreement in a
Second Amended and Restated Partnership Agreement dated as of December 30, 1993,
which set forth their respective rights and obligations in connection with the
Partnership; and
WHEREAS, in connection with the acquisition of all of the equity
interests in the Partnership by THCR Holdings (the "Acquisition"), Trump, TCHI
and TC/GP amended the Second Amended and Restated Partnership Agreement dated as
of December 30, 1993 in an Amendment dated October 7, 1996, whereby Trump, TCHI
and TC/GP converted the Partnership to a limited partnership governed by the New
Jersey Uniform Limited Partnership Law and set forth the respective limited and
general partnership interests of each Partner (the Second Amended and Restated
Partnership Agreement as amended and in effect on the date hereof is referred to
herein as the "Current Agreement"); and
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WHEREAS, Trump, TCHI and TC/GP desire to amend the Current Agreement to
convert each of Trump's and TC/GP's remaining one (1%) percent general
partnership interests in the Partnership into one (1%) percent limited
partnership interests (the "Conversion") such that upon the consummation of the
Conversion, Trump has a 61.5% limited partnership interest in the Partnership
and TC/GP has a 37.5% limited partnership interest in the Partnership; and
WHEREAS, simultaneously with the Conversion, Trump and TC/GP have
contributed their respective 61.5% or 37.5% limited partnership interest in the
Partnership to THCR Holdings; and
WHEREAS, Trump, TC/GP and TCHI desire to substitute THCR Holdings as a
limited partner of the Partnership in lieu of Trump and TC/GP to the full extent
of the interest so assigned;
NOW, THEREFORE, Trump, TCHI, TC/GP and THCR Holdings agree that the
Current Agreement, as amended by the Second Amendment, is hereby amended and
restated in its entirety and that the Partnership is hereby continued as a
limited partnership on the terms and conditions set forth herein, and further
agree as follows:
ARTICLE 1
Certain Matters
2.1 Name. The name of the Partnership shall be, and the business of the
Partnership shall be conducted under the name of, "Trump's Castle Associates,
L.P.". All contracts of the Partnership shall be made, all instruments and
documents executed, and all acts of the Partnership done, in the name of the
Partnership; and all properties of the Partnership shall be acquired, held and
disposed of in the name of the Partnership or in a designated nominee.
2.2 Term. The Partnership shall continue in existence until December
31, 2041 or until the earlier termination of the Partnership in accordance with
the provisions of Article 13.
ARTICLE 2
Definitions
The following definitions shall for all purposes, unless otherwise
clearly indicated to the contrary, apply to the terms used in this Agreement:
"Acquisition" has the meaning set forth in the preamble to this
Agreement.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person,
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and, with respect to any specified natural Person, any other Person having a
relationship with such specified Person by blood, marriage or adoption not more
remote than first cousin. For purposes of this definition: "control" when used
with respect to any specified Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agreement" means this Partnership Agreement, as in effect from time to
time.
"Alternate Noteholder Representative" has the meaning stated in Section
7.2 of this Agreement.
"Appraisal" shall mean the appraisal of the Castle dated August 31,
1993 prepared by Appraisal Group International.
"Bank Pledge Agreements" shall mean the pledge agreements listed on
Schedule 1 hereto in favor of certain creditors of Donald J. Trump.
"Board of Partner Representatives" has the meaning stated in Section
6.1.
"Capital Account" has the meaning stated in Section 4.1.
"Capital Expenditure" means, with respect to any Person, amounts which
should in accordance with generally accepted accounting principles be added to
the fixed assets account on the balance sheet of such Person in respect of (i)
the acquisition, construction, improvement, replacement or betterment of assets
or leaseholds and (ii) to the extent related to and not included in clause (i)
above, expenditures on, account of materials, contract labor and direct labor
(excluding expenditures properly chargeable to repairs and maintenance), all
determined in accordance with generally accepted accounting principles
consistently applied.
"Capitalized Lease" means, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee which, in
conformity with generally accepted accounting principles consistently applied,
is or should be accounted for as a capitalized lease on the balance sheet of
such Person.
"Capitalized Lease Obligations" means, with respect to any Person, the
amount of the liability reflecting the aggregate discounted amount of future
payments under all Capitalized Leases by such Person as lessee, calculated in
conformity with generally accepted accounting principles consistently applied.
"Casino Control Act" means the New Jersey Casino Control Act and the
regulations promulgated thereunder, each as in effect from time to time.
"Castle" has the meaning stated in Article 3.
"Certificate of Interest" has the meaning stated in Section 15.15.
"Certificate Transfer Ledger" has the meaning stated in Section 15.15.
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"Code" means the Internal Revenue Code of 1986, as in effect from time
to time.
"CRDA Bonds" has the meaning stated in Section 1.01 of the Indenture.
"Debt" means, with respect to any Person, any indebtedness in respect
of borrowed money (whether or not the recourse of the lender is to the whole of
the assets of such Person or only to a portion thereof), or evidenced by bonds,
notes, debentures or similar instruments or letters of credit, or representing
the balance deferred and unpaid of the purchase price of any property (excluding
trade credit, so long as such trade credit is not characterized as a long-term
liability under generally accepted accounting principles), if and to the extent
such indebtedness would appear as a liability upon a balance sheet of such
Person prepared in accordance with generally accepted accounting principles
consistently applied, and shall also include any Capitalized Lease Obligations
of such Person.
"EBITDA" means, with respect to any period, an amount equal to the sum
of (i) the net income (or loss) of the Partnership for such period determined in
accordance with generally accepted accounting principles, consistently applied,
excluding any extraordinary, unusual or non-recurring gains or losses, plus (ii)
all amounts deducted in computing such net income (or loss) in respect of
interest (including the imputed interest portions of rentals under Capitalized
Leases), depreciation, amortization and taxes based upon or measured by income,
plus (iii) other non-cash charges arising from market value adjustments and
adjustments pertaining to contributions of deposits in each case in respect of
CRDA Bonds.
"General Partner" shall mean TCHI, its successors and assigns.
"Guarantee" means:
(i) any guarantee by a Person of the payment or performance of,
or any contingent obligation by a Person in respect of, any
Debt or other obligations of any obligor other than such
Person;
(ii) any other arrangement whereby credit is extended to one
obligor on the basis of any promise or undertaking of
another Person (including any "comfort letter" written by
such other Person to a creditor or prospective creditor) to
(a) pay the Debt or other obligations of such obligor, (b)
purchase an obligation owed by such obligor, (c) purchase or
lease assets under circumstances designed to enable such
obligor to discharge certain specific obligations or (d)
maintain the capital, working capital, solvency or general
financial condition of such obligor, in each case whether or
not such arrangement is disclosed in the balance sheet of
such other Person or referred to in a note thereto;
(iii) any liability of a Person as a general partner of a
partnership in respect of Debt or other obligations of such
partnership (other than non-recourse Debt or other
non-recourse obligations);
(iv) any liability of a Person as a joint venturer of a joint
venture in respect of Debt or other obligations of such
joint venture (other than non-recourse Debt or other
non-recourse obligations); and
(v) reimbursement obligations with respect to outstanding
letters of credit, surety bonds and other financial
guarantees; provided,
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however, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary
course of business.
"Intercreditor Agreement" means the Intercreditor Agreement dated as of
the date hereof between Midlantic, the Partnership and the Trustees under the
Mortgage Note Indenture, PIK Indenture and Senior Note Indenture.
"Limited Partner" shall mean THCR Holdings, its successors and assigns.
"Limited Partner Priority Capital" means, at any date, an amount equal
to $15 million, less distributions made pursuant to Section 5.7.
"Midlantic" means Midlantic National Bank, together with its successors
and assigns.
"Midlantic Debt" means the indebtedness in a principal amount not to
exceed $38,000,000 evidenced by the Amended and Restated Credit Agreement, dated
as of May 29, 1992, as amended, between the Partnership, TCFI and Midlantic
National Bank and the Amended and Restated Term Note of the Partnership issued
thereunder. Said Amended and Restated Credit Agreement, as amended, is referred
to herein as the "Midlantic Credit Agreement."
"Midlantic Debt Default" shall mean the occurrence of (i) any Event of
Default (as such term is defined in the Midlantic Credit Agreement), in respect
of which Midlantic shall be obligated to give the Partnership the 90-day notice
required by Section 3.1 of the Intercreditor Agreement prior to any acceleration
of the Midlantic Debt based thereupon, but only if such a 90-day notice is given
by Midlantic, or (ii) any other Event of Default (as so defined).
"Mortgage Noteholders" shall mean the Holders (as defined in Section
1.1 of the Mortgage Note Indenture) of Mortgage Notes.
"Mortgage Note Indenture" means the Indenture, dated as of the date
hereof, by and among TCFI, the Partnership and the Trustee, relating to TCFI's
11 3/4% Mortgage Notes due 2003, as such Indenture may be supplemented, modified
or amended by one or more indentures or other instruments supplemental thereto
entered into pursuant to the applicable provisions thereof.
"Mortgage Notes" has the meaning stated in Section 1.1 of the Mortgage
Note Indenture.
"New Jersey Uniform Limited Partnership Law" means Sections 1 through
73 of Chapter 2A of Title 42 of the New Jersey Statutes Annotated, as in effect
from time to time.
"Noteholders" shall mean the Mortgage Noteholders and the PIK
Noteholders.
"Noteholder Representatives" means the Partner Representatives
appointed by the Noteholders in accordance with Section 7.2.
"Notes" shall mean the Mortgage Notes and the PIK Notes.
"Partner" means any of TC/GP, Trump and TCHI and the permitted
transferees, successors and assigns of each, including THCR Holdings.
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"Partner Representative" means a member of the Board of Partner
Representatives appointed and holding such office in accordance with Article 7.
"Partnership" has the meaning stated in the Preliminary Statement to
this Agreement.
"Partnership Interest" means the interest of a Partner in the
Partnership.
"Partnership Percentage" has the meaning stated in Section 4.5.
"Person" means any individual, partnership, corporation, company,
association, trust, joint venture, unincorporated organization, entity or
division, or any government, governmental department or agency or political
subdivision thereof.
"PIK Notes" have the meaning stated in section 1.1 of the PIK
Indenture.
"PIK Noteholders" shall mean the Holders (as defined in Section 1.1 of
the PIK Indenture) of PIK Notes.
"PIK Indenture" means the Indenture dated as of the date hereof by and
among TCFI, the Partnership and the Trustee, relating to TCFI's Increasing Rate
Subordinated Pay-in-Kind Notes due 2005, or such Indenture may be supplemented,
modified or amended by one or more indentures or other instruments supplemental
thereto entered into pursuant to the applicable provisions thereof.
"Profits" and "Losses" mean, for each fiscal year or other period of
the Partnership, the amount of profits or losses, as the case may be, for such
year or period determined in the manner prescribed in Code Section 703(a) using
the tax accounting methods used for Federal income tax purposes and as
prescribed in Regulations under Code Section 704(b) reflecting the book
adjustment of the Capital Accounts as initially reflected in Article 4. Amounts,
if any, allocated and payable pursuant to Section 5.5 shall be treated as
expenses for determining such profits and losses.
"Security Documents" shall mean the Mortgage Documents (as defined in
the Mortgage Note Indenture) and the Pledge Agreement (as defined in the PIK
Indenture).
"Senior Note Indenture" has the meaning set forth for such term in the
Mortgage Note Indenture.
"Services Agreement" means the Services Agreement dated as of the date
hereof between the Partnership and TC/GP, as the same may be supplemented,
modified or amended in accordance with Section 7.11.1.12.
"TCFI" means Trump's Castle Funding, Inc., a New Jersey corporation,
all of the capital stock of which is owned by the Partnership and which acts for
the Partnership as a nominee corporation to effect, in a conduit basis, the
borrowings evidenced by the Mortgage Notes and the PIK Notes issued under the
Mortgage Note Indenture and PIK Indenture.
"TC/GP" has the meaning set forth in the Preamble to this Agreement.
"TCHI" has the meaning set forth in the Preamble to this Agreement.
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"THCR Holdings" has the meaning set forth in the preamble to this
Agreement.
"Trump" has the meaning stated in the Preamble to this Agreement.
"Trump Representatives" means the Partner Representatives appointed by
the General Partner in accordance with Section 7.2.
"Trustee" means First Bank National Association, as trustee under the
Mortgage Note Indenture and the PIK Indenture, and any successor trustee
appointed under the provisions of said indentures.
"Withdrawing Limited Partners" shall mean TC/GP and Trump.
ARTICLE 3
Purpose
The purpose and business of the Partnership is to conduct casino gaming
and to own and operate the Trump's Castle Casino Resort and the ancillary
structures, marina and other facilities used or to be used in connection with
the operation thereof located in Atlantic City, New Jersey (collectively, the
"Castle"), with the power to: (i) buy, sell, lease, or enter into any
transaction to effectuate any of the foregoing; (ii) exercise complete control
over the Castle and all personal property attached to or used in connection
therewith and all securities or other interests or obligations arising out of
the sale, exchange or other disposition of the Castle or any of its properties
by the Partnership; (iii) borrow money for Partnership purposes and otherwise
mortgage, pledge or encumber the Castle or any part thereof either directly or
through one or more nominee corporations, including, without limitation, TCFI;
and (iv) do all things necessary, incidental, desirable or appropriate in
connection with the foregoing.
ARTICLE 4
Capital Accounts
2.3 Capital Accounts. A separate capital account shall be maintained
for each Partner (each a "Capital Account"). Capital Accounts shall be
maintained in accordance with the regulations promulgated under Section 704(b)
of the Code. The Capital Account as of the date of this Agreement of each
Partner is as follows:
(a) THCR Holdings shall have a capital account equal to the
combined capital accounts of Trump and TC/GP at the time of
the contribution of their Partnership Interests to THCR
Holdings, adjusted in accordance with Treasury Regulation
Sections 1.704-1(b)(2)(iv)(l) and 1.704-1(b)(2)(iv)(e).
(b) TCHI shall have a capital account equal to its capital
account at the time of the contribution by Trump and TC/GP
of their Partnership Interests to THCR Holdings, adjusted in
accordance with Treasury Regulations Section
1.704-1(b)(2)(iv)(e).
2.4 Maintenance of Separate Capital Accounts. There shall be credited
to each Partner's Capital Account, as set forth in Section 4.1, each Partner's
share of the Profits of the Partnership allocated to such Partner pursuant to
Article 5 and any additional contributions to the capital of the Partnership
made by such Partner in accordance with Section 4.4. There shall be charged
against each Partner's Capital Account the amount of all cash
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distributions made to such Partner (other than such distributions treated as
guaranteed payments pursuant to Section 5.5), such Partner's share of the Losses
of the Partnership allocated to such Partner pursuant to Article 5 and the fair
market value of any property (other than cash) distributed to such Partner.
2.5 Capital Account Determinations. Except as otherwise provided in
this Agreement, whenever it is necessary to determine the Capital Account of any
Partner for purposes of any provision hereof, the Capital Account of the Partner
shall be determined after giving effect to all capital contributions theretofore
made to the Partnership and all allocations of Profits and Losses for
transactions effected prior to the time as of which such determination is made
and all distributions theretofore made. The Capital Account of any Partner,
including any additional or substitute partner, who shall receive a Partnership
Interest in the Partnership or whose Partnership Interest shall be increased by
means of a transfer to such Partner of all or a part of the Partnership Interest
of another Partner shall be credited with (or charged with) the transferor's
Capital Account (or an appropriate part thereof in the case of a partial
transfer of a Partnership Interest); and, in such event, corresponding
adjustments shall be made with respect to the Capital Account of the transferor
Partner.
2.6 Additional Capital Contributions. No Partner shall be obligated to
make any additional contributions to the capital of the Partnership or, as
between Partners, to restore any deficit in its Capital Account. If a Partner
shall make any additional contributions to the capital of the Partnership, the
amount thereof shall be credited to such Partner's Capital Account; but, unless
otherwise agreed among the Partners at the time such contribution is made, such
Partner will not be entitled to the return of such contribution prior to the
termination of the Partnership. No additional contribution made by a Partner
will result in a change in the Partnership Percentages of the Partners.
2.7 Partnership Percentages. As at any date, each Partner's
"Partnership Percentage" shall mean such Partner's percentage interest in the
Profits and Losses of the Partnership determined in accordance with this Section
4.5. As at the date of this Agreement the Partnership Percentage of each Partner
is as follows:
General Limited
Partnership Partnership Partnership
Partner Percentage Percentage Percentage
- ------- ------------- ----------- ------------
THCR Holdings -- 99.0% 99.0%
TCHI 1.0% -- 1.0%
ARTICLE 5
Allocations, Certain Payments and Distributions
2.8 Allocations. Except as is otherwise provided in this Agreement, all
Profits and Losses of the Partnership shall be allocated among the Partners for
each calendar year (or portion thereof) and credited or debited, as the case may
be, to their Capital Accounts as follows:
2.8.1 Losses. Losses shall be allocated as follows: (A) First, to those
Partners with positive balances in their Capital Accounts in proportion to and
to the extent of the respective positive balances of such Capital Accounts,
until either the full amount of such Losses
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shall have been so allocated or the Capital Account balances equal zero, and (B)
next, in accordance with the Partners' Partnership Percentages.
2.8.2 Profits. Profits shall be allocated as follows: (A) First, to
those Partners with negative balances in their Capital Accounts, in proportion
to and to the extent of the respective negative balances of the Capital
Accounts, until either the full amount of such Profit shall have been so
allocated or the Capital Account Balances of such Partners equal zero, (B) then,
if the ratio between the Capital Account Balances of the Partners is other than
in the ratio of their then prevailing Partnership Percentages (determined for
this purpose without regard to any unrecovered amounts of Limited Partner
Priority Capital), there shall be credited to the Partners with the lesser
balance so much of the Profit as may be available to eliminate or reduce the
disparity and (C) next, in accordance with the Partners' Partnership
Percentages.
2.9 Allocations for Tax Purposes.
2.9.1 Except as otherwise provided in this Section 5.2, Profits and
Losses for all income tax purposes shall be allocated to the Partners to the
greatest extent practicable in a manner consistent with the manner set forth in
Sections 5.1.1 and 5.1.2 and Code Section 704(b) and (c) and the Regulations
promulgated thereunder. Except as provided in Section 5.2.5, allocations
pursuant to this Section 5.2 shall not be reflected in the Capital Accounts of
the Partners.
2.9.2 Notwithstanding anything to the contrary in this Agreement, if
there is a net decrease in partnership minimum gain, as defined in Treasury
Regulation Section 1.704-2(b)(2), (except as a result of conversion or
refinancing of Partnership indebtedness, certain capital contributions or
revaluations of the Partnership property as further outlined in Treasury
Regulation Sections 1.704-2(d)(4), (f)(2) or (f)(3)), each Partner shall be
specially allocated items of Partnership income and gain for such year (and if
necessary, subsequent years) in an amount equal to that Partner's share of the
net decrease in Partnership minimum gain. The items to be so allocated shall be
determined in accordance with Treasury Regulation Section 1.704-2(f). This
section 5.2.2 is intended to comply with the minimum gain chargeback rule in
said Section of the Treasury Regulations and shall be interpreted consistently
therewith. Allocations pursuant to this section 5.2.2 shall be made in
proportion to the respective amounts required to be allocated to each Partner
pursuant hereto.
2.9.3 Notwithstanding anything to the contrary in this Agreement except
Section 5.2.2, if there is a net decrease in minimum gain attributable to
partner nonrecourse debt, as determined in accordance with Treasury Regulation
Section 1.704-2(i)(2), each Partner shall be specially allocated items of
Partnership income and gain for such year (and if necessary, subsequent years)
in an amount equal to that Partner's share of the net decrease in the minimum
gain attributable to partner nonrecourse debt. The items to be so allocated
shall be determined in accordance with Treasury Regulation Section 1.704-2(i)(4)
and (j)(2). This Section 5.2.3 is intended to comply with the minimum gain
chargeback requirement contained in Treasury Regulations Section 1.704-2(i)(4)
and shall be interpreted consistently therewith. Allocations pursuant to this
section 5.2.3 shall be made in proportion to the respective amounts required to
be allocated to each Partner pursuant hereto.
2.9.4 If during any taxable year of the Partnership any Partner
unexpectedly receives an adjustment, allocation or distribution described in
Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), and such
Partner has a deficit Capital Account balance, there shall be allocated to
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such Partner items of income and gain (consisting of a pro rata portion of each
item of Partnership income, including gross income and gain for such year) in an
amount and manner sufficient to eliminate such Partner's deficit Capital Account
balance as quickly as Possible. This Section 5.2.4 is intended to constitute a
"Qualified Income Offset", under Treasury Regulation Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
2.9.5 Each Partner's Capital Account shall be charged for such
Partner's allocable share of expenditures of the Partnership (based on the
Partnership Percentages prevailing on the date such expenditures were made)
described in Section 705(a)(2)(B) of the Code (relating to expenditures which
are neither deductible nor properly chargeable to capital) and expenditures
which, pursuant to the Regulations under Section 704(b) of the Code, are
characterized as Section 705(a)(2)(B) expenditures.
2.9.6 The amount of any partner nonrecourse deductions as defined in
Treasury Regulation Section 1.704-2(i)(2) attributable to debt of the
Partnership for which a Partner bears the economic risk of loss, within the
meaning of Treasury Regulation Section 1.752-2(d)(3), shall be specially
allocated to such Partner.
2.9.7 To the extent an adjustment to the adjusted tax basis of any
Partnership asset pursuant to Section 732, 734 or 743 of the Code is required to
be taken into account in determining Capital Accounts in accordance with
Treasury Regulations Section 1.704-1(b)(2)(iv)(m), the amount of such adjustment
to the Capital Accounts shall be treated as an item of gain (if the adjustment
decreased such basis) and such gain or loss shall be specially allocated to the
Partners in a manner consistent with the manner in which their Capital Accounts
are required to be adjusted pursuant to such Section of the Regulations.
2.10 Tax Elections. All elections required or permitted to be made by
the Partnership under any applicable tax law shall be made by the General
Partner in its sole discretion.
2.11 Interim Closing of Books. In the event of a transfer of a
Partnership Interest or a change in the Partners' Partnership Percentages, then
Profits and Losses, each item thereof and all tax items shall be allocated to
the Partners by taking into account their varying interests during the taxable
year of the transfer or change in accordance with Section 706(d) of the Code,
using the interim closing of the books method.
2.12 Certain Payments.
The payments specified in this Section 5.5 shall be made to the
specified Partner for services or the use of capital and shall be treated as
"guaranteed payments" within the purview of Section 707(c) of the Code for
Federal income tax purposes and as expenses of the Partnership for purposes of
determining partnership Profits and Losses.
Subject to the following provisions of this Section 5.5, the Limited
Partner shall be entitled to receive a distribution on February 25 and August 25
in each fiscal year (each a "distribution date") in respect of Limited Partner
Priority Capital unrecovered and outstanding during the period commencing on the
date immediately following the next preceding distribution date and ending on
such distribution date calculated at a rate per annum equal to 9.5%. The
Partnership shall pay such distribution in cash not later than the 30th day
following the applicable distribution date if, and to the extent, permitted by
Sections 10.09 of the Mortgage Note Indenture, PIK Indenture and Senior Note
Indenture. If the Partnership shall be unable to pay the entire
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amount of any such distribution in cash, the portion not paid in cash shall be
forgiven and shall not cumulate.
2.13 Distributions. Except as prohibited by contractual obligations of
the Partnership entered into in accordance with the terms and provisions of this
Agreement, the General Partner may distribute to the Partners the net cash flow
of the Partnership from time to time in amounts as determined by the General
Partner in accordance with Partnership Percentage Interests.
2.14 Priority Return of Limited Partner Priority Capital in Certain
Events. The Limited Partner shall be entitled to receive an amount equal to
Limited Partner Priority Capital upon any liquidation or winding-up of the
Partnership in priority to other distributions to the Partners.
ARTICLE 6
Management and Operation of Business
2.15 Board of Partner Representatives. The business, operations and
affairs of the Partnership shall be managed by and through a Board of Partner
Representatives (the "Board of Partner Representatives"), which shall be
comprised of those individuals who are members of the Board of Directors of the
General Partner. The Board of Partner Representatives shall conduct its
activities as set forth in Article 7. Except as otherwise provided expressly in
this Agreement, the Board of Partner Representatives shall have full authority
to do all things deemed necessary or desirable by it in the conduct of the
business, operations and affairs of the Partnership.
Except as otherwise provided expressly in this Agreement, all matters
of policy pertaining to the business of the Castle shall be approved by the
Board of Partner Representatives.
The Board of Partner Representatives shall approve an annual operating
budget prepared by the General Partner and any material changes thereto. Such
annual operating budget shall set forth in reasonable detail, consistent with
then current practice for companies which own and operate casino-hotels, all
major items of income, expense, capital and extraordinary expenditures,
investments and similar matters.
2.15.1 Audit Committee. The Board of Partner Representatives
shall have an Audit Committee consisting of two Noteholder
Representatives appointed by the Noteholder Representatives and
one Trump Representative appointed by the Trump Representatives.
Such Audit Committee shall perform the duties to be performed by
the audit committee of the Partnership in accordance with the
Casino Control Act.
2.15.2 Compensation Committee. The Board of Partner
Representatives shall have a Compensation Committee consisting of
two Noteholder Representatives appointed by the Noteholder
Representatives and two Trump Representatives appointed by the
Trump Representatives. The Compensation Committee shall review
and recommend to the Board of Partner Representatives the
compensation and benefits to be paid to the executive officers of
the Partnership. The Compensation Committee shall also review and
advise the Board of Partner Representatives in connection with
any changes to the Partnership's employee benefit policies.
2.16 Partners. The day-to-day control of the business, operations and
activities of the Partnership shall be vested in and conducted by the General
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Partner which shall be responsible for supervising the activities of the
Partnership's officers, employees and agents. Except as otherwise provided
expressly in this Agreement, and subject to the provisions of Section 6.1 and
Article 7, the General Partner shall have full authority in the name and on
behalf of the Partnership to do all things deemed necessary or desirable by it
in the conduct of the business of the Partnership, including, without
limitation, the right to enter into and perform contracts of all kinds, to bring
and defend actions at law or in equity, to buy, own, manage, sell, lease or
otherwise acquire or dispose of Partnership assets, to pay all expenses incurred
by or on behalf of the Partnership, and to cause the Partnership to enter into
partnerships, joint ventures and similar arrangements; provided, however, that
no action that would, if the Partnership were a corporation incorporated under
the laws of the State of New Jersey, require the authorization of the board of
directors of such corporation, shall be deemed authorized or be undertaken by
the Partners without the prior approval of the Board of Partner Representatives
in accordance with Article 7 hereof. The General Partner may delegate matters
within the authority of the General Partner hereunder to a third party, acting
as agent for the General Partner, pursuant to a management or similar agreement.
2.17 Compensation and Reimbursement of Partners and Board of Partner
Representatives.
2.17.1 Compensation of Partner Representatives. No Partner or member of
the Board of Partner Representatives shall be entitled to separate
compensation for services as Partner or a member of the Board of
Partner Representatives, except that Partner Representatives (other
than Trump or any of his Affiliates) shall be entitled to receive an
annual fee not in excess of $50,000 plus an additional fee of $2,500
for each meeting attended (in person or by conference telephone call)
(provided, that the aggregate amount of said additional fees shall not
exceed $25,000 in any fiscal year), and to reimbursement of reasonable
out-of-pocket expenses incurred in connection with attendance at
meetings. The provisions of this Section 6.3.1 shall not limit any
payment made in accordance with the Services Agreement.
2.17.2 Reimbursement of Expenses. Subject to Section 7.11.1.7, the
Partners and the Partner Representatives shall be reimbursed by the
Partnership for all expenses, disbursements, and advances incurred or
made in good faith to third parties for or on behalf of the
Partnership.
ARTICLE 7
Partner Representatives; Officers; Conduct of Business
The Partners agree that, until the earlier of (i) such time as all
amounts payable under the Notes have been paid in full, or (ii) such time as (A)
the amount obtained by multiplying the Partnership's EBITDA for the immediately
preceding twelve full calendar months by five (5) exceeds (B) the aggregate
principal amount of the Partnership's indebtedness for borrowed money, on a
consolidated basis, outstanding as of such time, the affairs of the Partnership
shall be governed in accordance with the provisions of this Article 7.
2.18 Number. The number of Partner Representatives which shall
constitute the whole Board of Partner Representatives shall be seven.
2.19 Appointment of Partner Representatives. The Board of Partner
Representatives shall be constituted as provided in this Section 7.2, and each
of the Partners shall take whatever action is deemed necessary or desirable by
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the Noteholder Representatives then in office to ensure that the Board of
Partner Representatives is constituted from time to time in accordance with the
provisions of this Section 7.2.
There shall be three Noteholder Representatives and four Trump
Representatives on the Board of Partner Representatives. The initial Trump
Representatives shall be Trump, Nicholas L. Ribis, Robert M. Pickus and Roger P.
Wagner. The initial Noteholder Representatives shall be Asher O. Pacholder,
Thomas F. Leahy and Arthur S. Bahr. The Partnership shall give prompt written
notice to the Trustee of the appointment of any successor Trump Representative
and of any successor Noteholder Representative.
No Partner shall take any action that would result in the removal of
any Noteholder Representative, except in accordance with the written
instructions of the Trustee acting in accordance with the vote of the
Noteholders. The Noteholders, acting at a joint meeting, may remove any
Noteholder Representative. Any two Noteholder Representatives can request that
the Trustee call a joint meeting of the Noteholders for such purpose. If the
Trustee so requests, then each Partner shall take whatever action is necessary
to remove a Noteholder Representative from the Board of Partner Representatives.
Any vacancy on the Board of Partner Representatives created by the
resignation, removal, incapacity or death of any Noteholder Representative shall
be filled by a designated alternate Representative (the "Alternate Noteholder
Representative"). If there is any vacancy in the position of Noteholder
Representative or Alternate Noteholder Representative, such vacancy shall be
filled by the agreement of any two of the remaining Noteholder Representatives
or by the sole remaining Noteholder Representative if only one Noteholder
Representative remains in office. If the Noteholder Representatives are unable
to agree on a replacement within 45 days after any vacancy occurs or if, as a
consequence of multiple vacancies occurring simultaneously, no Noteholder
Representatives remain, then the Partnership shall promptly notify the Trustee
of such vacancy. The Trustee shall, promptly after receipt of such Notice, call
a joint meeting of the Noteholders, at which meeting such vacancy or vacancies
shall be filled. Each Partner shall take whatever action is deemed necessary or
desirable by the Noteholder Representatives or the Trustee upon instruction of
the Noteholders, as the case may be, to ensure that the Alternate Noteholder
Representative or other Person so appointed as a Noteholder Representative shall
be appointed to the Board of Partner Representatives. Any such vacancy shall not
be filled in the absence of a new appointment by the Noteholder Representatives
or the Noteholders, as the case may be.
2.19.1 Noteholder Meetings. Any meeting of the Noteholders shall be
held in accordance with Article 15 of the Mortgage Indenture and
Article 15 of the PIK Indenture. At any such meeting, the Mortgage
Noteholders and the PIK Noteholders shall vote as a single class by
principal amount of the Notes then outstanding, and the vote of the
holders of a majority of the principal amount of the Notes then
outstanding shall be the act of the Noteholders.
2.20 Tenure. Except as otherwise provided by this Agreement, each
Partner Representative shall hold office until his or her successor is appointed
and qualified, or until he or she sooner dies, resigns, is removed or becomes
incapacitated or disqualified.
2.21 Regular Meetings. Regular meetings of the Board of Partner
Representatives may be held without call or notice at such places within or
without the State of New Jersey and at such times as the
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Board of Partner Representatives may from time to time determine, provided that
notice of the first regular meeting following any such determination shall be
given to Partner Representatives absent when such determination was made.
2.22 Special Meetings. Special meetings of the Board of Partner
Representatives may be held at any time and at any place within or without the
State of New Jersey designated in the notice of the meeting, when called by
either the General Partner or by two or more of the Partner Representatives,
reasonable notice thereof being given to each Partner Representative by the
Person calling the meeting.
2.23 Notice. It shall be reasonable and sufficient notice to any
Partner Representative to send notice by mail at least four business days or by
telecopy at least two Business Days before the meeting addressed to him or her
at his or her usual or last known business or residence address or to give
notice to him or her in person or by telephone at least twenty-four hours before
the meeting. Notice of a meeting need not be given to any Partner Representative
if a written waiver of notice, executed by him or her before or after the
meeting, is filed with the records of the meeting, or to any Partner
Representative who attends the meeting without protesting prior thereto or at
its commencement the lack of notice to him or her. Neither notice of a meeting
nor a waiver of a notice need specify the purposes of the meeting.
2.24 Quorum. Except as may be otherwise provided by law or by this
Agreement, at any meeting of the Board of Partner Representatives a majority of
the Partner Representatives then in office, including, however, at least one of
the Noteholder Representatives shall constitute a quorum; a quorum shall not in
any case be less than one-third of the total number of Partner Representatives
constituting the whole Board of Partner Representatives. Any meeting may be
adjourned from time to time by a majority of the votes cast upon the question,
whether or not a quorum is present, and the meeting may be held as adjourned
without further notice. Notwithstanding the foregoing provisions of this Section
7.7, participation by a Noteholder Representative shall not be necessary to form
a quorum if all of the Noteholder Representatives fail to attend three
consecutive meetings of the Board of Partner Representatives, so long as (i)
such meetings were duly scheduled or called, as the case may be, in compliance
with this Article 7, (ii) notice was duly given to each Noteholder
Representative in accordance with Section 7.6 and (iii) no action was taken by
any Partner to hinder or obstruct participation by any Noteholder
Representatives at such meetings. In the event of such failure, a majority of
the Trump Representatives (but not less than one-third of the total number of
Partner Representatives constituting the whole Board of Partner Representatives)
shall constitute a quorum at such third consecutive meeting and for a six-month
period from and after the date thereof; provided, however, that immediately
following the second such consecutive meeting the Partner Representatives shall
notify the Noteholder Representatives of their failure to participate; and
provided, further, that such third consecutive meeting shall be held not less
than three business days after the second meeting at a place where conference
telephone facilities are available, and that the notice of such third meeting
clearly specifies the date, time and place of such meeting and the correct
telephone number to be called in the event that a Noteholder Representative
wishes to participate therein via conference telephone in accordance with
Section 7.10. Nothing in this Section 7.7 shall be deemed to modify the other
rights and obligations of the Partners set forth herein, including without
limitation the other provisions of this Article 7.
2.25 Action by Vote. Except as may be otherwise provided by law or by
this Agreement, when a quorum is present at any meeting the vote of a majority
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of the Partner Representatives present shall be the act of the Board of Partner
Representatives.
2.26 Action Without a Meeting. Any action required or permitted to be
taken at any meeting of the Board of Partner Representatives may be taken
without a meeting if all the members of the Board of Partner Representatives
consent thereto in writing, and such writing or writings are filed with the
records of the meetings of the Board of Partner Representatives. Such consent
shall be treated for all purposes as the act of the Board of Partner
Representatives.
2.27 Participation in Meetings by Conference Telephone. Members of the
Board of Partner Representatives may participate in a meeting of the Board of
Partner Representatives by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other or by any other means permitted from time to time by
the New Jersey Business Corporation Law for the conduct of a meeting of a board
of directors of a corporation organized thereunder. Such participation shall be
deemed to constitute presence in person at such meeting.
2.28 Special Vote of Noteholder Representatives Required
2.28.1 Vote of at least Two Noteholder Representatives. Notwithstanding
any other provisions of this Agreement, authorization by the
Partnership of the following actions shall require, in addition to the
vote of a majority of the Partner Representatives present at a meeting
at which there is a quorum, the affirmative vote of at least two of the
Noteholder Representatives:
2.28.1.1 Change in Management. Any replacement of the individual
holding the office of, or any material change in the nature of the
duties or terms of employment of, the Chief Executive Officer, the
Chief Operating Officer or the Chief Financial Officer of the
Partnership.
2.28.1.2 Capital Expenditures. The making of any Capital Expenditures
which, in the case of any individual expenditure or related series of
expenditures would exceed $500,000, or, in the aggregate in any fiscal
year of the Partnership would exceed $5,000,000.
2.28.1.3 Debt. The direct or indirect creation, incurrence, assumption
or other subjection to or maintenance of any Debt or Guarantee which,
(i) in the case of any single transaction or related series of
transactions, exceeds $5,000,000 or (ii) is not subject to the
preceding clause (i) but, together with all other such Debt and
Guarantees not subject thereto, exceeds $10,000,000 in aggregate
principal amount at any time outstanding (with this clause (ii)
pertaining solely to such excess), other than: (a) Debt and Guarantees
incurred under the Senior Note Indenture, the Mortgage Note Indenture
or the PIK Indenture and under the Notes, the Security Documents and
the Senior Notes (as hereinafter defined); (ii) the Midlantic Debt; and
(iii) Debt or Guarantees incurred for the purpose, and the proceeds of
which are applied, either (A) to redeem all, but not less than all, of
the Midlantic Debt, the Notes and the 11 3/8% Senior Secured Notes of
the Partnership due 1999 (the "Senior Notes") in accordance with the
terms of the Mortgage Note Indenture and the PIK Indenture and the
Indenture relating to the Senior Notes or (B) to repay the Notes and
the Senior Notes in full at the stated or any accelerated maturity
thereof (a "Notes Refinancing Transaction"). If the terms of a line of
credit, revolving credit facility or similar credit facility shall be
approved in accordance with this Section 7.11.1.3, then no additional
approval in
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respect of such credit facility shall be required by this Section
7.11.1.3 for any borrowing made in accordance with such terms.
2.28.1.4 Operating Leases. The direct or indirect creation, incurrence,
assumption or maintenance of any obligation under any lease (including
any lease of real property or improvements, any vehicle, vessel or
aircraft, or any other personal property) other than a Capitalized
Lease, unless the aggregate fixed rental payments to be paid or accrued
for any period of four consecutive fiscal quarters of the Partnership
under such lease (including payments required to be made by the lessee
in respect of taxes and insurance, whether or not denominated as rent)
does not exceed $1,500,000 for such period, or, during such periods the
Partnership's EBITDA exceeds $45,000,000, does not exceed $5,000,000
for such period.
2.28.1.5 Sales of Assets. Any sale, lease, sublease or other transfer
or disposition of all or any significant portion of the Partnership's
assets, or the entrance into any agreement to do any of the foregoing,
other than dispositions of surplus or obsolete equipment, dispositions
resulting from any casualty or condemnations of assets or properties,
and dispositions of equipment in the ordinary course of business to the
extent such equipment is replaced with substitute equipment of like
kind or purpose. For purposes of this Section a "significant portion of
its assets" shall mean assets having an aggregate fair market value or
book value (whichever is greater) of $2,000,000 or more which are
proposed to be sold, leased, subleased, transferred or disposed of in
any single transaction or series of related transactions.
2.28.1.6 Amendment of Midlantic Debt. Any amendment or supplement to,
or modification of, or waiver under, or any other change in, the
Midlantic Debt.
2.28.1.7 Affiliate Transactions. Any transaction to which any Partner
or any of his or its respective affiliates is a party, participant or
beneficiary.
2.28.1.8 Amendment of Indentures. Any amendment or waiver of or
supplement to or any change in the Mortgage Note Indenture or the PIK
Indenture which is permitted by the terms of such Indenture to be
accomplished without the consent of the Mortgage Noteholders or the PIK
Noteholders, as the case may be.
2.28.1.9 Merger or Liquidation. The merger, combination, consolidation,
or termination or liquidation of the Partnership with or into any other
entity or the merger, combination or consolidation of any other entity
with or into the Partnership or the entering into of any agreement with
respect to the foregoing.
2.28.1.10 Change in the Nature of Business. Engagement in any business
other than owning and operating the Castle and other incidental
businesses in connection therewith which individually and in the
aggregate are not material to the Partnership.
2.28.1.11 Restoration. Any determination to effect a Restoration (as
such term is defined in the Note Mortgage) pursuant to Section
5.10(e)(iii) thereof or any determination that an eminent domain taking
does not constitute a Taking (as such term is defined in the Note
Mortgage).
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2.28.1.12 Services Agreement. The consent by the Partners to any
amendment or supplement to, or modification of, or waiver under, the
Services Agreement, or the approval of any other management or other
similar agreement pursuant to Section 6.2, or any amendment or
supplement thereto, or modification thereof, or waiver thereunder.
2.28.1.13 Trump Compensation. Any compensation, whether salary, bonus,
remuneration or any other payments or benefits, to Trump in excess of
that provided for in the Services Agreement.
2.28.2 Vote of at least One Noteholder Representative. Notwithstanding
the provisions of Section 7.7, in addition to the vote of a majority of
the Partner Representatives present at a meeting at which there is a
quorum, the affirmative vote of at least one Noteholder Representative
shall be required for: (i) the commencement by the Partnership of a
voluntary case under Title 11 of the United States Code, as from time
to time in effect; (ii) the seeking of relief as a debtor under any
applicable law, other than said Title 11, of any jurisdiction relating
to the liquidation or reorganization of debtors or to the modification
or alteration of the rights of creditors; (iii) the filing of an answer
or similar pleading with respect to any involuntary case under said
Title 11 or any other such applicable law; or (iv) the assignment for
the benefit of, or the entering into a composition with, the
Partnership's creditors.
2.28.3 Vote of Noteholders. Notwithstanding the foregoing provisions of
this Section 7.11, a special vote of the Noteholder Representatives
under Section 7.11.1 or 7.11.2 shall not be required to any action
approved by the Mortgage Noteholders and the PIK Noteholders pursuant,
respectively, to a meeting duly called under the Mortgage Note
Indenture and the PIK Indenture and otherwise in accordance with the
terms and provisions of such Indentures.
2.29 Officers of the Partnership.
2.29.1 Enumeration. Subject to Sections 7.2 and 7.11.1.1, the
Partnership shall have a Chief Executive Officer, a Chief Operating
Officer, a Chief Financial Officer, a Secretary and such other
officers, if any, as the Partners from time to time may in its
discretion elect or appoint. The Partnership may also have such agents,
if any, as the Partners from time to time may in its discretion choose.
Any officer may be (but none need be) a Partner Representative.
2.29.2 Duties and Powers. Subject to law and to the other provisions of
this Agreement, each officer shall have such duties and powers as are
commonly incident to his or her office and, subject to Section
7.11.1.1, such additional duties and powers as the Board of Partner
Representatives may from time to time designate.
2.29.3 Tenure. Except as provided in Sections 7.11.1.1 and 7.13, each
officer and agent shall retain his or her authority at the pleasure of
the Board of Partner Representatives.
2.30 Resignations and Removals.
2.30.1 Resignations. Any Trump Representative may resign at any time by
delivering his or her resignation in writing to the Partnership and
Trump. Any Noteholder Representative may resign at any time by
delivering his or her resignation in writing to the Partnership and the
other Noteholder Representatives. Any officer may resign by delivering
his or her resignation in writing to the Board of Partner
Representatives. Such resignations shall
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be effective upon receipt unless specified to be effective at some
other time, and without in either case the necessity of its being
accepted unless the resignation shall so state.
2.30.2 Removal. The Partners may at any time remove any Trump
Representative either with or without cause.
2.31 Minutes, etc. The Secretary shall record all proceedings of the
Board of Partner Representatives in a book or series of books to be kept
therefor and shall file therein all actions by written consent of such bodies.
In the absence of the Secretary from any meeting, an Assistant Secretary, or if
there be none or he or she is absent, a temporary secretary chosen at the
meeting, shall record the proceedings thereof.
ARTICLE 8
Books, Records, Accounting and Reports
2.32 Records and Accounting. The General Partner shall maintain a
standard, modern system of accounting in which full, true and correct entries
will be made of all dealings and transactions with respect to the Partnership's
business. All books of account and other records shall at all times be kept at
the principal office of the Partnership and shall be open to the inspection and
examination of the Partners or their representatives during reasonable hours.
All books and records of the Partnership shall be kept on an accrual basis of
accounting with the fiscal year as its annual accounting period which shall end
on the date of the final dissolution or termination of the Partnership. All
references in this Agreement to a "fiscal year" are to such an annual accounting
period. Any records maintained by the Partnership in the regular course of its
business, including the books of account, and records of Partnership proceedings
may be kept on, or be in the form of, punch cards, magnetic tape, photographs,
micrographics or any other information storage device, provided that the records
so kept are convertible into clearly legible written form within a reasonable
period of time. The books of the Partnership shall be maintained for financial
reporting purposes according to generally accepted accounting principles.
2.33 Fiscal Year. The fiscal year of the Partnership shall end on
December 31.
2.34 Annual and Periodic Reports.
2.34.1 Annual Statement; Annual Budget. The General Partner shall, as
soon as practicable, but in no event later than 90 days after the close
of each fiscal year, cause to be furnished to each Partner the combined
balance sheet of the Partnership and its combined subsidiaries as at
the end of such fiscal year and the combined statements of profit and
loss, partners' capital and cash flow for such year (all in reasonable
detail), such combined statements to be accompanied by reports or
certificates of Arthur Andersen & Co., auditors of the Partners and its
consolidated subsidiaries, or other independent certified public
accountants of recognized national standing selected by the General
Partner.
2.34.2 Quarterly Reports. The General Partner shall, as soon as
available and, in any event, within 45 days after the end of each of
the first three fiscal quarters of the Partnership, furnish to each
Partner the internally prepared unaudited combined balance sheet of the
Partnership and its combined subsidiaries as of the end of such quarter
and the combined statements of profit and loss, partners' capital and
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cash flow for such quarter and for the portion of the fiscal year then
ending (all in reasonable detail), accompanied by a certificate of the
General Partner or of the chief financial officer of the Partnership to
the effect that, except for the lack of required footnotes, such
balance sheets and statements have been properly prepared in accordance
with generally accepted accounting principles and fairly present the
financial condition of the Partnership and its combined subsidiaries as
of the date thereof and the results of their operations for the
period-covered thereby, subject only to normal year-end audit
adjustments.
2.34.3 Other Information. From time to time upon request of any
Partner, the General Partner shall furnish to such Partner such other
information regarding the business, affairs and condition, financial or
otherwise, of the Partnership and its subsidiaries as such Partner may
reasonably request. The authorized officers and representatives of any
Partner shall have the right during normal business hours to examine
the books and records of the Partnership and each of its subsidiaries,
to make copies, notes and abstracts therefrom, and to make an
independent examination of its books and records.
ARTICLE 9
Income Tax Matters
2.35 Preparation of Tax Returns. The General Partner shall arrange for
the preparation (at the Partnership's expense) and timely filing of all returns
of Partnership income, gains, deductions and losses necessary for federal and
state income tax purposes. The General Partner shall use its best efforts to
furnish to the Partners within sixty days and in any event shall furnish within
ninety days of the close of the taxable year the tax information reasonably
required for federal and state income tax reporting purposes. A copy of the
Partnership's income tax returns will be furnished to any Partner upon request.
The classification, realization and recognition of income, gain, losses and
deductions and other items shall be on the accrual method of accounting for
federal income tax purposes. The taxable year of the Partnership shall end on
December 31.
2.36 Tax Controversies. Subject to the provisions hereof, the Partners
hereby designate the General Partner as the "Tax Matters Partner" (as defined in
Section 6231 of the Code), and the General Partner is authorized and required to
represent the Partnership (at the Partnership's expense) in connection with all
examinations of the Partnership's affairs by tax authorities, including
resulting administrative and judicial proceedings, and to expend Partnership
funds for professional services and costs associated therewith.
2.37 Organizational Expenses. The Partnership shall elect to deduct
expenses, if any, incurred in organizing the Partnership ratably over a
sixty-month period as provided in Section 709 of the Code.
ARTICLE 10
Transfer of Interests
2.38 Transfer. The term "transfer," when used in this Article 10 with
respect to a Partnership Interest means a transaction by which the holder of a
Partnership Interest assigns the Partnership Interest or any part thereof to
another Person, and includes a sale, assignment, gift, pledge, encumbrance,
hypothecation, mortgage, exchange or any other disposition.
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2.39 Transfers Generally. No Partnership Interests shall be
transferred, in whole or in part, provided, that, the foregoing shall not apply
to the pledges pursuant to the Bank Pledge Agreements.
Any transfer or purported transfer of any Partnership Interest not made in
accordance with this Section 10.2 shall be null and void.
ARTICLE 11
[Intentionally Omitted]
ARTICLE 12
Admission of Additional Partners
2.40 Admission of Additional Partners. The General Partner may admit
additional Partners without the consent of the Partners. In admitting additional
Partners, the Partnership shall not be obligated to offer first to the existing
Partners the right to make additional capital contributions or subscriptions.
The Percentage Interest of each additional Partner shall be determined by the
General Partner.
2.41 Amendment of Agreement in Connection with the Admission of
Additional Partners. For the admission to the Partnership of any Partner, the
Partners, shall take all steps necessary and appropriate to prepare an amendment
of this Agreement reflecting the same.
ARTICLE 13
Termination and Winding-Up of Partnership
2.42 Termination. The Partners hereby waive their right of partition
and agree not to do anything that would terminate the Partnership prior to the
expiration of its term without the prior written consent of the other Partners.
No Partner may voluntarily withdraw from the Partnership without the prior
written consent of all other Partners. Upon the withdrawal, death, retirement or
insanity of the General Partner, or any other event of dissolution under the New
Jersey Uniform Limited Partnership Law, the business of the Partnership shall be
wound up and terminated unless all remaining Partners, within ninety (90) days
thereafter, agree in writing that the Partnership shall be reconstituted and its
business continued.
2.43 Winding-Up of the Partnership. Upon any winding up of the
Partnership, the following shall be accomplished:
2.43.1 The financial officers of the Partnership shall be directed to
prepare a balance sheet of the Partnership in accordance with generally
accepted accounting principles as of the date of dissolution, which
shall be reported upon by the Partnership's independent public
accountants.
2.43.2 The assets of the Partnership shall be liquidated by the
Partners as promptly as possible, but in an orderly and businesslike
manner so as not to involve undue sacrifice.
2.43.3 The proceeds of sale of all or substantially all of the property
of the Partnership and all other assets of the Partnership to be
liquidated shall be applied and distributed as follows, and in the
following order of priority:
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2.43.3.1 To the payment of debts and liabilities of the Partnership and
the expenses of liquidation not otherwise adequately provided for; then
2.43.3.2 To the setting up of any reserves which are reasonably
necessary for any contingent liabilities or obligations of the
Partnership or of the Partners arising out of, or in connection with,
the Partnership; and then
2.43.3.3 The remaining proceeds, to the Partners in proportion to and
to the extent of their positive Capital Account balances determined
after giving effect to the allocations of Profits and Losses provided
for in Article 5 hereof.
2.43.3.4 The Partnership shall terminate when all property and assets
owned by the Partnership to be liquidated shall have been disposed of,
and the net sale proceeds, after payment of or provision for the
amounts specified in Sections 13.2.3.1 and 13.2.3.2, and any assets to
be distributed shall have been distributed to the Partners as provided
herein.
ARTICLE 14
Amendments; Etc.
2.44 Amendments. The Partners may amend any provision of this
Agreement, and any provision of this Agreement may be waived, from time to time,
with a writing executed on behalf of each of the Partners.
2.45 Non-Waiver. Except as expressly provided herein, no delay on the
part of any Partner in exercising any right hereunder shall operate as a waiver
thereof; nor shall any waiver by any Partner of any right hereunder or of any
failure to perform or breach hereof by any other Partner constitute or be deemed
a waiver of any other right hereunder or of any other failure to perform or
breach hereof by the same or any other Partner, whether of a similar or
dissimilar nature thereof.
ARTICLE 15
General Provisions
2.46 Addresses and Notices. The address of each Partner for all
purposes initially shall be the address set forth in Exhibit A to this
Agreement. Any notice or communication required hereunder shall be in writing
and either delivered personally or by overnight courier service, or mailed first
class and registered, postage prepaid, to an officer of the addressee and shall
be deemed to be given when so delivered to, or if mailed when received at, such
initial address (or to such other address or addresses as such Person may
subsequently designate by notice given hereunder).
2.47 Titles and Captions. The table of contents to this Agreement and
all article or section titles or captions in this Agreement are for convenience
only. They shall not be deemed part of this Agreement and in no way define,
limit, extend or describe the scope or intent of any provisions hereof.
2.48 Pronouns and Plurals. Whenever the context may require, any
pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa.
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2.49 Further Action. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking action as may
be necessary or appropriate to achieve the purposes of this Agreement.
2.50 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties and their heirs, executors, administrators,
successors, legal representatives and permitted assigns.
2.51 Integration. This Agreement constitutes the entire agreement among
the parties pertaining to the subject matter hereof and supersedes all prior
agreements and understandings pertaining thereto, whether written or oral.
2.52 Waiver. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.
2.53 Counterparts. This Agreement may be executed in counterparts, all
of which together shall constitute one agreement binding on all the parties,
notwithstanding that all the parties are not signatories to the original or the
same counterpart.
2.54 Applicable Law; Jurisdiction. This Agreement shall be governed by
and construed in accordance with the laws of the State of New Jersey regardless
of the laws that might otherwise govern under applicable principles of conflict
of laws thereof. Each party hereto hereby expressly and irrevocably agrees and
consents that any action, suit or proceeding arising out of or relating to this
Agreement and the transactions contemplated hereby may be instituted and
maintained in any state or federal court sitting in Atlantic County, New Jersey
or in any federal court sitting in the State of New Jersey or in any state or
federal court sitting in the Borough of Manhattan in New York, New York and, by
execution of this Agreement, each party hereto expressly waives any objection
that it may have now or hereafter to the venue or jurisdiction of any such
action, suit or proceeding and irrevocably submits to the jurisdiction of any
such court in any such action, suit or proceeding.
2.55 Invalidity of Provisions. If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not be
affected thereby.
2.56 Indemnification; Exculpation.
2.56.1 Indemnification. The Partnership shall indemnify and hold
harmless each Partner, its Affiliates, each Partner Representative (and
each director of the General Partner and his or her Affiliates, and all
officers, directors, employees and agents of such Partner, Partner
Representative or director of the General Partner, and his, her or its
Affiliates (each individually, an "Indemnitee") from and against any
and all losses, claims, demands, costs, damages, liabilities, joint and
several, expenses of any nature (including attorneys' fees and
disbursements), judgments, fines, settlements and other amounts arising
from any and all claims, demands, actions, suits, or proceedings,
civil, criminal, administrative or investigative, in which the
Indemnitee may be involved, or threatened to be involved, as a party or
otherwise, arising out of or incidental to the business of the
Partnership, including without limitation liabilities under the Federal
and state
22
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securities laws, regardless of whether the Indemnitee continues to be a
Partner, an Affiliate of a Partner, a Partner Representative, a
director of the General Partner or an Affiliate of a Partner
Representative or of a director of the General Partner, or an officer,
director, employee, attorney or agent of a Partner, Partner
Representative or a director of the General Partner or an Affiliate of
such Persons at the time any such liability or expense is paid or
incurred, but only if such course of conduct does not constitute gross
negligence or willful misconduct; provided, however, that such
indemnification or agreement to hold harmless shall be recoverable only
out of assets of the Partnership and not from the Partners. The
indemnification provided by this Section 15.11 shall be in addition to
any other rights to which an Indemnitee may be entitled under any
agreement, as a matter of law or equity, or otherwise, both as to
action in the Indemnitee's capacity as a Partner, an Affiliate of a
Partner, a Partner Representative or a director of the General Partner
or an Affiliate of a Partner Representative or of a director of the
General Partner, or as an officer, director, employee, attorney or
agent of a Partner, Partner Representative or a director of the General
Partner or an Affiliate of such Persons and as to any action in another
capacity, and shall continue as to an Indemnitee who has ceased to
serve in such capacity and shall inure to the benefit of the heirs,
successors, assigns and administrators of the Indemnitee. No Indemnitee
shall be denied indemnification in whole or in part under this Section
15.11 by reason of the fact that the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the
transaction was approved in accordance with Article 7.
2.56.2 Exculpation. No Partner Representative or director of the
General Partner shall have any liability to the Partnership or any
Partner for monetary damages for any action taken, or any failure to
take any action, as a Partner Representative or a director of the
General Partner, except liability for (a) any improper financial
benefit received by a Partner Representative or as a director of the
General Partner; (b) an intentional infliction of harm on the
Partnership or any Partner; (c) acts or omissions not in good faith or
which involve intentional misconduct; and (d) any knowing violation of
law.
2.57 Specific Performance; Third Party Beneficiaries. The Partners
agree that the Noteholders are third party beneficiaries to this Agreement and
that the legal remedies of the Noteholders and the Noteholder Representatives
may be inadequate in the event of a breach of, or other failure to perform, any
covenants or obligations in this Agreement; therefore, in addition to obtaining
any other remedy or relief available to them, the Noteholders and Noteholder
Representatives may obtain specific enforcement of this Agreement and other
equitable remedies.
2.58 Casino Control Commission Regulation. Notwithstanding anything to
the contrary in this Agreement:
(i) This Agreement will be deemed to include all provisions required by
the Casino Control Act and to the extent that anything contained in this
Agreement is inconsistent with the Casino Control Act, the provisions of the
Casino Control Act shall govern. All provisions of the Casino Control Act, to
the extent required by law to be included in this Agreement, are incorporated
herein by reference as if fully restated in this Agreement.
(ii) If the continued holding of a Partnership Interest by any Partner
will disqualify the Partnership to continue as the owner and operator of a
casino licensed in the State of New Jersey under the provisions of the Casino
Control Act, such Partner shall enter into such escrow, trust or similar
23
<PAGE>
arrangement as may be required by the Commission under the circumstances. It is
the intent of this Section 15.13 to set forth procedures to permit the
Partnership to continue, on an uninterrupted basis, as the owner and operator of
a casino licensed under the provisions of the Casino Control Act.
(iii) (a) All transfers (as defined by the Casino Control Act) of
securities (as defined by the Casino Control Act), shares and other interests in
the Partnership shall be subject to the right of prior approval by the
Commission; and (b) the Partnership shall have the absolute right to repurchase
at the market price or purchase price, whichever is the lesser, any security,
share or other interest in the Partnership in the event that the Commission
disapproves a transfer in accordance with the provisions of the Casino Control
Act.
(iv) Each Partner hereby agrees to cooperate reasonably and promptly
with the others in obtaining any and all licenses, permits or approvals required
by any governmental authority or deemed expedient by the Partners in connection
with the Casino Control Act.
(v) Each Partner shall have the right to offer to acquire any
Partnership Interest required to be disposed of pursuant to this Section 15.13
on the same basis as other potential purchasers, subject to the Casino Control
Act.
2.59 Survival of Rights, Duties and Obligations. Termination of the
Partnership for any cause shall not release any party from any liability which
at the time of termination had already accrued to any other party or which
thereafter may accrue in respect of any act or omission prior to such
termination.
2.60 Certificate of Interest.
2.60.1 Form of Certificate of Interest. The interest of each Partner in
the Partnership shall be evidenced by a Certificate of Interest in the
form attached as Annex 15.15 hereto (each a "Certificate of Interest").
A certificate transfer ledger (the "Certificate Transfer Ledger")
recording the issue and transfer of Certificates of Interest in the
Partnership shall be maintained at the principal office of the
Partnership. Each such Certificate of Interest shall be serially
numbered and shall be issued by, or at the written direction of, each
of the Partners to the lawful holder of an interest in the Partnership,
upon payment by the issue of the full amount of the capital
contributions then due with respect to its interest in the Partnership
represented by such Certificate of Interest. All Certificates of
Interest shall be executed in the name of the Partnership by each of
the Partners. Each Certificate of Interest shall state on its face the
name of the registered holder thereof and the then interest in the
Partnership held by the issue; and shall bear, on both sides thereof, a
statement of the restrictions imposed by Section 105 of the Casino
Control Act.
2.60.2 Transfers of Certificates of Interest. Certificates of Interest
in the Partnership may be transferred by the lawful holders thereof
only in connection with the pledge or transfer of all or part of the
interest of such holder in the Partnership, and only in accordance with
the provisions of this Agreement. All such transfers shall be effected
by duly executed and acknowledged instruments of assignment, each of
which shall be duly recorded on the Certificate Transfer Ledger. No
effect shall be given to any purported assignment of a Certificate of
Interest, or transfer of the interest in the Partnership evidenced
24
<PAGE>
thereby, unless such assignment and transfer shall be in compliance
with the terms and provisions of this Agreement, and any attempted
assignment or transfer in contravention hereof shall be ineffectual.
2.60.3 Lost, Stolen, Destroyed or Mutilated Certificates of Interest.
In the event that a Certificate of Interest shall be lost, stolen,
destroyed or mutilated, the Partnership may cause a replacement
Certificate of Interest to be issued upon such terms and conditions as
shall be fixed by the General Partner, including, without limitation,
provision for indemnity and the posting of a bond or other adequate
security as security therefor. No replacement Certificate of Interest
shall be issued to any person unless such person has surrendered the
Certificate of Interest to be replaced, or has complied with the terms
of this Section 15.15.
2.60.4 Inspection of Certificate Transfer Ledger. The Certificate
Transfer Ledger containing the names and addresses of all Partners and
the interest of each Partner in the Partnership shall be open to the
inspection of the Partners at the principal office of the Partnership
during usual business hours upon request of any Partner. Such
Certificate Transfer Ledger shall, in addition, be available for
inspection by the Casino Control Commission or the Division of Gaming
Enforcement of the State of New Jersey and each of their respective
authorized agents at all reasonable times without notice.
2.61 Execution of Certain Documents by the Partnership in Connection
with the Acquisition. TCHI, in its capacity as General Partner of the
Partnership, shall have the authority to execute and deliver on behalf of the
Partnership all agreements, instruments and other documents to be executed and
delivered by the Partnership in connection with the Acquisition, including,
without limitation, any mortgages, security agreements and assignments
contemplated thereby and all instruments, certificates and other documents
related thereto.
25
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IN WITNESS WHEREOF, this Agreement has been executed as of the 7th day
of October, 1996.
General Partner
TRUMP'S CASTLE HOTEL & CASINO, INC.
By: /s/ NICHOLAS L. RIBIS
--------------------------------
Nicholas L. Ribis
Vice President
Limited Partner
TRUMP HOTELS & CASINO RESORTS
HOLDINGS, L.P.
By: TRUMP HOTELS & CASINO RESORTS, INC.
By: /s/ NICHOLAS L. RIBIS
---------------------------
Nicholas L. Ribis, President
and Chief Executive Officer
Withdrawing Limited Partners
/s/ DONALD J. TRUMP
----------------------------
Donald J. Trump
TRUMP CASINOS II, INC.
By: /s/ DONALD J. TRUMP
--------------------------------
Donald J. Trump
President
<PAGE>
STATE OF NEW YORK :
: ss.
COUNTY OF NEW YORK :
BE IT REMEMBERED that on October 7, 1996, before me, the subscriber,
personally appeared Donald J. Trump, an individual, who, I am satisfied, is the
person who has signed the within instrument on his own behalf, and I having
first made known to him the contents thereof he thereupon acknowledged that he
signed and delivered the said instrument in his personal capacity as an
individual, and that the within instrument is his voluntary act and deed.
/s/
-----------------------------
Notary Public
<PAGE>
STATE OF NEW YORK :
: ss.
COUNTY OF NEW YORK :
BE IT REMEMBERED that on October 7, 1996, before me, the subscriber,
personally appeared Donald J. Trump, the President of Trump Casinos II, Inc., a
Delaware corporation, who, I am satisfied, is the person who has signed the
within instrument on behalf of such corporation, and I having first made known
to him the contents thereof he thereupon acknowledged that he signed and
delivered the said instrument in his capacity as such officer aforesaid, and
that the within instrument is the voluntary act and deed of said corporation,
made by virtue of authority from its Board of Directors.
/s/
---------------------------
Notary Public
<PAGE>
STATE OF NEW YORK :
: ss.
COUNTY OF NEW YORK :
BE IT REMEMBERED that on October 7, 1996, before me, the subscriber,
personally appeared Nicholas L. Ribis, the Vice President of Trump's Castle
Hotel and Casino, Inc., a New Jersey corporation, who, I am satisfied, is the
person who has signed the within instrument on behalf of such corporation, and I
having first made known to him the contents thereof he thereupon acknowledged
that he signed and delivered the said instrument in his capacity as such officer
aforesaid, and that the within instrument is the voluntary act and deed of said
corporation, made by virtue of authority from its Board of Directors.
/s/
--------------------------------
Notary Public
<PAGE>
STATE OF NEW YORK :
: ss.
COUNTY OF NEW YORK :
BE IT REMEMBERED that on October 7, 1996, before me, the subscriber,
personally appeared Nicholas L. Ribis, the President and Chief Executive Officer
of Trump Hotels & Casino Resorts, Inc., general partner of Trump Hotels & Casino
Resorts Holdings, L.P., a Delaware limited partnership, who, I am satisfied, is
the person who has signed the within instrument on behalf of such limited
partnership, and I having first made known to him the contents thereof he
thereupon acknowledged that he signed and delivered the said instrument in his
capacity as such officer aforesaid, and that the within instrument is the
voluntary act and deed of said limited partnership, made by virtue of authority
from its Board of Directors.
/s/
--------------------------------
Notary Public
THERMAL ENERGY SERVICE AGREEMENT
THIS THERMAL ENERGY SERVICE AGREEMENT ("Agreement") is entered into as of
the 26th day of September 1996, by and between ATLANTIC JERSEY THERMAL
SYSTEMS, INC., a Delaware corporation ("Seller"), and TRUMP PLAZA ASSOCIATES, A
New Jersey general partnership ("Buyer").
WITNESSETH:
WHEREAS, Seller is engaged in the business of producing and selling heating
and cooling energy; and
WHEREAS, Buyer operates the Trump Plaza Hotel and Casino and Trump World's
Fair Casino at Trump Plaza located at Mississippi and Florida Avenues and the
Boardwalk, Atlantic City, New Jersey 08401, as the same may be expanded or
improved from time to time ("Buyer's Facilities"); and
WHEREAS, Buyer presently purchases from Seller and Seller presently sells
to Buyer all of Buyer's heating and cooling energy requirements for Buyer's
Facilities pursuant to that certain Thermal Energy Sale Agreement ("TESA") dated
as of February 1, 1995 between Seller and Buyer, as amended by that certain
letter agreement ("Letter Agreement") dated as of February 23, 1995 between
Seller and Buyer, as further amended by that certain Letter Agreement ("Second
Letter Agreement") dated as of September 15, 1995 between Seller and Buyer; and
WHEREAS, Seller presently operates and maintains "Seller's Required
Facilities", as that term is defined in the TESA, pursuant to that certain
Operating Agreement ("Operating Agreement") dated as of May 1, 1995 between
Seller and Buyer; and
WHEREAS, Seller desires to obtain the exclusive right to use the steam and
chilled water production facilities located on-site at Buyer's Facilities in
order to sell to Buyer all of Buyer's heating and cooling energy requirements
for Buyer's Facilities at an additional cost savings to Buyer; and
WHEREAS, Buyer is willing to allow Seller to operate the steam and chilled
water production facilities and emergency electric generating facilities located
on-site at Buyer's Facilities on an exclusive basis for the aforestated purposes
on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants,
conditions and agreements hereinabove and hereinafter set forth and such other
good and valuable considerations, the receipt and sufficiency of which are
hereby
<PAGE>
acknowledged, Buyer and Seller, each intending to be legally bound, do hereby
agree as follows:
1. DEFINITIONS
Except as otherwise expressly provided herein, all capitalized terms used
in this Agreement shall have the respective meanings as set forth below:
(a) "Billing Month" shall mean any calendar month, or any portion
thereof, during which Buyer receives and Seller delivers Thermal Energy to
Buyer's Facilities in accordance with the terms and conditions of this
Agreement.
(b) "Contractual Obligation" shall mean, as to either party to this
Agreement, any contract, agreement, indenture, instrument or undertaking to
which such party is a party or by which any of its properties is bound or
affected.
(c) "Emergency Electric Generating Facilities" shall mean, the diesel
generators, motors, pumps, heat exchangers, piping, valves, day tanks and
starters ("Diesel Sets") and electric switchgear and transfer switches necessary
to start and operate the Diesel Sets, and all appurtenant equipment thereto,
together with any and all parts, supplies, meters and equipment installed or
added thereto, which constitute the emergency electric generating facilities
located at Buyer's Facilities, including but not limited to those more
specifically identified on Schedule 1(c) attached hereto and made a part hereof.
(d) "Emergency Electric Services" shall mean electric services
provided or which could be provided to Buyer by Seller from the Emergency
Electric Generating Facilities in the event of an interruption in electric
service to Buyer's Facilities by Atlantic City Electric Company or successor
thereto.
(e) "Governmental Authority" shall mean the federal government and
state or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and any other governmental entity with authority over
any aspect of this Agreement or the performance of any of the obligations
hereunder.
(f) "Metering Equipment" shall have the meaning set forth in Section
8.1 of this Agreement.
(g) "Points of Delivery" shall mean the physical point where Thermal
Energy is delivered to Buyer, as more specifically described on Schedule 1(g)
attached hereto and made a part hereof.
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(h) "Points of Return" shall mean the physical point where Seller is
anticipated to receive the chilled water return and condensate from Buyer, as
more specifically described on Schedule 1 (h) attached hereto and made a part
hereof.
(i) "New Service Commencement Date" shall have the meaning set forth
in Section 2.2 of this Agreement.
(j) "Thermal Energy" shall mean, as the context requires, quantities
of heating and cooling energy as measured in mmBtu's and ton-hrs., respectively,
extracted from the circulating flows of the steam/condensate and chilled water
provided to Buyer at Buyer's Facilities in accordance with the delivery
specifications set forth on Schedule 1 (j) of this Agreement.
(k) "Thermal Energy Capacity Charges" shall mean the capacity charges
for Thermal Energy for each Billing Month determined in accordance with the
capacity charges set forth on Schedule 7.1 of this Agreement.
(l) "Thermal Energy Production Facilities" shall mean the chillers,
boilers, cooling towers, pumps and all appurtenant equipment thereto, together
with any and all parts, supplies and equipment installed or added thereto, and
all improvements, additions or replacements made thereto (on the primary side)
which constitute the steam and chilled water production facilities located at
Buyer's Facilities, and shall include Buyer Owned Thermal Energy Production
Facilities and Seller Owned Thermal Energy Production Facilities, all as more
specifically identified on Schedule 1(l) attached hereto and made a part hereof.
(m) "Thermal Energy Usage Charges" shall mean the usage charges for
Thermal Energy for each Billing Month determined in accordance with the usage
charges set forth on Schedule 7.1 of this Agreement.
(n) "Trump Plaza (East Expansion)" shall mean the building and
associated structures of the former Holiday Inn hotel property, owned by Buyer
and located on the parcel bounded by Missouri Avenue, Pacific Avenue, Columbia
Avenue and The Boardwalk in Atlantic City, New Jersey.
(o) "Trump Plaza (Main)" shall mean the building and associated
structures owned by Buyer and located on the parcel bounded by Mississippi
Avenue, Pacific Avenue, Columbia Avenue and The Boardwalk in Atlantic City, New
Jersey.
3
<PAGE>
2. TERM AND TERMINATION OF TESA
2.1 Term. This Agreement shall be in full force and effect and be legally
binding upon the parties and their permitted successors and assigns as of the
date hereof and shall remain in effect for a term of twenty (20) years following
the New Service Commencement Date, unless otherwise terminated as provided
herein (the "Term").
2.2 New Service Commencement Date. Buyer and Seller shall mutually agree
upon a New Service Commencement Date upon which Seller shall first make
available and deliver to Buyer's Facilities Thermal Energy and upon which
[Atlantic Operating Systems, Inc.], Seller's affiliate, assumes operation of
Buyer's Emergency Electric Generating Facilities as provided herein, but in no
event shall the New Service Commencement Date occur any later than October 15,
1996, unless otherwise agreed to in writing by the parties.
2.3 Termination of TESA. As of the New Service Commencement Date, the TESA,
Letter Agreement, Second Letter Agreement and Operating Agreement shall
terminate and be of no further force and effect, it being the intent of the
parties that each of such agreements be superseded and replaced by this
Agreement and the operating agreement more specifically described in Section 5.2
of this Agreement.
3. LICENSE AGREEMENT
3.1 Grant of License. Buyer hereby grants to Seller (i) a non-exclusive
license throughout the Term of this Agreement to enter upon Buyer's Facilities
in order to inspect and gain access to the Thermal Energy Production Facilities
and Emergency Electric Generating Facilities; (ii) an exclusive license
commencing on the New Service Commencement Date and continuing thereafter
throughout the Term of this Agreement to use, operate and maintain the Thermal
Energy Production Facilities and Emergency Electric Generating Facilities to the
extent and for the purposes set forth herein, which license shall be irrevocable
for so long as the Agreement remains in effect and Seller is not in default of
any of its obligations hereunder; and (iii) a non-exclusive license to use,
without interruption, the electrical service, makeup water lines and fire
control system which support the Thermal Energy Production Facilities and
Emergency Electric Generating Facilities to the extent necessary in the use,
operation and maintenance of the Thermal energy Production Facilities and
Emergency Electric Generating Facilities; provided, however, that Seller shall
at no time interfere with the business operations of Buyer's Facilities
including, without limitation, the operation of the casino-hotel located at
Buyer's Facilities.
4
<PAGE>
3.2 Consideration for Licenses. In consideration for the licenses granted
to Seller by Buyer pursuant to the provisions of Section 3.1 above, Seller
hereby agrees to pay to Buyer the sum of Five Million ($5,000,000.00) Dollars
(the "License Fee"). The License fee shall be payable on the New Service
Commencement Date, but in no event later than September 30, 1996, in immediately
available funds to an account designated by Buyer.
4. EASEMENTS
4.1 Easements and Rights-Of-Way; Access. Buyer shall grant, or cause to be
granted, to Seller all rights-of-way, access rights, easements, licenses and
other rights with respect to Buyer's Facilities as may be reasonably necessary
for Seller to perform its obligations and exercise its rights hereunder. Buyer
shall use commercially reasonable efforts to obtain, or cause to be obtained (in
form and substance reasonably satisfactory to Seller) non-disturbance agreements
or, if applicable, waivers and/or consents from each of its mortgagees or
landlords with respect to all rights of way, access rights, easements, licenses
and other property rights which Seller is obligated to provide or cause to be
provided to Seller pursuant to this Article 4.
5. THERMAL ENERGY PRODUCTION FACILITIES, EMERGENCY ELECTRIC GENERATING
FACILITIES AND RELATED REQUIREMENTS
5.1 Thermal Energy Production Facilities. Seller will engineer, permit,
construct, finance, operate and maintain the Thermal Energy Production
Facilities so as to produce and deliver Thermal Energy to Buyer at the agreed
upon Points of Delivery.
5.2 Emergency Electric Generating Facilities. Seller will engineer, permit,
construct, finance, operate and maintain the Emergency Electric Generating
Facilities so as to produce and deliver Emergency Electric Services to Buyer as
required.
5.3 Facility Operation. Seller will use, operate and maintain the Thermal
Energy Production Facilities and Emergency Electric Generating Facilities in a
manner which meets or exceeds good industry practice, and Seller shall secure
and maintain, at its sole cost and expense, all permits necessary for the use,
operation and maintenance of Buyer's Thermal Energy Production Facilities and
Emergency Electric Generating Facilities. As soon as practicable, but in no
event later than October 15, 1996, Buyer and Seller shall enter into a
definitive operating agreement on terms mutually acceptable to each of them
setting forth their respective responsibilities for the use, operation and
maintenance
5
<PAGE>
of the Thermal Energy Production Facilities and Emergency Electric Generating
Facilities.
5.4 Facility Ownership. Title to the Buyer Owned Thermal Energy Production
Facilities and Emergency Electric Generating Facilities shall remain with Buyer
and Seller shall not remove, alter (except as otherwise required or permitted
under this Agreement) or permit any lien to exist on such Thermal Energy
Production Facilities and Emergency Electric Generating Facilities.
5.5 Buyer's Gas Requirements. Commencing on the New Service Commencement
Date and continuing throughout the Term of this Agreement, Seller shall pay for
all natural gas requirements of Buyer, provided, however, that Buyer shall
reimburse Seller for the as-delivered cost of all gas quantities delivered to
Buyer for use in its kitchen facilities, on a firm basis. Seller shall maintain
a separate meter to measure and record gas delivered to Buyer's kitchen
facilities. Upon the execution and delivery of this Agreement, Seller shall
proceed with due diligence to transfer all natural gas service at Buyer's
Facilities to Seller as of the New Service Commencement Date or as soon as
practicable thereafter. If Seller is proceeding diligently with such transfer
but is unable to effect the same as of the New Service Commencement Date, Buyer
agrees to take gas service at such meters in its name and Seller shall reimburse
Buyer at cost for all gas service taken in Buyer's name for use in Buyer's
Facilities until such time as Seller is able to effect such transfer.
5.6 Removal of Temporary Facilities. No later than December 31, 1997,
Seller shall dismantle and remove the temporary building and the Thermal Energy
generating facilities in such building located on the Trump Plaza (East
Expansion) parcel and previously constructed and installed by Seller to enable
Seller on a temporary basis to provide all the Thermal Energy requirements of
the Trump Plaza (East Expansion) and the Trump Plaza (Main). Seller shall
reasonably restore the site of such temporary building to its prior condition.
5.7 Buyer's Electric Requirements. Commencing on the New Service
Commencement Date and continuing throughout the Term of this Agreement, Seller
shall be responsible for establishing and coordinating the electric submetering
of electric service to the Thermal Energy Production Facilities and Seller shall
grant a credit to Buyer on a monthly basis equal to the cost of such electricity
delivered to Buyer's Thermal Energy Production Facilities, provided, however,
that Buyer shall provide Seller with timely copies of its electric bills. The
parties intend that Buyer shall remain the customer of record for all electric
service to Buyer's Facilities.
6
<PAGE>
5.8 Buyer's Water Requirements. Commencing on the New Service Commencement
Date and continuing throughout the Term of this Agreement, Seller shall be
responsible for measuring the make-up water associated with the water
requirements of the Thermal Energy Production Facilities and Seller shall grant
to Buyer a credit on a quarterly basis equal to the cost of such water usage at
the currently applicable tariff rates.
6. PURCHASE AND SALE OF THERMAL ENERGY AND EMERGENCY ELECTRIC SERVICES
6.1 Purchase and Sale of Thermal Energy. Commencing on the New Service
Commencement Date and continuing thereafter throughout the Term of this
Agreement, Seller will produce and deliver for sale to Buyer, and Buyer will
purchase and receive from Seller, all of Buyer's Thermal Energy requirements for
Buyer's Facilities. Such Thermal Energy requirements will be produced by Seller
from the Thermal Energy Production Facilities; provided, however, that Seller,
at its sole reasonable discretion, may provide such Thermal Energy requirements
from a centralized thermal energy plant to be owned and operated by Seller or an
affiliate thereof, in which event Seller will maintain the Thermal Energy
Production Facilities in a moth-ball condition which meets or exceeds good
industry practice and in which event appropriate changes will be made to the
Points of Delivery and Points of Return. Provided Buyer's Thermal Energy
requirements do not exceed the levels of contract capacity specified in Schedule
7.1 attached hereto on more than two (2) occasions within any two (2)
consecutive billing periods or in any two (2) Billing Months within consecutive
calendar years, the costs thereof shall be as set forth in Schedule 7.1. Subject
to the provisions of Section 7.2 hereof which shall control in the circumstances
described therein, if Buyer's Thermal Energy requirements exceed the levels of
contract capacity specified in Schedule 7.1 on more than two (2) occasions
within any two (2) consecutive billing periods, the contract capacity specified
in Schedule 7.1 shall be increased to the maximum quantity of capacity delivered
to Buyer and the cost thereof shall be as set forth in Schedule 7.1.
6.2 Purchase and Sale of Emergency Electric Services. Commencing on the New
Service Commencement Date and continuing thereafter throughout the Term of this
Agreement, Seller will produce and deliver for sale to Buyer, and Buyer will
purchase and receive from Seller, Emergency Electric Services produced from the
Emergency Electric Generating Facilities that may be required in the event of an
interruption in electric services to Buyer by Atlantic City Electric Company or
successor thereto.
7
<PAGE>
6.3 Points of Delivery and Return. Buyer will obtain its Thermal Energy, in
the case of heating, by extracting heat from and, in the case of cooling, by
transferring heat to, the circulating flows of steam and chilled water that
Seller will make available to Buyer at the agreed upon Points of Delivery. Buyer
agrees to take and accept the flows of steam and chilled water at such Points of
Delivery and return the condensate and chilled water to Seller at the agreed
upon Points of Return.
6.4 Point of Transfer, Risk of Loss. The sale of Thermal Energy shall be
deemed to occur at the Points of Delivery and the risk of loss of the
circulating medium shall transfer to Buyer at such points and shall transfer
back to Seller at the Points of Return.
6.5 Delivery Specifications. The Thermal Energy delivered by Seller at the
Points of Delivery shall satisfy the conditions of temperature and pressure
specified in Schedule 1 (j) attached hereto and made a part hereof.
6.6 Treatment of Condensate and Chilled Water. Buyer shall not interfere
with, or restrict (other than to extract its Thermal Energy requirements), or
contaminate in any way the flows of steam, condensate or chilled water supplied
to or collected from Buyer hereunder. Buyer agrees to compensate Seller for the
reasonable costs of treating or replacing any condensate or chilled water that
is either contaminated or not returned, after making allowance for reasonable
losses occurring within normal operating conditions by Buyer, as reasonably
demonstrated by Seller to Buyer. Further, it is agreed that Seller may suspend
service if Buyer fails to cure any contamination of steam, condensate or chilled
water caused by Buyer, as reasonably demonstrated by Seller to Buyer, within
thirty (30) days after being advised in writing by Seller of such contaminating,
provided, however, that if the nature of such contamination is such that the
same cannot reasonably be cured within such thirty (30) day period, Buyer shall
not be deemed to be in default if it shall have commenced such cure within such
thirty (30) day period and thereafter diligently and continuously prosecutes
such cure to completion, and Seller may not suspend service to Buyer during such
period of cure.
6.7 Scheduled Outages. Whenever it shall become necessary for Seller to
schedule an outage so that Seller may make repairs, replacements or changes in
the Thermal Energy Production Facilities, both parties shall exercise reasonable
efforts to coordinate the timing of the scheduled outage, and, in any event,
Seller shall give Buyer not less than ten (10) days prior written notice of such
outage. Seller shall use reasonable means to limit the duration of the outage
and shall attempt to schedule chilled water outages during winter months and
steam outages during summer
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months. Both parties agree to act reasonably and in good faith, recognizing that
such outages will, from time to time, be required. Notwithstanding anything
herein contained to the contrary, Seller agrees that outages shall not and may
not result in the reduction of Thermal Energy services required to continue to
maintain and meet Buyer's Thermal Energy requirements within reasonable levels
hereunder.
6.8 Buyer's Rights During Interruption in Service. If at any time during
this Agreement, Seller shall fail to deliver Buyer's Thermal Energy requirements
and such failure is, in Buyer's reasonable judgment, attributable to Seller's
failure to diligently pursue and implement appropriate corrective actions
consistent with the facts and circumstances of the interruption, Buyer may at
its option elect to cure Seller's non performance, without being in default of
Buyer's obligations under this Agreement, by producing its own Thermal Energy
(with or without use of the Thermal Energy Production Facilities) or purchasing
and accepting deliveries of Thermal Energy from any other source. In such event,
Seller shall reimburse Buyer for the excess of any costs if incurred by Buyer to
cover over and above Seller's rates and charges hereunder.
7. CHARGES AND PAYMENTS
7.1 Charges for Heating and Cooling Service. For each Billing Month in
which Buyer receives Thermal Energy from Seller, Buyer shall pay Seller (i) the
applicable Thermal Energy Capacity Charges for Thermal Energy set forth in
Schedule 7.1 attached hereto and made a part hereof; (ii) the applicable Thermal
Energy Usage Charges for Thermal Energy set forth in Schedule 7.1 attached
hereto and made a part hereof; and (iii) the Supplemental Chilled Water Capacity
Charge.
7.2 Charges for Emergency Electric Services. For each billing month, Buyer
shall pay Seller a monthly fee, said monthly fee to escalate annually, as set
forth Schedule 7.1 attached hereto and made a part hereof, for Emergency
Electric Services which could be provided to Buyer by Seller from the Emergency
Electric Generating Facilities.
7.3 Adjustment in Thermal Energy Capacity Charges. In the event the Thermal
Energy required by Buyer increases at any time within five (5) years of the New
Service Commencement Date as the result of any expansion to Buyer's Facilities,
Seller shall, at Buyer's option exercisable within six (6) months of Buyer's
commencement of any expansion, provide such additional Thermal Energy
requirements to Buyer under the same rates, terms and conditions then applicable
under this Agreement.
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7.4 Capacity Charge Payments; No Set-Off. Unless excused by reason of Force
Majeure, payment of the Thermal Energy Capacity Charges and Thermal Energy Usage
Charges are conditioned on Seller's ability to deliver to Buyer at the Points of
Delivery the full Thermal Energy requirements of Buyer under this Agreement, and
subject to the provisions of this Agreement, shall not otherwise be subject to
any set-off, counterclaim, abatement, or diminution. If Seller is unable to
deliver to Buyer when required any quantity of Thermal Energy up to the levels
of Contract Capacity specified in Schedule 7.1 the applicable Thermal Energy
Capacity Charges shall be adjusted to on a pro rated basis to account for such
deficiency.
7.5 Supplemental Riser Capital Charge. For each Billing Month commencing
with October 1996 and continuing through and until May 2002, Buyer shall pay
Seller the charges set forth in Schedule 7.5 attached hereto, which changes are
independent of any other obligations hereunder and shall not be subject to
set-off, counter claim, abatement, or diminution.
7.6 Invoice and Payments. Within fifteen (15) days following the close of
each Billing Month, Seller shall send Buyer a detailed invoice setting forth all
charges for Thermal Energy delivered to Buyer by Seller during such calendar
month. Payment, less any credits or rebates due to Buyer pursuant to this
Agreement, will be due and payable within thirty (30) days of receipt by Buyer
of the invoice from Seller, or the first business day following such day if such
day is not a business day. Buyer shall have the right at reasonable hours to
examine the testing records and meter reading charts of Seller to the extent
reasonably necessary to verify the accuracy of any invoice. If any such
examination reveals any error or inaccuracy in Seller's invoice, than proper
adjustment and correction thereof shall be made as promptly as practicable
thereafter.
7.7 Delinquent Payments. Any invoice tendered for service rendered
hereunder shall be deemed delinquent if not paid within thirty (30) days after
becoming due and payable. The outstanding balance of any delinquent invoice
shall accrue interest from the date due until paid, at the prime rate then in
effect at Citibank, N.A., as published in the Wall Street Journal or comparable
publication, plus one percent (2%) per annum.
8. METERING
8.1 Metering Equipment. Seller will furnish, install, and maintain for the
Term of this Agreement without charge to Buyer all required meters, instruments,
recording devices, and other related
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data logging equipment required to measure and record all charges payable by
Buyer under this Agreement (collectively, the "Metering Equipment").
8.2 Testing. All Metering Equipment will be tested and calibrated by Seller
periodically in accordance with the manufacturer's instructions and good
industry practice. Test and calibration records will be issued to the Buyer upon
request. Further, Buyer may request additional meter tests at any time;
provided, however, if a meter is subsequently found to have a variance for
accuracy of less than three (3%) percent, Buyer will bear the reasonable cost of
such testing.
8.3 Adjustment to Prior Invoices. If any test establishes that a meter is
not accurately performing (i.e., in accordance with the manufacturer's variance
specifications), Seller shall make an adjustment in Buyer's invoices, measured
from the date it is determined by Seller or Buyer, in good faith, that the
inaccuracy began.
9. SALE OF THERMAL ENERGY TO THIRD PARTIES
9.1 Resale of Thermal Energy by Buyer. Thermal Energy may be resold by
Buyer to its tenants, provided such tenants occupy Buyer's Facilities and
provided that such resale does not subject Seller to any new or additional
governmental rules, regulations or laws, including but not limited to, tax laws
or regulations by any New Jersey regulatory authority. In case of any such
resale, Buyer shall remain primarily liable to Seller for all costs and charges
of Thermal Energy delivered to Buyer pursuant to this Agreement.
10. REPRESENTATIONS AND WARRANTIES
10.1 Seller Representations. Seller hereby represents and warrants that:
(a) It is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation and has all requisite
corporate power and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby;
(b) Seller has or will obtain all necessary corporate approvals for
the execution and delivery of this Agreement and the performance of its
obligations hereunder;
(c) This Agreement is a legal, valid and binding obligation of Seller
enforceable against Seller in accordance with
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its terms, subject to the qualification, however, that the enforcement of the
rights and remedies herein is subject to (i) bankruptcy and other similar laws
of general application affecting rights and remedies of creditors and (ii) the
application of general principals of equity (regardless of whether considered in
a proceeding in equity or at law);
(d) To the best knowledge of Seller, as of the date of execution
hereof, no Governmental Approval (other than any Governmental Approvals which
have been previously obtained or disclosed, in writing, to Buyer), is required
to authorize, or is required in connection with the execution, delivery and
performance of this Agreement or the performance of Seller's obligations
hereunder which Seller has reason to believe that it will be unable to obtain in
due course; and
(e) Neither the execution nor delivery of this Agreement by Seller nor
compliance by Seller with any of the terms and provisions hereof (i) conflicts
with, breaches or contravenes the provisions of the corporate charter or bylaws
of Seller or any Contractual Obligation of Seller or (ii) results in a condition
or event that constitutes (or that, upon notice or lapse of time or both, would
constitute) an event or default under any Contractual Obligation of the Seller.
10.2 Buyer Representations. Buyer hereby represents and warrants that:
(a) It is a general partnership duly formed, validly and existing and
in good standing under the laws of the state of its formation and has all
requisite power and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
(b) The execution and delivery of this Agreement and the performance
of its obligations hereunder have been duly authorized by all necessary
partnership action;
(c) This Agreement is a legal, valid and binding obligation of Buyer
enforceable against Buyer in accordance with its terms, subject to the
qualification, however, that the enforcement of the rights and remedies herein
is subject to (i) bankruptcy and other similar laws of general application
affecting rights and remedies of creditors and (ii) application of general
principals of equity (regardless of whether considered in a proceeding in equity
or at law);
(d) To the best knowledge of Buyer, as of the date of execution
hereof, no Governmental Approval (other than any Governmental Approvals which
have been previously obtained or
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disclosed, in writing, to Seller) is required to authorize, or is required in
connection with the execution, delivery and performance of this Agreement or the
performance of Buyer's obligations hereunder which Buyer has reason to believe
that it will be unable to obtain in due course.
(e) Neither the execution and delivery of this Agreement by Buyer nor
compliance by Buyer with any of the terms and provisions hereof (i) conflicts
with, breaches or contravenes the provisions of the Partnership Agreement of
Buyer or any Contractual Obligation of Buyer or (ii) results in a condition or
event that constitutes (or that, upon notice or lapse of time or both, would
constitute) an event of default under any Contractual Obligation of the Buyer.
11. INDEMNIFICATION/INSURANCE
11.1 Seller's Indemnity. Seller hereby agrees to defend, indemnify and hold
harmless Buyer, its employees, officers, shareholders, directors and agents from
and against any and all claims, demands, suits, actions, recoveries, judgments,
and costs and expenses in connection therewith (including, without limitation,
reasonable attorneys' fees and expenses), made, brought or obtained on account
of the loss of life, property, or injury or damage to the person or property of
any person or persons whomsoever, which loss of life or property, or injury or
damage to persons or property, shall arise out of or in connection with Seller's
or its employees' use, operation and maintenance of the Thermal Energy
Production Facilities, or any act required of or omission by Seller, or any
agent or employee of Seller under this Agreement or in connection therewith.
11.2 Buyer's Indemnity. Buyer hereby agrees to defend, indemnify and hold
harmless Seller, its employees, officers, shareholders, directors and agents
from and against any and all claims, demands, suits, actions, recoveries,
judgments, and costs and expenses in connection therewith (including, without
limitation, reasonable attorneys' fees and expenses), made, brought or obtained
on account of the loss of life, property, or injury or damage to the person or
property of any person or persons whomsoever, which loss of life or property, or
injury or damage to persons or property, shall arise out of or in connection
with Sellers or its employees' operation of Buyer's Facilities (exclusive of the
Thermal Energy Production Facilities), or any act required of or omission by
Buyer, or any agent or employee of Buyer, under this Agreement or in connection
therewith.
11.3 Seller's Insurance. Seller shall maintain throughout the Term of this
Agreement, at its sole cost and
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expense, the policies of insurance meeting the terms and conditions set forth on
Schedule 11.3 attached hereto and made a part hereof.
11.4 Buyer's Insurance. Commencing on the date of this Agreement and at all
times thereafter throughout the Term of this Agreement, Buyer shall maintain, at
is sole cost and expense, comprehensive general public liability (including
contractual) insurance, in an amount not less than $10,000,000, with respect to
any liability, losses, damages, expenses, claims, actions, judgments and
settlement for any personal injury, death or property or economic loss occurring
in Buyer's Facilities (exclusive of the Thermal Energy Production Facilities) or
surrounding premises and arising out of or incident to the operation,
maintenance, repair, construction, replacement or modification of Buyer's
Facilities (exclusive of the Thermal Energy Production Facilities).
11.5 Evidence of Insurance. Prior to commencing any construction or
delivering any Thermal Energy under this Agreement, Seller and Buyer shall each
furnish to the other one or more certificates of insurance evidencing the
existence of the coverages set forth in Sections 11.3 and 11.4, respectively.
Each certificate shall state that the insurance carrier will give Seller and
Buyer at least thirty (30) days written notice of any cancellation or material
change in the terms and conditions of such policy during the periods of
coverage.
12. DEFAULT
12.1 Seller Default. Anyone of the following events shall constitute an
"Event of Default" hereunder with respect to Seller:
(a) In connection with itself or its assets, Seller shall (i) apply
for or consent to the appointment of or taking of possession by a receiver or
liquidator, (ii) make a general assignment for the benefit of creditors, (ii)
file a petition for relief under the Federal Bankruptcy Code or similar state
law, or (iii) take similar action to commence a proceeding for relief under any
other law relating to the bankruptcy, insolvency, reorganization, or winding up
of itself or the composition or adjustment of its debts;
(b) An action or proceeding shall be commenced, without the
application or consent of Seller, in any court of competent jurisdiction for (i)
the liquidation, reorganization, dissolution, or winding up of Seller of the
composition or adjustment of its debts, (ii) the appointment of a trustee,
receiver, liquidator or custodian of Seller or substantially of all its assets,
or (iii) any similar relief under any law relating to Seller's bankruptcy or
insolvency, provided such proceeding shall
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continue undismissed, or an order, judgment or decree approving or ordering any
of the foregoing shall be entered and continues unstayed for ninety (90) days;
(c) Any representation or warranty made by Seller and contained in
this Agreement shall prove to have been incorrect in any material respect when
made; or
(d) Seller shall fail to (i) timely make any payment required
hereunder, or (ii) comply with any non-payment obligation under this Agreement
and shall fail to cure or remedy such default within thirty (30) days following
notice and written demand by Buyer to cure the same; provided, however, that
Seller's failure to provide and deliver to Buyer the Thermal Energy required
pursuant to this Agreement for any period of three (3) consecutive days, unless
excused due to Force Majeure or actions or inactions of Buyer its agents
representatives or employees, shall constitute an immediate Event of Default.
12.2 Buyer Default. Any one of the following events shall constitute an
"Event of Default" hereunder with respect to Buyer.
(a) In connection with itself or its assets, Buyer shall (i) apply for
or consent to the appointment of or taking of possession by a receiver or
liquidator, (ii) make a general assignment for the benefit of creditors, (ii)
file a petition of relief under the Federal Bankruptcy Code or similar state
law, or (iii) take similar action to commence a proceeding for relief under any
other law relating to the bankruptcy, insolvency, reorganization, or winding up
of itself or the composition or adjustment of its debts;
(b) An action or proceeding shall be commenced, without the
application or consent of Buyer, in any court of competent jurisdiction for (i)
the liquidation, reorganization, dissolution, or winding up of the buyer or the
composition or adjustment of its debts, (ii) the appointment of a trustee,
receiver, liquidator or custodian of Buyer or substantially all of its assets,
or (iii) any similar relief under any law relating to Buyer's bankruptcy or
insolvency, provided such proceeding shall continue undismissed or order,
judgment or decree approving or ordering any of the foregoing shall be entered
and continue unstayed for ninety (90) days;
(c) Any representation or warranty made by Buyer and contained in this
Agreement shall prove to have been incorrect in any material respect when made
by Buyer; or
(d) Buyer shall fail to comply with any provision of this Agreement
and shall fail to cure or remedy such default within
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thirty (30) days following notice and written demand by Seller to cure the same.
13. REMEDIES
13.1 Seller's Remedies. Upon an Event of Default by Buyer, Seller may
declare the Buyer to be in material breach of this Agreement and (i) suspend
service until Buyer either cures the default or, in the case of nonpayment,
provides Seller with such assurances and security as Seller may reasonably
request, (ii) terminate this Agreement by written notice to Buyer, or (iii) seek
such other relief to which Seller may be entitled at law or equity.
13.2 Buyer's Remedies. Upon an Event of Default by Seller, Buyer may (i) to
the extent commercially practicable, cure the default by Seller and obtain
reimbursement (through direct cash payment, credit, offset or otherwise as Buyer
may elect) from Seller for all costs and expenses incurred by Buyer in
connection with such cure, (ii) terminate this Agreement by written notice to
Seller, or (iii) seek whatever relief to which Buyer may be entitled at law or
equity.
14. FORCE MAJEURE
14.1 Suspension of Performance. Neither Buyer nor Seller shall be in
default in respect of any obligation under this Agreement if the party is unable
to perform its obligation by reason of an event of Force Majeure, provided (i)
that the suspension of performance shall be commensurate with the nature and
duration of the event of Force Majeure and the non-performing party is using its
best efforts to restore its ability to perform, (ii) that for so long as an
event of Force Majeure relieves Seller of its obligation to deliver Thermal
Energy to Buyer as required under this Agreement, Buyer may elect, without being
in default of its obligations hereunder, to produce its own Thermal Energy or to
purchase and accept deliveries of Thermal Energy from any other source.
14.2 Termination by Reason of Force Majeure. Notwithstanding anything in
this Agreement contained to the contrary, if a party's performance is suspended
for more than one (1) year, the other party may terminate this Agreement upon
thirty (30) days written notice to the other, provided (with respect to an event
of Force Majeure by Seller) that upon such termination Buyer is able to generate
its own Thermal Energy or to obtain Thermal Energy from a third party.
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14.3 Force Majeure Defined. Force Majeure shall mean any event that
prevents or delays a party from performing in whole or in part any obligation
arising under this Agreement and neither was within the reasonable control of
the non-performing party nor could have been prevented by reasonable actions
taken by the non-performing party, including, without limitation, an act of God,
explosion, fire, lightening, earthquake, hurricane, storm, civil disturbance,
strike, lock-out, unavailability of fuel or power, changes in law, orders of
governmental authorities, and equipment failures that are not due to the
negligence of the non-performing party.
15. TERMINATION
This Agreement shall terminate at the end of the Term and may otherwise be
sooner terminated only: (i) by Buyer upon the occurrence of an Event of Default
by Seller, (ii) by Seller upon the occurrence of an Event of Default by Buyer,
(iii) by either party in accordance with the provisions of Section 14.2 of this
Agreement, or (iv) by Buyer in the event of any increase in the cost of Thermal
Energy hereunder by more than ten (10%) percent and actually paid or to be paid
by Buyer resulting solely from the assertion of rate jurisdiction and imposition
of any law or regulation respecting rates, whether now existing or hereafter
enacted, (including without limitation any rate regulation by the State of New
Jersey Board of Public Utilities) or directly resulting form the administration
or interpretation of any such law or regulation respecting rate regulation by
any Governmental Authority.
16. MISCELLANEOUS
16.1 Assignment. Neither Party shall assign this Agreement without first
having obtained the written consent of the other party, provided, however, that
either party may assign its rights and delegate its duties hereunder without
first obtaining the other party's consent to any subsidiary or affiliated entity
controlled by the assigning party, on the condition that the assignee agrees in
writing to assume all of the obligations of the assigning party hereunder,
further provided, however, that either party may assign, pledge or mortgage this
Agreement as security for the obligations or indebtedness of such party,
including Seller's financing of the District Thermal Energy Facilities, without
the approval of the other party.
16.2 Notice. All notices hereunder shall be sufficient if sent by
registered or certified mail postage prepaid, addressed, if to Seller: Atlantic
Jersey Thermal Systems, Inc., 5100 Harding
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Highway, Route 40 & 32 Avenue, Mays Landing, New Jersey 08330, Attention:
President; and if to Buyer: Trump Plaza Associates, Mississippi and Florida
Avenues and the Boardwalk, Atlantic City, New Jersey 08401, Attention: President
and Chief Operating Officer, provided that either Seller or Buyer may by like
notice designate any further or different address or addresses or person to
which notices shall be sent.
16.3 Limitation of Liability. Except in the case of willful misconduct or
gross negligence, neither Seller nor Buyer, nor their respective officers,
officials, partners, agents, employees, subsidiaries, parents or affiliates
shall be liable to the other party, or their respective officers, officials,
directors, partners, agents, employees, subsidiaries, parents or affiliates for
claims for incidental, special, direct or consequential damages of any nature,
including lost profits and opportunity costs in connection with or resulting
from performance or non-performance of their respective obligations under or in
connection with this Agreement. Nothing in this Section 16.3, however, shall
limit either party's rights or remedies to recover any direct damages for a
breach of this Agreement.
16.4 Confidentiality. Each of the parties agrees to hold in confidence any
information supplied to it by the other and designated in writing as
confidential unless the recipient is required to disclose the information as a
matter of law, in which case, the recipient shall give the other party prior
written notice.
16.5 Counterparts. This Agreement may be executed in separate and several
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same instrument.
16.6 Severability. Any provision hereof that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction and to the fullest extent
permitted by applicable law, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof and
without affecting the validity or enforceability of any provision in any other
jurisdiction.
16.7 Casino Control Commission Approval. During the Term of this Agreement,
all provisions of the New Jersey Casino Control Act shall be complied with by
Buyer and Seller, and Seller agrees to apply for a casino service industry
license, if required by the New Jersey Casino Control Commission. In addition,
Seller agrees to file a vendor registration if it has not already done so.
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16.8 Governing Law. This Agreement shall be construed in accordance with
and shall be enforceable under the laws of the State of New Jersey.
16.9 Entire Agreement. The Agreement constitutes the entire agreement
between the Parties with respect to the matters contained herein and all prior
agreements with respect thereto are superseded hereby. No amendment or
modification hereof shall be binding unless duly executed by both Parties.
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed and delivered as of the date and day first above written.
ATLANTIC JERSEY THERMAL SYSTEMS, INC.
By: /s/ CARL H. FOGLER
------------------------------------
Name: Carl H. Fogler
Title: Vice President
TRUMP PLAZA ASSOCIATES
By: /s/ BARRY J. CREGAN
------------------------------------
Name: Barry J. Cregan
Title: Chief Operating Officer
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SCHEDULE 1(g)
POINTS OF DELIVERY
"Steam" point of delivery is defined as the point of exit from the
boiler mechanical room of the steam piping system located in Buyer's Facilities.
Metering of steam usage will occur within the boiler mechanical room.
"Chilled Water Supply" point of delivery is defined as the point of
exit from the chiller mechanical room of the chilled water supply piping system
located in Buyer's Facilities. Metering of chilled water usage will occur within
the chiller mechanical room.
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SCHEDULE 1(h)
POINTS OF RETURN
"Condensate" point of return is defined as the point of entry into the
boiler mechanical room of the condensate piping system located in Buyer's
Facilities.
"Chilled Water Return" point of return is defined as the point of
entry into the chiller mechanical room of the chilled water return piping system
located in Buyer's Facilities.
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SCHEDULE 1(j)
CONTRACT CAPACITIES AND THERMAL ENERGY SPECIFICATIONS
[Please see attached].
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SCHEDULE 1(l)
THERMAL ENERGY PRODUCTION FACILITIES
The "Thermal Energy Production Facilities" are defined as all
equipment identified on the following Chilled Water Piping Schematic and Steam
Piping Schematic. All equipment shown on these schematics reside in the
respective Chiller and Boiler Mechanical Rooms located within Buyer's
Facilities.
Also included is the entire condenser water system including pumps,
piping and cooling towers.
All associated electrical and controls equipment required for the
operation of the above-mentioned equipment is also included.
[To Be Completed].
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SCHEDULE 7.1
Thermal Energy Capacity Charges, Thermal Energy Usage Charges, and
Emergency Electric Services
I. CHARGES FOR HEATING SERVICE
The charges for heating service in any billing month shall equal the sum of
the Monthly Capacity Charges and Monthly Usage Charges.
A. MONTHLY CAPACITY CHARGES
The Monthly Steam Capacity Charge shall equal the product of the Steam
Contract Capacity times the sum of the Steam Capital Capacity Rate and the Steam
O&M Capacity Rate, i.e.,
MSCC = SCC x (SCCR + SOMCR)
where,
MSCC = Monthly Steam Capacity Charge ($)
SCC = Steam Contract Capacity (MMBtu/hr.), and
SCCR = Steam Capital Capacity Rate ($ per MMBtu/hr.)
SOMCR = Steam O&M Capacity Rate ($ per MMBtu/hr.)
The initial Steam Capital Capacity Rate shall equal $668.39 per MMBtu/hr
and the initial Steam O&M Capacity Rate shall equal $273.81 per MMBtu/hr. These
rates shall be adjusted annually commencing on January 1, 1997. The new rates
shall be determined by multiplying the old rates times the fraction whose
numerator shall equal the latest available "Consumer Price Index, All Items,
Urban Consumers, Wilmington - Philadelphia" as published by the U.S. Department
of Commerce and whose denominator shall equal the same index as of twelve months
immediately preceding, provided that with respect to the Steam Capital Capacity
Rate, such fraction shall be no less than 1.03 nor more than 1.04.
- ----------
Refer to Schedule 1(j) for the Steam Contract Capacities.
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B. MONTHLY USAGE CHARGE
The Monthly Steam Usage Charge shall equal the product of the Monthly Steam
Energy Deliveries times the quantity determined by adding the Monthly Steam Base
Usage Rate and the Monthly Steam Energy Usage Rate, i.e.,
MSUC = MSED x ( MSBUR + MSEUR )
where,
MSUC = Monthly Steam Usage Charge ($)
MSED = Monthly Steam Energy Deliveries (MMBtu)
MSBUR = Monthly Steam Base Usage Rate ($/MMBtu), and
MSEUR = Monthly Steam Energy Usage Rate ($/MMBtu)
The initial Monthly Base Usage Charge shall equal $0.750 per MMBtu. This
rate shall be adjusted annually commencing on January 1, 1997. The new rates
shall be determined by multiplying the old rate times the fraction whose
numerator shall equal the latest available "Consumer Price Index, All Items,
Urban Consumers, Wilmington - Philadelphia" as published by the U.S. Department
of Commerce and whose denominator shall equal the same index as of twelve months
immediately preceding.
The initial Monthly Energy Usage Charge shall equal $4.00 per MMBtu. This
charge shall be adjusted quarterly commencing on January 1, 1997. The new rate
shall be determined by multiplying the old rate times the fraction whose
numerator shall equal the latest available Energy Usage Index Steam, as defined
below, and whose denominator shall equal the same index as of the immediately
preceding quarter.
"Energy Usage Index Steam" shall mean, for any quarter, the quantity
obtained by performing the following calculation:
[80%(NG Index - Current Quarter) + 20%(No. 2 Fuel Oil Index - Current
Quarter)]
[80%(NG Index - Previous Quarter) + 20%(No. 2 Fuel Oil Index - Previous
Quarter)]
Where,
"NG Index" means, for any month, the arithmetic mean of the City Gate
Prices for NY/NJ for such month, as published in Inside FERC Gas Market Report
(or any successor publication mutually acceptable to Seller and Purchaser).
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"No. 2 Fuel Oil Index" means, for any month, the price on the first
business day of such month of the Philadelphia Reseller Tank Car Price of No. 2
Oil, as published daily in the Journal of Commerce (or any successor publication
mutually acceptable to Seller and Purchaser).
II. CHARGES FOR COOLING SERVICE
The charges for cooling service in any billing month shall equal the sum of
the Monthly Capacity Charges and Monthly Usage Charges.
A. MONTHLY CAPACITY CHARGES
The Monthly Chilled Water Capacity Charge shall equal the product of the
Chilled Water Contract Capacity times the sum of the Chilled Water Capital
Capacity Rate and the Chilled Water O&M Capital Rate, i.e.,
MCWCC = CWCC x (CWCCR + CWOMCR)
where,
MCWCC = Monthly Chilled Water Capacity Charge ($)
CWCC = Chilled Water Contract Capacity (Tons), and
CWCCR = Chilled Water Capital Capacity Rate ($ per Ton)
CWOMCR = Chilled Water O&M Capacity Rate ($ per Ton)
The initial Chilled Water Capital Capacity Rate shall equal $9.03 per Ton
and the initial Chilled Water O&M Capacity Rate shall equal $8.97 per Ton. This
rate shall be adjusted annually commencing on January 1, 1997. The new rates
shall be determined by multiplying the old rate times the fraction whose
numerator shall equal the latest available "Consumer Price Index, All Items,
Urban Consumers, Wilmington - Philadelphia" as published by the U.S. Department
of Commerce and whose denominator shall equal the same index as of twelve months
immediately preceding, provided that fraction with respect to Chilled Water
Capital Capacity Rate, such shall be no less than 1.03 nor more than 1.04.
- ----------
Refer to Schedule 1(j) for the Steam Contract Capacities.
27
<PAGE>
B. MONTHLY USAGE CHARGE
The Monthly Chilled Water Usage Charge shall equal the product of the
Monthly Chilled Water Energy Deliveries times the quantity determined by adding
the Monthly Chilled Water Base Usage Rate and the Monthly Chilled Water Energy
Usage Rate, i.e.,
MCWUC = MCWED x ( MCWBUR + MCWEUR )
where,
MCWUC = Monthly Chilled Water Usage Charge ($)
MCWED = Monthly Chilled Water Energy Deliveries (MMBtu)
MCWBUR = Monthly Chilled Water Base Usage Rate ($/MMBtu), and
MCWEUR = Monthly Chilled Water Energy Usage Rate ($/MMBtu)
The initial Monthly Chilled Water Base Usage Charge shall equal $0.0390 per
Ton-hr. This rate shall be adjusted annually commencing on January 1, 1997. The
new rates shall be determined by multiplying the old rate times the fraction
whose numerator shall equal the latest available "Consumer Price Index, All
Items, Urban Consumers, Wilmington Philadelphia" as published by the U.S.
Department of Commerce and whose denominator shall equal the same index as of
twelve months immediately preceding.
The initial Monthly Chilled Water Energy Usage Charge shall equal $0.0529
per Ton-hr. This charge shall be adjusted quarterly commencing on January 1,
1997. The new rate shall be determined by multiplying the old rate times the
Energy Usage Index Chilled Water, as defined below.
"Energy Usage Index Chilled Water" means, during any quarter, the
fraction whose numerator shall equal the currently applicable AE
Transmission Gen Service (TGS) Tariffed Rate for energy components only
as of the end of such quarter (including applicable riders or
adjustments) and whose denominator shall equal the same quantity for
the immediately preceding quarter.
III. Charges for Emergency Electric Service
28
<PAGE>
Commencing on the New Service Commencement Date, the charges for Emergency
Electric Services in any Billing Month shall equal thirty thousand dollars
($30,000). This monthly charge shall be adjusted annually commencing on January
1, 1997. The new monthly charges shall be determined by multiplying the old
charges times the fraction whose numerator shall equal the latest available
"Consumer Price Index, All Items, Urban Consumers, Wilmington - Philadelphia" as
published by the U.S. Department of Commerce and whose denominator shall equal
the same index as of twelve months immediately preceding.
29
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000943322
<NAME> TRUMP HOTELS & CASINO HOLDINGS, L.P.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 219,671
<SECURITIES> 0
<RECEIVABLES> 76,347
<ALLOWANCES> 14,198
<INVENTORY> 9,537
<CURRENT-ASSETS> 305,258
<PP&E> 1,890,960
<DEPRECIATION> 415,898
<TOTAL-ASSETS> 2,003,916
<CURRENT-LIABILITIES> 164,231
<BONDS> 1,355,000
0
0
<COMMON> 0
<OTHER-SE> 441,172
<TOTAL-LIABILITY-AND-EQUITY> 2,003,916
<SALES> 649,660
<TOTAL-REVENUES> 724,296
<CGS> 0
<TOTAL-COSTS> 381,535 <F1>
<OTHER-EXPENSES> 177,117 <F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 97,844
<INCOME-PRETAX> 16,545
<INCOME-TAX> 42
<INCOME-CONTINUING> 16,503
<DISCONTINUED> 0
<EXTRAORDINARY> (59,132)
<CHANGES> 0
<NET-INCOME> (42,629)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1> Includes gaming, lodging, food & beverage and other.
<F2> Includes general & administration and depreciation & amortization.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000943323
<NAME> TRUMP HOTELS & CASINO RESORTS FUNDING, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 7,007
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 162,007
<CURRENT-LIABILITIES> 7,007
<BONDS> 155,000
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 162,007
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0<F1>
<OTHER-EXPENSES> 0<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,019
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1> Includes gaming, lodging, food & beverage and other.
<F2> Includes general & administration and depreciation & amortization.
</FN>
</TABLE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended: September 30, 1996
Commission File No. 1-9029
-------------
TRUMP'S CASTLE FUNDING, INC.
(Exact Name of Registrant as Specified in its Charter)
NEW JERSEY 11-2739203
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
One Castle Boulevard
Atlantic City, New Jersey 08401
(609) 441-6060
(Address, Including Zip Code and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
-------------
TRUMP'S CASTLE ASSOCIATES, L.P.
(Exact Name of Registrant as Specified in its Charter)
NEW JERSEY 22-2608426
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
One Castle Boulevard
Atlantic City, New Jersey 08401
(609) 441-6060
(Address, Including Zip Code and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
-------------
Indicate by check mark whether the Registrants (1) have filed all Reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) have been subject to such
filing requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark whether the Registrants have filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes |X| No |_|
Trump's Castle Funding, Inc. meets the conditions set forth in General
Instructions H(1)(a) and (b) of From 10-Q and is therefore filing this form with
the reduced disclosure format.
As of November 14, 1996, there were 200 shares of Trump's Castle Funding,
Inc.'s common stock outstanding.
================================================================================
<PAGE>
TRUMP'S CASTLE ASSOCIATES, L.P. AND SUBSIDIARY
-------------
INDEX TO FORM 10-Q
Page No.
--------
PART I -- FINANCIAL INFORMATION
ITEM 1 -- Financial Statements
Consolidated Balance Sheets of Trump's Castle Associates, L.P.
and Subsidiary as of September 30, 1996 (unaudited) and
December 31, 1995 ............................................. 1
Consolidated Statements of Operations of Trump's Castle
Associates, L.P. and Subsidiary for the Three Months and
Nine Months Ended September 30, 1996 and 1995 (unaudited) ..... 2
Consolidated Statement of Partners' Capital/Deficit of Trump's
Castle Associates, L.P. and Subsidiary for the Nine Months
Ended September 30, 1996 (unaudited) .......................... 3
Consolidated Statements of Cash Flows of Trump's Castle
Associates, L.P. and Subsidiary for the Nine Months Ended
September 30, 1996 and 1995 (unaudited) ....................... 4
Notes to Consolidated Financial Statements of Trump's Castle
Associates, L.P. and Subsidiary (unaudited) ................... 5-7
ITEM 2 -- Management's Discussion and Analysis of Financial
Condition and Results of Operations ...................... 8-11
PART II -- OTHER INFORMATION
ITEM 1 -- Legal Proceedings ........................................ 12
ITEM 2 -- Changes in Securities .................................... 12
ITEM 3 -- Defaults Upon Senior Securities .......................... 12
ITEM 4 -- Submission of Matters to Vote of Security Holders ........ 12
ITEM 5 -- Other Information ........................................ 12
ITEM 6 -- Exhibits and Reports on Form 8-K ......................... 13
SIGNATURES
Signature -- Trump's Castle Funding, Inc. ........................ 14
Signature -- Trump's Castle Associates, L.P. ..................... 15
i
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
TRUMP'S CASTLE ASSOCIATES, L.P. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(in thousands)
ASSETS
September 30, December 31,
1996 1995
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents ....................... $ 21,049 $ 21,038
Receivables, net ................................ 8,191 10,259
Due from affiliates ............................. -- 1,146
Inventories ..................................... 1,357 1,567
Other current assets ............................ 2,522 4,961
--------- --------
Total Current Assets ........................ 33,119 38,971
--------- --------
PROPERTY AND EQUIPMENT ............................ 317,015 322,115
--------- --------
OTHER ASSETS ...................................... 10,810 9,495
--------- --------
Total Assets ................................ $ 360,944 $370,581
========= ========
LIABILITIES AND PARTNERS' CAPITAL/DEFICIT
CURRENT LIABILITIES:
Current maturities--other borrowings ............ $ 3,799 $ 2,903
Accounts payable and accrued expense ............ 27,890 31,108
Due to affiliates ............................... 604 --
Accrued interest payable ........................ 11,910 4,391
--------- --------
Total Current Liabilities ................... 44,203 38,402
MORTGAGE NOTES .................................... 208,409 206,569
(Net of unamortized discount of $ 33,732 and
$ 35,572, respectively)
PIK NOTES ......................................... 58,576 54,110
(Net of unamortized discount of $ 7,575 and
$ 7,750, respectively)
OTHER BORROWINGS .................................. 62,865 62,336
OTHER LONG TERM LIABILITIES ....................... 5,947 3,351
--------- --------
Total Liabilities ........................... 380,000 364,768
--------- --------
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL/DEFICIT ......................... (19,056) 5,813
--------- --------
Total Liabilities and Capital ............... $ 360,944 $370,581
========= ========
The accompanying notes to consolidated financial statements are an
integral part of these consolidated statements.
1
<PAGE>
TRUMP'S CASTLE ASSOCIATES, L.P. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(unaudited)
(in thousands)
Three Months Nine Months
Ended Ended
September 30, September 30,
------------------- ---------------------
1996 1995 1996 1995
-------- -------- --------- ---------
REVENUES:
Gaming ......................... $ 67,103 $ 81,050 $ 194,276 $ 205,561
Rooms .......................... 5,624 6,281 14,629 15,475
Food and beverage .............. 9,474 9,431 25,064 22,411
Other .......................... 3,019 3,219 6,936 7,053
-------- -------- --------- ---------
Gross Revenues ................ 85,220 99,981 240,905 250,500
Less-Promotional allowance ....... 11,278 10,823 30,221 25,186
-------- -------- --------- ---------
Net Revenues ................... 73,942 89,158 210,684 225,314
-------- -------- --------- ---------
COSTS AND EXPENSES:
Gaming ......................... 43,340 46,204 124,319 119,881
Rooms .......................... 426 657 1,181 1,984
Food and beverage .............. 3,389 3,527 8,174 9,500
General and administrative ..... 19,269 19,518 57,409 55,054
Depreciation and amortization .. 4,102 3,704 11,779 10,817
-------- -------- --------- ---------
Total costs and expense ........ 70,526 73,610 202,862 197,236
-------- -------- --------- ---------
Income From Operation .......... 3,416 15,548 7,822 28,078
INTEREST INCOME .................. 208 82 466 306
OTHER INCOME ..................... 3,000 -- 3,000 --
INTEREST EXPENSE ................. (12,561) (11,640) (36,157) (34,229)
-------- -------- --------- ---------
Net Income (Loss) .............. $ (5,937) $ 3,990 $ (24,869) $ (5,845)
======== ======== ========= =========
The accompanying notes to consolidated financial statements are an
integral part of these consolidated statements.
2
<PAGE>
TRUMP'S CASTLE ASSOCIATES, L.P. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL/DEFICIT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(unaudited)
(in thousands)
Partners' Partners'
Capital Deficit Total
------- -------- --------
Balance at December 31, 1995 ........... $73,395 $(67,582) $ 5,813
Net Loss ............................... -- (24,869) (24,869)
------- -------- --------
Balance at September 30, 1996 .......... $73,395 $(92,451) $(19,056)
======= ======== ========
The accompanying notes to consolidated financial statements are an
integral part of these consolidated statements.
3
<PAGE>
TRUMP'S CASTLE ASSOCIATES, L.P. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(unaudited)
(in thousands)
Nine Months
Ended September 30,
--------------------
1996 1995
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ................................................ $(24,869) $ (5,845)
Adjustments to reconcile net loss to net cash flows
provided by
operating activities --
Noncash charges --
Depreciation and amortization ........................ 11,779 10,817
Accretion of bond discount ........................... 2,015 1,750
Provisions for losses on receivables ................. 1,321 905
Valuation allowance-- CRDA investments ............... 997 1,179
-------- --------
(8,757) 8,806
Decrease (increase) in receivables ................... 1,893 (689)
Decrease in inventories .............................. 210 348
Decrease(increase) in other current assets ........... 2,139 (3,567)
Decrease(increase) in other assets ................... 215 (209)
Increase in current liabilities ...................... 4,735 6,350
Increase in other liabilities ........................ 6,520 5,716
-------- --------
Net cash flows provided by operating activities .... 6,955 16,755
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net ................. (4,125) (4,647)
Purchase of CRDA investments ............................ (2,104) (2,048)
-------- --------
Net cash flows used in investing activities ........ (6,229) (6,695)
-------- --------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
Proceeds from issuance of debt .......................... 1,738 --
Payments of other borrowings ............................ (2,453) (794)
-------- --------
Net cash flows (used in) provided by investing
activities ....................................... (715) (794)
-------- --------
Net increase in cash and cash equivalents .......... 11 9,266
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ......... 21,038 19,122
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ............... $ 21,049 $ 28,388
======== ========
SUPPLEMENTAL INFORMATION:
Cash paid for interest .................................. $ 19,595 $ 18,767
SUPPLEMENTAL DISCLOSURE OF INVESTING AND FINANCING
======== ========
ACTIVITIES:
Capital Lease Obligations .............................. $ 2,017 $ --
======== ========
The accompanying notes to consolidated financial statements are an
integral part of these consolidated statements.
4
<PAGE>
TRUMP'S CASTLE ASSOCIATES, L.P. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(1) Organization and Operations
The accompanying consolidated financial statements include those of Trump's
Castle Associates, L.P., currently a New Jersey limited partnership (the
"Partnership"), and its wholly owned subsidiary, Trump's Castle Funding, Inc., a
New Jersey corporation ("Funding").
The Partnership owns and operates Trump's Castle Casino Resort ("Trump's
Castle"), a luxury casino hotel located in the marina district of Atlantic City,
New Jersey.
The accompanying consolidated financial statements have been prepared by
the Partnership without audit. In the opinion of the Partnership, all
adjustments, consisting of only normal recurring adjustments necessary to
present fairly the financial position, results of operations and cash flows for
the periods presented have been made. All significant intercompany balances and
transactions have been eliminated in the consolidated financial statements.
The accompanying consolidated financial statements have been prepared by
the Partnership pursuant to the rules and regulations of the Securities and
Exchange Commission (the "SEC"). Accordingly, certain information and note
disclosures normally included in the financial statements prepared in conformity
with generally accepted accounting principles have been omitted.
These financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the annual
report on Form 10-K for the year ended December 31, 1995 filed with the SEC by
the Partnership and Funding. Certain reclassifications have been made to conform
prior year financial information with the current year presentation.
The casino industry in Atlantic City is seasonal in nature; accordingly,
the results of operations for the period ending September 30, 1996 are not
necessarily indicative of the operating results for a full year.
(2) PIK Notes
On June 23, 1995, the Partnership entered into an Option Agreement (the
"Option Agreement") with Hamilton Partners, L.P. ("Hamilton") which granted the
Partnership an option (the "Option") to acquire the Increasing Rate Subordinated
Pay-in-Kind Notes due 2005 of Funding (the "PIK Notes") owned by Hamilton. The
Option was granted to the Partnership in consideration of $1.9 million of
aggregate payments to Hamilton. The Option was exercisable at a price equal to
60% of the aggregate principal amount of the PIK Notes delivered by Hamilton,
with accrued but unpaid interest, plus 100% of the PIK Notes issued to Hamilton
as interest subsequent to June 23, 1995. Pursuant to the terms of the Option
Agreement, upon the occurrence of certain events within 18 months of the time
the Option is exercised, the Partnership is required to make an additional
payment to Hamilton of up to 40% of the principal amount of the PIK Notes. On
May 21, 1996, the Partnership assigned the Option to Trump Hotels & Casino
Resorts Holdings, L.P. ("THCR Holdings"), a Delaware limited partnership and a
subsidiary of Trump Hotels & Casino Resorts, Inc. ("THCR"), which, on that same
date, exercised the Option and acquired approximately 90% of the PIK Notes for
approximately $38.7 million (the "Purchase Price"), in exchange for which THCR
Holdings received an aggregate of approximately $59.3 million of PIK Notes.
Concurrently with the exercise of the Option, THCR Holdings entered into an
agreement with the Partnership and Donald J. Trump ("Trump"), which granted THCR
Holdings a six-month exclusive right to negotiate with Trump and the Partnership
with respect to the acquisition of the Partnership (the "Acquisition") (see Note
3). If an agreement with respect to the Acquisition did not occur within six
months, the Partnership had the right to repurchase from THCR Holdings, for a
period of 90 days (the "Castle Repurchase Date"), the acquired PIK Notes for an
amount in cash equal to the Purchase Price plus 16% interest thereon (the
"Repurchase Price"). In the event that the Partnership did not repurchase the
acquired PIK Notes, Trump had the right to purchase from THCR Holdings, for a
period of 90 days following the Castle Repurchase Date, the acquired PIK Notes
for an amount in cash equal to the Repurchase Price calculated to the date of
such purchase.
On May 15, 1996, the semi-annual interest payment of $4,292,000 was paid by
issuance of additional PIK Notes.
5
<PAGE>
TRUMP'S CASTLE ASSOCIATES, L.P. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(unaudited)
(3) Acquisition of the Partnership
On October 7, 1996, THCR Holdings acquired from Trump all of the
outstanding equity of the Partnership.
Pursuant to the terms of the Agreement, dated as of June 24, 1996, as
amended (the "Agreement"), by and among THCR, THCR Holdings, Trump Casinos II,
Inc., formerly known as TC/GP, Inc. ("TCI-II"), Trump's Castle Hotel & Casino,
Inc. ("TCHI") and Trump, the aggregate consideration payable for all of the
outstanding equity interests of the Partnership (assuming, as of the date of the
Agreement, a value of $30 per share for THCR's Common Stock, par value $.01 per
share (the "THCR Common Stock")), was $176.9 million, payable in limited
partnership interests in THCR Holdings (exchangeable into shares of THCR Common
Stock) and cash as set forth below. The consideration represented, as of the
date of the Agreement, (A) $525.0 million (the agreed-upon value for the
business and operations of the Partnership) minus (B) $314.0 million (the sum of
all the aggregate principal amounts of (i) the Partnership's capital lease
obligations and indebtedness under the loan with PNC Bank, N.A. (successor to
Midlantic Bank, N.A.) (the "Term Loan"), (ii) the PIK Notes not held by THCR
Holdings, (iii) 111 @ 2% Senior Secured Notes due 2000 of Funding (the "Senior
Notes") and (iv) 113 @ 4% Mortgage Notes due 2003 of Funding (the "Mortgage
Notes") outstanding as of the date of the Agreement) minus (C) $40.8 million
(the aggregate principal amount of all PIK Notes held by THCR Holdings estimated
(on the date of the Agreement) to be outstanding as of the closing date of the
Acquisition (the "Closing Date") less the aggregate discount at which Trump
could have repurchased the PIK Notes held by THCR Holdings) plus (D) $6.7
million (the estimated (as of the date of the Agreement) excess cash over the
operating needs of the Partnership on the Closing Date).
As contemplated in the Agreement, on October 7, 1996, the Closing Date, the
following transactions were effected:
(i) Trump contributed to THCR Holdings his 61.5% equity interest in
the Partnership, in consideration of which he received a 9.52854% limited
partnership interest in THCR Holdings, exchangeable into 3,626,450 shares
of THCR Common Stock (valuing each such share at $30.00 (the "THCR Stock
Contribution Value"));
(ii) TCI-II contributed to THCR Holdings its 37.5% equity interest in
the Partnership, in consideration of which it received a 5.81009% limited
partnership interest in THCR Holdings, exchangeable into 2,211,250 shares
of THCR Common Stock (valuing each such share at the THCR Stock
Contribution Value); and
(iii) THCR-TCHI Merger Corp., a Delaware corporation and a wholly
owned subsidiary of THCR Holdings ("Merger Sub"), merged (the "TCHI
Merger") with and into TCHI (holder of a 1% equity interest in the
Partnership) whereupon (x) each share of common stock of TCHI, par value
$.01 per share (the "TCHI Common Stock"), outstanding immediately prior to
the TCHI Merger was converted into the right to receive $.8845 in cash (the
"TCHI Consideration") and each share of common stock of Merger Sub was
converted into the right to receive one share of common stock of the
surviving corporation of the TCHI Merger and (y) each holder of the
outstanding warrants (the "Castle Warrants") issued under the Warrant
Agreement, dated as of December 30, 1993, between TCHI and First Bank
National Association, as warrant agent, became entitled to receive, for
each former share of TCHI Common Stock for which each Castle Warrant was
exercisable, an amount in cash equal to the TCHI Consideration.
In the aggregate, Trump received (i) a limited partnership interest in THCR
Holdings convertible into 5,837,700 shares of THCR Common Stock and (ii)
$884,550 in cash. On October 7, 1996, the closing sale price of the THCR Common
Stock on the New York Stock Exchange was $22.625 per share.
In connection with the Acquisition, the Partnership was converted to a
limited partnership with THCR Holdings as a 99% limited partner and TCHI, as the
surviving corporation of the TCHI Merger, as a 1% general partner. The business
and operations of the Partnership are managed by its sole general partner, TCHI.
TCHI's Board of Directors includes, as of October 7, 1996, the three members
appointed by the holders of the Mortgage Notes and the PIK Notes, as well as
four other members appointed by THCR Holdings.
The Partnership and TCHI have been designated unrestricted subsidiaries
under the indenture governing the 151 @ 2% Senior Secured Notes due 2005 (the
"THCR Senior Notes") of THCR Holdings and Trump Hotels & Casino
6
<PAGE>
TRUMP'S CASTLE ASSOCIATES, L.P. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(unaudited)
Resorts Funding, Inc. (the "THCR Senior Note Indenture"). All of THCR Holding's
direct and indirect equity interests in the Partnership were pledged to the
trustee under the THCR Senior Note Indenture for the benefit of the holders of
the THCR Senior Notes.
(4) Financial Information of Funding
Financial information relating to Funding is as follows (in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------ ------------
<S> <C> <C>
Total Assets (including Mortgage Notes Receivable of
$242,141, net of unamortized discount of $33,732 and
$35,572 at September 30, 1996 and December 31, 1995, PIK
Notes Receivable of $66,151, net of unamortized discount
of $7,575 at September 30, 1996 and $61,860, net
unamortized discount of $7,750 at December 31, 1995, and
Senior Notes Receivable of $27,000 at September 30, 1996
and December 31, 1995) $293,985 $287,679
Total Liabilities and Capital (including Mortgage Notes
Payable of $242,141, net of unamortized discount of $33,732
and $35,572 at September 30, 1996 and December 31, 1995, PIK
Notes Payable of $66,151, net of unamortized discount of
$7,575 at September 30, 1996, and $61,860, net of unamortized
discount of $7,750 at December 31, 1995, and Senior Notes
Payable of $27,000 at September 30, 1996 and December 31, 1995) $293,985 $287,679
======== ========
</TABLE>
Nine Months
Ended September 30,
1996 1995
-------- --------
Interest Income .......................... $ 32,242 $ 31,148
Interest Expense ......................... 32,242 31,148
-------- --------
Net Income ............................... $ -- $ --
======== ========
(5) License Revenue
On September 27, 1996, the Partnership entered into a Thermal Energy
Service Agreement with Atlantic Jersey Thermal Systems, Inc. ("Atlantic
Thermal") pursuant to which Atlantic Thermal was granted an exclusive license
for a period of 20 years to use, operate and maintain certain steam and chilled
water production facilities at Trump's Castle (the "Thermal Agreement"). In
consideration of the license, Atlantic Thermal paid the Partnership $3,000,000,
which amount has been included in other non-operating income during the three
month and nine month periods ended September 30, 1996.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULT OF OPERATIONS.
Capital Resources and Liquidity
Cash flow from operating activities is the Partnership's principal source
of liquidity. For the nine months ended September 30, 1996, the Partnership's
net cash flow provided by operating activities before cash debt service
obligations was $28.9 million and cash debt service was $21.9 million, resulting
in net cash provided by operating activities of approximately $7.0 million.
In addition to cash needs to fund the day-to-day operations of Trump's
Castle, the Partnership's principal uses of cash are capital expenditures and
debt service.
Total capital expenditures for 1996 are anticipated to be approximately
$7.0 million and principally consist of (i) the purchase of slot machines, (ii)
renovations to guest rooms and the hotel tower and (iii) the construction of two
new player clubs. Management believes that these levels of capital expenditures
are sufficient to maintain the attractiveness of Trump's Castle and the
aesthetics of its hotel rooms and other public areas. Capital expenditures of
$6.6 million (including $2.5 million of capital leases) were incurred during the
nine months ended September 30, 1996 primarily for the previously mentioned
projects.
The Partnership's debt consists primarily of (i) the Term Loan, (ii) the
Senior Notes, (iii) the Mortgage Notes and (iv) the PIK Notes.
The Term Loan bears interest at the prime rate plus 3%, currently 11-1/4%,
and requires amortized monthly principal payments of approximately $158,000. The
Term Loan matures on May 28, 2000.
The Senior Notes have an outstanding principal amount of $27 million, and
bear interest at the rate of 11-1/2% per annum (which may be reduced to 11-1/4%
upon the occurrence of certain events). The Senior Notes mature on November 15,
2000 and are subject to a sinking fund which requires the retirement of 15% of
the Senior Notes on each of November 15, 1998 and 1999.
The Mortgage Notes have an outstanding principal amount of approximately
$242 million, bear interest at the rate of 11-3/4% per annum (which may be
reduced to 11-1/2% upon the occurrence of certain events) and mature on November
15, 2003.
The PIK Notes have an outstanding principal amount of approximately $66.2
million and mature on November 15, 2005. Interest is currently payable
semi-annually at the rate of 13-7/8%. On or prior to November 15, 2003, interest
on the PIK Notes may be paid in cash or through the issuance of additional PIK
Notes. During the second quarter, interest on the PIK Notes was paid through the
issuance of additional notes aggregating $4.3 million, and the Partnership
anticipates that additional interest due in 1996 of approximately $4.6 million
will be paid through the issuance of additional PIK Notes.
On June 23, 1995, the Partnership entered into the Option Agreement with
Hamilton which granted the Partnership the Option to acquire the PIK Notes owned
by Hamilton. The Option was granted to the Partnership in consideration of $1.9
million of aggregate payments to Hamilton. The Option was exercisable at a price
equal to 60% of the aggregate principal amount of the PIK Notes delivered by
Hamilton, with accrued but unpaid interest, plus 100% of the PIK Notes issued to
Hamilton as interest subsequent to June 23, 1995. Pursuant to the terms of the
Option Agreement, upon the occurrence of certain events within 18 months of the
time the Option is exercised, the Partnership is required to make an additional
payment to Hamilton of up to 40% of the principal amount of the PIK Notes. On
May 21, 1996, the Partnership assigned the Option to THCR Holdings which, on
that same date, exercised the Option and acquired approximately 90% of the PIK
Notes for the Purchase Price, in exchange for which THCR Holdings received an
aggregate of approximately $59.3 million of PIK Notes. Concurrently with the
exercise of the Option, THCR Holdings entered into an agreement with the
Partnership and Trump which granted THCR Holdings a six-month exclusive right to
negotiate with Trump and the Partnership with the respect to the Acquisition. If
an agreement with respect to the Acquisition did not occur within six months,
the Partnership had the right to repurchase from THCR Holdings, for a period of
90 days, the acquired PIK Notes for the Repurchase Price. In the event that the
Partnership did not repurchase the acquired PIK Notes, Trump had the right to
purchase from THCR Holdings, for a
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period of 90 days following the Castle Repurchase Date, the acquired PIK Notes
for an amount in cash equal to the Repurchase Price calculated to the date of
such purchase.
The Partnership's total cash debt service requirement was approximately
$21.9 million during the nine months ended September 30, 1996 and the
Partnership anticipates that approximately $17.9 million will be required for
the remainder of 1996 to meet its debt service obligations. As a result of the
Acquisition and the Partnership's designation as an unrestricted subsidiary
under the THCR Senior Note Indenture, the Partnership has the ability to receive
advances, subject to the limitations and restrictions set forth in the THCR
Senior Note Indenture, to the Partnership for working capital, debt service and
other purposes. It is contemplated that THCR Holdings may fund up to $5 million
to the Partnership for such purposes. In addition, the Partnership has the
ability to obtain a working capital facility of up to $10 million, although
there can be no assurance that such financing will be available on terms
acceptable to the Partnership.
The ability of Funding and the Partnership to pay their indebtedness when
due will depend on their ability to either generate cash from operations
sufficient for such purposes or to refinance such indebtedness on or before the
date on which it becomes due. The Partnership does not currently anticipate
being able to generate sufficient cash flow from operations to repay a
substantial portion of the principal amounts of the Mortgage Notes and the PIK
Notes. Thus, the repayment of the principal amount of this indebtedness will
likely depend primarily upon the ability of Funding and the Partnership to
refinance this debt when due. The future operating performance of the
Partnership and the ability to refinance this debt will be subject to the then
prevailing economic conditions, industry conditions and numerous other
financial, business, and other factors, many of which are beyond the control of
Funding or the Partnership. There can be no assurance that the future operating
performance of the Partnership will be sufficient to meet these repayment
obligations or that the general state of the economy, the status of the capital
markets generally or the receptiveness of the capital markets to the gaming
industry will be conducive to refinancing this debt or other attempts to raise
capital.
Important Factors Relating to Forward Looking Statements
In connection with certain forward-looking statements contained in this
Quarterly Report on Form 10-Q and those that may be made in the future by or on
behalf of the Partnership and Funding, the Partnership and Funding note that
there are various factors that could cause actual results to differ materially
from those set forth in any such forward-looking statements. The forward-looking
statements contained in this Quarterly Report were prepared by management and
are qualified by, and subject to, significant business, economic, competitive,
regulatory and other uncertainties and contingencies, all of which are difficult
or impossible to predict and many of which are beyond the control of the
Partnership and Funding. Accordingly, there can be no assurance that the
forward-looking statements contained in this Quarterly Report will be realized
or that actual results will not be significantly higher or lower. The statements
have not been audited by, examined by, compiled by or subjected to agreed-upon
procedures by independent accountants, and no third-party has independently
verified or reviewed such statements. Readers of this Quarterly Report should
consider these facts in evaluating the information contained herein. In
addition, the business and operations of the Partnership and Funding are subject
to substantial risks which increase the uncertainty inherent in the
forward-looking statements contained in this Quarterly Report. The inclusion of
the forward-looking statements contained in this Quarterly Report should not be
regarded as a representation by the Partnership and Funding or any other person
that the forward-looking statements contained in this Quarterly Report will be
achieved. In light of the foregoing, readers of this Quarterly Report are
cautioned not to place undue reliance on the forward-looking statements
contained herein.
Results of Operations: Operating Revenues and Expenses
The financial information presented below reflects the financial condition
and results of operations of the Partnership. Funding is a wholly-owned
subsidiary of the Partnership and conducts no business other than collecting
amounts due under certain intercompany notes from the Partnership for the
purpose of paying principal of, premium, if any, and interest on its
indebtedness, which Funding issued as a nominee for the Partnership.
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Comparison of Results of Operations for the Three-Month Periods Ended
September 30, 1996 and 1995. The Partnership's net revenues (gross revenues less
promotional allowances) for the three months ended September 30, 1996 and 1995
were approximately $73.9 million and $89.2 million, respectively. The $15.3
million or 17.2% decrease is primarily the result of the decreased win
percentage as described below.
Gaming revenues provide the majority of the Partnership's revenues and
primarily consist of slot machine and table games win.
Slot win was approximately $49.2 million and $56.6 million (a decrease of
approximately $7.4 million or 13.1%) for the three months ended September 30,
1996 and 1995, respectively. The total dollar amount wagered by customers on
slot machines decreased by approximately $65.6 million or 9.8% to $601.2 million
for the three months ended September 30, 1996. This decrease in slot volume was
the primary reason for the decline in slot win. Additionally the slot win
percentage decreased to 8.2% for the three months ended September 30, 1996, from
8.5% for the three months ended September 30, 1995.
Table game win was approximately $17.9 million and $24.5 million (a
decrease of $6.6 million or 26.9%) for the three months ended September 30, 1996
and 1995, respectively. The total dollar amount wagered by customers on table
games decreased by approximately $2.5 million or 1.7% to $140.8 million for the
three months ended September 30, 1996 from $143.3 million for the three months
ended 1995. The decrease in table game win was primarily caused by a decrease in
the table game win percentage (table game win as a percentage of dollars wagered
on table games) to12.3% for the three months ended September 30, 1996 from 16.5%
for the three months ended September 30, 1995. The table game win percentage is
outside the control of the Partnership, and although it is fairly constant over
the long-term, it can vary significantly from period to period, due in part to
the play of certain premium patrons who tend to wager substantial dollar amounts
on table games.
For the three months ended September 30, 1996 and 1995, credit extended to
the table games customers was approximately 32.6% and 31.4% of overall table
play, respectively. This relatively high level of credit play continues a trend
which started in the last fiscal year and is the result of an increased level of
play by individuals who wager relatively large sums. These premium patrons tend
to use a higher percentage of credit when they wager.
Nongaming revenues, in the aggregate, decreased by approximately $800,000
or 4.2% to $18.1 million for the three months ended September 30, 1996 from
$18.9 million for the three months ended September 30, 1995, primarily as a
result of a decrease in rooms revenue activity. Although occupancy rates
remained constant when compared with the same period in 1995, average
complimentary revenues per room declined. This average rate was decreased by
management with the intention of stimulating casino gaming volume.
Promotional allowances increased by approximately $500,000 or 4.6% to $11.3
million for the three months ended September 30, 1996 from $10.8 million for the
three months ended September 30, 1995, primarily as a result of an increase in
complimentary food and beverage activity. During the current year two player
clubs were opened which provide private dining for premium gaming patrons.
Gaming costs and expenses decreased by approximately $2.9 million or 6.2%
to $43.0 million for the three months ended September 30, 1996 from $46.2
million for the three months ended September 30, 1995. This decrease is
primarily the result of lower promotional coupon costs as well as decreases in
gaming revenue taxes and payroll costs.
Other non-operating income of $3.0 million for the three months ended
September 30, 1996 represents the non-refundable licensing fee resulting from
the Thermal Agreement (see Note 5 to the Consolidated Financial Statements).
Interest expense increased approximately $1.0 million or 8.6% to $12.6
million for the three months ended September 30, 1996 from $11.6 million
primarily due to an increase in the outstanding principal related to the PIK
Notes.
Comparison of Results of Operations for the Nine-Month Periods Ended
September 30, 1996 and 1995. The Partnership's net revenues (gross revenues less
promotional allowances) for the nine months ended September 30, 1996 and 1995
were approximately $210.7 million and $225.3 million, respectively.
Slot win was approximately $144.1 million and $147.0 million (a decrease of
approximately $2.9 million or 2.0%) for the nine months ended September 30, 1996
and 1995, respectively. The total dollar amount wagered by
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customers on slot machines increased by approximately $48.1 million or 2.8% to
$1,737.2 million for the nine months ended September 30, 1996. This slot volume
increase is the result of marketing programs and special events implemented by
management to stimulate slot play. This increase in slot volume was offset by a
decrease in the slot win percentage (slot win as a percentage of dollars wagered
on slot machines) to 8.3% for the nine months ended September 30, 1996 from 8.7%
for the nine months ended September 30, 1995. This slot win percentage decrease
was primarily due to an increased volume of customer play on higher denomination
slot machines, which traditionally have a lower slot win percentage.
Table game win was approximately $50.2 million and $58.6 million (a
decrease of $8.4 million or 14.3%) for the nine months ended September 30, 1996
and 1995, respectively. The total dollar amount wagered by customers on table
games increased by approximately $29.6 million or 8.3% to $384.4 million for the
nine months ended September 30, 1996 from $354.8 for the nine months ended
September 30, 1995. This increase, again, is the result of marketing programs
and special events implemented by management as well as an increased emphasis on
providing superior customer service. These increases were offset by a decrease
in the table game win percentage (table game win as a percentage of dollar
wagered on table games) to 12.6% for the nine months ended September 30, 1996
from 15.9% for the nine months ended September 30, 1995. The table game win
percentage is outside the control of the Partnership, and although it is fairly
constant over the long-term, it can vary significantly from period to period,
due in part to the play of certain premium patrons who tend to wager substantial
dollar amounts on table games.
For the nine months ended September 30, 1996 and 1995, credit extended to
the table games customers was approximately 31.6% and 29.0% of overall table
play, respectively. This relatively high level of credit play continues a trend
which started in the last fiscal year and is the result of an increased level of
play by individuals who wager relatively large sums. These premium patrons tend
to use a higher percentage of credit when they wager.
Nongaming revenues, in the aggregate, increased by approximately $1.7
million or 3.8% to $46.6 million for the nine months ended September 30, 1996
from $44.9 million for the nine months ended September 30, 1995, primarily as
the result of food and beverage revenue (an approximate $2.7 million increase).
During the current year, marketing programs designed to increase gaming revenues
caused an increase in complimentary rooms and food and beverage revenues (an
approximate $5.2 million increase) as compared to the prior year.
Promotional allowances increased by approximately $5.0 million or 19.8 % to
$30.2 million for the nine months ended September 30, 1996 from $25.2 million
for the nine months ended September 30, 1995. As discussed above, marketing
programs designed to increase gaming revenues caused an increase in
complimentary rooms and food and beverage activity as compared to the prior
year.
Gaming costs and expenses increased by approximately $4.4 million or 3.7%
to $124.3 million for the nine months ended September 30, 1996 from $119.9
million for the nine months ended September 30, 1995. This increase is primarily
the result of an increase in promotional coupon costs as well as increased
direct marketing and advertising costs associated with the new marketing
programs and special events introduced to stimulate gaming revenues.
Room and food and beverage costs and expenses for the nine months ended
September 30, 1996 and 1995 decreased approximately $2.1 million or 18.5%. This
decrease is primarily due to the increased level of complimentary food, beverage
and hotel services provided to patrons. The costs of such complimentaries have
been included in gaming costs and expenses.
For the nine months ended September 30, 1996, general and administrative
costs increased approximately $2.3 million or 4.2% primarily due to higher
facilities costs, advertising costs and other administrative costs.
Other non-operating income of $3.0 million for the nine months ended
September 30, 1996 represents the non-refundable licensing fee resulting from
the Thermal Agreement (see Note 5 to the Consolidated Financial Statements).
Interest expense increased approximately $2.0 million or 5.8% to $36.2
million for the nine months ended September 30, 1996 from $34.2 million,
primarily resulting from an increase in the outstanding principal related to the
PIK Notes.
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PART II -- OTHER INFORMATION
ITEM 1 -- LEGAL PROCEEDINGS
The Partnership, its partners, its affiliates, Funding and certain of their
employees have been involved in various legal proceedings. In general, the
Partnership and Funding have agreed to indemnify such persons and entities
against any and all losses, claims, damages, expenses (including reasonable
costs, disbursements and counsel fees) and liabilities (including amounts paid
or incurred in satisfaction of settlements, judgments, fines and penalties)
incurred by them in said legal proceedings. Such persons and entities are
vigorously defending the allegations against them and intend to vigorously
contest any future proceedings.
Various legal proceedings are now pending against the Partnership. The
Partnership considers all such proceedings to be ordinary litigation incident to
the character of its business and not material to its business or financial
condition. The majority of such claims are covered by liability insurance
(subject to applicable deductibles), and the Partnership believes that the
resolution of these claims, to the extent not covered by insurance, will not,
individually or in the aggregate, have a material adverse effect on its
financial condition or results of operations of the Partnership.
On August 14, 1996, certain stockholders of THCR filed two derivative
actions in the Court of Chancery in Delaware (Civil Action Nos. 15148 and 15160)
against each of the members of the Board of Directors of THCR, THCR, THCR
Holdings, the Partnership and TCI-II. The plaintiffs claim that the directors of
THCR breached their fiduciary duties in connection with the Acquisition and seek
an injunction, damages and an accounting.
On October 16, 1996, a stockholder of THCR filed a derivative action in the
United States District Court, Southern District of New York (96 Civ. 7820)
against each member of the Board of Directors of THCR, THCR, THCR Holdings, the
Partnership, Trump Casinos, Inc., TCI-II, TCHI and Salomon Brothers Inc
("Salomon") . The plaintiff claims that the defendants breached their fiduciary
duties and engaged in ultra vires acts in connection with the Acquisition and
that Salomon was negligent in the issuance of its fairness opinion with respect
to the Acquisition. The plaintiff also alleges violations of the federal
securities laws for alleged omissions and misrepresentations in THCR's proxies,
and that Trump, TCI-II and TCHI breached that Agreement by supplying THCR with
untrue information for inclusion in the proxy statement delivered to THCR's
stockholders in connection with the Acquisition. The plaintiff seeks removal of
the directors of THCR, an injunction, rescission and damages.
The Partnership and the other defendants in the foregoing actions believe
that the suits are without merit and intend to contest vigorously the
allegations against them.
ITEM 2 -- CHANGES IN SECURITIES
None.
ITEM 3 -- DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 -- SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
None.
ITEM 5 -- OTHER INFORMATION
On October 23, 1996, Trump Casino Services, L.L.C. ("Trump Services"), a
New Jersey limited liability company and a subsidiary of Trump Atlantic City
Associates, Trump Plaza Associates, Trump Taj Mahal Associates
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and the Partnership entered into an Amended and Restated Services Agreement (the
"Services Agreement"), pursuant to which Trump Services, in order to generate
efficiencies and realize synergies through consolidation of operations, will
provide certain management, financial and other functions necessary and
incidental to the operations of each of the Trump Plaza Hotel and Casino, the
Trump Taj Mahal Casino Resort and Trump's Castle. Trump Services will receive no
compensation for providing the services, other than payments to fund the costs
and expenses incurred in connection therewith.
Reference is made to the Services Agreement, attached as an Exhibit hereto
and incorporated herein by reference.
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
Exhibit No. Description of Exhibit
----------- ----------------------
3.7.2 Amendment to the Second Amended and Restated Partnership
Agreement of Trump's Castle Associates, dated as of
October 7, 1996.
3.7.3 Third Amended and Restated Partnership Agreement of Trump's
Castle Associates, L. P., dated as of October 7, 1996.
10.46 Thermal Energy Service Agreement, dated as of September 27,
1996, by and between Atlantic Jersey Thermal Systems, Inc.
and Trump's Castle Associates.
10.47 Amended and Restated Services Agreement, dated as of October
23, 1996, by and among Trump Plaza Associates, Trump Taj
Mahal Associates, Trump's Castle Associates, L.P. and Trump
Casino Services, L.L.C.
27.1 Financial Data Schedule of Trump's Castle Funding, Inc.
27.2 Financial Data Schedule of Trump's Castle Associates, L.P.
b. Current Reports on Form 8-K:
The Registrants did not file any Current Reports on Form 8-K during the
period beginning July 1, 1996 and ending September 30, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRUMP'S CASTLE FUNDING, INC.
(Registrant)
Date: November 14, 1996
By: /s/ DONALD J. TRUMP
-----------------------------------
Donald J. Trump
President and Treasurer
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRUMP'S CASTLE ASSOCIATES, L.P.
(Registrant)
Date: November 14, 1996
By: /s/ JOHN P. BURKE
-----------------------------------
John P. Burke
Treasurer
15
