FOURTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF TRUMP ENTERTAINMENT RESORTS HOLDINGS, L.P.

Exhibit 10.4

 

EXECUTION VERSION

 

 

FOURTH AMENDED AND RESTATED

 

AGREEMENT OF LIMITED PARTNERSHIP

 

OF

 

TRUMP ENTERTAINMENT RESORTS HOLDINGS, L.P.

 

 

TABLE OF CONTENTS

 

 

(i)

 

(ii)

 

(iii)

 

(iv)

 

(v)

 

SCHEDULES

 

 

EXHIBITS

 

 

(vi)

 

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.

 

FOURTH AMENDED AND RESTATED

 

AGREEMENT OF LIMITED PARTNERSHIP

 

OF

 

TRUMP ENTERTAINMENT RESORTS HOLDINGS, L.P.

 

THIS FOURTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP of Trump Entertainment Resorts Holdings, L.P. (formerly Trump Hotels & Casino Resorts Holdings, L.P.) is made and entered into this 20 ^th day of May, 2005, by and among Trump Entertainment Resorts, Inc. (formerly Trump Hotels & Casino Resorts, Inc.), a Delaware corporation (“TER”), Donald J. Trump (“Trump” or the “Initial Limited Partner”), Trump Casinos, Inc., a New Jersey corporation (“TCI”), TCI 2 Holdings, LLC, a Delaware limited liability company (“TCI 2 Holdings”), 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, TER 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, TER 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”), TER, Trump, THCR/LP Corporation, a New Jersey corporation (“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, in connection with the acquisition (the “Marina Acquisition”) by the Partnership of the equity interests of Trump’s Castle Associates, L.P., predecessor-in-interest to Trump Marina Associates LP, a New Jersey limited partnership (“Marina Associates”), TER, Trump, THCR/LP, TCI and Trump Casinos II, Inc., a Delaware Corporation (“TCI-II”), entered into a Third Amended and Restated Agreement of Limited Partnership, dated as of October 7, 1996, which provided for the capital contributions as set forth on Schedule IV hereto and the admission of TCI-II as a Limited Partner of the Partnership;

 

WHEREAS, in connection with the restructuring (the “Restructuring”) of TER and certain of its subsidiaries pursuant to the second amended joint plan of reorganization of the

 

Company and its subsidiaries dated March 30, 2005 (as amended pursuant to the terms thereof, the “Plan”) under chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”), (a) THCR/LP has been merged into TER, which has been admitted as a substituted Limited Partner, (b) TCI-II has been merged into TCI 2 Holdings, which has been admitted as a substituted Limited Partner, and (c) the parties desire to enter into this Fourth Amended and Restated Agreement of Limited Partnership and to provide for the capital contributions set forth in Schedule V hereto; 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 Ernst & Young 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 Partnership Interests ” shall have the meaning set forth in Section 4.2(a).

 

“ Adjusted Capital Account ” shall mean, with respect to any Partner, the balance, if any, in such Partner’s Capital Account as of the end of any relevant fiscal year and after giving effect to the following adjustments:

 

(a) credit to such Capital Account any amounts which such Partner is obligated or treated as obligated to restore with respect to any deficit balance in such Capital Account pursuant to Section 1.704-1(b)(2)(ii)(c) of the 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 definition of Adjusted Capital Account 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.

 

“ Adjusted Capital Account Deficit ” shall mean, with respect to any Partner, a negative balance in such Partner’s Adjusted Capital Account.

 

“ Adjustment Date ” shall have the meaning set forth in Section 4.3 hereof.

 

“ Affected Gain ” shall have the meaning ascribed in Section 5.3(b) 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 Fourth 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, the NIGC and the NGC.

 

“ Applicable Tax Returns ” shall have the meaning set forth in Section 6.3(f) hereof.

 

“ 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 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 Bankruptcy Code with respect to such Person, (iv) the filing of any such petition or the commencement of any such case or proceeding against such Person, unless such petition and the case or proceeding initiated thereby are dismissed within ninety (90) days from the date of such filing or (v) the filing of an answer by such Person admitting the allegations of any such petition.

 

“ Bankruptcy Code ” shall have the meaning set forth in the recitals hereof.

 

“ 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. Although each Partner shall have only one Capital Account, if a Partner holds both Class A Units and Class B Units, the Partnership shall establish and maintain separate sub-accounts for such Partner as if the holder of the Class A Units and the holder of the Class B Units were two separate Partners, and the Capital Account of such Partner shall be the sum of his Class A sub-Capital Account and his Class B sub-Capital Account. The balance of each Partner’s Class B sub-Capital Account as of the Effective Date shall be zero.

 

“ 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 actually contributed or deemed contributed pursuant to Sections 4.2 or 7.10.

 

“ Casino Control Act ” shall mean the New Jersey Casino Control Act, N.J.S.A. 5:12-1 et seq.

 

“ CCC ” shall mean the New Jersey Casino Control Commission and any successor agency.

 

“ Certificate ” shall mean the Certificate of Limited Partnership establishing the Partnership, as filed with the office of the Delaware Secretary of State on March 28, 1995, as it may be amended from time to time in accordance with the terms of this Agreement and the Act.

 

“ Certificate of Interest ” shall have the meaning set forth in Section 14.1 hereof.

 

“ Certificate Transfer Ledger ” shall have the meaning set forth in Section 14.1 hereof.

 

“ Class A Percentage Interest ” shall mean, with respect to each Partner, the fraction, expressed as a percentage, the numerator of which is the number of Class A Units held by such Partner and the denominator of which is the aggregate outstanding Class A units held by all Partners.

 

“ Class A Unit ” shall mean a Partnership Interest in the Partnership with the rights set forth in this Agreement. As of the Effective Date, the number of Class A Units held by each Partner is as set forth in Schedule I hereto.

 

“ Class A sub-Capital Account ” shall mean the account established and maintained by the Partnership and so designated pursuant to the definition of “Capital Account.”

 

“ Class A Warrants ” shall mean the Class A Warrants issued pursuant to the Plan.

 

“ Class B Overall Percentage Interest ” shall mean, with respect to each Partner, the fraction, expressed as a percentage, the numerator of which is the number of Class B Units held by such Partner and the denominator of which is the aggregate outstanding Units held by all Partners.

 

“ Class B Percentage Interest ” shall mean, with respect to each Partner, the fraction, expressed as a percentage, the numerator of which is the number of Class B Units held by such Partner and the denominator of which is the aggregate outstanding Class B Units held by all Partners.

 

“ Class B Stock ” shall mean Class B Common Stock, par value $0.001 per share, of TER, and any class of securities into which the Class B Stock has been converted, other than Common Stock.

 

“ Class B sub-Capital Account ” shall mean the account established and maintained by the Partnership and so designated pursuant to the definition of “Capital Account.”

 

“ Class B Unit ” shall mean a Partnership Interest in the Partnership with the rights set forth in this Agreement. As of the Effective Date, the number of Class B Units held by each Partner is as set forth in Schedule I hereto.

 

“ 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 $0.001 per share, of TER, 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.

 

“ CPR ” shall have the meaning set forth in Section 6.3 hereof.

 

“ 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 or Nasdaq, of the closing sale price of the security (or, if such price is unavailable 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 or Nasdaq, as the case may be, or (b) if the security is not then listed or admitted to trading on any national securities exchange or Nasdaq, of such closing sale price (or such bid and asked prices if sale prices are unavailable) as published by any authoritative source thereof selected by the General Partner. If the security is not then listed or admitted to trading or if no prices therefor are then quoted or published by such other authoritative sources, “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.

 

“ 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 aggregate Percentage Interest (expressed as a decimal) of the General Partner and TCI 2 Holdings, (ii) the aggregate Fair Market Value of the outstanding capital stock of TER, other than the Common Stock or the Class B Stock, if any, and (iii) the Fair Market Value of the outstanding Indebtedness of TER appearing on the balance sheet of TER, prepared in accordance with GAAP, as of the Valuation Date, which Indebtedness (the “ Included Indebtedness ”) shall exclude (A) the Indebtedness of the Partnership or 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, (B) Indebtedness of TER in its capacity as General Partner of the Partnership or any guarantee by TER of Indebtedness of the Partnership or its consolidated or combined Subsidiaries, and (C) any other Indebtedness appearing on the balance sheet of TER, prepared in accordance with GAAP, as of the Valuation Date, the proceeds of which were not used to purchase additional Partnership Interests, reduced by (b) the amount, if any, by which the consolidated net worth of the General Partner exceeds its pro rata share of the consolidated net worth of the Partnership; provided , however , that if the General Partner shall have material amounts of liabilities (other than Included Indebtedness) or material assets other than cash and

 

Partnership Interests, the General Partner may seek the advice of an investment banking firm of national reputation as to the appropriate modification of the Deemed Value of the Partnership formula set forth herein to take into account such liabilities or assets.

 

“ Depreciation ” shall mean, with respect to any asset of the Partnership for any fiscal year or other period, the depreciation or amortization, as the case may be, allowed or allowable for federal income tax purposes in respect of such asset for such fiscal year or other period; provided , however , that if there is a difference between the Gross Asset Value and the adjusted tax basis of such asset, Depreciation shall mean “book depreciation, depletion or amortization” as determined under Section 1.704-1(b)(2)(iv)(g)(3) of the Regulations.

 

“ Disabling Event ” shall have the meaning set forth in Section 8.5(a) 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.

 

“ Effective Date ” shall mean 10:00 a.m. Eastern Daylight Time, on May 20, 2005, the effective date of this Agreement and the Plan.

 

“ 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).

 

“ Excess Tax Amount ” shall mean, with respect to any Partner for any taxable year or other period, the amount, if any, of distributions received by such Partner with respect to such taxable year or other period pursuant to Section 6.2(a)(ii).

 

“ Exchange Rights Agreement ” shall mean the Third Amended and Restated Exchange and Registration Rights Agreement, dated as of the Effective Date, substantially in the form of Exhibit A hereto, entered into by and among Trump, TCI, the Partnership and TER, providing, among other things, for 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.

 

“ 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.

 

“ GAAP ” shall have the meaning set forth in Section 1.2 hereof.

 

“ General Partner ” shall mean TER, 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 with respect to which a distribution is made to the General Partner pursuant to Section 6.2(a) and (ii) any administrative and operating costs and expenses of the General Partner to the extent arising out of any Outside Business Activities.

 

“ Gross Asset Value ” shall mean, with respect to any asset of the Partnership, such asset’s adjusted basis for federal income tax purposes, except as follows:

 

(a) the initial Gross Asset Value of any asset contributed by a Partner to the Partnership shall be

 

(i) in the case of any asset described on attached Schedule I, the gross fair market value ascribed thereto on such Schedule; and

 

(ii) in the case of any other asset hereafter contributed by a Partner, the gross Fair Market Value of such asset at the time of its contribution, which determination, in the case of the Initial Limited Partner and his Permitted Holders, shall be made by a majority of the Special Committee;

 

(b) the Gross Asset Values of all Partnership assets shall be adjusted to equal their respective gross Fair Market Values:

 

(i) immediately prior to the issuance by the Partnership to a new or existing Partner of a Partnership Interest;

 

(ii) immediately prior to the distribution by the Partnership to a Partner of more than a de minimis amount of Partnership property as consideration for the redemption of a Partnership Interest;

 

(iii) immediately prior to the liquidation of the Partnership within the meaning of Section 1.704-1(b)(2)(ii)(g) of the Regulations; and

 

(iv) upon any other event as to which the General Partner reasonably determines that an adjustment is necessary or appropriate to reflect the relative economic interests of the Partners;

 

(c) the Gross Asset Values of Partnership assets distributed to any Partner shall be the gross Fair Market Values of such assets as of the date of distribution; and

 

(d) the Gross Asset Values of Partnership assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Sections 734(b) or 743(b) of the Code, but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Section 1.704-1(b)(2)(iv)(m) of the Regulations; provided , however , that Gross Asset Values shall not be adjusted pursuant to this paragraph to the extent that the General Partner reasonably determines that an adjustment pursuant to paragraph (b) above is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this paragraph (d).

 

At all times, Gross Asset Values shall be adjusted by any Depreciation taken into account with respect to the Partnership’s assets for purposes of computing Net Income and Net Loss. Any adjustment to the Gross Asset Values of Partnership property shall require an adjustment to the Partners’ Capital Accounts; as for the manner in which such adjustments are allocated to the Capital Accounts, see clause (c) of the definition of Net Income and Net Loss in the case of adjustment by Depreciation, and clause (d) of said definition in all other cases.

 

“ IGC ” shall mean the Indiana Gaming Commission and any successor agency.

 

“ 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) guarantees (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, or Liquidating Trustee of the Partnership, a Partner or an Affiliate of a Partner.

 

“ Indian Gaming Regulatory Act ” shall mean the Indian Gaming Regulatory Act, 25 U.S.C. Section 2701 et seq.

 

“ 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 §§ 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.

 

“ 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.

 

“ Limited Partnership Interest ” means a Partnership Interest of a Limited Partner representing a fractional part of the Partnership Interests of all Limited Partners and includes any and all benefits to which the holder of such a Partnership Interest may be entitled as provided in this Agreement, together with all obligations of such Person to comply with the terms and provisions of this Agreement.

 

“ Liquidating Trustee ” shall mean such individual or Entity which is selected as the Liquidating Trustee hereunder by the General Partner (or, if there is no General Partner, by the Consent of the Limited Partners), 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 is the Beneficial Owner of 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 is the Beneficial Owner of any Limited Partnership Interest), as a class.

 

“ Marina Acquisition ” shall have the meaning set forth in the recitals hereof.

 

“ Marina Acquisition Agreement ” shall mean the Agreement, dated as of June 24, 1996, by and among TER, the Partnership, TCI-II, Trump’s Castle Hotel & Casino, predecessor-in-interest to TMI, and Trump, as amended as of August 27, 1996.

 

“ Marina Associates ” shall have the meaning set forth in the recitals hereof.

 

“ 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).

 

“ Net Income ” or “ Net Loss ” shall mean, for each fiscal year or other applicable period, an amount equal to the Partnership’s net income or loss for such year or period as determined for federal income tax purposes by the Accountants, determined in accordance with Section 703(a) of the Code (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Section 703(a) of the Code shall be included in taxable income or loss), with the following adjustments: (a) by including as an item of gross income any tax-exempt income received by the Partnership; (b) by treating as a deductible expense any expenditure of the Partnership described in Section 705(a)(2)(B) of the Code (including amounts paid or incurred to organize the Partnership (unless an election is made pursuant to Code Section 709(b)) or to promote the sale of interests in the Partnership and by treating deductions for any losses incurred in connection with the sale or exchange of Partnership property disallowed pursuant to Section 267(a)(1) or Section 707(b) of the Code as 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 5.1 or Section 5.2. If an item of income, gain, loss or deduction has been included in the initial computation of Net Income or Net Loss and such item is subjected to the special allocation rules in Section 5.1(a), (b) or (e) or Section 5.2, Net Income and Net Loss shall be computed without regard to such item (to avoid double counting of such item).

 

“ New Notes ” means those certain promissory notes described in Schedule VI hereto which are nonrecourse to the Partnership.

 

“ New Notes Indenture ” shall mean the Indenture among the Partnership, Trump Entertainment Resorts Funding, L.P., and U.S. Bank National Association, as trustee, dated as of the Effective Date, as amended from time to time.

 

“ New Securities ” means Indebtedness or Equity Interests of the General Partner and any of its Subsidiaries other than the Partnership and its Subsidiaries, in each case issued after the Effective Date; provided that, New Securities shall not include Class B Stock and Common Stock issued by TER on or prior to the Effective Date or any securities issued pursuant to the Plan (other than Common Stock issued upon exercise of Warrants).

 

“ NGCA ” means the Nevada Gaming Control Act, N.R.S. 463.010 et seq ., and ancillary statutes, and Regulations of the NGC and the NGCB.

 

“ NGC ” means the Nevada Gaming Commission.

 

“ NGCB ” means the Nevada Gaming Control Board.

 

“ NIGC ” means the National Indian Gaming Commission.

 

“ Nonrecourse Deductions ” shall have the meaning set forth in Sections 1.704-2(b)(1) and (c) of the Regulations.

 

“ Nonrecourse Liabilities ” shall have the meaning set forth in Section 1.704-2(b)(3) of the Regulations.

 

“ Outside Business Activity ” shall mean any business other than (i) the ownership, acquisition and disposition of Partnership Interests as a General Partner or Limited Partner and (ii) the management of the business of the Partnership, and such activities as are incidental thereto, including, without limitation, the issuance of New Securities and the application of the proceeds thereof in compliance with the provisions of Section 7.10 of this Agreement.

 

“ Partner Nonrecourse Debt ” shall have the meaning set forth in Section 1.704-2(b)(4) of the Regulations.

 

“ Partner Nonrecourse Deductions ” shall have the meaning set forth in Section 1.704-2(i)(2) of the Regulations.

 

“ 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 governed by this Agreement.

 

“ Partnership Accountants ” shall have the meaning set forth in Section 6.3(d).

 

“ Partnership Interest ” shall mean the partnership interest of a Partner in the Partnership from time to time, including each Partner’s Class A Units and Class B Units 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 Class A Units and Class B Units, 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 Class A Units and Class B Units. The Class A Units and the Class B Units are not separate series of partnership interests within the meaning of Section 17-218 of the Act.

 

“ 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 each Partner, the fraction, expressed as a percentage, the numerator of which is the aggregate number of Class A Units and Class B Units and any other units of Partnership Interest held by such Partner and the denominator of which is the aggregate outstanding Class A Units and Class B Units and any other units of Partnership Interest held by all Partners.

 

“ 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, TCI 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.

 

“ Person ” shall mean any natural person or Entity.

 

“ Plan ” shall have the meaning set forth in the recitals hereof.

 

“ 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).

 

“ Regulatory Allocations ” shall have the meaning set forth in Section 5.2(g) hereof.

 

“ Representatives ” shall have the meaning set forth in Section 6.3(j).

 

“ Restructuring ” shall have the meaning set forth in the recitals hereof.

 

“ Right of First Offer Agreement ” shall mean that certain Right of First Offer Agreement among TER, the Partnership and Trump Organization LLC, a New York limited liability company, dated as of the Effective Date, as amended from time to time.

 

“ Rights ” shall mean the Exchange Right, the Conversion Right, the Purchase Right, and/or the Alternative Repurchase Right, each as defined in the Exchange Rights Agreement.

 

“ SEC ” shall mean the United States Securities and Exchange Commission.

 

“ Services Agreement ” shall mean that certain Services Agreement, among Trump, TER and the Partnership, dated as of the Effective Date, as amended from time to time.

 

“ 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.

 

“ Specified Property ” shall mean any direct or indirect interest in any of the following assets owned by the Partnership as of the date hereof: the Taj Mahal, Trump Plaza, and Trump Marina properties and the Partnership’s shares of Trump Indiana, Inc.

 

“ Stock Incentive Plan ” shall mean the General Partner’s Stock Option Plan, effective on or after the Effective Date.

 

“ Stock Option ” shall mean an option, granted under the Stock Incentive Plan, or any successor plan, to purchase shares of TER common stock.

 

“ 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 hereof.

 

“ Taj Lease Income ” shall have the meaning set forth in Section 5.1(a).

 

“ 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 hereof.

 

“ 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 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 of the Partnership would be subject in the relevant year of determination (as certified to the General Partner by the Accountants); provided , that in no event shall the Tax Percentage be greater than the sum of (x) the highest, aggregate effective marginal rate of federal, state and local income tax or, when applicable, alternative minimum tax, to which the 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 owner of such Partner (with similar principles applying if such owner is itself a pass-through entity).

 

“ TCI ” shall have the meaning set forth in the preamble hereof.

 

“ TCI 2 Holdings ” shall have the meaning set forth in the preamble hereof.

 

“ TCI-II ” shall have the meaning set forth in the recitals hereof.

 

“ TER ” shall have the meaning set forth in the preamble hereof.

 

“ THCR/LP ” shall have the meaning set forth in the recitals hereof.

 

“ TMI ” shall mean Trump Marina, Inc., a New Jersey corporation.

 

“ Trademark License Agreement ” shall mean the Trademark License Agreement, dated as of the Effective Date, by and between Trump and the Partnership, as amended from time to time.

 

“ Trading Day ” shall mean a day on which the principal national securities exchange or trading market on which the Common Stock is listed or admitted to trading is open for the transaction of business or, if the Common Stock is not so listed or admitted, 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 hereof.

 

“ Trump Accountant ” shall have the meaning set forth in Section 6.3(d).

 

“ Trump Marina ” shall mean Trump Marina Hotel Casino and the ancillary structures and other facilities used in connection with the operation thereof located in Atlantic City, New Jersey.

 

“ 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 Tower Lease ” shall mean the lease agreement, dated as of November 1, 1996, between Trump Tower Commercial LLC and the Partnership, as amended.

 

“ 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.

 

“ Warrants ” shall mean any warrants to purchase Common Stock or other New Securities, including the Class A Warrants and the Warrants issued to Trump pursuant to the Plan.

 

“ Withholding Tax Act ” shall have the meaning set forth in Section 6.2(d) 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 Entertainment Resorts Holdings, L.P. or such other name as shall be chosen from time to time by the General Partner in its sole and absolute discretion. The inclusion of Trump’s name in the name of the Partnership shall not be deemed to be evidence that Trump participates in the control of the business within the

 

meaning of Section 17-303 of the Act or any comparable provision. The General Partner shall promptly notify the Limited Partners upon a change to the name of the Partnership.

 

(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.

 

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 Marina, and (v) such other gaming properties and facilities as the Partnership may acquire, manage or operate 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 1000 Boardwalk at Virginia Avenue, 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. The General Partner shall promptly notify the Limited Partners upon a change to the location of the principal place of business of the Partnership.

 

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. Term . The Partnership shall continue until dissolved pursuant to Article VIII hereof.

 

ARTICLE IV.

 

CAPITAL CONTRIBUTIONS

 

Section 4.1. Capital Contributions; Partnership Interests and Percentage Interests of the Partners .

 

(a) As a result of the Restructuring, the Capital Accounts of the Partners have been restated in accordance with Regulation Section 1.704-1(b)(2)(iv)(f). As of the

 

Effective Date, and giving effect to the transactions contemplated by the Restructuring, the balance of each Partner’s Capital Account (and, in the case of the Partners holding both Class A Units and Class B Units, such Partner’s Class A Capital sub-Account and Class B Capital sub-Account) is set forth on Schedule I hereto. Schedule I also sets forth aggregate Capital Contributions, the number of Class A Units and Class B Units and the Percentage Interests of each Partner as of the Effective Date. The portion of Schedule I showing the number of Class A Units and Class B Units held by each Partner, and such Partner’s corresponding Percentage Interests, shall be adjusted from time to time after the date hereof to the extent necessary to reflect redemptions or conversions of Partnership Interests, Capital Contributions, the issuance of Additional Partnership Interests or any other event having an effect on the number of Class A Units or Class B Units held by a Partner, 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 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) or (d), be obligated to return any distributions of any kind received from the Partnership.

 

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, the Initial Limited Partner and his Permitted Holders, TCI and TCI 2 Holdings, 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, 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 shall be Class A Units; provided, however, in the cases of the issuance of

 

Common Stock as compensation for services rendered, the issuance of Common Stock upon exercise of Class A Warrants, or the issuance of Common Stock to the former holders of TAC Notes (as defined in the Plan) upon expiration of unexercised Class A Warrants, the General Partner shall be deemed to have contributed to the Partnership as a Capital Contribution pursuant to Section 4.3 hereof an amount equal to the product of (x) the Fair Market Value of the Common Stock (as of the Trading Day immediately preceding the date of issue of the stock to such recipient or exercise or expiration of the Class A Warrant, as the case may be), times (y) the number of shares of Common Stock issued by the General Partner to such recipient; (B) if such New Securities are Stock Options or Warrants, no Additional Partnership Interests shall be issued at the time of the issuance of such Stock Options or Warrants; provided that, upon the exercise of such Stock Options or Warrants (other than Class A Warrants), the General Partner shall contribute to the capital of the Partnership an amount equal to the proceeds of exercise (if any) of such Stock Options or Warrants, as the case may be, 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 Trading Day immediately preceding the date on which the Stock Options or Warrants are exercised), and (y) the number of shares of Common Stock issued upon the exercise of such Stock Options or Warrants, and (C) if such New Securities are other than Common Stock or Stock Options or Warrants, such Additional Partnership Interests having 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.

 

Section 4.3. Adjustment of Partnership Interests . Except with respect to a Capital Contribution in connection with a transaction described in Section 4.2(b)(i)(C), effective on each date on which a Partner has made (or is deemed to have 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’s Partnership Interest (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. Any adjustments to the Percentage Interests of the Partners shall, to the extent possible, be effected by increasing or decreasing the number of Class A Units held by the affected Partner(s).

 

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 Restructuring . Notwithstanding anything to the contrary contained in this Agreement, the adjustments to the Partnership Interest of each Partner with respect to the Restructuring shall be as set forth in Schedule I and Schedule V 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 .

 

Net Income, Net Loss, and any other items of income, gain, loss or deduction shall be allocated pursuant to this Article V as of the last day of each fiscal year; provided that Net Income, Net Loss, and such other items shall also be allocated at such times as the Gross Asset Values of Partnership property are adjusted pursuant to subparagraphs (b), (c) or (d) of the definition thereof.

 

(a) Special Allocation of Items Relating to the Taj Mahal . All items of gross income and gain attributable to third party leases in respect of retail space at the Taj Mahal (such income and gain, the “Taj Lease Income”) shall be allocated 95% to Trump and 5% to TCI, in each case with respect to their Class A Units. If the Partnership disposes of all or a portion of the Taj Mahal rental properties referred to above, or if such properties are subject to a material casualty, then the Partnership and Trump shall agree

 

on one or more properties to be substituted therefor for purposes of the special allocation described in the preceding sentence. Until one or more replacements has been agreed upon, Trump and TCI shall be allocated an amount of gross income of the Partnership equal to 100% of the average Taj Lease Income in respect of the property or properties disposed of or subject to casualty for the three years prior to the disposition or casualty. To the maximum extent possible the substituted properties agreed upon shall yield income allocations in amounts, and are intended to produce tax effects to the parties, that are substantially similar to the income allocations of the Taj Lease Income under this Section 5.1(a) and the allocation of “excess nonrecourse liabilities” provided for by Section 5.2(d). This Section 5.1(a) shall terminate and be of no further force or effect as set forth in Section 7.12(b).

 

(b) Special Allocation of Income from Cancellation of Indebtedness . If and to the extent that, as a result of the transactions occurring on the Effective Date, the Partnership recognizes income from cancellation of indebtedness pursuant to Section 108 of the Code in excess of $50 million, then 100% of such excess shall be allocated to TER.

 

(c) Allocation of Net Income and Net Loss for Taxable Years Beginning Before the Fifth Year Anniversary of the Effective Date . Subject to paragraphs (a), (b) and (e) and Section 5.2, Net Income and Net Loss for taxable years or other periods beginning before the fifth anniversary of the Effective Date shall be allocated among the Partners in proportion to their relative Percentage Interests.

 

(d) Allocation of Net Income and Net Loss for Taxable Years Beginning On or After the Fifth Year Anniversary of the Effective Date . Subject to paragraphs (a), (b) and (e) and Section 5.2, Net Income for taxable years or other periods beginning on or after the fifth anniversary of the Effective Date shall be allocated 100% to the holders of the Class B Units (pro rata in accordance with their relative Class B Percentage Interests) until the Class B sub-Capital Account of each holder of Class B Units is equal to the product of (A) the Class B Overall Percentage Interest of such Partner multiplied by (B) the sum of (1) the lesser of the aggregate of all Capital Account balances of all Partners as of the Effective Date or the end of the taxable year for which the allocation is being made (excluding amounts included in clause (2) hereof) and (2) the net aggregate amount allocated to all Class B holders for the current and all prior periods pursuant to this Section 5.1(d). All Net Loss for taxable years or other periods beginning on or after the fifth anniversary of the Effective Date, and all Net Income in excess of the amount described in the prior sentence, shall be allocated among the Partners in proportion to their relative Percentage Interests.

 

(e) Special Allocation in the Year of Sale or Other Disposition of All or Substantially All the Assets . Notwithstanding paragraphs (c) and (d), Net Income, Net Loss and to the extent necessary, items of income, gain, loss and deduction arising from the sale or other disposition of all or substantially all of the assets of the Partnership shall be allocated among the Partners in such manner as will, to the maximum extent possible, cause each Partner’s Adjusted Capital Account balance (expressed as a percentage of the aggregate Adjusted Capital Account balances of all Partners) to equal such Partner’s Percentage Interest. In connection therewith, income or gain otherwise allocable to

 

Trump shall be reallocated to TER to the extent necessary to offset any disproportionality between TER and TCI 2 Holdings, on the one hand, and Trump and TCI, on the other hand, as a result of TCI’s Capital Account balance.

 

Section 5.2. Special Allocations . Notwithstanding any provisions of Section 5.1, the following special allocations shall be made 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.

 

(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 and Liabilities . 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, subject to Section 7.12(b), be allocated among the Partners (i) first, to each Partner in an amount equal to such Partner’s 704(c) gain (to the extent not captured pursuant to debt allocated pursuant to Regulation Section 1.752-3(a)(1) and (2)) and (ii) thereafter, in the same manner as the Taj Lease Income is allocated pursuant to Section 5.1(a).

 

(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) Limitation on Loss Allocations . If the allocation of Net Loss (or any item of loss or deduction) to a Partner as provided in Section 5.1 hereof would create or increase an Adjusted Capital Account Deficit (treating for purposes of this Section 5.2(f) each Class B Sub-Capital Account and Class A Sub-Capital Account as held by separate Partners), there shall be allocated to such Partner only that amount of Net Loss as will not create or increase an Adjusted Capital Account Deficit. The Net Loss that would, absent the application of the preceding sentence, otherwise be allocated to such Partner shall be allocated to the other Partners in accordance with their relative Percentage Interests, subject to the limitations of this Section 5.2(f).

 

(g) Curative Allocation . The allocations set forth in subsections (a), (b), (c), (d), (e), and (f) of this Section 5.2 (the “Regulatory Allocations”) are intended to comply with certain requirements of Regulations Sections 1.704-1(b) and 1.704-2(i). Notwithstanding the provisions of Section 5.1, the Regulatory Allocations shall be taken into account in allocating other items of income, gain, loss and deduction among the Partners so that, to the extent possible, the net amount of such allocations of other items and the Regulatory Allocations to each Partner shall be equal to the net amount that would have been allocated to each such Partner if the Regulatory Allocations had not occurred.

 

(h) Additional Allocations . Notwithstanding the foregoing, if, upon dissolution of the Partnership and after taking into account all allocations of Net Income and Net Loss (and corresponding 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 6.4 hereof, then gross items of income and gain (and corresponding Tax Items) for the taxable year of the dissolution (and, to the extent permitted under section 761(c) of the Code, gross items of income and gain (and corresponding 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 6.4 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 are allocated pursuant to Sections 5.1 and 5.2.

 

(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 (or in the case of any items of income or loss that are specially allocated pursuant to this Agreement, allocations of corresponding depreciation and amortization deductions shall be made in the same manner as such special allocation of income or loss).

 

(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 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. If the Gross Asset Value of any Partnership property is adjusted pursuant to paragraph (b) of the definition of “Gross Asset Value,” subsequent allocations of income, gain, loss and deduction with respect to such property will take account of any variation between the adjusted basis of such asset for federal income tax purposes and its Gross Asset Value in the same manner as under section 704(c) of the Code and the Regulations 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 Marina Acquisition Agreement and the documents of transfer executed in

 

connection therewith, dated as of October 7, 1996, 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 sentence to cure for the effect of the ceiling rule set forth in Regulation Section 1.704-3(b). The Partnership shall allocate items of income, gain, loss and deduction allocated to it by a partnership to the Partner or Partners contributing the interest or interests in such partnership, so that, to the greatest extent possible and 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) Except as provided in the third sentence of paragraph (c)(i), the General Partner shall not specially allocate any Tax Items to cure for the effect of the ceiling rule set forth in Regulations Section 1.704-3(b).

 

(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. Notwithstanding the foregoing, Trump shall have the right (a) to review, a reasonable time in advance of filing, and to consent to, the Partnership