Subordination Agreement - THCR Management Services LLC, Trump Hotel & Casino Resorts Development Co. LLC and First National Bank
SUBORDINATION AGREEMENT
This Agreement, dated as of October 17, 2001, is made by THCR
Management Services, LLC, a Delaware limited liability company (the "Manager"),
and Trump Hotel & Casino Resorts Development Company, LLC, a Delaware limited
liability company (the "Developer"), in favor of the Lenders described in the
Loan Agreement (defined below).
RECITALS
WHEREAS, in accordance with the terms and conditions of a Loan
Agreement of even date herewith (the "Loan Agreement"), the Lenders have agreed
to lend to the Twenty-Nine Palms Enterprises Corporation (the "Borrower") an
amount equal to the Loan Principal (as defined in the Loan Agreement) (the
"Loan") for the purposes of financing the expansion costs of the Spotlight 29
Casino located in Coachella, California (the "Casino Facilities"); and
WHEREAS, under the terms of a Gaming Facility Management Agreement,
dated April 27, 2000 (the "Management Agreement"), the Manager has agreed to
provide certain management, marketing and technical services to the Borrower in
connection with the Casino Facilities in consideration for certain fees (the
"Management Fees") as defined in the Management Agreement; and
WHEREAS, under the terms of a Gaming Facility Development and
Construction Agreement, dated April 27, 2000, as amended (the "Development
Agreement"), the Developer has agreed to provide certain services to the
Borrower in connection with the development, design, construction, furnishing
and equipping of the Casino Facilities in consideration for a certain fee (the
"Development Fee") as defined in the Development Agreement; and
WHEREAS, under the terms of an Assignment and Bill of Sale dated July
5, 2001, the Tribe transferred all of its rights and obligations under the
Management Agreement and the Development Agreement to the Borrower; and
WHEREAS, as a condition to the making of the Loan, the Lenders have
required that the Manager and the Developer subordinate the payment of
Management Fees, Development Fees and other "Subordinated Obligations" (as
defined herein) to the payment of the Loan.
AGREEMENT
ACCORDINGLY, in consideration of the making of the Loan by the Lender
and other financial accommodations that may hereafter be made for the benefit of
the Borrower and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Manager and the Developer
hereby agree as follows:
1. Definitions. As used herein, the following terms have the meanings
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set forth below:
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Administrative Agent: means First National Bank, acting as
administrative agent for the Lenders under the terms of the Loan Agreement.
Bankruptcy Code: means 11 U.S.C.ss.101 et seq., as amended from time to
time.
Borrower: means the Twenty-Nine Palms Enterprises Corporation, a
federal corporation chartered under the provisions of 25 U.S.C.ss.477 and wholly
owned by the Tribe.
Collateral: means the "Collateral" defined in the Security Agreement.
Default: means a "Default" or "Event of Default" as defined in the Loan
Agreement, the Security Agreement or any other agreement or instrument
evidencing, governing, or issued in connection with the Loan, or any default
under or breach of any such agreement or instrument.
Developer: means Trump Hotels & Casino Resorts Development Company,
LLC, a Delaware limited liability company, its successors and assigns.
Development Agreement: means the Gaming Facility Development and
Construction Agreement dated as of April 27, 2000, between the Developer and the
Borrower (as successor in interest to the Tribe), as amended.
Development Fees: means all amounts payable by the Borrower to the
Developer under the Development Agreement other than Reimbursement Obligations.
Lenders: means the Lenders identified in the Loan Agreement, and their
successors and assigns.
Loan: means the loan of $41,500,000 to be made by Lenders to the
Borrower pursuant to the Loan Agreement.
Loan Agreement: means the Loan Agreement, dated as of the date hereof,
between the Borrower and the Lender.
Manager: means THCR Management Services, LLC, a Delaware limited
liability company, its successors and assigns.
Management Agreement: means the Gaming Facility Management Agreement
dated as of April 27, 2000, as amended, between the Manager and the Borrower (as
successor in interest to the Tribe). The Management Agreement has been executed
and delivered by the parties but shall not be effective until approved by the
National Indian Gaming Commission pursuant to 25 U.S.C.ss.2711.
Management Fees: means the amounts payable by the Borrower to the
Manager under the Management Agreement.
Notes: means any promissory notes issued by the Borrower evidencing the
indebtedness under the Loan Agreement.
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Pledged Revenues: shall have the meaning assigned such term in the
Transfer and Deposit Agreement.
Reimbursement Obligations: means all obligations of the Borrower to
reimburse the Developer for "Project Costs" (as defined in the Loan Agreement)
which have been paid by the Developer for the benefit of the Borrower pursuant
to the Development Agreement.
Security Agreement: means the Security Agreement, dated as of the date
hereof, by the Borrower in favor of the Administrative Agent, on behalf of the
Lenders.
Subordinated Obligations: means, except as provided below, all
obligations of the Borrower to the Manager and the Developer, including, without
limitation, the Borrower's obligation to pay Management Fees, Development Fees,
or any other obligation of the Borrower to the Manager or the Developer,
respectively, whether now existing or hereinafter arising. However,
"Subordinated Obligations" does not include the Borrower's obligation to repay
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Advances made by the Manager pursuant to the Loan Agreement.
Transfer and Deposit Agreement: means the agreement of even date
herewith between the Borrower, the Administrative Agent, and the Depository Bank
pursuant to which the Borrower agrees to transfer the Net Revenues on a daily
basis to the Depository Bank for deposit and application in accordance with the
terms of such agreement.
Tribe: means the Twenty-Nine Palms Band of Luiseno Mission Indians of
California, a federally recognized Indian tribe.
2. Subordination. The payment of all Subordinated Obligations is hereby
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expressly subordinated to the extent and in the manner hereinafter set forth to
the payment in full of the Loan. Regardless of any priority otherwise available
to the Manager or the Developer by law or by agreement, such parties agree that
(i) the Lenders, through the Depository Bank, hold a first priority security
interest in all Pledged Revenues (including any proceeds thereof), (ii) the
Lenders hold a first priority security interest in all Collateral (including any
proceeds thereof), subject only to Permitted Encumbrances, (iii) the Developer
shall be entitled to receive the Development Fee only after such time as the
Management Agreement has been approved by the National Indian Gaming Commission
and is fully effective, and (iv) the Manager is entitled to be paid amounts due
on the Subordinated Obligations on a monthly basis in accordance with the
Transfer and Deposit Agreement.
3. Payments. Until the Loan has been paid in full and all obligations
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of the Borrower thereunder fully satisfied, and unless the Lender otherwise
consents in writing, neither the Manager nor the Developer may receive or accept
any payment from the Borrower in respect of the Subordinated Obligations, or
exercise any right of or permit any setoff in respect of the Subordinated
Obligations, except to the extent permitted by Section 2 above. No prepayment of
any Subordinated Obligation shall be accepted by the Developer or the Manager,
respectively, while any amount is due and owing under the Loan, and no payments
may be accepted with respect to any Subordinated Obligation if a Default has
occurred and is continuing or if such payments on the Subordinated Obligation
would result in such a Default.
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4. Receipt of Prohibited Payments. If the Manager or the Developer
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receives any payment on the Subordinated Obligations except as permitted by
Section 2 above, such parties will hold the amount so received in trust for the
Lender and will forthwith turn over such payment to the Lender in the form
received (except for the endorsement of the Manager or the Developer where
necessary) for application to the outstanding indebtedness on the Loan (whether
or not due). If the Manager or the Developer exercises any right of setoff which
they are not permitted to exercise under the provisions of this Agreement, the
Manager or the Developer, as applicable, will promptly pay over to the
Administrative Agent, in immediately available funds, an amount equal to the
amount of the claims or obligations offset. If the Manager or the Developer
fails to make any endorsement required under this Agreement, the Administrative
Agent, or any of its officers or employees or agents, is hereby irrevocably
appointed by the Manager and the Developer as the attorney-in-fact (which
appointment is coupled with an interest) for the Manager and the Developer, as
applicable, to make such endorsement in their name.
5. Action on Subordinated Obligations. Until the Loan has been paid in
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full and the Loan Agreement has been terminated, neither the Manager nor the
Developer will commence any action or proceeding against the Borrower to recover
all or any part of the Subordinated Obligations, or join with any creditor
(unless the Lenders so join) in bringing any proceeding against the Tribe or the
Borrower under any bankruptcy, reorganization, readjustment of debt, arrangement
of debt, receivership, liquidation or insolvency law or statute of the federal
or any state government, or exercise or enforce any right or remedy available to
the Manager or the Developer with respect to the Pledged Revenues or the
Collateral. Notwithstanding anything contained herein to the contrary, in the
event of a default by the Borrower under either or both of the Development
Agreement or Management Agreement, including as a result of non-payment by the
Borrower thereunder as a result of the provisions of this Agreement or the Loan
Agreement, the Developer and the Manager reserve all rights to suspend or
terminate services provided under such agreements.
6. Bankruptcy and Insolvency. In the event of (a) any distribution,
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division, or application, partial or complete, voluntary or involuntary, by
operation of law or otherwise, of all or any part of the assets of the Borrower
or the proceeds thereof to the creditors of the Borrower or to their claims
against the Borrower, or (b) any readjustment of the debt or obligations of the
Borrower, whether by reason of liquidation, bankruptcy, arrangement,
receivership, assignment for the benefit of creditors or any other action or
proceeding involving the readjustment of all or any part of the Loan or
Subordinated Obligations, or the application of the assets of the Borrower to
the payment or liquidation thereof, or (c) the dissolution or other winding up
of the business of the Borrower, or (d) the sale of all or substantially all of
the assets of the Borrower, then, and in any such event, the Lenders shall be
entitled to receive payment in full of all of the Loan prior to the payment of
all or any part of the Subordinated Obligations.
To enable the Lenders to enforce their rights hereunder in any of the
actions or proceedings described in the preceding paragraph, the Administrative
Agent is hereby irrevocably authorized and empowered, in its discretion, to file
and present for and on behalf of the Manager and the Developer such proofs of
claims or other motions or pleadings as the Administrative Agent may deem
expedient or proper to establish the Lender's entitlement of payment from, or on
behalf of, the Manager or the Developer with respect to the Subordinated
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Obligations and, in the exercise of its reasonable discretion giving due regard
for the amounts outstanding under the Loan and the Subordinated Obligations,
respectively, to vote such proofs of claims in any such proceeding and to
demand, sue for, receive and collect any and all dividends or other payments or
disbursements made thereon in whatever form the same may be paid or issued and
to apply the same on account of the Loan. The Manager and the Developer
irrevocably authorize and empower the Administrative Agent to demand, sue for,
collect and receive each of the payments and distributions described in the
preceding paragraph and give acquittance therefor and to file claims and take
such other actions, in the Administrative Agent's own name or in the name of the
Manager, the Developer, or otherwise, as the Lender may deem necessary or
advisable for the enforcement of this Agreement. To the extent that payments of
distributions are made in property other than cash, the Manager and the
Developer authorize the Administrative Agent to sell such property to such
buyers and on such terms as the Administrative Agent, in its sole discretion,
shall determine. The Manager and the Developer will execute and deliver to the
Administrative Agent such powers of attorney, assignments and other instruments
or documents, including debentures, notes, instruments, documents or other
agreements (together with such assignments or endorsement as the Administrative
Agent shall deem necessary), as may be reasonably requested by the
Administrative Agent in order to enable the Administrative Agent to enforce any
and all claims upon or with respect to any or all of the Subordinated
Obligations and to collect and receive any and all payments and distributions
which may be payable or deliverable at any time upon or with respect to the
Subordinated Obligations, all for the benefit of the Lenders. The Administrative
Agent shall provide to the Developer and the Manager notice, reasonably in
advance whenever possible, of its exercise of any rights provided in this
Paragraph 6, and copies of any proofs of claims, motions or pleadings received
or filed by the Lenders. Upon satisfaction of the Loan, the Administrative Agent
shall deliver to the Developer and the Manager any payments or other
distributions received by the Administrative Agent with respect to the
Subordinated Obligations.
If the Borrower becomes the subject of proceedings under the Bankruptcy
Code and if the Administrative Agent desires to permit the use of cash
collateral or to provide financing to the Borrower under either Section 363 or
Section 364 of the Bankruptcy Code, the Manager and the Developer agree that
adequate notice of such financing to the Manager and the Developer, if required
under applicable law, shall have been provided if such parties receive notice
two business days prior to entry of any order approving such cash collateral
usage or financing. Notice of a proposed financing or use of cash collateral
shall be deemed given upon the sending of such notice to the parties in the
manner specified in Section 8. All allocations of payments between the Lenders,
the Manager and the Developer shall continue to be made after the filing of a
petition under the Bankruptcy Code on the basis provided in this Agreement. In
the event that the Manager and the Developer at any time acquire any security
for the Subordinated Obligations, they agree not to assert any right they may
have to "adequate protection" of their respective interests in such security in
any Bankruptcy proceeding, or to seek to have their claims in such Bankruptcy
proceeding treated as "secured claims" under Section 506(a) of the Bankruptcy
Code, without the prior written consent of the Administrative Agent. The Manager
and the Developer waive any claim they may now or hereafter have against the
Administrative Agent or the Lenders arising out of the Administrative Agent's
election, in any proceeding instituted under Chapter 11 of the Bankruptcy Code,
of the application of Section 1111(b)(2) of the Bankruptcy Code, and/or any
borrowing or grant of a security interest under Section 364 of the Bankruptcy
Code by the Borrower, as debtor in possession, or by a trustee.
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7. Continuing Effect. This Agreement constitutes a continuing agreement
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of subordination, and the Lenders may, without notice to or consent by the
Manager or the Developer, modify any term of the Note, the Loan Agreement or the
Security Agreement in reliance upon this Agreement. Without limiting the
generality of the foregoing, the Lenders may, at any time and from time to time,
without the consent of or notice to the Manager or the Developer, and without
incurring responsibility to such parties or impairing or releasing any of the
Lenders' rights or any of the Manager's or Developer's obligations hereunder:
(a) increase the principal amount of any Note, extend the time for
payment thereof or otherwise alter the terms of the Loan and any
security therefor;
(b) sell, exchange, release or otherwise deal with any property at
any time securing payment of the Loan or any part thereof; and
(c) exercise or refrain from exercising any right against the
Borrower or any other person.
8. Notices. All notices and other communications hereunder must be in
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writing and must be (i) personally delivered, (ii) transmitted by registered
mail, postage prepaid, or (iii) transmitted by telecopy, in each case addressed
to the party to whom notice is being given at its address as set forth below:
If to the Manager: THCR Management Services, LLC
Huron Avenue & Brigantine Boulevard
Atlantic City, NJ 08401
Attention: Robert M. Pickus
If to the Developer: Trump Hotels & Casino Resorts
Development Company, LLC
Huron Avenue & Brigantine Boulevard
Atlantic City, NJ 08401
Attention: Robert M. Pickus
And to: Trump Hotels & Casino Resorts
Holdings, L.P.
1000 Boardwalk
Atlantic City, NJ 08401
Attention: Joseph Polisano
If to the Administrative Agent: First National Bank
20900 S. Western Avenue
Olympia Fields, Illinois 60461
Attn: Brent Frank
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And to: Barnes & Thornburg
2600 Chase Plaza
10 South LaSalle Street
Chicago, IL 60603
Attention: Larry Blust
or at such other address as may hereafter be designated in writing by that
party. All such notices or other communications are deemed given on (i) the date
received if delivered personally, or (ii) the date of transmission if delivered
by telecopy on a business day between the hours of 9:00 a.m. and 5:00 p.m.
(Eastern Time), otherwise on the immediately following business day.
9. Instrument Legend. Any agreement or instrument evidencing any
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Subordinated Obligation, or any portion thereof, which has been or is hereafter
executed by the Borrower will, on the date hereof or the date of execution, be
inscribed with a legend conspicuously indicating that payment thereof is
subordinated to the claims of the Lenders pursuant to the terms of this
Agreement. The original of any such agreement or instrument will be delivered to
the Administrative Agent within five business days after the date hereof or the
date of its execution. Neither the Manager nor the Developer will agree to any
amendment, restatement or other modification of any such instrument or agreement
or any other agreement or document evidencing any Subordinated Obligation which
materially increases any payment obligation of the Borrower without the prior
written consent of the Administrative Agent, which consent shall not be
unreasonably withheld.
10. Subrogation. When the Loan shall have been fully paid and
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discharged and all financing arrangements between the Borrower and the Lenders
have been terminated, the Administrative Agent shall promptly provide notice
thereof to the Manager and the Developer, both of whom shall be subrogated to
the rights of the Lenders to receive payments or distribution of assets of the
Borrower made with respect to the Loan until the Subordinated Obligations shall
be paid in full.
11. Conflict in Agreements. If the subordination provisions of any
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instrument evidencing Subordinated Obligations conflict with the terms of this
Agreement, the terms of this Agreement govern the relationship between the
parties to this Agreement.
12. No Waiver. No waiver is deemed to be made by the Lenders of any of
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their rights hereunder unless the same is in writing signed by the
Administrative Agent, and each such waiver, if any, is a waiver only with
respect to the specific matter or matters to which the waiver relates and in no
way impairs the rights of the Lenders or the obligations of the Manager or the
Developer to the Lenders in any other respect at any time.
13. Governing Law; Consent to Jurisdiction and Venue. This Agreement is
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governed by and construed in accordance with the substantive laws (other than
conflict laws) of the State of California. Each party consents to the personal
jurisdiction of the state and federal courts located in the State of California
in connection with any controversy related to this Agreement and waives any
argument that venue in any such forum is not convenient.
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14. Binding Effect; Acceptance; Assignment This Agreement is binding
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upon the Manager, the Developer, their heirs, legal representatives, successors
and assigns and inures to the benefit of the Lenders, and their successors and
assigns irrespective of whether this or any similar agreement is executed by any
other creditor of the Borrower. Notice of acceptance by the Lenders of this
Agreement or reliance by the Lenders upon this Agreement is hereby waived by the
Manager and the Developer.
Each of the Manager and the Developer represents and warrants that it
has not previously assigned any interest in any Subordinated Obligation, that no
other person or entity owns any interest in any Subordinated Obligation (whether
as a joint holder, participant or otherwise). Neither the Manager nor the
Developer shall assign any Subordinated Obligation to any other person or entity
without prior consent of the Administrative Agent, and unless the assignee
agrees with the Administrative Agent to be bound by the provisions of this
Subordination Agreement, including the provisions of this paragraph 14.
15. Miscellaneous. The paragraph headings herein are included for
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convenience of reference only and do not constitute a part of this Agreement for
any other purpose. This Agreement may be executed in counterparts, each of which
shall constitute an original Agreement.
16. Term of Agreement. This Agreement expires when the Note has been
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paid in full and the Loan Agreement and Security Agreement have been terminated;
provided that the Manager and the Developer agree that, to the extent that the
Borrower makes any payment or payments with respect to the Loan, which payment
or payments or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a lender,
receiver, or any other party under any bankruptcy, insolvency or other similar
state or federal statute, common law, or principles of equity, then, to the
extent of such payment or repayment, the Loan or part thereof intended to be
satisfied may be revived and continued in full force and effect as if such
payment had not been made, and this Agreement may be revived and continued in
full force and effect as if such payment had not been made.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above-written.
THCR MANAGEMENT SERVICES, TRUMP HOTELS & CASINO
LLC RESORTS DEVELOPMENT
COMPANY, LLC
By: THCR Ventures, Inc. By: THCR Ventures, Inc.
/s/ Robert M. Pickus /s/ Robert M. Pickus
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Robert M. Pickus Robert M. Pickus
Executive Vice President Executive Vice President
The foregoing Subordination Agreement is hereby accepted by the
Administrative Agent on behalf of the Lenders as of the date first above
written.
FIRST NATIONAL BANK, as Administrative Agent
By: /s/ Brent Frank
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Brent Frank, Executive Vice President
ACKNOWLEDGMENT BY BORROWER
The Twenty-Nine Palms Enterprises Corporation hereby acknowledges
receipt of a copy of the foregoing Subordination Agreement and agrees to the
terms and provisions thereof.
TWENTY-NINE PALMS
ENTERPRISES CORPORATION
By: /s/ Dean Mike
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President
By: /s/ Gene Gambale
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Secretary