ICA TRUST AGREEMENT
This Declaration of Trust and Agreement is made on this 29 day of
October, 1996 ("Agreement"), between and among Sun International Hotels
Limited, a corporation organized and existing under the laws of the Commonwealth
of the Bahamas ("Parent"), having an office at Coral Towers, Paradise Island,
The Bahamas, Sun Merger Corp., a Delaware Corporation and a wholly-owned
subsidiary of Parent ("Sub"), having an office at 0000 Xxxx Xxxxxxx Xxxxxxxxx,
Xxxx Xxxxxxxxxx, Xxxxxxx, and the Xxxxxxxxx Xxxxxx X. Xxxx, whose address is the
Office of the President, Drew University, Xxxx Xxxx, Madison, New Jersey
("Trustee").
RECITALS
Whereas, Resorts International Hotel, Inc., a New Jersey corporation
located at 0000 Xxxxxxxxx, Xxxxxxxx Xxxx, Xxx Xxxxxx ("RIH") holds a casino
license and a casino-hotel alcoholic beverage license, both issued by the New
Jersey Casino Control Commission ("CCC") pursuant to the terms of the New
Jersey Casino Control Act, N.J.S.A. 5:12-1 ET SEQ., ("Act") and both effective
January 31, 1996 for a term expiring on January 31, 2000;
Whereas, RIH holds the aforementioned licenses in connection with a CCC
approved casino-hotel which occupies the southerly two-thirds of a block in the
City of Atlantic City bounded by Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxx Xxxxxx,
Xxxxxxxxxxxx Avenue and the Boardwalk, with the approved casino-hotel site
presently comprised of the Haddon Hall site, the former site of the Xxxxxxx
Hotel on which the "Xxxxxxx Addition" is situated, the North Carolina Avenue
Corridor and the North Tower Annex;
Whereas, RIH is a wholly-owned subsidiary of an intermediary company known
as GGRI, Inc. ("GGRI") and GGRI is a wholly-owned subsidiary of a publicly-
traded holding company known as Xxxxxxx Gaming & Entertainment, Inc., a
Delaware corporation located at 0000 Xxxxxxxxx, Xxxxxxxx Xxxx, Xxx Xxxxxx
("GGE");
Whereas, GGE wholly owns Resorts International Hotel Financing, Inc.
("RIHF"), which has two issues of debt securities outstanding, each of which is
publicly-traded and. bears a relation to the RIH casino-hotel and, although
RIH is not a holding company of RIH, it has been required by the CCC to comply
with N.J.A.C. 19:43-1.1, 2.3, 2.5, 2.7, 2.8, 2.9, 8.1 and 19.45-1.4 and 1.7, as
if it was a holding company;
Whereas, each of RIH, GGRI, GGE and RIHF have been found qualified by the
CCC pursuant to the applicable provisions of the Act, specifically N.J.S.A.
5:12-82, 83, 84, 85, 88 and 105 and N.J.A.C. 19:43-1.1 ET SEQ.;
Whereas, on August 19, 1996 Parent, Sub and GGE entered into an Agreement
and Plan of Merger ("Merger Agreement") (attached hereto as Exhibit A);
Whereas, pursuant to the applicable terms and subject to the conditions set
forth in the Merger Agreement, and in accordance with the Delaware General
Corporation Law ("DGCL"), GGE will be merged with Sub and, following the
effective date of this event, GGE, and accordingly, RIH, GGRI and RIHF, will
become wholly-owned subsidiaries of Parent in accordance with the DGCL (the
"Merger");
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Whereas, as a result of the Merger, Parent will be required to qualify
under the Act, specifically N.J.S.A. 5:12-84 and 85, as a holding company of
RIH;
Whereas, N.J.S.A. 5:12-95.12 ET SEQ., the Interim Casino Authorization
section of the Act, provides that whenever any entity contracts to transfer any
property relating to an on-going casino operation, including a security holding
in a casino licensee or holding or intermediary company of the casino licensee,
under circumstances which require that the transferee be qualified under the
Act, specifically N.J.S.A. 5:12-84 and 85, the CCC may grant interim
authorization ("ICA") where it finds by clear and convincing evidence:
(1) that statements of compliance have been issued pursuant to various
sections of the Act, specifically N.J.S.A. 5:12-81, 82(c), 82(d),
82(e) and 134;
(2) that the casino-hotel facility is an approved hotel in accordance with
the requirements of the Act, specifically N.J.S.A. 5:12-83;
(3) that a trustee designated in accordance with the Act, specifically
N.J.S.A. 5:12-95.14, has satisfied the qualification criteria
applicable to a casino key employee, except for residency; and
(4) that interim operation will best serve the interests of the public;
and
Whereas, the Trustee has agreed to act as the trustee required to obtain
an ICA and has further agreed to do all things necessary in order to qualify as
the trustee in accordance with the Act, specifically N.J.S.A. 5:12-95.14;
Now, therefore, in consideration of the mutual promises contained herein,
the parties hereto agree as follows:
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SECTION I. TERM OF AGREEMENT AND TRUST
(a) This Agreement and the Trust that it creates shall become effective
upon the execution of this Agreement by the parties, final approval of this
Agreement and the Trustee by the CCC, the consummation of the Merger prior to a
final determination by the CCC that Parent is qualified and delivery of all
necessary documents and Trust Property, which shall hereinafter be defined as
all of the Parent's present and future right, title and interest in property
related to RIH or its holdings, which shall be evidenced by the shares of GGE
as the surviving corporation and all voting rights in such shares ("Trust
Property"), in accordance with the terms of this Agreement.
(b) This Agreement and the Trust that it creates shall terminate
automatically on the transfer of the Trust Property and any funds acquired in
connection therewith to the Parent following the qualification of the Parent
under the Act, or on approval by the CCC of an application to terminate the
Agreement and/or Trust.
(c) Although the Trust created as a result of this Agreement shall be
effective at such time and upon the events set forth in subsection (a) above,
the provisions of Section VII shall only become operative if, after the
effective date, the CCC makes a finding that there is reasonable cause to
believe that Parent, or any Person required to be qualified in connection with
Parent, may be found unqualified and a stay of the effect of this finding is not
granced to Parent by either the CCC or a court of competent
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jurisdiction. The Trust, once operative, shall remain operative until the CCC
finds the Parent qualified, or until there is a final and unappealable
determination that the Parent is unqualified and the property subject to the
trust is disposed of in accordance with the Act, specifically N.J.S.A, 5: 12-
95. 14 (e) , except that the Parent may request the CCC to direct the Trustee to
dispose of the Trust Property in accordance with N.J.S.A. 5:12-95.14(e) prior to
a final and unappealable determination with respect to qualification.
SECTION II. PURPOSE OF THE AGREEMENT AND TRUST
The primary purpose of this Agreement and the Trust created as a result
thereof is to allow the Parent to obtain an ICA which will in turn give the
Parent the discretionary ability to consummate the Merger Agreement and operate
GGE, RIH and RIHF subject to a final, plenary determination by the CCC that
Parent is qualified to act as holding company in connection with RIH.
Consummation of the Merger shall also be subject to the conditions set forth, in
the Merger Agreement.
SECTION III. TRANSFER OF TRUST PROPERTY
Upon the execution of this Agreement by the parties and final approval of
the Agreement and the Trustee by the CCC and the consummation of the Merger, the
Parent shall transfer and convey the Trust Property to the Trustee, subject to
the terms and conditions and for the use and purposes of this Agreement.
Subject to the provisions of the Act and this Agreement, Parent shall be the
beneficiary of the Trust.
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SECTION IV. TRUSTEE'S ACCEPTANCE OF THE AGREEMENT
Upon the Agreement becoming effective and the Trust Property being
transferred to him in accordance with Section III above, the Trustee agrees to
hold the Trust Property in trust, subject to the terms and conditions of this
Agreement. Prior to the Trust becoming operative in accordance with Section
I(c) of this Agreement, the Trustee shall, upon the request of Parent,
distribute any funds received in connection with the Trust Property to Parent or
as Parent so directs.
SECTION V. TRUSTEE COMPENSATION
(a) To compensate the Trustee for the service, costs and expenses he shall
incur in connection with his duties under this Agreement, Parent shall pay the
Trustee the sum of $37,500 upon the effective date of the Agreement as that term
is defined in Section I(a) of this Agreement, and the sum of $37,500 on the
termination of this Agreement as same is defined in Section I(b) of this
Agreement. This second payment shall be forfeited by the Trustee, however, if
prior thereto the CCC determines that he has breached his fiduciary obligations
in the discharge of his duties under this Agreement.
(b) Commencing on the effective date of this Agreement and continuing
until the termination of this Agreement, the Parent shall also pay the Trustee
$300 per hour for the time reasonably spent by the Trustee in administering the
Trust business and the Parent shall reimburse the Trustee for all reasonable
expenses incurred in fulfilling his duties under this Agreement, including
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the retention of any necessary financial and/or legal advisors. Expenses
incurred by the Trustee in remaining qualified under the Act shall be deemed to
be reasonable expenses incurred by the Trustee in fulfillment of his duties
under this Agreement.
SECTION VI. FIDUCIARY DUTIES OF THE TRUSTEE
(a) Up and until such time as the CCC orders that this Trust shall become
operative in accordance with Section I(c) of this Agreement, the Trustee shall
be required to follow the Parent's written instructions regarding the holding
and management of the Trust Property pursuant to the terms of this Agreement.
The Trustee shall have the duty to provide the issuer of the Trust Property with
an executed copy of this Agreement, and in cooperation with the Parent take all
necessary steps to have all of the Parent's interest in the Trust Property
transferred to his name and have that transfer duly recorded on the Register and
Records of the issuer.
(b) Unless and until the provisions of Section VII shall become operative
in accordance with Section I(c) of this Agreement, and subject to the terms of
this Agreement, the Trustee, as Parent's agent for holding and management of the
Trust Property, shall follow all of Parent's written instructions regarding the
holding and management of the Trust Property and Parent shall have all of the
rights afforded it by the Trust Property including by way of illustration and
not limitation, the right to instruct the Trustee to: (1) pledge the Trust
Property as collateral for loans, with the prior approval of the CCC following
notice to the CCC and
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New Jersey Division of Gaming Enforcement ("DGE"); (2) with notice to the CCC
and DGE, sell, transfer or distribute all or any part of the Trust Property to
any third party subject to the requirements of the ICA; and (3) vote any
securities that are part of the Trust Property. It is hereby acknowledged that
the only instrument that the Trustee will hold that evidences the Trust Property
will be the shares of GGE and that, prior to the Trust becoming operative in
accordance with Section I (c) of this Agreement, the Trustee will not be
required to act with respect to any matter involving the operation of GGE or its
subsidiaries, unless such matter requires the approval of the shareholders of
GGE in accordance with DGCL and/or the Act. In the event a matter requires the
approval of the shareholders of GGE, and prior to the Trust becoming operative,
the Trustee shall act as directed by Parent.
(c) After a determination by the CCC that Parent is qualified and after
written notice of same to the Trustee, the Trustee, in cooperation with the
Parent, shall not later than the business day next following the determination
transfer the Trust Property to Parent or an assignee to which Parent's rights
under this Agreement are assigned by Parent. After this transfer, this
Agreement and the Trust that it creates shall terminate.
(d) The parties recognize and agree that the purpose of this Agreement is
to allow Parent to comply with the ICA and, to that end, some of the duties and
responsibilities of the Trustee under this Agreement relating to the control and
management of the Trust Property may change from time to time, as provided in
this
8
Agreement, to insure Parent's continued compliance with the requirements of
the ICA.
SECTION VII. DUTIES OF THE TRUSTEE IF THE TRUST BECOMES OPERATIVE
(a) In the event the Trust created as a result of this Agreement becomes
operative in accordance with Section I (c) of this Agreement, the Trustee shall
exercise all rights incident to the ownership of the Trust Property, including
the right to vote any securities that are part of the Trust Property, and he
shall be vested with all powers, authority and duties necessary to the
unencumbered exercise of such rights, as provided under the Act, specifically
N.J.S.A. 5:12-130.1 through 130-11. Parent, however, shall have no right to
participate in the earnings of the casino-hotel or receive any return on its
investment or debt security holdings during the time the Trust is operative.
(b) In terms of exercising the rights and powers set forth in subsection
(a) above, the Trustee agrees to adhere to the provisions of this Agreement in
exercising his powers under this Section and, among other things, the Trustee
agrees to place any funds received as a return on the Trust Property in bonds or
other obligations, maturing in not more than 180 days, which, as to Principal
and interest, constitute direct obligations of, or are unconditionally
guaranteed by, the United States of America.
(c) If the CCC denies qualification to Parent and such denial becomes
final and unappealable, the Trustee shall endeavor and be authorized to sell,
assign, convey or otherwise dispose of all Trust Property to such persons as
shall be appropriately licensed
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or qualified or shall obtain interim authorization in accordance with the Act,
specifically N.J.S.A. 5:12-95.12 to 95-16. The disposition of Trust Property by
the Trustee shall be completed within 120 days of the final and unappealable
denial of qualification, or within such additional time as the CCC may for good
cause allow, and shall be conducted in accordance with the Act, specifically
N.J.S.A. 5:12-130.1 through 130.11, except that the proceeds of such disposition
shall be distributed to Parent only in an amount not to exceed the lower of the
actual cost of the Trust Property to Parent or the value of the Trust Property
calculated as if the investment had been made on the date the Trust becomes
operative, and any excess remaining proceeds shall be paid to the New Jersey
Casino Revenue Fund which has been created pursuant to the Act, specifically
N.J.S.A. 5:12-145.
(d) For purposes of subsection (c) above, the "actual cost" of the Trust
Property shall be the aggregate value of Parent's ordinary shares issued at the
time the Merger is consummated plus the purchase price paid by Parent for any
other Trust Property, reduced by any return obtained by Parent on the dividends,
interest or any other payment, including proceeds of any partial or total sale
of the Trust Property permitted by this Agreement and regardless of whether any
such return occurred before or after the execution of this Agreement.
SECTION VIII. QUALIFICATION OF TRUSTEE
(a) The Trustee warrants and represents that he satisfies the qualification
criteria applicable to a casino key employee, except
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for residency and that he shall continue to meet such criteria throughout the
duration of this Agreement.
(b) The Trustee agrees that if he commits an act or becomes aware of any
information that would cause a reasonable person to believe that he will
ultimately not be able to satisfy the qualification criteria applicable to
a casino key employee, he will notify Parent and the DGE within two (2)
days of becoming aware of such information, in a writing that sets forth
the details of his action or knowledge.
SECTION IX. REMOVAL OF TRUSTEE
(a) Parent shall have the right to petition the CCC on an emergent basis
to immediately remove the Trustee from his position as Trustee under this
Agreement for cause and/or a breach of the Trustee's fiduciary duties and
replace him with a successor deemed qualified by the CCC.
(b) In the event a successor trustee is proposed by Parent and approved by
the CCC, the successor trustee shall promptly execute and deliver to Parent and
the CCC a copy of this Agreement. Also, the Trust Property shall be transferred
to the successor trustee and he shall hold the Trust Property subject to the
terms of this Agreement.
SECTION X. RESIGNATION OF TRUSTEE
The Trustee shall have the right to resign as Trustee under this Agreement
on ten (10) days' notice to both Parent and the CCC. However, a resignation by
the Trustee shall not be effective unless and until a successor trustee has been
appointed, installed and
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approved by the CCC in accordance Section X(b) above. If no successor trustee
is proposed by Parent within ten (10) business days of such resignation, the CCC
shall be empowered to appoint any person it deems qualified to be the successor
trustee.
SECTION XI. LIABILITY OF TRUSTEE
The Trustee shall incur no liability to Parent as holder of the Trust
Property, as the Trustee or otherwise, except in instances where an action or
omission constitutes gross negligence or willful misconduct. The Trustee shall
serve without bond.
SECTION XII. RECORDS
The Trustee agrees to keep records of all of his business and transactions
as Trustee including time spent by the Trustee in attending to Trust business
and the expenses incurred in connection with such business. The Trustee shall
send Parent a monthly statement that lists all business undertaken in relation
to the Trust and every transaction made by him and the time spent and expenses
incurred by him in conducting his business and completing each transaction in
the month previous to the date of the statement. The Trustee agrees to make his
records available to the CC and the DGE. Parent expressly consents to the
Trustee allowing the CCC and the DGE to view the records of Trustee's
transactions and business as Trustee.
SECTION XIII. INDEMNIFICATION OF TRUSTEE
Parent agrees to indemnify and hold harmless the Trustee to the fullest
extent permitted by law, from and against all claims, losses, damages, expenses
(including legal fees), penalties and
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liabilities arising out of any action or omission in connection with the
performance of his duties under this Agreement, except in instances where an
action or omission constitutes gross negligence or willful misconduct. The
rights of the Trustee under this Section shall survive the termination of this
Agreement regardless of whether any claims, losses, damages, expenses, penalties
or liabilities are asserted or incurred prior to the termination of this
Agreement.
SECTION XIV. RIGRTS OF THE TRUSTEE
(a) The Trustee shall have no duties or responsibilities except those
expressly set forth herein. The Trustee may rely on any notice, instruction,
certificate, statement, request, consent, confirmation, agreement or other
instrument that is authorized or permitted by this Agreement and that he
reasonably believes to be genuine and to have been signed or presented by a
proper person or Persons on Parent's behalf. As a condition to the taking,
suffering or omitting of any action by him hereunder, the Trustee may consult
with counsel, and the written advice of such counsel or any opinion of counsel
shall be full and complete authorization and protection with respect to any
action taken, suffered or omitted by him hereunder in good faith and in
reasonable reliance thereon.
(b) No provision of this Agreement shall require the Trustee to expend or
risk his own funds or otherwise incur any financial liability in the performance
of any of his duties hereunder, or in the exercise of any of his rights or
powers, unless he shall have received adequate indemnity against such risk or
liability.
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(c) The Trustee may execute any duties or obligations hereunder
either directly or by or through agents or attorneys-in-fact. The Trustee shall
not be responsible for the negligence or misconduct of any agents or attorneys-
in-fact selected by him with reasonable care. However, this provision will not
act to release or relieve any agent or attorney-in-fact from any responsibility
they may have to Parent as a result of any negligence or misconduct on their
part.
SECTION XV. ASSIGNABILITY
Parent shall have the right to assign its rights under this Agreement. Any
such assignment must have the prior approval of the CCC.
SECTION XVI. MODIFICATION OR WAIVER
This Agreement may not be amended, modified or supplemented, nor may any
provisions of this Agreement be waived, discharged or revoked, without the prior
written consent of Parent and the Trustee. No modification, amendment or
supplement to this Agreement shall be effective without the prior approval of
the CCC after notice to the CCC and DGE of any proposed amendment, modification
or supplement.
SECTION XVII. HEADINGS
The headings of the Sections of this Agreement are for reference purposes
only and shall in no way affect the meaning or interpretation of this Agreement.
SECTION XVIII. INVALIDITY
The invalidity of any provision of this Agreement shall not be
14
deemed to impair or affect in any manner the validity or enforceability of the
remainder of this Agreement.
SECTION XIX. NOTICES
Any notice or other communication required to be given under this Agreement
shall be given by telephone, telefax, facsimile or other similar means of
electronic communication and by a writing sent by Federal Express or an
equivalent overnight delivery service. Notice shall be deemed to be given upon
transmission or upon its being delivered to Federal Express or any other
acceptable overnight delivery service. The number and address for providing
notice under this Agreement shall be as follows:
Trustee: Xxxxxxxxx Xxxxxx X. Xxxx
Office of the President
Drew University
Xxxx Xxxx
Xxxxxxx, Xxx Xxxxxx 00000
Telecopier: (000) 000-0000
With a copy to:
Xxxxxxx X. Xxxx, Esquire and
Xxxxxx Xxxxxx, III, Esquire
Xxxxx, Danzig, Scherer, Xxxxxx & Xxxxxxxx
Xxxxxxxxxxxx Xxxxx
X Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Telecopier: (000) 000-0000
Parent: Sun International Hotels Limited
0000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Telecopier: (000) 000-0000
With a copy to:
Xxxxxxx X. Xxxxx, Esquire
Sun International Executive Offices
Coral Towers
Atlantis Resort & Casino
P.O. Box N-4777
Paradise Island
15
Nassau, The Bahamas
Telecopier: (000) 000-0000
and
Xxxxxxx Xxxxxx, Esquire
Kozlov, Seaton, Xxxxxxxx & Xxxxxx, P.C.
0000 Xxxxx 00 Xxxx, Xxxxx 000
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Telecopier: (000) 000-0000
CCC: Xxxx X. Xxxxxxxxx, General Counsel
Casino Control Commission
Tennessee Avenue and Xxx Xxxxxxxxx
Xxxxxx Xxxxxxxx
Xxxxxxxx Xxxx, Xxx Xxxxxx 00000
Telecopier: (000) 000-0000
DGE: Xxxxx Xxxxxxx, Director
Division of Gaming Enforcement
000 Xxxx Xxxxx Xxxxxx
XX-000
Xxxxxxx, Xxx Xxxxxx 00000
Telecopier: (000) 000-0000
SECTION XX. COUNTERPARTS
This Agreement may be executed in counterparts, each of which, when
executed and delivered, shall be an original and both of which together will
constitute the same Agreement.
SECTION XXI. VARIATIONS IN PRONOUNS
All pronouns and any variations thereof refer to the masculine, feminine or
neuter, singular or plural, as the identity of the person or persons may
require.
SECTION XXII. WAIVERS
No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party of any right, power or privilege hereunder, nor any single
or partial exercise of any right, power or privilege hereunder preclude any
other or further
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exercise thereof or the exercise of any other right, power or privilege
hereunder. The right and remedies provided herein are cumulative and are not
exclusive of any rights or remedies which any party may otherwise have at law
in equity.
SECTION XXIII. GOVERNING LAW
The parties agree that this Agreement shall be governed and construed in
accordance with the laws of the State of New Jersey.
In Witness Whereof, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
Attest: Sun International Hotels Limited
/s/ illegible /s/ Xxxxxxx X. Xxxxx
----------------------- ----------------------------------------
Xxxxxxx X. Xxxxx
Executive Vice-President,
General Counsel
Attest: Sun Merger Corp.
/s/ illegible /s/ Xxxxxxx X. Xxxxx
----------------------- ----------------------------------------
Xxxxxxx X. Xxxxx
Executive Vice-President
General Counsel
Witness:
/s/ illegible /s/ Xxx. Xxxxxx X. Xxxx, Trustee
----------------------- ----------------------------------------
Xxx. Xxxxxx X. Xxxx, Trustee
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