1 1 STATE OF NEW JERSEY 2 CASINO CONTROL COMMISSION 3 - - - - - - - - - - - - - - - - - - - 4 5 PUBLIC MEETING NO. 10-03-03 6 7 - - - - - - - - - - - - - - - - - - - 8 9 Wednesday, March 3, 2010 10 Atlantic City Commission Offices 11 Joseph P. Lordi Public Meeting Room - First Floor 12 Tennessee Avenue and Boardwalk 13 Atlantic City, New Jersey 08401 14 10:33 a.m. to 4:30 p.m. 15 16 17 Certified Court Reporter: Darlene Sillitoe 18 - - - - - - - - - - - - - - - - - - - - - - - - - - - 19 20 ATLANTIC CITY COURT REPORTING, LLC 21 CERTIFIED COURT REPORTERS AND VIDEOGRAPHERS 22 1125 ATLANTIC AVENUE, SUITE 416 23 ATLANTIC CITY, NEW JERSEY 08401 24 (609) 345-8448 www.accourtreporting.com 25 2 1 B E F O R E : 2 CASINO CONTROL COMMISSION: SHARON ANNE HARRINGTON, ACTING CHAIR 3 MICHAEL C. EPPS, COMMISSIONER WILLIAM T. SOMMELING, COMMISSIONER 4 EDWARD J. FANELLE, COMMISSIONER 5 PRESENT FOR THE CASINO CONTROL COMMISSION: 6 DARYL W. NANCE, ADMINISTRATIVE ANALYST DANIEL J. HENEGHAN, PUBLIC INFORMATION OFFICER 7 OFFICE OF THE GENERAL COUNSEL: 8 DIANNA W. FAUNTLEROY, GENERAL COUNSEL/EXECUTIVE SECRETARY 9 LEONARD J. DiGIACOMO, ASSISTANT GENERAL COUNSEL TERESA M. NAGENGAST, SENIOR COUNSEL 10 SETH H. BRILLIANT, SENIOR COUNSEL LON E. MAMOLEN, SENIOR COUNSEL 11 TRACY E. RICHARDSON, COUNSEL CLAIRE FRANK, PROGRAM MANAGER 12 SANDRA DeLIA, LEGAL SUPPORT SPECIALIST 13 DIVISION OF GAMING ENFORCEMENT: DEPUTY ATTORNEYS GENERAL 14 JOHN E. ADAMS, JR., DEPUTY ATTORNEY GENERAL BRIAN C. BISCIEGLIA, DEPUTY ATTORNEY GENERAL 15 MARY JO FLAHERTY, DEPUTY ATTORNEY GENERAL CHARLES F. KIMMEL, DEPUTY ATTORNEY GENERAL 16 LOUIS ROGACKI, DEPUTY ATTORNEY GENERAL R. LANE STEBBINS, DEPUTY ATTORNEY GENERAL 17 18 19 20 21 22 23 24 25 3 1 A P P E A R A N C E S : 2 ITEM NO. 4 LON E. MAMOLEN, SENIOR COUNSEL R. LANE STEBBINS, DEPUTY ATTORNEY GENERAL 3 FREDERICK T. CUNNINGHAM, ESQ. FOR: TRUMP MARINA ASSOCIATES, LLC 4 ITEM NO. 8 TERESA M. NAGENGAST, SENIOR COUNSEL 5 LOUIS ROGACKI, DEPUTY ATTORNEY GENERAL STERNS & WEINROTH, PC 6 DENNIS DALY, ESQ. FOR: SIRIUS XM RADIO, INC. 7 ITEM NO. 11 SETH H. BRILIANT, SENIOR COUNSEL 8 CHARLES F. KIMMEL, DEPUTY ATTORNEY GENERAL KAREN M. WOSNACK, ESQ. 9 FOR: RESORTS INTERNATIONAL HOTEL, INC. 10 ITEM NO. 12 DIANNA W. FAUNTLEROY, GENERAL COUNSEL LEONARD J. DiGIACOMO, ASSISTANT GENERAL 11 COUNSEL TRACY E. RICHARDSON, COUNSEL 12 JOHN E. ADAMS, JR., DEPUTY ATTORNEY GENERAL 13 MARY JO FLAHERTY, DEPUTY ATTORNEY GENERAL DUANE MORRIS, LLP 14 GILBERT L. BROOKS, ESQ. ERIC D. FRANK, ESQ. 15 PETER D. VISALLI, ESQ. FOR: TROPICANA ATLANTIC CITY CORP. 16 PASHMAN STEIN SEAN MACK, ESQ. 17 FOR: TRUSTEE/CONSERVATOR JUSTICE STEIN 18 ITEM NO. 13 MARY JO FLAHERTY, DEPUTY ATTORNEY GENERAL HILL WALLACK, LLP 19 RICHARD F. DeLUCRY, ESQ. FOR: HARRAH'S ATLANTIC CITY OPERATING 20 COMPANY, LLC 21 22 23 24 25 4 1 AGENDA PUBLIC MEETING NO. 10-03-03 2 March 3, 2010, 10:33 a.m. ITEM PAGE VOTE 3 1 Ratification of the minutes of the 10 10 February 17, 2010, public meeting 4 2 Applications for employee and casino service industry licenses 5 2 initial and/or renewal of casino key 11 11 and casino employee licenses 6 2 initial and/or renewal of casino key 12 12 and casino employee licenses 7 Applications for casino services industry 11 12 license, initial and/or renewal for: 8 Manfre Provisions of New Jersey, LLC Brand Interaction Group, LLC 9 Cole and Company Kitchen and Bath, LP Korn Ferry International 10 Baldor Specialty Foods, Inc. 3 Stipulations of settlement and consent 11 Agreements: a) Randall C. Pinkston, Jr. (09-0687-EA) 15 16 12 b) John M. Derichie (09-0481-ER) 15 16 c) Domenick Perry, Jr. (09-0277-ER) 15 16 13 d) Ulysses Mack, Jr. (09-0373-ER) 15 16 e) Anthony M. Serafina, Jr. (09-0232-RC) 15 16 14 f) Clinton L. Stokes (09-0571-RC) 15 16 g) Sherry M. Moore (09-0005-EA) 15 16 15 4 Stipulations of settlement in State 17 19 v. Trump Marina Associates, LLC (d/b/a 16 Trump Marina Hotel Casino) (09-0635-VC) 5 Initial Decision in State v. John E. 19 21 17 Stetz, Jr. (08-0191-RC) 6 Applications for suspension: 18 a) John Hilyard (10-0077-RC) 22 23 b) John P. Shea, III (10-0078-RC) 22 23 19 7 Consideration of forfeiture orders in: a) State v. Trump Taj Mahal Associates, 23 25 20 et al. (09-0611-VC) b) State v. Bally's Atlantic City, 23 25 21 et al. (09-0609-VC) 8 Petition of Sirius XM Radio, Inc., for 26 27 22 successor to Sirius Satellite Radio, Inc., for exemption from casino service 23 industry license (PRN 2860901) 9 Readoption of NJAC 19:54 (Taxes) 28 29 24 10 Petition of the Atlantic City Pay Day 29 31 Trust for permission to terminate and 25 dissolve the Atlantic City Pay Day Trust (PRN 0471001) 5 1 CONTINUED AGENDA PUBLIC MEETING NO. 10-03-03 2 March 3, 2010, 10:33 a.m. ITEM PAGE VOTE 3 11 Petition of Resorts International Hotel, 31 32 Inc., (d/b/a Resorts Atlantic City) for 4 permission to transfer progressive slot jackpots pursuant to NJAC 19:45-1.39(n) 5 12 Application of Tropicana Atlantic City 36 198 Corp. for interim authorization and other 6 relief (PRN 0111001) Hunter Clark Gary, sworn 46 7 Scott Charles Butera, sworn 91 Mark Giannantonio, sworn 147 8 Harold First, sworn 168 And; 9 Consideration of the applications of the 33 36 Trustee/Conservator for the former 10 casino licensee, Adamar of New Jersey, Inc., for approval of fees for the 11 Conservator/Trustee 13 Petition of Harrah's Atlantic City 13 14 12 Operating Company, LLC, requesting the issuance of a temporary casino key 13 employee license to Laurence Szapor pursuant to NJSA 5:12-89(e) and to permit 14 him pursuant to NJAC 19:43-2.6 to assume the duties and exercise the powers of 15 Director of Security without first having been found qualified (PRN 0561002) 16 17 18 19 20 21 22 23 24 25 6 1 E X H I B I T S : 2 ITEM NO. 2 DESCRIPTION EVD 3 P-1 Remand for hearings 2 license X 4 P-2 Grant 2 licenses X 5 ITEM NO. 12 6 PETITIONERS 7 P-1 Tropicana Entertainment, Inc., structure X chart 8 P-2 Certificate of Incorporation and the X amendment thereto as filed by Tropicana 9 Atlantic City Corp. ("Top AC") P-3 Certificate of Incorporation of Trop AC X 10 P-4 Certificate of Incorporation as filed X for Tropicana AC Sub Corp. ("Trop Sub") 11 P-5 Certificate of Incorporation of Trop Sub X as approved by the lenders 12 P-6 amendments to existing leased and two X A-J new leases in connection with the 13 utilization of land under the Tropicana Casino and Resort 14 P-7 Information and charts setting forth the X identity and percentage of interest of 15 various entities in connection with the Tropicana Entertainment, Inc., credit 16 facility (Redacted) P-8 Ownership organizational structure X 17 proposed by Icahn in connection with its effective ownership of the common stock 18 of Tropicana Entertainment, Inc. (Redacted) P-9 Schedule setting forth the ownership of X 19 Icahn Partners, LP (Redacted) P-10 Schedule setting forth the ownership of X 20 Icahn Partners Master Fund, LP P-11 Schedule setting forth the ownership of X 21 Icahn Cayman Partners, LP (Redacted) P-12 The limited Partnership Agreement of X 22 Icahn Cayman Partners, LP P-13 Certificate of Registration and Articles X 23 of Association of Icahn Fund, Ltd. P-14 Schedule setting forth the investors in X 24 Icahn Fund, Ltd. (Redacted) P-15 Schedule setting forth the ownership X 25 of Icahn Partners Master Fund, II, LP 7 1 CONTINUED E X H I B I T S : 2 ITEM NO. 12 DESCRIPTION EVD 3 P-16 The Limited Partnership Agreement of X Icahn Partners Master Fund, II, Feeder, LP 4 P-17 Certificate of Incorporation and Articles X of Association of Icahn Fund, II, Ltd. 5 P-18 Schedule setting forth the investors in X Icahn Master Fund, III, LP (Redacted) 6 P-19 Schedule setting forth the ownership of X Icahn Partners Master Fund, III, LP 7 P-20 Certificate of Incorporation and Articles X of Association of Icahn Fund, III, Ltd. 8 P-21 Schedule setting forth the investors in X Icahn Fund III, Ltd. (Redacted) 9 P-22 Schedule setting forth the indirect X beneficial ownership interest of Carl 10 Icahn in Tropicana Entertainment, Inc. P-23 Credit agreement dated as of December 29, X 11 2009, between Tropicana Entertainment, Inc., and the Lenders party thereto as 12 well as exhibits to the Credit Agreement including the Guarantee and Collateral 13 Agreement, form of Mortgage, and a form of Warrant (Redacted) 14 P-24 Control Group Commitment in connection X with the Lenders to the Credit Agreement 15 (Redacted) P-25 Proffer of Trop AC in accordance with X 16 the Third Count of the Amended Petition of Trop AC for Interim Authorization 17 P-26 January 22, 2010, letter to the Casino X A-H Control Commission and exhibits thereto 18 confirming compliance with Section 82(d) (7-10) 19 P-27 Proposed ICA Trust Agreement (Redacted) X P-28 Charter of the Audit Committee of the X 20 Board of Directors of Tropicana Entertainment Inc. 21 P-29 Trop AC EEBOP Plan dated March 3, 2010 X P-30 Memorandum in Response to Request for X 22 Renewal of CHAB license P-31 Tropicana's system of accounting and X 23 Internal Controls, Table of Contents P-32 Supplemental certification providing X 24 A-L confirmation of qualification to do business in the State of New Jersey 25 8 1 CONTINUED E X H I B I T S : 2 ITEM NO. 12 DESCRIPTION EVD 3 P-33 January 26, 2010, letter to the Casino X A-E Control Commission and exhibits thereto 4 confirming substantial compliance with Section 82(d)(7-10) 5 P-34 Certification of Tama B. Hughes in X connection with Trop AC's Application 6 for Interim Authorization P-35 Certification of Ed Garruto in connection X 7 with Trop AC's Application for Interim Authorization 8 P-36 Complaint, Lightsway Litigation Services, X LLC, as Trustee of the Tropicana litigation 9 Trust v. William Yung, III, Wimar Tahoe Corporation f/k/a Tropicana Casino and 10 Resorts, Inc., Columbia Sussex Corporation, Joe Yung, 1994, William J. Yung Family 11 Trust, CDC Holdings, LLC, JMBS Casino Trust, Casuarina Cayman Holdings, LLC 12 P-37 Tropicana Entertainment Sources and Uses X of cash analysis 13 14 DIVISION D-1 DGE report, 2-11-10, Re: Application of X 15 Tropicana Atlantic City Corp. For interim Authorization and Other Related Relief 16 (PRN 0111001) (Redacted) 17 18 19 20 21 22 23 24 25 (Exhibits retained by Commission.) 9 1 (Public Meeting 10-03-03 was commenced 2 at 10:33 a.m.) 3 MR. NANCE: Good morning. I'd like to 4 read an opening statement: 5 This is to advise the general public 6 that in compliance with Chapter 231 of the 7 public laws of 1975 entitled the "Open Public 8 Meeting Act," the New Jersey Casino Control 9 Commission on October 15, 2009, filed with the 10 Secretary of State at the State House in 11 Trenton, an annual meeting schedule. On 12 October 16, copies were mailed to subscribers. 13 Members of the press will be permitted 14 to take photographs, and we ask that this be 15 done in a manner which is not disruptive or 16 distracting to the Commission. 17 The use of cell phones in the public 18 meeting room is prohibited. 19 Any member of the public who wish to 20 address the Commission will be given the 21 opportunity to do so before the Commission 22 adjourns for the day. 23 Please stand for the Pledge of 24 Allegiance. 25 (The flag salute was recited.) 10 ITEM NO. 1 1 VICE CHAIR HARRINGTON: Good morning. 2 As you know, I am not the chair. My 3 name is Sharon Harrington. I'm the Vice Chair. 4 Unfortunately, Chairman Kassekert's father 5 passed away late last night, and so I will be 6 substituting today. 7 MR. NANCE: Good morning. 8 VICE CHAIR HARRINGTON: Good morning. 9 MR. NANCE: The matters discussed in 10 closed session were: Employee and enterprise 11 license matters. 12 The Commissioners approved the February 13 17th, 2010, closed-session minutes. 14 Item No. 1, ratification of the minutes 15 of the February 17, 2010, public meeting. 16 COMMISSIONER SOMMELING: Move to 17 approve. 18 COMMISSIONER EPPS: Second. 19 VICE CHAIR HARRINGTON: All in favor? 20 (Ayes.) 21 VICE CHAIR HARRINGTON: Opposed? 22 (No response.) 23 VICE CHAIR HARRINGTON: Abstentions? 24 (No response.) 25 VICE CHAIR HARRINGTON: Motion carries. 11 ITEM NO. 2 1 MR. NANCE: Item No. 2, application for 2 employee and casino service industry licenses. 3 This agenda item will be entered as Exhibit 4 Lists 1 and 2. 5 Exhibit List 1 consists of two 6 applications for initial and/or renewal of 7 casino key and casino employee licenses. 8 The Division has objected to licensure. 9 COMMISSIONER EPPS: I move that we 10 remand these matters for hearing. 11 COMMISSIONER SOMMELING: Second. 12 VICE CHAIR HARRINGTON: All in favor? 13 (Ayes.) 14 VICE CHAIR HARRINGTON: Opposed? 15 (No response.) 16 VICE CHAIR HARRINGTON: Abstentions? 17 (No response.) 18 VICE CHAIR HARRINGTON: Motion carries. 19 MR. NANCE: For consideration is the 20 casino service industry license initial and/or 21 renewal applications pursuant to NJSA 22 5:12-92(c) for: Manfre Provisions of New 23 Jersey, LLC, Brand Interaction Group, LLC, Cole 24 and Company Kitchen and Bath, LP, Korn Ferry 25 International, and Baldor Specialty Foods, Inc. 12 ITEM NO. 2 1 The Division has objected to these 2 applications. 3 COMMISSIONER EPPS: I move that we 4 remand these matters for hearing. 5 COMMISSIONER SOMMELING: Second. 6 VICE CHAIR HARRINGTON: All in favor? 7 (Ayes.) 8 VICE CHAIR HARRINGTON: Opposed? 9 (No response.) 10 VICE CHAIR HARRINGTON: Abstentions? 11 (No response.) 12 VICE CHAIR HARRINGTON: Motion carries. 13 MR. NANCE: Exhibit List 2 consists of 14 two applications for initial and/or renewal of 15 casino key and casino employee licenses. 16 Staff and the Division have recommended 17 that these licenses be granted. 18 COMMISSIONER EPPS: Move that we grant 19 the applications. 20 COMMISSIONER SOMMELING: Second. 21 VICE CHAIR HARRINGTON: Thank you. 22 All in favor? 23 (Ayes.) 24 VICE CHAIR HARRINGTON: Opposed? 25 (No response.) 13 ITEM NO. 13 1 VICE CHAIR HARRINGTON: Abstentions? 2 Motion carries. 3 Thank you. 4 MR. NANCE: For your consideration, Item 5 No. 13, Petition No. 0561002 of Harrah's 6 Atlantic City Operating Company, LLC, is 7 requesting the issuance of a temporary casino 8 key employee license to Laurence Szapor 9 pursuant to NJSA 5:12-89(e) and to permit him, 10 pursuant to NJAC 19:43-2.6, to assume the 11 duties and exercise the powers of Director of 12 Security without first having been found 13 qualified. 14 MR. DeLUCRY: Good morning, 15 Commissioners. Richard DeLucry, Hill Wallack, 16 on behalf of Petitioner Harrah's. 17 VICE CHAIR HARRINGTON: Thank you. 18 MS. FLAHERTY: Yes. Commissioners, good 19 morning. 20 The Division undertook the necessary 21 preliminary review with regard to this 22 application, and as a result of that, we have 23 no objection to the issuance of the temporary 24 qualification and license. 25 Thank you. 14 ITEM NO. 13 1 VICE CHAIR HARRINGTON: Thank you. 2 MR. DeLUCRY: I would just like to say 3 that I'm very much appreciative of the 4 Commission's and Division's incredibly quick 5 turnaround on this application, which I think 6 you saw last Thursday. 7 VICE CHAIR HARRINGTON: We have a pretty 8 remarkable staff, so thank you. 9 COMMISSIONER EPPS: Madame Chair, I move 10 that we approve the petition and issue a 11 temporary casino key employee license to 12 Laurence Szapor and permit him to assume the 13 duties and exercise the powers of Director of 14 Security without first having been found 15 qualified. 16 VICE CHAIR HARRINGTON: Thank you. 17 Second? 18 COMMISSIONER SOMMELING: Second. 19 VICE CHAIR HARRINGTON: Thank you. 20 This is a roll call vote. 21 MR. NANCE: Commissioner Sommeling? 22 COMMISSIONER SOMMELING: Yes. 23 MR. NANCE: Commissioner Epps? 24 COMMISSIONER EPPS: Yes. 25 MR. NANCE: Commissioner Fanelle? 15 ITEM NO. 3 1 COMMISSIONER FANELLE: Yes. 2 MR. NANCE: Vice Chair Harrington? 3 VICE CHAIR HARRINGTON: Yes. 4 MR. NANCE: The motion will reflect -- 5 the record will reflect that the motion is 6 unanimous. 7 VICE CHAIR HARRINGTON: Thank you. 8 MR. Thank you. 9 VICE CHAIR HARRINGTON: Thank you. 10 MR. NANCE: Item No. 3, stipulation of 11 settlement and consent agreements. When I call 12 your name, please come forward, stand behind 13 this middle table, spreading across the room so 14 that you may be seen: Randall Pinkston, Jr., 15 John Derichie, Domenick Perry, Jr., Ulysses 16 Mack, Jr., Anthony Serafina, Jr., Clinton 17 Stokes, and Sherry Moore. 18 VICE CHAIR HARRINGTON: Thank you. 19 Can you please introduce yourself? 20 MR. DERICHIE: Yeah. John Derichie. 21 MR. PERRY: Domenick Perry. 22 MR. PINKSTON: Randall Pinskton. 23 MR. SERAFINA: Anthony Serafina. 24 VICE CHAIR HARRINGTON: Thank you. 25 Would any of you like to speak? You 16 ITEM NO. 3 1 don't have to. 2 FROM THE FLOOR: No. 3 FROM THE FLOOR: No, thank you. 4 VICE CHAIR HARRINGTON: Okay. Thank 5 you. 6 I'm sorry. Yes? 7 MR. BISCIEGLIA: Good morning, Vice 8 Chair, Commissioners. 9 The Division has nothing further and ask 10 that the stipulations be approved as submitted, 11 and I'll answer any questions. 12 Thank you. 13 VICE CHAIR HARRINGTON: Thank you, Mr. 14 Biscieglia. 15 COMMISSIONER SOMMELING: Madame Vice 16 Chair, I move that the stipulations be 17 approved. 18 COMMISSIONER EPPS: Second. 19 VICE CHAIR HARRINGTON: Thank you. 20 All in favor? 21 (Ayes.) 22 VICE CHAIR HARRINGTON: Opposed? 23 (No response.) 24 VICE CHAIR HARRINGTON: Abstentions? 25 (No response.) 17 ITEM NO. 4 1 VICE CHAIR HARRINGTON: Motion carries. 2 Thank you. Good luck. 3 FROM THE FLOOR: Thank you. 4 FROM THE FLOOR: Thank you. 5 MR. NANCE: Item No. 4, stipulation of 6 settlement in State versus Trump Marina 7 Associates, LLC. 8 Mr. Mamolen? 9 MR. MAMOLEN: Good morning, 10 Commissioners. 11 You have before you a stipulation of 12 settlement in a violation complaint case 13 wherein the Respondent, Trump Marina, admits to 14 several violations regarding the rules of the 15 game -- the game of -- authorized game of 16 blackjack, particularly with respect to a hand 17 once started and not being completed. The 18 parties have stipulated to a civil penalty of 19 $5,000. 20 Before you today is Mr. Cunningham for 21 the Respondent and Lane Stebbins for the 22 Division. 23 VICE CHAIR HARRINGTON: Thank you. 24 MR. STEBBINS: Vice Chair Harrington, 25 members of the Commission, in this particular 18 ITEM NO. 4 1 matter, as Mr. Mamolen said, it was an anomaly 2 in the dealing of a hand, and as a result of 3 that anomaly, there was somewhat of confusion 4 at the table and how to resolve the issue. 5 There's no indication of intentionality 6 here, nevertheless, it was an error in the 7 round of play which had some domino effect with 8 some other regulations that were violated. As 9 there was no intentionality, the agreed-upon 10 penalty of $5,000 is reflective of that, and I 11 would urge to you adopt the stipulation. 12 Thank you. 13 VICE CHAIR HARRINGTON: Thank you. 14 Proceed. 15 MR. CUNNINGHAM: Thank you. 16 The Trump Marina is familiar with the 17 terms of the stipulation and would recommend 18 that the Commission adopt it. 19 Thank you. 20 VICE CHAIR HARRINGTON: Thank you. 21 Are there any questions? 22 COMMISSIONER SOMMELING: I have no 23 questions, Madame Vice Chair. 24 VICE CHAIR HARRINGTON: Thank you. 25 Is there a motion? 19 ITEM NO. 5 1 COMMISSIONER EPPS: I move that we 2 approve the stipulation of settlement and 3 impose a civil penalty of $5,000 against Trump 4 Marina Associates, LLC, for violation of 5 Commission regulations regarding the rules of 6 the game. 7 COMMISSIONER SOMMELING: Second. 8 VICE CHAIR HARRINGTON: Thank you. 9 All in favor? 10 (Ayes.) 11 VICE CHAIR HARRINGTON: Opposed? 12 (No response.) 13 VICE CHAIR HARRINGTON: Abstentions? 14 (No response.) 15 VICE CHAIR HARRINGTON: Motion carries. 16 Thank you. 17 MR. STEBBINS: Thank you. 18 MR. CUNNINGHAM: Thank you. 19 MR. NANCE: Item No. 5, initial decision 20 in State versus John E. Stetz, Jr. 21 Mr. Mamolen? 22 MR. MAMOLEN: Commissioners, this is 23 before you. It's an initial decision of 24 Commissioner Epps in which he, acting as the 25 hearing examiner, found that Respondent was 20 ITEM NO. 5 1 disqualified pursuant to Sections 86c(1) c(2), 2 and g of the Casino Control Act and not 3 qualified pursuant to Sections 89b(2) and 90b. 4 Notwithstanding the disqualification and 5 the lack of Respondent's ability to establish 6 his affirmative qualifications, the hearing 7 examiner recommended that the disqualification 8 be waived as to the casino service employee 9 registration and, thereby, also enabled the 10 Respondent to permit noncredential employment. 11 I don't see any appearance on behalf of 12 Mr. Stetz. 13 Mr. Biscieglia is here on behalf of the 14 Division. 15 VICE CHAIR HARRINGTON: Thank you. 16 Mr. Biscieglia? 17 MR. BISCIEGLIA: Thank you. 18 As Mr. Mamolen stated, the Division 19 filed no objections. Based upon the evidence 20 presented at the hearing, it's the Division's 21 position that the initial decision -- the 22 findings in the initial decision were more than 23 appropriate in this matter. 24 And the Division will answer any 25 questions you may have. 21 ITEM NO. 5 1 Thank you. 2 VICE CHAIR HARRINGTON: Thank you. 3 Are there any questions? 4 COMMISSIONER SOMMELING: No questions, 5 Madame Vice Chair. 6 I move that we adopt the initial 7 decision finding John E. Stetz, Jr., 8 disqualified, thereby revoking his casino 9 employee license and waive the disqualification 10 pursuant to NJSA 5:12-91e to allow Mr. Stetz to 11 hold a -- Stetz to hold a casino service 12 employee registration and to work in a position 13 that does not require a license. 14 VICE CHAIR HARRINGTON: Thank you. 15 Is there a second? 16 COMMISSIONER FANELLE: Second. 17 VICE CHAIR HARRINGTON: Thank you. 18 All in favor? 19 (Ayes.) 20 VICE CHAIR HARRINGTON: Opposed? 21 (No response.) 22 VICE CHAIR HARRINGTON: Abstentions? 23 (No response.) 24 VICE CHAIR HARRINGTON: Motion carries. 25 Thank you. 22 ITEM NO. 6 1 VICE CHAIR HARRINGTON: Thank you, 2 Commissioner. 3 MR. NANCE: Item No. 6, application for 4 suspension in John Hilyard and John P. Shea, 5 III. 6 Miss DeLia? 7 MS. DeLIA: Good morning. 8 I just want to ask if anybody's here on 9 behalf of John Hilyard or John P. Shea? 10 (No response.) 11 MS. DeLIA: Doesn't seem like it. Mr. 12 Biscieglia is here on behalf of the Division. 13 Biscieglia. Excuse me. 14 MR. BISCIEGLIA: Thank you. 15 The Division would just add that in 16 regards to John Hilyard, he has been indicted 17 for one count of aggravated manslaughter, first 18 degree, and three other associated offenses. 19 He is scheduled for a status conference on 20 March 16th of 2010. 21 In regards to B, John Shea, he was 22 indicted for one count of computer theft, third 23 degree, and there's currently no further action 24 stated -- scheduled for this time. 25 Thank you. 23 ITEM NO. 7 1 VICE CHAIR HARRINGTON: Thank you. 2 Is there any questions? Any discussion? 3 COMMISSIONER SOMMELING: No questions, 4 Madame Vice Chair. 5 COMMISSIONER EPPS: I move that we grant 6 the Division's applications for suspension. 7 COMMISSIONER FANELLE: Second. 8 VICE CHAIR HARRINGTON: Thank you. 9 All in favor? 10 (Ayes.) 11 VICE CHAIR HARRINGTON: Opposed? 12 (No response.) 13 VICE CHAIR HARRINGTON: Abstentions? 14 (No response.) 15 VICE CHAIR HARRINGTON: Motion carries. 16 MR. NANCE: Item No. 7. 17 VICE CHAIR HARRINGTON: Thank you. 18 MR. NANCE: Consideration of forfeiture 19 orders in State versus Trump Taj Mahal 20 Associates, et al., and State versus Bally's 21 Atlantic City, et al. 22 Miss DeLia? 23 MS. DeLIA: For the Commission's 24 consideration there are two forfeiture orders 25 seeking money confiscated from underage 24 ITEM NO. 7 1 gamblers at Taj Mahal and Bally's Park Place to 2 be turned over to the Commission for 3 disposition. 4 Respective counsel for the two licensees 5 have provided letters advising that they have 6 no objection to the entry of a forfeiture order 7 and are not here today. 8 Each patron was provided with notice of 9 the forfeiture action and the opportunity to be 10 heard. They have either not responded or 11 stated that they were not contesting the 12 action. 13 The matter is now being presented to the 14 Commission for final action. 15 VICE CHAIR HARRINGTON: Thank you. 16 MR. STEBBINS: I have nothing to add. I 17 just would ask that the appropriate order be 18 entered. 19 Thank you. 20 VICE CHAIR HARRINGTON: Thank you. 21 Is there any questions or any 22 discussion? 23 COMMISSIONER SOMMELING: No questions, 24 Madame Chair -- Madame Vice Chair. 25 VICE CHAIR HARRINGTON: Okay. 25 ITEM NO. 7 1 COMMISSIONER EPPS: I'll -- 2 VICE CHAIR HARRINGTON: Is there a 3 motion? 4 COMMISSIONER EPPS: Due to their being 5 underaged on the date of their winnings, the 6 money theoretically won by the individuals 7 cited in the two complaints is forfeited -- or 8 I move that due to their age being -- due to 9 their being underaged on the date of winnings, 10 the money theoretically won by the individuals 11 cited in the two complaints be forfeited and 12 the respective casinos be required to remit the 13 forfeited money to the Commission for 14 appropriate disposition in accordance with NJSA 15 5:71.3(c). 16 VICE CHAIR HARRINGTON: Thank you. 17 Is there a second? 18 COMMISSIONER FANELLE: Second. 19 VICE CHAIR HARRINGTON: Thank you. 20 All in favor? 21 (Ayes.) 22 VICE CHAIR HARRINGTON: Opposed? 23 (No response.) 24 VICE CHAIR HARRINGTON: Abstentions? 25 (No response.) 26 ITEM NO. 8 1 VICE CHAIR HARRINGTON: Motion carries. 2 MR. STEBBINS: Thank you. 3 MS. DeLIA: Thank you. 4 MR. NANCE: Item No. 8, petition of 5 Sirius XM Radio, Inc., for successor to Sirius 6 Satellite Radio, Inc., for exemption from 7 casino service industry licensure. 8 MS. NAGENGAST: Good morning, Vice Chair 9 and Commissioners. 10 For your consideration is the petition 11 of Sirius XM Radio, Inc., seeking an exemption 12 from nongaming CSI licensure. 13 Dennis Daly is here on behalf of the 14 Petitioner and Lou Rogacki on behalf of the 15 Division. 16 VICE CHAIR HARRINGTON: Thank you. 17 MR. DALY: Good morning, Vice Chair, 18 Commissioners. 19 We have filed a petition that 20 demonstrates that the company, Sirius XM Radio, 21 clearly fits within the exemption guidelines of 22 Section 92(c)(3), and we urge you to grant the 23 exemption from CSI licensure. 24 VICE CHAIR HARRINGTON: Thank you. 25 MR. ROGACKI: Vice Chair, Commissioners. 27 ITEM NO. 8 1 The Division filed its letter on 2 November 5th recommending that the exemption be 3 granted. 4 I'll be happy to answer any questions. 5 VICE CHAIR HARRINGTON: Thank you. 6 Are there any questions? 7 COMMISSIONER SOMMELING: No questions, 8 Madame Vice Chair. 9 I would move, though, to grant the 10 petition of Sirius XM Radio, Incoporated, for 11 an exemption from non-gaming casino service 12 industry licensure pursuant to NJSA 13 5:12-92(c)(3)(ii) and subject to the conditions 14 in the order. 15 COMMISSIONER EPPS: Second. 16 VICE CHAIR HARRINGTON: Thank you. 17 All in favor? 18 (Ayes.) 19 VICE CHAIR HARRINGTON: Opposed? 20 (No response.) 21 VICE CHAIR HARRINGTON: Abstentions? 22 (No response.) 23 VICE CHAIR HARRINGTON: Motion carries. 24 Thank you. 25 MR. DALY: Thank you. 28 ITEM NO. 9 1 MR. ROGACKI: Thank you. 2 MR. NANCE: Item No. 9, readoption of 3 NJAC 19:54. 4 Miss Frank? 5 MS. FRANK: Good morning, Vice Chair and 6 Commissioners. 7 The proposed readoption of this chapter, 8 taxes, was exempted from the freeze on 9 rulemaking imposed by Governor Christie's 10 Executive Order 1. 11 If approved by you today, the readoption 12 would become effective with its filing with the 13 Office of Administrative Law tomorrow. It will 14 also appear in the April 5th, 2010, issue of 15 the New Jersey "Register." 16 VICE CHAIR HARRINGTON: Thank you. 17 Any questions or discussion? 18 COMMISSIONER SOMMELING: No questions, 19 Madame Vice Chair. 20 VICE CHAIR HARRINGTON: Is there a 21 motion? 22 COMMISSIONER EPPS: I move this for 23 approval for final readoption as published. 24 COMMISSIONER SOMMELING: Second. 25 VICE CHAIR HARRINGTON: Thank you. 29 ITEM NO. 10 1 All in favor? 2 (Ayes.) 3 VICE CHAIR HARRINGTON: Opposed? 4 (No response.) 5 VICE CHAIR HARRINGTON: Abstentions? 6 (No response.) 7 VICE CHAIR HARRINGTON: Motion carries. 8 MS. FRANK: Thank you. 9 VICE CHAIR HARRINGTON: Thank you. 10 MR. NANCE: Item No. 10, petition of 11 Atlantic City Pay Day Trust for permission to 12 terminate and dissolve the Atlantic City Pay 13 Day Trust. 14 Mr. Briliant? 15 MR. BRILIANT: Good morning, Madame 16 Acting Chair and Commissioners. 17 Mr. Mitnick, the attorney for the 18 Petitioner, has asked that the matter be heard 19 on the papers. Mr. Kimmel is here on behalf of 20 the Division. 21 I have circulated a draft resolution in 22 this matter. The game, the Pay Day game 23 itself, ended in October of 2009, and they're 24 simply now requesting permission to terminate 25 the trust that operated that game. 30 ITEM NO. 10 1 Thank you. 2 VICE CHAIR HARRINGTON: Thank you. 3 MR. KIMMEL: Good morning, Vice Chair 4 and members of the Commission. 5 I've read the draft resolution and do 6 not have any objection to its adoption and 7 encourage you to, in fact, adopt it. 8 Thank you. 9 VICE CHAIR HARRINGTON: Thank you. 10 Any questions or discussion? 11 COMMISSIONER SOMMELING: No questions, 12 Madame Vice Chair. 13 VICE CHAIR HARRINGTON: Is there a 14 motion? 15 COMMISSIONER EPPS: I will move that we 16 adopt the draft resolution and grant the 17 requested relief to terminate and dissolve the 18 Pay Day Trust in accordance with the provisions 19 of the Pay Day Trust agreement. 20 VICE CHAIR HARRINGTON: Thank you. 21 COMMISSIONER FANELLE: Second. 22 VICE CHAIR HARRINGTON: Second? 23 Thank you. All in favor? 24 (Ayes.) 25 VICE CHAIR HARRINGTON: Opposed? 31 ITEM NO. 11 1 (No response.) 2 VICE CHAIR HARRINGTON: Abstentions? 3 (No response.) 4 VICE CHAIR HARRINGTON: Motion carries. 5 Thank you. 6 MR. NANCE: Item No. 11, petition of 7 Resorts International Hotel, Inc., for 8 permission to transfer progressive slot 9 jackpots pursuant to NJAC 19:45-1.39(n). 10 Mr. Briliant? 11 MR. BRILIANT: Miss Wosnack is here on 12 behalf of Resorts and Mr. Kimmel on behalf of 13 the Division. 14 MS. WOSNACK: Good morning, Madame Vice 15 Chair and Commissioners. 16 I have nothing to add to the petition 17 other than to let you know I have the director 18 of slot operations, Christopher Downey, with me 19 in the event you have any other questions. 20 Thank you. 21 MR. KIMMEL: Good morning. 22 The Division does not have any objection 23 to the relief requested by the petition, and we 24 encourage you to grant that relief. 25 Thank you. 32 ITEM NO. 11 1 VICE CHAIR HARRINGTON: Thank you. 2 Any questions or discussion? 3 COMMISSIONER SOMMELING: No discussion, 4 Madame Vice Chair. 5 Move to adopt the draft resolution and 6 grant the relief requested by Resorts 7 International Hotel, Inc., to permit the 8 transfer of the progressive jackpots in suject 9 to compliance with the 30-notice requirement in 10 NJAC 19:45-1.39(n)2. 11 VICE CHAIR HARRINGTON: Thank you. 12 Second? 13 COMMISSIONER FANELLE: Second. 14 VICE CHAIR HARRINGTON: Thank you. 15 The motion has been moved and seconded. 16 All in favor? 17 (Ayes.) 18 VICE CHAIR HARRINGTON: Opposed? 19 (No response.) 20 VICE CHAIR HARRINGTON: Abstentions? 21 (No response.) 22 VICE CHAIR HARRINGTON: Motion carries. 23 MS. WOSNACK: Thank you very much. 24 MR. BRILIANT: Thank you. 25 VICE CHAIR HARRINGTON: Thank you. 33 ITEM NO. 12 1 All right. We're going to recess now 2 until 11:15, and we'll take up the next 3 matters. We'll continue with our agenda. 4 Thank you. 5 (A recess was taken from 10:52 to 11:23 6 a.m.) 7 VICE CHAIR HARRINGTON: Thank you. We 8 will reconvene. 9 MS. FAUNTLEROY: We will address the 10 least complicated of Item B, which is initially 11 the approval of the fees for the Conservator, 12 Justice Stein, for the period November 1 13 through December 31, 2009, in the amount of 14 15,883.12 and for the period January 1 through 15 January 31, 2010, in the amount of 13,081, for 16 a total request for approval in the amount of 17 28,964.12. 18 Sean Mack is here on behalf of the 19 Conservator. Mary Jo Flaherty is here on 20 behalf of the Division. 21 VICE CHAIR HARRINGTON: Thank you. 22 MR. MACK: Good morning, Vice Chair, 23 Commissioners. 24 You have Justice Stein's invoices and 25 his monthly reports for those periods. 34 ITEM NO. 12 1 I'd be happy to answer any questions you 2 may have. 3 VICE CHAIR HARRINGTON: Thank you. 4 MR. FLAHERTY: Vice Chair and 5 Commissioners, the Division's reviewed the 6 invoices and has also reviewed the reports that 7 were submitted by the Trustee/Conservator, and 8 based on that, we don't have any objection. 9 With regard to the payment, we would 10 just note that it should be subject to the 11 condition relating to the financial 12 requirements, the cash balance. 13 If you would like me to address the cash 14 balance on the record, I could do that as well. 15 VICE CHAIR HARRINGTON: Certainly. 16 MS. FLAHERTY: Dianna, would you like me 17 to do the cash balance right now on the record 18 or should we -- 19 MS. FAUNTLEROY: Sure. 20 MS. FLAHERTY: With regard to the 21 condition that would be satisfied with regard 22 to the balances available at Tropicana today 23 for the period for the next 30 days, the 24 balance is approximately $51.5 million. And 25 for the next 13 weeks, the low balance should 35 ITEM NO. 12 1 be approximately $47 million. 2 Thank you very much. 3 VICE CHAIR HARRINGTON: Thank you. 4 Are there any questions? 5 COMMISSIONER SOMMELING: No questions, 6 Madame Vice Chair. 7 COMMISSIONER FANELLE: No questions. 8 VICE CHAIR HARRINGTON: Is there -- 9 COMMISSIONER EPPS: Madame Vice Chair, I 10 will move approval of the invoices for Justice 11 Stein for November 1 through December 31, 2009, 12 in the amounts of $15,883.12 and for January 1 13 through January 31, 2010, in the amount of 14 $13,081. 15 COMMISSIONER SOMMELING: Second. 16 VICE CHAIR HARRINGTON: Thank you. 17 MS. FAUNTLEROY: And if you might add, 18 subject to the previous conditions expressed in 19 the prior-- 20 COMMISSIONER EPPS: Subject to the 21 conditions in the prior resolutions about the 22 balance. 23 COMMISSIONER: Very well. I'll second 24 that. 25 VICE CHAIR HARRINGTON: Thank you. 36 ITEM NO. 12 1 All in favor? 2 (Ayes.) 3 VICE CHAIR HARRINGTON: Opposed? 4 (No response.) 5 VICE CHAIR HARRINGTON: Abstentions? 6 (No response.) 7 VICE CHAIR HARRINGTON: Thank you. 8 MR. NANCE: For the record, I would just 9 like to identify this as Item 12, joint 10 petition, application of Tropicana Atlantic 11 City Corp. for interim authorization and other 12 relief. 13 VICE CHAIR HARRINGTON: Thank you. 14 Good morning. 15 MR. BROOKS: Good morning, ma'am. 16 VICE CHAIR HARRINGTON: So on behalf of 17 the Commission? 18 MR. DiGIACOMO: If counsel could enter 19 their appearances for the record. 20 MR. BROOKS: Good morning, Vice Chair 21 Harrington. Gil Brooks, firm of Duane Morris. 22 And with me today are Eric Frank and Pete 23 Visalli from Duane Morris. 24 VICE CHAIR HARRINGTON: Thank you. 25 MR. ADAMS: Vice Chair, Jack Adams, 37 ITEM NO. 12 1 Deputy Attorney General and Mary Jo Flaherty, 2 Deputy Attorney General for the Division of 3 Gaming Enforcement. 4 VICE CHAIR HARRINGTON: Thank you. 5 Due to unforeseen circumstances, only 6 four commissioners will be present to 7 adjudicate this matter today. Significantly, 8 Subsection 73(d) requires the affirmative vote 9 of four Commission members for the issuance of 10 interim casino authorization. So proceeding 11 today would require unanimity. Are the parties 12 prepared to proceed with this matter on that 13 basis? 14 MR. BROOKS: Vice Chair Harrington, on 15 behalf of the Applicant, Tropicana Atlantic 16 City Corp., we were prepared to proceed. 17 MR. ADAMS: So is the Division, Vice 18 Chair. 19 VICE CHAIR HARRINGTON: Thank you. And 20 I believe we are as well. 21 We almost had a crisis. I left my 22 glasses upstairs. This could have been a 23 problem. 24 (Laughter.) 25 VICE CHAIR HARRINGTON: The Commission 38 ITEM NO. 12 1 is considering today the request by Tropicana 2 Atlantic City Corp., which we'll refer to as 3 Trop AC, and Tropicana Entertainment, Inc., 4 which we'll refer to as Reorganized Tropicana, 5 for interim casino authorization to acquire and 6 operate the Tropicana Casino and Resort. 7 Because the Tropicana Casino will be held as 8 collateral for the $150 million credit 9 facility, Reorganized Tropicana is obtaining 10 to, in large part, repay its bankruptcy 11 debtor-in-possession loan. We are also being 12 asked to examine now the financial stability of 13 Reorganized Tropicana and its qualifying 14 entities. 15 ICA is essentially a form of temporary 16 qualification that allows an entity such as 17 Trop AC to acquire and control casino-related 18 assets without a plenary suitability review 19 while still assuring that it does not profit 20 from its investment in the casino industry 21 unless it ultimately obtains qualification. 22 To start the process, the ICA candidate 23 must submit a completed application, including 24 a trust agreement. The Commission examines who 25 has to qualify, and then we check for whether 39 ITEM NO. 12 1 the necessary application forms have been 2 filed. 3 In order to assist in evaluating the 4 statutory ICA criteria, the Commission will 5 hear testimony today. There are also a number 6 of exhibits that have been premarked. 7 I would ask if counsel has reviewed the 8 lists of exhibits available? 9 MR. NANCE: Yes. 10 VICE CHAIR HARRINGTON: Yes? 11 MR. BROOKS: Yes, Vice Chair Harrington, 12 we have. 13 VICE CHAIR HARRINGTON: And are you 14 satisfied that the list prepared accurately 15 identify the premarked exhibits? 16 MR. BROOKS: Yes, Vice Chair Harrington. 17 They do accurately describe the documents, and 18 we would seek to move those documents into 19 evidence. We do have a sealing request with 20 some of the documents, but subject to the 21 sealing request, we would seek to move those 22 documents into evidence. 23 VICE CHAIR HARRINGTON: Okay. 24 MR. ADAMS: Vice Chair, I have reviewed 25 the list of exhibits. Don't have any objection 40 ITEM NO. 12 1 with respect to those. 2 I would add, I believe, another Exhibit 3 will be D-1, which will be our report, but it 4 needs to be redacted or a proposed redacted 5 version. 6 VICE CHAIR HARRINGTON: Thank you. 7 COMMISSIONER EPPS: Madame Chair, I 8 would move Exhibits P-1 through 37 and D-1 9 subject to the sealing requests as noted. 10 VICE CHAIR HARRINGTON: Okay. Thank 11 you. 12 Does that require a second? 13 COMMISSIONER SOMMELING: Second. 14 VICE CHAIR HARRINGTON: Thank you. 15 All in favor? 16 (Ayes.) 17 VICE CHAIR HARRINGTON: Opposed? 18 (No response.) 19 VICE CHAIR HARRINGTON: Abstentions? 20 (No response.) 21 VICE CHAIR HARRINGTON: Motion carries. 22 Thank you. 23 With those exhibits in the record, 24 Petitioners urge us to find that that completed 25 their ICA filing. However, the Casino Control 41 ITEM NO. 12 1 Act essentially affords the Division a 90-day 2 opportunity to review a completed application, 3 but that period may be abbreviated whenever the 4 Division reports sooner. 5 Although the Division has reported here, 6 it is in my view, still entitled to a full 7 90-day review, especially given the recent 8 arrival of some materials. Nevertheless, do I 9 understand correctly the Division does not 10 object to this matter proceeding now? 11 MR. ADAMS: You understand correctly, 12 Vice Chair. We do not. 13 I have to make one comment, though. I 14 hope I never have to do it this way under this 15 time constraints ever again. 16 (Laughter.) 17 MR. ADAMS: And I hope every person out 18 there who might think about coming in for an 19 ICA application do not think that this sets any 20 kind of precedent as to how we will respond and 21 in what manner. 22 VICE CHAIR HARRINGTON: Thank you. 23 I think that is duly noted, and I take 24 liberty in suggesting that we would concur with 25 that. 42 ITEM NO. 12 1 Is that true? 2 MR. DiGIACOMO: No comment, Madame 3 Chair. 4 VICE CHAIR HARRINGTON: Okay. 5 Are there any other procedural matters 6 to be brought at this time? 7 (No response.) 8 VICE CHAIR HARRINGTON: No? Hearing 9 none, we are now set for opening statements 10 which the parties may waive and elect instead 11 to proceed directly to testimony. 12 Counsel? 13 MR. BROOKS: Madame Chair, I'll be 14 brief. You've summed up pretty adequately why 15 we're here today. We intend to present proofs 16 to the Commission. Hopefully, the proofs that 17 we introduce today will give the Commission a 18 feel for who the owners are going to be in 19 connection with -- should you approve this 20 transaction, allow the -- grant the interim 21 authorization and allow the transaction to be 22 approved, who the owners will be the Tropicana 23 Atlantic City Corp. or Trop AC, Trop AC Sub, 24 which will be the owner of the land underneath 25 the Tropicana Atlantic City complex, Tropicana 43 ITEM NO. 12 1 Entertainment, the holding company, and the 2 Icahn organization, which is the only holder in 3 Tropicana Entertainment which will have more 4 than five percent or five percent or more of 5 the equity securities when those issue as part 6 of the restructuring transactions in the 7 Delaware bankruptcy and that plan goes 8 effective. 9 So we intend to introduce that evidence. 10 We intend to introduce evidence with respect to 11 control, the prepared the board of directors in 12 those entities. We expect to introduce 13 evidence today regarding the officers and 14 management, and give a sense of how the 15 Tropicana AC or Trop AC intends to manage the 16 property should the ICA be granted, the interim 17 authorization be granted. And we also are 18 here, as you noted, to ask for a material debt 19 transaction approval in connection with the 20 credit facility, and we intend to introduce 21 proofs related to that request. 22 Given the nature of this transaction and 23 the fact that there's an existing 24 conservatorship and an existing ICA trust, we 25 are asking for certain relief related to that 44 ITEM NO. 12 1 circumstance. In particular, we're looking for 2 relief related to the ability of the 3 Conservator to transfer assets back to Adamar 4 briefly or a moment in time before the closing 5 takes place so that the assets can go through 6 the bankruptcy process. And we have some other 7 relief that we're seeking in connection with 8 the -- the existing circumstances in terms of 9 the conservatorship that exists at the property 10 and the ICA trustee. 11 We are proposing an ICA trust. We have 12 a document, an ICA trust agreement, that we'll 13 move into evidence today. I think you'll hear 14 testimony that the parties to that document are 15 prepared to execute it. So we're prepared to 16 move forward in connection with that document. 17 We also intend to present proofs today largely 18 by way of a proffer that we've already provided 19 and moved into evidence. It's now been moved 20 in evidence today with respect to the fact that 21 the requirements of Section 5:12-95.14(e) has 22 been satisfied in that the unqualified 23 Applicant will not receive a sum greater than 24 what he actually paid for, the property of 25 Tropicana Atlantic City and/or the value of 45 ITEM NO. 12 1 that asset as of the time the ICA trust was 2 activated in December of 2007. 3 Finally, we need -- and we're going to 4 ask for certain relief with respect to the 5 ability to serve liquor, alcoholic beverages at 6 the facility during the period of time that we 7 operate on an interim basis. 8 And we have already moved the documents. 9 We intend to introduce four witnesses here 10 today to testify before the Commission, and if 11 you would indulge me, I'd like to introduce the 12 witnesses to the Commission before they're 13 called. 14 VICE CHAIR HARRINGTON: Yes. 15 MR. BROOKS: I have here with me today 16 from the Icahn organization Hunter Gary. 17 THE WITNESS: Hello, Madame Chair. 18 MR. BROOKS: I have with me from 19 Tropicana Entertainment Scott Butera. 20 MR. BUTERA: Good morning. 21 MR. BROOKS: From Tropicana AC, Mark 22 Giannantonio. 23 MR. GIANNANTONIO: Good morning. 24 MR. BROOKS: And we have with us our ICA 25 trustee, Harold First. 46 ITEM NO. 12 1 With that, Madame Chair, we're prepared 2 to proceed. Thank you. 3 VICE CHAIR HARRINGTON: Thank you. 4 MR. ADAMS: I have only brief comments. 5 I would just reiterate what is basically 6 already in our report. The Division 7 anticipates that after the hearing today, you 8 will have everything you need to make your 9 decision with respect to the ICA application 10 and the various other applications that Mr. 11 Brooks just made reference to. 12 Thank you. 13 VICE CHAIR HARRINGTON: Thank you. 14 Mr. Brooks, please call your first 15 witness. 16 MR. BROOKS: Vice Chair, we call Hunter 17 Gary. 18 19 HUNTER CLARK GARY was duly sworn to 20 testify in this matter. 21 22 MR. NANCE: Please state your name for 23 the record. 24 THE WITNESS: Hunter Clark Gary. 25 MR. NANCE: Would you please spell your 47 ITEM NO. 12 1 name for the record. 2 THE WITNESS: H-u-n-t-e-r, space, 3 C-l-a-r-k, space, G-a-r-y. 4 MR. NANCE: Thank you. I was just 5 asking for your last name. 6 THE WITNESS: Thank you. 7 VICE CHAIR HARRINGTON: Thank you. 8 9 MR. BROOKS: Vice Chair Harrington, 10 before we begin, I just want to point out that 11 we are going to talk about the exhibits that 12 we've now moved into evidence and at times 13 refer to them with respect to the witnesses. 14 For purposes of the record, we will -- we will 15 have some of these exhibits that we will -- you 16 know, we will actually bring up on the board 17 there. But we have paper copies of all the 18 exhibits. We've given the commissioners 19 binders which have each of the documents, and 20 they are tabbed P-1 through P-37, so you have 21 those documents before you to make it easier 22 for you to follow along. 23 VICE CHAIR HARRINGTON: Okay. 24 MR. BROOKS: And we will, again, project 25 certain of the exhibits. The exhibits that 48 Hunter - direct - Brooks 1 we're projecting are exhibits that are 2 relatively short documents and are easy to 3 project. But we have given you paper 4 documents, and we'll refer to those. You have 5 them in your binders. I would hand the 6 individual documents to the witness and to the 7 Division and the Commission staff. 8 Thank you. 9 VICE CHAIR HARRINGTON: Thank you. 10 11 DIRECT EXAMINATION BY MR. BROOKS: 12 Q. Mr. Gary, could you give us the benefit 13 of your educational background? 14 A. Sure. I have my undergraduate degree 15 from Georgetown University and graduate studies at 16 Columbia Graduate School of Business. 17 Q. Could you provide the Commission with 18 the benefit of your professional background? 19 A. Yes. For the last seven years, I've 20 worked at Icahn Associates. I'm currently the Chief 21 Operating Officer of Icahn Sourcing, LLC, which is a 22 subsidiary of Icahn Associates and an affiliate of 23 Icahn Enterprises. And my responsibility is to 24 oversee various portfolio operations as well as 25 monitor cost efficiency opportunities across the 49 Hunter - direct - Brooks 1 portfolio in which Icahn has an interest. 2 Q. Are you familiar with the fact that the 3 Icahn organization has an investment in Atlantic City 4 that involves Tropicana Casino and Resort? 5 A. Yes. 6 Q. What's your understanding of that 7 investment? 8 A. It is my understanding that we own 9 approximately 46 percent of a debt facility which is 10 secured by Tropicana Atlantic City pursuant to a 11 bankruptcy auction process. The lenders have -- are 12 looking to exchange the debt for equity in a new 13 holding company, and that holding company will have 14 the asset Tropicana Atlantic City, and pursuant to a 15 purchase agreement, it's my understanding that we will 16 have common shares valued approximately 46 percent of 17 that holding company. 18 Q. And could you identify for the 19 Commission the holding company you're referring to? 20 A. Tropicana Entertainment. 21 Q. Now, can you identify what entity or 22 entities in the Icahn organization will be involved or 23 are involved with the credit facility you mentioned? 24 A. There are four entities. One is Icahn 25 Partners. The next is Icahn Partners Master. And 50 Hunter - direct - Brooks 1 then there's Icahn Partners Master II and Icahn 2 Partner Masters III. 3 Q. Are these the entities that will hold 4 the shares of Tropicana Entertainment, Inc., if the 5 Commission grants the approval here today and allows 6 the transactions to move forward? 7 A. Yes. 8 Q. Let me show you what we've marked into 9 evidence as Exhibit P-7. 10 VICE CHAIR HARRINGTON: Should we lower 11 the lights? 12 Q. If I could, Mr. Gary, let me direct your 13 attention to Page 3 of that exhibit. And you'll see 14 that that page is headed up "Tropicana Entertainment 15 Share Allocation." Do you see that. 16 A. Yes. For me it's Page 1. It shows Page 17 1 on this. 18 Q. We're -- 19 A. Okay. 20 Q. Yeah. I'm just asking you in terms of 21 the exhibit I gave you. Now, under the column marked 22 "Investor," do you see the Icahn funds listed as 23 investors? 24 A. Yes. 25 Q. And are those the funds that you 51 Hunter - direct - Brooks 1 testified about earlier to the Commission? 2 A. Yes. 3 Q. Take a look, if you would, at column -- 4 the column on Page 3 that is marked "Pre-petition Debt 5 Commitment." Do you see that column? 6 A. Yes. 7 Q. Is the amount set forth as corresponding 8 to the Icahn funds consistent with your understanding 9 of the investment of the Icahn funds in the credit 10 facility you referenced? 11 A. Yes. And for the Commission's 12 clarification, if you look -- I don't know if that 13 exhibit is up. If you want to show the exhibit. I 14 can point out exactly how it ads up to the 45.63 15 percent. 16 Q. The commissioners have the copies you're 17 looking at right there. 18 A. Okay. If you look at the very bottom, 19 there are a couple of entities, one that says Icahn 20 Partners, LP. Icahn Partners Master Fund II, LP, 21 Icahn Master Partner Fund, III, LP, Icahn Partner 22 Master, LP. If you see, you can look under the 23 percentage. You add 17.65, plus 7.48, plus 2.84, plus 24 17.66. It approximates a 46 percent, which is 25 reflected in this pie chart. 52 Hunter - direct - Brooks 1 Q. Now, if you could, look at the column on 2 that exhibit that's marked "Total Shares." Do you see 3 that column? 4 A. Yes. 5 Q. Now, with reference to that column, you 6 see that there is also a breakdown between New Jersey 7 shares and Delaware shares? 8 A. Correct. 9 Q. Do you have an understanding as to why 10 the share allocation is broken down that way? 11 A. Yes. With respect to New Jersey, I 12 think I mentioned that before, how the assets will be 13 rolled in, but it is my also understanding that the 14 land and perhaps a few other items, intellectual 15 property, is covered under a separate bankruptcy. So 16 there's two. One is the New Jersey bankruptcy, and 17 the second is a Delaware bankruptcy. And under the 18 Delaware bankruptcy, there are some assets which would 19 be listed here as Delaware shares versus New Jersey 20 shares. But the total shares is the aggregate amount 21 that will be -- that become of the final entity. 22 Q. And when those shares are issued, 23 Icahn -- the Icahn organization through the funds, the 24 Icahn funds, will hold approximately 46 percent of the 25 shares of Reorganized Tropicana? 53 Hunter - direct - Brooks 1 A. Correct. 2 Q. Do you know whether or not there will be 3 any other holder in terms of the lending group who 4 will have five percent or more of the shares of 5 Reorganized Tropicana? 6 A. No one, to my knowledge. 7 Q. Now, will you have any involvement with 8 Reorganized Tropicana? 9 A. Yes. I will serve on the board of 10 directors of Tropicana Entertainment. 11 Q. Are you familiar with the subsidiaries 12 created by Tropicana Entertainment in connection with 13 its proposed ownership of the Tropicana Atlantic City 14 complex? 15 A. Yes. There are two subsidiaries. And I 16 don't know if you have an exhibit for -- 17 Q. Let me show you what we've marked 18 for identifi -- or marked into evidence as Exhibit 19 P-1. 20 A. If you look under "Tropicana 21 Entertainment, Inc.," there's a wholly-owned 22 subsidiary entitled "Tropicana Atlantic City Corp. 23 (New Jersey)". That entity will have all the assets 24 from the New Jersey bankruptcy. And underneath it is 25 a wholly-owned subsidiary entitled "Tropicana AC Sub 54 Hunter - direct - Brooks 1 Corp.," and that entity will receive all the assets 2 from the Delaware bankruptcy. 3 Q. Let me shift your focus, if I could, 4 back to the Icahn funds. Could you provide the 5 Commission with a brief overview of the Icahn funds? 6 A. Sure. Do you have exhibits? With 7 the -- 8 Thank you. 9 Q. Just for purposes of the record, let me 10 show you what we've marked into evidence as Exhibit 11 P-8. 12 A. Thank you. 13 I'm happy, Madame Chair, you brought 14 your glasses because you definitely will need them for 15 this chart. 16 (Laughter.) 17 VICE CHAIR HARRINGTON: Yes, indeed. 18 A. So the four funds which I've mentioned 19 before, you can see primarily in green. It says: 20 Icahn Partners Master Fund II, Icahn Master Fund III, 21 Icahn Partners Master Fund, LP, and the Onshore Fund 22 is what I called before just Icahn Partners. 23 Q. And those are limited partnerships; 24 correct? 25 A. Correct. 55 Hunter - direct - Brooks 1 Q. And who were the general partners of 2 those limited partnerships? 3 A. Of -- if we start with the three Icahn 4 Partners Master Fund II and III, as well as Icahn 5 Partners is Icahn Offshore, LP. And the Icahn 6 Partners, LP, is Icahn Onshore, LP. If you look at 7 the -- for me it's blue on this but purple here right 8 above the four green items. 9 Q. Now, in terms of the fund limited 10 partnerships and in the context of the general partner 11 versus the limited partner, who controls those limited 12 partnerships? 13 A. How it rolls into Icahn Enterprises 14 holdings? 15 Q. No. In terms of the limited 16 partnerships themselves, are they controlled by the 17 general partners? 18 A. Correct. 19 Q. Aunt general partners have exclusive 20 control in terms of the decisions made in respect to 21 the limited partnerships? 22 A. Yes. 23 Q. Now, in terms of the general partners 24 you identified, they are also limited partnerships; 25 correct? 56 Hunter - direct - Brooks 1 A. Correct. 2 Q. And who are the -- who is the general 3 partner of those two limited partnerships? 4 A. If you look at Icahn Offshore, LP, the-- 5 it rolls into IPH, GP, LLC. 6 Q. And do you see "Icahn Capital" there? 7 A. Right. 8 Q. Icahn Capital. Is Icahn Capital -- does 9 Icahn Capital have a role with respect to the Onshore 10 Fund and the Offshore Fund limited partnership? 11 A. Correct. It is the general partner of 12 both. 13 Q. Now, with respect to those limited 14 partnerships, again, who controls the limited 15 partnerships? The general partner or the limited 16 partners? 17 A. The general partner. 18 Q. Now, with respect to Icahn Capital, 19 that's also a limited partnership; correct? 20 A. Correct. 21 Q. And who is the general partner of Icahn 22 Capital? 23 A. IPH, GP, LLC. 24 Q. And who is the sole member of IPH, GP, 25 LLC? 57 Hunter - direct - Brooks 1 A. Icahn Enterprises Holding, LP. 2 Q. And just backing up with reference to 3 the Icahn Capital limited partnership, again, who 4 controls that limited partnership? The general 5 partner or the limited partners? 6 A. The general partner. And that's Icahn 7 Enterprises, GP. 8 Q. Now, with respect to Icahn Enterprises 9 Holdings, again, that's a limited partnership; 10 correct? 11 A. Correct. 12 Q. And who is the general partner of that 13 limited partnership? 14 A. Icahn Enterprises, GP. 15 Q. And Icahn Enterprises, GP -- well, 16 strike that. 17 In the context of that limited 18 partnership, again, who controls the general 19 partnership? The general partner or the limited 20 partner? 21 A. The general partner. 22 Q. Now, Icahn Enterprises, GP, is a 23 corporation. Who owns that corporation? 24 A. Beckton Corp. 25 Q. And who owns Beckton Corp? 58 Hunter - direct - Brooks 1 A. Mr. Icahn. 2 Q. Now, as a consequence of this ownership 3 structure laid out here and you testified about, who 4 effectively is going to control the shares of 5 Tropicana Entertainment, Reorganized Tropicana, that 6 will be held by the Icahn funds? 7 A. The board of directors of Icahn 8 Enterprises, GP. 9 Q. And that's as a consequence of the 10 general partner's control of the various limited 11 partnerships? 12 A. Correct. 13 Q. So if a vote is put to the shareholders 14 of Tropicana Entertainment, Reorganized Tropicana, the 15 decision as to how the Icahn funds will vote will be 16 made by the board of Icahn Enterprises, GP? 17 A. Correct. 18 Q. Who is the board of Icahn Enterprises, 19 GP? 20 A. It consists of the following 21 individuals: Mr. Icahn, Mr. Intrieri, Mr. Nelson, Mr. 22 Leidersdorf, Mr. Wasserman, Mr. Meister, and -- I 23 think I have them all. 24 Q. That's it. 25 A. All right. 59 Hunter - direct - Brooks 1 Q. Do you know who appoints the board of 2 Icahn Enterprises, GP? 3 A. Beckton Corp. 4 Q. And Beckton is totally owned by Icahn; 5 correct? 6 A. Correct. 7 Q. Do you know who comprises the board of 8 directors of Beckton? 9 A. Mr. Icahn. 10 Q. He's the sole director? 11 A. Correct. 12 Q. Now, is Icahn Enterprises, GP, also the 13 general partner for another entity in the Icahn 14 ownership structure? 15 A. Yes. Icahn Enterprises, LP. 16 Q. Does Icahn Enterprises, LP, have a 17 relationship to Icahn Enterprise Holdings? 18 A. Yes. It has a 99 percent LP interest. 19 Q. And what -- could you provide the 20 Commission with a description of the business 21 activities of Icahn Enterprises? 22 A. Icahn Enterprises is a publicly traded 23 company on the New York Stock Exchange under ILP, and 24 it's a diversified holding company. We have home 25 textiles, real estate, automotive, manufacturing, so 60 Hunter - direct - Brooks 1 just a plethora of different interests. 2 Q. And its interests are traded on the New 3 York Stock Exchange? 4 A. Correct. 5 Q. Do you have an understanding of who the 6 dominant owner of those interests are? The interests 7 that are traded on the New York Stock Exchange? 8 A. Which entities? 9 Q. No. Is there an individual who has a 10 dominant ownership? 11 A. Oh, Mr. Icahn. 12 Q. And approximately how much of the units 13 or interests that are traded on the New York Stock 14 Exchange does Mr. Icahn own? 15 A. I can't say off the top of my head, but 16 if I had to estimate, I'd say the majority. 17 Q. Does 90 percent or better sound right? 18 A. Absolutely. 19 Q. Is there any other holder of the 20 interests of Icahn Enterprises who has five percent or 21 more of the units or interests that are traded on the 22 New York Stock Exchange? 23 A. None to my knowledge. 24 Q. Now, this is a somewhat complex 25 structure. Do you have an understanding as to why it 61 Hunter - direct - Brooks 1 is structured this way in terms of the ownership of 2 the funds? 3 A. Yes. Primarily driven for tax and legal 4 purposes. I know it looks a little complicated but, 5 hopefully, I've explained it. I think this chart is 6 very helpful about how it all rolls into each other. 7 Q. Let me show you what we've marked into 8 evidence as Exhibit P-9. 9 Could you describe the document for the 10 Commission? 11 A. Sure. It defines the different entities 12 that comprise of Icahn Partners, LP, and the Onshore 13 Fund. 14 Q. Now, who are the limited partners of 15 Icahn Partners? 16 A. Icahn Onshore, LP, Icahn Enterprises 17 Onshore/Offshore Investor, LLC, Koala Holding, LP, 18 Blomma Holding, LLC, Icahn Capital, LP, and then, I 19 believe, 130 or so individual entity investors. 20 Q. Now, with respect to the individual or 21 entity investors, will any of them have an indirect 22 ownership interest in the shares of Tropicana 23 Enterprises held by Icahn partners which equals or 24 exceeds one percent? 25 A. No. 62 Hunter - direct - Brooks 1 Q. Now, with reference to Page 3 of Exhibit 2 P-8 in evidence. That was the chart. If you turn to 3 Page 3 of that document, it has a structure above the 4 "Icahn Partners Entity." 5 A. Okay. 6 Q. Do you see that? 7 A. Yes. 8 Q. Who owns Icahn Enterprises 9 Onshore/Offshore investment? 10 A. (Reviewing.) Icahn Enterprise Holdings, 11 LP. 12 Q. And it's the sole member of Icahn 13 Enterprises Onshore/Offshore Investment? 14 A. Correct. 15 Q. Now, who is the sole limited partner of 16 Icahn Capital? 17 A. IPH, GP, LLC. 18 Q. IPH, GP, is the general partner; 19 correct? 20 A. Correct. 21 Q. Who is the sole limited partner of Icahn 22 Capital? 23 Let me put it to you this way. Is Icahn 24 Enterprise Holdings the sole limited partner of Icahn 25 Capital? 63 Hunter - direct - Brooks 1 A. Yes. 2 Q. Who owns Blomma Holding? 3 A. (Reviewing.) Blomma is owned by Koala. 4 Q. And Koala Holding is a limited 5 partnership? 6 A. Correct. 7 Q. Who is the general partner of Koala? 8 A. Koala Holding, GP, Corp. 9 Q. And who owns Koala Holding, GP? 10 A. Barberry Corp. 11 Q. Who owns Barberry? 12 A. Mr. Icahn. 13 Q. Now, what can you tell us -- there's a 14 lot of boxes there above Koala Holding, but what can 15 you tell us about the ownership of those various 16 limited partners of Koala Holding? 17 A. If you look at the percentages, I think 18 that gives the biggest story. Everything on the left 19 deals with primarily Mr. Icahn's personal investment 20 which, if you look, like Carl C. Icahn Foundation, 21 it's less than one percent, and everything on the 22 right deals with the general partner, Icahn 23 Enterprises. 24 Q. So Mr. Icahn owns every part of Koala 25 not owned -- not otherwise owned by the Carl Icahn 64 Hunter - direct - Brooks 1 Foundation? 2 A. Correct. 3 Q. Now, in terms of the general partner of 4 Icahn Partners and Icahn -- which is Icahn Onshore, 5 who are its owners? 6 A. (Reviewing.) Of Icahn, LP, Onshore 7 Fund? 8 Q. Yeah. Icahn Onshore, LP. 9 A. It's going to be several. There's -- we 10 start from, there's the 130 investors. Then you 11 have -- 12 Q. Now, with respect to -- I'm talking 13 about Icahn Onshore, which would be above the -- its 14 one of the -- it's the general partner of Icahn 15 Partners. See? It's the box roughly in the middle 16 there on the exhibit. 17 A. If you can point it out. 18 Q. Yeah. It's designated "Onshore GP"? 19 A. The pink on the right? 20 Q. No. It's the purple box in the middle. 21 Let me ask you this: Is Icahn Capital, 22 LP, a substantial holder of Icahn Onshore, LP? 23 A. Yes. 24 Q. And what percentage of it does it own, 25 of the Icahn does it own? 65 Hunter - direct - Brooks 1 A. Approximately 90 percent. 2 Q. Okay. And is ICN, GP, Corp. also a 3 limited partner in connection with Icahn Onshore, LP? 4 A. Yes. 5 Q. And who are the other limited partners? 6 A. Of IPH, GP, LLC? 7 Q. No. Onshore Icahn, LP. 8 A. You also have Icahn Enterprises 9 Holdings, LP. 10 Q. Well, there's a number in of individuals 11 referred there. As holding -- 12 A. Alexander Denner, Richard Elden, James 13 Gordon, Keith Meister, Robert Hurst, Vince Intrieri, 14 and -- 15 Q. Who are the only individuals in 16 connection with that ownership group that has more 17 than -- or who hold more than one percent of a limited 18 partnership interest in Icahn Onshore? Would that be 19 Mr. Intrieri and Mr. Meister? 20 A. Correct. 21 Q. Let me show you what we've marked into 22 evidence as Exhibit P-10. 23 Now, who are the limited partners of 24 Icahn Partners Master Fund, LP? 25 A. Icahn Offshore, LP. Icahn Enterprises 66 Hunter - direct - Brooks 1 Onshore/Offshore Investor, LLC, Icahn Cayman Partners, 2 LP, Icahn Fund, Ltd., Koala Holding, LP, and Blomma 3 Holding, LLC. 4 Q. And do you know who the general partner 5 is of Icahn Cayman Partners? 6 A. I believe it is Icahn Offshore, LP. 7 Q. And do you know what percentage interest 8 Icahn Cayman Partners has in Icahn Partners Master 9 Fund? 10 A. .5 percent. 11 Q. So less than one percent? 12 A. Correct. 13 Q. And what can you tell the Commission 14 about Icahn Funds, Ltd? 15 A. I believe, if I recall correctly, Icahn 16 Fund Ltd. is a Cayman Island corporation which has 17 various shareholders. These are the investors from 18 overseas. And they have no voting rights. And the 19 only vote is held by a separate entity. If I recall 20 correctly, I think it's a Cayman trust which is made 21 up of various attorneys that represent Mr. Icahn's 22 interests, and they have one. They can exercise their 23 votes towards this Cayman corporation. 24 Q. Now, do any of investors in Icahn Fund 25 have an indirect beneficial ownership interest in the 67 Hunter - direct - Brooks 1 shares of Tropicana Entertainment or Reorganized 2 Tropicana held by Icahn Partners Master Fund which 3 exceeds one percent? 4 A. No. 5 Q. Now, let's turn back, if we could, to 6 Exhibit P-8 and go to Page 4 of that exhibit, which 7 would be the next page, which deals with the ownership 8 of Icahn Partner Master Fund, LP. Do you see that? 9 A. Yes. 10 Q. Now, what could you tell the Commission 11 about the ownership of Icahn Offshore? Icahn 12 Offshore, LP. 13 A. It looks -- it's very similar to the 14 chart that you've seen before. You have the same 15 individuals, James Gordon, Alexander Denner, Vince 16 Intrieri. Vince Intrieri, Keith Meister make up the 17 larger LP of this GP. There's also ICM, GP, Corp. and 18 Icahn Capital which represents the majority of the 19 shares of Icahn Offshore. 20 Q. And who owns ICM, GP, Corp? Who's its 21 sole stockholder? 22 A. Icahn Capital, LP. 23 Q. And Icahn Capital, LP, has over 90 24 percent in terms of the ownership interest in Icahn 25 Offshore, LP? 68 Hunter - direct - Brooks 1 A. Correct. 2 Q. Let me show you what we've marked into 3 evidence as Exhibit P-15. 4 With reference to this exhibit, could 5 you identify for the Commission who the limited 6 partners are of Icahn Partners Master Fund II? 7 A. Icahn Offshore, LP, Icahn Partners 8 Master Fund II Feeder, LP, Icahn Fund II, Ltd., Koala 9 Holding, LP, and Blomma Holding, LLC. 10 Q. And just for the record, Icahn Offshore, 11 LP, is the general partner of that entity; correct? 12 A. Correct. 13 Q. Now, with respect to Icahn Partners 14 Master Fund II Feeder, who is its general partner? 15 A. Icahn Offshore, LP. 16 Q. How much of an interest does Icahn 17 Partners Master Fund II Feeder have in Icahn Partners 18 Master Fund II? 19 A. Less than one percent. 20 Q. Now, what can you tell the Commission 21 about Icahn Fund II, Ltd? 22 A. Icahn Fund II is also a Cayman 23 corporation with various shareholders. None of them 24 have voting rights. And it has a similar structure as 25 described before where there is a trust, and that 69 Hunter - direct - Brooks 1 trust can exercise voting rights on behalf of Mr. 2 Icahn, and it's managed by attorneys. 3 Q. Now, do any of the investors in Icahn 4 Fund II have an indirect beneficial ownership interest 5 in the shares of Reorganized Tropicana that will be 6 held by Icahn Partners Master Fund II that equals or 7 exceeds two percent? 8 A. No. 9 Q. Let me show you what we've marked into 10 evidence as Exhibit P-19. 11 Who are the limited partners of Icahn 12 Partners Master Fund III? 13 A. Icahn Offshore, LP, Icahn Funds III, 14 Ltd., Koala Holding, LP, and Blomma Holding, LLC. 15 Q. And, again, just for purposes of the 16 record, Icahn Offshore, LP, is the general partner of 17 that fund; correct? 18 A. Correct. 19 Q. Now, what can you tell the Commission 20 about Icahn Fund III? 21 A. Icahn Fund III is a Cayman corporation 22 that has various shareholders, various investors, none 23 of which have voting rights. And similar to the other 24 structures that I've described before, there's also a 25 trust entity which is managed by various attorneys who 70 Hunter - direct - Brooks 1 work on behalf of Mr. Icahn. 2 Q. Do any of the investors in Icahn Fund 3 III have an indirect beneficial ownership interest in 4 the shares of Tropicana Entertainment or Reorganized 5 Tropicana that will be held by Icahn Partners Master 6 Fund III that equals or exceeds two percent? 7 A. No. 8 Q. Now, one of the limited partners of 9 Icahn Fund is Icahn Management, LP; correct? 10 A. Correct. 11 Q. And I'm going to refer you again back to 12 Exhibit P-8 and, in particular, the second page of 13 Exhibit P-8. There's a lot on that page, and I would 14 refer you to the top part of it. 15 A. Okay. 16 Q. And I would ask you to identify for the 17 Commission the owners of Icahn Management. 18 A. Mr. Icahn and -- is the primary owner. 19 Q. And he has a 99 percent limited 20 partnership interest? 21 A. Correct. 22 Q. Who is the general partner of that 23 entity? 24 A. The general partner is CC Manager, LLC. 25 Q. And who owns CC Manager, LLC? 71 Hunter - direct - Brooks 1 A. Mr. Icahn. 2 Q. And is there any other limited partner 3 involved with Icahn Management, LP? 4 A. Keith Meister has less than a five 5 percent interest. 6 Q. Now -- 7 A. Actually, no. I believe it's less than 8 a one percent interest. 9 Q. Okay. Thank you. 10 Now, Icahn Management, is it also an 11 investor in the other two Icahn funds we talked about, 12 Icahn Fund and Icahn Fund II? 13 A. Yes. 14 Q. Now, are there any -- are there any 15 individual investors with respect to Icahn Partners -- 16 we've talked about the fact, I think you identified 17 approximately 130 individual investors. Are there any 18 individual investors who are qualifying in connection 19 with the application by Tropicana Entertainment for 20 interim authorization? 21 A. Yes. In addition to myself, Vince 22 Intrieri and Tina March. 23 Q. And you are investors in Icahn Partners? 24 A. Yes. 25 Q. Now, you've referenced Mr. Icahn's 72 Hunter - direct - Brooks 1 ownership -- or we've referenced Mr. Icahn's 2 ownership -- in a number in of these entities that we 3 went through. I'm going to refer you now to Exhibit 4 P-22 into evidence. 5 Now, with reference to P-22 in evidence, 6 could you identify for the Commission approximately 7 the indirect beneficial ownership interest Mr. Icahn 8 has in the shares of Tropicana Entertainment that will 9 be held by the four Icahn funds? 10 A. Twenty-seven percent. 11 Q. So of the 46 percent on an indirect 12 beneficial ownership basis, Mr. Icahn personally would 13 own 27 percent of those shares? 14 A. Correct. 15 Q. Now, are you familiar with the fact that 16 Tropicana Entertainment, Inc., has entered into a 17 credit agreement? 18 A. Yes. 19 Q. Is the Icahn organization and, in 20 particular, I would refer to Icahn Agency Services, 21 involved in any way with the credit agreement? 22 A. Yes, it is. Would you like me to speak 23 about the terms of the credit agreement or overall 24 dollar amounts? 25 Q. Well, let me ask you one other question 73 Hunter - direct - Brooks 1 in terms of the credit agreement. Are the Icahn funds 2 involved with the credit agreement? 3 A. Yes. 4 Q. How so? 5 A. They are the lenders of -- to get down 6 to the numbers, there's approximately 150 million in 7 senior secured loan that we're giving. And if you 8 separate the two, there's 20 million, which is, I'd 9 say, a hundred percent financed by the fund and 50 or 10 so percent -- probably it's above 50 -- by the fund in 11 Icahn Capital. 12 Q. Let me show you what we've marked into 13 evidence as Exhibit P-23. 14 And this is the credit agreement we're 15 talking about; correct? 16 A. Correct. 17 Q. Now, you referenced, I think, a $20 18 million revolving credit facility. Is that a revolver 19 in connection with this agreement? 20 A. Correct. 21 Q. And a hundred percent of that is being 22 provided by Icahn Funds? 23 A. A hundred percent is provided by Icahn 24 Funds. And the remaining of the 130 million is by the 25 Icahn Funds and Icahn Capital, and I think it's over 74 Hunter - direct - Brooks 1 50 percent. It's like 56 percent. 2 Q. Now, right after the signature pages in 3 connection with the credit agreement itself -- there's 4 not a page number for this, but it's right after the 5 signature pages. There's a schedule. Schedule 2.01. 6 Could you turn to that for me? 7 A. Mine's blank. 8 Q. It's right after the signature pages. 9 A. Yes. 10 Q. Do you have it there? 11 A. "Lenders and commitments"? 12 Q. Yes. Lenders and commitments. 13 A. Okay. 14 Q. Do you see that? 15 And does that -- that schedule contain 16 the information you've alluded to with respect to the 17 ownership of the -- or the amount of money committed 18 by the funds with respect to this credit facility or 19 credit agreement? 20 A. Correct. 21 Q. And these are the same funds that are 22 involved in terms of the ownership of the shares of 23 Tropicana Entertainment or Reorganized Tropicana? 24 A. Yes. 25 Q. So as I understand it, Icahn 75 Hunter - direct - Brooks 1 organization is not only going to own approximately 46 2 percent of Reorganized Tropicana, but it's also 3 arranged for this credit facility for Tropicana 4 Entertainment? 5 A. Correct. 6 Q. And it's providing the bulk of the funds 7 being committed in connection with the credit 8 facility? 9 A. Yes. 10 Q. Now, you mentioned that you're going to 11 be a board member of Tropicana Entertainment. Can you 12 describe for the Commission how and when the board 13 will begin operations? 14 A. Sure. Once the Commission approves and 15 votes on this matter, the next step is -- which we're 16 looking to do as quickly as possible is to consummate 17 the purchase agreement and close on the reorganization 18 plan. And once that is done, the board is created. 19 Q. And so the board will -- 20 A. The board assumes its duties on that 21 date. 22 Q. And it will be deemed appointed at that 23 point? 24 A. Correct. 25 Q. And how many members are going to be on 76 Hunter - direct - Brooks 1 the board of Tropicana Entertainment, Inc., with 2 respect to Reorganized Tropicana? 3 A. Seven. 4 Q. Would those seven members be yourself -- 5 strike that. 6 Will those seven members be Mr. Butera, 7 Scott Butera, Mr. Icahn, Michael Corrigan, Glenn 8 Christenson, Stephen Deckoff, and Jim Nelson? 9 A. Yes. 10 Q. Now, have any preliminary decisions been 11 made with respect to the officers and management team 12 for Tropicana Entertainment once the plan of 13 reorganization is affected? 14 A. Yes. We're planning on keeping things 15 as they are, and Mr. Butera will assist in the 16 oversight and the transition. 17 Q. And would that also include the 18 management team to works for Mr. Butera -- 19 A. Absolutely. 20 Q. -- at Tropicana Entertainment? 21 A. Yes. 22 Q. Now, you'll be on the board of directors 23 for Tropicana Atlantic City Corp. and Tropicana AC Sub 24 Corp; correct? 25 A. Correct. 77 Hunter - direct - Brooks 1 Q. And will the same board members I've 2 identified be on the board as well? 3 A. Yes. 4 Q. So that would be yourself, Mr. Butera, 5 Mr. Icahn, Mr. Corrigan, Mr. Christenson, Mr. Deckoff, 6 and Mr. Nelson; correct? 7 A. Correct. Yes. 8 Q. Now, assuming the Commission issues 9 interim authorization and allows a closing to take 10 place with respect to the amended and restated 11 purchase agreement that you referred to earlier in 12 your testimony, have any decisions been made with 13 respect to officers and management team for Tropicana 14 Atlantic City or Trop AC? 15 A. Yes. The lenders intend to keep the 16 management team as led by Mr. Mark Giannantonio as 17 well as any of his current officers or executive 18 management of the company. 19 Q. Would that also be -- will the same 20 management team also be involved with Trop Sub, 21 Tropicana AC Sub or -- 22 A. Correct. 23 Q. Could you share with the Commission 24 generally the Icahn organization's vision and 25 expectations with respect to Tropicana Atlantic City 78 Hunter - direct - Brooks 1 and the Tropicana investment overall? 2 A. Yes. I mean, we're very excited. As 3 I'm sure some of you know the history. This 4 corporation used to be part of a bigger group, and 5 once, with your approval, this transaction is 6 consummated, it will again benefit from being part of 7 a larger holding company with various casinos across 8 the country. 9 Q. Now, there's been a fair amount of 10 attention paid lately in the press and other venues in 11 connection with Icahn's interest or Icahn 12 organization's interest in the Trump casinos. Could 13 you just give us a brief overview of the current 14 status of that matter? 15 A. Sure. I believe we currently have 51 16 percent of the first lien debt of which is secured by 17 the three Trump casinos, and we have a right to 18 purchase one hundred percent. I believe the total is 19 somewhere 138 to 140 million of that entire facility, 20 and I believe right now it's in New Jersey bankruptcy 21 court. 22 Q. Are the hearings taking place right now? 23 A. Correct. 24 Q. Can you share with the Commission any 25 plans the Icahn organization might have if it's 79 Hunter - direct - Brooks 1 successful in connection with the matter before the 2 bankruptcy court in terms of Trump casinos? 3 A. I think it's too early to comment on 4 that other than we're prepared to make another 5 significant investment in Atlantic City. 6 Q. There's also been a fair amount of 7 reporting in connection with the acquisition by Icahn 8 of the Fountainbleu -- Foutnainbleu [sic] in Las 9 Vegas? 10 A. Yes. 11 Q. Could you tell the Commission a little 12 bit about that acquisition? 13 A. Yeah. I can't speak to any long-term 14 plan since we haven't made them yet, but I'm sure if 15 you'd like me to expand, I'd be happy to on the 16 property. And, as I'm sure you know, it's a -- 17 Q. Tell us a little bit about the property. 18 What's its current status? 19 A. It's unfinished, and it's the -- will be 20 the second largest casino in Las Vegas. 21 Q. Now, are you familiar with the fact that 22 the Icahn organization previously owned the Sands 23 Casino Hotel in Atlantic City? 24 A. Yes. 25 Q. And the Icahn organization sold the 80 Hunter - direct - Brooks 1 Sands? 2 A. To Pinnacle. 3 Q. All right. And now it seeks to re-enter 4 the Atlantic City gaming market. 5 A. Right. 6 Q. Correct? And could you talk a little 7 bit or explain a little bit to the Commission the 8 rationale, if you will, behind those decisions? 9 A. Sure. When we initially acquired the 10 Sands, it was in conjunction with other acquisitions, 11 Stratosphere, as well as Arizona Charlie's, two of our 12 other properties in Vegas and a casino in Laughlin. 13 Several years later we sold the properties and look 14 forward to partaking again in Atlantic City. 15 Q. And when you sold the Sands Casino 16 Hotel, was that a favorable transaction for Icahn? 17 A. Yes. 18 MR. BROOKS: Madame Chair -- or Vice 19 Chair Harrington, I didn't ask that many 20 questions with respect to the credit agreement 21 related to some of the details of that. I'm 22 going to save that for Mr. Butera. But with 23 that caveat, I have no further questions. 24 VICE CHAIR HARRINGTON: Okay. Thank 25 you. 81 Hunter - cross - Adams 1 MR. ADAMS: I just have a couple 2 questions. 3 VICE CHAIR HARRINGTON: Thank you. 4 5 CROSS-EXAMINATION BY MR. ADAMS: 6 Q. I just want to be clear with respect to 7 Icahn Enterprises, GP, Inc. 8 A. Okay. 9 Q. That's the company you testified about 10 with its board of directors having the control of the 11 voting shares that were going to be issued with 12 respect to the Reorganized Tropicana; is that correct? 13 A. Yes. 14 Q. Now, do you have any involvement in 15 Icahn Enterprises, GP, Inc., and if so, what is it? 16 A. My only involvement is to monitor 17 portfolio companies in which Icahn Enterprises, GP, 18 may have an investment and to propose cost efficiency 19 opportunities for those portfolio opportunities. 20 Q. You are not on the board of directors of 21 that company? 22 A. Correct. 23 Q. And you will have no input at all with 24 respect to the vote of Reorganized Tropicana's share 25 of that company will have the control of; is that 82 Hunter 1 correct? 2 A. Correct. 3 Q. Okay. Now, is it fair to state with 4 respect to Mr. Icahn's personal interest that we've 5 talked about, the 27 percent he has and the 46 6 percent, that the vote with respect to those shares 7 will, nonetheless, go through ultimately Icahn 8 Enterprises, GP, Inc? 9 A. Correct. 10 MR. ADAMS: All right. I have nothing 11 further. 12 VICE CHAIR HARRINGTON: Thank you. 13 Commissioners? Have any questions? 14 COMMISSIONER EPPS: I just have a couple 15 of quick questions that are Atlantic 16 City-centric, I guess. And first is a comment. 17 Well, you testified that once the 18 bankruptcy -- provided you get approval here 19 and once the Reorganized Trop comes out of the 20 Delaware bankruptcy, Trop AC will become part 21 of a bigger group. 22 THE WITNESS: Correct. 23 COMMISSIONER EPPS: But when it becomes 24 part of that bigger group, where does it stand 25 in the pecking order, if you will, as 83 Hunter 1 moneymakers in that big group? How big a 2 producer would the Atlantic City -- Trop AC be 3 in that group? 4 THE WITNESS: I'd say if I look at the 5 whole group right now, it's one of the largest. 6 COMMISSIONER EPPS: One of the biggest 7 producers. 8 THE WITNESS: Absolutely. 9 COMMISSIONER EPPS: Okay. And so the 10 question then becomes, will Trop AC be expected 11 to fund other -- you know, supply sources to 12 keep other places going? Certainly, hopefully, 13 not to the detriment of its own survival? Do 14 you understand my question? 15 THE WITNESS: I understand. 16 COMMISSIONER EPPS: I don't -- the fear 17 of siphoning money off to other places at the 18 risk of Trop AC because it is a moneymaker for 19 other less-profitable operations. 20 THE WITNESS: Understood. 21 COMMISSIONER EPPS: Could you talk about 22 that a little? 23 THE WITNESS: I think use of funds -- 24 let me break the world into maintenance, things 25 that has to be done, things are broken. You 84 Hunter 1 need to have certain regulatory expenses. 2 Those are no-brainers. Then you have 3 additional capital. And I think, at first, 4 we'll probably be conservative. But what's 5 most important is to have the management of the 6 company recommend to us and say here are 7 investments. And we can then review those 8 investments and see what is the return on the 9 investment? And I think Atlantic City, being 10 that it's the largest right now, looking at the 11 group, as well as the most profitable, it will 12 be in a good position to have additional 13 capital expenditures made here. 14 COMMISSIONER EPPS: All right. My 15 second question is for the Icahn investment 16 plan in general, I guess, if you will. I know 17 that the acquisition of Trop AC came by way of 18 owning the debt originally. 19 THE WITNESS: Right. 20 COMMISSIONER EPPS: Which was ultimately 21 converted to equity. And I guess the 22 investment in Trump sort of goes about the same 23 way, ultimately. Only holding the loans, 24 holding -- 25 THE WITNESS: Right. 85 Hunter 1 COMMISSIONER EPPS: Being lenders as 2 opposed -- 3 THE WITNESS: Okay. 4 COMMISSIONER EPPS: But, ultimately, 5 both would convert you then to owner/operators 6 in Atlantic City. Is this result because the 7 Icahn group is bullish on Atlantic City and 8 believes in the potential of Atlantic City? Or 9 is this strictly more of financial 10 opportunities to turn money over? 11 THE WITNESS: I can't speak that much to 12 the Trump since it's an ongoing hearing, but I 13 can definitely say we have a favorable view of 14 Atlantic City or else we wouldn't be making 15 these investments. There are a lot of 16 opportunities across the country. We think the 17 Trop is a fabulous property. And we think we 18 have excellent management. And there are a lot 19 of synergies being part of another group. We 20 look at reservations, marketing so it can even 21 be better than what it is now. 22 COMMISSIONER EPPS: And I'll tell you, 23 I'm -- I didn't know what your answer was going 24 to be, but I'm glad that your answer was what 25 it was because in the last few years, we've had 86 Hunter 1 a lot of doom-and-gloom reports financially and 2 the gaming industry and the market here, and 3 whatever. And it is encouraging -- at least I 4 suspected it would be encouraging, and you 5 answered that way, that investors still see 6 Atlantic City as a -- as a good investment and 7 a place to invest and do business. And it 8 seemed to be confident in the potential of the 9 future. So I guess that says favorable things 10 for what we can look forward to in this market. 11 Or at least it suggests from your answer that 12 it does. Much -- so it seems to bring some 13 light, at least at the future, that we can see 14 to this market and investment opportunities, to 15 potentials to this market. So that's 16 encouraging. That was my question. 17 That's all I have. 18 THE WITNESS: Commissioner, if I may -- 19 VICE CHAIR HARRINGTON: Thank you. 20 THE WITNESS: -- elaborate. You're 21 absolutely correct. The current market 22 situation is terrible. Unemployment is high. 23 Housing is not getting better. We're getting 24 plummeted by bad weather which also doesn't 25 help revenue. But our hope -- and this is why 87 Hunter 1 we make these types of investments -- is times 2 will change. And Atlantic City should become a 3 great mecca for hotel casinos. 4 COMMISSIONER EPPS: It's encouraging. 5 Thank you. 6 VICE CHAIR HARRINGTON: Commissioner 7 Sommeling? 8 COMMISSIONER SOMMELING: I'm encouraged 9 by what you say, and I'm thinking myself that 10 if the need arises where the Icahn corporation 11 needed to spend money in Atlantic City to 12 improve what is a very competitive property -- 13 Tropicana has always been a competitive 14 property -- to put money back into Atlantic 15 City, to do whatever it has to do to sustain 16 the operations and build up profitability of 17 the Tropicana property. Has that been part of 18 your discussion? 19 THE WITNESS: We haven't spoken about 20 any particular capital expenditures at this 21 point in time. The process, how it would 22 normally go, is management will put together a 23 budget and divide the world. As I described 24 before, what are things we must have to sustain 25 the property? And then what are additional 88 Hunter 1 improvements that could benefit the property 2 and the customer's experience? And then we 3 look at each one of those and see what makes 4 the most sense to do. 5 COMMISSIONER SOMMELING: Just along the 6 same lines, just in terms of what you've just 7 said, has there been any discussion -- I have 8 to ask this question. 9 THE WITNESS: I know. 10 COMMISSIONER SOMMELING: With respect to 11 if the need arises and the reason why the need 12 would arise -- I mean, the response to the need 13 would arise to downsize the company? Has there 14 been any discussion along those lines? 15 THE WITNESS: We have not had any 16 discussions about reorganization at this time. 17 COMMISSIONER SOMMELING: I ask that 18 question because Mr. Icahn has built up 19 properties in the past. 20 THE WITNESS: Right. 21 COMMISSIONER SOMMELING: Especially out 22 in Las Vegas. 23 THE WITNESS: Correct. 24 COMMISSIONER SOMMELING: And I was 25 wondering if there's some kind of scheme in the 89 Hunter 1 background. Because, again, I've always known 2 Tropicana to be a competitive property. 3 THE WITNESS: Well, our goal -- I mean, 4 this is why we're good at what we do -- is to 5 turn companies around. So the first step is to 6 make detailed assessment. And if things in the 7 environment change, then we need to be nimble 8 and act appropriately. 9 COMMISSIONER SOMMELING: Last question I 10 have. I listened to you mention marketing and 11 advertising before. Have you conceived a plan 12 of marketing and advertising that's different 13 or that expands the current operations and 14 marketing and advertising at Trop? 15 THE WITNESS: To my knowledge, we have 16 not looked at that at this detail yet. 17 COMMISSIONER SOMMELING: That's all I 18 have. 19 VICE CHAIR HARRINGTON: Thank you. 20 Commissioner? No? 21 I simply want to echo the enthusiasm and 22 optimism that you bring us. 23 Thank you. 24 THE WITNESS: Thank you. 25 MR. BROOKS: Nothing on redirect, Vice 90 Hunter - recross - Adams 1 Chair Harrington. 2 VICE CHAIR HARRINGTON: Thank you. 3 MR. ADAMS: I just have one question 4 with respect to what we were just talking about 5 with Commissioner Sommeling. 6 VICE CHAIR HARRINGTON: Yes. 7 8 RECROSS-EXAMINATION BY MR. ADAMS: 9 Q. Have you had any discussions, or have 10 you particularly identified any cost-saving 11 opportunities with respect to the Atlantic City 12 property at this point? 13 A. I think we can enter into those 14 discussions once the transaction fully closes. But, 15 clearly, there will be synergies. I mean, just look 16 across the basic items, food and beverage, marketing, 17 reservations. If you have multiple properties buying 18 the same thing, you definitely have much more scale if 19 they didn't in centralized fashion. 20 MR. ADAMS: Thank you. 21 VICE CHAIR HARRINGTON: Thank you. 22 MR. ADAMS: No further questions. 23 MR. BROOKS: Nothing further, 24 Commissioner Harrington. 25 VICE CHAIR HARRINGTON: Thank you. 91 ITEM NO. 12 1 You can step down. 2 THE WITNESS: Thank you. 3 MR. BROOKS: I'm prepared to call Mr. 4 Butera. He would be a little bit -- take a 5 little bit of time. I don't know if you want 6 to break for lunch, but we're prepared to go 7 forward with Mr. Butera. 8 VICE CHAIR HARRINGTON: We'll do -- 9 we'll hear from Mr. Butera. 10 Thank you. 11 MR. BROOKS: Thank you, Vice Chair 12 Harrington. Call Scott Butera. 13 14 SCOTT C. BUTERA was duly sworn to 15 testify in this matter. 16 17 MR. NANCE: Please spell state your name 18 for the record. 19 THE WITNESS: Scott Charles Butera. 20 B-as-in-boy-u-t-e-r-a. 21 MR. NANCE: Thank you. 22 THE WITNESS: And thank you, Vice Chair 23 Harrington, Commissioner Fanelle, Epps and 24 Sommeling. 25 Actually, Mr. Brooks, before we proceed, 92 Butera - direct - Brooks 1 I would just like to start by offering my 2 deepest sympathies for Chair Kassekert. I 3 always look forward to seeing Chair Kassekert, 4 and I hope that she can find comfort in what 5 must be a very difficult for time for her and 6 her family. 7 VICE CHAIR HARRINGTON: I appreciate 8 that. 9 MR. BROOKS: Thank you, Mr. Butera. 10 11 DIRECT EXAMINATION BY MR. BROOKS: 12 Q. Mr. Butera, could you provide the 13 Commission with benefit of your educational 14 background. 15 A. Yes. I earned my undergraduate degree 16 from Trinity College in Hartford, Connecticut, and 17 then earned a master's of science in accounting and 18 master's of business administration in economics from 19 New York University's School of Business. 20 Q. Could you provide the Commission with 21 the benefit of your professional background. 22 A. Yes. I spent the first 15 years of my 23 career as an investment banker on Wall Street, 24 servicing the gaming, leisure, hospitality, and real 25 estate businesses. And then realized I was in banking 93 Butera - direct - Brooks 1 business for so long because I loved the operations 2 and loved the business and went on to be President and 3 Chief Operating Officer of what is now Trump 4 Entertainment from 2002 to 2005. 5 After that I went on to work for a large 6 development company in Las Vegas, Nevada, called the 7 Cosmopolitan Resort, where I was the Chief Operating 8 Officer prior to becoming the President of Tropicana 9 Entertainment in March of 2008. 10 Q. And you are currently the President and 11 Chief Executive Officer of Tropicana Entertainment? 12 A. That is correct. And also serve on the 13 Board of Managers. 14 Q. Now, Tropicana Entertainment, LLC, 15 previously filed a bankruptcy petition in the United 16 States District Court of Delaware; correct? 17 A. That is correct. 18 Q. And has the Delaware Bankruptcy Court 19 approved a plan of reorganization for Tropicana 20 Entertainment? 21 A. That is correct. Our plan went 22 effective in May of this year. 23 Q. Now, you testified at length about that 24 plan at the July 27th, 2009, hearing conducted by the 25 Commission. And you also provided us with a 94 Butera - direct - Brooks 1 certification for the November 12th, 2009, hearing 2 conducted by the Commission, so I don't want to go 3 back over areas that we've already covered. But could 4 you provide the Commission with an update of recent 5 events related to the Tropicana Entertainment 6 reorganization? 7 A. Yes. We've gotten regulatory approval 8 in the four other states in which we operate, which 9 would be Nevada, Louisiana, Mississippi, and Indiana, 10 subject to our plan going effective. We also have 11 filed and have gotten effective our Form 10 document, 12 which makes us a public company for reporting purposes 13 under the Securities and Exchange Act of 1934. So 14 we'll be functioning as a public company from here on 15 out, certainly from a reporting standpoint. So filing 16 10-Ks and Qs and Ks and things of that nature. 17 We've also made further improvements and 18 revisions to our management team. We've added 19 seasonal personnel at each of our properties at the 20 general manager level and senior marketing and finance 21 levels at those properties. So I think a fair amount 22 of progress has been made. 23 In addition, I think the last time I 24 testified, we were still operating 200 slot machines 25 for Park Cattle at Tahoe Horizons as of October 2009. 95 Butera - direct - Brooks 1 That has been officially turned over to Columbia 2 Sussex and Park Cattle. We no longer have any 3 involvement in that entity. 4 Q. Now, has there been any recent 5 developments besides that, and I appreciate you 6 talking about that again, and that was the subject 7 matter of your November certification; is that 8 correct? 9 A. That is correct. 10 Q. Now, has there been any other recent 11 developments with respect to Bill Yung? And in that 12 regard, let me show you what we've marked into 13 evidence as P-36. 14 A. Yes. 15 Yes. As you know, there is a litigation 16 trust that exists. We, as management, don't operate 17 that trust, but it is managed by certain people 18 affiliated with the company. And that trust went and 19 filed a former complaint against Mr. Yung highlighting 20 gross negligence and breach of contract as to the base 21 points. 22 Q. Now, Mr. Butera, if the Commission 23 grants the relief that we're seeking here today, will 24 Tropicana Entertainment be in a position to consummate 25 the plan of reorganization? 96 Butera - direct - Brooks 1 A. Yes, it will. 2 Q. Now, when the plan goes effective, the 3 holding company that will merge for the assets, the 4 Tropicana Entertainment assets, will be Reorganized 5 Tropicana or Tropicana Entertainment, Inc.; correct? 6 A. That is correct. 7 Q. And what will your relationship be to 8 that entity? 9 A. I will be its President, Chief Executive 10 Officer, and I will also serve on its board of 11 directors. 12 Q. Now, are you also going to be on the 13 board of directors for Tropicana Atlantic City Corp. 14 and Tropicana AC Sub Corp? 15 A. Yes. 16 Q. Now, to the best of your knowledge, have 17 any plans been made regarding officers and a 18 management team for Tropicana Entertainment, Inc? 19 A. Yes. We've spent a good deal of time 20 throughout the restructuring process building our 21 management team, and I believe that we have a very 22 strong management team at Tropicana Entertainment 23 which we'll finally be able to coordinate with the 24 management team at Tropicana AC. 25 To highlight a few professionals, our 97 Butera - direct - Brooks 1 Chief Finance Officer is a gentleman named Lance 2 Millage. Lance has a lot of experience here in 3 Atlantic City, worked for Colony Capital and Resorts 4 at their properties. And our head of human resources 5 is a gentleman named Cass Palmer. Cass is a 6 25-year-plus executive in HR in the gaming industry, 7 worked in Boyd Corporation and also has familiarity 8 with Atlantic City from his time in Boyd. Our general 9 counsel is a gentleman named Marc Rubinstein, who was 10 general counsel to Wynn Resorts, and prior to that 11 Park Place and Caesars Entertainment. And our chief 12 compliance officer is a gal named Laura Westheimer, 13 who spent a long time in compliance and accounting in 14 a high-gaming corporation. 15 Q. Now, who's your -- do you have somebody 16 in the security surveillance position at Tropicana 17 Entertainment? 18 A. Yes. His name is Charles Barry. 19 Charles spent most of his career in security and 20 surveillance with Hilton Corporation and their 21 properties around the world, and most notably Las 22 Vegas. 23 Q. Is there somebody presently involved 24 with the audit function? 25 A. Yes. We -- with regard to internal 98 Butera - direct - Brooks 1 audit, which is something that we take very seriously, 2 we have two gentlemen that are currently running our 3 internal audit function. But, more importantly, we've 4 identified and hired or are about to hire a gentleman 5 named Michael Mann, who will become our head of 6 internal audit. Michael spent over 25 years in 7 accounting and internal audit and was very 8 instrumental in setting up the internal audit function 9 and 404 compliance function at Harrah's Entertainment, 10 and he'll be joining us very shortly. 11 Q. To the best of your knowledge, will the 12 Tropicana Entertainment or Reorganized Tropicana board 13 of directors have an audit committee? 14 A. Yes, it will. 15 Q. And do you have an understanding as to 16 which of the directors of Tropicana Entertainment will 17 be members of the audit committee? 18 A. Yes. There will be three. There will 19 be Michael Corrigan, who currently sits on Tropicana 20 Entertainment's Board of Managers and currently our 21 Chairman of Internal Audit, as well as Glenn 22 Christenson and James Nelson. 23 Michael Corrigan -- give some background 24 on each individual. Mike Corrigan spent a lot of his 25 career in accounting, in financing, ran the worldwide 99 Butera - direct - Brooks 1 global entertainment practice for 2 PricewaterhouseCoopers and also served as the Chief 3 Financial Officer for MGM Studios during their public 4 offering and is very skilled in accounting and audit. 5 Again, Mr. Christenson is a very 6 long-time Chief Financial Officer for Stations Casino, 7 which is one of the more prominent locals casino 8 operators in Las Vegas so, obviously, very familiar 9 with accounting and internal audit. 10 And James Nelson who also runs his own 11 investment banking called Eagles Cliff. He is 12 involved in internal audit function with Icahn 13 Enterprises. 14 So all three individuals are very 15 seasoned finance individuals that have a good deal of 16 understanding for audit and accounting. 17 Q. With that background in mind, let me ask 18 you some specific questions regarding the three. Is 19 either Mr. Christenson, Mr. Corrigan, or Mr. Nelson a 20 present or former employee of Tropicana Entertainment? 21 A. No. The only one would be Michael 22 Corrigan is a current member of the Board of Managers 23 but not an employee. 24 Q. No. And that would be true of the 25 affiliated companies with Tropicana Entertainment? 100 Butera - direct - Brooks 1 A. That's correct. 2 Q. Has there been any decision made yet in 3 terms of compensation for the board members of 4 Tropicana? 5 A. There has not. 6 Q. Have there been any discussions about 7 possible compensation amounts? 8 A. Yeah. I would say the -- you know, our 9 current board members make in the -- make $150,000 a 10 year. I would expect that the compensation for the 11 board of managers would be fairly modest. 12 Q. Will there be additional compensation 13 for the members of the audit committee? 14 A. That hasn't been decided yet, but if 15 there is, that wouldn't be any anything outrageous. 16 Q. You've had experience in boards in terms 17 of the gaming companies; is that correct? 18 A. That's correct. 19 Q. Given your experience, would it be your 20 expectation, that the compensation that Mr. Christian, 21 Mr. Corrigan, and Mr. Nelson will receive for being 22 board members would affect their ability to exercise 23 independent judgment? 24 A. No. No. Not at all. While I think the 25 internal audit job involved will be very important to 101 Butera - direct - Brooks 1 each of them, I don't think compensation will be a 2 factor. 3 Q. Do you know of any relationship that 4 either Mr. Christenson, Mr. Corrigan, or Mr. Nelson 5 has with Tropicana Entertainment or Tropicana Atlantic 6 City Corp. which would affect or exercise an 7 independent judgment on matters that come before the 8 audit committee? 9 A. No. 10 Q. Do you know whether Mr. Christenson, Mr. 11 Corrigan, or Mr. Nelson have a long-standing 12 relationship with Tropicana Entertainment or Tropicana 13 Atlantic City Corp. or any of the affiliated 14 companies? 15 A. No. Other than Mr. Corrigan's current 16 membership on the board of Tropicana Entertainment, 17 there is none. 18 Q. And how long has Mr. Corrigan been on 19 the Board of Managers of Tropicana Entertainment? 20 A. Approximately a year and a half. 21 Q. Will Mr. Christenson, Mr. Corrigan, or 22 Mr. Nelson have any relationship with Tropicana 23 Entertainment or Tropicana Atlantic City other than 24 being directors of the companies that you've 25 referenced? 102 Butera - direct - Brooks 1 A. No. No. We don't do any business with 2 any of their other organizations. 3 Q. Okay. Do you have any understanding as 4 to whether or not the -- being on the board and the 5 compensation they receive for being on the board would 6 be a material portion of their livelihood, Mr. 7 Christenson, Mr. Corrigan, and Mr. Nelson? 8 A. No. All three are very successful 9 individuals, and this is not something that would 10 impact them materially from a financial standpoint. 11 Q. Do you know whether either of the three, 12 Mr. Christenson, Mr. Corrigan, or Mr. Nelson have any 13 cross-affiliations through corporate directorships 14 with anybody involved with Tropicana Entertainment or 15 Tropicana Atlantic City Corp? 16 A. No. 17 Q. Do you know whether or not Mr. 18 Christenson, Mr. Corrigan, or Mr. Nelson have any 19 close familial ties to the senior management at 20 Tropicana Entertainment or Tropicana Atlantic City 21 Corp? 22 A. No. Not to my knowledge. 23 Q. Will the respective firms that you 24 mentioned in connection with Mr. Christenson, Mr. 25 Corrigan, and Mr. Nelson receive compensation for 103 Butera - direct - Brooks 1 professional services from Tropicana Entertainment? 2 A. No. 3 Q. Will any of the individuals, Mr. 4 Christenson, Mr. Corrigan, or Mr. Nelson, receive 5 compensation for professional services from Tropicana 6 Entertainment? 7 A. No. 8 Q. Will Mr. Christenson, Mr. Corrigan, and 9 Mr. Nelson be owners of Tropicana Entertainment? 10 A. Not in any material way. There may be 11 an option or share allocation to some of the board 12 members, but not in any material way. And they are 13 currently not owners now. 14 Q. Do you know if Mr. Christenson, Mr. 15 Corrigan, or Mr. Nelson are employees of the Icahn 16 organization? 17 A. I do know that Mr. Nelson serves on the 18 board of Icahn Enterprises, GP. Other than that, no. 19 Q. Okay. Do you know whether or not Mr. 20 Christenson, Mr. Corrigan, or Mr. Nelson, are employed 21 by any of the other lenders involved with Tropicana 22 Entertainment, the lenders that will receive shares of 23 Tropicana? 24 A. It is my understanding that they are 25 not. 104 Butera - direct - Brooks 1 Q. Were all the factors that we just 2 discussed considered in selecting Mr. Christenson, Mr. 3 Corrigan, or Mr. Nelson, for the audit committee? 4 A. Absolutely. As well as their financial 5 expertise. 6 Q. Do you know whether or not the Tropicana 7 Entertainment audit committee will have a charter? 8 A. Yes, it will. 9 Q. Let me show you what we've marked into 10 evidence here today as P-28. 11 Could you identify this document for the 12 Commission? 13 A. Yes. This is the audit committee 14 charter, board of directors. 15 Q. Now, are you familiar with the 16 requirements of the Commission with respect to the 17 supervisors of the surveillance and audit departments 18 at Tropicana Atlantic City? 19 A. Absolutely. 20 Q. And could you provide the Commission 21 with your understanding of the Commission's 22 requirements in that regard? 23 A. Yes. I think fundamentally it's 24 critical that anyone involved in internal audit or 25 surveillance report to an independent audit committee 105 Butera - direct - Brooks 1 or the licensee's boards of directors or senior 2 individuals that serve in such capacities that 3 ultimately review reports of independent audit 4 committee or board of the directors. 5 Q. Do you know whether or not the 6 Commission has imposed any requirements with respect 7 to hiring or termination or salary? 8 A. Yes. Hiring and determination of salary 9 all need to be controlled by that independent audit 10 committee or by the board of directors of the 11 licensee. 12 Q. How about, has the Commission imposed 13 any requirements with respect to reporting on matters 14 of policy, purpose, responsibility, authority? Do you 15 know whether or not there's any requirements imposed 16 in that regard? 17 A. There are requirements, and we adhere to 18 all of those requirements as stated. 19 Q. Now, has the proposed charter for 20 Tropicana Entertainment, P-28 in evidence, accounted 21 for those requirements? 22 A. Yes. 23 Q. And could you provide the Commission 24 with the details of how Tropicana Entertainment 25 through the charter has determined to comply with the 106 Butera - direct - Brooks 1 Commission requirements? 2 A. Yes, I can. The senior individuals in 3 charge of surveillance and internal audit at Trop AC 4 will report to the senior individuals in those same 5 functions as Tropicana Entertainment. That would be 6 Charles Barry for the function of surveillance and 7 Michael Mann for the function of internal audit. Both 8 Mr. Barry and Mr. Mann will report to our internal 9 audit committee. 10 Q. Are there any other provisions in the 11 charter that you would want the Commission to be aware 12 of in terms of the Commission's involvement with the 13 independent audit function? 14 A. The only other thing I'd like to -- I'd 15 like to highlight two things. The one thing I would 16 like to highlight is that if there are any changes to 17 the member of the internal audit committee, that is 18 something that we would come and seek regulatory 19 approval for, so we wouldn't change an individual 20 without seeking such approval. And in addition to 21 everything that we do from an independent standpoint, 22 internal audit is something that we take very 23 seriously from a management standpoint as well. Both 24 myself and Mr. Millage, our Chief Financial Officer, 25 actually review every single internal audit memo and 107 Butera - direct - Brooks 1 make sure that to the extent changes are required that 2 they are done immediately. 3 Q. So per the charter, there couldn't be a 4 change in the composition of the audit committee 5 without on the Commission's prior approval? 6 A. That's correct. 7 Q. Let me show you what we've marked as 8 Exhibit P-23 into evidence. Exhibit P-23. 9 Do you recognize this document? 10 A. Yes, I do. 11 Q. And what is it? 12 A. It's the credit agreement that relates 13 to our exit financing. 14 Q. Turn to Page 88 of that document, if you 15 would. 16 A. Okay. 17 Q. Is that your signature? 18 A. Yes, it is. They call it the "dollar 19 sign." 20 (Laughter.) 21 A. But that's my signature. 22 Q. Are you familiar with the terms of the 23 credit agreement? 24 A. Yes, I am. 25 Q. And were you involved in the negotiation 108 Butera - direct - Brooks 1 of the credit agreement? 2 A. I was the principal officer involved in 3 the negotiations, yes. 4 Q. Could you describe the effort you 5 undertook for the Commission with respect to obtaining 6 this credit agreement? 7 A. Sure. Well, you know, as I mentioned, I 8 spent a lot of my early career as an investment banker 9 on Wall Street. We reached out to most of the banks 10 that are involved in providing financing to the gaming 11 industry and asked them to basically compete for this 12 piece of financing. We ended up talking to three or 13 four of those banks about committed financing. 14 At the same time, I also reached out to 15 the Icahn group and our other lenders and asked if 16 they would be interested in providing such financing. 17 And as a result of a probably a three-to-four-month 18 process, Icahn -- the Icahn group and our senior 19 lenders emerged as the sole group that was willing to 20 provide us committed financing, which for a company 21 going through Chapter 11 process, is very important. 22 Because from a timing standpoint, you want to know 23 that you have funds certain when you emerge. So while 24 those other banks were offering transactions that were 25 what I'll call best-efforts transactions where you 109 Butera - direct - Brooks 1 essentially go to the market and hope you end up with 2 a good result, nothing was guaranteed. 3 Obviously, the credit markets at the 4 time that we put this together back in May of 2009 5 were very troubled, much more troubled than they are 6 now, as there's a sizable recovery in the credit 7 markets from that time until now. So the long and the 8 short of it is the Icahn group, which comprises Icahn 9 and our other senior lenders, came to us with a market 10 deal that has the most certainty of execution and also 11 the most flexibility in terms of covenants and other 12 provisions, so we decided to proceed with them. 13 Q. In terms of entering into the credit 14 agreement with the Icahn organization, did Icahn 15 demand that you do so? Or did Icahn dictate to you 16 the terms and insist that you accept them? 17 A. No. Absolutely not. We actually 18 approached Icahn and our senior lenders and asked them 19 if they would be interested in this opportunity. 20 Q. Could you describe for the Commission 21 the material terms of the credit agreement? 22 A. Yes. As Mr. Gary mentioned earlier, 23 it's $150 million facility comprised of two tranches. 24 A $130 million term loan, which will be fully drawn 25 day one. That does have an OID, original-issue 110 Butera - direct - Brooks 1 discount of seven percent. So the actual funds to the 2 company from that 130 million will be just under 120 3 million. And then we'll have another $20 million 4 revolver, which will be undrawn at the time we emerge, 5 which will be excess capacity for us. The -- both 6 tranches will bear interest at a flat rate of 15 7 percent fixed. It is a three-year deal. It does call 8 for principal repayments of 1.3 million in each of 9 years one and two, which is a fairly modest 10 amortization. 11 And there are three financial covenants 12 of note. One, there's a $50 million cap on capex 13 spending per year across the portfolio, as well as we 14 have to maintain what we call a fixed-charged coverage 15 ratio of 2.0 to 1. What that essentially means is 16 that our cash flow has to be two times greater than 17 what our fixed charges are. And fixed charges would 18 comprise interest payments plus principal and capital 19 expenditures. 20 To use round numbers, and I know that 21 Mr. Adams -- and by the way, I compliment the Division 22 and Mr. Adams on his report. I couldn't have done a 23 better job myself. It was a good job. But simply 24 put, we have about a hundred million cash flow. That 25 would mean that we could spend 50 million between 111 Butera - direct - Brooks 1 interest and capital expenditures per year. So that 2 would be probably more of a governor on our spending 3 than the actual 50 million restriction on the capex. 4 We have also have a limit on 5 indebtedness of no more than 2.5 times indebtedness to 6 cash flow. So if we had a hundred million of cash 7 flow, that means that we have up to 425 million in 8 debt, which I assure you we would never approach, nor 9 would we want. 10 Q. Could you describe for the Commission 11 how the loan proceeds from the credit agreement would 12 be used by Tropicana Entertainment? 13 A. Yes. Our loan proceeds and our cash on 14 hand will be used essentially for two functions. One 15 to repay our debtor-in-possession financing, which has 16 a current balance of approximately 65 million, as well 17 as to escrow approximately 20 million for remaining 18 professional fees and claims. That 20 million is a 19 fully big number. I would expect that we would spend 20 significantly less than that when those matters get 21 adjudicated and resolved. 22 Q. Now, would the credit agreement be 23 secured? 24 A. Yes, it will. 25 Q. And could you describe for the 112 Butera - direct - Brooks 1 Commission how it will be secured? 2 A. It will be secured by security and 3 collateral agreements as well as mortgages on 4 essentially all the assets of the company. 5 Q. Would that include Tropicana Atlantic 6 City? 7 A. Yes, it would. 8 Q. And Tropicana AC Sub Corp? 9 A. Correct. 10 Q. Now, has there been any allocation done 11 in terms of the security, an allocation related to the 12 various properties owned by Tropicana? 13 A. That's in a process now. There haven't 14 been any final allocations. That is in process. But 15 I would assume there would be an allocation based on 16 the relative values of each of the properties. 17 Q. But you don't have numbers in that 18 regard at this point? 19 A. Not at this point. 20 Q. When is the credit agreement expected to 21 close? 22 A. At the time that the plan goes 23 effective. 24 Q. And I think you testified to this 25 already, but in terms of proceeds, net proceeds, it 113 Butera - direct - Brooks 1 will be just under 120 million? 2 A. That's correct. 3 Q. Are you aware that financial 4 information -- financial information was provided to 5 the Commission and the Division related to the credit 6 agreement? 7 A. Yes. 8 Q. And do you have an understanding as to 9 what was provided? 10 A. Yes. Financial projections were 11 provided to everyone. 12 Q. Let me show you what we've marked into 13 evidence as Exhibit P-37. 14 Could you identify this document for the 15 Commission? 16 A. Yes. This is what we call a "sources 17 and uses" chart. It's a schedule, how we an intend to 18 use our cash at the time of closing and where that 19 cash will be provided. 20 Q. Now, was there an estimation or an 21 estimated EBITDA for Tropicana Entertainment provided 22 to the Commission and the Division? 23 A. Yes, there was. 24 Q. And the EBITDA was for the properties in 25 the Tropicana Enterprises ownership structure? 114 Butera - direct - Brooks 1 A. There would be for the property level 2 EBITDA plus corporate expense. Yes. 3 Q. And in terms of the projections that 4 were provided, were there assumptions behind the 5 projections? 6 A. Yes. 7 Q. And the projections show increases? 8 A. The projections showed modest increases, 9 certainly at the revenue line with some little bit 10 more significant increases at the EBITDA line. 11 Q. And could you explain for the Commission 12 the assumptions behind the increases? 13 A. Yes. I mean, I think we all expect 14 that, you know, at least for the immediate term, the 15 revenue-line items, it's hard to project a significant 16 increases there. But we have done a good deal of work 17 internally at streamlining our operations, 18 right-sizing our marketing, consolidating certain 19 areas that needed to be consolidated. So while our 20 revenue numbers have remained flat to, in some 21 markets, down, and in some cases we have seen double 22 digits now, we've been able to improve our cash flows 23 by operating our facilities much better. 24 Q. Now, you talked about the fixed charge 25 ratio, and we provided information with respect to 115 Butera - direct - Brooks 1 fixed charge ratio to the Division and the Commission; 2 correct? 3 A. Yes. Correct. 4 Q. And the forecasts for compliance with 5 the covenant and the credit agreement are close to the 6 minimum threshold; correct? 7 A. That is correct. Although, I would 8 offer that a lot of the capex is discretionary. As 9 Mr. Gary mentioned, obviously, anything that relates 10 to life safety or regulatory concern gets spent and 11 gets spent right away. But a lot of capex is 12 discretionary. So we would, obviously, bring it to 13 the point that we were able to. But -- but in terms 14 of our interests coverage, which I think is very 15 important, because I think there's an old saying: If 16 the equity markets don't put you out of business, the 17 debt markets will. We have significant coverage on 18 our interests. That's actually only our cash 19 interest, which is 19 million, which would relate to 20 our 90 or a hundred million of cash flow. So, yes, it 21 is close because most of that is because of 22 discretionary consumption. 23 Q. Could there be measures or steps taken 24 to remain in compliance with that covenant if 25 necessary? 116 Butera - direct - Brooks 1 A. Absolutely. 2 Q. The fixed charge ratio? 3 A. Yes. Absolutely. 4 Q. And could you could you describe those 5 for the Commission? 6 A. Well, obviously, as Mr. Gary mentioned, 7 we will evaluate capital expenditures from return on 8 investment standpoint. We have a shareholder base 9 that is very astute and very successful in making 10 investments, and to the extent there were 11 opportunities that made sense for the company, you 12 know, my guess is our shareholders would be there to 13 support it with capital. One of the benefits of 14 having the Icahn group as our largest lender is just 15 that. You know, there is an alignment between how the 16 company performs and how the equity value performs 17 from the lending group, which is not always the case. 18 Q. Do you anticipate that there will be a 19 necessity for any additional debt financing to 20 facilitate the plan reorganization, the Tropicana 21 Entertainment plan of reorganization? 22 A. No. At this point, no. And it's 23 important that when we sized the debt offer, we tried 24 to come up with what we thought was enough to get us 25 through what our capital expenditures needs would be 117 Butera - direct - Brooks 1 not too much to bear a large interest burden. So, 2 again, with the idea was to keep -- you know, the 3 other element fixture is interest, which you do have 4 to pay. So the more debt you have, the more interest 5 you have, you know, the less you have to expend on 6 capex. So, in a way, it was really an art to try to 7 get to the right size as opposed to just getting as 8 much as we possibly could and then suffering big 9 interest expenses as a result of that. 10 Q. Now, do you intend to cancel or replace 11 Tropicana Atlantic City's existing inner-company debt 12 with new inner-company debt? 13 A. Yeah. That will be cancelled at the 14 time of the closing. 15 Q. Now, take a look again, if you could, at 16 Exhibit P-37 in evidence. See "resources, summary." 17 Do you see entry for cash from Tropicana Atlantic City 18 upon closing? 19 A. Yes, I do. 20 Q. Could you explain for the Commission how 21 Tropicana Entertainment intends to handle the cash it 22 receives from Tropicana Atlantic City upon the 23 closing? 24 A. Yes. I think that probably also speaks 25 to Commissioner Epps' question earlier of Mr. Gary. 118 Butera - direct - Brooks 1 When we look at our properties, clearly Tropicana 2 Atlantic City is the largest, but we also have other 3 large properties as well. So our property in 4 Evansville and our property in Baton Rouge from an 5 EBITDA standpoint are fairly similar to what you see 6 in Atlantic City. However, I do think that Atlantic 7 City offers the most upside across our portfolio. So 8 if I were to look at place where you could get your 9 most bang for your buck or return on investments, look 10 across the markets. I am a strong believer long-term 11 in Atlantic City, and I do believe across the 12 portfolio this is the property that has the 13 potentially the greatest upside from a cash flow 14 standpoint. It clearly had been there once before, 15 and I think we can get it back there again. 16 But, you know, that having been said, we 17 will have a very formal budgeting process. Our cash 18 resources will be pooled. We will review that with 19 our board, and our board will make -- we will make 20 recommendations on our board, and our board will make 21 capital expenditures across the portfolio. But I 22 would assume that Tropicana Atlantic City will be very 23 much a focal point, along with maybe two or three 24 other properties in our portfolio. 25 Q. Okay. Let me again, if you could, take 119 Butera - direct - Brooks 1 a look at P-23, which is the credit agreement. 2 There's a section of that agreement which is entitled 3 "warrants." Could you describe for the Commission 4 exactly what's involved there in terms of the warrant? 5 A. Yes. Each of the lenders who committed 6 to the syndication of the credit facility will receive 7 what we call "penny warrants." They are basically 8 warrants at that zero conversion value, so they are in 9 the money day one, which will represent approximately 10 five percent of the equity of the company. Because -- 11 because of that, one of the things that we put into 12 our bankruptcy plan was that every senior lender would 13 have the opportunity to participate in this loan pro 14 rata based on their, you know, individual holdings of 15 our senior loan. So it was -- it is a -- it is 16 something that's being offered to the folks that did 17 commit to this loan. But it was offered to each of 18 our senior lenders. 19 Q. All right. And are the warrants or the 20 exercise of the warrants subject to applicable gaming 21 laws? 22 A. Absolutely. 23 Q. Now, with the consummation of the 24 Delaware plan of -- plan of reorganization, Tropicana 25 plan of reorganization, and the closing of an amended 120 Butera - direct - Brooks 1 and restated purchase agreement and entry into the 2 credit agreement, could you provide the Commission 3 with the comparison of the capital structure for 4 Tropicana Entertainment as compared with Tropicana 5 Entertainment, LLC, when it emerged the last time with 6 Mr. Yung. 7 A. Yes. As I mentioned before, debt 8 markets will put you out of business, so we spent a 9 lot of time working to reduce basically all of the 10 liabilities of the predecessor companies. So 11 approximately two and a half billion dollars of debt 12 and other liabilities will be eliminated at the time 13 that we emerge from Chapter 11. We don't have any 14 significant outside claims. As I did say, we will be, 15 you know, escrowing $20 million simply because, as a 16 matter of due course, we would do that because that's 17 the full extent if everybody got a hundred percent, we 18 think it would be much less, and will have the credit 19 facility, which essentially will be all cash on our 20 behalf sheet day one. So you'll go from a company 21 that was significantly over-levered and struggling to 22 survive to one that has virtually no debt and ample 23 capital to support its operations going forward. 24 Q. Mr. Butera, could you share with the 25 Commission your vision and expectations for Tropicana 121 Butera - direct - Brooks 1 Atlantic City? 2 A. Yes. It's a real exciting time to be 3 able to consider coming back to Atlantic City. I -- 4 I, as I mentioned earlier, am a strong believer in the 5 long-term viability of Atlantic City. I, obviously, 6 have been following everything that's been going on 7 around us and some of the things that have been said 8 in the press. But you'll always have competition. 9 We've had competition in each of our markets, and we 10 found ways to prosper despite that. I think it's 11 important that, you know, you change your business 12 model and respond to competition. 13 You know, for example, talking earlier 14 with Mr. Gary about a property in Lake Tahoe. Lake 15 Tahoe is a market where gaming revenues are down 40 16 percent because of proliferation of Native American 17 gaming throughout northern California and Reno. But I 18 had never been there before. I got to the West 19 Coast -- but if you've ever been there on Lake Tahoe, 20 it's one of the most spectacular places, I think, in 21 the country. And we were able to run our properties 22 much more of a destination resort for people who 23 actually want to go to the lake and have fun. So as a 24 result, we were profitable where on these we haven't 25 been. 122 Butera - direct - Brooks 1 So I think, you know, in every market 2 you're going to have competition. Every state is 3 going to look to gaming as a way. Certainly budget 4 crunches are in order, a way to help, you know, fill 5 coffers. And I think it's just something that you 6 have to deal with. It doesn't mean you can't have a 7 bad business. I still think it's one of the largest 8 gaming communities in the country and in the world. I 9 think it's still a beautiful place. I'm very 10 encouraged by some of the initiatives I've seen from 11 government. So I don't see any reason why this can't 12 continue to -- come back and continue to be one of the 13 finest destination resorts areas for gaming. 14 And, also, I think there's a great 15 opportunity to do more convention business. And I see 16 big opportunity for Tropicana Atlantic City in that 17 function. I still think it's one of the nicest 18 properties on the boardwalk. So I am very 19 enthusiastic. I think we will -- we have a great 20 team. And I feel really good about the team that's 21 here in Atlantic City. And I think if we can work 22 together and fold Tropicana Atlantic City in with our 23 other nine properties and run it like a real company 24 and offer, you know, multiple product, good quality 25 product, to each of our customers, I think we can be 123 Butera - direct - Brooks 1 very successful. 2 So I think it's a great place to invest. 3 I always like to invest in areas where people don't 4 want to invest. Usually that means there's some 5 opportunity. But I think with some better operating 6 practices and some creativity and hard work, we can do 7 real well in this market. 8 Q. Let me show you what we've marked into 9 evidence as Exhibit P-27. 10 This is the ICA trust agreement. 11 A. That's correct. 12 Q. Have you had a chance to review this 13 document? 14 A. I have. 15 Q. Are you generally familiar with its 16 terms? 17 A. Yes, I am. 18 Q. And what's your understanding of what 19 would be placed into trust in connection with the ICA 20 trust agreement? 21 A. The common stock of Trop AC will be 22 placed in the trust as well as the -- I mentioned 23 earlier the security collateral agreement and mortgage 24 agreements for our credit facility. 25 Q. Now, on behalf of Tropicana 124 Butera - cross - Adams 1 Entertainment, Inc., the Reorganized Tropicana, if the 2 ICA trust agreement is approved by the Commission, are 3 you prepared to execute this trust document? 4 A. Absolutely. 5 MR. BROOKS: I have no further 6 questions, Madame Chair. 7 VICE CHAIR HARRINGTON: Thank you. 8 Mr. Adams? 9 10 CROSS-EXAMINATION BY MR. ADAMS: 11 Q. First of all, I appreciate the kudos 12 about the report. George Clark, Susan, and Scott and 13 Bob deserve the real kudos on that portion. 14 We briefly talked, and I think in 15 response to one of the Mr. Brooks' question, about 16 your opinion re: the terms of the credit agreement. 17 Let's start with that. 18 A. Uh-hum. 19 Q. What is your opinion about the terms of 20 the credit agreement and how do you view it vis-a-vis 21 Tropicana Entertainment going forward? 22 A. I think the terms of the credit 23 agreement are very fair. I think that we got 24 committed financing in a time when nobody was willing 25 to offer committed financing, which was very critical 125 Butera - cross - Adams 1 to us. I think we can easily manage servicing that 2 amount of indebtedness, and I think the flexibility 3 that the covenant package affords us is fair. So I 4 think it's a very fair facility. 5 Q. And I don't know if you have P-37 there 6 in front of you, but Mr. Brooks asked you some 7 questions about it. 8 A. Yes. 9 Q. Again, you talked about the cash from 10 Trop AC that would be available for Trop 11 Entertainment. 12 A. Yes. 13 Q. And the way I review -- our 14 understanding of P-37, that entire amount will be 15 available. It's not going to be spent. Let's put it 16 that way. 17 A. Correct. 18 Q. Is that correct? 19 A. That's correct. We'll have 20 approximately -- actually, since the time this was put 21 together, the numbers are actually higher. I expect 22 to have somewhere in the neighborhood of $120 million 23 of cash available. Excuse me. When we -- 24 Q. All right. This question may seem a 25 little foolish in light of that, but if, by some 126 Butera - cross - Adams 1 chance, things got really bad and you needed to go 2 back to some source for additional financing, would 3 you consider going back to Mr. Icahn or his companies 4 for additional financing? 5 A. Absolutely. They've been very 6 supportive of us and very good to work with. So, yes, 7 the relationship has been very strong and, by all 8 means, we would. 9 Q. Okay. The allocation process that you 10 made reference to -- and I appreciate the fact that 11 you don't have any numbers yet. I assume Trop AC 12 would be a significant player in the allocation 13 allotment, so to speak? 14 A. That's correct. 15 Q. Okay. In that regard, if you have P-23 16 in front of you, there's a schedule there at the end 17 of the signature page that Mr. Brooks had originally 18 made reference to with Mr. Gary. 19 A. Yes. 20 Q. It's Schedule 2.01. 21 A. Right. The syndication. 22 Q. Yes. The lenders and the commitments 23 and the various amounts. I'm not sure if it was clear 24 in the record, but it seems to me in reviewing these 25 numbers that, by far and away, the Icahn-related 127 Butera - cross - Adams 1 entities are responsible for the bulk of these funds. 2 Is that your understanding? 3 A. For the majority. Yes. 4 Q. Rough-figure-wise, the 20 million is 5 strictly Icahn related. The revolver; is that 6 correct? 7 A. Correct. 8 Q. And then I did some quick math. I mean, 9 it looks like out of the 130, maybe 70 of it is coming 10 from the Icahn entities as well? 11 A. Yeah. 12 Q. I'm sorry. 13 A. I would just highlight that on the 14 revolver piece -- 15 Q. Yes? 16 A. -- it's very typical that your lead 17 arranger would take down your whole revolver. Usually 18 they're not very attractive financial instruments 19 because you're not earning any fees other than that. 20 So that's a very typical structure. 21 Q. And correspondingly, therefore, the 22 other lenders who are participating -- and I don't 23 mean to downplay the fact that they are participating 24 because it is significant. 25 A. Uh-hum. 128 Butera - cross - Adams 1 Q. But their interest, if you will, is much 2 smaller on an individual basis than, obviously, what 3 the Icahn funds are providing. 4 A. That's correct. That's correct. 5 Q. Okay. And, in addition, the entire 6 credit facility is available for Trop Entertainment 7 Inc., at the top. It's not just allocated for 8 Atlantic City. 9 A. That's correct. 10 Q. Is that correct? 11 A. There's no specific allocation. 12 Correct. 13 Q. Now, I'm just going to go over to the 14 audit committee. There was some testimony that you 15 gave about that. 16 A. Uh-hum. 17 Q. If you could take a look at P-28 and 18 specifically Page 2, right at the top where it says 19 "Composition of the Committee." And I think you've 20 already highlighted the fact that there would be no 21 changes made without coming to the Commission for 22 prior approval as far as the individuals are involved. 23 A. That's correct. 24 Q. You'll notice that in that first 25 paragraph there's a reference to the fact that those 129 Butera - cross - Adams 1 directors shall be found qualified to act in such 2 capacity by the New Jersey Casino Control Commission 3 and any -- meaning those individuals -- shall satisfy 4 any additional requirements that the board deems 5 appropriate. 6 A. Correct. 7 Q. But I assume that your understanding is 8 that's also subject to any Commission rules or 9 regulations with respect to being independent and any 10 other requirements that would have to be satisfied by 11 the regulatory authorities. 12 A. Absolutely. Not only here but in the 13 other four states where we operate as well. 14 MR. ADAMS: I don't have any further 15 questions. 16 VICE CHAIR HARRINGTON: Thank you. 17 Commissioners? 18 COMMISSIONER EPPS: I do. 19 Mr. Butera, with respect to the credit 20 agreement, just from my understanding, you 21 testified that the Icahn credit agreement was 22 most attractive because it was committed funds, 23 and it gave you certainty and flexibility. 24 Does that suggest that some of the other 25 opportunities, while less certain, gave you a 130 Butera 1 lower interest rate but not certain? Or is 2 that a -- 3 THE WITNESS: Yeah. There were 4 opportunities that perhaps would have resulted 5 in a slightly lower interest rate but were not 6 certain and were subject to the vagaries of the 7 market. But, you know, my view is that it was 8 important to have this facility be able to 9 emerge. And then the other things is there's 10 flexibility to repay this facility. So, you 11 know, if the company is successful in turning 12 itself around in the next, you know, 9 to 12 13 months, perhaps there would be an opportunity 14 to go back when we have a little bit more 15 flexibility and leeway and less pressure on 16 timing to perhaps look at a capital markets 17 transaction at that point in time. 18 COMMISSIONER EPPS: Okay. Because my 19 other -- I guess the corollary part of that 20 question is, is that the value of the money 21 right now? Or is it -- in that range but maybe 22 not quite? 23 THE WITNESS: No. I think this is an 24 accurate reflection of the company's financing 25 capacity right now. 131 Butera 1 COMMISSIONER EPPS: Okay. The other 2 thing is a three-year term is reasonable? 3 THE WITNESS: Yes, it is. 4 COMMISSIONER EPPS: And it's doable with 5 your company's flexibility and everything? 6 THE WITNESS: Yes, it is. 7 COMMISSIONER EPPS: Okay. The 50 8 million dollar cap on capex. 9 THE WITNESS: Uh-hum. 10 COMMISSIONER EPPS: Is that only limited 11 to those funds? 12 THE WITNESS: We're allowed -- 13 COMMISSIONER EPPS: You can use 50 14 million cap on those per year on those funds? 15 THE WITNESS: Yeah. 16 COMMISSIONER EPPS: Can you use other 17 sources of income for capex? 18 THE WITNESS: Yes. 19 COMMISSIONER EPPS: If you -- 20 THE WITNESS: Yes. The 50 million is 21 limited to -- well, the 50 million is -- no. 22 The 50 million is limited to what we would be 23 able to spend per year on our properties. If 24 we were to go out and raise equity capital or 25 things like that, then we might, you know, seek 132 Butera 1 a waiver to be able to spend that money on 2 capex. And I think one of the benefits -- you 3 know, we mentioned the 50 percent ownership of 4 Icahn and the Icahn funds, obviously, they 5 would be the most interested in anything that 6 would improve the equity of the company. You 7 can waive provisions within our document with a 8 vote of 51 percent of the ownership, of which 9 Icahn would represent. So I do believe if 10 there were opportunities for -- to spend capex 11 beyond the 50 million, it made sense we would 12 be able to do that. 13 COMMISSIONER EPPS: Okay. You spoke, 14 also, to the warrants that are out there. And 15 correct me if I'm wrong, I believe we had 16 testimony in the past, and I know we made 17 reference to it earlier in the testimony. Is 18 Mr. Yung one of those people who has an 19 opportunity to get a warrant, or does that go 20 away? 21 THE WITNESS: Mr. Yung has nothing -- 22 has nothing to do with the company. You know, 23 could he conceivably, you know, buy a security 24 of ours if it were traded down the road? You 25 know, I guess there's no provision, you know, 133 Butera 1 against that. I sincerely don't believe that 2 would ever happen. You know, Mr. Yung hasn't 3 been involved in this company for quite some 4 time. None of these warrants are being 5 offered, you know, to Mr. Yung, as you can 6 imagine. So, you know, I don't -- although I 7 don't think there's any specific prohibition 8 against that, I don't think that would ever 9 happen. 10 COMMISSIONER EPPS: The projections that 11 you spoke to suggest modest EBITDA growth -- 12 THE WITNESS: Right. 13 COMMISSIONER EPPS: -- over time, 14 including 2010 -- 15 THE WITNESS: Yes. 16 COMMISSIONER EPPS: -- I believe. Can 17 you briefly discuss with us how you think those 18 would be achieved? And if you would consider 19 this as your you're explaining it, are there 20 inherent opportunities provided in this market, 21 particularly in the areas of entertainment and 22 convention opportunities? And if those are, 23 could you expound on those? 24 THE WITNESS: Yeah. Absolutely. And 25 one, obviously, when we file projections and we 134 Butera 1 have numbers that are public, we want to be 2 very careful with those numbers. So, you know, 3 as an operator I believe that we can under 4 deliver and over perform -- under promise and 5 under perform. I generally believe that's 6 true. I have started to see some signs of 7 encouragement on the properties that we're 8 running. Actually, February turned out to be a 9 fairly encouraging month for us despite some 10 continuing challenges with unemployment and 11 weather and everything else. I do believe that 12 there's great opportunity to be a lot smarter 13 about our business, offer our customers 14 entertainment, quality food, quality promotions 15 that are meaningful to them. People still want 16 to go out and have a good time and still want 17 to take their vacation and still want to enjoy, 18 you know, gaming and our facilities. So, yes, 19 I think there's great opportunity to continue 20 to do that. We've been very successful in our 21 business and improving our bottom line, not so 22 much by taking things away but just by taking 23 away things that weren't very productive and 24 give more of what is productive. You know, 25 and -- you know, it's all about knowing your 135 Butera 1 customer and being very sophisticated about 2 your customer. And giving them, you know, what 3 they want and enticing them that way. 4 The other thing that's very encouraging, 5 and we started to do is, Mr. Gary mentioned, 6 you know, some of the synergies that we've 7 operated in the group and working very closely 8 with Mr. Gary and Icahn Sourcing to help us in 9 terms of our cost structure. So our 10 purchasing, you know, and buying of the 11 entertainment and buying of medias and all of 12 those things create extra dollars, you know, 13 without -- create extra dollars in savings 14 without reducing the number of employees we 15 have or offering a lower quality product to our 16 customers. So I think that's, you know, what 17 it's all about. 18 This is still a people business. It's 19 important that we appropriate -- that we employ 20 the right amount of people so that when 21 customers come, in they feel like we're a 22 healthy, viable organization. We've motivated 23 our staff. It's important that we have rooms 24 and gaming facilities and entertainment 25 facilities that, you know, are appealing to 136 Butera 1 people and that we compete. It's all 2 important. It's actually more important now, 3 because, you know, the customers spend their 4 precious dollar. They actually want more, not 5 less, than two or three years ago. So it's a 6 fine balance. But, you know, I think, 7 competition is healthy. I think in a way it's 8 good for those who are strong and smart and can 9 survive. In a way, it's better. You know, 10 sometimes you eliminate some competition. I 11 don't think we'll have the supply increases 12 that people have projected, obviously, two or 13 three years ago. So I think that's a positive 14 thing. So, yes, I think that there's a lot of 15 opportunity beyond what's in those numbers. 16 And, as you know, Commissioner Epps, we 17 haven't had an ability because of the situation 18 with the license to really be involved on a 19 day-to-day basis with Mr. Giannantonio and his 20 team. But I'm very confident that once we're 21 able to do that, hopefully real shortly, you 22 know, we'll be able to identify those 23 opportunities and start working on them. 24 COMMISSIONER EPPS: And you made 25 reference to competition. You've been in this 137 Butera 1 market before, and you know it's a unique 2 market in that there are periods of the year 3 when you almost have an advantage because you 4 got the beach and the boardwalk, and it becomes 5 a destination. The question is -- 6 THE WITNESS: Right. 7 COMMISSIONER EPPS: -- what are your 8 ideas? How do you make it work to your 9 advantage when your natural advantages go away? 10 Meaning November, December, January, and 11 February when there's snow on the beach? 12 THE WITNESS: Yeah. Well, you know, 13 it's smaller version of the same issue in Lake 14 Tahoe, you know, where you have -- weather is 15 very seasonal, and you run a seasonal business. 16 And I think -- I think you have to be flexible, 17 and I think you basically scale -- scale your 18 business for your demand. And if you expect -- 19 and there are going to be periods where there's 20 less demand because of natural resources, and I 21 think what you do is -- doesn't mean you can't 22 have a good business. Just means that maybe 23 you have a little bit smaller business during 24 those months and a bigger business during the 25 bigger months. And I think that's where you 138 Butera 1 get down to, you know, how you can save money 2 but not affect the quality of your product. 3 So, you know, if you have a 4,000, you know, 4 room hotel and in November you only need a 5 2,000 room hotel, run it like a 2,000 room 6 hotel. Doesn't hurt the product. And then 7 when you need -- excuse me -- four, go back to 8 four when times are better. It allows you to 9 hire the same amount of people and, again, 10 offer the same quality product. 11 So I think it's all about being a heck 12 of a lot more smart, hands-on about how we 13 manage our business. And one of the good 14 things about, you know, this bad market is it 15 has done just that. I mean, there are a lot of 16 things that, you know, we've done that, you 17 know, would have easily worked, you know, two 18 or three years ago that don't work so easily 19 today that have forced to us really hunker down 20 and be a lot smarter about how we run our 21 business and what we buy and what we give away. 22 So, in a way, I feel a lot better as an 23 operator having gone through the last two years 24 about my abilities to succeed than maybe if I 25 haven't gone through this. 139 Butera - cross - DiGiacomo 1 COMMISSIONER EPPS: I don't have 2 anything else. 3 VICE CHAIR HARRINGTON: Thank you. 4 Commissioner Sommeling? No? 5 VICE CHAIR HARRINGTON: No. 6 MR. DiGIACOMO: Thank you, Chair. With 7 your indulgence, may I ask just the two areas 8 that I have prepared? 9 10 CROSS-EXAMINATION BY MR. DiGIACOMO: 11 Q. Mr. Butera, you mentioned that Mr. Barry 12 is going to be the senior official at the Reorganized 13 Tropicana security for surveillance and security; is 14 that correct? 15 A. That's correct. 16 Q. And he is submitted as part the ICA 17 process for qualification; correct? 18 A. Yes. That's correct. 19 Q. So the supervisor of surveillance at the 20 local property, Trop Atlantic City, will report to him 21 on day one as well as Mr. Barry reporting to the 22 internal audit committee on day one once the plan 23 becomes effective; is that correct? 24 A. That's correct. And Mr. Barry actually 25 reports to our current internal audit committee right 140 Butera - cross - DiGiacomo 1 now, so it would just be a continuation of that. 2 Q. Now, what about Mr. Mann? He will be 3 the senior official for internal audit; is that 4 correct? 5 A. That's correct. 6 Q. And has he filed as part of the 7 qualification process here? 8 A. We're in the process of hiring Mr. Mann, 9 so as soon as he's hired, he will be filing 10 immediately. 11 Q. On day one, would the company be 12 amenable to -- with a limited purpose, before Mr. Mann 13 is qualified, having the supervisor of internal audit 14 in Atlantic City report directly to the audit 15 committee at Reorganized Tropicana for that limited 16 purpose? 17 A. I think we'd be amenable to that. 18 Q. On the -- 19 A. We do have two senior internal audit 20 individuals that are functioning in that capacity 21 right now at Tropicana Entertainment as well, but I 22 certainly think we would be amenable to that. 23 Q. As to those individuals, have they filed 24 in connection with -- for qualification in connection 25 with this process? 141 Butera - cross - DiGiacomo 1 A. No. 2 Q. Okay. But so that the direct report 3 from the local internal audit official here -- 4 A. Right. 5 Q. -- to the audit committee for that 6 limited purpose would be satisfactory? 7 A. Correct. Although I expect Mr. Mann to 8 be able to, you know, file and meet the requirements 9 very quickly. As I mentioned, he's on many years at 10 Harrah's. 11 Q. I think the Commission anticipates that 12 there will be a temporary permitting process that 13 would allow that to occur on a fairly quick basis. 14 A. Yes. 15 Q. Uh-hum. The other topic I'd like to 16 cover. Turning to the P-27, identified and marked 17 into evidence, it's a trust agreement involving the 18 ICA trustee? 19 A. Yes. 20 Q. I think you mentioned what would 21 constitute the trust property, and Mr. Brooks on 22 direct had asked you that. Just for my purposes, what 23 was that going to constitute again? 24 A. It's all of the common stock of 25 Tropicana Atlantic City, and then the collateral and 142 Butera - redirect - Brooks 1 security agreements and mortgages which are the 2 documents that back up the collaterals to our exit 3 facility -- 4 Q. Okay. 5 A. -- would be placed in that trust. 6 Q. I know I have seen various iterations of 7 P-27 before this one, and I think in those prior 8 iterations it mentions the Trop Atlantic City common 9 stock. Quickly glancing, I didn't see. Do the other 10 documents or materials that you've mentioned, 11 specifically I'll refer to in P-27, as the trust 12 property? And, if not, would you be planning to amend 13 the document to include those? 14 A. If it doesn't, it absolutely should. We 15 do plan the thousand shares of common stock of Trop AC 16 would be placed in this trust. 17 MR. DiGIACOMO: That's all I have, Vice 18 Chair. 19 MR. BROOKS: Just briefly on redirect, 20 Madame Chair. 21 22 REDIRECT EXAMINATION BY MR. BROOKS: 23 Q. Let me show you, if I could, Mr. Butera, 24 Exhibit P-27. And I'm going to specifically refer you 25 to Page 8. You have it in front of you? I'm sorry. 143 Butera - redirect - Brooks 1 A. Yes, I do. 2 Q. Just, if you could, read that sub -- or 3 that Paragraph A, rather, of Section 1 there. 4 A. Yes. 5 Q. If you could, just glance at that first 6 sentence, if you will, and indicate whether or not 7 that sentence deals with the trust property, the 8 property that will be placed into trust. 9 A. (Reviewing.) Yes. It does. 10 Q. And could you tell us what that covers? 11 A. That covers all of the trust property 12 which I mentioned earlier, which would be the shares 13 and the collateral and security agreements and 14 mortgages. 15 Q. Okay. Now, when Commissioner Epps asked 16 you a question about warrants, there are warrants that 17 are being offered as part of the plan of 18 reorganization; correct? 19 A. That's correct. 20 Q. Okay. Now, the warrants in connection 21 with the credit agreement, P-23 in evidence, those are 22 separate warrants; correct? 23 A. Correct. We'll have two sets of 24 warrants. 25 Q. And those warrants, penny warrants that 144 Butera - redirect - Brooks 1 you talked about, they'll only be offered to the 2 lenders who are party to the credit agreement; 3 correct? 4 A. That is correct. 5 Q. Let me show you, if I could -- oh. And 6 just for purposes of clarification of the record in 7 terms of the source, we've talked about the -- in 8 terms of the -- strike that. 9 The schedule of lenders and commitments. 10 We talked about the Icahn funds. Icahn Capital is 11 also part of that group; correct? 12 A. That's correct. 13 Q. And let me show you what we've marked 14 into evidence as Exhibit P-24. 15 And Exhibit P-24, that document 16 indicates the amount or the percentage that the Icahn 17 funds will have in connection with the credit facility 18 in terms of the commitment? 19 A. That is correct. 20 Q. The loan commitment? 21 MR. BROOKS: I have nothing further, 22 Vice Chair Harrington. 23 VICE CHAIR HARRINGTON: Thank you. 24 MR. ADAMS: I just have one more 25 question. 145 Butera - recross - Adams 1 2 RECROSS-EXAMINATION BY MR. ADAMS: 3 Q. Actually, I forgot to ask you the first 4 time around. 5 Your role and contact, if any, that you 6 anticipate having in your various capacities with Mr. 7 Icahn, could you describe that? Meaning Carl Icahn 8 himself. 9 A. Yes. Obviously, I report to Mr. Icahn 10 and our other directors. But without Mr. Icahn, and I 11 would say the Icahn Enterprises, we have significant 12 involvement. We have -- I have significant -- it's 13 always my objective to have significant communication 14 with all of our shareholders, so it's not just Mr. 15 Icahn. 16 Q. Right. 17 A. I do spend a fair amount of time with 18 our significant investors as well. But we do spend a 19 lot of time talking about the business. He has great 20 familiar with the gaming industries. He's been 21 successful. I've found him to be, you know, very 22 helpful to me in terms of offering guidance and 23 opportunities. So it's a pretty, you know, 24 close-knit, interactive relationship between myself 25 and the folks -- myself and my team and the folks at 146 1 Icahn Enterprises. 2 Q. Would it be fair of me to say, however, 3 that he has imposed confidence in you to operate 4 Tropicana Entertainment, Inc., and the various 5 subsidiaries? 6 A. I certainly hope that's the case. 7 MR. ADAMS: Thank you. Nothing further. 8 VICE CHAIR HARRINGTON: Thank you. 9 Thank you. 10 MR. DiGIACOMO: Vice Chair, through you, 11 a question for Mr. Brooks. 12 VICE CHAIR HARRINGTON: Sure. 13 MR. DiGIACOMO: And I may have missed 14 it, but for P-27, the trust agreement, are you 15 seeking any sealing request and, in particular, 16 on Page 12? 17 MR. BROOKS: Yeah. We asked for -- 18 that's part the redacted exhibits that we 19 provided. We are asking for a sealing 20 request -- 21 MR. DiGIACOMO: I just wanted to confirm 22 that. 23 MR. BROOKS: -- in connection with 24 certain exhibits that we included. 25 Thank you. 147 1 VICE CHAIR HARRINGTON: Thank you. 2 MR. BROOKS: Thank you, Madame Chair. 3 VICE CHAIR HARRINGTON: You may step 4 down. 5 I believe at this time I'll propose we 6 take a recess until 2:30. 7 Thank you. 8 (A recess was taken from 1:23 to 2:28 9 p.m. 10 VICE CHAIR HARRINGTON: Good afternoon. 11 FORM THE FLOOR: Good afternoon. 12 VICE CHAIR HARRINGTON: I think we'll 13 reconvene. 14 Thank you. All right. Okay? Are we 15 okay? 16 Mr. Brooks? 17 MR. BROOKS: Vice Chair Harrington, if 18 it please the Commission, I call Mark 19 Giannantonio. 20 21 MARK GIANNANTONIO was duly sworn to 22 testify in this matter. 23 24 MR. NANCE: Please state your name for 25 the record. 148 Giannantonio - direct - Brooks 1 THE WITNESS: It's Mark Giannantonio. 2 MR. NANCE: Please spell -- 3 THE WITNESS: G-i-a-n-n-a-n-t-o-n-i-o. 4 MR. NANCE: Thank you. 5 THE WITNESS: Just before I begin my 6 testimony, I just echo Scott Butera's comments 7 regarding the Chair and our deepest sympathies 8 for her and her family. 9 VICE CHAIR HARRINGTON: I'm sure she'll 10 appreciate that. 11 MR. BROOKS: Thank you, Mr. 12 Giannantonio. 13 14 DIRECT EXAMINATION BY MR. BROOKS: 15 Q. Could you provide the Commission with 16 the benefit of your educational background? 17 A. Yes. I have a bachelor of arts degree 18 from Richard Stockton College in economics. 19 Q. And could you provide the Commission 20 with the benefit of your professional background? 21 A. Sure. I've been for the last, I guess, 22 two and a half years the President and Chief Operating 23 Officer of Tropicana Atlantic City. Prior to that 24 I've held various positions in various casinos. But 25 more recently, I was the head of Resort Operations, 149 Giannantonio - direct - Brooks 1 Senior Vice President of Resort Operations at the 2 Tropicana. 3 Q. Now, if the Commission grants interim 4 authorization and permits a closing to take place with 5 respect to the an amended and restated purchase 6 agreement, will you have a position at Tropicana 7 Atlantic City Corp? 8 A. Yes, I will. 9 Q. And what will that position be? 10 A. The position would be President and 11 Chief Executive Officer. 12 Q. Is that similar to the role you 13 currently occupy at Tropicana Atlantic City? 14 A. Yes, it is. 15 Q. Do you have -- do you presently have 16 officers, any management team at Tropicana? 17 A. I do. 18 Q. And what's your expectation and 19 understandings -- understanding with respect to those 20 officers and management team you have at Tropicana 21 Entertainment? 22 A. They will remain in similar capacities 23 in the property. 24 I would like to just comment. Very, 25 very happy about this day. But with regard to the 150 Giannantonio - direct - Brooks 1 management team and the employees, I have to say how 2 proud I am of everybody that's been involved over the 3 last couple of years with the process. 4 Q. Would you identify for the Commission 5 some of the folks that will be coming over to 6 Tropicana in the event that there is a closing with 7 respect to the acquisition of those assets by 8 Tropicana -- or Trop AC? 9 A. Sure. I have nine key managers. Ed 10 Garruto is our Senior Vice President and CFO. Tama 11 Hughes is Vice President and Corporate Counsel. Mary 12 Tindall is Vice President of Marketing. Al Maiorani 13 who is Senior Vice President of Resort Operations. 14 Chris Broome is Vice President of Finance. Andy 15 Fiorentino is Assistant Vice President of Slot 16 Operations. Mario DiGuiseppe is Vice President of 17 Casino Games. Tina Tartaglio is our Vice President of 18 Human Resources. And Jules Vorndran is our Senior 19 Vice President of Casino Marketing. 20 Q. Now, there are certain positions or 21 departments that are mandated by the Commission; 22 correct? 23 A. Yes, there are. 24 Q. And you currently have individuals who 25 occupy those departments and positions at Tropicana 151 Giannantonio - direct - Brooks 1 Atlantic City? 2 A. Yes. 3 Q. Will they also be coming over if there 4 is a closing? 5 A. They will. 6 Q. And could you identify those folks for 7 the Commission. 8 A. Sure. I hope I don't miss anybody. 9 Frank Politi is our head of Casino Operations. We 10 have Bill Carey is the head of Surveillance. Bill 11 King is the head of Internal Audit. Chad Mostats is 12 the head of our IT department. Jean Alexander is the 13 head of EEO. That covers the basics. 14 Q. And does Tropicana Atlantic City 15 currently employ a system of internal procedures and 16 administrative and accounting controls? 17 A. We do. Yes. 18 Q. And has this system of internal 19 procedures and administrative controls been approved 20 by the Commission? 21 A. Yes, it has. 22 Q. Let me show you what we've marked into 23 evidence as Exhibit P-31. 24 Could you identify this document for the 25 Commission? 152 Giannantonio - direct - Brooks 1 A. Sure. It is -- that's a table of 2 contents of all of Tropicana's accounting and internal 3 control procedures. 4 Q. This is the table of contents? 5 A. Yes. 6 Q. Is this a rather voluminous document? 7 A. It's a very, vary large document. 8 Q. And to the best of your knowledge, does 9 each of the procedures identified in P-31 conform to 10 the requirements of the Casino Control Act? 11 A. Yes, they do. 12 Q. Let me show you what we've marked into 13 evidence as Exhibit P-34. 14 Could you identify that document for the 15 Commission? 16 A. Yes. This is a certification by Tama 17 Hughes. 18 Q. And Tama -- again, what role does she 19 occupy at Tropicana? 20 A. She is Vice President and Corporate 21 Counsel. 22 Q. Would she be -- would it be fair to say 23 she's the Chief Legal Officer at Tropicana? 24 A. That is correct. 25 Q. And does Tama expect to be the 153 Giannantonio - direct - Brooks 1 Chief legal Officer -- excuse me -- or Miss Hughes 2 expect to be the Chief Legal Officer at -- 3 A. Yes. 4 Q. -- Tropicana after a closing takes 5 place? 6 A. Yes. 7 Q. And in connection with P-34 in evidence, 8 does Miss Hughes address the conformance in terms of 9 the internal controls with respect to the requirements 10 of the Casino Control Act? 11 A. Yeah. This is Miss Hughes' 12 certification regarding the conformity of the 13 document. 14 Q. Let me show you what we've marked into 15 evidence as Exhibit P-35. 16 Now, with reference to P-35, to the best 17 of your knowledge, do the procedures which we've 18 identified in P-31 provide Tropicana Atlantic City 19 with adequate and effective controls in terms of an 20 overall system of internal procedures? 21 A. They do. Yes. 22 Q. And how does P-35 relate to that? 23 A. This is Mr. Garruto's -- who is our 24 CFO -- his certification that those procedures 25 conform. 154 Giannantonio - direct - Brooks 1 Q. And he's your Chief Financial Officer? 2 A. That is correct. 3 Q. And Mr. Garruto is expected to be the 4 Chief Financial Officer after the closing? 5 A. That is correct. Yes. 6 Q. Now, to the best of your knowledge, and 7 again with reference to P-35, do the internal 8 procedures conform to generally accepted accounting 9 principles? 10 A. Yes. 11 Q. And, again, does Mr. Garruto verify that 12 information? 13 A. He does. In this document. 14 Q. Now, in terms of the internal -- the 15 system of internal procedures and administrative 16 controls and accounting controls, will those continue 17 to apply and continue to be utilized at Tropicana 18 Atlantic City in the event of a closing? 19 A. Yes, they will. With one exception. 20 Q. And what is that exception? 21 A. The exception is that there will be 22 reporting-line changes with regards to the head of our 23 surveillance and the head of our internal audit 24 department. 25 Q. And there's a lot of testimony today in 155 Giannantonio - direct - Brooks 1 terms of marrying that process up with Tropicana 2 Entertainment, Inc. 3 A. Yes. Right. 4 Q. And is that the change you're talking 5 about? 6 A. Yes. 7 Q. Now, does Tropicana Atlantic City 8 currently operate with an equal employment and 9 business opportunity plan? 10 A. Yes, we do. 11 Q. And has that plan been approved by the 12 Commission? 13 A. It has. Yes. 14 Q. I'll show you what we've marked into 15 evidence as Exhibit P-29. 16 Could you identify this document for the 17 Commission? 18 A. Yes. It's Tropicana's equal 19 opportunity -- equal employment business opportunity 20 plan. Currently. 21 Q. And if there's a closing and Tropicana 22 AC acquires Tropicana Atlantic City -- Trop AC 23 acquires Tropicana Atlantic City, do you have any 24 understanding as to whether or not -- or what they're 25 going to do with in terms of their equal employment 156 Giannantonio - direct - Brooks 1 and business opportunity plan? 2 A. Yes. We will utilize this plan. 3 Q. Now, since the denial of Adamar's 4 request for renewal of its casino license and also its 5 CHAB license, has Tropicana Atlantic City continued to 6 serve or provide alcoholic beverages to patrons? 7 A. Yes, we have. 8 Q. Let me show you what we've marked into 9 evidence as Exhibit P-30. 10 Could you explain to the Commission what 11 this document represents? 12 A. Yes. This is a Division document by Mr. 13 Storcella essentially explaining our CHAB license and 14 also the venues of where we are permitted to serve 15 alcoholic beverages. 16 Q. And in terms of the places where 17 alcoholic beverages are either purchased or sold at 18 the Tropicana in Atlantic City, it's consistent with 19 the locations identified in P-30? 20 A. That is correct. 21 Q. Do you have an understanding of 22 Tropicana Atlantic City's -- Atlantic City Corp.'s, 23 Trop AC's plan with respect to the purchase and sale 24 of alcoholic beverages if it's permitted by the 25 Commission to acquire Tropicana Atlantic City? 157 Giannantonio - direct - Brooks 1 A. Yes. We'd like to continue to serve 2 alcoholic beverages -- 3 (Laughter.) 4 A. -- in our current locations. 5 Q. And that would be the same locations as 6 identified in P-30? 7 A. Yes. 8 Q. What would happen to Tropicana Atlantic 9 City's business -- business operations if they weren't 10 permitted to serve alcoholic beverages to its patrons? 11 A. Do I really need to answer that 12 question? 13 (Laughter.) 14 A. It would not be as fun. 15 Q. Okay. Fair enough. 16 A. Just kidding. 17 Q. Since the time of the denial of the 18 application of the casino license for Adamar -- 19 renewal of the casino license for Adamar -- has 20 Tropicana Atlantic City continued to meet its 21 investment alternative tax obligations pursuant to 22 NJSA 5:12-1.4.1? 23 A. Yes, we have. 24 Q. Are you aware of outstanding contracts 25 between the Casino Reinvestment Development Authority 158 Giannantonio - direct - Brooks 1 and Adamar that the Casino Reinvestment Development 2 Authority has asked Trop AC to assume? 3 A. I am aware of those contracts. Yes. 4 Q. Do you have any understanding as to 5 Tropicana Atlantic City Corp.'s position with respect 6 to those contracts? 7 A. Yeah. It's my understanding that we are 8 going to assume those contracts. 9 Q. Do you know, is there any negotiations 10 or discussions currently going on in connection with 11 those contracts? 12 A. There are. 13 Q. And could you describe that -- or where 14 that's happening to the Commission? 15 A. I believe it's in the process with 16 regard to many stipulations that occur regarding those 17 agreements and the assumption of those agreements. 18 Q. And is that taking place in the 19 bankruptcy -- the Adamar bankruptcy? 20 A. Yes, it is. 21 Q. And have you been involved with any 22 other contracts that are being acted upon in 23 connection with the Adamar bankruptcy matter? 24 A. Yes, I have. 25 Q. Could you explain that process for the 159 Giannantonio - direct - Brooks 1 Commission? 2 A. Yes. We've had an opportunity looking 3 at contracts, utilizing our good business judgment 4 throughout this process. And we've looked at a lot of 5 contracts. 6 Q. And have you done anything with the 7 contracts in terms of designations? 8 A. We have. We have -- in -- during this 9 proceeding or time, we've put contracts in two 10 fundamental buckets. A, contracts that are no longer 11 needed at the property, and, B, contracts that are 12 essentially -- we'd like to renegotiate those 13 contracts. 14 Q. And that -- would it be fair to say that 15 that's a process that's ongoing in the bankruptcy 16 court right now? 17 A. That's correct. 18 Q. And that's not every contract. 19 A. Yeah. 20 Q. That's just a small universe of 21 contracts? 22 A. That's right. 23 Q. Are you familiar with Tropicana AC Sub 24 Corp? 25 A. Yes, I am. 160 Giannantonio - direct - Brooks 1 Q. Are you expected to have a position with 2 that entity should the various closings take place? 3 A. Yes. 4 Q. And what would that position be? 5 A. President and Chief Executive Officer. 6 Q. Will there be any other members of your 7 current management team that will also have positions 8 with respect to Trop AC Sub? 9 A. Yes. Those folks are Ed Garruto, who is 10 our CFO, Tama Hughes, who is our VP of Corporate 11 Counsel, and Chris Broome is our Vice President of 12 Finance. 13 Q. And they'll be officers in similar 14 capacities at Trop Sub Corp? 15 A. Correct. 16 Q. Let me show you what we've marked into 17 evidence as Exhibit P-6. 18 Now, this is a series of documents, and 19 it's actually broken down by letter, so it's P-6A 20 through P-6J. Can you identify those documents for 21 the Commission? 22 A. Yes. These are leases that deal with 23 the land underneath the Tropicana. 24 Q. Now, are they -- for the most part, are 25 they entire leases, or are they something smaller than 161 Giannantonio - direct - Brooks 1 the entire lease? 2 A. They are something smaller than the 3 entire lease. 4 Q. And what are they? 5 A. Essentially they are -- I guess, they're 6 eight leases that are -- speak to various land parcels 7 and so forth underneath the Tropicana. 8 Q. And are they proposed amendments to 9 those existing leases? 10 A. They are. They're proposed amendments. 11 Q. And what -- could you describe for the 12 Commission generally what the proposed amendments 13 entail? 14 A. Sure. The proposed amendments to these 15 leases are twofold. One is to set a rent that's -- 16 that correlates to the market value of rents 17 pertaining to the lease. 18 Secondly, it allowed us to kind of work 19 out the -- there might have been some noncompliance. 20 To allow us more compliance with regard to the 21 regulatory matters. 22 Q. So there's some additional language in 23 there regarding the requirements of the Casino Control 24 Act or the Commission? 25 A. That's correct. 162 Giannantonio - direct - Brooks 1 Q. Now, look, if you would, at E and F. 2 P-6E and P-6F. What do those documents involve? 3 A. These two documents are with regard to 4 the Quarter leases. What used to be Atlantic- 5 Deauville and Manchester Mall. Adamar garage. 6 Q. Are these new leases? 7 A. They are new leases. 8 Q. And they are -- they involve parcels of 9 property that are under the Quarter? 10 A. That's correct. 11 Q. And were those parcels of property, the 12 property that are subject to these new leases, being 13 utilized in connection with the Tropicana Atlantic 14 City Casino Hotel complex? 15 A. Yes, they were. 16 Q. So, essentially, these documents 17 document the use of that property? 18 A. That's correct. 19 Q. Do you have an understanding as to why 20 there are multiple leases for the property underneath 21 the complex? 22 A. Yeah. It's a little complicated, but 23 it's -- as a result of property being purchased over 24 the years, essentially. 25 Q. So the complex itself is put together in 163 Giannantonio - direct - Brooks 1 phases? 2 A. Correct. As everybody knows, we have 3 evolved over 30 some -- 30 years or so. 4 Q. Now, it is my understanding that if a 5 closing takes place, that the -- these documents, if 6 they are permitted, the amendments are permitted by 7 the Commission, the documents themselves, the leases 8 themselves will be assigned to Tropicana Atlantic City 9 Corp. and Trop AC Sub; is that correct? 10 A. That is correct. 11 Q. Now, are you aware of the credit 12 agreement that Tropicana Entertainment, Inc., has 13 entered into which involves loans which will be 14 secured, in part, by Tropicana Atlantic City? 15 A. Yes. 16 Q. Were you involved in providing estimated 17 EBITDA figures to Tropicana Entertainment for purposes 18 of submissions they made to the Commission and 19 Division? 20 A. Yes, I was. 21 Q. And the estimated EBITDA figures for 22 Tropicana Atlantic City in terms of 2010 show an 23 expected increase; correct? 24 A. Yes, it does. 25 Q. Could you provide the Commission with 164 Giannantonio - direct - Brooks 1 the assumptions related to that, the estimate and the 2 expected increase in EBITDA? 3 A. Sure. You know, it was our intention 4 that as a stand-alone, we've had to kind of deal in 5 the last year -- couple years -- deal in a way that 6 isn't very helpful in growing business as a 7 stand-alone. So with a company and being involved 8 with many other properties, there are certainly 9 synergies that we're going to look to exploit, 10 economies of scale, marketing efficiencies. 11 In addition, you know, we've worked very 12 hard to deal with this economic downturn, keep our 13 spending in check, make sure that, you know, we are 14 deploying our marketing dollars as effectively as 15 possible. We are still very much engaged with the 16 convention and -- business. Our business with regard 17 to conventions in '10 versus '09 looks like it will be 18 up about 16,000 room nights. It's a big credit to the 19 team at the Trop. We are looking to bring on 20 additional player development personnel. You may have 21 heard me mention that before. 22 As a stand-alone you have a -- it's a 23 competitive disadvantage, especially when you're in 24 bankruptcy, to bring people on board with the talent 25 that we were looking for. But in the last three, 165 Giannantonio - direct - Brooks 1 four, five months, we've had some great opportunities, 2 and we've exploited those opportunities with regard to 3 personnel. So those are the kinds of things that we 4 think is going to drive and improve the EBITDA. 5 Q. Do you have a view or an understanding 6 as to the capital expenditure needs for Tropicana 7 Atlantic City? 8 A. Yes, I do. 9 Q. Could you talk about that a little bit 10 for the Commission. 11 A. Yeah. As both Mr. Gary and Mr. Butera 12 had discussed, we have been in the process of 13 improving our property. And, honestly, I'd like to 14 commend Justice Stein in these last couple of years 15 for allowing us to operate and giving us the support 16 to operate the way we needed to operate. But, 17 clearly, we've looked at every aspect of the property. 18 We want to remain very fiercely competitive, and we 19 are going to spend our capital as with Scott and 20 Hunter had mentioned, you know, very responsibly. 21 We're putting lists together of projects that we think 22 will have pretty good returns on investment. And with 23 regard to maintenance capital, you know, we're going 24 to do the things that that property needs and, you 25 know, typically has to have as a first-class 166 Giannantonio - direct - Brooks 1 operation. 2 Q. Are you confident, based upon your 3 interactions to date, that if a closing is permitted 4 to take place by the Commission that Tropicana 5 Atlantic City will have the necessary capital and 6 maintenance expenditures in order to adequately ensure 7 that it remains a first-class, superior facility? 8 A. Yes. Absolutely confident. 9 Q. You and your management team have been 10 weathering the storm since the Adamar license renewal 11 was denied, license renewal application was denied, 12 and kind of waiting for this day. If Tropicana 13 Atlantic City Corp. is permitted by this Commission to 14 acquire Tropicana Atlantic City, what do you see ahead 15 for Tropicana Atlantic City? 16 A. Well, I'm sure many of you know, I'm 17 very optimistic in our abilities to move the needle at 18 the Tropicana. We have a great plant, just a terrific 19 plant. We have a very, very dedicated and loyal and 20 talented management team that I, you know, again, I 21 commend because of, you know, the things that they've 22 had to overcome and in our ability to move the needle 23 even in light of all of those things. 24 And we have a wonderful workforce. You 25 know, it's every day that when I talk to customers, 167 Giannantonio - direct - Brooks 1 how many people come because of the workforce and the 2 family orient -- family experience that you get when 3 you come to the Tropicana. So I think in light of 4 moving out of bankruptcy with the new owner, I'm very 5 confident that, you know, as spoken in previous 6 testimony, that Mr. Icahn, Mr. Butera, Mr. Hunter, are 7 very keen on Atlantic City. They see the real -- the 8 opportunity in that property, that we're going to be 9 able to move the needle there. 10 Q. Let me show you what we've marked into 11 evidence as Exhibit P-27. It's the ICA trust 12 agreement. 13 Have you had a chance to review the 14 document? 15 A. Yes. 16 Q. Are you generally familiar with its 17 terms? 18 A. Yes. 19 Q. On behalf of the Tropicana Atlantic City 20 Corp. and Trop AC Sub Corp., are you prepared to 21 execute the ICA trust agreement? 22 A. I am. 23 MR. BROOKS: I have nothing further. 24 VICE CHAIR HARRINGTON: Thank you. 25 MR. ADAMS: I have no questions. 168 ITEM NO. 12 1 VICE CHAIR HARRINGTON: Really? 2 (Laughter.) 3 MR. ADAMS: Hard to believe. Hard to 4 believe. 5 VICE CHAIR HARRINGTON: Thank you. 6 Any of the commissioners? 7 COMMISSIONER SOMMELING: No questions, 8 Madame Vice Chair. 9 COMMISSIONER EPPS: I have no questions. 10 (Laughter.) 11 COMMISSIONER EPPS: Even harder to 12 believe. 13 VICE CHAIR HARRINGTON: Wait a minute. 14 What's in the water here? 15 Commissioner? No. 16 All right. Thank you. You may step 17 down. 18 MR. BROOKS: Vice Chair Harrington, I 19 have one final witness. I call Harold First. 20 VICE CHAIR HARRINGTON: Thank you. 21 22 HAROLD FIRST was duly sworn to testify 23 in this matter. 24 25 MR. NANCE: Please state your name for 169 First - direct - Brooks 1 the record. 2 THE WITNESS: Harold First. F-i-r-s-t. 3 MR. NANCE: Thank you. 4 5 DIRECT EXAMINATION BY MR. BROOKS: 6 Q. Good afternoon, Mr. First. Could you 7 provide the Commission with the benefit of your 8 professional background. 9 A. I'm a CPA. I was a partner in a very 10 large accounting firm for 30 years. I was CFO of a 11 multi-national corporation for a few years. I've 12 served on over 25 publicly held boards and most cases 13 chairman of the audit committee. I'm currently on 14 three boards and chairman of the audit committee. 15 I've also been on the boards of two casinos, Taj 16 Mahal, and the Sands. 17 Q. Now, in connection with being on the 18 boards at both Taj Mahal and the Sands, were you 19 licensed? 20 A. Yes. 21 Q. And the Commission granted you a 22 license -- 23 A. Yes, it did. 24 Q. -- in connection with that role? 25 A. Yes. 170 First - direct - Brooks 1 Q. Take a look, if you would, at Exhibit 2 P-27 in evidence. It's the ICA trust agreement. 3 Are you familiar with -- 4 A. Yes, I am. 5 Q. Have you see this documents before? 6 A. Yes, I have. 7 Q. Are you familiar with its term? 8 A. Yes. 9 Q. You've had a chance to review it? 10 A. Yes. 11 Q. Are you prepared to serve as the ICA 12 Trustee in connection with the ICA trust? 13 A. Yes. 14 Q. And are you prepared to serve in 15 accordance with the terms of the ICA trust agreement? 16 A. Yes, I am. 17 Q. What is your understanding of what -- of 18 the items or the corpus that will go into the trust if 19 the ICA trust agreement is approved by the Commission? 20 A. Would be the common stock of the 21 Tropicana and the collateral basis for the stock -- 22 the collateral -- the collateral for the -- 23 Q. The credit agreement? The collateral 24 documents in connection with the credit agreement. 25 A. Right. Uh-huh. 171 ITEM NO. 12 1 MR. BROOKS: I have no further 2 questions. 3 VICE CHAIR HARRINGTON: Thank you. 4 MR. ADAMS: No questions. 5 VICE CHAIR HARRINGTON: Well? 6 COMMISSIONER SOMMELING: No. 7 VICE CHAIR HARRINGTON: All right. 8 Thank you. You may step down. 9 Let me at this time ask if the parties 10 would like to make closing statements? 11 MR. ADAMS: I'm ready. 12 VICE CHAIR HARRINGTON: Okay. 13 MR ADAMS: Vice Chair and Commissioners, 14 simply stated as predicted, I think you now 15 have everything in front of you. And I might 16 add that it is voluminous, to say the least. 17 Just considering the testimony we've already 18 heard, the various documents that have been 19 supplied over the course of quite a length of 20 time, this was not what I would call an easy 21 effort on anybody's part, and certainly given 22 the fact that both the Division and the 23 Commission undertook to move it on an extremely 24 expedited basis, I'm confident that you now 25 have everything you need before you, hopefully, 172 ITEM NO. 12 1 to make a final decision here. 2 Now, I say that because, obviously, some 3 documents even myself I didn't see until today, 4 and you may need to consider those in some 5 fashion. But the Division is confident that 6 our initial recommendation which we made in the 7 report still stands, that there is no 8 information that we are aware of at this point 9 which would in any way prohibit an ICA from 10 issuing to Trop AC and thus allow the saga, 11 I'll call it, to finally end. I think we've 12 all waited for quite a length of time for this 13 day to come. And I think it's now upon us. 14 And it's available for your decision. 15 I had said that, you know, a lot of 16 information was supplied which, obviously, it 17 was. But I think the gist of it is before you 18 in some of the charts that have been supplied. 19 I found them to be extremely helpful when 20 you're considering what's going to happen here. 21 We've heard the percentage that the 22 Icahn-related entities are going to have. 23 We've heard the percentage that Mr. Icahn is 24 going to have. And it's kind of clear the way 25 it's been set up that they are going to be in 173 ITEM NO. 12 1 control. And as the vast majority interest 2 holder, I think it's appropriate that they are 3 in the manner that they've set forth to us. 4 But I also believe that the testimony 5 establishes that this is truly a new beginning 6 or a fresh start, whatever you want to call it. 7 Those terms sometimes are used in a bankruptcy 8 setting, but I think that they certainly apply 9 here, that this organization can now as it's 10 constituted go forward and have a new 11 beginning. And, besides that, there are enough 12 experienced people, from the Division's 13 viewpoint, that are involved both at the Trop 14 level and now even at the higher ownership 15 level that I think there's comfort there for 16 the regulators. 17 So having said that, the last thing I 18 want to do is thank, certainly, the Commission, 19 the Commission staff, Dianna in particular, 20 Len, Tracy, Chris -- I mean, I don't think I 21 would have been in a position and the Division 22 would have been in a position to respond as 23 quickly as we did without their assistance. 24 Definitely. 25 And I certainly want to give some thanks 174 ITEM NO. 12 1 to some of the people that worked on the 2 investigative team. Supervisor Antoinette Hill 3 is here, and I mentioned some of the financial 4 people earlier. And Dan Villo has been working 5 on this case. They put a lot of time and 6 effort into this to make sure that all the i's 7 were dotted and the t's were crossed. And I 8 think they are. 9 So unless you have any questions from 10 me, I have no other comments. 11 VICE CHAIR HARRINGTON: Thank you. 12 Mr. Brooks? 13 MR. BROOKS: Thank you, Vice Chair 14 Harrington. 15 First of all, on behalf of the Applicant 16 and everyone associated with the Applicant, 17 we'd like to thank the Commission for hearing 18 this matter today and hearing this matter so 19 promptly after the Division issued its report 20 and the ICA -- the amended ICA petition was 21 filed. 22 It goes without saying that we have a 23 deep debt of gratitude to the Division of 24 Gaming Enforcement, to Mr. Adams and Mary Jo 25 Flaherty, the members of staff, Bob Latimer and 175 ITEM NO. 12 1 his team, all the folks that Jack identified, 2 for all their efforts in turning around that 3 report. It was extraordinary. It was an 4 extremely heavy lift, and we are very, very 5 grateful. And I think that we're grateful to 6 what it means on a broader context in terms of 7 the property and the future for Atlantic City. 8 We're extremely thankful to the 9 Commission staff and the guidance they have 10 given throughout this process. Dianna 11 Fauntleroy, who probably can't wait to stop 12 hearing from me. 13 (Laughter.) 14 MR. BROOKS: Len DiGiacomo, Tracy 15 Richardson, Daryl, everyone involved with the 16 staff, and Dan. They've been tremendously 17 helpful in terms of getting ready for today. 18 Again, an extremely heavy lift, and we are just 19 so grateful for those efforts. 20 I think there are some other thank-yous 21 that I feel are appropriate. Justice Stein, 22 his team, particularly Sean Mack, who is here 23 today, who has did done a great job over the 24 last couple of years in terms of a very tough 25 process. A process for which there was no 176 ITEM NO. 12 1 gratitude. No matter how good a job Sean did, 2 there was still resentment that the there 3 was -- that the conservatorship wasn't over. 4 But he was probably the perfect guy for the 5 job. He had a great temperament for that, and 6 he did a great job. 7 I think there are some thanks that are 8 definitely needed in terms of Mark 9 Giannantonio, Tama Hughes, and the entire 10 Tropicana management team. They couldn't have 11 been faced with an tougher task. The state 12 police headed to the property two years ago, 13 and they've managed to right that ship, keep 14 things going, and actually keep the property 15 very competitive in this marketplace and an 16 exceptional facility. I marvel every time I go 17 there. I think it's a property with tremendous 18 up side and tremendous potential, and I think 19 they've just done a great job in keeping the 20 team together. 21 I also want to thank Scott Butera, Marc 22 Rubinstein for all their efforts. 23 We started this process in earnest in 24 July, and actually before then in terms of the 25 April 4th and February -- February through 177 ITEM NO. 12 1 April hearings related to the original asset 2 purchase agreement, and they've been very 3 helpful in terms of moving that process along. 4 And I'd also like to thank and recognize 5 the great efforts of Paul O'Gara and Sterns & 6 Weinroth and their team, Dennis Daly. They've 7 done a great job in terms of helping move this 8 process along so that we'd be in a position 9 here today. 10 There are a couple of things that I 11 think we need to touch upon in terms of the 12 relief. Most of it is dealt with in the draft 13 resolution that we have been presented with, 14 and it's acceptable to the -- we have one 15 little language change that we're going to talk 16 about, but it's a very minor change. And the 17 draft resolution, I think, is great, and I 18 won't dwell on any of the relief sought that's 19 actually covered with that document. 20 There is one little thing you heard a 21 little testimony about today. There's a 22 problem with the alcoholic beverage permit 23 because of the fact that there is no CHAB 24 license. And we're getting interim 25 authorization, but we won't have a CHAB license 178 ITEM NO. 12 1 unless and until the Commission grants that 2 license at the time it considers the casino 3 licensure of the Applicant. We've made an 4 application. We filed a petition. I filed a 5 separate petition which was filed. It was 6 Petition Reference No. 0621001 requesting a 7 temporary miscellaneous contingency permit 8 pursuant to NJAC 19:50-5.6(a). And we would -- 9 the petition covers all the items that are 10 required in connection with that. I believe 11 we've perfected that application. I've 12 interacted with Mr. Storcella with respect to 13 that. And, in fact, he's provided me with a 14 draft document that would be acceptable to us 15 in connection with that approval if the 16 Commission would grant us that approval to -- 17 would grant us the temporary miscellaneous 18 contingency permit so as to allow alcoholic 19 beverages to continue to be served and 20 purchased at the Tropicana Atlantic City casino 21 in the locations that they are presently being 22 purchased and sold. 23 We've also had one other issue that we 24 had to deal with, and I'll just touch upon it 25 briefly. It's the third count of the amended 179 ITEM NO. 12 1 ICA petition. One of the requirements is that 2 in connection with a sale of the property -- 3 and I'm referring to NJSA 5:12-95.14(e) is that 4 the unqualified Applicant not realize a benefit 5 or compensation that is above either of one of 6 two things. The actual purchase price or the 7 value of the property on the day the ICA trust 8 was activated, which in this case would be 9 December 12th of 2007. 10 We've submitted a proffer, and what 11 is -- that proffer is in evidence. It's P-25 12 in evidence. And we attempted to set forth in 13 that proffer the various -- the value of the 14 property at the various intervals that are 15 relevant for that analysis. 16 I won't burden you with the all the 17 details. But the proffer covers the three 18 dates, and there's certain documents in 19 connection with that. In terms of the 20 purchase, at the time the purchase took place 21 by the unqualified or disqualified applicant, 22 which in this case would be Tropicana Casino 23 and Resorts, there was -- when they filed their 24 petition, their amended petition for interim 25 authorization in October of 2006, they had 180 ITEM NO. 12 1 indicated that they saw value for purposes of 2 allocation among the properties of $975 3 million. 4 Subsequently on August 7th, 2007, the 5 firm of Duff & Phelps prepared a report. And 6 in connection with that report, they have two 7 values attributed to Tropicana Atlantic City. 8 One was 822.9 million, and the other, which was 9 an enterprise value in connection with their 10 analysis was 1.457 billion. 1.457 billion. So 11 they provided two figures in terms of their 12 analysis. 13 So I think that for purposes of initial 14 purchase price, we have a high of 1.4 billion 15 and a low of 822 million, given the figures, 16 the range of figures we have. 17 Now, at the time the trust was 18 activated, there wasn't any particular value at 19 that point in terms of evaluation like the Duff 20 & Phelps report, but almost immediately after 21 the trust was activated, there were two 22 unsolicited bids for the property. One was 23 from Colony Capital on January 10, 2008, in the 24 amount of $850 million. At that time Colony 25 Capital was licensed. It had the money. It 181 ITEM NO. 12 1 was prepared to close, I think, in a very short 2 time frame. There was also another unsolicited 3 bid in March of 2008 of $950 million. 4 Justice Stein, as he is required to do 5 under the statute, went through a process and 6 sought the submission of bids, and that process 7 concluded in March of 2008. And there were a 8 number of bids ranging -- the range was I think 9 650 million to 975 million. Sean is here. He 10 can address that even a little bit more in 11 detail if there are any questions with that. 12 So I think that those are telling -- telling 13 statistics or telling evidence in terms of the 14 value of the property because, basically, we 15 have a situation where we have a willing buyer 16 and willing seller. And that's generally the 17 best indication of value. 18 So I think in terms of the value of the 19 property on the December 12th date, the date in 20 2007, the date that the trust was activated, 21 would be a low of $650 million and a high of 22 $975 million, with a median of somewhere around 23 $800 million. 24 Now, in terms of what TCR gets for the 25 property, the disqualified entity, you could 182 ITEM NO. 12 1 make a very good argument that they get zero. 2 They're not really getting anything by way of 3 compensation as a consequence of the closing 4 that takes place. We did hear some testimony 5 in the July time frame, particularly from Mr. 6 Kieselstein. We've attached that testimony. 7 That there are some administrative claims. The 8 absolute value of those administrative claims, 9 and they are related a little bit to the 10 warrants that we talked about earlier. They 11 would be about a hundred thousand dollars. So 12 if we gave him the benefit of that, even though 13 I don't think that's quite what we're talking 14 about in terms of compensation, but give them 15 the benefit of that, they would have that 16 hundred thousand dollars. And then I think you 17 could craft an argument that the forgiveness of 18 the debt, the $200 million, in connection with 19 the amended and restated purchase agreement, 20 has some value. So I think we can say that, at 21 best, they have a value or a compensation is 22 going to TCR in the amount of $200.1 million 23 and, therefore, they will not realize a benefit 24 as consistent with the requirements of NJSA 25 5:12-95.14(e) that's greater than either the 183 ITEM NO. 12 1 purchase price or the price at the time of the 2 activation of ICA trust. 3 And I just want to conclude by pointing 4 out one word. One word that comes to mind. 5 Unprecedented. Unprecedented. How many times 6 have we dealt in this case with thing that were 7 unprecedented? 8 December 12th, 2007, this Commission was 9 faced with a very tough choice. Very tough 10 choice. And they made a decision. You made a 11 tough call, a call that's now been affirmed as 12 the proper call up through the New Jersey 13 Supreme Court. In terms of their tasks as 14 regulators, and that set us off on an 15 unchartered course, facts and circumstances 16 that had never happened before in this market. 17 And I dare say not in too many other markets 18 that I'm aware of. And so we had the -- this 19 Commission had to deal with a lot of different 20 issues. All the folks that we've talked about 21 who were involved in this process helped with a 22 lot of issues, a lot of unprecedented issues. 23 And I think everybody's worked diligently and 24 hard to get us to the point where we're at 25 today. 184 ITEM NO. 12 1 The good news is -- and you heard it 2 through the testimony of Mr. Gary, Mr. Butera, 3 Mr. Giannantonio -- that there's a bright 4 future ahead for Tropicana Atlantic City, and a 5 bright future ahead in this market. And I, for 6 one, am grateful that finally we're hearing a 7 little good news. And I think that anybody who 8 doubts it should just visit that property. 9 That property will go like gangbusters, and I 10 think they'll make it work. 11 So we faced a lot of unprecedented 12 things, an unprecedented economic meltdown in 13 the financial markets. Last week we had 14 unprecedented blizzards and unprecedented 15 snowfall. 16 (Laughter.) 17 MR. BROOKS: But we finally, I think, 18 have gotten to the end of the process. And I 19 would ask for the necessary approvals so that 20 we could complete the process, have interim 21 authorization be granted so that Tropicana 22 Atlantic City Corp. can take ownership of 23 Tropicana Atlantic City and look forward to a 24 brighter future. 25 Thank you. 185 ITEM NO. 12 1 VICE CHAIR HARRINGTON: Thank you. All 2 right. 3 I would propose that before we make a 4 motion that we again take a break, recess, make 5 sure everybody's got what we need in order and 6 everything is satisfactory and reconvene at 7 4:00? 8 Wait. Let me say that with confidence. 9 Reconvene at 4:00. 10 Thank you. 11 (Laughter.) 12 MR. BROOKS: Thank you very much. 13 (A recess was taken from 3:20 to 4:30 14 p.m.) 15 VICE CHAIR HARRINGTON: Good afternoon. 16 MR. BROOKS: Good afternoon. 17 VICE CHAIR HARRINGTON: We shall 18 reconvene. 19 I said upstairs, this is sort of like 20 legislative time. You know, 4:00-ish. 21 (Laughter.) 22 VICE CHAIR HARRINGTON: But thank you. 23 I think we're closing in on the end. 24 I have two questions. If there are no 25 comments on the draft resolution, do the 186 ITEM NO. 12 1 parties consent to its adoption? 2 MR. BROOKS: On behalf of the Applicant, 3 Vice Chair Harrington, we consent. 4 VICE CHAIR HARRINGTON: Okay. 5 MR. ADAMS: Yes. On behalf of the 6 Division, we would not interpose any objection. 7 VICE CHAIR HARRINGTON: Thank you. 8 And are there any other matters that 9 need to be brought to our attention? 10 MR. ADAMS: Yes. I believe there are. 11 With respect to the application for what 12 I'll call the temporary CHAB license, the 13 Division would obviously not oppose that. 14 And then with respect to the audit 15 committee, I think Mr. DiGiacomo had asked some 16 questions about this of one of the witnesses. 17 It would be a situation where pending -- I 18 think it's addressed in the new draft 19 resolution -- the filing by certain individuals 20 who would then qualify. The reporting lines 21 would be directly to the committee at this 22 point, at least on a temporary basis so that 23 there's no gap in having any individual in the 24 process who is not already qualified or at 25 least temp qualified or already licensed. 187 ITEM NO. 12 1 Is that correct? 2 MR. DiGIACOMO: Yes. Mr. Adams, your 3 overall view of the suitability of the members 4 to serve on the committee -- 5 MR. ADAMS: Correct. 6 MR. DiGIACOMO: -- and their 7 independent -- 8 MR. ADAMS: Correct. 9 VICE CHAIR HARRINGTON: Thank you. 10 MR. BROOKS: I think we had one -- 11 one -- just one thing, Vice Chair Harrington. 12 The application for the temporary miscellaneous 13 contingency permit, just for purposes of the 14 record, is a joint application. I have Sean 15 here representing Adamar, and it's an 16 application that we made on behalf of the 17 Tropicana Atlantic City Corp., and I think 18 Adamar is joining in that application. 19 MR. MACK: For the record, on behalf of 20 the Trustee/Conservator and Adamar, we join in 21 that application. 22 VICE CHAIR HARRINGTON: Thank you. 23 We'll proceed. 24 After no viable bids resulted in a 25 purchase contract for the Tropicana Casino, 188 ITEM NO. 12 1 Justice Stein entered into an asset purchase 2 agreement with Reorganized Tropicana's secured 3 lenders who submitted a credit bid. Today's 4 hearing signals the near completion of the sale 5 process which included Adamar filing a Chapter 6 11 bankruptcy in order to gain the benefits of 7 a sale free and clear of liens under Bankruptcy 8 Code Section 363. 9 The secured lenders are led by Carl C. 10 Icahn who is no stranger to casino operations 11 in Atlantic City. 12 Mr. Icahn and his various entities 13 owning just below 50 percent of Reorganized 14 Tropicana's debt, along with the other secured 15 lenders, will become proportional equity owners 16 of Reorganized Tropicana and Trop AC. 17 As was noted at the outset, Reorganized 18 Tropicana will obtain a term loan of $130 19 million and a revolver of $20 million, in part, 20 to repay the debtor-in-possession financing 21 Reorganized Tropicana obtained during its 22 Chapter 11 bankruptcy. This credit facility 23 will be secured by all of Reorganized 24 Tropicana's assets, including the Tropicana 25 Casino in Atlantic City. Thus, were we are 189 ITEM NO. 12 1 called upon to assess the financial stability 2 repercussions from this material debt 3 transaction. A review of Reorganized 4 Tropicana's financial information indicates 5 that the credit facility will not have a 6 negative impact on Trop AC's financial 7 stability. 8 As the Division notes, Trop AC, based on 9 the information provided, would be financially 10 able to meet its payment obligations and meet 11 the other criteria under our financial 12 stability regulations. 13 In acquiring the Tropicana Casino, the 14 stock of Trop AC will be put in trust with the 15 ICA Trustee, Harold First, who in other 16 capacities has been previously qualified by 17 this Commission. A review of Mr. First's 18 updated qualifications shows nothing that would 19 cause this Commission to question his good 20 character or integrity, and we thank him for 21 his anticipated service here. 22 The organizational structure of 23 Reorganized Tropicana and to the testimony 24 about it help to identify those entities and 25 individuals that need to qualify in order for 190 ITEM NO. 12 1 Petitioner's ICA application to be complete. 2 Those individuals and entities have filed the 3 required personal history disclosure forms and 4 business entities disclosure forms. Of course, 5 the Commission's prior determination as to the 6 qualifying entities and individuals would not 7 foreclose any determination that other 8 entities, and individuals must qualify should 9 the Division's plenary investigation reveal 10 such a need. 11 While not affecting the completeness of 12 the Petitioners' ICA applications, there are 13 some issues concerning designation of necessary 14 qualifiers which are not ready for 15 determination at this time. The draft 16 resolution, therefore, addresses a process by 17 which Petitioners will bring those issues 18 forward for resolution within the first -- 19 approximately the first 45 days of the ICA 20 period. I would, therefore, recommend that 21 Trop AC file a petition for possible 22 consideration at our April 7th, 2010, public 23 meeting, allowing sufficient time for the 24 Division to respond in advance of that date. 25 Section 95.13 of the Act sets forth the 191 ITEM NO. 12 1 necessary findings we must make by clear and 2 convincing evidence in order to grant ICA. 3 Some of those rulings are technical in nature 4 and, therefore, are not necessary for us to 5 discuss here, but each requirement under the 6 ICA statute will be detailed in our resolution 7 entered in this matter. 8 What essentially is left to consider is 9 whether it is in the public interest to allow 10 interim authorization to Petitioners while the 11 Division conducts its plenary investigation. 12 Necessarily, the Commission assesses all 13 relevant information, especially any 14 preliminary evaluation from the Division as to 15 the company's good character and financial 16 stability without requiring the Division to 17 disclose anything that may prejudice or 18 otherwise compromise its investigation. 19 Petitioners have also requested relief 20 regarding whether a conservatorship for the 21 Tropicana Casino must continue if ICA is 22 granted to Trop AC and Reorganized Tropicana. 23 Petitioners have requested this relief in the 24 alternative, allowing for the possibility of 25 either continuing or terminating the 192 ITEM NO. 12 1 conservatorship, depending on how our relevant 2 statutes are interpreted. In carefully 3 reviewing Petitioners' request, the Act and the 4 Division's arguments strongly in favor of 5 proceeding with ICA alone and no replacement 6 Conservator, for my part, I am satisfied that 7 the continuation of the conservatorship is not 8 necessary. None of the triggering events set 9 forth in Section 130.1A of the Act are present 10 under the current purchase circumstances which 11 would prompt the imposition of a conservator. 12 And that certainly is one factor that 13 distinguishes, for me, the situation from what 14 was confronted in December 2007. Therefore, in 15 my view, under these unique circumstances, the 16 protections of the ICA trust alone are 17 sufficient to allow operations to continue 18 uninterrupted pending plenary qualification of 19 Reorganized Tropicana and Casino licensure for 20 Trop AC. 21 There are additional requests for relief 22 related to the grant of the ICA which, with one 23 exception, also do not necessitate discussion 24 here but are detailed in the proposed 25 resolution in this matter. 193 ITEM NO. 12 1 The matter to which I refer is the 2 request to allow Reorganized Tropicana to 3 institute an independent audit committee of its 4 board of directors for the purposes of 5 overseeing the supervisors of Trop AC's 6 surveillance and internal audit departments 7 consistent with our regulations. The contrast 8 from prior ownership could not be more 9 dramatic. As Petitioners set forth in the 10 record, this three-member audit committee will 11 consist of individuals whose separate financial 12 resources and lack of in offending employment 13 relationship with Reorganized Tropicana and its 14 affiliates greatly serve to demonstrate their 15 independence. 16 For its part, the Division 17 wholeheartedly agrees, and I, therefore, have 18 no hesitancy in recommending that the 19 Commission permit Reorganized Tropicana to 20 constitute its independent audit committee as 21 proposed. 22 Today's hearing regarding ICA is a major 23 phase of what has been a more lengthy process 24 than any of us could have anticipated. An 25 appellate process, followed by an unprecedented 194 ITEM NO. 12 1 economic downturn greatly impacted the bidding 2 process. While the progression of this sales 3 process was unforeseen, I am sure I speak for 4 my fellow commissioners when I say that the 5 granting of ICA to Petitioners will certainly 6 be a positive step towards bringing the process 7 to a conclusion. 8 Carl Icahn's return to the business of 9 gaming in New Jersey certainly brings, as we 10 heard from the witnesses, signs of a 11 rejuvenation and optimism in the market. Mr. 12 Icahn has much to gain by ensuring the 13 property's success, and the entire state and 14 community stands to benefit by him and the 15 company achieving their goals. 16 While the industry is not near its 17 record peak from 2006, it still generates 18 critical and impressive annual revenues around 19 $4 billion and is coping with the new economic 20 realities facing its customers and employees. 21 I believe I speak for all the commissioners 22 when I say we remain convinced that Atlantic 23 City continues to offer a premier entertainment 24 value that is unmatched on the East Coast. 25 Based on the entire record of this 195 ITEM NO. 12 1 proceeding, including the testimony today and 2 the documents filed, I am satisfied that 3 Petitioners have met the standards for interim 4 casino authorization. In particular, I believe 5 that the record demonstrates that interim 6 authorization advances and serves the public 7 interest by allowing Petitioners -- excuse 8 me -- a greater measure of control over their 9 investment, albeit through the mechanism of the 10 ICA trust, but only now that the Division 11 having completed its preliminary evaluation of 12 the Petitioners' overall suitability has 13 concurred in the granting of ICA without 14 reporting anything untoward. 15 Excuse me. 16 Before calling for the final vote, I 17 have some brief additional comments. 18 When the Commission started the race to 19 find a buyer for Tropicana, we anticipated a 20 sprint; instead we got a marathon. And as 21 Chair Kassekert and Commissioner Sommeling and 22 Epps know best, the road was not always smooth 23 but more often bumpy and sometimes rock strewn. 24 But Justice Stein persevered through it all. 25 Finding a willing buyer at a fair price is 196 ITEM NO. 12 1 always challenging, but to do so in the midst 2 of a historical international economic 3 meltdown, when expectations at the outset were 4 so high, and the task at hand perceived to be 5 so easy based on the prior thriving financial 6 landscape, Justice Stein, nevertheless, proved 7 up to the challenge. At times along the 8 course, he and we faced criticism, but there 9 was never a doubt that the effort was made 10 always to do the best as we each saw it under 11 trying circumstances for the sake of the good 12 of New Jersey and Atlantic City. 13 With his service as a conservator coming 14 to a close, on behalf of all of us and 15 certainly Chair Kassekert, it is my fervent 16 hope that he accept our thanks for having run 17 the race to its successful end. And thank you, 18 also, Sean, for all that you've done every step 19 of the way. 20 I would be remiss if I didn't also take 21 a moment on behalf of we commissioners to say 22 thank you to our extraordinary staff, without 23 whom you all know this day would never have 24 come. Most especially Dianna Fauntleroy, Len 25 DiGiacomo, Tracy Richardson, Chris Glaum, and 197 ITEM NO. 12 1 Chris Storcella, and their staff. And to the 2 Division, Jack Adams, Mary Jo, all the people 3 you named, Jack. George Scott, Susan Clark, 4 Bob Latimer, Antoinette Hill, Dan DeLia, and 5 for everyone at the Division, our partners in 6 this. And I also have thanks from Director 7 Josh Lichtblau who offers his appreciation for 8 finishing this -- this effort. 9 So with those parting comments and our 10 best hope for a new day, I move that the 11 Commission adopt the proposed resolution and 12 grant ICA to the Reorganized Tropicana and Trop 13 AC and approve the material debt transaction as 14 set forth in the findings and rulings and 15 subject to the conditions in the resolution. 16 COMMISSIONER SOMMELING: I echo that 17 motion, Madame Vice Chair. 18 VICE CHAIR HARRINGTON: Is there a 19 second? 20 COMMISSIONER EPPS: Second. 21 VICE CHAIR HARRINGTON: Any discussion? 22 COMMISSIONER EPPS: Roll call. 23 VICE CHAIR HARRINGTON: Roll call. 24 MR. NANCE: Commissioner Sommeling? 25 COMMISSIONER SOMMELING: Yes. 198 ITEM NO. 12 1 MR. NANCE: Commissioner Epps? 2 COMMISSIONER EPPS: Yes. 3 MR. NANCE: Commissioner Fanelle? 4 COMMISSIONER FANELLE: Yes. 5 MR. NANCE: Vice Chair Harrington? 6 VICE CHAIR HARRINGTON: Yes. 7 MR. NANCE: The record will reflect that 8 the motion is unanimous. 9 VICE CHAIR HARRINGTON: Thank you. 10 Thank you. 11 MR. NANCE: In accordance with 12 resolution -- 13 COMMISSIONER EPPS: Question. Mr. 14 DiGiacomo. Did we capture the CHAB motion in 15 that resolution? Or do we need a -- 16 MR. DiGIACOMO: I believe it's Paragraph 17 22. 18 COMMISSIONER EPPS: Okay. So it is 19 captured. Okay. 20 MR. DiGIACOMO: Yes. Yes. 21 VICE CHAIR HARRINGTON: Okay. 22 MR. NANCE: In accordance with 23 Resolution No. 09-12-16-20, the next closed 24 session of the Commission -- 25 VICE CHAIR HARRINGTON: Uh-uh-uh. It's 199 1 now time for the public portion of the meeting. 2 (Laughter.) 3 COMMISSIONER EPPS: He says that -- 4 MR. HENEGHAN: He says that afterwards. 5 (Laughter.) 6 MR. NANCE: The next closed session of 7 the Commission shall be held on Wednesday, 8 March 17th, 2010, at 9:15 a.m. in the 9 Commission offices. 10 It is now time for the public 11 participation portion of the meeting. 12 (Laughter.) 13 VICE CHAIR HARRINGTON: Uh-oh. 14 Is there anyone from the public who 15 wishes to be heard? 16 (No response.) 17 VICE CHAIR HARRINGTON: Hearing none, 18 our meeting is concluded? 19 Oh, no. A motion to adjourn. 20 COMMISSIONER SOMMELING: Motion to 21 adjourn, Madame Vice Chair. 22 VICE CHAIR HARRINGTON: Second? 23 COMMISSIONER EPPS: Second. 24 VICE CHAIR HARRINGTON: Second. 25 We're adjourned. And I guess I'm fired. 200 1 I won't be here next month. 2 (Laughter.) 3 (Public Meeting 10-03-03 was adjourned 4 at 4:46 p.m.) 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 201 1 2 C E R T I F I C A T E 3 4 5 I, DARLENE SILLITOE, a Certified Court 6 Reporter and Notary Public of the State of New 7 Jersey, certify that the foregoing is a true 8 and accurate transcript of the proceedings. 9 10 11 I further certify that I am neither 12 attorney, of counsel for, nor related to or 13 employed by any of the parties to the action; 14 further that I am not a relative or employee of 15 any attorney or counsel employed in this case; 16 nor am I financially interested in the action. 17 18 19 DARLENE SILLITOE CCR 20 License No XI01023 21 22 Dated: March 7, 2010 23 My Notary Commission Expires July 22, 2014 24 ID No 2062871 25