UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: 3/31/99
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to___________
Commission file number: 333-17795
Waterford Gaming, L.L.C.
--------------------------
(Exact name of Registrant as specified in its charter)
Delaware 06-1465402
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
914 Hartford Turnpike, P.O. Box 715
Waterford, CT 06385
------------------------------------ ---------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code (860) 442-4559
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
WATERFORD GAMING, L.L.C.
INDEX TO FORM 10-Q
Page
Number
PART I -- FINANCIAL INFORMATION
ITEM 1 -- Financial Statements
Report of Independent Accountants 1
Financial Information 2
Condensed Balance Sheets of Waterford Gaming, L.L.C.
as of March 31, 1999 (unaudited) and December 31, 1998 3
Condensed Statements of Operations of Waterford
Gaming, L.L.C. for the three months ended March 31, 1999
(unaudited) and March 31, 1998 (unaudited) 4
Condensed Statements of Changes in Members'
Deficiency of Waterford Gaming, L.L.C. for the
three months ended March 31, 1999 (unaudited)
and March 31, 1998 (unaudited) 5
Condensed Statements of Cash Flows of Waterford
Gaming, L.L.C. for the three months ended March 31, 1999
(unaudited) and March 31, 1998 (unaudited) 6
Notes to Condensed Financial Statements for Waterford
Gaming, L.L.C. 7
ITEM 2 -- Management's Discussion and Analysis of
Financial Condition and Results of Operations 12
ITEM 3 -- Quantitative and Qualitative Disclosure
about Market Risk 28
PART II -- Other Information
Item 1 -- Legal Proceedings 28
Item 2 -- Changes in Securities 28
Item 3 -- Defaults upon Senior Securities 28
Item 4 -- Submission of Matters to a Vote of Security Holders 28
Item 5 -- Other Information 28
Item 6 -- Exhibits and Reports on Form 8-K 29
Signatures - Waterford Gaming, L.L.C. 33
Report of Independent Accountants
----------------------------------
To the Members of Waterford Gaming, L.L.C.:
We have reviewed the accompanying condensed balance sheet of
Waterford Gaming, L.L.C. (the "Company") as of March 31, 1999,
and the related condensed statements of operations for the three
months ended March 31, 1999 and 1998, and the related condensed
statements of changes in member's deficiency and cash flows for
the three months ended March 31, 1999 and 1998. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the accompanying financial
statements for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the balance sheet as of December 31, 1998,
and the related statements of operations and changes in member's
deficiency and cash flows for the year then ended (not presented
herein); and in our report dated February 24, 1999, we expressed
an unqualified opinion on those financial statements. In our
opinion, the information set forth in the condensed balance sheet
as of December 31, 1998, is fairly stated, in all material
respects, in relation to the balance sheet from which it has been
derived.
PricewaterhouseCoopers LLP
May 11, 1999
1
PART I - FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
--------------------
The unaudited condensed financial information as of March 31, 1999, and for
the three months ended March 31, 1999, included in this report was reviewed
by PricewaterhouseCoopers LLP, independent public accountants, in accordance
with the professional standards and procedures established for such reviews
by the American Institute of Certified Public Accountants.
2
WATERFORD GAMING, L.L.C.
CONDENSED BALANCE SHEETS
March 31, 1999 (Unaudited) and December 31, 1998
____________
March 31, December 31,
1999 1998
--------- -----------
ASSETS
Current assets:
Cash $ 6,232,787 $ 2,783,344
Temporary investments 10,849 2,045,430
Restricted investments 11,875,000 ---
Due from Trading Cove
Associates 2,835,000 1,611,288
Other assets 59,765 19,299
------------ ------------
Total current assets 21,013,401 6,459,361
------------ ------------
Trading Cove Associates
-equity investment 8,403,149 8,662,198
Beneficial interest-Leisure
Resort Technology, Inc. 5,958,796 4,191,909
Investment in 15%
subordinated notes
receivable 33,232,426 32,059,517
Investment in completion
guarantee subordinated
notes receivable 5,187,500 5,075,000
Deferred financing costs,
net of accumulated
amortization of $15,795
and $1,058,895 at March 31,
1999 and December 31, 1998,
respectively 4,154,007 3,339,780
Leasehold improvements, net of
accumulated depreciation of
$1,273 and $0 at March 31,
1999 and December 31, 1998,
respectively 47,727 ---
------------- ------------
Total assets $ 77,997,006 $ 59,787,765
============== =============
LIABILITIES AND MEMBERS' DEFICIENCY
Current liabilities:
Accrued expenses $ 635,737 $ 35,172
Accrued interest on
senior notes payable 494,792 1,002,715
-------------- -------------
Total current liabilities 1,130,529 1,037,887
12-3/4% senior notes payable --- 61,471,000
9-1/2% senior notes payable 125,000,000 ---
-------------- -------------
Total liabilities 126,130,529 62,508,887
-------------- -------------
Members' deficiency (48,133,523) (2,721,122)
-------------- -------------
Total liabilities and
members' deficiency $ 77,997,006 $ 59,787,765
============= =============
The accompanying notes are an integral part of these condensed
financial statements.
3
WATERFORD GAMING, L.L.C.
CONDENSED STATEMENTS OF OPERATIONS
for the three months ended March 31, 1999 and March 31, 1998
(Unaudited)
____________________
For the three For the three
months ended months ended
March 31, 1999 March 31, 1998
-------------- --------------
Revenue:
Interest and dividend
income $ 1,359,582 $ 1,143,105
Completion guarantee notes
fee income - Trading
Cove Associates --- 21,250
Management services income -
Trading Cove Associates 665,355 1,813,759
Organization and
administrative fee income -
Trading Cove Associates 5,639,486 ---
------------ --------------
Total revenue 7,664,423 2,978,114
------------ --------------
Expenses:
Interest expense 9,981,386 1,959,388
General and administrative 179,869 94,704
12-3/4% senior notes tender
expense 648,486 ---
Amortization of beneficial
interest - Leisure Resort
Technology, Inc. 233,113 204,307
Amortization on deferred
financing costs 3,355,575 115,518
Depreciation - leasehold
improvements 1,273 ---
------------ -------------
Total expenses 14,399,702 2,373,917
------------ -------------
(6,735,279) 604,197
Equity in income(loss)
of Trading Cove
Associates 208,610 (443,258)
------------ --------------
Net income(loss) $ (6,526,669) $ 160,939
============= =============
The accompanying notes are an integral part of these condensed
financial statements.
4
<TABLE>
WATERFORD GAMING, L.L.C.
CONDENSED STATEMENTS OF CHANGES IN MEMBER'S DEFICIENCY
for the three months ended March 31, 1999 and March 31, 1998
(Unaudited)
________________________
For the three months ended
March 31, 1999
Slavik LMW Waterford Group,
Suites, Inc. Investments, Inc. L.L.C. Total
------------- ---------------- --------------- -------------
<S> <C> <C> <C> <C>
Balance, January 1 $ (1,765,936) $ (955,186) $ (2,721,122)
Contributions - January 1
- March 17 33,220 15,780 49,000
Distributions - January 1
- March 17 (1,277,787) (606,945) (1,884,732)
Net income(loss)-
January 1 - March 17 (5,067,483) (2,407,045) (7,474,528)
Transfer of interest 8,077,986 3,953,396 (12,031,382) ---
Distributions --- --- (37,050,000) (37,050,000)
Net income(loss) --- --- 947,859 947,859
---------------- -------------- ------------ --------------
Balance, March 31 $ --- $ --- $(48,133,523) $(48,133,523)
=================== ============== ============= =============
</TABLE>
For the three months ended
March 31, 1998
Slavik LMW Investments,
Suites, Inc. Inc. Total
-------------- --------------- -------
Balance, January 1 $ (6,154,626) $ (3,039,806) $(9,194,432)
Contributions -
January 1- March 31 --- --- ---
Distributions -
January 1 - March 31 --- --- ---
Net income(loss) -
January 1 - March 31 109,111 51,828 160,939
------------- ------------- ------------
Balance, March 31 $ (6,045,515) $ (2,987,978) $(9,033,493)
============= ============= ============
The accompanying notes are an integral part of these condensed
financial statements.
5
WATERFORD GAMING, L.L.C.
CONDENSED STATEMENTS OF CASH FLOWS
for the three months ended March 31, 1999 and March 31, 1998
(Unaudited)
______________________
For the three For the three
months ended months ended
March 31, 1999 March 31, 1998
-------------- --------------
Cash flow from operating
activities:
Net income(loss) $ (6,526,669) $ 160,939
--------------- -------------
Adjustments to reconcile
net income(loss) to net
cash (used in) provided by
operating activities:
Amortization 3,588,688 319,825
Depreciation 1,273 ---
Equity in (income)
loss of Trading
Cove Associates (208,610) 443,258
Changes in operating
assets and liabilities:
Due from Trading Cove
Associates (1,223,712) (1,519,836)
Other assets (40,466) 38,563
Accrued interest
receivable - 15%
subordinated notes
receivable (1,172,909) (1,014,956)
Accrued interest
receivable - completion
guarantee subordinated
notes receivable (112,500) (51,221)
Accrued expenses 160,504 271,177
Accrued interest on
senior notes payable (507,923) 1,959,388
--------------- --------------
Total adjustments 484,345 446,198
--------------- --------------
Net cash (used in)
provided by
operating
activities (6,042,324) 607,137
-------------- --------------
Cash flow from investing activities:
(Purchases) and sales of temporary
investments - net (9,840,419) (57,618)
Beneficial interest - Leisure
Resort Technology, Inc. (2,000,000) (5,057,211)
Distributions from Trading Cove
Associates 667,659 224,680
Contributions to Trading Cove
Associates (200,000) ---
Leasehold improvements (49,000) ---
Release of cash in escrow --- 5,000,000
Return on investment in completion
guarantee subordinated notes
receivable --- 425
------------- -------------
Net cash (used in)
provided by investing
activities (11,421,760) 110,276
-------------- -------------
Cash flows from financing
activities:
Proceeds from 9-1/2%
senior notes issuance 125,000,000 ---
Redemption of 12-3/4%
senior notes (61,471,000) ---
Distributions to members (38,934,732) ---
Deferred financing costs (3,729,741) (255,790)
Contributions by members 49,000 ---
-------------- -------------
Net cash provided
by (used in)
financing activities 20,913,527 (255,790)
-------------- -------------
Net increase (decrease) in cash 3,449,443 461,623
Cash and cash equivalents at
beginning of quarter 2,783,344 232,759
-------------- -------------
Cash and cash equivalents at
end of quarter $ 6,232,787 $ 694,382
============== =============
Supplemental disclosure of
cash flow information:
Cash paid during the
quarter for interest $ 10,489,309 $ ---
============== =============
Supplemental disclosure of
non-cash financing
activities:
Deferred financing costs
funded through accrued
expenses $ 440,061 $ ---
============== =============
The accompanying notes are an integral part of these condensed
financial statements.
6
WATERFORD GAMING, L.L.C.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
______________________
1. Basis of Presentation:
The unaudited condensed interim financial statements have
been prepared in accordance with the policies described in
the Company's 1998 audited financial statements and should
be read in conjunction with the Company's 1998 audited
financial statements within the Company's Annual Report for
the fiscal year ended December 31, 1998 on Form 10-K/A as
filed with the Securities and Exchange Commission (the
"Commission") File No. 333-17795 on March 8, 1999. The
condensed Balance Sheet at December 31, 1998, contained
herein, was derived from audited financial statements, but
does not include all disclosures contained in the Form 10-
K/A and required by generally accepted accounting
principles.
The unaudited condensed interim financial statements include
normal and recurring adjustments which are, in the opinion
of management, necessary to present a fair statement of
financial position as of March 31, 1999, and the results of
operations, the statement of members' deficiency and cash
flows for the three months ended March 31, 1999. Results of
operations for the period are not necessarily indicative of
the results to be expected for the full year. In March
1999, the Company with its wholly-owned subsidiary Waterford
Gaming Finance Corp. ("Finance") has issued $125 million 9-
1/2% senior notes payable which mature March 15, 2010 (the
"$125 Million Senior Notes") in connection with the
redemption of the Company's and Finance's existing $65
million 12-3/4% senior notes (the $65 Million Senior Notes).
2. Trading Cove Associates - Equity Investment:
As of March 31, 1999 and 1998, the following summary
information relates to Trading Cove Associates ("TCA").
Total revenues and net income are for the three months ended
March 31, 1999 and 1998:
March 31, March 31,
1999 1998
--------- ----------
Total assets $10,761,020 $ 9,206,938
Total liabilities (5,804,077) (4,688,650)
----------- -----------
Partners' capital $ 4,956,943 $ 4,518,288
=========== ===========
Total revenue $15,397,856 $12,628,335
=========== ===========
Net income(loss) $ 1,183,486 $ (120,250)
=========== ===========
Company's interest:
Trading Cove Associates -
equity investment,
beginning of quarter $ 8,662,198 $10,384,292
Contributions 200,000 ---
Distributions (667,659) (224,680)
----------- -----------
8,194,539 10,159,612
----------- -----------
Income(loss) from Trading Cove
Associates 591,743 (60,125)
Amortization of interests (383,133) (383,133)
purchased ----------- -----------
Equity in income(loss) of
Trading Cove Associates 208,610 (443,258)
----------- -----------
Trading Cove Associates -
equity investment $ 8,403,149 $ 9,716,354
=========== ===========
7
3. Beneficial Interest - Leisure Resort Technology, Inc.
On January 6, 1998, the Company paid $5,000,000 to Leisure
Resort Technology, Inc. ("Leisure") whereby Leisure gave up
its beneficial interest in 5% of certain fees and excess
cash flows, as defined, of TCA and any other claims it may
have had against the Company, TCA and TCA's partners and
former partner. On August 6, 1997, Leisure, a former
partner of TCA, had filed a lawsuit against TCA, the Company
and its owners, Sun Cove Limited ("Sun Cove") and former
partner of TCA, RJH Development Corp., claiming breach of
contract, breach of fiduciary duties and other matters in
connection with the development of the Mohegan Sun Casino
(the "Mohegan Sun") by TCA. The Company agreed to acquire
Leisure's contractual rights and settle all matters. The
Company no longer has the obligation to pay to Leisure 5% of
the Organizational and Administrative Fee, as defined in the
Organizational and Administrative Services Agreement, and 5%
of TCA's Excess Cash as defined in TCA's partnership
agreement. The Company is now entitled to such cash flow.
If, at any time, TCA or any of its partners, affiliates,
related entities, or any related person enters into an
agreement with the Tribe, or any of its affiliates or any
other related party, pursuant to which TCA's management or
operation of, or any involvement of any kind with the
enterprises is amended, restated, extended or renewed, or if
a new agreement or related arrangement is entered into
between TCA and the Tribe, the Company shall pay an
additional $2,000,000 to Leisure on the earliest to occur of
(i) the retirement of the $65 Million Senior Notes, (ii) any
renewal, extension, refinancing or refunding of, or
amendment, modification or supplement to, the $65 Million
Senior Notes, and (iii) November 30, 2003. On March 17,
1999, the $65 Million Senior Notes were retired and on March
18, 1999, the Company paid $2,000,000 to Leisure.
The Leisure payments plus associated costs were amortized on
a straight-line basis over the remaining term of TCA's
Management Agreement through March 17, 1999. As a result of
the Relinquishment Agreement becoming effective, the
remaining balance will be amortized over 189 months
beginning March 18, 1999. Accumulated amortization at March
31, 1999 and 1998 amounts to $1,098,415 and $204,307,
respectively.
4. 15% Subordinated Notes Receivable:
On November 8, 1996, the Company purchased a 15%
subordinated note receivable from the Mohegan Tribal Gaming
Authority (the "Authority") an instrumentality of the
Mohegan Tribe of Indians of Connecticut (the "Tribe"), which
matures November 15, 2003, in the principal amount of
$19,150,000 from Sun International Hotels Limited ("Sun
International"). The Company also purchased the related
accrued interest, deferred interest and subordinated notes
fee amounts, as of November 8, 1996, totaling $5,922,543.
In addition, on November 8, 1996, the Company received a
distribution from TCA of an additional 15% subordinated
notes receivable from the Authority in the principal amount
of $850,000, together with accrued interest of $148,406.
The 15% subordinated notes receivable from the Authority
bear interest at 15% per annum.
At March 31, 1999 and December 31, 1998, the 15%
subordinated notes receivable included accrued interest
receivable of $13,232,426 and $12,059,517, respectively.
8
5. Completion Guarantee Subordinated Notes Receivable:
On September 22, 1997, and on October 12, 1998, the Company
purchased a completion guarantee subordinated note
receivable issued by the Authority which matures on November
15, 2003, in the aggregate principal amount of $5,000,000
from Sun International. The Company also purchased the
related accrued interest and deferred interest amounts which
had not been paid by TCA totaling $106,875 as of September
22, 1997 and October 12, 1998, and completion guarantee note
fee amounts totaling $191,250 as of September 22, 1997 and
October 12, 1998. As of December 31, 1997, $425 related to
completion guarantee note fee amounts that were owed by TCA
on the completion guarantee subordinated note. During the
quarter ended March 31, 1998, the Company received $21,675
in completion guarantee note fee payments from TCA. These
completion guarantee note fee payments were netted against
the $425 resulting in recognition of $21,250 in completion
guarantee notes fee income during the quarter ended March
31, 1998.
The rate of interest payable by the Authority on the
completion guarantee subordinated notes is the prime rate
per annum announced by Chase Manhattan Bank from "time to
time" plus 1% (the "Base Rate"). The Base Rate is set and
revised at intervals of six months. At March 31, 1999, the
Base Rate was 9.0% per annum and at March 31, 1998 the Base
Rate was 9.50% per annum.
At March 31, 1999 and December 31, 1998, the completion
guarantee subordinated notes receivable includes accrued
interest receivable of $187,500 and $75,000, respectively.
6. $65 Million 12-3/4% Senior Notes Payable:
The $65 Million Senior Notes payable at March 31, 1999 and
December 31, 1998, consist of $0 and $61,471,000,
respectively, aggregate principal amount of the $65 Million
Senior Notes issued on November 8, 1996 by the Company and
Finance.
The $65 Million Senior Notes were redeemed as part of the
Company's and Finance's $125 Million Senior Notes offering
which was completed on March 17, 1999.
9
7. $125 Million 9-1/2% Senior Notes Payable:
General. On March 17, 1999, the Company and Finance,
issued $125 Million Senior Notes. Payment of the principal
of, and interest on, the $125 Million Senior Notes is
subordinate in right of payment to all of their existing and
future secured debts.
Interest. Interest is payable semi-annually in arrears
on March 15 and September 15 at a rate of 9-1/2% per annum
commencing on September 15, 1999.
Optional Repayment. The principal amount of the $125
Million Senior Notes is payable on March 15, 2010. The
Company and Finance may elect to redeem the $125 Million
Senior Notes at any time after March 15, 2004 at a
redemption price equal to a percentage (105.182% after March
15, 2004 and declining to 104.318% after March 15, 2005,
103.455% after March 15, 2006, 102.591% after March 15,
2007, 101.727% after March 15, 2008, 100.864% after March
15, 2009 and to 100% after March 15, 2010) of the principal
amount thereof plus accrued interest. The $125 Million
Senior Notes provide that upon the occurrence of a Change of
Control (as defined), the holders thereof will have the
option to require the redemption of the $125 Million Senior
Notes at a redemption price equal to 101% of the principal
amount thereof plus accrued interest.
Mandatory Repayment. If the Company and Finance have
any excess cash, as defined, they must redeem the $125
Million Senior Notes (on a semi-annual basis on March 15 and
September 15) equal to a percentage (109.500% after March
15, 1999 and declining to 108.636% after March 15, 2000,
107.773% after March 15, 2001, 106.909% after March 15,
2002, 106.045% after March 15 2003, 105.182% after March 15,
2004, 104.318% after March 15, 2005, 103.455% after March
15,2006, 102.591% after March 15,2007, 101.727% after March
15, 2008, 100.864% after March 15, 2009 and to 100.000%
after March 15, 2010). In some circumstances, if either the
Company or its partner in TCA exercises the option to buy or
sell partnership interests in TCA, the Company and Finance
must redeem the $125 Million Senior Notes.
Covenants. The indenture relating to the $125 Million
Senior Notes (the "Indenture") contains certain affirmative
and negative covenants customarily contained in agreements
of this type, including without limitation, covenants that
restrict, subject to specified exceptions the Company's and
Finance's ability to (i) borrow money, (ii) pay dividends on
stock or make certain other restricted payments, (iii) use
assets as security in other transactions, (iv) make
investments, (v) sell other assets or merge with other
companies and (vi) engage in any business except as
currently conducted or contemplated or amend their
relationship with TCA. The Indenture also provides for
customary events of default and the establishment of a
restricted investment fund with a trustee for interest
reserves.
8. Change of Ownership:
In connection with the Company's and Finance's recently
completed issuance of $125 Million Senior Notes, each of
Slavik Suites, Inc. ("Slavik") and LMW Investments, Inc.
("LMW") have contributed their respective interests in the
Company as of March 17, 1999 to a Delaware Limited Liability
Company, Waterford Group, L.L.C. (the "Waterford Group").
The Waterford Group is now the sole member of the Company.
Slavik and LMW own Waterford Group in the same respective
interest as they had in the Company.
10
9. Related Party Agreements:
The Company paid an affiliate for accounting services in the
amount of $95,200 during the quarter ended March 31, 1999
and $0 for the quarter ended March 31, 1998.
On September 28, 1998, the Company entered into an
employment agreement with Len Wolman. The employment
agreement provides for a base annual salary of $250,000
reduced by any amounts Mr. Wolman receives as a salary from
TCA for such period. Pursuant to such employment agreement,
the Company shall pay to Mr. Wolman an amount equal to 0.05%
of the revenues of the Mohegan Sun including the expansion
to the extent Mr. Wolman has not received such amounts from
TCA. On and after January 1, 2004, the Company shall pay to
Mr. Wolman incentive compensation based on the revenues of
the Mohegan Sun, including the expansion, as a percentage
(ranging from .00% to .10%) to be determined using a formula
attached to the employment agreement which compares actual
revenues to predetermined revenue targets.
Slavik and the other principals of the Company have
interests in and may acquire interests in hotels in
southeastern Connecticut which have or may have arrangements
with the Mohegan Sun to reserve and provide hotel rooms to
patrons of the Mohegan Sun.
11
Item 2. Management's Discussion and Analysis of Financial
--------------------------------------------------
Condition and Results of Operations
-----------------------------------
The following discussion should be read in conjunction with, and
is qualified in its entirety by, the Company's condensed
financial statements and the notes thereto included elsewhere
herein.
Certain Forward Looking Statements
- ----------------------------------
Certain information included in this Form 10-Q and other
materials filed or to be filed by the Company with the Commission
(as well as information included in oral statements or other
written statements made or to be made by the Company) contains
forward-looking statements, within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Such statements
include information relating to the Mohegan Sun including plans
for future expansion and other business development activities,
financing sources and the effects of regulation (including gaming
and tax regulation) and competition. Any forward-looking
statements included herein do not purport to be predictions of
future events or circumstances. Forward-looking statements can
be identified by, among other things, the use of forward-looking
terminology such as "believes", "expects", "may", "will",
"should", "seeks", "pro forma, "anticipates", "intends" or the
negative of any thereof or other variations thereon or comparable
technology. Such forward-looking information involves important
risks and uncertainties that could significantly affect
anticipated results in the future and, accordingly, such results
may differ from those expressed in any forward-looking statements
made by or on behalf of the Company.
Development and Operational Activities
- ---------------------------------------
The operation of the Company or its predecessors in its role as a
managing general partner of TCA has been to assist the Tribe and
the Authority in obtaining federal recognition, negotiate the
tribal-state compact with the State of Connecticut, obtain
financing for the development of the Mohegan Sun located on
certain Tribal land in Uncasville, Connecticut, negotiate the
Amended and Restated Gaming Facility Management Agreement (the
"Management Agreement") and participate in the design and
development of the Mohegan Sun which commenced operations on
October 12, 1996. Since the opening of the Mohegan Sun, TCA has
overseen the Mohegan Sun's day-to-day operations.
12
On February 7, 1998, TCA and the Tribe and the Authority
finalized contract negotiations and are moving forward with a
significant expansion project (the "Project") at the Mohegan Sun.
Under the terms of an agreement (the "Relinquishment Agreement"),
TCA will continue to manage the Mohegan Sun under the existing
Management Agreement until the Relinquishment Date (the later of
(a) January 1, 2000 or (b) the Effective Date). The Effective
Date under the Relinquishment Agreement is the later of (a) the
date the Authority receives all required approvals, or (b) the
date the Authority's senior secured notes, in the original
principal amount of $175,000,000, and due 2002 (the "Authority
Senior Notes"), are refinanced or repaid. The final required
approval was received during February 1999 and the Authority's
refinancing was completed during March 1999. Accordingly, the
Relinquishment Date has been determined to be January 1, 2000.
On the Relinquishment Date, the existing Management Agreement
will terminate and the Tribe will assume day-to-day management of
the Mohegan Sun. As part of the Relinquishment Agreement and to
compensate TCA for giving up its rights under the current
agreements, the Tribe has agreed to pay to TCA 5% of revenues, as
defined, (the "Relinquishment Fees") beginning on the
Relinquishment Date and ending on the day immediately preceding
the fifteenth (15th) annual anniversary of the Relinquishment
Date. The Relinquishment Fees will be divided into senior
relinquishment payments and junior relinquishment payments, each
of which will be 2.5% of revenues, as defined. Senior
relinquishment payments will be payable quarterly in arrears
commencing on April 25, 2000, for the quarter ended March 31,
2000 and the junior relinquishment payments will be payable semi-
annually in arrears commencing on July 25, 2000, for the six
months ended June 30, 2000.
TCA has also negotiated a second agreement with the Tribe and the
Authority (the "Development Agreement"), which has made TCA the
exclusive developer of the Project. Under this Development
Agreement, TCA will oversee the planning, design, and
construction of the Project. TCA will be paid a development fee
(the "Development Fee") of $14 million under the terms of the
Development Agreement. The effective date under the Development
Agreement is the first day of the first calendar month following
the later of (a) the date the Authority receives all required
approvals, or (b) closing of the anticipated refinancing of
certain of the Authority's existing indebtedness, together with
construction financing. The Development Agreement became
effective April 1, 1999. The Development Fee shall be paid as
follows: on January 15, 2000 and thereafter within fifteen (15)
days following the end of each calendar quarter until the Project
is completed, the Authority shall pay TCA a percentage of the
Development Fee equal to the completed percentage of the Project
as of December 31, 1999 and on the incremental completed
percentage at the end of each successive calendar quarter.
13
Certain Risk Factors
- ---------------------
Lack of Operations; Dependence on the Mohegan Sun
- --------------------------------------------------
The Company does not conduct any business operations other than
in connection with its role as a managing general partner of TCA
and activities incidental to the Company's ownership of the
Authority Subordinated Notes, as defined, the issuance of the
$125 Million Senior Notes and the making of temporary
investments. The Company is prohibited by the terms of the
Indenture from engaging in any other business activities. The
Company intends to fund its operating, debt service and capital
needs from cash flows from TCA and until January 1, 2000,
payments of principal and interest under the Authority
Subordinated Notes, as defined, to the extent that such payments
are payable in cash.
TCA has one current source of revenue, management fees under the
Management Agreement (the "Management Fees"). After January 1,
2000, TCA will no longer be entitled to receive such Management
Fees. Although, TCA is entitled to a $14.0 million Development
Fee under the Development Agreement, it has entered into a
subcontract with affiliates of Sun International who in turn have
entered into a subcontract with affiliates of the Company to
provide the services required by such agreement and is to pay
such subcontractors a development services fee and incur expenses
equal to 3% of the Project. Based upon the estimated cost of the
Project, $750 million, such fees and expenses are expected to be
approximately $22.5 million. Such fees are only payable to the
extent of available cash flow. Thus, ultimately TCA may pay more
in development services fees and expenses to its subcontractors
than it will receive under the Development Agreement. Although
the Authority has passed a resolution that the total costs of the
Project cannot exceed $800 million, the actual costs of the
Project may exceed such amounts. If the total costs of the
Project increase, then the total development services fees and
expenses paid by TCA will increase proportionately, which reduces
the cash flow distributable to the Company.
Commencing on January 1, 2000, TCA will receive Relinquishment
Fees based on a percentage of gross revenues generated by the
Mohegan Sun. There can be no assurance that the Mohegan Sun will
continue to generate sufficient revenues for the Authority to be
profitable or to service its debt obligations, including its
obligations under the Authority Subordinated Notes, as defined,
or to pay Management and/or Relinquishment Fees. The Company is
entirely dependent upon the performance of the Mohegan Sun, which
is subject to matters over which the Authority, TCA and the
Company have no control including, without limitation, general
economic conditions, effects of competition, political,
regulatory and other factors, and the actual number of gaming
customers and the amount wagered.
While the Company expects its future operating cash flows will be
sufficient to cover its expenses, including interest costs, the
Company cannot give any assurance that it will be able to do so.
14
Overview of Current and Future Cash Flows
- -----------------------------------------
The Company expects to fund its operating, debt service and
capital needs from cash flows from the Company's share of
payments from TCA, the Subordinated Notes, as defined, (to the
extent interest and Subordinated Notes Fee amounts, as defined,
are payable in cash on the Subordinated Notes and to the extent
of principal payments on the Subordinated Notes), Non-Pik
Completion Guarantee Notes, as defined, (to the extent interest
and Completion Guarantee Note Fee Amounts, as defined, are
payable in cash on the Non-Pik Completion Guarantee Notes, as
defined, and to the extent of principal payments on the Non-Pik
Completion Guarantee Notes, as defined) and from the Company's
available cash. Based upon the Company's anticipated future
operations, management believes that available cash flow will be
sufficient to meet the Company's anticipated requirements for
future operating expenses, future scheduled payments of principal
and interest on the $125 Million Senior Notes and additional
investments in TCA that may be required in connection with the
Project. No assurance, however, can be given that the operating
cash flow will be sufficient for that purpose.
Sources of Revenues
- --------------------
The Company has two primary sources of revenues: payments from
TCA and payments under the Authority Subordinated Notes, as
defined, that it holds. The Company anticipates regular payments
from TCA based on the results of the Mohegan Sun and Management
Fees payments by the Authority and from Relinquishment Fees
payments by the Authority.
15
Distributions on the Company's Partnership Interest in TCA
- -----------------------------------------------------------
TCA's primary source of revenue for 1999 is Management Fees. The
Management Fees are paid monthly and are calculated in three
tiers based upon Net Revenues, as defined, of the Mohegan Sun set
forth below (in thousands):
I II III
----------- --------------- ---------------
40% of Net Net Revenues in Net Revenues in
Revenues Tier I Plus Tiers I and II
up to 35% of Net plus 30% of Net
Revenues Revenues
between above
----------- --------------- ---------------
Year 1 $50,546 $ 50,547-$63,183 $ 63,183
Year 2 $73,115 $ 73,116-$91,394 $ 91,394
Year 3 $91,798 $91,799-$114,747 $114,747
Year 4 $95,693 $95,694-$119,616 $119,616
As defined in the Management Agreement, "Net Revenues" of the
Mohegan Sun means the amount of the gross revenues of the
facility less operating expenses and certain specified categories
of revenue, such as income from any financing or refinancing,
taxes or charges received from patrons on behalf of and remitted
to a governmental entity, proceeds from the sale of capital
assets, insurance proceeds and interest on the capital
replacement reserve. Net Revenues also include Net Gaming
Revenues, which are equal to the amount of the "net win" from
Class III Gaming operations (i.e., the difference between gaming
wins and losses) less all gaming-related operational expenses
(excluding the Management Fees).
In addition, TCA is required to fund $1.2 million per year
($100,000 per month) from its Management Fees into a capital
replacement reserve.
Pursuant to the Amended and Restated Omnibus Financing Agreement,
as agreed to by TCA, the Company and Sun International, dated
September 10, 1997 (effective as of September 29, 1995) (the
"Omnibus Financing Agreement"), upon receipt of the Management
Fees, TCA is required to make a number of different types of
payments to its subcontractors. The subcontracts are primarily
with TCA's partners or their affiliates. One of the
considerations used by the National Indian Gaming Commission (the
"NIGC") in determining whether or not to approve a management
contract is whether TCA is providing a portion of the capital
required. Accordingly, TCA agreed to provide or cause to be
provided $40 million of capital in the form of the Subordinated
Notes, as defined. However, at the time that the subordinated
loan was made, the partners of TCA, including the Company's
predecessors-in-interest, did not participate in the loan in
accordance with their economic interests in TCA. Therefore, the
partners of TCA agreed that Sun International, who subscribed for
almost all of the Subordinated Notes, as defined, would be
entitled to fees for agreeing to participate in the Mohegan Sun
project. Other fees payable are to compensate the recipients for
other subcontracted services provided by them to the Mohegan Sun.
16
As of March 31, 1999, the Authority had outstanding the following
Authority Subordinated Notes, as defined.
1. 15% subordinated notes principal amount $40,000,000 due
November 2003 (the "Subordinated Notes").
2. Completion guarantee subordinated notes principal amount
$50,000,000 due November 2003 (the "Completion Guarantee
Subordinated Notes").
For purposes of points (c), (d) and (e) below, the Company,
Sun International and TCA have agreed that the Completion
Guarantee Subordinated Notes be split into two principal
amounts of $32,500,000 Completion Guarantee Subordinated
Notes (the "Non-Pik Completion Guarantee Notes") and
$17,500,000 Completion Guarantee Subordinated Notes (the
"Pik Completion Guarantee Notes").
The following table sets forth the priority of the distribution
from TCA of the Management Fees to its partners or TCA's
subcontractors:
(a) First, for each fiscal year of the Authority, up to
$2,000,000 of the Management Services Fee, as defined, will
be paid by TCA for expenses. A portion of the Management
Services Fee, as defined, will be used to pay the
compensation of the officers and directors of the Company.
(b) Second, to return capital contributions made by the partners
of TCA after September 29, 1995. These capital
contributions aggregated $3,400,000 and were repaid to the
partners, 50% to the Company and 50% to Sun Cove. As of
March 31, 1999, no capital contributions remain outstanding.
TCA anticipates making monthly capital calls to fund
expenses related to the development of the Project and these
capital calls will be repaid in the month following the
month made.
(c) Third, to pay to the Company and Sun International every six
months, beginning October 31, 1997 an amount equal to the
product of (1) $2,300,000 and (2) a fraction, the numerator
of which is the weighted average principal amount of
Subordinated Notes outstanding including all interest that
is not paid in cash by the Authority on any interest payment
date, May 15 and November 15, during the applicable Semi-
Annual Period (defined as the six month periods ending,
respectively, on April 30 and October 31) and the
denominator of which is $40,000,000 (the "Subordinated Notes
Fee Amounts"). The Company and Sun International are
entitled to one half of the Subordinated Notes Fee Amounts.
For the quarters ended March 31, 1999 and 1998, $0 had been
paid by TCA in terms of this third priority. When the
Authority's Subordinated Notes are redeemed on January 1,
2000, payments under this priority will cease.
(d) Fourth, i) to pay every six months beginning October 31,
1997 an amount equal to the product of the number arrived at
by dividing the difference between (26-1/2% and the Base
Rate) by two (the "Multiplier") and the weighted average of
principal amount of Non-Pik Completion Guarantee Notes
outstanding during the applicable Semi-Annual Period (the
"Completion Guarantee Notes Fee Amounts"), and ii) payment
of an amount equal to the Base Rate on the Non-Pik
Completion Guarantee Notes to the extent the Authority is
not permitted to pay interest thereon (the "Deferred
Interest Amounts"). This amount will be paid semi-annually
pari passu with the amount under paragraph (d) i) above.
When the Authority can pay such interest, payment under this
paragraph (d) ii) shall be reduced accordingly. When the
Authority's Subordinated Notes are redeemed on January 1,
2000 payments under this priority will cease.
17
In addition, when the Authority pays Sun International any
amounts relating to the Non-Pik Completion Guarantee Notes
(other than current interest), such amounts that relate to
the Deferred Interest Amounts acquired by TCA shall be
immediately paid over to TCA.
When the Authority pays the Company any amounts relating to
the Non-Pik Completion Guarantee Notes (other than current
interest), such amounts that relate to the Deferred Interest
Amounts acquired by TCA shall be immediately paid over to
TCA.
During September 1997 and October 12, 1998, the Company
purchased from Sun International $2.5 million principal
amount of the outstanding first funded Non-Pik Completion
Guarantee Notes and the Company is required to purchase from
Sun International on October 12, 1999 $2.5 million principal
amount of the outstanding first funded Non-Pik Completion
Guarantee Notes owned by Sun International, at the purchase
price equal to the outstanding principal balance of the Non-
Pik Completion Guarantee Notes to be purchased, plus the
related accrued interest and deferred interest amounts which
have not been paid by TCA and Completion Guarantee Notes Fee
Amounts.
For the quarters ended March 31, 1999 and 1998, $0 had been
paid by TCA in terms of this fourth priority.
(e) Fifth, to pay Sun International every six months beginning
October 31, 1997 an amount equal to the product of the
Multiplier and the weighted average of principal amount of
Pik Completion Guarantee Notes (including the applicable Pik
Amounts) outstanding during the applicable Semi-Annual
Period. For the quarters ended March 31, 1999 and 1998, $0
had been paid by TCA in terms of this fifth priority. When
the Authority's Subordinated Notes are redeemed on January
1, 2000 payments under this priority will cease.
(f) Sixth, return of capital contributions made before September
29, 1995. These capital contributions aggregated $6,715,000
(unreturned balance as of March 31, 1999 and 1998 was $0).
(g) Seventh, payment of a Development Services Fee Phase I to
Sun International Management Limited ("SIML") equal to
$8,280,000 constituting 3% of the total development costs
(less land acquisition costs) of the Mohegan Sun plus
$25,000. SIML has subcontracted with certain affiliates of
the Company. The fees payable by SIML to the affiliates of
the Company are equal to 20.83% of the Development Services
Fee plus $25,000 (total $1,749,724). At March 31, 1999 and
1998 $8,305,000 had been paid by TCA as Development Services
Fee Phase I.
18
(h) Eighth, payment of a monthly Management Services Fee (less
the amounts paid pursuant to paragraph (a) above) equal to
the lesser of i) 1% of the gross revenues of the Mohegan Sun
or ii) 25% of the sum of the Excess Cash (as defined in the
Amended and Restated Partnership Agreement of TCA) of TCA
plus 25% of the Organizational and Administrative Fee, as
defined, and the Marketing and the Casino Operations Fee, as
defined. After deducting operating expenses (which will be
the following amounts; $2.0 million if the Mohegan Sun's
EBITDA (defined as the Mohegan Sun's net income plus
depreciation, amortization, management fee expense, interest
expense and other non-cash charges less interest income) is
$200.0 million or less, $3.0 million if the Mohegan Sun's
EBITDA is greater than $200.0 million but less than $225.0
million and $4.0 million if the Mohegan Sun's EBITDA is
greater than $225.0 million the remaining amounts will be
distributed in equal amounts to SIML and the Company. A
portion of the Management Services Fee will be used to pay
the compensation of the officers and directors of the
Company.
For the quarters ended March 31, 1999 and 1998, $1,330,710
($665,355 to SIML and $665,355 to the Company) and
$3,845,000 ($1,922,500 to SIML, $108,741 to affiliates of
the Company and $1,813,759 to the Company), respectively,
had been paid by TCA in terms of this eighth priority.
(i) Ninth, payment of a fee to Sun International of $5,520,000
constituting 2% of the total development costs (less land
acquisition costs) of the Mohegan Sun. At March 31, 1999
and 1998, $5,520,000 and $0, respectively, had been paid by
TCA in terms of this ninth priority.
(j) Tenth, distribution of an amount equal to the state and
federal income tax liability of TCA as if it were an
individual paying federal income tax and the higher of
Michigan or Connecticut state income taxes. This amount
will be paid 50% to Sun Cove and 50% to the Company. For the
quarters ended March 31, 1999 and 1998, $935,317 and $0,
respectively, had been paid by TCA in terms of this tenth
priority.
(k) Eleventh, payment of the Organizational and Administrative
Fee to the Company and the Marketing and Casino Operations
Fee to SIML which fees will be paid in equal amounts to the
Company and SIML. These fees are each equal to 1.5% of the
gross revenues of the Mohegan Sun if the Mohegan Sun's
fiscal year ending September 30 gross revenues equal or
exceed $300 million and 2% of the gross revenues of the
Mohegan Sun if the Mohegan Sun's fiscal year ending
September 30 gross revenues equal or exceed $400 million.
For the quarters ended March 31, 1999 and 1998, $11,278,973
and $0, respectively, 50% to the Company and 50% to SIML,
had been paid by TCA in terms of this eleventh priority.
(l) Twelfth, all excess cash distributed 50% to Sun Cove and 50%
to the Company.
19
The Company has the obligation to purchase from Sun International
on October 12, 1999, $2.5 million of the outstanding principal
amount of the Completion Guarantee Subordinated Notes owned by
Sun International.
On March 18,1999, the Omnibus Termination Agreement (the "Omnibus
Termination Agreement") was entered into by TCA, SIHL, the
Company, SIML, LMW, Sun Cove, Slavik and Wolman Construction,
L.L.C.; which (i) terminated the memorandum of understanding
dated February 7, 1998; and (ii) effective January 1, 2000
provided that the Relinquishment Agreement is in full force and
effect will terminate a) the Omnibus Financing Agreement; b)
completion guarantee and investment banking and financing
arrangement fee agreement (the "Financing Arrangement
Agreement"); c) the management services agreement; d) the
organizational and administrative services agreement; e) the
marketing services agreement; and f) a letter agreement relating
to expenses dated October 19, 1996.
In consideration for the termination of such agreements, TCA will
use its cash to pay the following obligations in the priority set
forth below:
(a) First, to pay all unpaid amounts which may be due under
the terminated letter agreement and to pay certain
affiliates of the Company and to Sun Cove a percentage of
an annual fee of $2.0 million less the actual expenses
incurred by TCA. Such annual fee shall be payable in
equal quarterly installments beginning March 31, 2000 and
ending December 31, 2014.
(b) Second, to return all capital contributions made by the
partners of TCA after September 29, 1995.
(c) Third, to pay any accrued amounts for obligations
performed prior to January 1, 2000 under the Financing
Arrangement Agreement.
(d) Fourth, to make the payments set forth in the agreement
relating to development services and the local
construction services agreement.
(e) Fifth, to pay SIHL an annual fee of $5.0 million payable
in equal quarterly installments of $1.25 million
beginning March 31, 2000 and ending December 31, 2006.
(f) Sixth, to pay any accrued amounts for obligations
performed with respect to periods prior to January 1,
2000 under the management services agreement, the
organizational and administrative services agreement and
the marketing services agreement.
(g) Seventh, for the period beginning March 31, 2000 and
ending December 31, 2014, to pay each of SIML and the
Company twenty-five percent (25%) of the relinquishment
payments.
(h) Eighth, to distribute all excess cash.
20
Notwithstanding the foregoing, on the date TCA receives any funds
from SIHL or the Company pursuant to the last sentence of Section
3 of the Financing Arrangement Agreement, as detailed under point
(d) of the table set forth above under "Overview of Current and
Future Cash Flows" TCA shall immediately distribute such amounts
to its partners.
In addition, TCA shall not make any distributions pursuant to the
Omnibus Termination Agreement until it has annually distributed
to its partners pro rata, the amounts related to its partners tax
obligations as described in Section 3.03a (1) of the Partnership
Agreement less twice the amount of all other funds paid or
distributed to the Company during such year pursuant to the
Omnibus Termination Agreement.
To the extent TCA does not have adequate cash to make the
payments pursuant to the Omnibus Termination Agreement, such
amounts due shall be deferred without the accrual of interest
until TCA has sufficient cash to pay them.
On February 9, 1998, the Development Services Agreement (the
"Development Services Agreement") was entered into between TCA
and SIML. Pursuant to the Development Services Agreement, TCA
subcontracted with SIML and SIML agreed to perform those services
assigned to SIML by TCA in order to facilitate TCA's fulfillment
of its duties and obligations to the Authority under the
Development Agreement. TCA shall pay to SIML a fee, as
subcontractor, (the "Development Services Fee Phase II") equal to
3% of the development costs of the Project (less land acquisition
costs and capitalized interest), less all costs incurred by TCA
in connection with the Project. The Development Services Fee
Phase II shall be paid in three installments on December 31,
1999, 2000, and 2001.
SIML has subcontracted with certain affiliates of the Company to
provide certain of the services pursuant to the Development
Services Agreement for a fee equal to approximately 20% of the
Development Services Fee Phase II.
For the three months ended March 31, 1999, the Company received
$4,137,500 from TCA and $2,835,000 was due from TCA, which
represents the Company's share in terms of the Omnibus Financing
Agreement of approximately $14,398,000 in net Management Fees
earned by TCA from the Authority pursuant to the terms of the
Management Agreement for the same period. The actual amount of
Management Fees earned by TCA for any annual period of the
Authority ending September 30 are subject to year-end adjustment.
For the three months ended March 31, 1998, the Company received
$33,787 from TCA and $1,813,759 was due from TCA, which
represents the Company's share of approximately $12,594,000 in
net Management Fees earned by TCA from the Authority pursuant to
the terms of the Management Agreement for the same period.
For the quarters ended March 31, 1999 and 1998, the Company also
received $0 and $224,680, respectively, in cash distributions
from TCA which represents the Company's share of repayments by
the Tribe to TCA of amounts due in terms of the promissory note
dated September 29, 1995 between TCA and the Tribe.
21
Payments by the Authority on the Subordinated Notes, Non-Pik
- --------------------------------------------------------------
Completion Guarantee Notes and Pik Completion Guarantee Notes
- --------------------------------------------------------------
(collectively the "Authority Subordinated Notes")
- -------------------------------------------------
Interest is calculated semi-annually on the Authority
Subordinated Notes. Interest is deferred (and compounds semi-
annually) until the Authority purchases or offers to purchase at
least 50% of its Authority Senior Notes and certain fixed charge
coverage ratios are met. The Authority is required to offer
annually to purchase the Authority Senior Notes with the sum of
(i) 50% of its Excess Cash Flow (defined as an amount equal to
the cash flow of the Authority for any given period, less (a)
management fees for such period, (b) interest expense and
principal payments on indebtedness of the Authority for such
period, (c) amounts set aside in the Cash Maintenance Account (as
defined in the indenture for the Authority Senior Notes) for such
period, (d) amounts for the payment of federal and state taxes
for such period, and (e) certain other amounts (not to exceed
$6.8 million) for such period, (ii) 100% of the amount of
Deferred Subordinated Interest (as defined in the indenture for
the Authority Senior Notes) for such period and (iii) accrued and
unpaid interest, if any, to the date of closing of such Excess
Cash Purchase Offer (as defined in the indenture for the
Authority Senior Notes). If the holders of the Authority Senior
Notes do not accept the offer, then such amount of the Excess
Cash must be offered to purchase the Authority Subordinated
Notes. For the three months ended March 31, 1999 and 1998, the
Company did not receive any cash payments on the Authority
Subordinated Notes that it holds from the Authority.
Pursuant to the terms of the Omnibus Financing Agreement, TCA is
required to pay every six months beginning October 31, 1997, an
amount equal to the product of (1) $2,300,000 and (2) a fraction,
the numerator of which is the weighted average principal amount
of Subordinated Notes outstanding including all interest that is
not paid in cash by the Authority on any interest payment date,
May 15 and November 15, during the applicable Semi-Annual period
and the denominator of which is $40,000,000. Subject to certain
priorities set forth in the Omnibus Financing Agreement, to the
extent that TCA does not receive sufficient Management Fees to
pay the full amount of any such payments due, TCA shall pay the
entire Management Fees as partial payment and any portion which
remains outstanding shall be deferred until TCA receives
sufficient Management Fees. In addition, TCA shall pay every six
months beginning October 31, 1997 an amount equal to the product
of the number arrived at by dividing the difference between the
Multiplier and the weighted average of principal amount of Non-
Pik Completion Guarantee Notes outstanding during the applicable
Semi-Annual Period and payment of an amount equal to the Base
Rate on the Non-Pik Completion Guarantee Notes to the extent the
Authority is not permitted to pay interest thereon. If the
Authority is permitted to accrue and not pay interest on its Non-
Pik Completion Guarantee Subordinated Notes, the Omnibus
Financing Agreement provides that TCA will pay the Authority's
portion of such interest on such Non-Pik Completion Guarantee
Subordinated Notes.
22
On February 7, 1998, the Company, Sun International, the
Authority and the Tribe agreed to a letter of understanding (the
"Letter"), regarding the repurchase of the Authority Subordinated
Notes. The Letter provides that until January 1,2000, neither
the Authority nor the Tribe shall exercise any option it may have
to redeem the Authority Subordinated Notes provided that nothing
contained in the Letter shall limit or amend the rights of the
holders of the Authority Subordinated Notes to require the
Authority to redeem or repurchase the Authority Subordinated
Notes - pursuant to the Note Purchase Agreement dated as of
September 29, 1995 between the Authority and Sun International.
On December 15, 1998, Sun International, TCA, the Authority and
the Tribe agreed to amend the Letter ("Amended Letter"). The
Amended Letter provides that the holders of the Authority
Subordinated Notes will not accept the Excess Cash purchase offer
with respect to the Authority's fiscal year 1998 and Sun
International acknowledges and agrees that the remaining Excess
Cash purchase offer shall be inapplicable following the closing
of the Authority's refinancing which was completed on March 3,
1999.
In connection with the issuance of its 8-1/2% Senior Notes due
2006 and 8-3/4% Senior Subordinated Notes due 2009, the Authority
has implemented a covenant defeasance for all of the Authority
Subordinated Notes and has deposited with the defeasance agent an
amount of securities sufficient to satisfy all obligations of
such Authority Subordinated Notes. The Authority Subordinated
Notes have been defeased to January 1, 2000 when they will be
redeemed.
Results of Operations
- -----------------------
Comparison of Operating Results for the Quarters Ended March 31,
- ----------------------------------------------------------------
1999 and March 31, 1998
- ------------------------
Total revenue for the three months ended March 31, 1999 was
$7,664,423 compared with $2,978,114 for the three months ended
March 31, 1998. This increase was primarily attributable to a
substantial increase in gross revenues and profitability of the
Mohegan Sun which resulted in higher Management Fees paid to TCA.
Organizational and administrative fee income-Trading Cove
Associates, as detailed under point (k) of the table set forth
above under "Overview of Current and Future Cash Flows",
increased by $5,639,486, completion guarantee notes fee income-
Trading Cove Associates, as detailed under point (d) of the table
set forth above under "Overview of Current and Future Cash
Flows", decreased by $21,250 and management services income-
Trading Cove Associates, as detailed under point (h) of the table
set forth above under "Overview of Current and Future Cash
Flows", decreased by $1,148,404. In addition, interest and
dividend income increased by $216,477.
23
Total expenses for the quarter ended March 31, 1999 was
$14,399,702 compared with $2,373,917 for the quarter ended March
31, 1998. Interest expense increased by $8,021,998 and
amortization on deferred financing costs increased by $3,240,057
due to the redemption of the $65 Million Senior Notes and the
issuance of the $125 Million Senior Notes, general and
administrative costs increased by $85,165, primarily attributable
to an increase in accounting fees of approximately $95,000
(during the quarters ended March 31, 1999 and 1998 the Company
paid accounting fees to an affiliate totaling approximately
$95,000 and $0, respectively), an increase in commission filing
expense of approximately $15,600 partially offset by a decrease
in legal fees of approximately $33,700, an increase in 12-3/4%
senior notes tender expense of $648,486, an increase in
amortization of beneficial interest-Leisure Resort Technology,
Inc. of $28,806 and by an increase in depreciation-leasehold
improvements of $1,273.
Equity in income(loss) of Trading Cove Associates for the three
months ended March 31, 1999 was $208,610 compared with $(443,258)
for the three months ended March 31, 1998, as a result of the
increase in income from Trading Cove Associates of $651,868 due
to the timing of payments pursuant to the Omnibus Financing
Agreement.
As a result of the foregoing factors, the Company experienced a
net loss of $(6,526,669) for the quarter ended March 31, 1999
compared with net income of $160,939 for the quarter ended March
31, 1998.
Comparison of Operating Results for the Quarters ended March 31,
- ----------------------------------------------------------------
1998 and March 31, 1997
- ------------------------
Total revenue for the quarter ended March 31, 1998 was $2,978,114
compared with $1,538,752 for the quarter ended March 31, 1997.
The increase was attributable to an increase in interest and
dividend income of $46,693, a decrease in subordinated notes fee
income - Trading Cove Associates, as detailed under point (c) of
the table set forth above under "Overview of Current and Future
Cash Flows", of $442,340, an increase in completion guarantee
notes fee income - Trading Cove Associates, as detailed under
point (d) of the table set forth above under "Overview of Current
and Future Cash Flows", of $21,250, and an increase in management
services income - Trading Cove Associates, as detailed under
point (h) of the table set forth above under "Overview of Current
and Future Cash Flows", of $1,813,759.
Total expenses for the three months ended March 31, 1998 were
$2,373,917 compared with $2,234,733 for the three months ended
March 31, 1997. Interest expense decreased by $112,487, as a
result of the redemption of $3,529,000 principal amount of $65
Million Senior Notes on November 15, 1997, amortization on
deferred financing costs increased by $13,830 due to additional
deferred financing costs incurred, amortization of beneficial
interest-Leisure Resort Technology, Inc. increased by $204,307
due primarily to amortization of the $5,000,000 payment to
Leisure during January 1998 and general and administrative costs
increased by $33,534 primarily attributable to an increase in
insurance of approximately $8,100, an increase in legal fees of
approximately $30,500 and partially offset by a decrease in
investment managers fees of approximately $7,200.
Equity in loss of Trading Cove Associates for the three months
ended March 31, 1998 was $(443,258) compared with $(405,400) for
the three months ended March 31, 1997, as a result of the
decrease in income from Trading Cove Associates of $37,858 due to
the timing of payments pursuant to the Omnibus Financing
Agreement.
As a result of the foregoing factors, the Company experienced net
income of $160,939 for the quarter ended March 31, 1998 compared
with a net loss of $(1,101,381) for the quarter ended March 31,
1997.
24
Liquidity and Capital Resources
- -------------------------------
The initial capital of the Company consists of the partnership
interests in TCA contributed by Slavik and LMW in forming the
Company. In connection with the offering of the $65 Million
Senior Notes, the Company used approximately $25.1 million to
purchase from Sun International $19.2 million in principal amount
of Subordinated Notes plus accrued and unpaid interest and
Subordinated Notes Fee Amounts. In addition, TCA distributed
approximately $850,000 in principal amount of Subordinated Notes
to the Company. During September 1997 and on October 12, 1998,
the Company purchased from Sun International $2.5 million Non-Pik
Completion Guarantee Notes plus accrued and unpaid interest and
Non-Pik Completion Guarantee Fee Amounts (total cost for each
purchase approximately $2.8 million). On January 6, 1998 the
Company paid $5,000,000 to Leisure whereby Leisure gave up its
beneficial interest in 5% of the Organizational and
Administrative Fee and Excess Cash of TCA and any other claims it
may have had against the Company, TCA and TCA's partners and
former partner.
In connection with the offering of the $125 Million Senior Notes,
the Company used approximately $72 million to repurchase its $65
Million Senior Notes, distributed approximately $37 million to
its new parent, Waterford Group, L.L.C. and paid the final $2
million to Leisure.
25
For the three months ended March 31, 1999 and 1998, cash (used
in) provided by operating activities (as shown in the Condensed
Statements of Cash Flows) was $(6,042,324) and $607,137,
respectively.
Current assets increased from $6,459,361 to $21,013,401 at March
31, 1999. The increase was caused primarily by the payment of
fees and distributions by TCA as a result of the profitable
operations of the Mohegan Sun and by the funding of the interest
reserve account that is required by the $125 Million Senior Notes
Indenture.
Current liabilities increased from $1,037,887 to $1,130,529 at
March 31, 1999. The increase was attributable to an increase in
accrued expenses, primarily attributable to the refinancing, of
$600,565 and a decrease in accrued interest on senior notes
payable of $507,923.
For the three months ended March 31, 1999 and 1998 cash (used in)
provided by investing activities (as shown in the Condensed
Statements of Cash Flows) was $(11,421,760) and $110,276,
respectively. The increase was caused primarily by the payment
to Leisure of $2,000,000 in March 1999, the increase in
contributions to TCA of $200,000 (to fund certain development
expenses in connection with the Project at the Mohegan Sun), an
increase in distributions from TCA of $442,979 in terms of the
second, sixth and tenth priorities of the Omnibus Financing
Agreement, by the increase in (purchases) and sales of temporary
investments-net of $9,782,801 (principally due to the funding of
the interest reserve account) and by the increase in cash
utilized for leasehold improvements of $49,000.
The Company is required to purchase from Sun International on
October 12, 1999 $2.5 million of the outstanding principal amount
of Non-Pik Completion Guarantee Notes owned by Sun International.
The purchase price which is to be paid by the Company to Sun
International will be equal to the outstanding principal balance
of the Non-Pik Completion Guarantee Notes to be purchased plus
any amounts due thereon under points (d)(i) and (d)(ii) of the
table set forth above under "Overview of Current and Future Cash
Flows". As of March 31, 1999, $32.5 million in principal amount
was outstanding as Non-Pik Completion Guarantee Notes.
The Company anticipates that up to $5,000,000 in additional
investments in TCA (as of March 31, 1999, $600,000 had been
invested in TCA) may be required by the Company in connection
with the Project at the Mohegan Sun.
For the quarters ended March 31, 1999 and 1998 cash provided by
(used in) financing activities (as shown in the Condensed
Statements of Cash Flows) was $20,913,527 and $(255,790),
respectively. The increase was caused primarily by the issuance
of the $125 Million Senior Notes, the increase in contributions
by members of $49,000 and offset by the increase in the
redemption of the $65 Million Senior Notes of $61,471,000, the
increase in deferred financing costs of $3,473,951 (primarily due
to the costs associated with the issuance of the $125 Million
Senior Notes) and by the increase in distributions to members of
$38,934,732.
The Company is required to make a mandatory redemption on
September 15 and March 15, of each year, beginning September 15,
1999, of $125 Million Senior Notes using any excess cash, as
defined in the Indenture, which the Company may have as of the
preceding August 1 and February 1.
26
Year 2000 Issues
- -----------------
The Company, with a Year 2000 issues consultant, is addressing
any Year 2000 compliance issues for TCA and itself. The
Company's management at this time believes that any issues
relating to the Company's Year 2000 compliance will not
materially interrupt its operations. The Company estimates that
it will be Year 2000 compliant by the end of September 1999;
there can be no assurance that this will be achieved. The total
cost associated with any required modifications for the Company
to become Year 2000 compliant will not have a material impact on
the Company's overall financial position. The Company estimates
the total cost to become Year 2000 compliant to be approximately
$20,000.
The failure to correct a material Year 2000 issue could result in
an interruption in, or a failure of, certain normal business
activities or operations. The Company has two primary sources of
revenues: payments from TCA and payments under the Authority
Subordinated Notes that it holds. Both of these sources of
revenues are dependent on the level of revenue generated by the
Mohegan Sun.
As derived from publicly filed information the Authority
discloses its Year 2000 readiness as follows:
Year 2000 Date Conversion
- --------------------------
The Authority is currently working to verify system readiness for
the processing of date-sensitive information by its computerized
information systems to the end of the Century. The "Year 2000"
problem impacts computer programs and hardware timers using two
digits (rather than four) to define the applicable year. Any of
the Authority's programs that have time-sensitive functions may
recognize a date using "00" as the year 1900 rather than 2000, or
not at all, which could result in miscalculations or system
failures. As a large facility in a relatively remote location,
the Mohegan Sun is heavily dependent on a local infrastructure
which may not be adequate to take on the challenges of the Year
2000 problem. It is especially dependent on that local
infrastructure for critical services such is incoming utilities
and outgoing sewage.
The Authority, like many companies, depends on fully operational
computer systems in all areas of its business. Additionally, the
Authority is dependent upon many vendors such as food and
beverage suppliers, outside software suppliers and system
integrators to provide uninterrupted service for its operation to
run effectively.
With the assistance of an outside consultant, the Authority has
implemented a Year 2000 program to provide an independent
analysis of the Authority's Year 2000 preparedness and the
adequacy of the Authority's Year 2000 plans. The program
includes inventorying entities, identifying problems, planning
compliance and implementation strategies, attempting to correct
the problems and testing the solutions.
As of February 1999, the Mohegan Sun is approximately 64% in
conformance with the Gartner Group Year 2000 best practices
model. Mohegan Sun anticipates completion of the program by
March 31, 1999. Although there can be no assurance, the
Authority has stated that it believes the cost of remediation and
verification to become Year 2000 compliant will not exceed $1.0
million and will not have a material adverse impact on the
Authority's financial position, results of operations, or cash
flow.
While the Authority's efforts are designed to be successful,
because of the complexity of the Year 2000 issues and the
interdependence of organizations using computer systems, there
can be no assurance that the Authority's efforts or those of a
third party with whom the Authority interacts, will be
satisfactorily completed in a timely fashion. This could result
in a material adverse effect on future operations.
Due to the general uncertainty inherent in the Year 2000 issues,
and in particular uncertainty of the Year 2000 compliance of the
Mohegan Sun, from which the Company receives its revenues, the
Company is unable to determine at this time whether the
consequences of Year 2000 failures will have a material impact on
its results of operations, liquidity or financial condition.
27
Item 3. Quantitative and Qualitative Disclosures about Market
-----------------------------------------------------
Risk
----
Not Applicable
Part II Other Information:
------------------
Item 1 -- Legal Proceedings:
------------------
As derived from publicly filed information, the Authority is a
defendant in certain litigations incurred in the normal course of
business. In the opinion of the Authority's management, based on
the advise of counsel, the aggregate liability, if any, arising
from such litigation will not have a material adverse effect on
the Authority's financial condition or results of operations.
On December 24, 1998, Leisure wrote a letter to TCA asserting
that TCA and/or certain of TCA's partners breached various
fiduciary duties to Leisure and that TCA's conduct in negotiating
the prior settlement constituted a violation of the anti-fraud
provisions of both federal and Connecticut securities laws, as
well as violations of other laws. The Company believes that if
such claims are pursued, it has meritorious defenses; however, no
litigation has been filed to date and no assurance can be given
that any ultimate claim will be decided in the Company's favor.
Item 2 -- Changes in Securities:
-----------------------
None
Item 3 -- Defaults Upon Senior Securities:
--------------------------------
None
Item 4 -- Submission of Matters to a vote of Security Holders:
----------------------------------------------------
None
Item 5 -- Other Information:
------------------
None
28
Item 6 -- Exhibits and Reports on Form 8-K:
---------------------------------
(a) Exhibits
--------
Exhibit No. Description
3.1 Certificate of Formation, as
amended, of Waterford Gaming,
L.L.C. (i)
3.2 Certificate of Incorporation of
Waterford Gaming Finance Corp. (i)
3.3 Bylaws of Waterford Gaming Finance
Corp. (i)
4.1 Indenture, dated as of November 8,
1996, between Waterford Gaming,
L.L.C. and Waterford Gaming Finance
Corp., the issuers, and Fleet
National Bank, as trustee, relating
to $65,000,000 12-3/4% Senior Notes
due 2003. (i)
4.1.1 First Supplemental Indenture, dated
as of March 4, 1999, among
Waterford Gaming, L.L.C. and
Waterford Gaming Finance, Corp., as
issuers, and State Street Bank and
Trust Company, as trustee, relating
to $65,000,000 12-3/4% Senior Notes
Due 2003. (vi)
4.2 Indenture, dated as of March 17,
1999, among Waterford Gaming,
L.L.C. and Waterford Gaming Finance
Corp., as issuers, and State Street
Bank and Trust Company, as trustee,
relating to $125,000,000 9-1/2%
Senior Notes due 2010. (vi)
4.3 Security and Control Agreement,
dated as of March 17, 1999, among
Waterford Gaming, L.L.C. and
Waterford Gaming Finance Corp., as
pledgors and State Street Bank and
Trust Company, as securities
intermediary. (vi)
4.4 Specimen Form of 9-1/2% Senior
Notes due 2010 (included in Exhibit
4.2). (vi)
10.1 Omnibus Financing Agreement, dated
as of September 21, 1995, between
Trading Cove Associates and Sun
International Hotels Limited. (i)
10.2 First Amendment to the Omnibus
Financing Agreement, dated as of
October 19, 1996, among Trading
Cove Associates, Sun International
Hotels Limited and Waterford
Gaming, L.L.C. (i)
10.2.1 Amended and Restated Omnibus
Financing Agreement dated September
10, 1997. (ii)
29
10.2.2 Omnibus Termination Agreement,
dated as of March 18, 1999, among
Sun International Hotels Limited,
Trading Cove Associates, Waterford
Gaming, L.L.C., Sun International
Management Limited, LMW
Investments, Inc., Sun Cove
Limited, Slavik Suites, Inc., and
Wolman Construction, L.L.C. (vi)
10.3 Amended and Restated Partnership
Agreement of Trading Cove
Associates, dated as of September
21, 1994, among Sun Cove Limited,
RJH Development Corp., Leisure
Resort Technology, Inc., Slavik
Suites, Inc., and LMW Investments,
Inc. (i)
10.4 First Amendment to Amended and
Restated Partnership Agreement of
Trading Cove Associates, dated as
of October 22, 1996, among Sun Cove
Limited, Slavik Suites, Inc., RJH
Development Corp., LWM Investments,
Inc., and Waterford Gaming, L.L.C.
(i)
10.5 Purchase Agreement, dated as of
March 10, 1999, among Waterford
Gaming, L.L.C., Waterford Gaming
Finance Corp., Bear, Stearns & Co.
Inc., Merrill Lynch, Pierce, Fenner
and Smith, Inc. and Salomon Smith
Barney. (vi)
10.5.1 Agreement with Respect to
Redemption or Repurchase of
Subordinated Notes, dated September
10, 1997. (ii)
10.6 Amended and Restated Limited
Liability Company Agreement of
Waterford Gaming, L.L.C., dated as
of March 17, 1999 by Waterford
Group, L.L.C. (vi)
10.7 Note Purchase Agreement, dated as
of October 19, 1996, among Sun
International Hotels Limited,
Waterford Gaming, L.L.C. and
Trading Cove Associates. (i)
10.8 Note Purchase Agreement, dated as
of September 29, 1995, between the
Mohegan Tribal Gaming Authority and
Sun International Hotels Limited
relating to the Subordinated Notes.
(i)
10.9 Management Agreement, dated as of
July 28, 1994, between the Mohegan
Tribe of Indians of Connecticut and
Trading Cove Associates. (i)
10.10 Management Services Agreement,
dated September 10, 1997. (ii)
10.11 Development Services Agreement,
dated September 10, 1997. (ii)
30
10.12 Subdevelopment Services Agreement,
dated September 10, 1997. (ii)
10.13 Completion Guarantee and Investment
Banking and Financing Arrangement
Fee Agreement, dated September 10,
1997. (ii)
10.14 Settlement and Release Agreement,
dated January 6, 1998, by and among
Leisure Resort Technology, Inc.,
Lee R. Tyrol, Trading Cove
Associates, Slavik Suites, Inc.,
LMW Investments, Inc., RJH
Development Corp., Waterford
Gaming, L.L.C. and Sun Cove
Limited. (iii)
10.15 Waiver and Acknowledgment of
Noteholder. (iv)
10.16 Relinquishment Agreement, dated
February 7, 1998, between the
Mohegan Tribal Gaming Authority and
Trading Cove Associates. (v)
10.17 Development Services Agreement,
dated February 7, 1998 between the
Mohegan Tribal Gaming Authority and
Trading Cove Associates. (v)
10.18 Agreement, dated September 28,
1998, by and among, Waterford
Gaming, L.L.C., Slavik Suites,
Inc., LMW Investments, Inc., Len
Wolman, Mark Wolman, Stephan F.
Slavik, Sr. and Del J. Lauria (Len
Wolman's Employment Agreement). (v)
10.19 Agreement Relating to Development
Services, dated as of February 9,
1998, between Trading Cove
Associates and Sun International
Management Limited. (vi)
10.20 Local Construction Services
Agreement, dated as of February 9,
1998 between Sun International
Management Limited and Wolman
Construction, L.L.C. (vi)
10.21 Escrow Deposit Agreement, dated as
of the 3rd day of March 1999, by
and among the Mohegan Tribal Gaming
Authority and First Union National
Bank, as Defeasance Agent. (vi)
21.1 Subsidiaries of Waterford Gaming,
L.L.C. (i)
21.2 Subsidiaries of Waterford Gaming
Finance Corp. (i)
27 Financial Data Schedule. (vii)
99.1 Quarterly Report, for the quarter ended
March 31, 1999, on Form 10-Q of the Mohegan
Tribal Gaming Authority (the "Authority")
dated May 14, 1999, incorporated by
reference to the Authority's electronic
filing of such report on Form 10-Q Securities
and Exchange Commission (the "Commission")
File Reference No. 033-80655.
31
(i) Incorporated by reference to the Registrant's
Registration Statement on Form S-4, Securities and
Exchange Commission (the "Commission") File no. 333-
17795, declared effective on May 15, 1997.
(ii) Incorporated by reference to the Registrant's Quarterly
Report on Form 10-Q for the period ended September 30,
1997, Commission File No. 333-17795, as accepted by the
Commission on November 14, 1997.
(iii) Incorporated by reference to the Registrant's Annual
Report on Form 10-K for the fiscal year ended December
31, 1997, Commission File No. 333-17795, as accepted by
the Commission on March 30, 1998.
(iv) Incorporated by reference to the Registrant's Quarterly
Report on Form 10-Q for the period ended March 31,
1998, Commission File No. 333-17795, as accepted by the
Commission on May 14, 1998.
(v) Incorporated by reference to the Registrant's Quarterly
Report on Form 10-Q for the period ended September 30,
1998, Commission File No. 333-17795, as accepted by the
Commission on November 13, 1998.
(vi) Filed herewith.
(vii) Included in Edgar filing only.
(b) Form 8-K filed on March 11, 1999
Item 5
On March 3, 1999, the Mohegan Tribal Gaming Authority (the
"Authority") completed the refinancing (the "Refinancing") of its
13-1/2% Senior Secured Notes due 2002. Pursuant to Article 10 of
the Development Services Agreement between the Authority and
Trading Cove Associates ("TCA"), in which Waterford Gaming,
L.L.C. has a fifty percent partnership interest, the Development
Services Agreement shall become effective on the first day of the
first calendar month following the later of (a) the date the
Authority receives certain regulatory approvals or (b) the
completion of the Refinancing. Pursuant to Article 3 of the
Relinquishment Agreement between the Authority and TCA, the
Relinquishment Agreement shall become effective on the later of
(a) the date the Authority receives certain regulatory approvals
or (b) the date the Authority completes its Refinancing. The
Authority has received all the regulatory approvals contemplated
by the Development Services Agreement and the Relinquishment
Agreement. The Development Services Agreement will, therefore,
become effective on April 1, 1999 and the Relinquishment
Agreement became effective on March 3, 1999.
Date of Report: March 3, 1999
32
Signatures
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this Report to
be signed on its behalf by the undersigned thereunto duly
authorized.
Date: May 17, 1999 By: /s/ Len Wolman
Len Wolman, Chief Executive Officer
Date: May 17, 1999 By: /s/ Alan Angel
Alan Angel, Chief Financial Officer
33
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Waterford Gaming, L.L.C.
All amounts are unaudited.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 6,232,787
<SECURITIES> 0
<RECEIVABLES> 2,835,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 21,013,401
<PP&E> 49,000
<DEPRECIATION> (1,273)
<TOTAL-ASSETS> 77,997,006
<CURRENT-LIABILITIES> 1,130,529
<BONDS> 125,000,000
0
0
<COMMON> 0
<OTHER-SE> (48,133,523)
<TOTAL-LIABILITY-AND-EQUITY> 77,997,006
<SALES> 0
<TOTAL-REVENUES> 7,664,423
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,418,316
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,981,386
<INCOME-PRETAX> (6,526,669)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,526,669)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,526,669)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
WATERFORD GAMING, L.L.C.
and
WATERFORD GAMING FINANCE CORP.
as Issuers,
$65,000,000
12-3/4% SENIOR NOTES DUE 2003
FIRST SUPPLEMENTAL INDENTURE
Dated as of March 4, 1999
STATE STREET BANK AND TRUST COMPANY
as Trustee
FIRST SUPPLEMENTAL INDENTURE dated as of March 4, 1999,
(the "Supplemental Indenture") among WATERFORD GAMING, L.L.C., a
Delaware limited liability company (the "Company"), WATERFORD
GAMING FINANCE CORP., a Delaware corporation ("Finance" and
together with the Company the "Issuers"), and STATE STREET BANK AND
TRUST COMPANY, as trustee (as successor to Fleet National Bank, the
"Trustee"), to the indenture, dated as of November 8, 1996 among
the Issuers and the Trustee (the "Indenture").
W I T N E S S E T H :
WHEREAS, the Issuers and Fleet National Bank (the
Trustee's predecessor in interest) have heretofore executed and
delivered the Indenture providing for the issuance of 12 % Senior
Notes due 2003 (the "Notes") of the Issuers;
WHEREAS, there is currently outstanding under the
Indenture $61,471,000 in aggregate principal amount of the Notes;
WHEREAS, Section 8.2 of the Indenture provides that the
Issuers and the Trustee may, with the written consent of the
Holders of at least a majority in aggregate principal amount of the
outstanding Notes, (i) enter into a supplemental indenture for the
purpose of amending the Indenture or (ii) waive compliance with
certain provisions of the Indenture, provided, however, that
without the consent of Holders of at least 662/3% of the aggregate
principal amount of the outstanding Notes, no such amendment may
change the provisions of Section 9 of the Indenture relating to a
Change in Control (as defined in the Indenture);
WHEREAS, the Issuers have offered to purchase all of the
outstanding Notes upon the terms and subject to the conditions set
forth in the Offer to Purchase and Solicitation Statement dated
February 24, 1999, and the accompanying Letter of Transmittal, as
the same may be further amended, supplemented or modified (the
"Offer");
WHEREAS, the Offer is conditioned upon, among other
things, the proposed amendments and waivers (the "Proposed
Amendments") to the Indenture set forth herein having been approved
by the holders of at least a majority in aggregate principal amount
of the outstanding Notes and with respect to the proposed amendment
to eliminate the Issuers' obligation to repurchase the Notes upon
a Change of Control (the "Change of Control Amendment") having been
approved by at least 662/3% in aggregate principal amount of the
outstanding Notes (and a supplemental indenture in respect thereof
having been executed and delivered), with the operativeness of such
Proposed Amendments and the Change of Control Amendment with
respect to the Notes being subject to the acceptance by the Issuers
of such Notes tendered pursuant to the Offer;
WHEREAS, the Issuers have received and delivered to the
Trustee the Requisite Consents and the Two-Thirds Consent (each, as
defined in the Offer) to effect the Proposed Amendments and the
Change of Control Amendment under the Indenture;
WHEREAS, Finance has been authorized by a resolution of
its Board of Directors to enter into this Supplemental Indenture;
and
WHEREAS, the Company has been authorized by a unanimous
written consent of its members to enter into this Supplemental
Indenture; and
WHEREAS, all other acts and proceedings required by law,
by the Indenture, by the certificate of formation and limited
liability company agreement of the Company and the certificate of
incorporation and by-laws of Finance, to make this Supplemental
Indenture a valid and binding agreement for the purposes expressed
herein, in accordance with its terms, have been duly done and
performed;
NOW, THEREFORE, in consideration of the premises and the
covenants and agreements contained herein, and for other good and
valuable consideration the receipt of which is hereby acknowledged,
and for the equal and proportionate benefit of the Holders of the
Notes, the Issuers and the Trustee hereby agree as follows:
Section
1. Deletion of Certain Provisions
Pursuant to the terms of the Offer and the consent of
Holders representing at least a majority in aggregate principal
amount of the outstanding Notes, and with respect to the proposed
amendment to eliminate the Issuers' obligation to repurchase the
Notes upon a Change of Control having been approved by at least
662/3% in aggregate principal amount of the outstanding Notes, the
Indenture is hereby amended to delete the following sections in
their entirety and, in the case of each such section, insert in
lieu thereof the phrase ["Intentionally Omitted"], and any and all
references to such sections, any and all obligations thereunder and
any event of default related solely to the following sections are
hereby deleted throughout the Indenture, and such sections and
references shall be of no further force or effect.
Section 4.3 (Limitation on Restricted Payments);
Section 4.5 (Payment of Taxes and Other Claims);
Section 4.6 (Compliance Certificate; Notice of
Default);
Section 4.7 (Reports);
Section 4.8 (Limitation on Status as Investment
Company);
Section 4.9 (Limitation of Transactions with
Affiliates);
Section 4.10 (Limitation on Indebtedness and
Disqualified Capital Stock);
Section 4.11 (Limitation on Liens);
Section 4.12 (Limitation on Sale of Assets);
Section 4.13 (Covenants with Respect to the
Manager);
Section 4.15 (Acceptance of Remaining Excess Cash
Purchase Offers and Change of Control Offers);
Section 4.17 (Limitation on Merger, Sale or
Consolidation; and
Section 9.1 (Repurchase of Securities at Option of
Holder Upon a Change of Control) (collectively, the
"Amended Sections").
Section 2. Other Amendments to the Indenture
1. Amendment of Section 4.14 (Limitation on
Activities of the Issuers);
Section 4.14 is hereby deleted in its entirety and the
following is hereby substituted in its place:
"The Issuers may engage in any business activity
whatsoever not explicitly prohibited by this Indenture and may use
any cash for any proper business purpose under this Indenture."
2. All definitions in the Indenture which are used
exclusively in the sections and clauses deleted pursuant to
Sections 1 and 2 of this First Supplemental Indenture are hereby
deleted.
Section
1. Effectiveness; Operativeness
1. This Supplemental Indenture (other than Sections
1 and 2 hereof) will become effective and binding upon the Issuers,
the Trustee and the Holders as of the latter of the date hereof and
(ii) the date on which the Opinion of Counsel and Officers'
Certificate required by the Indenture is delivered to the Trustee;
and
2. Sections 1 and 2 of this Supplemental Indenture
will become operative on and simultaneously with and shall have no
force or effect prior to the delivery by each of the Issuers of an
Officers' Certificate to the effect that the Issuers have accepted
for purchase the Notes tendered.
Section
1. Reference to and Effect on the Indenture
1. On and after the effective date of this
Supplemental Indenture, each reference in the Indenture to "this
Indenture," "hereunder," "hereof," or "herein" shall mean and be a
reference to the Indenture as supplemented by this Supplemental
Indenture unless the context otherwise requires.
2. Except as specifically amended above, the
Indenture shall remain in full force and effect and is hereby
ratified and confirmed.
Section
1. Governing Law
This Supplemental Indenture shall be construed and
enforced in accordance with the laws of the State of New York,
including, without limitation Section 5-1401 of the New York
General Obligation Law.
Section 2. Defined Terms
Unless otherwise indicated, capitalized terms used herein
and not defined shall have the respective meanings given such terms
in the Indenture.
Section 3. Trust Indenture Act Controls
If any provision of this Supplemental Indenture limits,
qualifies or conflicts with another provision of this Supplemental
Indenture or the Indenture that is required to be included by the
Trust Indenture Act of 1939, as amended (the "Act"), as in force at
the date this First Supplemental Indenture is executed, the
provision required by said Act shall control.
Section 4. Trustee Disclaimer
The recitals contained in this Supplemental Indenture
shall be taken as the statements of the Issuers, and the Trustee
assumes no responsibility for their correctness. The Trustee makes
no representations as to the validity or sufficiency of this
Supplemental Indenture.
Section 5. Counterparts and Method of Execution
This Supplemental Indenture may be executed in several
counterparts, all of which together shall constitute one agreement
binding on all parties hereto, notwithstanding that all the parties
have not signed the same counterpart.
Section 6. Titles
Section titles are for descriptive purposes only and shall not
control or alter the meaning of this Supplemental Indenture as set forth
in the text.
Section 7. Severability
In case any provision of this Supplemental Indenture
shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way
be effected or impaired thereby.
[Signature page follow]
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be executed as of the day and year first
above written.
Waterford Gaming, L.L.C.
By:
Name:
Title:
Waterford Gaming Finance Corp.
By:
Name:
Title:
State Street Bank and Trust Company
By:
Name:
Title:
Waterford Gaming, L.L.C.
OFFICERS' CERTIFICATE TO TRUSTEE
Pursuant to the offer to purchase dated February 24, 1999
(the "Offer") by Waterford Gaming, L.L.C. (the "Company") of all of
the outstanding 12 3/4% Senior Notes due 2003 (the "Notes") issued
by the Company and Waterford Gaming Finance Corp. (the "Company")
from the Holders (as defined below) thereof and their solicitation
of consents (the "Consents") from the Holders of the Notes to the
proposed amendments (the "Proposed Amendments") to the indenture
(the "Indenture") governing the Notes, waiver of certain
restrictive covenants and events of default ("Waivers"), the
undersigned officers of Finance (i) request the trustee under the
Indenture (the "Trustee") to enter into the supplemental indenture
effecting the Proposed Amendments (the "Supplemental Indenture")
and (ii) do hereby certify on behalf of Finance as follows:
I. We have (a) read all conditions precedent (if
applicable) specified in the Indenture relating to the Offer, the
Consents, the Waivers, the Proposed Amendments and the Supplemental
Indenture, the resolutions of the Company's Board of Directors with
respect to the foregoing and such other materials and documents,
(b) made such examination as we deem necessary to enable us to
express an informed opinion as to whether or not such conditions
precedent have been complied with, and (c) assumed in such
examination the genuineness of all signatures, the authenticity of
all documents submitted to us as originals and the conformity to
originals of all documents submitted to us as copies thereof;
II. MacKenzie Partners, Inc., as the Information Agent,
has informed us that 96.15% in aggregate principal amount of the
Notes have been tendered pursuant to the Offer and that the Holders
thereof have consented to the Proposed Amendments; and
III. The conditions precedent (if applicable)
specified in the Indenture relating to the Offer, the Consents, the
Proposed Amendments and the Supplemental Indenture have been
complied with.
IV. In connection with this certificate, (i) we have
read the conditions and covenants contained in the Indenture
regarding amendments to the Indenture with the consent of the
Holders and all definitions in the Indenture relating thereto, (ii)
we have examined and are familiar with originals or copies,
certified or otherwise identified to our satisfaction, of (a) an
execution copy of the Indenture and (b) reports of MacKenzie
Partners, Inc., as Information Agent, in connection with the
Issuers' obtaining consents from the holders of at least 66 2/3% in
aggregate principal amount of the Issuers' 12 % Senior Secured
Notes due 2003 regarding the amendments to the Indenture contained
in the Supplemental Indenture and (iii) as described above, we have
made such examinations as we have deemed necessary to express the
opinion contained herein.
This Officer's Certificate is furnished solely for your
benefit pursuant to Section 11.4 of the Indenture. Latham &
Watkins is entitled to rely on this certificate in connection with
the opinions that such firm is rendering pursuant to the Indenture
and the Dealer Manager Agreement among Finance, the Company Bear,
Stearns & Co. Inc., and Merrill Lynch & Co., dated March __, 1999.
IN WITNESS WHEREOF, the undersigned have executed this
Officers' Certificate as of this __ day of March, 1999.
Waterford Gaming, L.L.C.
By:
Name:
Title:
By:
Name:
Title:
Waterford Gaming Finance Corp.
OFFICERS' CERTIFICATE TO TRUSTEE
Pursuant to the offer to purchase dated February 24, 1999
(the "Offer") by Waterford Gaming Finance Corp. ("Finance") of all
of the outstanding 12 3/4% Senior Notes due 2003 (the "Notes")
issued by Finance and Waterford Gaming, L.L.C. (the "Company") from
the Holders (as defined below) thereof and their solicitation of
consents (the "Consents") from the Holders of the Notes to the
proposed amendments (the "Proposed Amendments") to the indenture
(the "Indenture") governing the Notes, waiver of certain
restrictive covenants and events of default ("Waivers"), the
undersigned officers of Finance (i) request the trustee under the
Indenture (the "Trustee") to enter into the supplemental indenture
effecting the Proposed Amendments (the "Supplemental Indenture")
and (ii) do hereby certify on behalf of Finance as follows:
(i) We have (a) read all conditions precedent (ifapplicable) specified
in the Indenture relating to the Offer, the Consents, the Waivers, the
Proposed Amendments and the Supplemental Indenture the resolutions of
Finance's Board of Directors with respect to the foregoing and such other
materials and documents, (b) made such examination as we deem necessary to
enable us to express an informed opinion as to whether or not such conditions
precedent have been complied with, and (c) assumed in such examination
the genuineness of all signatures, the authenticity of all documents
submitted to us as originals and the conformity to originals of all documents
submitted to us as copies thereof;
(ii) MacKenzie Partners, Inc., as the Information Agent, has informed
us that 96.15% in aggregate principal amount of the Notes have been tendered
pursuant to the Offer and that the Holders thereof have consented to the
Proposed Amendments; and
(iii) The conditions precedent (if applicable) specified in the
Indenture relating to the Offer, the Consents, the Proposed Amendments and
the Supplemental Indenture have been complied with.
(iv) In connection with this certificate, (i) we have read the
conditions and covenants contained in the Indenture regarding amendments to
the Indenture with the consent of the Holders and all definitions in the
Indenture relating thereto, (ii) we have examined and are familiar with
originals or copies, certified or otherwise identified to our satisfaction,
of (a) an execution copy of the Indenture and (b) reports of MacKenzie
Partners, Inc., as Information Agent, in connection with the Issuers'
obtaining consents from the holders of at least 66 2/3% in aggregate
principal amount of the Issuers' 12 % Senior Secured Notes due 2003 regarding
the amendments to the Indenture contained in the Supplemental Indenture and
(iii) as described above, we have made such examinations as we have deemed
necessary to express the opinion contained herein.
This Officer's Certificate is furnished solely for your benefit pursuant
to Section 11.4 of the Indenture. Latham & Watkins is entitled to rely on
this certificate in connection with the opinions that such firm is rendering
pursuant to the Indenture and the Dealer Manager Agreement among Finance, the
Company, Bear, Stearns & Co. Inc., and Merrill Lynch & Co., dated March __,
1999.
IN WITNESS WHEREOF, the undersigned have executed this Officers'
Certificate as of this __ day of March, 1999.
Waterford Gaming Finance Corp.
By:
Name:
Title:
By:
Name:
Title:
WATERFORD GAMING, L.L.C.
and
WATERFORD GAMING FINANCE CORP.
as Issuers,
and
STATE STREET BANK AND TRUST COMPANY
as Trustee
INDENTURE
Dated as of March 17, 1999
$125,000,000
9 1/2% Senior Notes due 2010
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE . .1
SECTION 1.1. Definitions. . . . . . . . . . . . . . . . .1
SECTION 1.2. Incorporation by Reference of TIA. . . . . 16
SECTION 1.3. Rules of Construction. . . . . . . . . . . 17
ARTICLE II
THE SECURITIES . . . . . . . . . . . . . . . 18
SECTION 2.1. Form and Dating. . . . . . . . . . . . . . 18
SECTION 2.2. Execution and Authentication . . . . . . . 18
SECTION 2.3. Registrar and Paying Agent . . . . . . . . 19
SECTION 2.4. Paying Agent to Hold Assets in Trust . . . 20
SECTION 2.5. Securityholder Lists . . . . . . . . . . . 20
SECTION 2.6. Transfer and Exchange. . . . . . . . . . . 20
SECTION 2.7. Replacement Securities . . . . . . . . . . 26
SECTION 2.8. Outstanding Securities . . . . . . . . . . 27
SECTION 2.9. Treasury Securities. . . . . . . . . . . . 27
SECTION 2.10. Temporary Securities . . . . . . . . . . . 27
SECTION 2.11. Cancellation . . . . . . . . . . . . . . . 28
SECTION 2.12. Defaulted Interest . . . . . . . . . . . . 28
SECTION 2.13. CUSIP Numbers. . . . . . . . . . . . . . . 29
ARTICLE III
REDEMPTION ........... . . . . . . . . . . . 29
SECTION 3.1. Right of Redemption. . . . . . . . . . . . 29
SECTION 3.2. Notices to Trustee . . . . . . . . . . . . 31
SECTION 3.3. Selection of Securities to Be Redeemed . . 31
SECTION 3.4. Notice of Redemption . . . . . . . . . . . 32
SECTION 3.5. Effect of Notice of Redemption . . . . . . 33
SECTION 3.6. Deposit of Redemption Price. . . . . . . . 33
SECTION 3.7. Securities Redeemed in Part. . . . . . . . 34
ARTICLE IV
COVENANTS........... . . . . . . . . . . . . 34
SECTION 4.1. Payment of Securities. . . . . . . . . . . 34
SECTION 4.2. Maintenance of Office or Agency. . . . . . 34
SECTION 4.3. Limitation on Restricted Payments. . . . . 35
SECTION 4.4. Corporate and Limited Liability Company
Existence. . . . . . . . . . . . . . . . . 36
SECTION 4.5. Payment of Taxes and Other Claims. . . . . 36
SECTION 4.6. Compliance Certificate; Notice of Default. 37
SECTION 4.7. Reports. . . . . . . . . . . . . . . . . . 37
SECTION 4.8. Limitation on Status as Investment Company 38
SECTION 4.9. Limitation on Transactions with Affiliates.38
SECTION 4.10. Limitation on Indebtedness and Disqualified
Capital Stock. . . . . . . . . . . .. . . 39
SECTION 4.11. Limitation on Liens. . . . . . . . . . . . 39
SECTION 4.12. Limitation on Sale of Assets . . . . . . . 39
SECTION 4.13. Covenants with Respect to the Manager. . . 39
SECTION 4.14. Limitation on Activities of the Issuers. . 40
SECTION 4.15. Acceptance of Remaining Excess Cash Purchase
Offers and Offers Other than Change of Control
Offers... . . . . . . . . . . . . . . . . 41
SECTION 4.16. Acceptance of Change of Control Offers . . 41
SECTION 4.17. Waiver of Stay, Extension or Usury Laws. . 42
SECTION 4.18. Limitation on Merger, Sale or Consolidation42
SECTION 4.19. Limitation on Use of Proceeds. . . . . . . 42
SECTION 4.20. Covenants with Respect to Interest Reserve
Account . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE V
EVENTS OF DEFAULT AND REMEDIES . . . . . . . 43
SECTION 5.1. Events of Default. . . . . . . . . . . . . 43
SECTION 5.2. Acceleration of Maturity Date; Rescission and
Annulment. . . . . . . . . . . . . . . . . 44
SECTION 5.3. Collection of Indebtedness and Suits for
Enforcement by Trustee .. . . . . . . . . .45
SECTION 5.4. Trustee May File Proofs of Claim . . . . . 46
SECTION 5.5. Trustee May Enforce Claims Without Possession
of Securities . . . . . . . . . . . . . . 47
SECTION 5.6. Priorities . . . . . . . . . . . . . . . . 47
SECTION 5.7. Limitation on Suits. . . . . . . . . . . . 48
SECTION 5.8. Unconditional Right of Holders to Receive
Principal, Premium and Interest. . . . . . 48
SECTION 5.9. Rights and Remedies Cumulative . . . . . . 48
SECTION 5.10. Delay or Omission Not Waiver . . . . . . . 49
SECTION 5.11. Control by Holders . . . . . . . . . . . . 49
SECTION 5.12. Waiver of Past Default . . . . . . . . . . 49
SECTION 5.13. Undertaking for Costs. . . . . . . . . . . 50
SECTION 5.14. Restoration of Rights and Remedies . . . . 50
ARTICLE VI
TRUSTEE . . . . . . . . . . . . . 50
SECTION 6.1. Duties of Trustee . . . . . . . . . . . . 50
SECTION 6.2. Rights of Trustee . . . . . . . . . . . . 51
SECTION 6.3. Individual Rights of Trustee. . . . . . . 52
SECTION 6.4. Trustee's Disclaimer. . . . . . . . . . . 53
SECTION 6.5. Notice of Default . . . . . . . . . . . . 53
SECTION 6.6. Reports by Trustee to Holders . . . . . . 53
SECTION 6.7. Compensation and Indemnity. . . . . . . . 54
SECTION 6.8. Replacement of Trustee. . . . . . . . . . 55
SECTION 6.9. Successor Trustee by Merger, Etc. . . . . 56
SECTION 6.10. Eligibility; Disqualification.. . . . . . 56
SECTION 6.11. Preferential Collection of Claims Against
Issuers. . . . . . . . . . . .. . . . . . 56
ARTICLE VII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE. . . . . 56
SECTION 7.1. Option to Effect Legal Defeasance or Covenant
Defeasance . . . . . . . . . . . . . . . . 56
SECTION 7.2. Legal Defeasance and Discharge . . . . . . 56
SECTION 7.3. Covenant Defeasance. . . . . . . . . . . . 57
SECTION 7.4. Conditions to Legal or Covenant Defeasance 57
SECTION 7.5. Deposited Cash and U.S. Government Obliga
Obligations to be Held in Trust; Other
Miscellaneous Provisions. . . . . . . .. . 59
SECTION 7.6. Repayment to the Issuers . . . . . . . . . 59
SECTION 7.7. Reinstatement. . . . . . . . . . . . . . . 60
ARTICLE VIII
AMENDMENTS, SUPPLEMENTS AND WAIVERS. . . . . . . 60
SECTION 8.1. Supplemental Indentures Without Consent of
Holders. . . . . . . . . . . . . . . . . . 60
SECTION 8.2. Amendments, Supplemental Indentures and Waivers
with Consent of Holders . . . . . . . . . .61
SECTION 8.3. Compliance with TIA. . . . . . . . . . . . 62
SECTION 8.4. Revocation and Effect of Consents. . . . . 62
SECTION 8.5 Notation on or Exchange of Securities. . . 63
SECTION 8.6. Trustee to Sign Amendments, Etc. . . . . . 63
ARTICLE IX
RIGHT TO REQUIRE REPURCHASE . . . . . . . . 64
SECTION 9.1. Repurchase of Securities at Option of the
Holder Upon a Change of Control . . . . . 64
ARTICLE X
SECURITY. . . . . . . . . . . . . 66
SECTION 10.1. Security Interest . . . . . . . . . . . . 66
SECTION 10.2. Recording; Opinions of Counsel. . . . . . 66
SECTION 10.3. Interest Reserve Account. . . . . . . . . 67
SECTION 10.4. Certain Releases of Note Collateral . . . 68
SECTION 10.5. Payment of Expenses . . . . . . . . . . . 68
SECTION 10.6. Suits to Protect the Note Collateral. . . 68
SECTION 10.7. Trustee's Duties. . . . . . . . . . . . . 68
ARTICLE XI
MISCELLANEOUS. . . . . . . . . . . . 69
SECTION 11.1. TIA Controls. . . . . . . . . . . . . . . 69
SECTION 11.2. Notices . . . . . . . . . . . . . . . . . 69
SECTION 11.3. Communications by Holders with Other Holders
. . . . . . . . . . . . . . . . . . . . . 70
SECTION 11.4. Certificate and Opinion as to Conditions
Precedent. . . . . . . . .. . . . . . . . 70
SECTION 11.5. Statements Required in Certificate or
Opinion. . . . . . . . . . . . . . . . . .71
SECTION 11.6. Rules by Trustee, Paying Agent, Registrar 71
SECTION 11.7. Non-Business Days . . . . . . . . . . . . 71
SECTION 11.8. Governing Law . . . . . . . . . . . . . . 72
SECTION 11.9. No Adverse Interpretation of Other
Agreements. . . . . . . . . . . . . . . . 72
SECTION 11.10. No Recourse against Others. . . . . . . . 72
SECTION 11.11. Successors. . . . . . . . . . . . . . . . 72
SECTION 11.12. Duplicate Originals . . . . . . . . . . . 73
SECTION 11.13. Severability. . . . . . . . . . . . . . . 73
SECTION 11.14. Table of Contents, Headings, Etc. . . . . 73
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . 74
Exhibit A . . . . . . . . . . . . . . . . . . . . . . . .A-1
INDENTURE, dated as of March 17, 1999, by and among
Waterford Gaming, L.L.C., a Delaware limited liability company
("the Company"), and Waterford Gaming Finance Corp., a Delaware
corporation ("Finance" and, together with Gaming, the "Issuers")
and State Street Bank and Trust Company, as Trustee.
Each party hereto agrees as follows for the benefit of
each other party and for the equal and ratable benefit of the
Holders of the Issuers' 9 1/2% Senior Notes due 2010:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions.
"Acceleration Notice" shall have the meaning specified in
Section 5.2.
"Acquisition" means the purchase or other acquisition of any
person or substantially all the assets of any person by any other
person, whether by purchase, stock purchase, merger, consolidation,
or other transfer, and whether or not for consideration.
"Affiliate" means any person directly or indirectly control
ling or controlled by or under direct or indirect common control
with such person. For purposes of this definition, the term
"control" means the power to direct the management and policies of
a person, directly or through one or more intermediaries, whether
through the ownership of voting securities, by contract, or
otherwise, provided, however, that with respect to ownership
interests in the Company a Beneficial Owner of 10% or more of the
total voting power normally entitled to vote in the election of
directors, managers or trustees, as applicable, shall for such
purposes be deemed to constitute control.
"Affiliate Transaction" shall have the meaning specified in
Section 4.9.
"Agent" means any authenticating agent, Registrar, Paying
Agent or transfer agent.
"Asset Sale" shall have the meaning specified in Section 4.12.
"Authority" means the Mohegan Tribal Gaming Authority.
"Bankruptcy Law" means Title 11, U.S. Code, or any similar
Federal, state or foreign law for the relief of debtors.
"Beneficial Owner" or "beneficial owner" for the purposes of
the definition of Change of Control has the meaning attributed to
it in Rules l3d-3 and l3d-5 under the Exchange Act (as in effect on
the Issue Date), whether or not applicable, except that a "person"
shall be deemed to have "beneficial ownership" of all shares that
any such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time.
"Board of Directors", "Board of Managers" or "Board" means,
with respect to any Person, the Board of Directors or Board of
Managers of such Person or any committee of the Board of Directors
or Board of Managers of such Person authorized, with respect to any
particular matter, to exercise the power of the Board of Directors
or Board of Managers of such Person.
"Board Resolution" means, with respect to any Person, a duly
adopted resolution of the Board of Directors or the Board of
Managers of such Person.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in New
York, New York are authorized or obligated by law or executive
order to close.
"Buy Out Notice" has the meaning set forth in Section 4.03 of
the Partnership Agreement.
"Capital Stock" means, with respect to any corporation, any
and all shares, interests, rights to purchase (other than convertible
or exchangeable Indebtedness), warrants, options, participations or other
equivalents of or interests (however designated) in stock issued by that
corporation.
"Capitalized Lease Obligation" means rental obligations under
a lease that are required to be capitalized for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligations shall be the capitalized amount of
such obligations, as determined in accordance with GAAP.
"Cash" or "cash" means such coin or currency of the United
States of America as at the time of payment shall be legal tender
for the payment of public and private debts.
"Cash Equivalents" means (a) United States dollars, (b)
securities issued or directly and fully guaranteed or insured by
the United States government or any agency or instrumentality
thereof having maturities of not more than six months from the date
of acquisition, (c) certificates of deposit and Eurodollar time
deposits with maturities of six months or less from the date of
acquisition, bankers' acceptances with maturities not exceeding six
months and overnight bank deposits, in each case with any commercial
bank having capital and surplus in excess of $300.0 million,
(d) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses (b) and
(c) entered into with any financial institution meeting the
qualifications specified in clause (c) above, (e) commercial paper
rated A-I or the equivalent thereof by Moody's Investors Service,
Inc. or Standard & Poor's Ratings Group and in each case maturing
within one year after the date of acquisition and (f) investment
funds investing solely in securities of the types described in
clauses (b) - (e) above.
"Change of Control" means any event, the result of which is
that Len Wolman and Mark Wolman and their Permitted Assignees cease
in the aggregate to "beneficially own," directly or indirectly, at
least 40% of the total voting power in the aggregate of the Company.
"Change of Control Offer" shall have the meaning specified in
Section 9.1.
"Change of Control Offer Period" shall have the meaning specified
in Section 9.1.
"Change of Control Purchase Date" shall have the meaning specified
in Section 9.1.
"Change of Control Purchase Price" shall have the meaning specified
in Section 9.1.
"Closing" has the meaning set forth in Section 4.03 of the
Partnership Agreement.
"Company" means Waterford Gaming, L.L.C.
"Company Excess Cash" means at any date of determination all cash
and Cash Equivalents of the Company (exclusive of any funds set aside for the
purchase of additional Mohegan Notes, in accordance herewith, including,
without limitation, Section 4.3) less the balance in the Interest Reserve
Account less any Group Flow-Through Payment less the Company Reserve Amount
plus any interest accrued on the Interest Reserve Account, plus any amounts
calculated to be released contemporaneously with any related redemption of
the Securities from the Interest Reserve Account that would be available as
Company Excess Cash; provided, however, if the principal amount of Securities
then outstanding, together with accrued and unpaid interest thereon, is less
than $2.0 million, then the Company shall treat all cash and Cash Equivalents
of the Company as Company Excess Cash (other than the Estimated Tax Reserve
Amount).
"Company Reserve Amount" shall be an amount determined by the
Company not to exceed $2.0 million plus the Estimated Tax Reserve Amount.
"Completion" means the opening of a substantial portion of the
casino portion of the expansion of the Mohegan Sun, including all necessary
gaming equipment, for gaming purposes on a twenty-four hours a day seven days
a week basis.
"Completion Guarantee Mohegan Notes" refers to the completion
guarantee subordinated notes of the Authority which mature on November 15,
2003.
"Consolidation" means, with respect to the Company, the
consolidation of the accounts of Finance with those of the Company, all in
accordance with GAAP. The term "consolidated" has a correlative meaning to
the foregoing.
"Consolidated Coverage Ratio" means, with respect to the Company, on
any date of determination (the "Transaction Date") means the ratio, on a pro
forma basis, of (a) the aggregate amount of Consolidated EBITDA of the Company
attributable to continuing operations and businesses (exclusive of amounts
attributable to operations and businesses permanently discontinued or disposed
of) for the Reference Period to (b) the aggregate Consolidated Fixed Charges
of the Company (exclusive of amounts attributable to
operations and businesses permanently discontinued or disposed of,
but only to the extent that the obligations giving rise to such
Consolidated Fixed Charges would no longer be obligations contrib
uting to the Company's Consolidated Fixed Charges subsequent to the
Transaction Date) during the Reference Period; provided, that for
purposes of such calculation, (i) transactions giving rise to the
need to calculate the Consolidated Coverage Ratio shall be assumed
to have occurred on the first day of the Reference Period, (ii) the
incurrence of any Indebtedness or issuance of any Disqualified
Capital Stock or the retirement of any Indebtedness during the
Reference Period or subsequent to the Reference Period and on or
prior to the Transaction Date (and the application of the proceeds
therefrom to the extent used to refinance or retire other Indebted
ness) shall be assumed to have occurred on the first date of the
Reference Period, and (iii) the Consolidated Fixed Charges of the
Company attributable to interest on any Indebtedness or dividends
or distributions on any Disqualified Capital Stock bearing a floating
interest (or dividend or other distribution) rate shall be computed on
a pro forma basis as if the rate on the Transaction Date had been the
applicable rate for the entire period.
"Consolidated EBITDA" means, with respect to the Company, for
any period, the Consolidated Net Income of the Company for such
period adjusted to add thereto (to the extent deducted from net
revenues in determining Consolidated Net Income), without duplication,
the sum of (a) Consolidated income tax expense, (b) Consolidated depreciation
and amortization expense, and (c) Consolidated Fixed Charges and less the
amount of all cash payments made by such Person or any of its Subsidiaries
during such period to the extent such payments relate to non-cash charges
that were added back in determining Consolidated EBITDA for such period or
any prior period.
"Consolidated Fixed Charges" means, with respect to the Company for
any period, the aggregate amount (without duplication and determined in each
case in accordance with GAAP) of (a) interest expensed or capitalized, paid,
accrued, or scheduled to be paid or accrued of the Company and Finance during
such period, including (i) original issue discount and non-cash interest
payments or accruals on any Indebtedness, (ii) the interest portion of all
deferred payment obligations, and (iii) all commissions,
discounts and other fees and charges owed with respect to bankers'
acceptances and letters of credit financings, in each case to the
extent attributable to such period, but excluding any premium paid
on the Securities redeemed or repurchased and (b) the amount of
dividends or other distributions accrued or payable (or guaranteed)
by the Company. For purposes of this definition, interest expense
attributable to any Indebtedness represented by the guaranty by the
Company or Finance of an obligation of another Person shall be
deemed to be the interest expense attributable to the Indebtedness
guaranteed.
"Consolidated Net Income" means, with respect to the Company
for any period, the net income (or loss) of the Company and Finance
(determined on a consolidated basis in accordance with GAAP) for such period,
adjusted to exclude (only to the extent included in computing such net income
(or loss) and without duplication) all gains (but not losses) which are either
extraordinary (as determined in accordance with GAAP) or are either unusual
or nonrecurring (including any gain from the sale or other disposition of
assets outside the ordinary course of business, including any Mohegan Note
Transfer or from the issuance or sale of any Capital Stock).
"Covenant Defeasance" shall have the meaning specified in
Section 7.3.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means any event or condition that is, or after
notice or passage of time or both would be, an Event of Default.
"Defaulted Interest" shall have the meaning specified in
Section 2.12.
"Definitive Securities" means Securities that are in the form
of the Security attached hereto as Exhibit A that do not include
the information called for by footnotes 1 and 3 thereof.
"Depositary" means, with respect to the Securities issuable or
issued in whole or in part in global form, the person specified in
Section 2.3 as the Depositary with respect to the Securities, until
a successor shall have been appointed and become such pursuant to
the applicable provision of this Indenture, and, thereafter,
"Depositary" shall mean or include such successor.
"Development Services Agreement" means the Development
Services Agreement, dated February 7, 1999, by and between the Authority
and the Manager.
"Disqualified Capital Stock" means with respect to any person,
Equity Interests of such person that, by its terms or by the terms of any
security into which it is then convertible, exercisable or exchangeable, is,
or upon the happening of an event or the passage of time would be, required
to be redeemed or repurchased (including at the option of the holder thereof)
by such person or any of its Subsidiaries, in whole or in part, on or prior
to the Stated Maturity of the Securities.
"DTC" shall have the meaning specified in Section 2.3.
"Equity Interest" of any Person means any shares, limited liability
company interests, limited partnership interests or other interests,
participations or other equivalents (however designated) in such Person's
equity, and shall in any event include any Capital Stock issued by, or
partnership interests in, such Person.
"Estimated Tax Reserve Account" means, with respect to any
redemption of Securities, an amount reasonably estimated by the Company and
confirmed by a nationally recognized firm of independent public accountants
to be necessary to pay the next Permitted Quarterly Tax Distribution to be
made, taking into account anticipated revenues prior to the date of such
distribution.
"Estimation Period" means the period for which a partner who
is an individual is required to estimate for federal income tax purposes such
individual's allocation of taxable income from a calendar year partnership in
connection with determining such individual's estimated federal income tax
liability for such period.
"Event of Default" shall have the meaning specified in Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC thereunder.
"Finance" means Waterford Gaming Finance Corp.
"GAAP" means United States generally accepted accounting
principles set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants
and statements and pronouncements of the Financial Accounting Standards Board
or in such other statements by such other entity as approved by a significant
segment of the accounting profession, as in effect on the Issue Date.
"Gaming Facility Development and Construction Agreement" means
the Amended and Restated Gaming Facility Development and Construction
Agreement, dated as of September 1, 1995, by and between the Mohegan Tribe and
the Manager.
"Gaming Regulatory Authority" means any agency, authority, board,
bureau, commission, department, office or instrumentality of any nature
whatsoever of the United States or foreign government, any state, province or
any city or other political subdivision, whether now or hereafter existing,
or any officer or official thereof, including without limitation, any division
of the Authority or any other agency with authority to regulate any gaming
operation (or proposed gaming operation) owned, managed or operated by the
Mohegan Tribe or the Authority.
"Global Security" means a Security that contains the paragraph
referred to in footnote 1 and the additional schedule referred to in footnote
3 to the form of Security attached hereto as Exhibit A.
"Government Securities" means the securities purchased by the
Company upon consummation of the Offering and deposited in the Interest
Reserve Account and in which the Trustee has a first priority perfected
security interest which are comprised of (a) direct obligations of the United
States of America for the timely payment of which its full faith and credit
is pledged or (b) obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States of America the
timely payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case,
are not callable or redeemable at the option of the issuer thereof, and shall
also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act), as custodian with respect to any such
Government Security or a specific payment of principle of or interest on any
such Government Security held by such custodian for the account of the holder
of such depository receipt; provided, that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to
the holder of such depository receipt from any amount received by the
custodian in respect of the Government Security or the specific payment of
principal of or interest on the Government Security evidenced by such
depository receipt.
"Group Flow-Through Payment" means the payment or Investment
of any amount by the Company to or in any third party in connection
with the conduct of the business of the Company substantially
concurrent with funds received by the Company as a capital contribution
from Waterford Group solely for such purpose for which Waterford Group
receives no consideration other than Qualified Capital Stock.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Hotel/Resort Facility Development and Construction Agreement"
means the Hotel/Resort Facility Development and Construction
Agreement, dated as of July 28, 1994, by and between the Mohegan
Tribe and the Manager.
"Hotel/Resort Management Agreement" means the Hotel/Resort
Management Agreement, dated July 28, 1994, by and between the
Mohegan Tribe and the Manager.
"Indebtedness" of any person means, without duplication, (a)
all liabilities and obligations, contingent or otherwise, of any
such person, (i) in respect of borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such person
or only to a portion thereof), (ii) evidenced by bonds, notes,
debentures or similar instruments, (iii) representing the balance
deferred and unpaid of the purchase price of any property or
services, except those incurred in the ordinary course of its
business that would constitute ordinarily a trade payable to trade
creditors, (iv) evidenced by bankers' acceptances or similar
instruments issued or accepted by banks, (v) relating to any
Capitalized Lease Obligation, or (vi) evidenced by a letter of
credit or a reimbursement obligation of such person with respect to
any letter of credit; (b) all liabilities and obligations of others
of the kind described in the preceding clause (a) that such person
has guaranteed or that is otherwise its legal liability or which
are secured by any assets or property of such person and all
obligations to purchase, redeem or acquire any Equity Interests;
(c) any and all deferrals, renewals, extensions, refinancing and
refunds (whether direct or indirect) of, or amendments, modifications
or supplements to, any liability of the kind described in any
of the preceding clauses (a) or (b), or this clause (c), whether or
not between or among the same parties; and (d) all Disqualified
Capital Stock of such person.
"Indenture" means this Indenture, as amended or supplemented
from time to time in accordance with the terms hereof.
"Information Agent" means MacKenzie Partners, Inc.
"Initial Purchasers" means Bear, Stearns & Co. Inc., Merrill
Lynch, Pierce, Fenner & Smith Incorporated and Salomon Smith Barney
Inc.
"Interest Payment Date" means the stated due date of an
installment of interest on the Securities.
"Interest Reserve Account" means the account to be maintained
by the Securities Intermediary and pledged to the Trustee under the
Security and Control Agreement.
"Investment" by any person in any other person means (without
duplication) (a) the acquisition (whether by purchase, merger,
consolidation or otherwise) by such person (whether for cash,
property, services, securities or otherwise) of Capital Stock,
bonds, notes, debentures, partnership or other ownership interests
or other securities, including any options or warrants, of such
other person or any agreement to make any such acquisition; (b) the
making by such person of any deposit with, or advance, loan or
other extension of credit to, such other person (including the
purchase of property from another person subject to an understand
ing or agreement, contingent or otherwise, to resell such property
to such other person) or any commitment to make any such advance,
loan or extension (but excluding accounts receivable or deposits
arising in the ordinary course of business); (c) the entering into
by such person of any guarantee of, or other credit support or
contingent obligation with respect to, Indebtedness or other
liability of such other person; and (d) the making of any capital
contribution by such person to such other person.
"Investment Grade Securities" means any Investment in
(a) marketable direct obligations issued or unconditionally
guaranteed by the United States government or issued by any agency
thereof and backed by the full faith and credit of the United
States, in each case maturing within five years from the date of
acquisition thereof, (b) marketable direct obligations issued by
any state of the United States of America maturing within one year
from the date of acquisition thereof and, at the time of acquisition,
having one of the two highest ratings obtainable from both Standard & Poor's
Corporation and Moody's Investors Service, Inc., (c) commercial paper maturing
no more than one year from the date of creation thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from both
Standard & Poor's Corporation and Moody's Investors Service, Inc., (d)
certificates of deposit maturing within two years from the date hereof
issued by, or bank accounts maintained with, commercial banks organized
under the laws of the United States of America or any state thereof
or the District of Columbia, each having combined capital and
surplus of not less than $500 million and having a rating of "A1"
or better from Standard & Poor's Corporation or "P1" or better from
Moody's Investors Service, Inc., (e) bonds issued by corporations
organized under the laws of the United States or any state thereof,
maturing within two years from the date hereof and having a rating
of "BBB-" or better by Standard & Poor's Corporation or "Baa3" or
better by Moody's Investors Service, Inc. or (f) money market funds
organized under the laws of the United States or any state thereof
that invest solely in any of the types of investments permitted
under this definition; provided that any such Investment Grade
Securities which are purchased with a portion of the net proceeds
from the sale of the Securities are deposited in the Interest
Reserve Account and the Trustee has a first priority perfected
security interest in such Investment Grade Securities.
"IRA Required Balance" means U.S. legal tender, Investment
Grade Securities and Government Securities or a combination
thereof, in an amount equal to the interest due on the outstanding
Securities (after giving effect to any redemption to be made in
connection with such calculation) on the following two Interest
Payment Dates unless only one Interest Payment Date remains, in
which case, on the following Interest Payment Date.
"Issue Date" means the date of first issuance of the Securities
under the Indenture.
"Issuers" means each of the parties named as such in this
Indenture.
"Legal Defeasance" shall have the meaning specified in Section
7.2.
"Lien" means any mortgage, charge, pledge, lien (statutory or
otherwise), privilege, security interest, hypothecation or other
encumbrance upon or with respect to any property of any kind, real
or personal, movable or immovable, now owned or hereafter acquired.
"Management Agreement" means the Amended and Restated Gaming
Facility Management Agreement, dated August 30, 1995, by and
between the Mohegan Tribe and the Manager.
"Manager" means Trading Cove Associates, a Connecticut general
partnership.
"Maturity Date" means, when used with respect to any Security,
the date specified on such Security as the fixed date on which the
final installment of principal of such Security is due and payable
(in the absence of any acceleration thereof pursuant to the
provisions of this Indenture regarding acceleration of Indebtedness
or any Change of Control Offer).
"Mohegan Note Transfer" shall have the meaning specified in
Section 4.3.
"Mohegan Note Transfer Proceeds" means the net proceeds of the
Mohegan Note Transfer (including any distribution from the Manager
in respect of deferred interest on the Mohegan Notes and any cash
interest (excluding additional amounts under the Omnibus Agreement)
paid on the Mohegan Notes.
"Mohegan Notes" refers to all 15% subordinated notes of the
Authority which mature November 15, 2003 and the Completion Guarantee
Mohegan Notes.
"Mohegan Sun" means the Mohegan Sun Casino.
"Mohegan Tribe" means the Mohegan Tribe of Indians of Connecticut.
"Note Collateral" means all assets to be held in the Interest
Reserve Account, in which the Trustee will have a first priority
security interest under the Security and Control Agreement.
"Note Purchase Agreement" means the Note Purchase Agreement,
dated as of September 29, 1995, by and between the Authority and
Sun International.
"Notice of Default" shall have the meaning specified in
Section 5.1(d).
"Offering" means the offering of the Securities by the
Issuers.
"Offering Memorandum" means the offering memorandum, dated
March 10, 1999, relating to the Securities.
"Officer" means, with respect to the Issuers, the
Chief Executive Officer, the President, any Executive or Senior Vice
President, the Chief Financial Officer, the Treasurer, the Controller or
the Secretary.
"Officers' Certificate" means, with respect to the Issuers, a
certificate signed by two Officers or by an Officer and an
Assistant Secretary of both of the Issuers, and otherwise complying
with the requirements of Sections 11.4 and 11.5, and delivered to
the Trustee or an Agent, as applicable.
"Old Notes" means the Issuers' 12-3/4% Senior Notes due 2003.
"Omnibus Agreement" means the Amended and Restated Omnibus
Financing Agreement, dated as of September 10, 1997, by and between
the Manager, the Company and Sun International, as amended through
the Issue Date.
"Omnibus Termination Agreement" means the Omnibus Termination
Agreement, dated as of March 18, 1999, by and between the Manager,
the Company, Sun Cove, Sun International and certain other parties
named therein.
"Operative Documents" means, collectively, the Partnership
Agreement, the Omnibus Termination Agreement, the Note Purchase Agreement,
the Mohegan Notes, the Management Agreement, the Relinquishment Agreement,
the Security and Control Agreement, the Hotel/Resort Management Agreement,
the Hotel/Resort Development and Construction Agreement, the Gaming Facility
Development and Construction Agreement and the Development Services Agreement.
"Opinion of Counsel" means a written opinion from legal counsel who
is reasonably acceptable to the Trustee (which may include counsel to the
Trustee or the Issuers including an employee of either of the Issuers) or an
Agent, as applicable, complying with the requirements of Sections 11.4 and
11.5, and delivered to the Trustee or an Agent, as applicable.
"Partnership Agreement" means the Amended and Restated
Partnership Agreement of the Manager, dated as of September 21, 1994, by and
among Sun Cove Ltd., RJH Development Corp., Slavik Suites, Inc., and LMW
Investments, Inc., as amended through the Issue Date.
"Paying Agent" shall have the meaning specified in Section
2.3.
"Permitted Assignee" means (a) any immediate family member of
Len and Mark Wolman, the estate of Len or Mark Wolman and any heirs
upon distribution of such estate, and any partnership, trust or
similar entity controlled by Len or Mark Wolman exclusively for
their benefit and/or the benefit of their immediate family members
and (b) any charitable organization upon whose board of directors
or similar governing entity either Len or Mark Wolman serves.
"Permitted Dividend" means a dividend made by the Company to
Waterford Group, following a Mohegan Note Transfer but in no event
prior to Completion, if (a) no Default or Event of Default shall
have occurred and be continuing at the time of, or would occur
after giving effect on a pro forma basis to, such dividend and (b)
on the date of such dividend (the "Dividend Date"), the Consolidated
Coverage Ratio of the Company for the Reference Period immediately preceding
the Dividend Date, after giving effect on a pro forma basis to such dividend
would be greater than or equal to 2.0 to 1.0 (in each case, the "Dividend
Ratio"), in an amount not to exceed the amount as of such Dividend Date in
the Interest Reserve Account in excess of the IRA Required Balance, provided,
however, that the sum of all Permitted Dividends shall not exceed $15.0
million.
"Permitted Investment" means any Investment in Cash Equivalents or,
prior to December 31, 1999, Mohegan Notes which the Company is obligated as
of the date hereof to purchase, not in excess of $2.5 million original
principal amount (plus accrued and unpaid interest and amounts due from the
Manager under the Omnibus Agreement).
"Permitted Lien" means:
(a) Liens imposed by governmental authorities for taxes,
assessments or other charges not yet subject to penalty or which
are being contested in good faith and by appropriate proceedings,
if adequate reserves with respect thereto are maintained on the
books of the Manager or the Issuers, as the case may be, in accordance
with GAAP;
(b) statutory Liens of carriers, warehousemen, mechanics,
materialmen, landlords, repairmen or other like Liens arising by
operation of law in the ordinary course of business; provided, that
(i) the underlying obligations are not overdue for a period of more
than 30 days, or (ii) such Liens are being contested in good faith
and by appropriate proceedings and adequate reserves with respect
thereto are maintained on the books of the Manager or the Issuers,
as the case may be, in accordance with GAAP;
(c) Liens securing the performance of bids, trade contracts
(other than borrowed money), leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business;
(d) easements, rights-of-way, zoning, similar restrictions
and other similar encumbrances or title defects which, singly or in
the aggregate, do not in any case materially detract from the value
of the property, subject thereto (as such property is used by the
Manager or the Issuers, as the case may be,) or interfere with the
ordinary conduct of the business of the Manager or the Issuers, as
the case may be;
(e) Liens arising by operation of law in connection with
judgments, only to the extent, for an amount and for a period not
resulting in an Event of Default with respect thereto;
(f) pledges or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other
types of social security legislation;
(g) leases or subleases granted to other persons in the
ordinary course of business not materially interfering with the
conduct of the business of the Manager or the Issuers, as the case
may be, or materially detracting from the value of the relative
assets of the Manager or the Issuers, as the case may be; and
(h) Liens arising from precautionary Uniform Commercial Code
financing statement filings regarding operating leases entered into
by the Manager or the Issuers, as the case may be, in the ordinary
course of business.
"Permitted Quarterly Tax Distributions" means quarterly
distributions of Tax Amounts determined on the basis of the estimated
taxable income of the Company, for the related Estimation Period,
as determined by the Tax Amounts CPA in a statement filed with the
Trustee; provided, however, that (a) prior to any distributions of
Tax Amounts, the Company shall deliver an Officers' Certificate
stating that the Company qualifies as a partnership or substantially
similar pass-through entity for federal income tax purposes and
(b) at the time of such distributions, the most recent audited
financial statements of the Company reflect that the Company was
treated as a partnership or substantially similar pass-through
entity for federal income tax purposes for the period covered by
such financial statements.
"Person" or "person" means any corporation, individual,
partnership, trust, unincorporated association, or a government or any
agency or political subdivision thereof.
"Property" or "property" means any right or interest in or to
property or assets of any kind whatsoever, whether real, personal
or mixed and whether tangible or intangible.
"Purchase Agreement" means the Purchase Agreement, dated March
10, 1999, by and among the Issuers and the Initial Purchasers.
"Qualified Capital Stock" means any Equity Interests of any
person that is not Disqualified Capital Stock.
"Quarterly Payment Period" means the period commencing on the
tenth day and ending on and including the twentieth day of each
month in which federal individual estimated tax payments are due
(provided that payments in respect of estimated state income taxes
due in January may instead, at the option of the Company, be paid
during the last five days of the immediately preceding December).
"Record Date" means a Record Date specified in the Securities
whether or not such Record Date is a Business Day.
"Redemption Date," when used with respect to any Security to
be redeemed, means the date fixed for such redemption pursuant to
Article III of this Indenture and Paragraphs 5, 6 and 7 in the form
of Security attached hereto as Exhibit A.
"Redemption Price," when used with respect to any Security to
be redeemed, means the redemption price for such redemption
pursuant to Paragraphs 5, 6 or 7 in the form of Security attached
hereto as Exhibit A, which shall not include, in each case, accrued
and unpaid interest to the Redemption Date.
"Reference Period" with regard to any Person means the two
full fiscal quarters ended immediately preceding any date upon
which any determination is to be made pursuant to the terms of the
Securities or this Indenture.
"Registrar" shall have the meaning specified in Section 2.3.
"Relinquishment Agreement" means the Relinquishment Agreement,
dated as of February 7, 1998, by and between the Authority and the
Manager.
"Required IRA True-Up Payment" means a payment by the Company
using 100% of Company Excess Cash to the Securities Intermediary in
an amount sufficient to permit the Securities Intermediary to
purchase assets for deposit in or credit to the Interest Reserve
Account, such that, all assets in the Interest Reserve Account
meet or exceed the IRA Required Balance plus, following a Mohegan
Note Transfer, $15.0 million, less any Permitted Dividend.
"Remaining Excess Cash Purchase Offers" has the meaning set
forth in Section 5.21 of the Note Purchase Agreement.
"Required Redemption" shall have the meaning specific
Section 3.1(a).
"Restricted Payment" means, with respect to any person, (a)
the declaration or payment of any dividend or other distribution in
respect of Equity Interests of such person or any parent of such
person, (b) any payment on account of the purchase, redemption or
other acquisition or retirement for value of Equity Interests of
such person or any Affiliate or parent of such person, (c) any
purchase, redemption, or other acquisition or retirement for value
of, any payment in respect of any amendment of the terms of or any
defeasance of, any Indebtedness, directly or indirectly, by such
person or a parent prior to the scheduled maturity, any scheduled
repayment of principal, or scheduled sinking fund payment, as the
case may be, of such Indebtedness, other than mandatory or optional
redemption of the Securities or pursuant to a Change of Control
Offer or defeasance thereof as provided herein and (d) other than
a Permitted Investment, any Investment by such person; provided,
however, that the term "Restricted Payment" does not include any
dividend, distribution or other payment on or with respect to
Equity Interests of an Issuer to the extent payable solely in
shares of Qualified Capital Stock of such Issuer.
"SEC" means the Securities and Exchange Commission.
"Securities" means the 9 1/2% Senior Notes due 2010, as
supplemented from time to time in accordance with the terms hereof,
issued under this Indenture on the Issue Date.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Securities Custodian" means the Registrar, as custodian with
respect to the Securities in global form, or any successor entity
thereto.
"Securities Intermediary" means State Street Bank and Trust
Company, in that capacity under the Security and Control Agreement.
"Security and Control Agreement" means the Security and
Control Agreement, dated the date hereof, by and among the
Securities Intermediary, the Trustee and the Issuers.
"Securityholder" or "Holder" means the Person in whose name a
Security is registered on the Registrar's books.
"Special Record Date" for payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 2.12.
"Stated Maturity," when used with respect to any Security,
means March 15, 2010.
"Subsidiary," with respect to any person, means (a) a
corporation a majority of whose Capital Stock with voting power,
under ordinary circumstances, to elect directors is at the time,
directly or indirectly, owned by such person, by such person and
one or more Subsidiaries of such person or by one or more Subsidiaries
of such person, (b) any other person (other than a corporation or
partnership) in which such person, one or more Subsidiaries
of such person, or such person and one or more Subsidiaries of such
person, directly or indirectly, at the date of determination
thereof has at least majority ownership interest, (c) a partnership
in which such person or a Subsidiary of such person is, at the
time, a general partner, or (d) any other person in which such
person holds in interest, which interest which would cause such
other person to be consolidated under GAAP.
"Sun Cove" means Sun Cove Limited, a corporation incorporated
under the laws of the State of Connecticut and a 100% controlled
Affiliate of Sun International.
"Sun International" means Sun International Hotels Limited, a
corporation incorporated under the laws of the Commonwealth of The
Bahamas, together with its Affiliates.
"Tax Amounts" with respect to any taxable period shall not
exceed an amount equal to (a) the product of (i) the taxable income
of the Company for such period as determined by the Tax Amounts CPA
and (ii) the Tax Percentage reduced by (b) to the extent not previously
taken into account, any income tax benefit attributable to the Company
which could be realized (without regard to the actual realization) by
its members in the current or any prior taxable year, or portion thereof,
commencing on or after the Issue Date (including any tax losses or tax
credits), computed at the applicable Tax Percentage for the year that such
benefit is taken into account for purposes of this computation.
"Tax Amounts CPA" means a nationally recognized certified
public accounting firm.
"Tax Percentage" means, for a particular taxable year, the
highest effective marginal combined rate of federal and state
income tax, imposed on an individual taxpayer, as certified by the
Tax Amounts CPA in a certificate filed with the Trustee. The rate
of "state income tax" to be taken into account for purposes of
determining the Tax Percentage for a particular taxable year shall
be deemed to be the higher of (a) the highest Connecticut income
tax rate imposed on individuals for such year or (b) the sum of (i)
the highest Michigan income tax rate imposed on individuals for
such year and (ii) the Michigan intangibles tax rate.
"Tender Offer" means the tender offer and consent solicitation
with respect to the Old Notes commenced by the Issuers on February
24, 1999.
"TIA" means the Trust Indenture Act of 1939, as amended (15
U.S. Code 77aaa-77bbbb), as in effect on the date of the execution of this
Indenture; except as otherwise provided in Section 8.3.
"Transfer Restricted Securities" means Securities that bear or
are required to bear the legend set forth in Section 2.6 hereof.
"True-up Amount" means, in respect of a particular taxable
year, an amount determined by the Tax Amounts CPA equal to the difference
between (a) the aggregate Permitted Quarterly Tax Distributions actually
distributed in respect of such taxable year and (b) the aggregate amount
permitted to be distributed in respect of such year as determined by
reference to the Company's Internal Revenue Service Form 1065 filed for such
year; provided, however, that if there is a filing of an amended Internal
Revenue Service Form 1065 for the Company for a particular taxable year or
any adjustment by the Internal Revenue Service with respect to the Company's
Internal Revenue Service Form 1065 for a particular taxable year that is
subsequently finalized by a final settlement between the Company and the
Internal Revenue Service or a judgment by a court having jurisdiction over
the relevant matters ("Adjustment Event"), clause (a) will mean the aggregate
Permitted Quarterly Tax Distributions as adjusted by the aggregate True-up
Amounts actually distributed in respect of such taxable year and clause (b)
will mean the aggregate amount permitted to be distributed in respect of such
year as determined by reference to the Company's Internal Revenue Service
Form 1065 for such taxable year, as adjusted to take into account the results
of the Adjustment Event. For purposes of this Indenture, the amount equal to
the excess, if any, of the amount described in clause (a) above over the amount
described in clause (b) above shall be referred to as the "True-up Amount due
to the Company" and the excess, if any, of the amount described in clause
(b) over the amount described in clause (a) shall be referred to as the
"True-up Amount due to the members."
"True-up Determination Date" means the date on which the Tax
Amounts CPA delivers a statement to the Trustee indicating the True-up
Amount.
"True-up Payment Period" means, in respect of any immediately
preceding taxable year of the Company, the later of (a) the period
commencing on the tenth day and ending on and including the
twentieth day of April or (b) the period commencing on the tenth
day following the True-up Determination Date and ending on and
including the twentieth day following the True-up Determination
Date.
"Trustee" means the party named as such in this Indenture
until a successor replaces it in accordance with the provisions of
this Indenture, and thereafter means such successor.
"Trust Officer" means any officer within the corporate trust
administration division (or any successor group) of the Trustee or
any other officer of the Trustee customarily performing functions
similar to those performed by the Persons who at that time shall be
such officers, and also means, with respect to a particular corporate trust
matter, any other officer of the Trustee to whom such trust matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
"U.S. Government Obligations" means direct non-callable obligations
of, or noncallable obligations guaranteed by, the United States of America
for the payment of which obligation or guarantee the full faith and credit of
the United States of America is pledged.
"Waterford Group" means Waterford Group, L.L.C., the parent of the
Company.
SECTION 1.2. Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture securityholder" means a Holder or a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture Trustee" or "institutional Trustee" means the Trustee.
"obligor" on the indenture securities means the Issuers and any other
obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and
not otherwise defined herein have the meanings assigned to them thereby.
SECTION 1.3. Rules of Construction.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and words in
the plural include the singular;
(e) provisions apply to successive events and transactions;
(f) "herein," "hereof" and other words of similar import
refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision; and
(g) references to Sections or Articles means reference to
such Section or Article in this Indenture, unless stated otherwise.
ARTICLE II
THE SECURITIES
SECTION 2.1. Form and Dating.
The Securities and the Trustee's certificate of authentication,
in respect thereof, shall be substantially in the form of Exhibit A hereto,
which Exhibit is part of this Indenture. The Securities may have notations,
legends or endorsements required by law, stock exchange rule or usage or the
terms hereof. The Issuers shall approve the form of the Securities and any
notation, legend or endorsement on them. Any such notations, legends or
endorsements not contained in the form of Security attached as Exhibit A
hereto shall be delivered in writing to the Trustee. Each Security shall be
dated the date of its authentication.
The terms and provisions contained in the form of Securities
shall constitute, and are hereby expressly made, a part of this Indenture
and, to the extent applicable, the Issuers and the Trustee, by their execution
and delivery of this Indenture, expressly agree to such terms and provisions
and to be bound thereby. However, to the extent any provision of any Security
conflicts with the express provisions of this Indenture, the provisions of this
Indenture shall govern and be controlling.
SECTION 2.2. Execution and Authentication.
Two Officers shall sign, or one Officer shall sign and one Officer
shall attest to, the Security for the Issuers by manual or facsimile signature.
If an Officer whose signature is on a Security was an Officer
at the time of such execution but no longer holds that office at the time the
Trustee authenticates the Security, the Security shall be valid nevertheless
and the Issuers shall nevertheless be bound by the terms of the Securities
and this Indenture.
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security
but such signature shall be conclusive evidence that the Security has been
authenticated pursuant to the terms of this Indenture.
The Trustee shall authenticate or cause to be authenticated the
Securities for original issue in the aggregate principal amount of up to
$125,000,000 upon a written order of the Issuers in the form of an Officers'
Certificate. The Officers' Certificate shall specify the amount of Securities
to be authenticated and the date on which the Securities are to be
authenticated. The aggregate principal amount of Securities outstanding at any
time may not exceed $125,000,000, except as provided in Section 2.7. Upon the
written order of the Issuers in the form of an Officers' Certificate, the
Trustee shall authenticate Securities in substitution of Securities
originally issued to reflect any name change of either of the Issuers.
The Trustee may appoint an authenticating agent acceptable to
the Issuers to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has
the same rights as an Agent to deal with the Issuers, any Affiliate of the
Issuers, or any Subsidiaries of the Issuers.
Securities shall be issuable only in fully registered form, without
coupons, in denominations of $1,000 and integral multiples thereof.
SECTION 2.3. Registrar and Paying Agent.
The Issuers shall maintain an office or agency in the Borough of
Manhattan, the City and State of New York, where Securities may be presented
for registration of transfer or exchange ("Registrar") and an office or agency
of the Issuers in the Borough of Manhattan, the City and State of New York,
where Securities may be presented for payment ("Paying Agent") and where
notices and demands to or upon the Issuers in respect of the Securities may
be served. The Issuers may act as Registrar or Paying Agent, except that for
the purposes of Articles III, VII and IX and as otherwise specified in this
Indenture none of the Issuers or any Affiliate of either the Company or
Finance shall act as Paying Agent. The Registrar shall keep a register of
the Securities and of their transfer and exchange. The Issuers may have one
or more co-Registrars and one or more additional Paying Agents. The term
"Registrar" includes any co-registrar and the term "Paying Agent" includes
any additional Paying Agent. The Issuers hereby initially appoint the
Trustee as Registrar and Paying Agent, and by its signature hereto, the
Trustee hereby agrees so to act. The Issuers may at any time change any
Paying Agent or Registrar without notice to any Holder.
The Issuers shall enter into an appropriate written agency agreement
with any Agent (including the Paying Agent) not a party to this Indenture,
which agreement shall implement the provisions of this Indenture that relate
to such Agent, and shall furnish a copy of each such agreement to the Trustee.
The Issuers shall promptly notify the Trustee in writing of the name and
address of any such Agent. If the Issuers fail to maintain a Registrar or
Paying Agent, the Trustee shall act as such.
The Issuers initially appoint The Depository Trust Company
("DTC") to act as Depositary with respect to the Global Securities.
The Issuers initially appoint the Registrar to act as
Securities Custodian with respect to the Global Securities.
Upon the occurrence of an Event of Default described in Section
5.1(e) or (f), the Trustee shall, or upon the occurrence of any other Event
of Default by notice to the Issuers, the Registrar and the Paying Agent, the
Trustee may, assume the duties and obligations of the Registrar and the Paying
Agent hereunder.
The Trustee is authorized to enter into a letter of representation
with DTC in the form provided to the Trustee by the Issuers and to act in
accordance with such letter.
SECTION 2.4. Paying Agent to Hold Assets in Trust.
The Issuers shall require each Paying Agent other than the Trustee
to agree in writing that such Paying Agent shall hold in trust for the benefit
of Holders or the Trustee all assets held by the Paying Agent for the payment
of principal of, premium, or interest on, the Securities (whether such assets
have been distributed to it by the Issuers or any other obligor on the
Securities), and shall notify the Trustee in writing of any Default in making
any such payment. If either of the Issuers acts as Paying Agent, it shall
segregate such assets and hold them as a separate trust fund for the benefit
of the Holders or the Trustee. The Issuers at any time may require a Paying
Agent to distribute all assets held by it to the Trustee and account for any
assets disbursed and the Trustee may at any time during the continuance of
any payment Default or any Event of Default, upon written request to a Paying
Agent, require such Paying Agent to distribute all assets held by it to the
Trustee and to account for any assets distributed. Upon distribution to the
Trustee of all assets that shall have been delivered by the Issuers to the
Paying Agent, the Paying Agent (if other than either of the Issuers) shall
have no further liability for such assets.
SECTION 2.5. Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses
of Holders and shall otherwise comply with TIA 312(a). If the Trustee is
not the Registrar, the Issuers shall furnish to the Trustee on or before the
third Business Day preceding each Interest Payment Date and at such other
times as the Trustee or any such Paying Agent may request in writing a list
in such form and as of such date as the Trustee reasonably may require
of the names and addresses of Holders and the Issuers shall otherwise comply
with TIA 312(a).
SECTION 2.6. Transfer and Exchange.
(a) Transfer and Exchange of Definitive Securities. When
Definitive Securities are presented to the Registrar with a
request:
(i) to register the transfer of such Definitive
Securities; or
(ii) to exchange such Definitive Securities for an equal
principal amount of Definitive Securities of other authorized
denominations, the Registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are
met; provided, however, that the Definitive Securities surrendered
for registration of transfer or exchange:
(1) shall be duly endorsed or accompanied by a
written instrument of transfer in form reasonably satisfactory to
the Issuers and the Registrar duly executed by the Holder thereof
or his attorney duly authorized in writing; and
(2) in the case of Definitive Securities that are
Transfer Restricted Securities, such request shall be accompanied
by the following additional information and documents, as applicable:
(A) if such Transfer Restricted Securities are
being delivered to the Registrar by a Holder for registration in
the name of such Holder, without transfer, a certification from
such Holder to that effect (in substantially the form set forth on
the reverse of the Security); or
(B) if such Transfer Restricted Security is
being transferred to a "qualified institutional buyer" (as defined
in Rule 144A under the Securities Act), which, in the case of a
dealer, owns and invests on a discretionary basis at least $25.0
million of securities of issuers that are not affiliated with the
dealer, in accordance with Rule 144A under the Securities Act, a
certification to that effect (in substantially the form set forth
on the reverse of the Security); or
(C) if such Transfer Restricted Security is
being transferred (i) pursuant to an exemption from registration in
accordance with Rule 144 under the Securities Act, or (ii) pursuant
to an effective registration statement under the Securities Act, or
(iii) in reliance on another exemption from the registration
requirements of the Securities Act, a certification to that effect
(in substantially the form set forth on the reverse of the
Security) and if the Issuers or the Registrar so request, a customary
opinion of counsel reasonably acceptable to the Issuers and to
the Registrar to the effect that such transfer is in compliance
with the Securities Act.
(b) Restrictions on Transfer of a Definitive Security for a
Beneficial Interest in a Global Security. A Definitive Security
may not be exchanged for a beneficial interest in a Global Security
except upon satisfaction of the requirements set forth below. Upon
receipt by the Registrar of a Definitive Security, duly endorsed or
accompanied by appropriate instruments of transfer, in form satisfactory
to the Registrar, together with:
(i) if such Definitive Security is a Transfer Restricted
Security, certification, substantially in the form set forth on the
reverse of the Security, that such Definitive Security is being
transferred to a "qualified institutional buyer" (as defined in
Rule 144A under the Securities Act), which, in the case of a
dealer, owns and invests on a discretionary basis at least $25.0
million of securities of issuers that are not affiliated with the
dealer, in accordance with Rule 144A under the Securities Act; and
(ii) whether or not such Definitive Security is a
Transfer Restricted Security, written instructions of the Holder
directing the Registrar to make, or to direct the Securities
Custodian to make, an endorsement on the Global Security to reflect
an increase in the aggregate principal amount of the Securities
represented by the Global Security,
then the Registrar shall cancel such Definitive Security and cause,
or direct the Securities Custodian to cause, in accordance with the
standing instructions and procedures existing between the Depositary
and the Securities Custodian, the aggregate principal amount
of Securities represented by the Global Security to be increased
accordingly. If no Global Securities are then outstanding, the
Issuers shall issue and the Trustee shall authenticate a new Global
Security in the appropriate principal amount.
(c) Transfer and Exchange of Global Securities. The transfer
and exchange of Global Securities or beneficial interests therein
shall be effected through the Depositary, in accordance with this
Indenture (including applicable restrictions on transfer set forth
herein, if any) and the procedures of the Depositary therefor which
shall include restrictions on transfer comparable to those set
forth herein to the extent required by the Securities Act.
(d) Transfer of a Beneficial Interest in a Global Security
for a Definitive Security.
(i) Any Person having a beneficial interest in a Global
Security may upon request exchange such beneficial interest for a
Definitive Security. Upon receipt by the Registrar of written
instructions or such other form of instructions as is customary for
the Depositary from the Depositary or its nominee on behalf of any
Person having a beneficial interest in a Global Security and upon
receipt by the Registrar of a written order or such other form of
instructions as is customary for the Depositary or the Person
designated by the Depositary as having such a beneficial interest
in a Transfer Restricted Security only, the following additional
information and documents (all of which may be submitted by facsimile):
(1) if such beneficial interest is being transferred
to the Person designated by the Depositary as being the beneficial owner,
a certification from such person to that effect (in substantially the form
set forth on the reverse of the Security); or
(2) if such beneficial interest is being transferred to
a "qualified institutional buyer" (as defined in Rule 144A under the
Securities Act), which, in the case of a dealer, owns and invests on a
discretionary basis at least $25.0 million of securities of issuers that
are not affiliated with the dealer, in accordance with Rule 144A under the
Securities Act a certification to that effect from the transferor (in
substantially the form set forth on the reverse of the Security); or
(3) if such beneficial interest is being transferred
(i) pursuant to an exemption from registration in accordance with Rule
144 under the Securities Act, or (ii) pursuant to an effective registration
statement under the Securities Act, or (iii) in reliance on another exemption
from the registration requirements of the Securities Act, a certification to
that effect from the transferee or transferor (in substantially the form set
forth on the reverse of the Security) and if the Issuers or the Registrar so
requests, a customary opinion of counsel from the transferee or transferor
reasonably acceptable to the Issuers and to the Registrar to the effect that
such transfer is in compliance with the Securities Act; then the Registrar or
the Securities Custodian, at the direction of the Trustee, will cause, in
accordance with the standing instructions and procedures existing between the
Depositary and the Securities Custodian, the aggregate principal amount of
the Global Security to be reduced and, following such reduction, the Issuers
will execute and, upon receipt of an authentication order in the form of an
Officers' Certificate, the Trustee or the Trustee's authenticating agent will
authenticate and deliver to the transferee, a Definitive Security.
(ii) Definitive Securities issued in exchange for a beneficial
interest in a Global Security pursuant to this Section 2.6(d) shall be
registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect participants
or otherwise, shall instruct the Registrar. The Registrar shall deliver such
Definitive Securities to the persons in whose names such Securities are so
registered.
(e) Restrictions on Transfer and Exchange of Global Securities.
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.6), a Global
Security may not be transferred as a whole except by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary
or another nominee of the Depositary or by the Depositary or any such nominee
to a successor Depositary or a nominee of such successor Depositary.
(f) Authentication of Definitive Securities in Absence of Depositary.
If at any time:
(i) the Depositary for the Securities notifies the
Issuers that the Depositary is unwilling, unable or ineligible to
continue as Depositary for the Global Securities and a successor
Depositary for the Global Securities is not appointed by the
Issuers within 90 days after delivery of such notice; or
(ii) the Issuers, in their sole discretion, notify the
Trustee and the Registrar in writing that they elect to cause the
issuance of Definitive Securities under this Indenture,
then the Issuers will execute, and the Trustee, upon receipt of an
Officers' Certificate requesting the authentication and delivery of
Definitive Securities, will, or its authenticating agent will,
authenticate and deliver Definitive Securities, in an aggregate
principal amount equal to the principal amount of the Global
Securities, in exchange for such Global Securities.
(g) Cancellation and/or Adjustment of Global Security. At
such time as all beneficial interests in a Global Security have
either been exchanged for Definitive Securities, redeemed,
repurchased or cancelled, such Global Security shall be returned to
or retained and cancelled by the Trustee. At any time prior to
such cancellation, if any beneficial interest in a Global Security
is exchanged for Definitive Securities, redeemed, repurchased or
cancelled, the principal amount of Securities represented by such
Global Security shall be reduced and an endorsement shall be made
on such Global Security, by the Trustee or the Securities Custodian,
at the direction of the Trustee, to reflect such reduction.
(h) Legends.
(i) Except as permitted by the following paragraph (ii),
each Security certificate evidencing the Global Securities and the
Definitive Securities (and all Securities issued in exchange
therefor or substitution thereof) shall bear a legend in substantially
the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF,
U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) WHICH, IN THE CASE OF A DEALER,
OWNS AND INVESTS ON A DISCRETIONARY BASIS AT LEAST $25.0
MILLION OF SECURITIES OF ISSUERS THAT ARE NOT AFFILIATED
WITH THE DEALER, (2) AGREES THAT IT WILL NOT WITHIN TWO
YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL
OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE
COMPANY, FINANCE OR ANY SUBSIDIARY THEREOF, (B) INSIDE
THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER
WHICH, IN THE CASE OF A DEALER, OWNS AND INVESTS ON A
DISCRETIONARY BASIS AT LEAST $25.0 MILLION OF SECURITIES
OF ISSUERS THAT ARE NOT AFFILIATED WITH THE DEALER, IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C)
INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED
INVESTOR (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT) WHICH, IN THE CASE OF A DEALER,
OWNS AND INVESTS ON A DISCRETIONARY BASIS, AT LEAST $25.0
MILLION OF SECURITIES THAT ARE NOT AFFILIATED WITH THE
DEALER AND IN THE CASE OF ALL OTHER INSTITUTIONAL
ACCREDITED INVESTORS, AT LEAST $5.0 MILLION, THAT, PRIOR
TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS
BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY
(THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
TRUSTEE FOR THIS SECURITY), (D) PURSUANT TO THE EXEMPTION
FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES
ACT (IF AVAILABLE), OR (E) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3)
AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS
SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER
OF THIS SECURITY WITHIN TWO YEARS AFTER THE ORIGINAL
ISSUANCE OF THIS SECURITY, IF THE PROPOSED TRANSFEREE IS
AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST,
PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE, THE
COMPANY AND FINANCE SUCH CERTIFICATIONS, LEGAL OPINIONS
OR OTHER INFORMATION AS ANY OF THEM MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT."
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by
a Global Security) pursuant to Rule 144 under the Securities Act or
an effective registration statement under the Securities Act:
(1) in the case of any Transfer Restricted Security
that is a Definitive Security, the Registrar shall permit the Holder thereof
to exchange such transfer Restricted Security for a Definitive Security that
does not bear the legend set forth above and rescind any restriction on the
transfer of such Transfer Restricted Security, in the case of a sale or
transfer pursuant to Rule 144 under the Securities Act after delivery of a
customary opinion of counsel; and
(2) any such Transfer Restricted Security represented
by a Global Security shall not be subject to the provisions set forth in (i)
above (such sales or transfers being subject only to the provisions of Section
2.6(c) hereof); provided, however, that with respect to any request for an
exchange of a Transfer Restricted Security that is represented by a Global
Security for a Definitive Security that does not bear a legend, which request
is made in reliance upon Rule 144 under the Securities Act, the Holder
thereof shall certify in writing (to be accompanied by a customary opinion of
counsel) to the Registrar that such request is being made pursuant to Rule
144 under the Securities Act (such certification to be substantially in the
form set forth on the reverse of the Security).
(iii) In addition, each Security shall bear a legend in
substantially the following form:
"THIS SECURITY WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT
UNDER SECTION 1273 OF THE INTERNAL REVENUE CODE. YOU MAY
CONTACT ALAN ANGEL, THE CHIEF FINANCIAL OFFICER OF THE
COMPANY AT 914 HARTFORD TURNPIKE, WATERFORD, CONNECTICUT
06385, TELEPHONE NUMBER (860) 442-4559, WHO WILL PROVIDE
YOU WITH ANY REQUIRED INFORMATION REGARDING THE ORIGINAL
ISSUE DISCOUNT."
(i) Obligations with respect to Transfers and Exchanges of
Securities.
(i) To permit registrations of transfers and exchanges,
the Issuers shall execute and the Trustee or any authenticating
agent of the Trustee shall authenticate Definitive Securities and
Global Securities at the Registrar's request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Issuers may require
payment of a sum sufficient to cover any transfer tax, assessment,
or similar governmental charge payable in connection therewith
(other than any such transfer taxes, assessments, or similar governmental
charge payable upon exchanges or transfers pursuant to Section 2.2
(fourth paragraph), 2.10, 3.7, 8.5, or 9.1 (final paragraph).
(iii) The Registrar shall not be required to register
the transfer of or exchange (1) any Security selected for redemption
in whole or in part pursuant to Article III, except the unredeemed portion
of any Security being redeemed in part, or (2) any Security for a period
beginning 15 Business Days before the mailing of a notice of an offer to
repurchase pursuant to Article IX hereof or a notice of redemption of
Securities pursuant to Article III hereof and ending at the close of
business on the day of such mailing.
(iv) Prior to due presentment for registration or transfer
of any Security, the Trustee, any Agent and the Issuers may deem and treat
the Person in whose name the Security is registered as the absolute owner of
such Security, and none of the Trustee, Agent or the Issuers shall be affected
by notice to the contrary.
(v) All Global Securities and Definitive Securities issued upon
any registration of transfer or exchange of Global Securities or Definitive
Securities shall be the valid obligations of the Issuers, evidencing the same
Indebtedness, and entitled to the same benefits under this Indenture, as Global
Securities or Definitive Securities surrendered upon such registration of
transfer or exchange.
(j) Any purported transfer in violation of the transfer restrictions
set forth in the Security and herein which shall require either of the Issuers
to be required to register as an "investment company" (as the term is defined
in the Investment Company Act of 1940, as amended) shall be void ab initio.
SECTION 2.7. Replacement Securities.
If a mutilated Security is surrendered to the Trustee or if the Holder
of a Security claims and submits an affidavit or other evidence, satisfactory
to the Trustee to the effect that the Security has been lost, destroyed or
wrongfully taken, the Issuers shall issue and the Trustee or any authenticating
agent of the Trustee shall authenticate a replacement Security if the Trustee's
requirements are met. If required by the Trustee or the Issuers, such Holder
must provide an indemnity bond or other indemnity, sufficient in the judgment
of the Issuers and the Trustee, to protect the Issuers, the Trustee or any
Agent from any loss which any of them may suffer if a Security is replaced.
The Issuers may require the payment of a sum sufficient to cover any transfer
tax, assessment or similar governmental charge that may be imposed in
relation to the issuance of any new Security and charge such Holder for its
reasonable, out-of-pocket expenses in replacing a Security.
Every replacement Security is an additional obligation of the Issuers.
SECTION 2.8. Outstanding Securities.
Securities outstanding at any time are all the Securities that
have been authenticated by the Trustee (including any Security represented by
a Global Security) except those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Security effected
by the Trustee hereunder and those described in this Section 2.8 as not
outstanding. A Security does not cease to be outstanding because the Issuers
or an Affiliate of either of the Issuers holds the Security, except as provided
in Section 2.9.
If a Security is replaced pursuant to Section 2.7 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser. A mutilated Security ceases to be
outstanding upon surrender of such Security and replacement thereof pursuant
to Section 2.7.
If on a Redemption Date or the Maturity Date the Paying Agent (other
than the Issuers or an Affiliate of either of the Issuers) holds Cash or U.S.
Government Obligations sufficient to pay all of the principal and interest
and premium, if any, due on the Securities payable on that date and payment
of the Securities called for redemption is not otherwise prohibited, then on
and after that date such Securities cease to be outstanding and interest on
them ceases to accrue.
SECTION 2.9. Treasury Securities.
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, amendment, supplement, waiver or
consent, Securities owned by the Issuers or Affiliates of either of the
Issuers shall be disregarded, except that, for the purposes of determining
whether the Trustee shall be protected in relying on any such direction,
amendment, supplement, waiver or consent, only Securities that a Trust Officer
of the Trustee knows are so owned shall be disregarded.
SECTION 2.10. Temporary Securities.
Until permanent Securities are ready for delivery, the Issuers may
prepare and the Trustee shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of permanent Securities but may
have variations that the Issuers reasonably and in good faith consider
appropriate for temporary Securities. Without unreasonable delay, the
Issuers shall prepare and the Trustee shall authenticate permanent Securities
in exchange for temporary Securities. Until so exchanged, the temporary
Securities shall in all respects be entitled to the same benefits
under this Indenture as permanent Securities authenticated and delivered
hereunder.
SECTION 2.11. Cancellation.
The Issuers at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the
Trustee any Securities surrendered to it or them (as applicable) for
registration of transfer, exchange or payment. The Trustee or, at the
direction of the Trustee, the Registrar or the Paying Agent (other than the
Issuers or an Affiliate of either of the Issuers), and no one else shall
cancel and, at the written direction of the Issuers, shall dispose of all
Securities surren dered for transfer, exchange, payment or cancellation.
Subject to Section 2.7, the Issuers may not issue new Securities to replace
Securities that have been paid or delivered to the Trustee for cancellation.
No Securities shall be authenticated in lieu of or in exchange for any
Securities cancelled as provided in this Section 2.11, except as expressly
permitted in the form of Securities and as permitted by this Indenture.
SECTION 2.12. Defaulted Interest.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date plus, to the extent
lawful, any interest payable on the defaulted interest (herein called
"Defaulted Interest") shall forthwith cease to be payable to the registered
holder on the relevant Record Date, and such Defaulted Interest may be paid
by the Issuers, at their election in each case, as provided in clause (a) or
(b) below:
(a) The Issuers may elect to make payment of any Defaulted
Interest to the persons in whose names the Securities (or their
respective predecessor Securities) are registered at the close of
business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The
Issuers shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each Security and the date
of the proposed payment, and at the same time the Issuers shall
deposit with the Trustee an amount of Cash equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for such
deposit prior to the date of the proposed payment, such Cash when
deposited to be held in trust for the benefit of the persons entitled
to such Defaulted Interest as provided in this clause (a).
Thereupon the Trustee shall fix a Special Record Date for the
payment of such Defaulted Interest which shall be not more than 15
days and not less than 10 days prior to the date of the proposed
payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly
notify the Issuers of such Special Record Date and, in the name and
at the expense of the Issuers, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date
therefor to be mailed, first-class postage prepaid, to each Holder
at his address as it appears in the Security register not less than
10 days prior to such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date
therefor having been mailed as aforesaid, such Defaulted Interest
shall be paid to the persons in whose names the Securities (or
their respective predecessor Securities) are registered on such
Special Record Date and shall no longer be payable pursuant to the
following clause (b).
(b) The Issuers may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Securities may be listed, and
upon such notice as may be required by such exchange, if, after
notice given by the Issuers to the Trustee of the proposed payment
pursuant to this clause, such manner shall be deemed practicable by
the Trustee.
Subject to the foregoing provisions of this Section, each
Security delivered under this Indenture upon registration of
transfer of or in exchange for or in lieu of any other Security
shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.
SECTION 2.13. CUSIP Numbers.
The Issuers in issuing the Securities may use "CUSIP" numbers
(if then generally in use), and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to
Holders; provided that any such notice may state that no representation
is made as to the correction of such numbers either as printed on the
Securities or as contained in any notice of a redemption and that reliance
may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Issuers will promptly notify the Trustee of any
change the "CUSIP" numbers.
ARTICLE III
REDEMPTION
SECTION 3.1. Right of Redemption.
Redemption of Securities, as permitted by any provision of this
Indenture, shall be made in accordance with such provision and this
Article III. The Issuers shall be required to make a mandatory
redemption on each March 15 and September 15, commencing September 15,
1999, of Securities in the largest principal amount that is an integral
multiple of $1,000, that may be redeemed using 100% of Company Excess Cash
as of the preceding February 1 and August 1, respectively, less all Required
IRA True-Up Payments and less any amount set aside for the payment of accrued
and unpaid interest on the Interest Payment Date which corresponds to the
Redemption Date for which the determination is being made, at the Redemption
Prices specified in the form of Security attached as Exhibit A set forth
therein in Paragraph 5 thereof (subject to the right of Holders of record on
a Record Date to receive interest due on an Interest Payment Date that is on
or prior to such Redemption Date) together with accrued and unpaid interest
thereon to the Redemption Date and subject to the provisions set forth in
Section 3.5.
In the event that either the Company or Sun International shall deliver
an election to either buy or sell the other party's interest in the Manager
pursuant to a Buy Out Notice or be deemed to have delivered an election to
sell such interest and such election to buy or sell is consummated, the
Issuers shall be required to make a mandatory redemption of all the
Securities then outstanding, at the Redemption Prices specified in the form
of Security attached as Exhibit A set forth in Paragraph 5 thereof
(subject to the right of Holders of record on a Record Date to receive
interest due on an Interest Payment Date that is on or prior to such
Redemption Date) together with accrued and unpaid interest thereon to the
Redemption Date and subject to the provisions set forth in Section 3.5.
Such redemption shall be made on a date no more than 35 days after the date
of the Closing under the option. Notwithstanding the foregoing, neither a
purchase by the Company of Sun Cove's partnership interest in the Manager
which is fully funded with a Group Flow-Through Payment, nor, if the
option to buy such interest is transferred to Waterford Group, a purchase
of such interest by Waterford Group or a subsidiary or parent of Waterford
Group, shall trigger a mandatory redemption.
Except as provided in the two preceding paragraphs of this
Section 3.1 and in the paragraph immediately following this
paragraph, the Issuers will not have the right to redeem any
Securities prior to March 15, 2004. The Securities will be
redeemable for cash at the option of the Issuers, in whole or in
part, at any time on or after March 15, 2004, with all or a portion
of Company Excess Cash, less all Required IRA True-Up Payments as
of the date notice is given at the Redemption Prices specified in
the form of Security attached as Exhibit A set forth in Paragraph
6 thereof (subject to the right of Holders of record on a Record
Date to receive interest due on an Interest Payment Date that is on
or prior to such Redemption Date) together with accrued and unpaid
interest thereon to the Redemption Date and subject to the
provisions set forth in Section 3.5.
Notwithstanding any other provisions of this Indenture, if any
Gaming Regulatory Authority requires that a Holder or beneficial
owner of the Securities must be licensed, qualified or found
suitable under any applicable gaming laws in order to maintain any
gaming license or franchise related to the Mohegan Sun under any
applicable gaming laws, and the Holder or beneficial owner fails to
apply for a license, qualification or finding of suitability within
30 days after being requested to do so by such Gaming Regulatory
Authority (or such lesser period that may be required by such
Gaming Regulatory Authority) or if such Holder or beneficial owner
is not so licensed, qualified or found suitable, the Company shall
have the right, at its option:
(a) to require such Holder or beneficial owner to dispose of
such Holder's or beneficial owner's Securities within 30 days of
receipt of such finding by the applicable Gaming Regulatory
Authority (or such earlier date as may be required by the applicable
Gaming Regulatory Authority); or
(b) to call for redemption of the Securities of such Holder
or beneficial owner (a "Required Redemption") at a redemption price
equal to (i) the principal amount thereof or, if required by such
Gaming Authority, the price at which such Holder or beneficial
owner acquired the Securities, if less than the principal amount
thereof, together with, in either case, accrued and unpaid interest
to the earlier of the date of redemption or the date of the finding
of unsuitability by such Gaming Regulatory Authority, which may be
less than 30 days following the notice of redemption if so ordered
by such Gaming Regulatory Authority or (ii) such other amount as
may be determined by such Gaming Regulatory Authority.
In connection with any Required Redemption, and except as may
be required by a Gaming Regulatory Authority, the Company shall
comply with the procedures contained in this Indenture for
redemptions of the Securities. The Company is not required to pay
or reimburse any Holder of the Securities or beneficial owner of
Securities who is required to apply for any such license, qualification
or finding of suitability for the costs of the licensure or
investigation for such qualification or finding of suitability.
Such expenses will, therefore, be the obligation of such Holder or
beneficial owner.
SECTION 3.2. Notices to Trustee.
If the Issuers are required, or elect, to redeem Securities
pursuant to Paragraphs 5, 6 or 7 of the Securities, they shall
notify the Trustee in writing of the Redemption Date and the principal
amount of Securities to be redeemed and whether they want the
Trustee to give notice of redemption to the Holders. Such notice
to the Trustee shall describe in reasonable detail the circumstances
requiring such redemption, and the Trustee shall not otherwise be deemed
to have knowledge of such circumstances.
If the Issuers elect to reduce the principal amount of Securities to be
redeemed pursuant to Paragraphs 5, 6 or 7 of the Securities by crediting
against any such redemption Securities they have not previously delivered to
the Trustee for cancellation, they shall so notify the Trustee of the amount
of the reduction and deliver such Securities with such notice.
The Issuers shall give each notice to the Trustee provided for
in this Section 3.2 at least 45 days before the Redemption Date (unless
a shorter notice shall be satisfactory to the Trustee). Any such notice may
be cancelled at any time prior to notice of such redemption being mailed to
any Holder and shall thereby be void and of no effect.
SECTION 3.3. Selection of Securities to Be Redeemed.
If less than all of the Securities are to be redeemed pursuant
to Paragraphs 5 or 6 thereof, the Trustee shall select the Securities or
portions thereof for redemption on a pro rata basis, by lot or by such other
method as the Trustee shall determine to be fair and appropriate; provided,
however, that mandatory and optional redemptions from Company Excess Cash
will be done as nearly as possible on a pro rata basis.
The Trustee shall make the selection from the Securities outstanding and
not previously called for redemption and shall promptly notify the Issuers in
writing of the Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount thereof to be
redeemed.
Securities in denominations of $1,000 may be redeemed only in whole. The
Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Securities that have denominations larger
than $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.
SECTION 3.4. Notice of Redemption.
Except in the case of any Required Redemption, as otherwise required
by any applicable Gaming Regulatory Authority, at least 30 days but not more
than 60 days before a Redemption Date, the Issuers shall mail a notice of
redemption by first class mail, postage prepaid, to the Trustee and each
Holder whose Securities are to be redeemed to such Holder's last address as
then shown on the registry books of the Registrar. At the Issuers' request,
upon at least 15 days' notice (unless a shorter notice shall be satisfactory
to the Trustee), the Trustee shall give the notice of redemption in the
Issuers' names and at the Issuers' expense. Each notice for redemption shall
identify the Securities to be redeemed and shall state:
(a) the Redemption Date;
(b) the Redemption Price, including the amount of accrued and unpaid
interest to be paid upon such redemption;
(c) the name, address and telephone number of the Paying Agent;
(d) that Securities called for redemption must be surrendered to the
Paying Agent at the address specified in such notice to collect the Redemption
Price;
(e) that, unless the Issuers default in their obligation to deposit
Cash or U.S. Government Obligations which through the scheduled payment of
principal and interest in respect thereof in accordance with their terms will
provide Cash in an amount to fund the Redemption Price with the Paying Agent
in accordance with Section 3.6 hereof or such redemption payment is otherwise
prohibited, interest on Securities called for redemption ceases to accrue on
and after the Redemption Date and the only remaining right of the Holders of
such Securities is to receive payment of the Redemption Price, including
accrued and unpaid interest to the Redemption Date, upon surrender to the
Paying Agent of the Securities called for redemption and to be redeemed;
(f) if any Security is being redeemed in part, the portion of
the principal amount equal to $1,000 or any integral multiple
thereof, of such Security to be redeemed and that, after the Redemption
Date, and upon surrender of such Security, a new Security or Securities
in aggregate principal amount equal to the unredeemed portion thereof will be
issued;
(g) if less than all the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount of such Securities to be
redeemed and the aggregate principal amount of Securities to be outstanding
after such partial redemption;
(h) the CUSIP number of the Securities to be redeemed; and
(i) that the notice is being sent pursuant to this Section
3.4 and pursuant to the mandatory or optional redemption provisions
of Paragraphs 5, 6 or 7, as applicable, of the Securities.
SECTION 3.5. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section
3.4, Securities called for redemption become due and payable on the
Redemption Date and at the Redemption Price, including accrued and
unpaid interest to the Redemption Date. Upon surrender to the
Trustee or, if the Trustee is no longer the paying agent, to the
Paying Agent, such Securities called for redemption shall be paid
at the Redemption Price, including interest accrued and unpaid to
the Redemption Date; provided that if the Redemption Date is on or
after a regular Record Date and on or prior to the Interest Payment
Date to which such Record Date relates, the accrued interest shall
be payable to the Holder of the redeemed Securities registered on
the relevant Record Date and no additional interest will be payable
to Holders of the redeemed Securities on the Redemption Date; and
provided, further, that if a Redemption Date is a non-Business Day,
payment shall be made on the next succeeding Business Day and no
interest shall accrue for the period from such Redemption Date to
such succeeding Business Day.
SECTION 3.6. Deposit of Redemption Price.
On or prior to the Redemption Date, the Issuers shall deposit
with the Paying Agent (other than the Issuers or an Affiliate of
either of the Issuers) Cash or U.S. Government Obligations sufficient
to pay the Redemption Price of, and accrued and unpaid interest on,
all Securities to be redeemed on such Redemption Date (other than
Securities or portions thereof called for redemption on that date
that have been delivered by the Issuers to the Trustee for cancellation).
The Paying Agent shall promptly return to the Issuers any Cash or U.S.
Government Obligations so deposited which is not required for that purpose
upon the written request of the Issuers.
If the Issuers comply with the preceding paragraph and the
other provisions of this Article III and payment of the Securities
called for redemption is not otherwise prohibited, interest on the
Securities to be redeemed will cease to accrue on the applicable
Redemption Date, whether or not such Securities are presented for
payment. Notwithstanding anything herein to the contrary, if any
Security surrendered for redemption in the manner provided in the
Securities shall not be so paid upon surrender for redemption
because of the failure of the Issuers to comply with the preceding
paragraph, interest shall continue to accrue and be paid from the
Redemption Date until such payment is made on the unpaid principal,
and, to the extent lawful, on any interest not paid on such unpaid
principal, in each case at the rate and in the manner provided in
Section 4.1 hereof and the Security.
SECTION 3.7. Securities Redeemed in Part.
Upon surrender of a Security that is to be redeemed in part,
the Issuers shall execute, and the Trustee shall authenticate and
deliver to the Holder, without service charge to the Holder, a new
Security or Securities equal in principal amount to the unredeemed
portion of the Security surrendered.
ARTICLE IV
COVENANTS
SECTION 4.1. Payment of Securities.
The Issuers shall pay the principal of and interest and
premium on the Securities on the dates and in the manner provided
herein and in the Securities. An installment of principal of or
interest and premium, if applicable, on the Securities shall be
considered paid on the date it is due if the Trustee or Paying
Agent (other than the Issuers or an Affiliate of either of the
Issuers) holds for the benefit of the Holders, on or before 10:00
a.m. New York City time on that date, Cash deposited and designated
for and sufficient to pay the installment.
The Issuers shall pay interest on overdue principal and on
overdue installments of interest at the rate specified in the
Securities compounded semi-annually, to the extent lawful.
SECTION 4.2. Maintenance of Office or Agency.
The Issuers shall maintain in the Borough of Manhattan, The
City of New York, an office or agency where Securities may be
presented or surrendered for payment, where Securities may be
surrendered for registration of transfer or exchange and where
notices and demands to or upon the Issuers in respect of the
Securities and this Indenture may be served. The Issuers shall
give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time
the Issuers shall fail to maintain any such required office or
agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be
made or served at the address of the Trustee set forth in Section
11.2.
The Issuers may also from time to time designate one or more
other offices or agencies where the Securities may be presented or
surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such
designation or rescission shall in any manner relieve the Issuers
of their obligation to maintain an office or agency in the Borough
of Manhattan, The City of New York, for such purposes. The Issuers
shall give prompt written notice to the Trustee of any such desig-
nation or rescission and of any change in the location of any such
other office or agency. The Issuers hereby initially designate the
Trustee's agency at State Street Bank and Trust Company N.A., 61
Broadway, New York, New York 10006, Attention: Corporate Trust
(Waterford Gaming, L.L.C./Waterford Gaming Finance Corp. 9 1/2% Senior
Notes due 2010) as such office.
SECTION 4.3. Limitation on Restricted Payments.
The Issuers shall not, directly or indirectly, make any
Restricted Payment.
The preceding paragraph, however, shall not prohibit (a) the
payment of Permitted Quarterly Tax Distributions to the members of
the Company as described below; (b) the dividend of $37.05 million
from the net proceeds of the Offering and cash on hand upon
consummation of the Offering to Waterford Group in accordance with
the "Use of Proceeds" section of the Offering Memorandum; or (c)
following all applicable Required IRA True-up Payments and provided
that no Default or Event of Default has occurred and is continuing,
(i) in the event the Company, in one or a series of related
transactions, conveys, sells, transfers, assigns, tenders for
redemption or otherwise disposes of, directly or indirectly, all of
the Mohegan Notes held by the Company to an entity which is not an
affiliate of the Company (a "Mohegan Note Transfer") and the
Company has complied with the terms of the Security and Control
Agreement with respect to the proceeds thereof, a dividend by the
Company to Waterford Group of the Mohegan Note Transfer Proceeds in
excess of $15.0 million; (ii) a Permitted Dividend; (iii) a Group
Flow-Through Payment; (iv) the purchase of the Old Notes pursuant
to the Tender Offer in accordance with the "Use of Proceeds"
section of the Offering Memorandum, provided that proceeds from the
Offering sufficient to effect such purchase are set aside for such
purchase; (v) Investments in the Manager to fund actual costs of
the Manager related to its role as developer of the expansion of
the Mohegan Sun provided that the amount of such Investment will
increase future distributions to the Company by the same amount by
offsetting costs of the Manager that would otherwise reduce cash
available for distributions to the Company; provided that the net
unreturned Investment under this clause (v) does not exceed $1.0
million outstanding at any one time; or (vi) return of capital to
Waterford Group from a return of capital from the Manager in
respect of a capital contribution of the type described in clause
(v) funded by a Group Flow-Through Payment from Waterford Group,
provided that no Investment under clause (v) remains outstanding
and that no Investment under this clause (vi) shall exceed the
corresponding Group Flow-Through Payment.
For so long as the Company is a partnership or substantially
similar pass-through entity for federal income tax purposes, the
Company may make cash distributions to its members out of available
cash after payment of any accrued and unpaid interest on the
Securities (taking into account that interest on the Securities may
be paid from amounts in the Interest Reserve Account) during each
Quarterly Payment Period, in an aggregate amount not to exceed the
Permitted Quarterly Tax Distribution in respect of the related
Estimation Period. If any portion of a Permitted Quarterly Tax
Distribution is not distributed during such Quarterly Payment
Period, the Permitted Quarterly Tax Distribution payable during the
immediately following Quarterly Payment Period shall be increased
by such undistributed portion. If, for any particular taxable
year, the Company is treated as an entity that is "disregarded" as
an entity separate from its owner for federal income tax purposes,
then, for such particular taxable year, (a) all references to
"partnership or substantially similar pass-through entity" in
respect of the Company shall include an entity that is a "disregarded"
entity for federal income tax purposes, (b) all references to
"Internal Revenue Service Form 1065" in respect of the Company
shall mean a hypothetical Internal Revenue Service Form 1065 that
is to be prepared by the Tax Amounts CPA taking into account such
items of income, gain, deduction, loss, credits and similar items
("Company Tax Items") that would have been taken into account had
the Company been treated as a "partnership" rather than a "disregarded"
entity, for federal income tax purposes, as such hypothetical Form
1065 may be subsequently adjusted by an Adjustment Event with respect
to the federal income tax return of the owner of the Company to the
extent such Adjustment Event relates to Company Tax Items, and (c) the
Tax Amount and the True-up Amount shall be determined as if the Company
were treated as a "partnership," rather than a "disregarded" entity, for
federal income tax purposes.
Within 10 days following the Company's filing of Internal Revenue
Service Form 1065 for the immediately preceding taxable year, the Tax Amounts
CPA shall file with the Trustee a written statement indicating in reasonable
detail the calculation of the True-up Amount. In the case of a True-up Amount
due to the members, the Permitted Quarterly Tax Distribution payable during
the immediately following Quarterly Payment Period out of available cash
after payment of any accrued and unpaid interest on the Securities (taking
into account that interest on the Securities may be paid from amounts in the
Interest Reserve Account) shall be increased by such True-up Amount. If the
available case is not sufficient to pay the Permitted Quarterly Tax
Distribution payable during a Quarterly Payment Period, the amount unpaid
shall be carried over and increase the Permitted Quarterly Tax Distribution
payable during the following Quarterly Payment Period. In the case
of a True-up Amount due to the Company, the Permitted Quarterly Tax
Distribution payable during the immediately following Quarterly
Payment Period shall be reduced by such True-up Amount and the
excess, if any, of the True-up Amount over such Permitted Quarterly
Tax Distribution shall be applied to reduce the immediately following Permitted
Quarterly Tax Distributions until such True-up Amount is entirely offset.
SECTION 4.4. Corporate and Limited Liability Company Existence.
Except as otherwise provided or permitted in this Indenture,
Finance and the Company shall do or cause to be done all things necessary
to preserve and keep in full force and effect their respective corporate and
limited liability company existence in accordance with the respective
organizational documents of each of them (as the same may be amended from
time to time) and the rights (charter and statutory) and corporate and limited
liability company franchises of the Issuers.
SECTION 4.5. Payment of Taxes and Other Claims.
The Issuers shall pay, prior to delinquency, all material taxes,
assessments, and governmental levies except (a) as contested in good faith
by appropriate proceedings and with respect to which appropriate reserves
have been taken to the extent required by GAAP or (b) where the failure to
effect such payment is not adverse in any material respect to the Holders.
SECTION 4.6. Compliance Certificate; Notice of Default.
(a) The Issuers shall deliver to the Trustee within 120 days after the
end of their fiscal year an Officers' Certificate complying with Section
314(a)(4) of the TIA and stating that a review of their activities during
the preceding fiscal year has been made under the supervision of the signing
Officers and stating, as to each such Officer signing such certificate, to the
best of his or her knowledge, based on such review, whether or not the signer
knows of any Event of Default or event which with notice or the passage of
time would become an Event of Default which has occurred and is continuing.
The Officers' Certificate shall also notify the Trustee should the relevant
fiscal year end on any date other than the current fiscal year end date.
(b) The Issuers shall, so long as any of the Securities are
outstanding, deliver to the Trustee, promptly upon becoming aware
of any Default or Event of Default, an Officers' Certificate specifying such
Default or Event of Default and what action the Issuers are taking or propose
to take with respect thereto; provided, however, that if the Manager is
notified in writing of any default under the Management Agreement (regardless
of whether or not any due period has expired) the Company shall promptly
notify the Holders directly of such event. The Trustee shall not be deemed
to have knowledge of any Default or any Event of Default unless one of
its Trust Officers receives written notice thereof from the Issuers or any of
the Holders.
SECTION 4.7. Reports.
The Issuers shall take all actions necessary to remain, and shall take
no actions which would preclude them from remaining subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, and each of the
Issuers shall deliver to the Trustee, to each Holder and to prospective
purchasers of Securities identified to the Issuers by an Initial Purchaser,
within 15 days after it is required or allowed to file such with the SEC,
annual and quarterly financial statements that were included in reports filed
with the SEC, including, with respect to annual information only, a report
thereon by the Issuers' certified independent public accountants as such is
required in such reports to the SEC, and, in each case, together with a
management's discussion and analysis of financial condition and results of
operations which is required.
In the event that the Issuers are no longer subject to the reporting
requirement of Section 13 or 15(d) of the Exchange Act, the Issuers shall use
their respective best efforts to continue to file with the SEC, and in the
event the SEC will no longer accept filings by either of the Issuers, the
Company shall furnish without cost to each Holder and file with the Trustee
and provide to the Information Agent, (a) within 90 days after the end of
each fiscal year of the Company, (i) audited year-end consolidated financial
statements of the Company (including a balance sheet, statement of operations
and statement of cash flows) prepared in accordance with GAAP and
substantially in the form included in the Offering Memorandum, (ii) the
information described in Item 303 of Regulation S-K under the Securities Act
with respect to such period and (iii) all pro forma and historical financial
information in respect of any significant transaction consummated more than
75 days prior to the date such information is furnished (and any other
transaction for which such information is available at such time) for the
time periods such financial information would be required in a filing on
Form 10-K with the SEC at such time; and (b) within 60 days after the end of
each of the first three fiscal quarters of each fiscal year of the Company,
(i) unaudited quarterly consolidated financial statements (including a
balance sheet, statement of operations and statement of cash flows) prepared
in accordance with GAAP and substantially in the form included in the Offering
Memorandum, (ii) the information described in Item 303 of Regulation S-K under
the Securities Act with respect to such period and (iii) all pro forma and
historical financial information in respect of any significant transaction
consummated more than 75 days prior to the date such information is furnished
(and any other transaction for which such information is available at such
time) to the extent not previously provided and for the time periods such
financial information would be required in filing on Form 8-K with the SEC
at such time.
SECTION 4.8. Limitation on Status as Investment Company.
Neither the Company nor Finance shall conduct its business in
a fashion that would cause it to be required to register as an "investment
company" (as that term is defined in the Investment Company Act of 1940, as
amended).
SECTION 4.9. Limitation on Transactions with Affiliates.
The Company shall not permit the Manager on or after the Issue
Date to enter into or suffer to exist any contract, agreement, arrangement or
transaction with any Affiliate of the Company (an "Affiliate Transaction"),
or any series of related Affiliate Transactions, other than those existing on
the Issue Date or permitted under the Section 4.13 (a) unless it is determined
that the terms of such Affiliate Transaction are fair and reasonable to the
Manager, and no less favorable to the Manager, than could have been obtained
in an arm's-length transaction with a non-Affiliate of the Company, (b) if
involving consideration to either party in excess of $500,000, unless such
Affiliate Transaction (or Transactions) is evidenced by an Officers'
Certificate addressed and delivered to the Trustee certifying that such
Affiliate Transaction (or Transactions) has been approved by a majority of
the members of the Board of Directors that are disinterested in such
transaction, if any, and (c) if involving consideration to either party in
excess of $1 million or $500,000 if there are no independent directors,
unless in addition, the Company, prior to the consummation thereof,
obtains a written favorable opinion as to the fairness of such
transaction to the Manager from a financial point of view from an
independent investment banking firm or accounting firm, in each case
having a national reputation.
The Company shall not pay any compensation to any officer or
director except (a) pursuant to the employment agreement with Len
Wolman in effect on the date of this Indenture and (b) other compensation,
provided that such other compensation and the compensation paid under clause
(a) together with all other operating expenses of the Company do not exceed
$1.0 million annually.
SECTION 4.10. Limitation on Indebtedness and Disqualified Capital Stock.
The Issuers shall not, directly or indirectly, create, issue,
assume, guaranty, incur, suffer to exist, become directly or indirectly
liable with respect to (including as a result of an Acquisition), or
otherwise become responsible for, contingently or otherwise, any Indebtedness
or any Disqualified Capital Stock, other than the Securities.
SECTION 4.11. Limitation on Liens.
The Issuers shall not, directly or indirectly, create, incur or suffer
to exist any Lien upon any of their property or assets, whether now owned or
hereafter acquired, or upon any income or profits therefrom, other than
Permitted Liens.
SECTION 4.12. Limitation on Sale of Assets.
The Issuers shall not, in one or a series of related transactions,
convey, sell, transfer, assign or otherwise dispose of, directly or indirectly,
any of their property, business or assets having a value in excess of $1,000
(an "Asset Sale"), except pursuant to a sale of its partnership interest in
the Manager pursuant to a Buy Out Notice as described in Section 3.1 or a
Mohegan Note Transfer.
SECTION 4.13. Covenants with Respect to the Manager.
The Company shall not permit the Manager to:
(a) incur any Indebtedness or make any Investment;
(b) directly or indirectly create, incur or suffer to exist any
Liens on any of its properties or assets;
(c) directly or indirectly, create, assume or suffer to exist any
consensual restriction on the ability of the Manager or any Subsidiary
of the Manager to pay dividends or make other distributions to or on behalf
of, or to pay any obligation to or on behalf of, or otherwise to transfer
assets or property to or on behalf of, or to pay any obligation to or on
behalf of, or otherwise to transfer assets or property to or on behalf of,
or make or pay loans or advances to or on behalf of, the Company, except, in
each case, for Permitted Liens and restrictions imposed by the Operative
Documents, provided, however, that customary provisions restricting
subletting or assignment of any lease entered into in the ordinary course
of business, consistent with industry practice shall not in and of themselves
be considered a restriction on the ability of the Manager or the applicable
Subsidiary to transfer such agreement or assets, as the case may be;
(d) directly or indirectly make any Asset Sale;
(e) enter into any subcontract to delegate the duties of the Manager
under the Management Agreement other than those described in Article IV of
the Partnership Agreement;
(f) issue any equity security in a manner that dilutes distributions
to the Company;
(g) make payments for management services, except for payments made in
accordance with the Operative Documents; or
(h) engage in any business other than as described in the Partnership
Agreement.
In addition, the Company shall not agree, and shall not permit the
Manager to agree, to terminate, amend or waive any provision of an Operative
Document or any of the agreements entered into prior to the Issue Date
incidental or related to the Relinquishment Agreement or the Mohegan Notes
in a manner adverse to the economic interest of the Holders without the
consent of holders of a majority of the principal amount of the Securities
outstanding, provided, however, that the Hotel/Resort Management Agreement
and the Management Agreement may be terminated pursuant to the Relinquishment
Agreement and the Hotel/Resort Development and Construction Agreement and the
Gaming Facility Development and Construction Agreement may be terminated
pursuant to the Development Services Agreement and the Omnibus Agreement may
be terminated pursuant to the Omnibus Termination Agreement and the Company may
enter into the Omnibus Termination Agreement, provided that the executed
Omnibus Termination Agreement documents do not differ materially from the
description thereof in the Offering Memorandum.
Notwithstanding the foregoing, the Manager may assign to Waterford Group
or its Affiliates any rights with respect to activities not related to the
Mohegan Sun and the Company may assign to Waterford Group or its Affiliates
the rights to exercise the "buy" option of the Buy Out Notice.
SECTION 4.14. Limitation on Activities of the Issuers.
The Issuers shall not conduct any business (including having any
Subsidiary except, in the case of the Company, Finance) whatsoever, other
than to (a) own and act upon the Mohegan Notes, in the case of the Company,
(b) comply with their respective rights and obligations under the Partnership
Agreement, this Indenture, the Securities, the Management Agreement, the
Omnibus Agreement, the Omnibus Termination Agreement, the Relinquishment
Agreement and the agreements entered into prior to the Issue Date incidental
or related to the Relinquishment Agreement or the Mohegan Notes, Mr.
Len Wolman's employment contract, the Security and Control Agreement, the
Development Services Agreement, the Hotel/Resort Management Agreement and
the Purchase Agreement and take action arising under such agreements or
related or incidental thereto, (c) take any action necessary in connection
with the settlement or litigation of any dispute with Leisure Resorts
Technology, Inc. or its Affiliates with respect to Leisure Resorts
Technology, Inc.'s former partnership or profits interest in the Manager and
the prior settlement with respect thereto, (d) invest in cash and Cash
Equivalents and (e) receive and make Group Flow-Through Payment,
provided, however, that such payment shall not expand the activities in which
the Issuers are engaged beyond (a) - (d) hereof. Notwithstanding anything
herein to the contrary, Finance shall not issue any Capital Stock or other
Equity Interest to any person other than the Company.
SECTION 4.15. Acceptance of Remaining Excess Cash Purchase Offers and
Offers Other than Change of Control Offers.
The Company shall accept Remaining Excess Cash Purchase Offers
or any other offer to purchase the Mohegan Notes made by the Authority other
than a Change of Control Offer (as defined in the Note Purchase Agreement) as
made as follows. The Company shall accept any such offer, if accepted by Sun
International. Sun International has agreed not to accept any Remaining
Excess Cash Purchase Offers in 1999. If less than all the Mohegan Notes owned
by Sun International are to be tendered, the Company shall tender that
principal amount of the Mohegan Notes, rounded to the nearest multiple of
$1,000, owned by the Company (with the Completion Guarantee Mohegan Notes to
be tendered first) that bears the same proportion to the total principal
amount of Mohegan Notes owned by the Company that the principal amount of
Mohegan Notes to be tendered by Sun International and its Affiliates bears
to the total principal amount of Mohegan Notes owned by Sun International and
its Affiliates. In the event that the total amount available for a Remaining
Excess Cash Purchase Offer or such other offer by the Authority is less than
the total amount needed to purchase the Mohegan Notes to be tendered by the
Company and Sun International and its Affiliates pursuant to the above
formula, the Company shall reduce the amount of Mohegan Notes to be tendered
pro rata, assuming Sun International and its Affiliates likewise reduce their
amount of Mohegan Notes to be so tendered, in each case rounded to
the nearest multiple of $1,000, such that the total amount of Mohegan Notes
to be tendered can be purchased in such offer.
Notwithstanding the foregoing, in the event that either (a) Sun
International fails to notify the Company of its intention to tender into
such offer prior to the time at which tenders are due and has not as of such
time tendered into such offer or (b) the total amount of cash or Cash
Equivalents held by the Company as of the date tenders are due is less than
$5.0 million, the Company shall tender into such offer all Mohegan Notes then
held by it.
SECTION 4.16. Acceptance of Change of Control Offers.
The Company shall accept Change of Control Offers (as defined in the
Note Purchase Agreement) in full.
SECTION 4.17. Waiver of Stay, Extension or Usury Laws.
Each of the Issuers covenants (to the extent that it may lawfully do so)
that it will not at any time voluntarily insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension
law or any usury law or other law which would prohibit or forgive the Issuers
from paying all or any portion of the principal of, premium of, or interest
on the Securities as contemplated herein, wherever enacted, now or at
any time hereafter in force; and (to the extent that it may lawfully do so)
each of the Issuers hereby expressly waives all benefit or advantage of any
such law, and covenants that it will not hinder, delay or impede the execution
of any power herein granted to the Trustee relating to any such law, but will
suffer and permit the execution of every such power as though no such law
had been enacted.
SECTION 4.18. Limitation on Merger, Sale or Consolidation.
Neither of the Issuers shall, directly or indirectly, consolidate with
or merge with or into another person or sell, lease, convey or transfer all
or substantially all of their respective assets (computed on a consolidated
basis), whether in a single transaction or a series of related transactions,
to another Person or group of affiliated Persons or adopt a plan of
liquidation.
SECTION 4.19. Limitation on Use of Proceeds.
The Company shall use the proceeds of the Offering in accordance with
the description thereof set forth under the caption "Use of Proceeds" in the
Offering Memorandum.
SECTION 4.20. Covenants with Respect to Interest Reserve Account.
The Issuers shall promptly pay or cause to be paid directly to the Securities
Intermediary the following amounts, which amounts the Securities Intermediary
shall use to purchase assets to be deposited in or credited to the Interest
Reserve Account, in accordance with the Security and Control Agreement:
(a) On the Issue Date, $11.875 million of the proceeds of the
Offering;
(b) Promptly upon receipt, the first $15.0 million in Mohegan
Note Transfer Proceeds; and
(c) Cash equal to the amount of any Required IRA True-up
Payment, as soon as practicable after Company Excess Cash becomes
available for that purpose.
ARTICLE V
EVENTS OF DEFAULT AND REMEDIES
SECTION 5.1. Events of Default.
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and
whether it shall be caused voluntarily or involuntarily or
effected, without limitation, by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) the failure by the Issuers to pay any installment of
interest on the Securities as and when the same becomes due and
payable and the continuance of any such failure for 30 days;
(b) the failure by the Issuers to pay all or any part of the
principal, or premium, if any, on the Securities when and as the
same becomes due and payable at maturity, redemption, by acceleration
or otherwise, including, without limitation, payment of the
Change of Control Purchase Price or on a mandatory redemption, or
otherwise;
(c) the failure by the Issuers to observe or perform the
terms of the covenant set forth in Section 4.18 of this Indenture;
(d) the failure by either of the Issuers to observe or
perform any other covenant or agreement contained in the Securities
or this Indenture (other than a default in the performance of any
covenant or agreement which is specifically dealt with elsewhere in
this Section 5.1) and the continuance of such failure for a period
of 30 days after written notice (a "Notice of Default") is given to
the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in aggregate principal amount of the
Securities outstanding, specifying such Default and requiring that
it be remedied;
(e) a decree, judgment, or order by a court of competent
jurisdiction shall have been entered adjudicating either or both of
the Issuers as bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization of either or both of the
Issuers under any bankruptcy or similar law, and such decree or
order shall have continued undischarged and unstayed for a period
of 60 consecutive days; or a decree or order of a court of competent
jurisdiction, judgment appointing a receiver, liquidator, trustee,
or assignee in bankruptcy or insolvency for either or both of the
Issuers or any substantial part of the property of any such
Person, or for the winding up or liquidation of the affairs of any
such Person, shall have been entered, and such decree, judgment, or
order shall have remained in force undischarged and unstayed for a
period of 60 days;
(f) either or both of the Issuers shall institute proceedings
to be adjudicated a voluntary bankrupt, or shall consent to the
filing of a bankruptcy proceeding against it, or shall file a petition
or answer or consent seeking reorganization under any
bankruptcy or similar law or similar statute, or shall consent to
the filing of any such petition, or shall consent to the appointment of a
Custodian, receiver, liquidator, trustee, or assignee in
bankruptcy or insolvency of it or any substantial part of its assets
or property, or shall make a general assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts as they
become due, or take any corporate action in furtherance of or to facilitate,
conditionally or otherwise, any of the foregoing;
(g) final unsatisfied judgments not covered by insurance
aggregating in excess of $2.0 million, at any one time rendered
against either or both of the Issuers and not stayed, bonded or
discharged within 60 days;
(h) any default in the performance or breach of the terms of
an Operative Document by the Manager or by the Company with respect
to the Partnership Agreement, extending past any applicable cure
period, that would result in material damages to either the Company
or the Manager;
(i) the failure by the Company to observe or perform any
material covenant set forth in the Security and Control Agreement,
subject to applicable cure periods;
(j) an Event of Default under any Indebtedness resulting in
an acceleration of the maturity thereof; or
(k) the failure by the Issuers to make any of the payments to
the Securities Intermediary required by Section 4.20 above.
Notwithstanding the 30-day period and notice requirement
contained in Section 5.1(d) above, (i) with respect to a default
under Article IX, the 30-day period referred to in Section 5.1(d)
shall be deemed to have begun as of the date notice of a Change of
Control Offer is required to be sent to the Holders in the event
that the Issuers have not complied with the provisions of Section
9.1, and the Trustee or Holders of at least 25% in principal amount
of the outstanding Securities thereafter give the Notice of Default
referred to in Section 5.1(d) in respect of such compliance to the
Issuers and, if applicable, the Trustee; provided, however, that if
the breach or default is a result of a default in the payment when
due of the Change of Control Purchase Price on the Change of
Control Payment Date, such default shall be deemed, for purposes of
this Section 5.1, to arise on the Change of Control Payment Date.
SECTION 5.2. Acceleration of Maturity Date; Rescission and
Annulment.
If an Event of Default occurs and is continuing (other than an
Event of Default specified in clauses (e) and (f) of Section 5.1,
relating to either or both of the Issuers) then in every such case,
unless the principal of all of the Securities shall have already
become due and payable, either the Trustee or the Holders of 25% in
aggregate principal amount of the Securities then outstanding, by
notice in writing to the Company (and to the Trustee if given by
Holders) (an "Acceleration Notice"), may declare all principal and
accrued interest thereon to be due and payable immediately. If an
Event of Default specified in clauses (e) and (f), of Section 5.1,
relating to either or both of the Issuers occurs, all principal and
accrued interest thereon will be immediately due and payable on all
outstanding Securities without any declaration or other act on the
part of Trustee or the Holders.
At any time after such a declaration of acceleration has been
made and before a judgment or decree for payment of the money due
has been obtained by the Trustee as hereinafter provided in this
Article V, the Holders of not less than a majority in aggregate
principal amount of then outstanding Securities, by written notice
to the Issuers and the Trustee, may rescind, on behalf of all
Holders, any such declaration of acceleration if:
(a) the Issuers have paid or deposited with the Trustee Cash
sufficient to pay
(i) all overdue interest on all Securities,
(ii) the principal of (and premium applicable to) any
Securities which would become due other than by reason of such
declaration of acceleration, and interest thereon at the rate borne
by the Securities,
(iii) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate borne by the
Securities,
(iv) all sums paid or advanced by the Trustee hereunder
and the compensation, expenses, disbursements and advances of the
Trustee and its agents and counsel, and any other amounts due the
Trustee under Section 6.7, and
(b) all Events of Default, other than the non-payment of the
principal of, premium, if any, and interest on Securities which
have become due solely by such declaration of acceleration, have
been cured or waived as provided in Section 5.12, including, if
applicable, any Event of Default relating to the covenants contained
in Section 9.1.
Notwithstanding the previous sentence of this Section 5.2, no
waiver shall be effective against any Holder for any Event of Default
or event which with notice or lapse of time or both would be
an Event of Default with respect to (i) any covenant or provision
which cannot be modified or amended without the consent of the
Holder of each outstanding Security affected thereby, unless all
such affected Holders agree, in writing, to waive such Event of
Default or other event and (ii) any provision requiring
supermajority approval to amend, unless such default has been
waived by such a supermajority. No such waiver shall cure or waive
any subsequent default or impair any right consequent thereon.
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement
by Trustee.
The Issuers covenant that if an Event of Default in payment of
principal, premium, or interest specified in clauses (a) or (b) of
Section 5.1 occurs and is continuing, the Issuers shall, upon
demand of the Trustee, pay to it, for the benefit of the Holders of
such Securities, the whole amount then due and payable on such
Securities for principal, premium and interest, and, to the extent
that payment of such interest shall be legally enforceable,
interest on any overdue principal (and premium) and on any overdue
interest, at the rate borne by the Securities, and, in addition
thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including compensation to, and
expenses, disbursements and advances of the Trustee and its agents
and counsel and all other amounts due the Trustee under Section
6.7.
If the Issuers fail to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express
trust in favor of the Holders, may institute a judicial proceeding
for the collection of the sums so due and unpaid, may prosecute
such proceeding to judgment or final decree and may enforce the
same against the Issuers or any other obligor upon the Securities
and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Issuers or any
other obligor upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights and
the rights of the Holders by such appropriate judicial proceedings
as the Trustee shall deem most effective to protect and enforce any
such rights, whether for the specific enforcement of any covenant
or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy.
SECTION 5.4. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial proceeding relative to the Issuers or
any other obligor upon the Securities or the property of the
Issuers or of such other obligor or their creditors, the Trustee
(irrespective of whether the principal of the Securities shall then
be due and payable as therein expressed or by declaration or otherwise
and irrespective of whether the Trustee shall have made any
demand on the Issuers for the payment of overdue principal and
premium or interest) shall be entitled and empowered, by intervention
in such proceeding or otherwise to take any and all actions
under the TIA, including
(a) to file and prove a claim for the whole amount of principal
(and premium, if any) and interest owing and unpaid in respect
of the Securities and to file such other papers or documents as may
be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee and its agent
and counsel and all other amounts due the Trustee under Section
6.7) and of the Holders allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation,
expenses, disbursements and advances of the Trustee and its
agents and counsel, and any other amounts due the Trustee under
Section 6.7.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of
any Holder any plan of reorganization, arrangement, adjustment, or
composition affecting the Securities or the rights of any Holder
thereof or to authorize the Trustee to vote in respect of the claim
of any Holder in any such proceeding.
SECTION 5.5. Trustee May Enforce Claims Without Possession of
Securities.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without
the possession of any of the Securities or the production thereof
in any proceeding relating thereto, and any such proceeding
instituted by the Trustee shall be brought in its own name as
trustee of an express trust in favor of the Holders, and any
recovery of judgment shall, after provision for the payment of
compensation to, and expenses, disbursements and advances of the
Trustee, its agents and counsel and all other amounts due the
Trustee under Section 6.7, be for the ratable benefit of the Holders
of the Securities in respect of which such judgment has been
recovered.
SECTION 5.6. Priorities.
Any money collected by the Trustee pursuant to this Article V
shall, subject to Article XII, be applied in the following order,
at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal, premium or interest,
upon presentation of the Securities and the notation thereon
of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: To the Trustee in payment of all amounts due pursuant
to Section 6.7;
SECOND: To the Holders in payment of the amounts then due and
unpaid for principal of, premium and interest on, the Securities in
respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for
principal, premium and interest, respectively; and
THIRD: To the Issuers or such other Person as may be lawfully
entitled thereto, the remainder, if any.
The Trustee may, but shall not be obligated to, fix a record
date and payment date for any payment to the Holders under this
Section 5.6.
SECTION 5.7. Limitation on Suits.
No Holder of any Security shall have any right to order or
direct the Trustee to institute any proceeding, judicial or
otherwise, with respect to this Indenture, or for the appointment
of a receiver or trustee, or for any other remedy hereunder, unless
(a) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% in aggregate principal
amount of then outstanding Securities shall have made written
request to the Trustee to institute proceedings in respect of such
Event of Default in its own name as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities to be
incurred or reasonably probable to be incurred in compliance with such
request;
(d) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such proceeding;
and
(e) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders
of a majority in aggregate principal amount of the outstanding
Securities;
it being understood and intended that no one or more Holders shall
have any right in any manner whatsoever by virtue of, or by
availing of, any provision of this Indenture to affect, disturb or
prejudice the rights of any other Holders, or to obtain or to seek
to obtain priority or preference over any other Holders or to
enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 5.8. Unconditional Right of Holders to Receive
Principal, Premium and Interest.
Notwithstanding any other provision of this Indenture, the
Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of, and premium
(if any) and interest on, such Security on the respective dates
such payments are due as expressed in such Security (in the case of
redemption, the Redemption Price on the applicable Redemption Date)
and to institute suit for the enforcement of any such payment after
such respective dates, and such rights shall not be impaired without
the consent of such Holder.
SECTION 5.9. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities in
Section 2.7, no right or remedy herein conferred upon or reserved
to the Trustee or to the Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter existing
at law or in equity or otherwise. The assertion or employment of
any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right
or remedy.
SECTION 5.10. Delay or Omission Not Waiver.
No delay or omission by the Trustee or by any Holder of any
Security to exercise any right or remedy arising upon any Event of
Default shall impair the exercise of any such right or remedy or
constitute a waiver of any such Event of Default. Every right and
remedy given by this Article V or by law to the Trustee or to the
Holders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Holders, as the case may
be.
SECTION 5.11. Control by Holders.
The Holder or Holders of a majority in aggregate principal
amount of then outstanding Securities shall have the right to
direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee or exercising any trust or
power conferred upon the Trustee, provided, that
(a) such direction shall not be in conflict with any rule of
law or with this Indenture or involve the Trustee in personal
liability,
(b) the Trustee shall not determine that the action so directed
would be unjustly prejudicial to the Holders not taking part in such
direction, and
(c) the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction.
SECTION 5.12. Waiver of Past Default.
Subject to Section 5.8, prior to the declaration of acceleration
of the maturity of the Securities, the Holder or Holders of not less than
a majority in aggregate principal amount of the Securities then outstanding
may, on behalf of all Holders, waive any past default hereunder and its
consequences, except a default
(a) in the payment of the principal of, premium, if any, or
interest on, any Security as specified in clauses (a) and (b) of
Section 5.1 and not yet cured;
(b) in respect of a covenant or provision hereof which, under
Article VIII, cannot be modified or amended without the consent of
the Holder of each outstanding Security affected; or
(c) in respect of any provision hereof which, under Article
VIII, cannot be modified, amended or waived without the consent of
the Holders of 66 % of the aggregate principal amount of the
Securities at the time outstanding; provided, that any such waiver
may be effected with the consent of the Holders of 66 % of the
aggregate principal amount of the Securities then outstanding.
Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Indenture; but no such waiver
shall extend to any subsequent or other default or impair the
exercise of any right arising therefrom.
SECTION 5.13. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any
Security by his acceptance thereof shall be deemed to have agreed,
that in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action
taken, suffered or omitted to be taken by it as Trustee, any court
may in its discretion require the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such
suit, having due regard to the merits and good faith of the claims
or defenses made by such party litigant; but the provisions of this
Section 5.13 shall not apply to any suit instituted by the Issuers,
to any suit instituted by the Trustee, to any suit instituted by
any Holder, or group of Holders, holding in the aggregate more than
10% in aggregate principal amount of the outstanding Securities, or
to any suit instituted by any Holder for enforcement of the payment
of principal of, or premium (if any) or interest on, any Security
on or after the respective maturity dates expressed in such
Security (including, in the case of redemption, on or after the
Redemption Date).
SECTION 5.14. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceed
ing has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in
every case, subject to any determination in such proceeding, the
Issuers, the Trustee and the Holders shall be restored severally
and respectively to their former positions hereunder and thereafter
all rights and remedies of the Trustee and the Holders shall
continue as though no such proceeding had been instituted.
ARTICLE VI
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this
Indenture and covenants and agrees to perform the same, as herein
expressed, subject to the terms hereof.
SECTION 6.1. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing,
the Trustee shall exercise such of the rights and powers vested in
it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the
circumstances in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) The Trustee need perform only those duties as are
specifically set forth in this Indenture and no others, and no
covenants or obligations shall be implied in or read into this
Indenture or the Collateral Agreements which are adverse to the
Trustee, and
(ii) In the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Indenture. However, in the case of any such
certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee
shall examine the certificates and opinions to determine whether or
not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act, or its own
willful misconduct, except that:
(i) This paragraph does not limit the effect of paragraph
(b) of this Section 6.1,
(ii) The Trustee shall not be liable for any error of
judgment made in good faith by it, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts, and
(iii) The Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance
with a direction received by it pursuant to Section 5.11.
(d) No provision of this Indenture or the Security and
Control Agreement shall require the Trustee to expend or risk its
own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder or to take or omit to take any
action under this Indenture or the Security and Control Agreement
or at the request, order or direction of the Holders or in the
exercise of any of its rights or powers if it shall have reasonable
grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured
to it.
(e) Every provision of this Indenture or the Security and
Control Agreement that in any way relates to the Trustee is subject
to paragraphs (a), (b), (c), (d) and (f) of this Section 6.1.
(f) The Trustee shall not be liable for interest on any
assets received by it except as the Trustee may agree in writing
with the Issuers. Assets held in trust by the Trustee need not be
segregated from other assets except to the extent required by law.
SECTION 6.2. Rights of Trustee.
Subject to Section 6.1:
(a) The Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper Person.
The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it may
consult with counsel and may require an Officers' Certificate or an
Opinion of Counsel, which shall conform to Sections 11.4 and 11.5.
The Trustee shall not be liable for any action it takes or omits to
take in good faith in reliance on such certificate or advice of
counsel.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any
agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes
or omits to take in good faith which it believes to be authorized
or within its rights or powers conferred upon it by this Indenture
or the Security and Control Agreement, nor for any action permitted
to be taken or omitted hereunder by any Agent.
(e) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, notice, request, direction,
consent, order, bond, debenture, or other paper or document, but
the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit.
(f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture or the
Security and Control Agreement at the request, order or direction
of any of the Holders, pursuant to the provisions of this Indenture
or the Security and Control Agreement, unless such Holders shall
have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred
therein or thereby.
(g) Unless otherwise specifically provided for in this Indenture,
any demand, request, direction or notice from the Issuers
shall be sufficient if signed by an Officer of each of the Issuers.
(h) The Trustee shall have no duty to inquire as to the
correctness of any notice of redemption given pursuant to Section
3.2 or as to the performance of the Issuers' covenants in Article
IV hereof or the Security and Control Agreement or as to the performance
by any Agent of its duties hereunder or thereunder. In addition, the
Trustee shall not be deemed to have knowledge of any Default or Event
of Default except any Default or Event of Default of which the Trustee
shall have received written notification or with respect to which a Trust
Officer shall have actual knowledge.
(i) Whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence be herein specifically
prescribed) may, in the absence of bad faith on its part, rely upon
an Officers' Certificate.
SECTION 6.3. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with the
Issuers, any of their Subsidiaries, or their respective Affiliates
with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights. However, the Trustee must
comply with Sections 6.10 and 6.11.
SECTION 6.4. Trustee's Disclaimer.
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Security and Control Agreement or
the Securities or as to the validity or perfection of any security
interest or lien created thereby and it shall not be accountable
for the Issuers' use of the proceeds from the Securities, and it
shall not be responsible for any statement in the Securities, other
than the Trustee's certificate of authentication (if executed by
the Trustee), or the use or application of any funds received by a
Paying Agent other than the Trustee.
SECTION 6.5. Notice of Default.
If a Default or an Event of Default occurs and is continuing
and if it is known to the Trustee, the Trustee shall mail to each
Securityholder notice of the uncured Default or Event of Default
within 90 days after such Default or Event of Default occurs.
Except in the case of a Default or an Event of Default in payment
of principal (or premium, if any) of, or interest on any Security
(including the payment of the Change of Control Purchase Price on
the Change of Control Purchase Date or the payment of the Redemption
Price on the Redemption Date), the Trustee may withhold the
notice if and so long as a Trust Officer in good faith determines
that withholding the notice is in the interest of the Security holders.
SECTION 6.6. Reports by Trustee to Holders.
Within 60 days after each January 31, beginning with January
31, 2001, the Trustee shall, if required by law, mail to each
Securityholder a brief report dated as of such January 31 that
complies with TIA 313(a). The Trustee also shall comply with TIA
313(b) and 313(c).
The Issuers shall promptly notify the Trustee in writing if
the Securities become listed on any stock exchange or automatic
quotation system.
A copy of each report at the time of its mailing to
Securityholders shall be mailed to the Issuers and filed with the
SEC and each stock exchange, if any, on which the Securities are
listed.
SECTION 6.7. Compensation and Indemnity.
The Issuers jointly and severally agree to pay to the Trustee
from time to time reasonable compensation for its services. The
Trustee's compensation shall not be limited by any law on compensation
of a trustee of an express trust. The Issuers shall reimburse
the Trustee upon request for all reasonable disbursements, expenses
and advances incurred or made by it in accordance with this
Indenture. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents, accountants,
experts and counsel.
The Issuers jointly and severally agree to indemnify the
Trustee (in its capacity as Trustee) and each of its officers,
directors, attorneys-in-fact and agents for, and hold it and each
of them harmless against, any claim, demand, expense (including but
not limited to reasonable compensation, disbursements and expenses
of the Trustee's agents and counsel), loss or liability incurred by
it without negligence or bad faith on the part of the Trustee,
arising out of or in connection with the administration of this
trust and its rights or duties hereunder including the reasonable
costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of
its powers or duties hereunder. The Trustee shall notify the
Issuers promptly of any claim asserted against the Trustee for
which it may seek indemnity. The Issuers shall defend the claim
and the Trustee shall provide reasonable cooperation at the
Issuers' expense in the defense. The Trustee may have separate
counsel and the Issuers shall pay the reasonable fees and expenses
of such counsel. The Issuers need not pay for any settlement made
without their written consent, which consent shall not be unreasonably
withheld. The Issuers need not reimburse any expense or
indemnify against any loss or liability to the extent incurred by
the Trustee through its negligence, bad faith or willful misconduct.
To secure the Issuers' payment obligations in this Section
6.7, the Trustee shall have a lien prior to the Securities on all
assets held or collected by the Trustee, in its capacity as
Trustee, except assets held in trust to pay principal and premium,
if any, of or interest on particular Securities.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 5.1(e) or (f) occurs, the
expenses and the compensation for the services are intended to
constitute expenses of administration under any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA
313(b)(2) to the extent applicable.
The Issuers' obligations under this Section 6.7 and any lien
arising hereunder shall survive the resignation or removal of the
Trustee, the discharge of the Issuers' obligations pursuant to
Article VII of this Indenture and any rejection or termination of
this Indenture under any Bankruptcy Law.
SECTION 6.8. Replacement of Trustee.
The Trustee may resign by so notifying the Issuers in writing,
to become effective upon the appointment of a successor trustee.
The Holder or Holders of a majority in aggregate principal amount
of the outstanding Securities may remove the Trustee by so
notifying the Issuers and the Trustee in writing and may appoint a
successor trustee with the Issuers' consent. The Issuers may
remove the Trustee if:
(a) the Trustee fails to comply with Section 6.10;
(b) the Trustee is adjudged bankrupt or insolvent;
(c) a receiver, Custodian, or other public officer takes
charge of the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Issuers shall promptly
appoint a successor Trustee. Within one year after the successor
Trustee takes office, the Holder or Holders of a majority in
aggregate principal amount of the Securities may appoint a
successor Trustee to replace the successor Trustee appointed by the
Issuers.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuers. Immediately
after that and provided that all sums owing to the retiring
Trustee provided for in Section 6.7 have been paid, the retiring
Trustee shall transfer all property held by it as trustee to the
successor Trustee, subject to the lien provided in Section 6.7, the
resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights,
powers and duties of the Trustee under this Indenture. A successor
Trustee shall mail notice of its succession to each Holder.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring
Trustee, the Issuers or the Holder or Holders of at least 10% in
aggregate principal amount of the outstanding Securities may
petition any court of competent jurisdiction for the appointment of
a successor Trustee.
If the Trustee fails to comply with Section 6.10, any
Securityholder may petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor
Trustee.
Notwithstanding replacement of the Trustee pursuant to this
Section 6.8, the Issuers' obligations under Section 6.7 shall
continue for the benefit of the retiring Trustee.
SECTION 6.9. Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business
(including the trust created by this Indenture) to, another
corporation, the resulting, surviving or transferee corporation
without any further act shall, if such resulting, surviving or
transferee corporation is otherwise eligible hereunder, be the
successor Trustee.
SECTION 6.10. Eligibility; Disqualification.
The Trustee shall at all times satisfy the requirements of TIA
310(a)(1), (2) and (5). The Trustee (together with its corporate
parent) shall have a combined capital and surplus of at least
$25,000,000 as set forth in its most recent published annual report
of condition. The Trustee shall comply with TIA 310(b).
SECTION 6.11. Preferential Collection of Claims Against
Issuers.
The Trustee shall comply with TIA 311(a), excluding any
creditor relationship listed in TIA 311(b). A Trustee who has
resigned or been removed shall be subject to TIA 311(a) to the
extent indicated.
ARTICLE VII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 7.1. Option to Effect Legal Defeasance or Covenant
Defeasance.
The Issuers may, at their option and at any time, elect to
have Section 7.2 or Section 7.3 applied to all outstanding Securities
upon compliance with the conditions set forth below in this
Article VII.
SECTION 7.2. Legal Defeasance and Discharge.
Upon the Issuers' exercise under Section 7.1 of the option
applicable to this Section 7.2, the Issuers shall be deemed to have
been discharged from their respective obligations with respect to
all outstanding Securities on the date the conditions set forth
below are satisfied (hereinafter, "Legal Defeasance"). For this
purpose, such Legal Defeasance means that the Issuers shall be
deemed to have paid and discharged the entire Indebtedness represented
by the outstanding Securities, which shall thereafter be
deemed to be "outstanding" only for the purposes of Section 7.5 and
the other Sections of this Indenture referred to in (a) and (b)
below, the Note Collateral shall have been released from the Liens
in favor of the Securities and the Issuers shall be deemed to have
satisfied all their other obligations under such Securities and
this Indenture (and the Trustee, on demand of and at the expense of
the Issuers, shall execute proper instruments acknowledging the
same), except for the following which shall survive until otherwise
terminated or discharged hereunder: (a) rights of Holders to
receive payments in respect of the principal of, premium, if any,
and interest on such Securities when such payments are due from the
trust funds described below; (b) the Issuers' obligations with
respect to such Securities concerning issuing temporary Securities,
registration of Securities, mutilated, destroyed, lost or stolen
Securities, and the maintenance of an office or agency for payment
and money for security payments held in trust; (c) the rights,
powers, trust, duties, and immunities of the Trustee, and the
Issuers' obligations in connection therewith; and (d) this Article
VII. Upon Legal Defeasance as provided herein, the Trustee shall
promptly execute and deliver to the Issuers any documents reason
ably requested by the Issuers to evidence or effect the foregoing.
Subject to compliance with this Article VII, the Issuers may exercise
their option under this Section 7.2 notwithstanding the prior
exercise of their option under Section 7.3 with respect to the
Securities.
SECTION 7.3. Covenant Defeasance.
Upon the Issuers' exercise under Section 7.1 of the option
applicable to this Section 7.3, the Issuers shall be released from
their respective obligations under the covenants contained in Sections
4.3, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.13, 4.14,
4.15, 4.16, 4.17, 4.18, 4.19, 4.20 and Article IX with respect to
the outstanding Securities on and after the date the conditions set
forth below are satisfied (hereinafter, "Covenant Defeasance"), and
the Securities shall thereafter be deemed not "outstanding" for the
purposes of any direction, waiver, consent or declaration or act of
Holders (and the consequences of any thereof) in connection with
such covenants, but shall continue to be deemed "outstanding" for
all other purposes hereunder. For this purpose, such Covenant
Defeasance means that, with respect to the outstanding Securities,
the Issuers need not comply with and shall have no liability in
respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any
reference in any such covenant to any other provision herein or in
any other document (and Section 5.1(d) shall not apply to any such
covenant), but, except as specified above, the remainder of this
Indenture and such Securities shall be unaffected thereby. In
addition, upon the Issuers' exercise under Section 7.1 of the
option applicable to this Section 7.3, Sections 5.1(c), (d), (g),
(h), (i), (j) and (k) shall not constitute Events of Default.
SECTION 7.4. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of
either Section 7.2 or Section 7.3 to the outstanding Securities:
(a) The Issuers shall irrevocably have deposited or caused to
be deposited with the Trustee (or another trustee satisfactory to
the Trustee satisfying the requirements of Section 6.10 who shall
agree to comply with the provisions of this Article VII applicable
to it) as trust funds in trust for the purpose of making the following
payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such Securities, (i)
Cash in an amount, or (ii) U.S. Government Obligations which
through the scheduled payment of principal and interest in respect
thereof in accordance with their terms will provide, not later than
one day before the due date of any payment, Cash in an amount, or
(iii) a combination thereof, in such amounts, as in each case will
be sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge and which
shall be applied by the Paying Agent (or other qualifying trustee)
to pay and discharge the principal of, premium and interest on the
outstanding Securities on the stated Interest Payment Date or on
the applicable optional Redemption Date, as the case may be, of
such principal or installment of principal, premium or interest on
the Securities; provided that the Paying Agent shall have been
irrevocably instructed to apply such Cash and the proceeds of such
U.S. Government Obligations to said payments with respect to the
Securities. The Holders of Securities shall have a valid,
perfected, exclusive security interest in such trust. The Paying
Agent shall promptly advise the Trustee in writing of any Cash or
Securities deposited pursuant to this Section 7.4;
(b) In the case of an election under Section 7.2, the Issuers
shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming that
(i) the Issuers have received from, or there has been published by,
the Internal Revenue Service, a ruling or (ii) since the date
hereof, there has been a change in the applicable federal income
tax law, in either case to the effect that, and based thereon such
opinion shall confirm that, the Holders of the outstanding Securities
will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
Legal Defeasance had not occurred;
(c) In the case of an election under Section 7.3, the Issuers
shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming that
the Holders of the outstanding Securities will not recognize
income, gain or loss for federal income tax purposes as a result of
such Covenant Defeasance and will be subject to federal income tax
in the same amount, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
(d) No Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or
Event of Default resulting from the borrowing of funds to be
applied to such deposit) or, insofar as Section 5.1(e) or Section
5.1(f) is concerned, at any time in the period ending on the 91st
day after the date of deposit or such earlier time as, in the
Opinion of Counsel, such deposit is not voidable as a preference
under applicable Bankruptcy Law;
(e) Such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under
any other material agreement (other than this Indenture) or
instrument to which either Issuer is a party or by which either are
bound;
(f) In the case of an election under either Section 7.2 or
7.3, the Issuers shall have delivered to the Trustee an Officers'
Certificate stating that the deposit made by the Issuers pursuant
to its election under Section 7.2 or 7.3 was not made by the
Issuers with the intent of preferring the Holders of such Securities
over any other creditors of the Issuers or with the intent of
defeating, hindering, delaying or defrauding any other creditors of
the Issuers or others; and
(g) The Issuers shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that
the conditions precedent provided for in, in the case of the
Officer's Certificate, clauses (a) through (f), and, in the case of
the Opinion of Counsel, clauses (a) (with respect to the validity
and perfection of the security interest), (b), (c) and (e) of this
Section 7.4 have been complied with.
SECTION 7.5. Deposited Cash and U.S. Government Obligations
to be Held in Trust; Other Miscellaneous Provisions.
Subject to Section 7.6, all Cash and U.S. Government Obligations
(including the proceeds thereof) deposited with the Paying
Agent (or other qualifying trustee, collectively for purposes of
this Section 7.5, the "Paying Agent") pursuant to Section 7.4 in
respect of the outstanding Securities shall be held in trust and
applied by the Paying Agent, in accordance with the provisions of
such Securities and this Indenture, to the payment, either directly
or through any other Paying Agent as the Trustee may determine, to
the Holders of such Securities of all sums due and to become due
thereon in respect of principal, premium and interest, but such
money need not be segregated from other funds except to the extent
required by law.
SECTION 7.6. Repayment to the Issuers.
Anything in this Article VII to the contrary notwithstanding,
the Trustee or the Paying Agent, as applicable, shall deliver or
pay to the Company from time to time upon the request of the
Issuers any Cash or U.S. Government Obligations held by it as
provided in Section 7.4 hereof which in the opinion of a nationally
recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee (which may
be the opinion delivered under Section 7.4(a) hereof), are in
excess of the amount thereof that would then be required to be
deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
Any Cash and U.S. Government Obligations (including the
proceeds thereof) deposited with the Trustee or any Paying Agent,
or then held by the Company, in trust for the payment of the
principal of, premium, if any, or interest on any Security and
remaining unclaimed for two years after such principal, and premium,
if any, or interest has become due and payable shall, subject
to the requirements of applicable law, be paid to the Company on
its request; and the Holder of such Security shall thereafter look
only to the Company for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money shall
thereupon cease; provided, however, that the Trustee or such Paying
Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in the New York
Times and The Wall Street Journal (national edition), notice that
such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money
then remaining will be repaid to the Company.
SECTION 7.7. Reinstatement.
If the Trustee or Paying Agent is unable to apply any Cash or
U.S. Government Obligations in accordance with Section 7.2 or 7.3,
as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Issuers' obligations under
this Indenture and the Securities shall be revived and reinstated
as though no deposit had occurred pursuant to Section 7.2 or 7.3
until such time as the Trustee or Paying Agent is permitted to
apply such money in accordance with Section 7.2 and 7.3, as the
case may be; provided, however, that, if the Issuers make any
payment of principal of, premium or interest on any Security
following the reinstatement of its obligations, the Company shall
be subrogated to the rights of the Holders of such Securities to
receive such payment from the Cash and U.S. Government Obligations
held by the Trustee or Paying Agent.
ARTICLE VIII
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 8.1. Supplemental Indentures Without Consent of
Holders.
Without the consent of any Holder, the Issuers, when autho
rized by Board Resolutions, and the Trustee, at any time and from
time to time, may enter into one or more indentures supplemental
hereto or amendments to the Security and Control Agreement, in form
satisfactory to the Trustee, for any of the following purposes:
(a) to cure any ambiguity, defect, or inconsistency, or make
any other provisions with respect to matters or questions arising
under this Indenture or the Security and Control Agreement which
shall not be inconsistent with the provisions of either this Indenture
or the Security and Control Agreement, provided such action
pursuant to this clause shall not adversely affect the interests of
the Holders;
(b) to add to the covenants of the Issuers for the benefit of
the Holders, to provide additional collateral or to surrender any
right or power herein conferred upon the Issuers;
(c) to comply with the TIA; or
(d) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee with respect to the Securities.
SECTION 8.2. Amendments, Supplemental Indentures and Waivers
with Consent of Holders.
Subject to Section 5.8, with the consent of the Holders of not
less than a majority in aggregate principal amount of then
outstanding Securities, by written act of said Holders delivered to
the Issuers and the Trustee, the Issuers, when authorized by Board
Resolutions, and the Trustee may amend or supplement this Indenture
or the Securities or enter into an indenture or indentures supplemental
hereto for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this
Indenture or the Securities or of modifying in any manner the
rights of the Holders under this Indenture or the Securities.
Subject to Section 5.8, the Holder or Holders of not less than a
majority in aggregate principal amount of then outstanding
Securities may waive compliance by the Issuers with any provision
of this Indenture or the Securities. Notwithstanding any of the
above, however, no such amendment, supplemental indenture or waiver
shall without the consent of the Holders of not less than 66 % of
the aggregate principal amount of Securities at the time outstanding
alter the Security and Control Agreement or, subject to
(c) below, the provisions (including the defined terms used
therein) of Section 9.1 in a manner adverse to the Holders; and no
such amendment, supplemental indenture or waiver shall, without the
consent of the Holder of each outstanding Security affected
thereby:
(a) reduce the percentage of principal amount of Securities
whose Holders must consent to an amendment, supplement or waiver of
any provision of this Indenture or the Securities;
(b) reduce the rate or extend the time for payment of interest on
(other than a rescission of acceleration of the Notes by the
Holders of at least a majority in aggregate principal amount of
such Notes and a waiver of the payment default arising from such
acceleration) any Security;
(c) reduce the principal or premium amount of any Security,
or reduce the Change of Control Purchase Price after the corresponding
Change of Control has occurred, or the Redemption Price;
(d) change the Stated Maturity;
(e) alter the redemption provisions of Article III in a
manner adverse to any Holder;
(f) make any changes in the provisions concerning waivers of
Defaults or Events of Default by Holders of the Securities or the
rights of Holders to recover the principal or premium of, interest
on, or redemption payments with respect to, any Security, including
without limitation any changes in Section 5.8, 5.12 or this third
sentence of this Section 8.2, except to increase any required
percentage or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of the
Holder of each outstanding Security affected thereby;
(g) make the principal of, or the interest or premium on any
Security payable with anything or in any manner other than as
provided for in this Indenture (including changing the place of
payment where, or the coin or currency in which, any Security or
any premium or the interest thereon is payable) and the Securities
as in effect on the date hereof; or
(h) cause the Securities to become subordinate in right of
payment of other Indebtedness.
It shall not be necessary for the consent of the Holders under
this Section 8.2 to approve the particular form of any proposed
amendment, supplement or waiver, but it shall be sufficient if such
consent approves the substance thereof.
After an amendment, supplement or waiver under this Section
becomes effective, the Issuers shall mail to the Holders affected
thereby a notice briefly describing the amendment, supplement or
waiver. Any failure of the Issuers to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the
validity of any such supplemental indenture or waiver.
After an amendment, supplement or waiver under this Section
8.2 or Section 8.4 becomes effective, it shall bind each Holder.
In connection with any amendment, supplement or waiver under
this Article VIII, the Issuers may, but shall not be obligated to,
offer to any Holder who consents to such amendment, supplement or
waiver, or to all Holders, consideration for such Holder's consent
to such amendment, supplement or waiver; provided that the Issuers
shall not, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any
Holder of Securities for or as an inducement to any consent, waiver
or amendment of any terms or provisions of the Security unless such
consideration is offered to be paid or agreed to be paid to all
Holders of Securities which so consent, waive or agree to amend in
the time frame set forth in the solicitation documents relating to
such consent, waiver or agreement.
SECTION 8.3. Compliance with TIA.
Every amendment, waiver or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
SECTION 8.4. Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and
every subsequent Holder of a Security or portion of a Security that
evidences the same debt as the consenting Holder's Security, even
if notation of the consent is not made on any Security. However,
any such Holder or subsequent Holder may revoke the consent as to
his Security or portion of his Security by written notice to the
Issuers or the Person designated by the Issuers as the Person to
whom consents should be sent if such revocation is received by the
Issuers or such Person before the date on which the Trustee
receives an Officers' Certificate certifying that the Holders of
the requisite principal amount of Securities have consented (and
not theretofore revoked such consent) to the amendment, supplement
or waiver.
The Issuers may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent
to any amendment, supplement or waiver, which record date shall be
the date so fixed by the Company notwithstanding the provisions of
the TIA. If a record date is fixed, then notwithstanding the last
sentence of the immediately preceding paragraph, those Persons who
were Holders at such record date, and only those Persons (or their
duly designated proxies), shall be entitled to revoke any consent
previously given, whether or not such Persons continue to be Holders
after such record date. No such consent shall be valid or
effective for more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it
shall bind every Securityholder, unless it makes a change described
in any of clauses (a) through (h) of Section 8.2, in which case,
the amendment, supplement or waiver shall bind only each Holder of
a Security who has consented to it and every subsequent Holder of
a Security or portion of a Security that evidences the same debt as
the consenting Holder's Security; provided, that any such waiver
shall not impair or affect the right of any other Holder to receive
payment of principal and premium of and interest on a Security, on
or after the respective dates set for such amounts to become due
and payable expressed in such Security, or to bring suit for the
enforcement of any such payment on or after such respective dates.
SECTION 8.5. Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee may require the Holder of the Security to
deliver it to the Trustee or require the Holder to put an appropriate
notation on the Security. The Trustee may place an appropriate
notation on the Security about the changed terms and return it to
the Holder. Alternatively, if the Issuers or the Trustee so
determine, the Issuers in exchange for the Security shall issue and
the Trustee shall authenticate a new Security that reflects the
changed terms. Any failure to make the appropriate notation or to
issue a new Security shall not affect the validity of such amendment,
supplement or waiver.
SECTION 8.6. Trustee to Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article VIII; provided, that the
Trustee may, but shall not be obligated to, execute any such
amendment, supplement or waiver which affects the Trustee's own
rights, duties or immunities under this Indenture. The Trustee
shall be entitled to receive, and shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of
any amendment, supplement or waiver authorized pursuant to this
Article VIII is authorized or permitted by this Indenture.
ARTICLE IX
RIGHT TO REQUIRE REPURCHASE
SECTION 9.1. Repurchase of Securities at Option of the Holder
Upon a Change of Control.
(a) In the event that a Change of Control occurs, each Holder
shall have the right, at such Holder's option, pursuant to an
irrevocable and unconditional offer by the Company or Finance (the
"Change of Control Offer") subject to the terms and conditions of
this Indenture, to require the Issuers to repurchase all or any
part of such Holder's Securities (provided, however, that the
principal amount of such Securities at maturity must be $1,000 or
an integral multiple thereof) on a date selected by the Issuers
that is no later than 35 Business Days after the occurrence of such
Change of Control (the "Change of Control Purchase Date"), at a
cash price (the "Change of Control Purchase Price") equal to 101%
of the principal amount thereof plus (subject to the right of Holders
of record on a Record Date to receive interest due on an Interest Payment
Date that is on or prior to such repurchase date and subject to clause
(b)(4) below) accrued and unpaid interest to the Change of Control Purchase
Date.
(b) In the event of a Change of Control, the Company or Finance
shall be required to commence an offer to purchase Securities (a "Change of
Control Offer") as follows:
(i) the Change of Control Offer shall commence within 10
Business Days following the occurrence of the Change of Control;
(ii) the Change of Control Offer shall remain open for
not less than 20 Business Days following its commencement (the
"Change of Control Offer Period");
(iii) upon the expiration of the Change of Control Offer
Period, the Issuers shall purchase all of the properly tendered
Securities at the Change of Control Purchase Price, plus accrued
and unpaid interest thereon;
(iv) if the Change of Control Purchase Date is on or
after a Record Date and on or before the related interest payment
date, any accrued interest will be paid to the Person in whose name
a Security is registered at the close of business on such Record
Date, and no additional interest will be payable to Security holders
who tender Securities pursuant to the Change of Control Offer;
(v) the Issuers shall provide the Trustee and the Paying
Agent with written notice of the Change of Control Offer at least
three Business Days before the commencement of any Change of
Control Offer; and
(vi) on or before the commencement of any Change of
Control Offer, the Company, Finance or the Registrar (upon the
request and at the expense of the Issuers) shall send, by firstclass mail,
a notice to each of the Securityholders, which (to the extent consistent with
this Indenture) shall govern the terms of the Change of Control Offer and
shall state:
(1) that the Change of Control Offer is being made
pursuant to such notice and this Section 9.1 and that all Securities, or
portions thereof, tendered will be accepted for payment;
(2) the Change of Control Purchase Price (including
the amount of accrued and unpaid interest, subject to clause (b)(4)
above) and the Change of Control Purchase Date;
(3) that any Security, or portion thereof, not
tendered or accepted for payment will continue to accrue interest;
(4) that, unless the Company defaults in depositing
Cash with the Paying Agent in accordance with the last paragraph of
this Article IX or such payment is prevented, any Security, or portion
thereof, accepted for payment pursuant to the Change of Control Offer shall
cease to accrue interest after the Change of Control Purchase Date;
(5) that Holders electing to have a Security, or
portion thereof, purchased pursuant to a Change of Control Offer
will be required to surrender the Security, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Security
completed, to the Paying Agent (which may not for purposes of this
Section 9.1, notwithstanding anything in this Indenture to the
contrary, be either of the Issuers or any Affiliate of the Issuers)
at the address specified in the notice prior to the expiration of
the Change of Control Offer;
(6) that Holders will be entitled to withdraw their
election, in whole or in part, if the Paying Agent (which may not
for purposes of this Section 9.1, notwithstanding anything in this
Indenture to the contrary, be either of the Issuers or any Affiliate of
the Issuers) receives, up to the close of business on the Change of Control
Purchase Date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Securities the
Holder is withdrawing and a statement that such Holder is withdrawing his
election to have such principal amount of Securities purchased; and
(7) a brief description of the events resulting in
such Change of Control.
The Issuers agree that any such Change of Control Offer shall
be made in compliance with all applicable federal and state laws,
rules and regulations, including, if applicable, Regulation 14E
under the Exchange Act and the rules thereunder and all other
applicable federal and state securities laws, and any provisions of
this Indenture which conflict with such laws shall be deemed to be
superseded by the provisions of such laws.
On or before the Change of Control Purchase Date, the Issuers
shall (a) accept for payment Securities or portions thereof
properly tendered pursuant to the Change of Control Offer, (b)
deposit with the Paying Agent Cash sufficient to pay the Change of
Control Purchase Price (together with accrued and unpaid interest)
of all Securities or portions thereof so tendered and (iii) deliver
to the Trustee Securities so accepted together with an Officers'
Certificate listing the Securities or portions thereof being purchased.
The Paying Agent promptly shall mail to Holders of Securities so accepted
payment in an amount equal to the Change of Control Purchase Price (together
with accrued and unpaid interest) for such Securities, and the Trustee or its
authenticating agent shall promptly authenticate and mail or deliver to such
Holders a new Security equal in principal amount to any unpurchased portion
of the Security surrendered; provided, however, that each such new
Security will be in a principal amount of $1,000 or an integral
multiple thereof. Any Securities not so accepted shall be promptly
mailed or delivered by the Issuers to the Holder thereof. The
Issuers shall publicly announce the results of the Change of Control Offer
on or as soon as practicable after the Change of Control Purchase Date.
ARTICLE X
SECURITY
SECTION 10.1. Security Interest.
(a) In order to secure the prompt and complete payment and
performance in full of the Issuers' obligations hereunder, the
Issuers, the Trustee and the Securities Intermediary, as applicable, have
entered into this Indenture and the Security and Control Agreement required
to be entered into on the Issue Date. Each Holder, by accepting a Security,
agrees to all of the terms and provisions of this Indenture and the Security
and Control Agreement, and the Trustee agrees to all of the terms and
provisions of this Indenture and the Security and Control Agreement, as this
Indenture and the Security and Control Agreement may be amended
from time to time pursuant to the provisions thereof and hereof.
(b) The Note Collateral as now or hereafter constituted shall
be held for the equal and ratable benefit of the Holders without
preference, priority or distinction of any thereof over any other
by reason of difference in time of issuance, sale or otherwise, as
the only security for the Issuers' obligations hereunder.
(c) The provisions of TIA 314(d), and provisions of TIA
314(c)(3) to the extent applicable by specific reference in this
Article X, are hereby incorporated by reference herein as if set
forth in their entirety.
SECTION 10.2. Recording; Opinions of Counsel.
(a) Each of the Issuers represents that it has caused to be
executed and delivered, filed and recorded and covenants that it
will promptly cause to be executed and delivered, file and
recorded, all instruments and documents, and has done and will do
or will cause to be done all such acts and other things, at the
Issuers' expense, as are necessary to effect and maintain valid and
perfected security interests in the Note Collateral. Each of the
Issuers shall, as promptly as practicable, cause to be executed and
delivered, filed and recorded all instruments and do all acts and
other things as may be required by law to perfect, maintain and
protect the security interests under the Security and Control
Agreement and herein.
(b) The Issuers shall furnish to the Trustee, concurrently
with the execution and delivery of this Indenture and the Security
and Control Agreement and promptly after the execution and delivery
of any amendment thereto or any other instrument of further
assurance, an Opinion(s) of Counsel stating that, in the opinion of
such counsel, subject to customary exclusions and exceptions
reasonably acceptable to the Trustee, either (i) this Indenture,
the Security and Control Agreement, any such amendment and all
other instruments of further assurance have been properly recorded,
registered and filed and all such other action has been taken to
the extent necessary to make effective valid security interests and
to perfect the first priority security interests intended to be
created by this Indenture and the Security and Control Agreement,
and reciting the details of such action, or (ii) no such action is
necessary to make effective and maintain in full force and effect
the validity and perfection of the security interests under the
Security and Control Agreement and hereunder.
(c) The Issuers shall furnish to the Trustee, on or prior to
November 1 of each year commencing in 1999, an Opinion(s) of
Counsel, dated as of such date, stating that, in the opinion of
such counsel, subject to customary exclusions and exceptions
reasonably acceptable to the Trustee, either (i) all such action
has been taken with respect to the recording, registering, filing,
rerecording and refiling of this Indenture, all supplemental
indentures, the Security and Control Agreement, financing state
ments, continuation statements and all other instruments of further
assurance as is necessary to maintain the validity and perfection
of first priority security interests under the Security and Control
Agreement and hereunder in full force and effect and reciting the
details of such action, and stating that all financing statements
and continuation statements have been executed and filed and such
other actions taken that are necessary fully to preserve and
protect the rights of the Holders and the Trustee hereunder and
under the Security and Control Agreement, or (ii) no such action is
necessary to maintain in full force and effect the validity and
perfection of the security interests under the Security and Control
Agreement and hereunder.
SECTION 10.3. Interest Reserve Account.
The Company shall establish and maintain with Securities
Intermediary pursuant to the terms of the Security and Control
Agreement an Interest Reserve Account which shall hold Investment
Grade Securities and Government Securities purchased with (a) a
portion of the net proceeds of the Offering in the amount of
approximately $11.875 million (representing an amount of funds
equal to the interest payments due on the Securities on the
following two Interest Payment Dates), (b) the first $15 million
from the Mohegan Note Transfer Proceeds and (c) all Required IRA
True-Up Payments. The Company shall grant a valid, perfected and
exclusive security interest in favor of the Trustee for the equal
and ratable benefit of the Holders in the Interest Reserve Account
without preference, priority, or distinction of any thereof over
any other thereof by reason of difference in time of issuance, sale
or otherwise, as security for the prompt and complete performance
and payment in full of the Issuers' obligations hereunder. The
funds from time to time on deposit in the Interest Reserve Account
may be disbursed from such account only for the purposes and in the
manner provided for in the Security and Control Agreement.
SECTION 10.4. Certain Releases of Note Collateral.
Subject to applicable law, the release of any Note Collateral
from Liens created by the Security and Control Agreement or the
release of, in whole or in part, the Liens created by the Security
and Control Agreement, will not be deemed to impair the Security
and Control Agreement in contravention of the provisions of this
Indenture if and to the extent the Note Collateral or Liens are
released pursuant to, and in accordance with, the Security and
Control Agreement or pursuant to, and in accordance with, the terms
hereof. To the extent applicable, without limitation, the Issuers
and each other obligor, if any, on the Securities shall cause TIA
314(d), relating to the release of property or securities from
the Liens of the Security and Control Agreement, to be complied
with. Any certificate or opinion required by TIA 314(d) may be
made by two Officers, except in cases in which TIA 314(d)
requires that such certificate or opinion be made by an independent
person.
SECTION 10.5. Payment of Expenses.
On demand of the Trustee, the Issuers forthwith shall pay or
satisfactorily provide for all reasonable expenditures incurred by
the Trustee under this Article X, including the reasonable fees and
expenses of counsel and all such sums shall be a Lien upon the Note
Collateral and shall be secured thereby and permitted hereby.
SECTION 10.6. Suits to Protect the Note Collateral.
Subject to Section 10.1 of this Indenture and to the provisions
of the Security and Control Agreement, the Trustee shall have
power to institute and to maintain such suits and proceedings as it
may deem expedient to prevent any impairment of the Note Collateral
by any acts which may be unlawful or in violation of the Security
and Control Agreement or this Indenture, including the power to
institute and maintain suits or proceedings to restrain the
enforcement of or compliance with any legislative or other
governmental enactment, rule or order that may be unconstitutional
or otherwise invalid or if the enforcement of, or compliance with,
such enactment, rule or order would impair the security interests
in contravention of this Indenture or be prejudicial to the
interests of the Holders or of the Trustee. The Trustee shall give
notice to the Issuers promptly following the institution of any
such suit or proceeding.
SECTION 10.7. Trustee's Duties.
The powers and duties conferred upon the Trustee by this
Article X are solely to protect the security interests and shall
not impose any duty upon the Trustee to exercise any such powers
and duties, except as expressly provided in this Indenture or the
TIA. The Trustee shall be under no duty to the Issuers or any
Holder whatsoever to make or give any presentment, demand for
performance, notice of nonperformance, protest, notice of protest,
notice of dishonor, or other notice or demand in connection with
any Note Collateral, or to take any steps necessary to preserve any
rights against prior parties except as expressly provided in this
Indenture. The Trustee shall not be liable to the Issuers or any
Holder for failure to collect or realize upon any or all of the
Note Collateral, or for any delay in so doing, nor shall the
Trustee be under any duty to the Issuers or any Holder to take
action whatsoever with regard thereto. The Trustee shall have no
duty to the Issuers or any Holder to comply with any recording,
filing, or other legal requirements necessary to establish or
maintain the validity, priority or enforceability of the security
interests in, or the Trustee's rights in or to, any of the Note
Collateral.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. TIA Controls.
If any provision of this Indenture limits, qualifies, or
conflicts with the duties imposed by operation of the TIA, the
imposed duties, upon qualification of this Indenture under the TIA,
shall control.
SECTION 11.2. Notices.
Any notices or other communications to the Issuers, Paying
Agent, Registrar, Securities Custodian, transfer agent or the
Trustee required or permitted hereunder shall be in writing, and
shall be sufficiently given if made by hand delivery, by telex, by
telecopier or registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
if to the Issuers:
Waterford Gaming, L.L.C.
Waterford Gaming Finance Corp.
914 Hartford Turnpike
P.O. Box 715
Waterford, CT 06385
Attention: Len Wolman
Telephone: (860) 442-4559
Telecopy: (860) 437-7752
if to the Trustee:
State Street Bank and Trust Company
Goodwin Square
225 Asylum St.
Hartford, CT 06103
Attention: Corporate Trust Adminis-
tration
(Waterford Gaming, L.L.C./
Waterford Gaming Finance Corp.
9 1/2% Senior Notes due 2010)
Telephone: (860) 244-1842
Telecopy: (860) 244-1889
Any party by notice to each other party may designate
additional or different addresses as shall be furnished in writing
by such party. Any notice or communication to any party shall be
deemed to have been given or made as of the date so delivered, if
personally delivered; when answered back, if telexed; when receipt
is acknowledged, if telecopied; and five Business Days after mailing
if sent by registered or certified mail, postage prepaid
(except that a notice of change of address shall not be deemed to
have been given until actually received by the addressee).
Any notice or communication mailed to a Securityholder shall
be mailed to him or her by first-class mail or other equivalent
means at his or her address as it appears on the registration books
of the Registrar and shall be sufficiently given to him or her if
so mailed within the time prescribed. Any notice or communication
shall also be so mailed to any Person described in TIA 313(c), to
the extent required by the TIA.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect
to other Securityholders. If a notice or communication is mailed
in the manner provided above, it is duly given, whether or not the
addressee receives it.
If the Issuers mail a notice or communication to Security
holders, they shall mail a copy to the Trustee and each Agent at the same
time.
SECTION 11.3. Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA 312(b) with
other Securityholders with respect to their rights under this
Indenture or the Securities. The Issuers, the Trustee, the
Registrar and any other Person shall have the protection of TIA
312(c).
SECTION 11.4. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by either or both of the
Issuers to the Trustee to take any action under this Indenture,
such Person shall furnish to the Trustee:
(a) an Officers' Certificate (in form and substance reasonably
satisfactory to the Trustee) stating that, in the opinion of
the signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been met; and
(b) an Opinion of Counsel (in form and substance reasonably
satisfactory to the Trustee) stating that, in the opinion of such
counsel, all such conditions precedent have been met;
provided, however, that in the case of any such request or
application as to which the furnishing of particular documents is
specifically required by any provision of this Indenture, no
additional certificate or opinion need be furnished under this
Section 11.4.
SECTION 11.5. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he has
made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such
covenant or condition has been met; and
(d) a statement as to whether or not, in the opinion of each
such Person, such condition or covenant has been met; provided,
however, that with respect to matters of fact an Opinion of Counsel
may rely on an Officers' Certificate or certificates of public
officials.
SECTION 11.6. Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by or at a
meeting of Securityholders. The Paying Agent or Registrar may make
reasonable rules for its functions.
SECTION 11.7. Non-Business Days.
If a payment date is not a Business Day at such place, payment
may be made at such place on the next succeeding day that is a
Business Day, and no interest shall accrue for the intervening
period.
SECTION 11.8. Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS
APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW
YORK INCLUDING WITHOUT LIMITATION SECTIONS 5-1401 AND 5-1402 OF THE
NEW YORK GENERAL OBLIGATIONS LAW AND NEW YORK CIVIL PRACTICE LAWS
AND RULES 327(b). EACH OF THE ISSUERS HEREBY IRREVOCABLY SUBMITS
TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH
OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT
SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN
RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS INDENTURE AND THE SECURITIES, AND IRREVOCABLY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. EACH OF THE
ISSUERS IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY
DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION
WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND
ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY SECURITYHOLDER
TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE ISSUERS IN
ANY OTHER JURISDICTION.
SECTION 11.9. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Issuers. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
SECTION 11.10. No Recourse against Others.
No direct or indirect stockholder, member, employee, officer,
manager or director, as such, past, present or future of the
Issuers or any successor entity, shall have any personal liability
in respect of the obligations of the Issuers under the Securities,
this Indenture or the Security and Control Agreement by reason of
his, her or its status as such stockholder, member, employee,
officer, manager or director. Each Securityholder by accepting a
Security waives and releases all such liability. Such waiver and
release are part of the consideration for the issuance of the Securities.
SECTION 11.11. Successors.
All agreements of the Issuers in this Indenture and the
Securities shall bind their respective successors. All agreements
of the Trustee in this Indenture shall bind its successor.
SECTION 11.12. Duplicate Originals.
All parties may sign any number of copies or counterparts of
this Indenture. Each signed copy or counterpart shall be an
original, but all of them together shall represent the same
agreement.
SECTION 11.13. Severability.
In case any one or more of the provisions in this Indenture or
in the Securities shall be held invalid, illegal or unenforceable,
in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of
the remaining provisions shall not in any way be affected or impaired
thereby, it being intended that all of the provisions hereof
shall be enforceable to the full extent permitted by law.
SECTION 11.14. Table of Contents, Headings, Etc.
The Table of Contents and headings of the Articles and the
Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof and shall in
no way modify or restrict any of the terms or provisions hereof.
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the date first written above.
WATERFORD GAMING, L..L.C.
By:
Name:
Title:
WATERFORD GAMING FINANCE CORP.
By:
Name:
Title:
STATE STREET BANK AND TRUST COMPANY, as
Trustee, Registrar, Paying Agent and
Securities Custodian
By:
Name:
Title:
Exhibit A
WATERFORD GAMING, L.L.C.
WATERFORD GAMING FINANCE CORP.
9 1/2% SENIOR NOTE DUE 2010
CUSIP: 941388 AD2
No.
$_________
_________
Waterford Gaming, L.L.C., a Delaware limited liability
company (the "Company"), and Waterford Gaming Finance Corp., a
Delaware corporation ("Finance" and together with the Company, the
"Issuers"), for value received, hereby promise to pay to
________________, or registered assigns, the principal sum of
_______________ Dollars, on March 15, 2010.
Interest Payment Dates: March 15 and September 15, commencing
September 15, 1999.
Record Dates: March 1 and September 1.
Reference is made to the further provisions of this Security on
the reverse side, which will, for all purposes, have the same effect as if
set forth at this place.
IN WITNESS WHEREOF, the Issuers have caused this Instrument to be
duly executed.
Dated: March __, 1999
WATERFORD GAMING, L.L.C.
By:
Name:
Title:
Attest:
Name:
Title:
WATERFORD GAMING FINANCE CORP.
By:
Name:
Title:
Attest:
Name:
Title:
FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities described in the withinmentioned
Indenture.
STATE STREET BANK AND TRUST COMPANY
as Trustee and
Authenticating Agent
By:
Authorized Signatory
WATERFORD GAMING, L.L.C.
WATERFORD GAMING FINANCE CORP.
9 1/2% Senior Note due 2010
Unless and until it is exchanged in whole or in part for
Securities in definitive form, this Security may not be transferred
except as a whole by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee
to a successor Depositary or a nominee of such successor Depositary.
Unless this certificate is presented by an authorized representative
of The Depository Trust Company (55 Water Street, New York, New
York) ("DTC") to the Issuers or their agent for registration of
transfer, exchange or payment and any certificate issued is registered
in the name of Cede & Co. or such other name as requested by
an authorized representative of DTC (and any payment is made to Cede
& Co. or such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND, ACCORD
INGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR
TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS
SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) WHICH, IN THE
CASE OF A DEALER, OWNS AND INVESTS ON A DISCRETIONARY BASIS AT
LEAST $25.0 MILLION OF SECURITIES OF ISSUERS THAT ARE NOT
AFFILIATED WITH THE DEALER, (2) AGREES THAT IT WILL NOT WITHIN
TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL
OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY,
FINANCE OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES
TO A QUALIFIED INSTITUTIONAL BUYER WHICH, IN THE CASE OF A
DEALER, OWNS AND INVESTS ON A DISCRETIONARY BASIS AT LEAST
$25.0 MILLION OF SECURITIES OF ISSUERS THAT ARE NOT AFFILIATED
WITH THE DEALER, IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITU
TIONAL ACCREDITED INVESTOR (AS DEFINED IN RULE 501(a)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT) WHICH, IN THE CASE OF A
DEALER, OWNS AND INVESTS ON A DISCRETIONARY BASIS, AT LEAST
$25.0 MILLION OF SECURITIES THAT ARE NOT AFFILIATED WITH THE
DEALER AND IN THE CASE OF ALL OTHER INSTITUTIONAL ACCREDITED
INVESTORS, AT LEAST $5.0 MILLION, THAT, PRIOR TO SUCH TRANSFER,
FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-
DEALER) TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON
TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM THE TRUSTEE FOR THIS SECURITY), (D) PURSUANT TO
THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE), OR (E) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES
THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY
WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY,
IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED
INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO
THE TRUSTEE, THE COMPANY AND FINANCE SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS ANY OF THEM MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT
TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
THIS SECURITY WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT UNDER
SECTION 1273 OF THE INTERNAL REVENUE CODE. YOU MAY CONTACT
ALAN ANGEL, THE CHIEF FINANCIAL OFFICER OF THE COMPANY AT 914
HARTFORD TURNPIKE, WATERFORD, CONNECTICUT 06385, TELEPHONE
NUMBER (860) 442-4559, WHO WILL PROVIDE YOU WITH ANY REQUIRED
INFORMATION REGARDING THE ORIGINAL ISSUE DISCOUNT.
1. Interest.
Waterford Gaming, L.L.C., a Delaware limited liability company
(the "Company"), and Waterford Gaming Finance Corp., a Delaware
corporation ("Finance" and together with the Company, the "Issuers"),
promise to pay interest on the principal amount of this
Security at the rate of 9 1/2% per annum from March 17, 1999 until
maturity. To the extent it is lawful, the Issuers promise to pay
interest on any interest payment due but unpaid on such principal
amount at a rate of 9 1/2% per annum compounded semi-annually.
The Issuers will pay interest semi-annually on March 15 and
September 15 of each year or, if any such day is not a Business Day,
on the next succeeding Business Day (each, an "Interest Payment
Date"), commencing September 15, 1999. Interest on the Securities
will accrue from the most recent date to which interest has been
paid or, if no interest has been paid on the Securities, from the
date of issuance. Interest will be computed on the basis of a 360-day
year consisting of twelve 30-day months.
2. Method of Payment.
The Issuers shall pay interest on the Securities (except
defaulted interest) to the Persons who are the registered Holders
at the close of business on the March 1 or September 1 immediately
preceding the Interest Payment Date. Holders must surrender Securities
to a Paying Agent to collect principal payments. Except as
provided below, the Issuers shall pay principal and interest in such
coin or currency of the United States of America as at the time of
payment shall be legal tender for payment of public and private
debts ("Cash"). The Securities will be payable as to principal,
premium and interest, and the Securities may be presented for registration
of transfer or exchange, at the office or agency of the Issuers maintained
for such purpose within the Borough of Manhattan, the City and State of New
York or, at the option of the Issuers, payment of interest may be made by
check mailed to the Holders at their addresses set forth in the register of
Holders, and provided that payment by wire transfer of immediately available
funds will be required with respect to principal, premium and interest on all
Global Securities and all other Securities the Holders of which
shall have provided wire transfer instructions to an account within
the United States to the Issuers or the Paying Agent. Until otherwise
designated by the Issuers, the Issuers' office or agency will
be the corporate trust office of the Trustee presently located at
the Trustee's agency at Goodwin Square, 225 Asylum Street,
Hartford, Connecticut 06103, Attention: Corporate Trust Operations,
and the Issuer's office or agency in The Borough of Manhattan and
City and State of New York will be State Street Bank and Trust
Company N.A., 61 Broadway, New York, New York 10006, Attention:
Corporate Trust (Waterford Gaming, L.L.C./Waterford Gaming Finance
Corp. 9 1/2% Senior Notes due 2010).
3. Paying Agent and Registrar.
Initially, State Street Bank and Trust Company (the "Trustee,"
which term includes any successor Trustee under the Indenture) will
act as Paying Agent and Registrar. The Issuers may change any
Paying Agent, Registrar or co-Registrar without notice to the
Holders. The Issuers may, subject to certain exceptions, act as
Paying Agent, Registrar or co-Registrar.
4. Indenture.
The Issuers issued the Securities under an Indenture, dated as
of March 17, 1999 (the "Indenture"), among the Issuers and the
Trustee. Capitalized terms herein are used as defined in the Indenture
unless otherwise defined herein. The terms of the Securities
include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act, as in effect on
the date of the Indenture. The Securities are subject to all such
terms, and Holders of Securities are referred to the Indenture and
said Act for a statement of them. The Securities are senior
secured, joint and several general obligations of the Issuers limited
in aggregate principal amount to $125,000,000.
5. Mandatory Redemption with Excess Cash Flow or Upon Exercise of
Buy/Sell Option.
The Issuers will be required to make a mandatory redemption
on each March 15 and September 15, commencing September 15, 1999, of
Securities in the largest principal amount that is an
integral multiple of $1,000, that may be redeemed using 100% of
Company Excess Cash as of the preceding February 1 and August 1,
respectively, less all Required IRA True-Up Payments and less any
amount set aside for the payment of accrued and unpaid interest on
the Interest Payment Date which corresponds to the Redemption Date
for which the determination is being made, at the following
redemption prices (expressed as percentage of principal amount) if
redeemed during the 12-month period commencing March 15 of the
years indicated below, in each case (subject to the right of Holders
of record on a Record Date to receive interest due on an Interest
Payment Date that is on or prior to such Redemption Date) together
with accrued and unpaid interest thereon to the Redemption Date:
Year Percentage
1999. . . . . . . . . . . . . . . . . . . . . . . 109.500%
2000. . . . . . . . . . . . . . . . . . . . . . . 108.636
2001. . . . . . . . . . . . . . . . . . . . . . . 107.773
2002. . . . . . . . . . . . . . . . . . . . . . . 106.909
2003. . . . . . . . . . . . . . . . . . . . . . . 106.045
2004. . . . . . . . . . . . . . . . . . . . . . . 105.182
2005. . . . . . . . . . . . . . . . . . . . . . . 104.318
2006. . . . . . . . . . . . . . . . . . . . . . . 103.455
2007. . . . . . . . . . . . . . . . . . . . . . . 102.591
2008. . . . . . . . . . . . . . . . . . . . . . . 101.727
2009. . . . . . . . . . . . . . . . . . . . . . . 100.864
2010. . . . . . . . . . . . . . . . . . . . . . . 100.000%
In the event that either the Company or Sun International shall
deliver an election to either buy or sell the other party's interest
in the Manager pursuant to a Buy Out Notice or be deemed to have
delivered an election to sell such interest and such election to buy
or sell is consummated, the Issuers will be required to make a
mandatory redemption of all the Securities then outstanding, at the
Redemption Prices described above (subject to the right of Holders
of record on a Record Date to receive interest due on an Interest
Payment Date that is on or prior to such Redemption Date) together
with accrued and unpaid interest thereon to the Redemption Date.
Such redemption shall be made on a date no more than 35 days after
the date of the Closing (as such term is defined in the Partnership
Agreement) under the option. Notwithstanding the foregoing, neither
a purchase by the Company of Sun Cove's partnership interest in the
Manager which is fully funded with a Group Flow-Through Payment,
nor, if the option to buy such interest is transferred to Waterford
Group, a purchase by Waterford Group or an Affiliate of Waterford
Group, shall trigger a mandatory redemption.
6. Optional Redemption.
Except as provided above in Paragraph 5 and below in Paragraph
7, the Issuers will not have the right to redeem any Securities
prior to March 15, 2004. The Securities will be redeemable for cash
at the option of the Issuers, in whole or in part, at any time on
or after March 15, 2004, with all or a portion of Company Excess
Cash, less Required IRA True-Up Payments as of the date notice is
given at the following redemption prices (expressed as percentages
of the principal amount) if redeemed during the 12-month period
commencing March 15 of the years indicated below, in each case
(subject to the right of Holders of record on a Record Date to
receive interest due on an Interest Payment Date that is on or prior
to such Optional Redemption Date) together with accrued and unpaid
interest thereon to the Optional Redemption Date:
Year Percentage
2004. . . . . . . . . . . . . . . . . . . . . . . 105.182%
2005. . . . . . . . . . . . . . . . . . . . . . . 104.318
2006. . . . . . . . . . . . . . . . . . . . . . . 103.455
2007. . . . . . . . . . . . . . . . . . . . . . . 102.591
2008. . . . . . . . . . . . . . . . . . . . . . . 101.727
2008. . . . . . . . . . . . . . . . . . . . . . . 100.864
2009. . . . . . . . . . . . . . . . . . . . . . . 100.000%
7. Regulatory Redemption.
Notwithstanding any other provisions of the Indenture, if any
Gaming Regulatory Authority requires that a Holder or beneficial
owner of the Securities must be licensed, qualified or found
suitable under any applicable gaming laws in order to maintain any
gaming license or franchise related to the Mohegan Sun under any
applicable gaming laws, and the Holder or beneficial owner fails to
apply for a license, qualification or finding of suitability within
30 days after being requested to do so by such Gaming Regulatory
Authority (or such lesser period that may be required by such Gaming
Regulatory Authority) or if such Holder or beneficial owner is not
so licensed, qualified or found suitable, the Company shall have the
right, at its option:
(a) to require such Holder or beneficial owner to dispose of
such Holder's or beneficial owner's Securities within 30 days of
receipt of such finding by the applicable Gaming Regulatory
Authority (or such earlier date as may be required by the applicable
Gaming Regulatory Authority); or
(b) to call for redemption of the Securities of such Holder
or beneficial owner (a "Required Redemption") at a redemption price
equal to (i) the lesser of the principal amount thereof or, if
required by such Gaming Authority, the price at which such Holder
or beneficial owner acquired the Securities, if less than the
principal amount thereof, together with, in either case, accrued and
unpaid interest to the earlier of the date of redemption or the date
of the finding of unsuitability by such Gaming Regulatory Authority,
which may be less than 30 days following the notice of redemption
if so ordered by such Gaming Regulatory Authority or (ii) such other
amount as may be determined by such Gaming Regulatory Authority.
In connection with any Required Redemption, and except as may
be required by a Gaming Regulatory Authority, the Company shall
comply with the procedures contained in the Indenture for redemptions
of the Securities. The Company is not required to pay or
reimburse any Holder of the Securities or beneficial owner of
Securities who is required to apply for any such license, qualification
or finding of suitability for the costs of the licensure or
investigation for such qualification or finding of suitability.
Such expenses will, therefore, be the obligation of such Holder or
beneficial owner.
8. Procedures for Redemption.
In the case of a partial redemption, the Trustee shall select
the Securities or portions thereof for redemption on a pro rata
basis, by lot or in such other manner it deems appropriate and fair;
provided, however, that mandatory and optional redemptions from
Company Excess will be done as nearly as practicable on a pro rata
basis. The Securities may be redeemed in part in multiples of
$1,000 only.
Except in the case of any Required Redemption, as otherwise
required by any applicable Gaming Regulatory Authority, notice of
any redemption will be sent by first class mail, at least 30 days
and not more than 60 days prior to the date fixed for redemption to
the Holder of each Security to be redeemed at such Holder's last address
as then shown upon the registry books of the Registrar.
Any notice which relates to a Security to be redeemed in part
only must state the portion of the principal amount equal to the
unredeemed portion thereof and must state that on and after the date
of redemption, upon surrender of such Security, a new Security or
Securities in a principal amount equal to the unredeemed portion
thereof will be issued. On and after the date of redemption,
interest will cease to accrue on the Securities or portions thereof
called for redemption, unless the Issuers default in the payment
thereof.
9. Denominations; Transfer; Exchange.
The Securities are in fully registered form, without coupons,
in denominations of $1,000 and integral multiples of $1,000. A
Holder may register the transfer of Securities in accordance with
the Indenture. No service charge will be made for any registration
of transfer or exchange of the Securities, but the Issuers may require
a Holder, among other things, to furnish appropriate endorsements
and transfer documents and to pay any taxes or other governmental
charge payable in connection therewith. The Registrar need
not register the transfer of or exchange any Securities selected for
redemption.
Any purported transfer in violation of the transfer restrictions
set forth herein and in the Indenture which shall require
either of the Issuers to be required to register as an "investment
company" (as the term is defined in the Investment Company Act of
1940, as amended) shall be void ab initio.
10. Persons Deemed Owners.
The registered Holder of a Security may be treated as the owner
of it for all purposes.
11. Unclaimed Money.
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee and the Paying Agent(s) will
pay the money back to the Issuers at their written request. After
that, all liability of the Trustee and any such Paying Agent(s) with
respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity.
Except as set forth in the Indenture, if the Issuers irrevocably
deposit with the Trustee, in trust, for the benefit of the
Holders, Cash, U.S. Government Obligations or a combination thereof,
in such amounts as will be sufficient in the opinion of a nationally
recognized firm of independent public accountants, to pay the principal of,
premium, and interest on the Securities to redemption or maturity and comply
with the other provisions of the Indenture relating thereto, the Issuers will
be discharged from certain provisions of the Indenture and the Securities
(including the restrictive covenants described in Paragraph 14 below, but
excluding their obligation to pay the principal of and interest on the
Securities).
13. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities
may be amended or supplemented with the written consent of the
Holders of a majority in aggregate principal amount of the Securities then
outstanding, and any existing Default or Event of Default or compliance with
any provision may be waived with the consent of the Holders of a majority in
aggregate principal amount of the Securities then outstanding; provided, that
no such amendment, supplemental indenture or waiver shall without the consent
of the Holders of not less than 66 % of the aggregate principal amount of
Securities at the time outstanding alter the Security and Control
Agreement or the provisions (including the defined terms used
therein) of Section 9.1 of the Indenture in a manner adverse to the
Holders and the amendment or supplement of certain provisions of the
Indenture require the consent of each Holder. Without notice to or
consent of any Holder, the parties thereto may under certain circumstances
amend or supplement the Indenture or the Securities to, among other things,
cure any ambiguity, defect or inconsistency, or make any other change that
does not adversely affect the rights of any Holder of a Security.
14. Restrictive Covenants and Excess Cash Purchase Offers.
The Indenture imposes certain limitations on the ability of the
Issuers to, among other things, incur additional Indebtedness and
Disqualified Capital Stock, pay dividends or make certain other
restricted payments, enter into certain transactions with Affiliates,
incur Liens, sell assets, merge or consolidate with any other
Person or transfer (by lease, assignment or otherwise) substantially
all of the properties and assets of the Issuers. The limitations
are subject to a number of important qualifications and exceptions.
The Issuers must periodically report to the Trustee on compliance
with such limitations.
In addition, the Indenture requires the Company to accept
Remaining Excess Cash Purchase Offers or any other offer to purchase
Mohegan Notes, subject to certain qualifications, exceptions and
requirements.
15. Repurchase at Option of Holder.
If there is a Change of Control, the Issuers shall be required
to offer to purchase on the Change of Control Purchase Date all
outstanding Securities at a purchase price equal to 101% of the
principal amount thereof, plus accrued and unpaid interest, if any,
to the Change of Control Purchase Date. Holders of Securities will
receive a Change of Control Offer from the Issuers prior to any
related Change of Control Purchase Date and may elect to have such
Securities purchased by completing the form entitled "Option of
Holder to Elect Purchase" appearing below.
16. Security for the Securities.
The obligations of the Issuers with respect to the Securities
are secured on an exclusive basis by a pledge of the Note Collateral.
The Company has entered into the Security and Control Agreement that
provide for the pledge of the Note Collateral to the Trustee for the
benefit of the Holders of the Securities. Such pledge secures the payment
and performance when due of all of the obligations of the Issuers under the
Indenture and the Securities.
Following an Event of Default, the Trustee, on behalf of the
Holders of the Securities, in addition to any rights or remedies
available to it under the Indenture, may take such action as it
deems advisable to protect and enforce its rights in the Note
Collateral, including the institution of foreclosure proceedings.
17. Defaults and Remedies.
If an Event of Default occurs and is continuing (other than an
Event of Default relating to certain events of bankruptcy, insolvency
or reorganization), then in every such case, unless the principal of
all of the Securities shall have already become due and payable,
either the Trustee or the Holders of 25% in aggregate principal
amount of Securities then outstanding may declare all the
Securities to be due and payable in the manner and with the effect
provided in the Indenture. Holders of Securities may not enforce
the Indenture or the Securities except as provided in the Indenture.
The Trustee may require indemnity satisfactory to it before it
enforces the Indenture, the Security and Control Agreement or the
Securities. Subject to certain limitations, Holders of a majority
in aggregate principal amount of the Securities then outstanding may
direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of Securities notice of any
continuing Default or Event of Default (except a Default in payment
of principal or interest), if it determines that withholding notice
is in their interest.
18. Trustee or Agent Dealings with Issuers.
The Trustee and each Agent under the Indenture, in its individual
or any other capacity, may make loans to, accept deposits from,
and perform services for the Issuers or their Affiliates, and may
otherwise deal with the Issuers or their Affiliates as if it were
not the Trustee and such Agent.
19. No Recourse Against Others.
No direct or indirect stockholder, member, employee, officer,
manager or director, as such, past, present or future, of the
Issuers or any successor entity shall have any personal liability
in respect of the obligations of the Issuers under the Securities
or the Indenture by reason of his or its status as such stockholder,
member, employee, officer, manager or director. Each Holder of a
Security by accepting a Security waives and releases all such
liability. The waiver and release are part of the consideration for
the issuance of the Securities.
20. Authentication.
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this
Security.
21. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of
a Security or an assignee, such as: TEN COM (= tenants in common),
TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with
right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
22. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Issuers will cause
CUSIP numbers to be printed on the Securities as a convenience to
the Holders of the Securities. No representation is made as to the
accuracy of such numbers as printed on the Securities and reliance
may be placed only on the other identification numbers printed
hereon.
23. Additional Rights of Holders of Securities.
The Issuers will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to:
Waterford Gaming, L.L.C.
914 Hartford Turnpike
P.O. Box 715
Waterford, CT 06385
Attn: Len Wolman
Telephone: (860) 442-4559
Telecopy: (860) 437-7752
ASSIGNMENT
I or we assign this Security to
__________________________________________________________
__________________________________________________________
__________________________________________________________
(Print or type name, address and zip code of assignee)
Please insert Social Security or other identifying number
of assignee
_________________________
and irrevocably appoint __________ agent to transfer this Security
on the books of the Issuers. The agent may substitute another to
act for him.
Dated: __________ Signed: ______________________________
__________________________________________________________
(Sign exactly as name appears on
the other side of this Security)
Signature Guarantee
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by
the Issuers pursuant to Article IX of the Indenture, check the box:
If you want to elect to have only part of this Security
purchased by the Issuers pursuant to Article IX of the Indenture,
as the case may be, state the amount you want to be purchased:
$________
Date: ________________ Signature: ________________________
(Sign exactly as your name
appears on the other side of
this Security)
Signature Guarantee
SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES
The following exchanges of a part of this Global Security
for Definitive Securities have been made:
Date of Amount of Amount of Principal Amount Signature of
Exchange decrease in increase in of this Global authorized of-
Principal Principal Security following ficer of Trus-
Amount of Amount of such decrease tee or Securities
Global this this Global (or increase) Custodian
Security Security
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION
OF TRANSFER OF SECURITIES
Re: 9 1/2% SENIOR NOTES DUE 2010 OF WATERFORD GAMING, L.L.C. AND
WATERFORD GAMING FINANCE CORP.
This Certificate relates to $______ principal amount of
Securities held in (check applicable box) _____ book-entry or
______ definitive form by _____ (the "Transferor").
The Transferor (check applicable box):
has requested the Registrar by written order to deliver
in exchange for its beneficial interest in the Global Security held
by the Depositary a Security or Securities in definitive, registered
form of authorized denominations and an aggregate principal
amount equal to its beneficial interest in such Global Security (or
the portion thereof indicated above); or
has requested the Registrar by written order to exchange
or register the transfer of a Security or Securities.
In connection with such request and in respect of each such
Security, the Transferor does hereby certify that Transferor is
familiar with the Indenture relating to the above-captioned
Securities and as provided in Section 2.6 of such Indenture, the
transfer of this Security does not require registration under the
Securities Act (as defined below) because (check applicable box):
Such Security is being acquired for the Transferor's own
account, without transfer (in satisfaction of Section 2.6(a)(2)(A)
or Section 2.6(d)(i)(1) of the Indenture).
Such Security is being transferred to a "qualified
institutional buyer" (as defined in Rule 144A under the Securities
Act of 1933, as amended (the "Securities Act")), which, in the case
of a dealer, owns and invests on a discretionary basis at least
$25.0 million of securities of issuer that are not affiliated with
the dealer, in reliance on Rule 144A (in satisfaction of Section
2.6(a)(2)(B), Section 2.6(b)(i) or Section 2.6(d)(i)(2) of the
Indenture) or pursuant to an effective registration statement under
the Securities Act (in satisfaction of Section 2.6(a)(2)(C)(ii) or
Section 2.6(d)(i)(3)(ii) of the Indenture).
Such Security is being transferred in accordance with
Rule 144 under the Securities Act (in satisfaction of Section
2.6(a)(2)(C)(i) or Section 2.6(d)(i)(3)(i) of the Indenture) or
pursuant to another exemption from registration under the Securities
Act (in satisfaction of Section 2.6(a)(2)(C)(iii) or Section
2.6(d)(i)(3)(iii) of the Indenture).
[INSERT NAME OF TRANSFEROR]
By:____________________________
Date:__________________________
SECURITY AND CONTROL AGREEMENT
WATERFORD GAMING, L.L.C., a Delaware limited liability
company, and WATERFORD GAMING FINANCE CORP., a Delaware corporation
(each, a "Pledgor" and collectively, the "Pledgors"), STATE
STREET BANK AND TRUST COMPANY, as trustee (in that capacity, the
"Trustee") for the registered holders from time to time (the
"Holders") of the Notes (as defined herein) issued by the Pledgors
under the Indenture referred to below, and STATE STREET BANK
AND TRUST COMPANY, as securities intermediary (in that capacity,
the "Securities Intermediary"), hereby enter into this SECURITY
AND CONTROL AGREEMENT (this "Security Agreement") as of and on
March 17, 1999.
All references herein to the "UCC" are to the Uniform
Commercial Code in effect in the State of New York. Capitalized
terms not otherwise defined herein have the meaning given them in
the Indenture referred to below.
RECITALS
A. The Pledgors and the Trustee have entered into
that certain Indenture dated as of the date hereof (as amended,
restated, supplemented or otherwise modified from time to time,
the "Indenture"), under which the Pledgors are issuing on the
date hereof $125,000,000 in aggregate principal amount of 9 1/2%
Senior Notes due 2010 (together with any notes that may from time
to time be issued in substitution therefor, the "Notes").
B. The Pledgors have agreed that (i) on the date
hereof , $11,875,000 of the net proceeds from the Notes' sale
(the "Interest Reserve") will be paid directly to the Securities
Intermediary, (ii) the Pledgors shall pay to the Securities
Intermediary, upon receipt, the first $15 million in Mohegan Note
Transfer Proceeds and (iii) the Pledgors shall pay to the Securities
Intermediary all Required True-Up Payments, as provided in the Indenture.
C. The Securities Intermediary has agreed to use the
Interest Reserve and all other amounts received from the Pledgors
in accordance with the foregoing paragraph to purchase Investment
Grade Securities, Government Securities or other Cash Equivalents
(the "Pledged Securities") and to place the Pledged Securities
in, or credit the Pledged Securities to, an account (the "Securities
Account") maintained by the Trustee with the Securities
Intermediary for the benefit of the Holders of the Notes.
D. The Trustee has opened an account with the Securities
Intermediary, at the Securities Intermediary's office at Goodwin Square,
225 Asylum Street, Hartford, Connecticut 06103, which account bears Account
No. 121774-011, is in the name of "State Street Bank and Trust Company as
Trustee for Waterford Gaming, L.L.C. and Waterford Gaming Finance Corp.,"
and will serve as the Securities Account. The Securities Account is the
"Interest Reserve Account" to which the Indenture and the Offering Memorandum
for the Notes make reference.
E. It is a condition to the issuance of the Notes that the
Pledgors (i) grant to the Trustee for its benefit and the ratable benefit of
the Holders of the Notes a security interest in the Pledged Securities and
related collateral to secure the Pledgors' payment and performance of their
Obligations (as defined below), and (ii) execute and deliver this Security
Agreement to evidence that security interest.
NOW, THEREFORE, in consideration of the mutual promises
herein and the benefits to be received therefrom, each Pledgor,
the Trustee, and the Securities Intermediary agree as follows:
SECTION 1. Grant of Security Interest. The Pledgors
hereby grant to the Trustee, for its benefit and for the ratable
benefit of the Holders of the Notes, a continuing first priority
security interest in and to all of the Pledgors' right, title and
interest in, to and under the following (wherever located),
whether investment property, general intangibles, other rights,
interests, claims, or otherwise (collectively, the "Pledged
Collateral"): (a) the Securities Account, all "Financial Assets"
(as defined in UCC 8-102(a)(9)) held therein (including the
Pledged Securities), and all "Securities Entitlements" (as
defined in UCC 8-102(a)(17)) with respect thereto, (b) any
successor or other account into which Financial Assets held in
the Security Account may be transferred or held at any time and
all Security Entitlements with respect thereto, and (c) all
proceeds of any of the foregoing (including, without limitation,
proceeds that constitute property of the types described in
clauses (a) and (b) of this Section 1).
SECTION 2. Security for Obligations. This Security
Agreement and the security interest granted hereby secure (i) the
Pledgors' prompt and complete payment of all amounts due, either
at maturity or upon acceleration, under the Notes and (ii) the
Pledgors' timely and full payment and performance of all other
obligations under the Notes, the Indenture, and this Security
Agreement (collectively, the "Obligations").
SECTION 3. Delivery of Pledged Securities; Maintenance
of Securities Account.
(a) Upon the Securities Intermediary's acquisition
of Pledged Securities or Security Entitlements thereto, the
Securities Intermediary shall promptly make appropriate book
entries indicating that the Trustee is the sole "Entitlement
Holder" (as defined in UCC 8-102(a)(7)) with respect to all
Pledged Collateral and all Securities Entitlements thereto.
Subject to the other terms and conditions of this Security
Agreement, all funds or other property held by the Trustee under
this Security Agreement shall be held in the Securities Account
and be subject to the Trustee's exclusive dominion and control
(including "control" as defined in UCC 9-115(l)(e)), for the
benefit of the Trustee and for the ratable benefit of the Holders
of the Notes, and segregated from all other funds or other
property otherwise held by the Trustee.
(b) The Securities Intermediary shall cause all
securities or other property underlying any Financial Assets
credited to the Securities Account, including, without limitation,
all Pledged Securities, to be registered in the name of the
Securities Intermediary, endorsed to the Securities Intermediary
or in blank, or credited to another securities account maintained
in the name of the Securities Intermediary. In no case will any
Financial Asset credited to the Securities Account be registered
in the name of, payable to the order of, or specially endorsed to
the Pledgors (or to either of them), unless it has been specially
endorsed to the Securities Intermediary or in blank.
(c) So long as no Event of Default has occurred and
is continuing, Waterford Gaming, L.L.C. may direct the Securities
Intermediary with respect to the selection of Investment Grade
Securities, Government Securities, or other Cash Equivalents to
be held in the Security Account. The Securities Intermediary
will comply with those directions, except that (i) if any such
direction conflicts with an Entitlement Order issued by the
Trustee in accordance with Section 6(a) below, the Securities
Intermediary shall comply with the Trustee's Entitlement Order,
and (ii) all Financial Assets in the Security Account will remain
subject to the Trustee's security interest granted herein and to
all other terms hereof.
(d) The Securities Intermediary shall not disburse
or dispose of any Pledged Collateral except in accordance with
the terms hereof.
(e) Concurrently with the execution and delivery of
this Security Agreement, the Trustee and the Securities Intermediary
are delivering to the Pledgors and to Bear Sterns & Co.
Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, and
Salomon Smith Barney Inc., as the Notes' initial purchasers, a
certificate, in the form of Exhibit A hereto, duly executed by an
officer of each of the Trustee and the Securities Intermediary,
confirming that (i) the Trustee has established and will maintain
the Securities Account with the Securities Intermediary, and (ii)
the Securities Intermediary has received the Interest Reserve,
has used the Interest Reserve to acquire Pledged Securities or a
Securities Entitlement thereto, and has credited the same to the
Securities Account, in accordance with this Security Agreement.
(f) Concurrently with the execution and delivery of
this Security Agreement, the Pledgors shall deliver to the
Trustee executed copies of proper financing statements, which the
Trustee shall cause to be duly filed in the office of the Secretary
of State of Connecticut, covering the Pledged Collateral described
in this Security Agreement.
SECTION 4. Entitlement Orders; Subordination of Lien,
Waiver of Set-Off, etc.
(a) The Trustee shall, in accordance with and
subject to all applicable laws, be the sole Entitlement Holder
of, and have the sole power to originate "Entitlement Orders" (as
defined in UCC 8-102(a)(8)) with respect to, the Pledged
Collateral. The Securities Intermediary shall immediately comply
with Entitlement Orders issued by the Trustee with respect to the
Pledged Collateral without further consent of the Pledgors or any
other Person.
(b) The Securities Intermediary agrees that any
security interest in any of the Pledged Collateral that it has or
may in the future acquire shall be subordinate to the Trustee's
security interest created hereby. The Financial Assets held in
the Securities Account will not be subject to deduction, setoff,
banker's lien, or any other right in favor of any Person other
than the Trustee (except that the Securities Intermediary may set
off or deduct all amounts due to it as customary fees for the
routine operation and maintenance of the Securities Account and
for the customary fees owed to the Trustee).
(c) In the event of any conflict between this
Security Agreement (or any term thereof) and any other agreement,
the terms of this Security Agreement shall prevail.
(d) The Securities Intermediary hereby confirms and
agrees that:
(i) It has not entered into any agreement
(other than this Security Agreement and the Indenture)
with the Pledgors with respect to the Securities Account;
(ii) It has not granted, and until the
termination of this Security Agreement will not grant,
control (including without limitation, "control" as
defined in UCC 9-115(l)(e)) over or with respect to
any Pledged Collateral to any Person other than the
Trustee. It has not entered into, and until the termination
of this Security Agreement will not enter into,
any agreement with any Person in which it agrees to
comply with Entitlement Orders, relating to the Pledged
Collateral, from any Person other than the Trustee or
which purports to limit or condition its obligation
under this Section 4 to comply with the Trustee's
Entitlement Orders.
SECTION 5. Adverse Claims. The Securities Intermediary
does not know of any claim to, or interest in, any Pledged
Collateral other than those of the Trustee and the Pledgors. If
any Person asserts or attempts to enforce any Lien or adverse
claim (including by means of writ, garnishment, judgment, warrant
of attachment, execution or similar process) against any Pledged
Collateral, the Securities Intermediary will promptly notify the
Trustee and the Pledgors.
SECTION 6. Disbursements.
(a) Upon the Trustee's receipt of a written request
from Waterford Gaming, L.L.C. that is substantially in the form
of Exhibit B, attached hereto (a "Cash Disbursement Request"),
the Trustee will promptly instruct the Securities Intermediary
(i) to liquidate sufficient assets in the Securities Account so
that net proceeds therefrom will fund the amount requested in the
Cash Disbursement Request, and (ii) to transfer those net proceeds
as indicated therein. Neither the Trustee nor the Securities
Intermediary shall be liable for any loss incurred upon the
liquidation of assets in the Securities Account.
(b) Any Cash Disbursement Request must be received
no later than five Business Days before the disbursement date
requested therein (which date must be a Business Date), must
include the certifications in Exhibit B, and (as applicable) must
be accompanied by the additional documentation referred to
therein.
(c) The Trustee need not inquire into or verify the
truth or accuracy of any statement in a Cash Disbursement Request.
(d) Nothing in this Security Agreement shall afford
the Pledgors (i) any right to issue Entitlement Orders with
respect to any Pledged Collateral or (ii) except as expressly
provided in Section 6(a) hereof (or as required by applicable
law), any other right with respect to the Pledged Collateral.
(e) Nothing in this Section 6 shall limit the
Trustee's rights and powers under this Security Agreement.
SECTION 7. Pledgors' Representations and Warranties.
The Pledgors hereby severally represent and warrant that, as of
the date hereof:
(a) The Pledgors' execution and delivery of, and
their performance of their obligations under, this Security
Agreement will not (i) contravene any provision of applicable
law or statute, either Pledgor's organization documents,
any material agreement or other material instrument binding
upon either Pledgor or any of their affiliates, or any
judgment, order or decree of any governmental or tribal
body, agency or court having jurisdiction over either
Pledgor or any of its affiliates, or (ii) result in the
creation or imposition of any Lien on assets of either
Pledgor, except for the security interest granted to the
Trustee herein. Except as described in the Offering
Memorandum, no consent, approval, authorization or order of,
qualification with, or other action by any governmental,
tribal, or regulatory body or agency or any third party is
required for (i) either Pledgor's execution, delivery or
performance of this Security Agreement, (ii) either
Pledgor's grant of, or the perfection and maintenance of,
the security interest created hereby (including its first
priority nature, assuming compliance by the Securities
Intermediary with its obligations in this Security
Agreement), or (iii) (except for any consents, approvals,
authorizations, or order required to be obtained by the
Trustee (or the Holders) for reasons other than the
consummation of the transactions contemplated by this
Security Agreement) the Trustee's exercise of its rights or
remedies with respect to the Pledged Collateral.
Notwithstanding the foregoing, a breach of any of the
representations and warranties in this Section 7(a) will not
constitute a default under this Security Agreement unless
that breach causes a material adverse effect on (i) the
validity or enforceability of this Security Agreement or any
other material agreement executed in connection herewith,
and (ii) the Pledgors' ability to perform their material
obligations under the Notes and the Indentures.
(b) The Pledgors have duly and validly authorized,
executed, and delivered this Security Agreement. Assuming
the Trustee's and Security Intermediary's due authorization,
execution and delivery of this Security Agreement and its
enforceability against the Trustee and the Securities
Intermediary in accordance with its terms, this Security
Agreement constitutes the Pledgors' valid and binding
agreement, enforceable against each of them, jointly and
severally, in accordance with its terms, except as (i) may
be limited by bankruptcy, insolvency, fraudulent transfer,
preference, reorganization, moratorium, or similar laws now
or hereafter in effect relating to or affecting creditors'
rights or remedies generally, (ii) the availability of
equitable remedies may be limited by equitable principles of
general applicability and the discretion of the court
considering the matter, (iii) the exculpation provisions and
rights to indemnification hereunder may be limited by
federal and state securities laws and public policy
considerations, and (iv) the waiver of rights and defenses
in and other provisions of Sections 13(b), 16.11, and 16.15
hereof may be limited by applicable law.
(c) The Pledgors are the legal and beneficial owners
of the Pledged Securities and other Pledged Collateral. The
Pledgors own the Pledged Securities and other Pledged
Collateral free and clear of any Lien or claim of any person
or entity, except for the security interest granted to the
Trustee herein. No financing statement or other instrument
similar in effect covering the Pledgors' interest in the
Pledged Securities is on file in any public office, other
than any financing statement filed under this Security
Agreement.
(d) Upon the Trustee's acquisition of a Security
Entitlement in the Pledged Collateral in accordance
herewith, and the Securities Intermediary's performance of
its obligations hereunder, the security interest granted to
the Trustee herein will constitute a first priority
perfected security interest in the Pledged Collateral
(except, with respect to proceeds, only to the extent
permitted by UCC 9-306), enforceable (except insofar as
enforcement may be affected by general equitable principles
whether considered in a proceeding in equity or at law) as
such against all creditors of the Pledgors and against any
Person purporting to purchase any of the Pledged Collateral
from the Pledgors. All filings and actions necessary to
perfect and protect that security interest have been duly
taken.
(e) There are no legal or governmental proceedings
pending or, to the best of either Pledgors' knowledge,
threatened, to which the Pledgors or any of their
subsidiaries is a party or relating to any property of the
Pledgors or any subsidiary, that would materially adversely
affect the Pledgors' power or ability to perform their
obligations under this Security Agreement, the Notes, or the
Indenture.
(f) No law or governmental regulation (including,
without limitation, Regulations T, U and X of the Board of
Governors of the Federal Reserve System) applicable to the
Pledgors prohibits the grant of the security interest to the
Trustee hereunder.
(g) Waterford Gaming, L.L.C. and Waterford Gaming
Finance Corp. each maintain their chief executive offices at
914 Hartford Turnpike, Waterford, Connecticut 06385.
Neither Pledgor will, until the Termination Date (as defined
below), change the location of its chief executive offices
without giving at least 30 days' prior written notice to the
Trustee.
(h) No Event of Default (as defined herein) exists.
SECTION 8. Pledgor's Covenants. In addition to its
other agreements herein, each Pledgor covenants and agrees with
the Trustee and the Holders of the Notes that from and after the
date hereof until the Termination Date:
(a) It will, promptly upon request by the Trustee,
execute and deliver or cause to be executed and delivered,
or use its commercially reasonable efforts to procure, all
assignments, instruments and other documents, in form and
substance reasonably satisfactory to the Trustee, and take
any other action that is necessary or desirable to perfect,
continue the perfection of, or protect the first priority of
the Trustee's security interest in the Pledged Collateral,
to protect the Pledged Collateral against rights, claims, or
interests asserted by third persons (other than any such
rights, claims or interests created by the Trustee), to
enable the Trustee to enforce its rights and remedies
hereunder, and to effect the purposes of this Security
Agreement. The Pledgors will promptly pay all reasonable
costs incurred in connection with any of the foregoing.
(b) it will not (and will not purport to) (i) sell
or otherwise dispose of, or grant any option or warrant with
respect to, any of the Pledged Collateral or its beneficial
interest therein, or (ii) create or permit to exist any Lien
or other adverse interest in or with respect to its
beneficial interest in any of the Pledged Collateral (other
than the security interest granted herein); and
(c) it will not (i) enter into any agreement or
understanding that restricts or inhibits or purports to
restrict or inhibit the Trustee's rights or remedies
hereunder, including, without limitation, the Trustee's
right to dispose of the Pledged Collateral as provided
herein, or (ii) fail to pay or discharge any tax, assessment
or levy of any nature with respect to its beneficial
interest in the Pledged Collateral later than five days
before the date of any proposed sale under any judgment,
writ or warrant of attachment with respect to its beneficial
interest; and
(d) it and the other Pledgor will at all times remain
the sole beneficial owners of the Pledged Collateral
(subject to the security interest granted to the Trustee
herein).
SECTION 9. Securities Intermediary's Representations,
Warranties and Covenants. The Securities Intermediary represents
and warrants that it is, as of the date hereof, and it agrees
that for so long as it maintains the Securities Account and acts
as securities intermediary under this Security Agreement it shall
be, a "Securities Intermediary" (as defined in the UCC and in 31
C.F.R. 357.2). In furtherance of the foregoing, and in addition
to its other representations, warranties, and agreements herein,
the Securities Intermediary hereby:
(a) represents and warrants that it is a corporation
that, in the ordinary course of its business, maintains
securities accounts for others and is acting in that
capacity with respect to the Securities Account;
(b) covenants that, as Securities Intermediary
hereunder and with respect to the Securities Account, it
shall not take any action inconsistent with, and represents
and warrants that it is not and so long as this Security
Agreement remains in effect will not become party to any
agreement whose terms are inconsistent with, this Security
Agreement;
(c) agrees to treat any item of property credited to
the Securities Account as a financial asset within the
meaning of UCC 8-102(a)(9);
(d) agrees, so long as it serves as Securities
Intermediary under this Security Agreement, to maintain the
Securities Account as a securities account and maintain
appropriate books and records in respect thereof in
accordance with its usual procedures and subject to the
terms of this Security Agreement;
(e) agrees, with the other parties to this Security
Agreement, that its jurisdiction, for purposes of UCC 8-110(e)
and 31 C.F.R. 357.11(b) as it pertains to this Security Agreement,
the Securities Account and Security Entitlements relating thereto,
shall be the State of New York.
(f) agrees that it will maintain the Securities
Account, at its office at the address set forth in the Recitals
hereof, segregated from all other accounts, and will not change
the name on the account or its account number without the
Trustee's prior written consent.
SECTION 10. Power of Attorney. Upon the occurrence
and continuation of an Event of Default, in addition to all of
the powers granted to the Trustee under the Indenture, each
Pledgor hereby appoints and constitutes the Trustee its attorney-
in-fact, with full authority in its place and its name to take,
from time to time in the Trustee's discretion, any action and to
execute any instrument that the Trustee may deem necessary or
advisable to accomplish the purposes of this Security Agreement.
The Trustee's authority under this Section 10 shall include,
without limitation, the authority to endorse and negotiate any
checks or instruments representing proceeds of Pledged Collateral
in the name of the Pledgors, execute and give receipt for any
certificate of ownership or any document constituting Pledged
Collateral, transfer title to any item of Pledged Collateral,
sign the Pledgors' names on all financing statements (to the
extent permitted by applicable law) or any other documents deemed
necessary or appropriate by the Trustee to preserve, protect or
perfect the security interest in the Pledged Collateral and to
file the same, prepare, file and sign the Pledgors's name on any
notice of Lien, and to take any other actions arising from or
incident to the powers granted to the Trustee in this Security
Agreement. This power of attorney is coupled with an interest
and is irrevocable. Notwithstanding anything to the contrary
herein, the Trustee has no duty or obligation to exercise any of
the powers in this Section 10.
SECTION 11. No Assumption of Duties; Reasonable Care.
The Trustee and the Securities Intermediary undertake to perform
only those duties that are specifically set forth herein. This
Security Agreement does not, and may not be interpreted to,
impose any implied duties or obligations on either of them.
Except as provided by applicable law or by the Indenture, the
Trustee shall be deemed to have exercised reasonable care in the
custody and preservation of the Pledged Collateral if the Trustee
accords the Pledged Collateral treatment substantially similar to
that which the Trustee accords similar property held by the
Trustee for similar accounts, it being understood that the
Trustee shall not have any responsibility for (i) ascertaining or
taking action with respect to calls, conversions, exchanges,
maturities or other matters relative to any Pledged Collateral,
whether or not the Trustee has or is deemed to have knowledge of
such matters, (ii) investing or reinvesting any Pledged
Collateral, or (iii) any loss on any investment.
SECTION 12. Indemnity. Each Pledgor shall jointly and
severally indemnify, hold harmless and defend each of the Trustee
and the Securities Intermediary and their respective directors,
officers, employees, attorneys, and agents (each, an "Indemnified
Person") from and against any and all claims, actions,
obligations, liabilities and expenses, including reasonable
defense costs, reasonable investigative fees and costs and
reasonable legal fees and expenses and damages, arising from the
performance by the Trustee and the Securities Intermediary of
their respective obligations under this Security Agreement. The
Pledgors shall, upon demand by any Indemnified Person, promptly
pay or reimburse that Indemnified Person for all such expenses,
costs, fees and damages. Notwithstanding the foregoing, the
Pledgors (i) shall not be obligated to indemnify any Indemnified
Person from any claim, action, obligation, liability or expense
against or incurred by that Indemnified Person that is judicially
determined (the determination having become final) to be directly
attributable to the gross negligence or willful misconduct of
that Indemnified Person, and (ii) shall, upon that final judicial
determination, be entitled to recover from that Indemnified
Person all amounts theretofore paid hereunder.
SECTION 13. Remedies Upon Event of Default. As used
herein, "Event of Default" means (i) any Event of Default as that
term is defined in the Indenture, and (ii) any breach by either
Pledgor of its representations, warranties, covenants, or
agreements herein. If any Event of Default shall occur before
the Termination Date and be continuing:
(a) The Trustee and the Holders of the Notes shall
have, in addition to all other rights given by law, by this
Security Agreement, or by the Indenture, all of the rights
and remedies with respect to the Pledged Collateral of a
secured party under the UCC. In addition, with respect to
any Pledged Collateral that shall then be in or shall
thereafter come into the possession or custody or under the
control of the Trustee, the Trustee may, upon the direction
of a majority in aggregate principal amount of the Holders
of the Notes, sell or cause the same to be sold at any
broker's board or at public or private sale, in one or more
sales or lots, for cash or on credit or for future delivery,
without assumption of any credit risk. The purchaser of any
or all Pledged Collateral so sold shall thereafter hold the
same absolutely, free from any claim, encumbrance or right
of any kind whatsoever of, or created by or through, the
Pledgors. The Trustee shall give the Pledgors such notice
of the time and place of any public sale of the Pledged
Collateral that is feasible and reasonable under the
circumstances, except no notice of sale shall be required if
the Trustee determines, in its reasonable judgment, that (i)
an immediate sale is necessary because the Pledged
Collateral threatens to decline speedily in value or (ii)
the Pledged Collateral is or becomes of a type regularly
sold on a recognized market. To the extent permitted by
applicable law, the Pledgors agree that any sale of the
Pledged Collateral conducted in conformity with reasonable
commercial practices of banks, insurance companies,
commercial finance companies, or other financial
institutions disposing of property similar to the Pledged
Collateral shall be deemed to be commercially reasonable.
Subject to the other provisions of this Section 13(a),
notice mailed to the Pledgors as provided in Section 18.1
hereof at least 10 days before the time of the sale or
disposition shall constitute reasonable notice. The Trustee
or any Holder of Notes may, in its own name or in the name
of a designee or nominee, buy any of the Pledged Collateral
at any public sale and, if permitted by applicable law, at
any private sale. All expenses (including court costs and
reasonable attorneys' fees, expenses and disbursements) of,
or incident to, the enforcement of any of the provisions
hereof shall be recoverable from the proceeds of the sale or
other disposition of the Pledged Collateral.
(b) Each Pledgor shall use its reasonable best
efforts to do or cause to be done all such other acts as may
be necessary to make a sale of all or portion of the Pledged
Collateral under this Section 13 valid and binding and in
compliance with any applicable requirements of law. The
Pledgors agree that a breach of any of their covenants in
this Section 13 will cause irreparable injury to the Trustee
and the Holders of the Notes, that the Trustee and the
Holders of the Notes would have no adequate remedy at law in
respect of such breach and, as a consequence, that each of
their covenants in this Section 13 shall be specifically
enforceable against them. The Pledgors hereby waive and
agree not to assert any defenses against an action for
specific performance of these covenants except for a defense
that no Event of Default has occurred.
(c) The Trustee may, without notice to the Pledgors
except as required by law and at any time or from time to
time, charge, setoff and otherwise apply all or any part of
the Obligations against the Securities Account or any part
thereof.
SECTION 14. Expenses. The Pledgors shall promptly
upon demand pay to each of the Trustee and the Securities
Intermediary any and all reasonable expenses, including, without
limitation, the reasonable fees, expenses and disbursements of
counsel, experts and agents, that either the Trustee or the
Securities Intermediary may incur in connection with (a) the
review, negotiation and administration of this Security
Agreement, (b) the maintenance of the Securities Account and the
custody, preservation, or sale of, collection from, or other
realization upon, any of the Pledged Collateral, (c) the exercise
or enforcement of any of the rights of the Trustee and the
Holders of the Notes hereunder, (d) the Pledgors' failure to
perform or observe any of the provisions hereof, or (e) any claim
covered by Section 12 hereof.
SECTION 15. Security Interest Absolute. All rights of
the Trustee and the Holders of the Notes and the security
interest granted to the Trustee hereunder, and all obligations of
the Pledgors hereunder, shall be absolute and unconditional under
all circumstances, including but not limited to:
(a) any lack of validity or enforceability of the
Indenture or any other agreement or instrument relating
thereto;
(b) any change in the time, manner or place of
payment or performance of, or in any other term of, any of
the Obligations, or any other amendment or waiver of or any
consent to any departure from the Indenture;
(c) any taking, exchange, surrender, release or non-
perfection of any other collateral or any taking, release,
amendment, or waiver of any provision of any guaranty for
all or any of the Obligations;
(d) any change, restructuring or termination of the
corporate structure or existence of the Pledgors or any of
their affiliates; or
(e) to the extent permitted by applicable law, any
other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Pledgors in respect of
the Obligations or of this Security Agreement.
SECTION 16. Miscellaneous Provisions.
Section 16.1 Notices. Any notice or communication
given hereunder shall be sufficiently given if in writing and
delivered in person or mailed by first class mail, commercial
courier service or telecopier communication, addressed as
follows:
if to the Pledgors:
Waterford Gaming, L.L.C.
Waterford Gaming Finance Corp.
914 Hartford Turnpike
P.O. Box 715
Waterford, Connecticut 06385
Attention: Chief Executive Officer
Telecopier: (860) 447-8554
with a copy to:
Latham & Watkins
885 Third Avenue
New York, NY 10022
Attention: Raymond Lin
Telecopier: (212) 751-4864
if to the Trustee:
State Street Bank and Trust Company
Goodwin Square
225 Asylum Street
Hartford, Connecticut 06385
Attention: Corporate Trust Administration
(Waterford Gaming, L.L.C./Waterford Gaming
Financing Corp. 1999 Security and Control
Agreement)
Telecopier: (860) 244-1889
if to the Securities Intermediary:
State Street Bank and Trust Company
Goodwin Square
225 Asylum Street
Hartford, Connecticut 06385
Attention: Corporate Trust Administration
(Waterford Gaming, L.L.C./Waterford Gaming
Financing Corp. 1999 Security and Control Agreement)
Telecopier: (860) 244-1889
Section 16.2 No Adverse Interpretation of Other
Agreements. This Security Agreement may not be used to interpret
another agreement or document of the Pledgors or any of their
affiliates. No other agreement or document (other than the
Indenture) may be used to interpret this Security Agreement.
Section 16.3 Severability. The provisions of this
Security Agreement are severable, and if any clause or provision
shall be held invalid, illegal or unenforceable in whole or in
part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such
clause or provision, or part thereof, and shall not in any manner
affect such clause or provision in any other jurisdiction or any
other clause or provision of this Security Agreement in any
jurisdiction.
Section 16.4 Headings. The headings in this Security
Agreement are included for convenience of reference only, are not
to be considered a part hereof, and do not modify or restrict any
of the terms or provisions hereof.
Section 16.5 Counterpart Originals; Photocopies. This
Security Agreement may be signed in two or more counterparts,
each of which shall be deemed an original, but all of which shall
together constitute one and the same agreement. A photocopy or
other reproduction of this Security Agreement or any financing
statement covering the Pledged Collateral or any part thereof
shall be sufficient as a financing statement where permitted by
law.
Section 16.6 Benefits of Security Agreement. Nothing
in this Security Agreement, express or implied, shall give to any
person, other than the parties hereto, their successors
hereunder, and (subject to the provisions of the Indenture) the
Holders of the Notes, any legal or equitable right, remedy or
claim. There shall be no third-party beneficiaries of this
Security Agreement. No Holder of Notes shall have any
independent rights hereunder, other than those rights granted to
individual Holders of the Notes under the Indenture
Section 16.7 Amendments, Waivers and Consents. Any
amendment of this Security Agreement and any consent to any
departure by the Pledgors from any provision of this Security
Agreement shall be effective only if made or duly given in
compliance with all of the terms and provisions of the Indenture.
Neither the Trustee nor any Holder of Notes shall be deemed, by
any act, delay, indulgence, omission or otherwise, to have waived
any right or remedy hereunder or to have acquiesced in any
Default or Event of Default or in any breach of any of the terms
and conditions hereof. A failure to exercise, a delay in
exercising, or a waiver of any right, power or privilege
hereunder by the Trustee or any Holder of Notes shall not
preclude any subsequent exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently,
and are not exclusive of any rights or remedies provided by law.
Section 16.8 Interpretation of Agreement. Acceptance
of or acquiescence in a course of performance rendered under this
Security Agreement shall not be relevant to determine the meaning
of this Security Agreement, even though the accepting or
acquiescing party had knowledge of the nature of the performance
and opportunity for objection.
Section 16.9 Continuing Security Interest;
Termination.
(a) This Security Agreement shall create a continuing
security interest in and to the Pledged Collateral, shall be binding
upon the Pledgors, their transferees, successors and assigns, shall
inure, together with the rights and remedies of the Trustee hereunder,
to the benefit of the Trustee, the Securities Intermediary, the Holders
of the Notes and their respective successors, transferees and assigns,
and shall remain in full force and effect until the Termination
Date. On or as soon as practicable after the Termination Date,
the Trustee shall, at the expense of the Pledgors, take any
reasonable action necessary to release the security interest
created hereby, including the execution and delivery of any
termination statement prepared and delivered to it by the
Pledgors. Any redelivery of the Pledged Collateral hereunder to
the Pledgors shall be without warranty by or recourse to the
Trustee in its capacity as such, except as to the absence of any
Liens on the Pledged Collateral created by or arising through the
Trustee, and shall be at the reasonable expense of the Pledgors.
(b) This Security Agreement shall terminate on the
day (the "Termination Date") on which all of the Pledgor's
outstanding obligations under the Notes have been paid in full.
(c) Notwithstanding the foregoing, the Pledgors'
obligations under Sections 12 and 14 shall survive this Security
Agreement's termination.
Section 16.10 Survival of Representations and
Covenants. All of the Pledgors' representations, warranties and
covenants herein shall survive execution and delivery of this
Security Agreement, and (subject to Section 16.9(c) above) shall
terminate only upon the termination of this Security Agreement.
Section 16.11 Waivers. The Pledgors waive presentment
and demand for payment of any of the Obligations, protest and
notice of dishonor or default with respect to any of the
Obligations, and all other notices to which the Pledgors might
otherwise be entitled, except as otherwise expressly provided
herein or in the Indenture.
Section 16.12 Authority of the Trustee and Securities
Intermediary.
(a) Each of the Trustee and Securities Intermediary
may exercise all rights and powers granted hereunder, together
with any powers reasonably incident hereto. The Trustee and the
Securities Intermediary may perform any of their respective
duties hereunder or in connection with the Pledged Collateral by
or through agents or employees and shall be entitled to retain
counsel and to act in reliance upon the advice of counsel
concerning their rights, powers and duties hereunder. The
Trustee and the Securities Intermediary shall not be responsible
for the validity, effectiveness or sufficiency hereof or of any
document or security furnished in accordance herewith. The
Trustee, the Securities Intermediary and their respective
directors, officers, employees, attorneys and agents may
conclusively rely on any communication, instrument or document
reasonably believed by them to be genuine and correct and to have
been signed or sent by the proper person or persons.
(b) The Pledgors acknowledge that, as between the
Pledgors and the Trustee, with respect to any action or inaction
by the Trustee in connection with the performance of its duties
hereunder, the Trustee shall be conclusively presumed to be
acting as agent for the Holders of the Notes with full and valid
authority so to act or refrain from acting, and the Pledgors may
not make any inquiry respecting such authority.
(c) No provision of this Security Agreement shall
require either the Trustee or the Securities Intermediary to
expend or risk its own funds or otherwise incur any financial
liability in the performance of its duties or the exercise of any
of its rights and powers hereunder.
Section 16.13 Removal or Resignation of the Securities
Intermediary. The Securities Intermediary may resign by notice
to, or be removed by notice from, the Trustee at any time, except
that in either case the Securities Intermediary's duties
hereunder shall not terminate until the Trustee has appointed a
successor Securities Intermediary, who has accepted the
appointment (by delivery of an agreement substantially in the
form hereof), and until all assets held by the retiring
Securities Intermediary have been transferred to the successor
Securities Intermediary in accordance with the Trustee's
instruction.
Section 16.14 Final Expression. This Security
Agreement, together with the Indenture and any other agreement
executed in connection herewith, is intended by the parties as a
final expression of this Security Agreement and is intended as a
complete and exclusive statement of the terms and conditions
thereof, subject to any amendment duly made in accordance
herewith.
Section 16.15 CHOICE OF LAW; SUBMISSION TO
JURISDICTION; WAIVER OF JURY TRIAL; WAIVER OF DAMAGES.
(a) THIS SECURITY AGREEMENT, THE SECURITIES ACCOUNT,
AND THE SECURITIES ENTITLEMENTS RELATED THERETO SHALL BE GOVERNED
BY THE LAW OF THE STATE OF NEW YORK INCLUDING, WITHOUT
LIMITATION, SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS
LAW. ANY DISPUTE ARISING FROM, RELATED TO, OR IN CONNECTION WITH
ANY OF THE FOREGOING, OR THE RELATIONSHIP AMONG OR THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO, SHALL LIKEWISE BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK. REGARDLESS OF ANY PROVISION OF
ANY OTHER AGREEMENT, FOR PURPOSES OF THE UCC, NEW YORK SHALL BE
DEEMED TO BE THE SECURITIES INTERMEDIARY'S JURISDICTION.
(b) THE PLEDGORS AGREE THAT THE TRUSTEE MAY, IN ITS
CAPACITY AS TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDER OF
NOTES, PROCEED AGAINST THE PLEDGORS (OR EITHER OF THEM) OR THE
PLEDGED COLLATERAL IN ANY COURT HAVING PERSONAL OR IN REM
JURISDICTION OVER THE PLEDGORS OR THE PLEDGED COLLATERAL, AS THE
CASE MAY BE, TO ENABLE THE TRUSTEE TO ASSERT A CLAIM OR EXERCISE
ITS RIGHTS AND REMEDIES UNDER THIS SECURITY AGREEMENT. EACH
PLEDGOR AGREES THAT IT WILL NOT ASSERT ANY COUNTERCLAIM, SETOFF,
OR CROSSCLAIM AGAINST THE TRUSTEE IN ANY PROCEEDING BROUGHT BY
THE TRUSTEE UNDER THIS SECURITY AGREEMENT OR THE INDENTURE OTHER
THAN A COUNTERCLAIM, SETOFF, OR CROSSCLAIM THAT, IF NOT ASSERTED
IN THAT PROCEEDING, COULD NOT OTHERWISE BE BROUGHT OR ASSERTED.
THE PLEDGORS WAIVE ANY OBJECTION BASED ON THE GROUNDS OF IMPROPER
VENUE OR FORUM NON CONVENIENS TO THE TRUSTEE'S COMMENCEMENT AND
PROSECUTION OF SUCH A PROCEEDING IN ANY COURT IN THE CITY OF NEW
YORK.
(c) EACH PLEDGOR AGREES THAT NEITHER ANY HOLDER OF
NOTES, THE TRUSTEE, THE SECURITIES INTERMEDIARY, OR ANY OTHER
INDEMNIFIED PERSON SHALL BE LIABLE TO EITHER PLEDGOR FOR LOSSES
ARISING FROM, RELATING TO, OR IN CONNECTION WITH THIS SECURITY
AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY, OR THE DUTIES
IMPOSED HEREUNDER, UNLESS A COURT DETERMINES (SUCH DETERMINATION
HAVING BECOME FINAL) THAT THE LOSSES RESULTED FROM THE BAD FAITH,
GROSS NEGLIGENCE, OR WILLFUL MISCONDUCT OF THE HOLDER OF NOTES,
THE TRUSTEE, THE SECURITIES INTERMEDIARY, OR ANY INDEMNIFIED
PERSON (AS THE CASE MAY BE).
(d) TO THE EXTENT PERMITTED BY LAW, THE PLEDGORS
WAIVE THE POSTING OF ANY BOND OTHERWISE REQUIRED OF THE TRUSTEE
OR ANY HOLDER OF NOTES IN CONNECTION WITH ANY JUDICIAL PROCEEDING
TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER, ENTERED AGAINST THE
PLEDGORS (OR EITHER OF THEM) RELATING TO THIS SECURITY AGREEMENT
OR ANY RELATED AGREEMENT OR DOCUMENT OR TO ENFORCE BY SPECIFIC
PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR
PERMANENT INJUNCTION, THIS SECURITY AGREEMENT OR ANY RELATED
AGREEMENT OR DOCUMENT AGAINST THE PLEDGORS.
IN WITNESS WHEREOF, the Pledgors, the Trustee and the
Securities Intermediary have each caused this Security Agreement
to be duly executed and delivered as of the date first above
written.
Pledgors:
WATERFORD GAMING, L.L.C.
By: ____________________________
Name:
Title:
WATERFORD GAMING FINANCE CORP.
By: ____________________________
Name:
Title:
Trustee:
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:_____________________________
Philip G. Kane
Vice President
Securities Intermediary:
STATE STREET BANK AND TRUST COMPANY,
as Securities Intermediary
By:_____________________________
Philip G. Kane
Vice President
EXHIBIT A
CERTIFICATE
In accordance with Section 3(e) of the Security
Agreement, dated as of March 17, 1999 (the "Security Agreement"),
by and among Waterford Gaming L.L.C. and Waterford Gaming Finance
Corp. (collectively, the "Pledgors"), State Street Bank and Trust
Company, as indenture trustee (the "Trustee") for the holders of
the Pledgors' 9 1/2% Senior Notes due 2010 (the "Notes"), and State
Street Bank and Trust Company, as securities intermediary (the
"Securities Intermediary"), the undersigned officers of the
Trustee and the Securities Intermediary, on behalf of the Trustee
and the Securities Intermediary respectively, hereby make the
following certifications to the Pledgors and the initial
purchasers of the Notes. Capitalized terms used and not defined
in this certificate have the meanings given them in the Security
Agreement or in the documents referenced therein.
1. Substantially contemporaneously with the execution
and delivery of this Certificate, the Trustee has established and
will maintain the Securities Account with the Securities
Intermediary. The Securities Intermediary has received
$11,875,000 from the net proceeds from the sale of the Notes and
has used those funds to purchase Pledged Securities (or intends
to do so as soon as practicable). The Securities Intermediary
has made or will (upon purchase of the Pledged Securities) make
appropriate book entries in its records establishing that the
Pledged Securities and the Trustee's Securities Entitlement
thereto have been credited to and are held in the Securities
Account.
2. The Trustee has established and maintained and
will maintain the Securities Account, all Securities Entitlements
thereto, and all rights with respect to the Pledged Collateral
solely in its capacity as Trustee and has not asserted and will
not assert any claim to or interest in the Pledged Collateral
except in that capacity.
3. The Trustee and the Securities Intermediary have
acquired their Security Entitlements to the Pledged Securities
for value and without notice of any adverse claim thereto.
Without limiting the generality of the foregoing, neither the
Pledged Securities nor the Security Entitlements thereto of the
Securities Intermediary and the Trustee are, to their knowledge,
subject to any Lien granted by either of them in favor of any
securities intermediary or any other Person.
4. Each signatory represents and warrants that he or
she is duly authorized to execute this certificate.
IN WITNESS WHEREOF, the undersigned officers have
executed this Certificate on behalf of the Trustee and the
Securities Intermediary, respectively, this 17th day of March
1999.
STATE STREET BANK AND TRUST COMPANY,
As Trustee
By:___________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
As Securities Intermediary
By:___________________________________
Name:
Title:
EXECUTION COPY
OMNIBUS TERMINATION AGREEMENT dated March 18, 1999, among the
parties set forth on Exhibit A (collectively, the "Parties").
WHEREAS, pursuant to the Amended and Restated Gaming Facility
Management Agreement dated August 30, 1995 and the Hotel/Resort
Management Agreement dated February 28, 1994 (collectively, the
"Management Agreement"), among TCA, the Mohegan Tribal Gaming
Authority ("MTGA") and The Mohegan Tribe of Indians of Connecticut
(the "Tribe"), among other things, TCA was obligated to develop
and manage the Mohegan Sun Casino complex (the "Mohegan Sun");
WHEREAS, in order to carry out its obligations under the
Management Agreement, TCA entered into certain agreements with
certain of the Parties, including the various agreements set forth
on Exhibit B (collectively, the "Agreements");
WHEREAS, the Tribe, MTGA and TCA have entered into a Relinquishment
Agreement dated as of February 7, 1998 (the "Relinquishment Agreement"),
pursuant to which the Management Agreement is to be terminated and TCA will
no longer be responsible for managing the Mohegan Sun;
WHEREAS, pursuant to the Relinquishment Agreement, TCA will be
entitled to certain payments in consideration of relinquishing its
rights under the Management Agreement (the "Relinquishment
Payments"); and
WHEREAS, as a result of the Relinquishment Agreement, and
provided that the Relinquishment Agreement is in full force and
effect as of January 1, 2000, the Parties are agreeable to
terminating certain of the Agreements in consideration of certain
payments, all as set forth herein.
NOW, THEREFORE, in consideration of the agreements and
obligations set forth herein, the Parties hereby agree as follows.
1. Status Until January 1, 2000. Effective as of the date
hereof, the agreements set forth as numbers 8 and 10 of
Exhibit B shall terminate. All of the other Agreements
shall remain in full force and effect until January 1,
2000 and all fees and amounts payable under such other
Agreements for the period ending December 31, 1999 which
have not been previously paid shall be calculated by
Waterford and Sun (the "Accrued Amounts"). The Accrued
Amounts shall be paid in accordance with paragraph 6 of
this Omnibus Termination Agreement.
2. Agreement Termination. Effective January 1, 2000, provided
that on such date the Relinquishment Agreement is in full
force and effect,
A. Omnibus Financing Agreement shall terminate;
B. All obligations, rights, payments and duties under the
Completion Guarantee Agreement which may arise or which
may exist from and after January 1, 2000 shall terminate,
and in consideration of such termination, TCA shall pay
to SIHL an annual fee of $5 million for seven years,
payable in equal quarterly installments of $1,250,000 on
each of March 31, June 30, September 30 and December 31
(the "Payment Dates"), beginning March 31, 2000 and
ending December 31, 2006;
C. All obligations, rights, payments and duties under
the Management Services Agreement, the Organizational and
Administrative Agreement and the Marketing Services
Agreement which may arise or which may exist from and
after January 1, 2000 shall terminate, and in
consideration of such termination, within thirty (30)
days of each Payment Date beginning March 31, 2000 and
ending on December 31, 2014, TCA shall pay to each of
SIML and Waterford 25% of the Relinquishment Payments;
D. The Expense Letter Agreement shall terminate, and in
consideration of such termination, TCA shall first pay
the actual expenses incurred by TCA as approved from time
to time by Sun Cove and Waterford (the "Expenses") and
thereafter shall pay to each of the following parties the
following percentages of an annual fee of $2 million
dollars less the Expenses, which fee shall be payable in
equal quarterly installments on the Payment Dates
beginning March 31, 2000 and ending December 31, 2014:
Party Percentage
Sun Cove 50.0%
Len Wolman 12.5%
Mark Wolman 12.5%
Del J. Lauria 12.5%
Stephan F. Slavik, Sr. 12.5%
100.0%
3. Development Services Agreements. It is agreed that the
Agreement Relating to Development Services and the Local
Construction Services Agreement attached hereto as Exhibit C are
duly effective as of February 9, 1998.
4. Payment From Cash Flow. The Parties agree that all amounts
due under this Omnibus Termination Agreement shall only be
payable in the order set forth in paragraph 6 below, as modified
by the provisions of paragraphs 7 and 8 below, and to the extent
to which TCA has adequate cash to pay such amounts and meet its
other obligations. To the extent that TCA does not have adequate
cash to make such payments and meet its other obligations, such
amounts due under this Omnibus Termination Agreement shall be
deferred (without the accrual of interest) until TCA has
sufficient cash to pay them.
5. Releases.
A. TCA and SIML hereby mutually release and discharge one
another from or with regard to any and all suits, claims,
causes of action, damages, torts, contracts, liabilities,
costs and expenses, including, without limitation,
attorneys' fees and disbursements, of every nature and
kind (collectively, "Claims"), whether known or unknown,
whether contingent or uncontingent, which previously
existed, exists now or which may exist in the future,
arising from, relating to and/or connected in any way
with the Development Services Agreement.
B. SIML and Wolman hereby mutually release and discharge one
another from or with regard to any and all Claims of
every nature and kind, whether known or unknown, whether
contingent or uncontingent, which previously existed,
exists now or which may exist in the future, arising
from, relating to and/or connected in any way with the
Subdevelopment Services Agreement.
C. Furthermore, effective as of January 1, 2000, provided
that on such date the Relinquishment Agreement is in full
force and effect, all of the Parties to the Omnibus
Financing Agreement, the Completion Guaranty Agreement,
the Management Services Agreement, the Expense Letter
Agreement, the Organizational and Administrative
Agreement and the Marketing Services Agreement
(collectively, the "Applicable Agreements") agree to
release and forever discharge one another from or with
regard to any and all Claims of every nature and kind,
whether known or unknown, whether contingent or
uncontingent, which previously existed, exist as of
January 1, 2000 or which may arise after January 1, 2000,
relating to and/or connected in any way with the
Applicable Agreements, except that such releases and
discharges shall not release such Parties from their
respective obligations under this Omnibus Termination
Agreement.
6. Priority of Payments. TCA agrees that it will use its cash to
pay the following obligations in the following order:
FIRST, to pay the Accrued Amounts relating to the Expense
Letter Agreement and the obligations set forth in Section
2.D of this Omnibus Termination Agreement;
SECOND, to return to TCA's partners all capital
contributions made by them to TCA after September 29,
1995;
THIRD, to pay the Accrued Amounts relating to the
Completion Guarantee Agreement;
FOURTH, to make the payments set forth in Agreement
Relating to Development Services and the Local
Construction Services Agreement;
FIFTH, to make the payments set forth in Section 2.B of
this Omnibus Termination Agreement;
SIXTH, to pay the Accrued Amounts due under the
Management Services Agreement, the Organizational and
Administrative Agreement and the Marketing Services
Agreement; and
SEVENTH, to make the payments set forth in Section 2.C
of this Omnibus Termination Agreement.
After making the payments and other distributions described in
subparagraphs FIRST through SEVENTH above, but subject to
paragraphs 7 and 8 below, TCA shall disburse all of its
remaining cash to its partners as "Excess Cash" consistent with
Section 3.03a.(3) of TCA's Amended and Restated Partnership
Agreement dated September 21, 1994, as amended (the "Partnership
Agreement").
7. Special Payout From TCA. Notwithstanding the priority of
payments set forth in paragraph 6 above, on the date TCA
receives any funds from SIHL or Waterford pursuant to the last
sentence of paragraph 3 of the Completion Guarantee Agreement,
TCA shall immediately pay such amounts 50% to Sun Cove and 50%
to Waterford.
8. Income Tax Distributions. Neither Sun Cove nor Waterford
currently anticipate receipt from TCA in any year of amounts
less than the amount described in Section 3.03a.(1) of the
Partnership Agreement. However, it is agreed by the Parties
that TCA shall not be required to make any of the payments or
distributions required by this Omnibus Termination Agreement
until it has annually distributed to its partners, pro rata, at
least the amount described in Section 3.03a.(1) of the
Partnership Agreement less twice the amount of all other funds
paid or distributed to Waterford during such year pursuant to
this Omnibus Termination Agreement.
9. Conflicts. If the provisions of this Omnibus Termination
Agreement shall conflict with those of the Partnership Agreement
or any of the Agreements, then the provisions of this Omnibus
Termination Agreement shall prevail.
10. Notices. All notices hereunder shall be deemed properly given
upon (i) receipt by the addressee by personal delivery or
facsimile transmission, (ii) two (2) business days after
delivery by an overnight express delivery service for the next
business day delivery, or (iii) if mailed, upon the first to
occur of receipt or the expiration of five (5) business days
after deposit in United States Postal Service certified mail,
postage prepaid, addressed to the parties at the addresses
appearing below. Such addresses may be changed by notice given
in the same manner.
If to Slavik: Del J. Lauria
The Slavik Companies
32605 West Twelve Mile Road
Suite 350
Farmington Hills, MI 48334
Telecopy: (248) 488-5533
With a copy to: Sheldon P. Winkelman, Esq.
Honigman Miller Schwartz and Cohn
2290 First National Building
Detroit, Michigan 48226-3583
Telecopy: (313) 465-7607
If to TCA, Waterford
or Wolman: Len Wolman
c/o LMW Investments, Inc.
914 Hartford Turnpike
P.O. Box 715
Waterford, CT 06385
Telecopy: (860) 447-8554
With a copy to: Honigman Miller Schwartz and Cohn
2290 First National Building
Detroit, Michigan 48226-3583
Attn: Sheldon P. Winkelman, Esq.
Telecopy: (313) 465-7607
If to SIHL, SIML,
TCA or Sun Cove: Howard ("Butch") Kerzner
Sun International Hotels Limited
Executive Offices, Coral Towers
Atlantis Resort, Paradise Island
Nassau, Bahamas
Telecopy: (242) 363-4581
With a copy to: Charles Adamo, Esq.
Sun International Hotels Limited
Executive Offices, Coral Towers
Atlantis Resort, Paradise Island
Nassau, Bahamas
Telecopy: (242) 363-4581
11. Amendments. This Agreement may be amended or modified only by a
written instrument executed by all of the parties hereto.
12. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New
York.
13. Severability. If any provision hereof shall be judicially
determined to be illegal, or if the application thereof to any
party or in any circumstance shall, to any extent, be judicially
determined to be invalid or unenforceable, the remainder of this
Agreement, or the application of such provision to parties or in
circumstances other than those to which it has been judicially
determined to be invalid or unenforceable, shall not be affected
thereby, and each provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
14. Counterparts. This Agreement may be executed by facsimile and in
any number of counterparts, each of which shall constitute an
original and all of which together shall constitute one and the
same Agreement.
15. Further Assurances. The parties will execute and deliver such
further instruments and undertake such further actions as may be
required to carry out the intent and purposes of this Agreement.
16. Successors and Assigns. This Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their
respective successors and assigns.
IN WITNESS WHEREOF, the undersigned have executed this Omnibus
Termination Agreement on the day and year first above written.
SUN INTERNATIONAL HOTELS LIMITED
By:
Its:
WATERFORD GAMING, L.L.C.
By: Slavik Suites, Inc.
Its: Member
By:
Its:
By: LMW Investments, Inc.
Its: Member
By:
Its:
[signatures cont'd on following page]
TRADING COVE ASSOCIATES
By: Sun Cove Limited
Its: Partner
By:
Its:
By: Waterford Gaming, L.L.C.
Its: Partner
By:
Its:
SLAVIK SUITES, INC.
By:
Its:
WOLMAN CONSTRUCTION, L.L.C.
By:
Its:
SUN INTERNATIONAL MANAGEMENT LIMITED
By:
Its:
[signatures cont'd on following page]
LMW INVESTMENTS, INC.
By:
Its:
SUN COVE LIMITED
By:
Its:
EXHIBIT A
The Parties
1. Sun International Hotels Limited, a Bahamian corporation ("SIHL")
2. Trading Cove Associates, a Connecticut general partnership ("TCA")
3. Waterford Gaming, L.L.C., a Delaware limited liability corporation
("Waterford")
4. Sun International Management Limited, a British Virgin Islands
corporation ("SIML")
5. LMW Investments, Inc., a Connecticut corporation ("LMW")
6. Sun Cove Limited, a Connecticut corporation ("Sun Cove")
7. Slavik Suites, Inc., a Michigan corporation ("Slavik")
8. Wolman Construction, L.L.C., a Connecticut limited liability
company ("Wolman")
EXHIBIT B
1. Amended and Restated Omnibus Financing Agreement dated as of September 19,
1995 among TCA, SIHL and Waterford (the "Omnibus Financing Agreement")
2. Completion Guarantee and Investment Banking and Financing Arrangement Fee
Agreement among TCA, Waterford and SIHL dated as of September 21, 1995
(the "Completion Guarantee Agreement")
3. Development Services Agreement between TCA and SIHL dated as of September
29, 1995 (the "Development Services Agreement")
4. Subdevelopment Services Agreement between SIML and Wolman Construction,
L.L.C. dated as of September 29, 1995 (the "Subdevelopment Services
Agreement")
5. Organizational and Administrative Services Agreement among TCA, RJH
Development Corp., Slavik and LMW dated as of February 6, 1995
(the "Organizational and Administrative Agreement")
6. Marketing Services Agreement between TCA, Sun Casino Management S. A. and
Sun Cove dated as of February 6, 1995 to which is attached Assignment and
Assumption Agreement between Sun Casino Management, S.A., Sun Cove, and
SIML dated as of September 21, 1995 (the "Marketing Services Agreement")
7. The Management Services Agreement, dated as of September 29, 1995 among
TCA, SIML, Waterford, LMW and Slavik (the "Management Services Agreement")
8. Agreement With Respect to Redemption or Repurchase of Subordinated Notes
between SIHL and Waterford dated as of October 19, 1996
9. Letter Agreement dated October 19, 1996, among Sun Cove, Slavik and LMW
(the "Expense Letter Agreement")
10. Memorandum of Understanding dated as of February 7, 1998, among SIHL,
Slavik, LMW, and Waterford (the "Memorandum of Understanding").
WATERFORD GAMING, L.L.C.
WATERFORD GAMING FINANCE CORP.
$125,000,000
9 1/2% Senior Notes due 2010
Purchase Agreement
March 10, 1999
Bear, Stearns & Co. Inc.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Salomon Smith Barney Inc.
WATERFORD GAMING, L.L.C.
WATERFORD GAMING FINANCE CORP.
$125,000,000
9 1/2% Senior Notes due 2010
PURCHASE AGREEMENT
March 10, 1999
New York, New York
BEAR, STEARNS & CO. INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
SALOMON SMITH BARNEY INC.
c/o Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
Ladies & Gentlemen:
Waterford Gaming, L.L.C., a Delaware limited liability company
(the "Company"), and Waterford Gaming Finance Corp., a Delaware corporation
("Finance" and, together with the Company, the "Issuers"), propose to issue
and sell to Bear, Stearns & Co. Inc. ("Bear Stearns"), Merrill Lynch, Pierce,
Fenner, & Smith Incorporated and Salomon Smith Barney Inc. (each, an "Initial
Purchaser" and collectively, the "Initial Purchasers") $125,000,000 in
aggregate principal amount of 9 1/2% Senior Notes due 2010 (the "Notes"),
subject to the terms and conditions set forth herein. The Notes will be
issued pursuant to an indenture (the "Indenture"), to be dated the Closing
Date (as defined), among the Issuers and State Street Bank & Trust Company,
as trustee (the "Trustee"). Capitalized terms used herein and not otherwise
defined shall have the meanings assigned to such terms in the Indenture.
1. Issuance of Securities. The Issuers propose, upon the terms and subject
to the conditions set forth herein, to issue and sell to the Initial
Purchasers an aggregate of $125,000,000 in principal amount of the Notes.
Upon original issuance thereof, and until such time as the same is no longer
required under the applicable requirements of the Securities Act of 1933, as
amended (the "Act"), the Notes (and all securities issued in exchange
therefor or in substitution thereof) shall bear the following legend:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO,
OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) WHICH, IN
THE CASE OF A DEALER, OWNS AND INVESTS ON A
DISCRETIONARY BASIS AT LEAST $25.0 MILLION OF
SECURITIES OF ISSUERS THAT ARE NOT AFFILIATED WITH
THE DEALER, (2) AGREES THAT IT WILL NOT WITHIN
TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS
SECURITY RESELL OR OTHERWISE TRANSFER THIS
SECURITY EXCEPT (A) TO WATERFORD, WATERFORD FINANCE
OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED
STATES TO A QUALIFIED INSTITUTIONAL BUYER WHICH,
IN THE CASE OF A DEALER, OWNS AND INVESTS ON A
DISCRETIONARY BASIS AT LEAST $25.0 MILLION OF
SECURITIES OF ISSUERS THAT ARE NOT AFFILIATED
WITH THE DEALER, IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED
STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR
(AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT) WHICH, IN THE CASE OF
A DEALER, OWNS AND INVESTS ON A DISCRETIONARY
BASIS, AT LEAST $25 MILLION OF SECURITIES THAT
ARE NOT AFFILIATED WITH THE DEALER AND IN THE
CASE OF ALL OTHER INSTITUTIONAL ACCREDITED
INVESTORS, AT LEAST $5 MILLION, THAT, PRIOR TO
SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON
ITS BEHALF BY A U.S. BROKER-DEALER) TO THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE
FORM OF WHICH LETTER CAN BE OBTAINED FROM THE
TRUSTEE FOR THIS SECURITY), (D) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE), OR (E)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND (3) AGREES THAT IT
WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY
IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS SECURITY WITHIN TWO YEARS AFTER
THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE
PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED
INVESTOR, THE HOLDER MUST, PRIOR TO SUCH
TRANSFER, FURNISH TO THE TRUSTEE, WATERFORD AND
WATERFORD FINANCE SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS ANY OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER
IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT."
2. Offering. The Notes will be offered and sold to the Initial
Purchasers pursuant to an exemption from the registration require
ments under the Act. The Issuers have prepared a preliminary
offering memorandum, dated March 1, 1999 (the "Preliminary Offer
ing Memorandum"), and a final offering memorandum, dated March 10,
1999 (the "Offering Memorandum"), relating to the Issuers and the
Notes.
The Initial Purchasers have advised the Issuers that the
Initial Purchasers will make offers (the "Exempt Resales") of the
Notes on the terms set forth in the Offering Memorandum, as
amended or supplemented, solely to persons whom the Initial Purchasers
reasonably believe to be "qualified institutional buyers,"
as defined in Rule 144A under the Act ("QIBs"), which in the case
of dealers, own and invest on a discretionary basis at least $25.0
million of securities of issuers that are not affiliated with the
dealer. Such persons are referred to herein as the "Eligible
Purchasers." The Initial Purchasers will offer the Notes to such
Eligible Purchasers initially at a price equal to 100% of the
principal amount thereof. Such price may be changed at any time
without notice.
The Notes will be secured by cash of the Company that is deposited
in an Interest Reserve Account and invested in Investment Grade Securities
or Government Securities, on the terms set forth in the security and control
agreement (the "Security Agreement "). This Agreement, the Notes, the
Security Agreement and the Indenture are hereinafter referred to collectively
as the "Operative Documents."
3. Purchase, Sale and Delivery. (a) On the basis of the representations,
warranties and covenants contained in this Agreement, and subject to its
terms and conditions, the Issuers agree to issue and sell to the Initial
Purchasers, and each Initial Purchaser agrees, severally and not jointly,
to purchase from the Issuers, the principal amount of Notes set forth
opposite the name of such Initial Purchaser on Exhibit A. The purchase price
for the Notes will be $973.75 per $1,000 principal amount Note. (b) Delivery
of the Notes shall be made, against payment of the purchase price therefor,
at the offices of Latham & Watkins, New York, New York or such other location
as may be mutually acceptable. Such delivery and payment shall be made at
9:00 a.m., New York City time, on March 17, 1999 or at such other time as
shall be agreed upon by the Initial Purchasers and the Issuers.
The time and date of such delivery and payment are herein called the "Closing
Date."
(c) On the Closing Date, one or more Notes in definitive global form,
registered in the name of Cede & Co., as nominee of The Depository Trust
Company ("DTC"), having an aggregate amount corresponding to the aggregate
principal amount of the Notes (the "Global Note") sold pursuant to Exempt
Resales to Eligible Purchasers shall be delivered by the Issuers to the
Initial Purchasers (or as the Initial Purchasers direct), against payment by
the Initial Purchasers of the purchase price therefor, by wire transfer of
immediately available funds, to an account or accounts designated by the
Issuers, provided that the Issuers shall give at least one business days'
prior written notice to the Initial Purchasers of the information required to
effect such wire transfer. The Global Note shall be made available to the
Initial Purchasers for inspection not later than 9:30 a.m. on the business
day immediately preceding the Closing Date.
4. Agreements of the Issuers. Each of the Issuers covenants and agrees
with the Initial Purchasers as follows:
(a) To advise the Initial Purchasers promptly and, if requested by the
Initial Purchasers, to confirm such advice in writing, (i) of the issuance by
any state securities commission of any stop order suspending the qualification
or exemption from qualification of any Notes for offering or sale in any
jurisdiction, or the initiation of any proceeding for such purpose by any
state securities commission or other regulatory authority and (ii) of the
happening of any event that makes any statement of a material fact made in
the Preliminary Offering Memorandum or the Offering Memorandum untrue or that
requires the making of any additions to or changes in the Preliminary Offering
Memorandum or the Offering Memorandum in order to make the statements therein,
in the light of the circumstances under which they are made, not misleading.
The Issuers shall use their respective best efforts to prevent the issuance
of any stop order or order suspending the qualification or exemption from
qualification of any Notes under any state securities or Blue Sky laws and,
if at any time any state securities commission or other regulatory authority
shall issue an order suspending the qualification or exemption from
qualification of any Notes under any state securities or Blue Sky laws, the
Issuers shall use their respective best efforts to obtain the withdrawal or
lifting of such order at the earliest possible time.
(b) To furnish the Initial Purchasers and those persons identified by
the Initial Purchasers to the Issuers, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum, and any amendments
or supplements thereto, as the Initial Purchasers may reasonably request. The
Issuers consent to the use of the Preliminary Offering Memorandum and the
Offering Memorandum, and any amendments and supplements thereto required
pursuant hereto, by the Initial Purchasers in connection with Exempt Resales.
(c) Not to amend or supplement the Preliminary Offering Memorandum or
the Offering Memorandum during such period as in the opinion of counsel for
the Initial Purchasers the Preliminary Offering Memorandum or the Offering
Memorandum is required by law to be delivered in connection with Exempt
Resales and in connection with market-making activities of the Initial
Purchasers for so long as any Notes are outstanding unless the Initial
Purchasers shall previously have been advised thereof and shall not have
objected thereto within a reasonable time after being furnished a copy
thereof (except to the extent that any such amendment or supplement objected
to is necessary, in the opinion of counsel to the Issuers, to make the
statements made in the Preliminary Offering Memorandum or Offering Memorandum,
not misleading). The Issuers shall promptly prepare, upon the Initial
Purchasers' request, any amendment or supplement to the Preliminary Offering
Memorandum or the Offering Memorandum that may be necessary or advisable in
connection with such Exempt Resales or such market-making activities (except
to the extent that any such amendment or supplement requested would, in the
opinion of counsel to the Issuers, render the statements made in the
Preliminary Offering Memorandum or Offering Memorandum, as proposed to be
amended or supplemented, misleading).
(d) If, during the period referred to in 4(c) above, any event shall
occur as a result of which, in the judgment of the Issuers or in the reasonable
opinion of counsel for the Issuers or counsel for the Initial Purchasers, it
becomes necessary or advisable to amend or supplement the Preliminary Offering
Memorandum or the Offering Memorandum in order to make the statements therein,
in the light of the circumstances then existing, not misleading, or if it is
necessary or advisable to amend or supplement the Preliminary Offering
Memorandum or the Offering Memorandum to comply with any law, statute, or
rule or regulation of any govern mental agency or entity, (i) to notify the
Initial Purchasers and (ii) forthwith to prepare an appropriate amendment or
supplement to such Preliminary Offering Memorandum or the Offering Memorandum
so that the statements therein as so amended or supplemented will not, in the
light of the circumstances when it is so delivered, be misleading, or so that
such Preliminary Offering Memorandum or the Offering Memorandum will comply
with applicable law.
(e) To cooperate with the Initial Purchasers and counsel for the
Initial Purchasers in connection with the qualification or registration of
the Notes for offer and sale under the state securities or Blue Sky laws of
such jurisdictions as the Initial Purchasers may reasonably request and to
continue such qualification or registration in effect so long as required for
the Exempt Resales; provided, however, that neither Issuer shall be required
in connection therewith to register or qualify as a foreign corporation or
limited liability company, as applicable, where it is not now so qualified or
to take any action that would subject it to a general consent to service of
process in suits or taxation, in each case, other than as to matters and
transactions relating to the Preliminary Offering Memorandum, the Offering
Memorandum or Exempt Resales, in any jurisdiction where it is not now so
subject.
(f) Whether or not the transactions contemplated by this Agreement
are consummated or this Agreement becomes effective or is terminated, to pay
all costs, expenses, fees and taxes incident to the performance of the
obligations of the Issuers hereunder, including in connection with: (i) the
preparation, printing, filing and distribution of the Preliminary Offering
Memorandum and the Offering Memorandum (including, without limitation,
financial statements) and all amendments and supplements thereto required
pursuant hereto, (ii) the preparation (including, without limitation,
duplication costs) and delivery of all agreements, correspondence and all
other documents prepared and delivered in connection herewith and with the
Exempt Resales, (iii) the issuance, transfer and delivery of the Notes to the
Initial Purchasers, including any transfer or other taxes payable thereon,
(iv) the qualification or registration of the Notes and for offer and sale
under the securities or Blue Sky laws of the jurisdictions referred to in
Section 4(e) (including, without limitation, the cost of printing and mailing
a preliminary and final Blue Sky Memorandum and the reasonable fees and
disbursements of counsel for the Initial Purchasers relating thereto),
(v) furnishing such copies of the Preliminary Offering Memorandum and the
Offering Memorandum, and all amendments and supplements thereto, as may be
requested for use in connection with Exempt Resales, (vi) the preparation of
certificates for the Notes (including, without limitation, printing and
engraving thereof), (vii) the fees, disbursements and expenses of the Issuers'
counsel and accountants, (viii) all fees and expenses (including fees and
expenses of counsel) of the Issuers in connection with the approval of the
Notes by DTC for "book-entry" transfer, (ix) rating the Notes by rating
agencies, (x) any fees payable for the review of the National Association of
Securities Dealers, Inc. (the "NASD") in connection with the initial and
continued designation of the Notes as PORTAL Securities under the PORTAL
Market Rules pursuant to NASD Rule 5322, (xi) the reasonable fees and expenses
of the Trustee and its counsel, (xii) the performance by the Issuers of their
other obligations under this Agreement and the other Operative Documents,
(xiii) any and all other additional fees and expenses incurred by the Issuers
and (xiv) one-half of the out-of-pocket expenses of the Initial Purchasers,
excluding the fees and expenses of counsel to the Initial Purchasers.
(g) To use the proceeds from the sale of the Notes in the manner
described in the Offering Memorandum (and any amendments or supplements
thereto) under the caption "Use of Proceeds."
(h) Not to voluntarily claim, and to resist actively any attempts to
claim, the benefit of any usury laws against the holders of any Notes.
(i) Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate and to cause the Trading Cove Associates, a Connecticut general
partnership (the "Manager"), not to engage in such activities in respect of
any security (as defined in the Act) that would be integrated with the sale
of the Notes in a manner that would require the registration under the Act of
the sale to the Initial Purchasers or the Eligible Purchasers of the Notes or
to take any other action and to cause the Manager not to take any other
action that would result in the Exempt Resales not being exempt from
registration under the Act.
(j) For so long as any of the Notes remain outstanding and during any
period in which the Issuers are not subject to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), to make
available to any holder or beneficial owner of Notes in connection with any
sale thereof and any prospective purchaser of such Notes from such holder or
beneficial owner, the information required by Rule 144A(d)(4) under the
Act.
(k) To comply with all of their agreements set forth in the
representation letters to DTC relating to the approval of the Notes by DTC
for "book-entry" transfer.
(l) To use their respective best efforts to effect the inclusion of the
Notes in PORTAL and to obtain approval of the Notes by DTC for "book-entry"
transfer.
(m) During a period of five years following the Closing Date, to deliver
without charge to the Initial Purchasers, as they may reasonably request,
promptly upon their becoming available, copies of (i) all reports or other
publicly available information that either Issuer shall mail or otherwise
make available to their respective securityholders and (ii) all reports,
financial statements and proxy or information statements filed by the Issuers
with the Securities and Exchange Commission (the "Commission") or any
national securities exchange and such other publicly available information
concerning either Issuer, including without limitation, press releases.
(n) Prior to the Closing Date, to furnish to the Initial Purchasers,
as soon as they have been prepared in the ordinary course by the Issuers,
copies of any unaudited interim financial statements for any period subsequent
to the periods covered by the financial statements appearing in the Offering
Memorandum.
(o) Not to take, directly or indirectly, any action designed to, or
that might reasonably be expected to, cause or result in stabilization or
manipulation of the price of any security of either Issuer to facilitate the
sale or resale of the Notes. Neither Issuer will distribute prior to the
Closing Date any (i) preliminary offering memorandum, other than the
Preliminary Offering Memorandum, (ii) offering memorandum, other than the
Offering Memorandum, or (iii) other offering material in connection with
the offering and sale of the Notes.
(p) To use their reasonable best efforts to do and perform all things
required or necessary to be done and performed under this Agreement prior to
the Closing Date and to satisfy all conditions precedent to the delivery of
the Notes.
5. Representations and Warranties.
(a) The Issuers, jointly and severally, represent and warrant to
the Initial Purchasers that:
i. The Preliminary Offering Memorandum as of its date
does not, and the Offering Memorandum as of its date and as
of the Closing Date does not and will not, and any supplement
or amendment to them will not, contain any untrue statement
of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading, except that the
representations and warranties contained in this paragraph shall
not apply to statements in or omissions from the Preliminary
Offering Memorandum and the Offering Memorandum (or any
supplement or amendment thereto) made in reliance upon and in
conformity with information relating to the Initial Purchasers
furnished to the Issuers in writing by the Initial Purchasers
expressly for use therein. No stop order preventing the use of
the Preliminary Offering Memorandum or the Offering Memorandum,
or any amendment or supplement thereto, or any order asserting that
any of the transactions contemplated by this Agreement are subject to
the registration requirements of the Act, has been issued.
ii. Each of the Issuers and the Manager (A) has been
duly organized or incorporated and is validly existing as a
corporation, limited liability company or partnership, as
applicable, in good standing under the laws of its jurisdiction
of incorporation or formation, as applicable, (B) has all
requisite corporate, limited liability company or partnership
power and authority, as applicable, to carry on its
business as it is currently being conducted and as described
in the Offering Memorandum and to own, lease and operate its
properties, and (C) is duly qualified and is in good standing
as a foreign corporation, limited liability company or
partnership, as applicable, authorized to do business in each
jurisdiction in which the nature of its business or its own
ership or leasing of property requires such qualification,
except where the failure to be so qualified could not reason
ably be expected to (1) result, individually or in the
aggregate, in a material adverse effect on the properties,
business, results of operations, condition (financial or other
wise), affairs or prospects of the Issuers and the Manager,
taken as a whole, (2) interfere with or adversely affect the
issuance or marketability of the Notes or (3) in any manner
draw into question the validity of this Agreement or any
other Operative Document or the transactions described in the
Offering Memorandum under the caption "Use of Proceeds" (any
of the events set forth in clauses (1), (2) or (3), a
"Material Adverse Effect").
iii. The Company directly owns all of the issued and
outstanding capital stock of Finance and 50% of the partner
ship interests of the Manager. Other than as set forth in the
previous sentence, the Company has no subsidiaries. Finance
has no subsidiaries.
iv. All of the outstanding capital stock of Finance
and 50% of the partnership interests of the Manager is owned,
directly or indirectly, by the Company, except as described
in the Offering Memorandum in connection with the buy/sell
option, free and clear of any security interest, claim, lien,
limitation on voting rights or encumbrance. All of the is
sued and outstanding shares of capital stock of Finance have
been duly authorized, validly issued, and are fully paid and
nonassessable and were not issued in violation of any
preemptive or similar rights.
v. Except as described in the Offering Memorandum in
connection with the buy/sell option relating to the partner
ship units of the Manager, there are currently no outstanding
subscriptions, rights, warrants, calls, commitments of sale
or options to acquire, or instruments convertible into or
exchangeable for, any capital stock or other equity interest
of any of the Issuers or related to or entitling any person
to purchase or otherwise acquire the Company's partnership
interest in the Manager.
vi. When the Notes are issued and delivered pursuant
to this Agreement, no Note will be of the same class (within
the meaning of Rule 144A under the Act) as securities of
either Issuer that are listed on a national securities exchange
registered under Section 6 of the Exchange Act or that
are quoted in a United States automated inter-dealer quotation
system.
vii. Each Issuer has all requisite corporate or limited
liability company power and authority, as applicable, to
execute, deliver and perform its obligations under this
Agreement and each of the other Operative Documents to which
it is a party and to consummate the transactions contemplated
hereby and thereby, including, without limitation, the corporate
or limited liability company power and authority to issue, sell
and deliver the Notes as provided herein and therein.
viii. This Agreement has been duly and validly authorized,
executed and delivered by each Issuer and (assuming the due
execution and deliver thereof by the Initial Purchasers) is the
legal, valid and binding agreement of each Issuer, enforceable
against each of them in accordance with its terms, except as such
enforceability may be (A) subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereinafter in
effect relating to or affecting the rights and remedies of creditors,
(B) subject, as to enforceability, to general principles of equity,
whether enforcement is considered in a proceeding in equity or at law,
and the discretion of the court before which any proceeding therefor may
be brought and (C) limited by securities laws prohibiting or limiting
the availability of, and public policy against, indemnification or
contribution.
ix. The Indenture has been duly and validly authorized by each
Issuer and, when duly executed and delivered by each Issuer (assuming
the due authorization, execution and delivery thereof by the Trustee),
will be the legal, valid and binding agreement of each Issuer, enforceable
against each of them in accordance with its terms, except as such
enforceability may be (A) subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereinafter in
effect relating to or affecting the rights and remedies of creditors and
(B) subject, as to enforceability, to general principles of equity,
whether enforcement is considered in a proceeding in equity or at
law, and the discretion of the court before which any proceeding
therefor may be brought. On the Closing Date, the Indenture will conform
in all material respects to the requirements of the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"), and the rules and
regulations of the Commission applicable to an indenture which is
qualified thereunder. The Offering Memorandum contains a summary of
the terms of the Indenture, which is accurate in all material respects.
x. The Notes have been duly and validly authorized by each
Issuer for issuance and sale to the Initial Purchasers pursuant to this
Agreement and, when issued and authenticated in accordance with the
terms of the Indenture and delivered against payment therefor in
accordance with the terms hereof and thereof, will be the legal, valid
and binding obligations of each Issuer, enforceable against it in
accordance with their terms and entitled to the benefits of the Indenture,
except as such enforceability may be (A) subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereinafter in effect relating to or affecting the rights and remedies
of creditors and (B) subject, as to enforceability, to general principles
of equity, whether enforcement is considered in a proceeding in equity
or at law, and the discretion of the court before which any proceeding
therefor may be brought. The Offering Memorandum contains a summary of
the terms of the Notes, which is accurate in all material respects.
xi. The Security Agreement has been duly and validly authorized by
each Issuer and, when executed and delivered by each Issuer, will be
the legal, valid and binding agreement of each Issuer, enforceable against
each of them in accordance with its terms, except as such enforceability
may be (A) subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereinafter in effect relating to
or affecting the rights and remedies of creditors and (B) subject, as to
enforceability, to general principles of equity, whether enforcement is
considered in a proceeding in equity or at law, and the discretion of
the court before which any proceeding therefor may be brought. The
Offering Memorandum contains a summary of the terms of the Security
Agreement, which is accurate in all material respects.
xii. Each of the Development Services Agreement dated as of February 7,
1999, by and between the Mohegan Tribal Gaming Authority (the "Authority")
and the Manager; the Relinquishment Agreement dated as of February 7,
1999, by and between the Authority and the Manager; the Amended and
Restated Gaming Facility Management Agreement dated as of August 30,
1995, by and between the Authority and the Manager; the Amended and
Restated Partnership Agreement of Trading Cove Associates, as amended
by the First Amendment thereto dated October 22, 1996; the Amended and
Restated Omnibus Financing Agreement dated as of September 10, 1997, by
and among the Manager, the Company and Sun International Hotels Limited
("Sun International"); and the Memorandum of Understanding dated
as of February 7, 1998, by and among the Company, Sun Cove Ltd.,
Sun International and the Manager (collectively, the "Agreements")
has been duly and validly authorized, executed and delivered by each
Issuer or the Manager a party thereto and is the legal, valid and
binding obligation of each Issuer or the Manager a party thereto,
enforceable against each Issuer or the Manager in accordance with
its terms, except as such enforceability may be (A) subject to
applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or herein after in effect relating to or
affecting the rights and remedies of creditors and (B) subject, as to
enforceability, to general principles of equity, whether enforcement
is considered in a proceeding in equity or at law, and the discretion
of the court before which any proceeding therefor may be brought.
The Offering Memorandum contains a summary of the terms of the
Agreements, which is accurate in all material respects.
xiii. Each of the Issuers and the Manager is not and, after giving
effect to the Offering, will not be, (A) in violation of its charter or
certificate of formation, as applicable, or bylaws, limited liability
company agreement or partnership agreement, as applicable, (B) in default
in the performance of any bond, debenture, note, indenture, mortgage,
deed of trust or other agreement or instrument to which it is a party or
by which it is bound or to which any of its properties is subject, which
singly or in the aggregate, could reasonably be expected to have a
Material Adverse Effect or (C) in violation of any local, state, federal,
tribal or foreign law, statute, ordinance, rule, regulation, requirement,
judgment or court decree (including, without limitation, environmental
laws, statutes, ordinances, rules, regulations, judgments or court
decrees) applicable to it or any of its assets or properties (whether
owned or leased), which singly or in the aggregate, could reasonably be
expected to have a Material Adverse Effect. To the best knowledge of
the Issuers, there exists no condition that, with notice, the passage of
time or otherwise, would constitute a default under any such document or
instrument.
xiv. None of (A) the execution, delivery or performance by either
Issuer of this Agreement or any of the other Operative Documents to
which it is a party, (B) the issuance and sale of the Notes and (C)
consummation by the Issuers of the transactions described in the Offering
Memorandum under the caption "Use of Proceeds," violates, conflicts with
or constitutes a breach of any of the terms or provisions of, or will
violate, conflict with or constitute a breach of any of the terms or
provisions of, or a default under (or an event that with notice or the
lapse of time, or both, would constitute a default under), or require
consent under, or result in the imposition of a lien or encumbrance on
any properties of any of the Issuers or the Manager, or an acceleration
of any indebtedness of any of the Issuers or the Manager pursuant
to, (1) the charter or certificate of formation, as applicable, or bylaws,
limited liability company agreement or partnership agreement, as
applicable, of any of the Issuers and the Manager, (2) any material bond,
debenture, note, indenture, mortgage, deed of trust or other agreement
or instrument to which any of the Issuers or the Manager is a party or
by which they or their property is or may be bound, (3) any statute,
rule or regulation applicable to any of the Issuers or the Manager or
any of their assets or properties or (4) any judgment, order or decree
of any court or governmental or tribal agency or authority having
jurisdiction over any of the Issuers or the Manager or any of their
assets or properties (including, without limitation, the gaming regulators
of the State of Connecticut, the Bureau of Indian Affairs of the
Department of the Interior, the Secretary of the Interior, the
National Indian Gaming Commission, the Authority Director of Regulation
or the Gaming Disputes Court of the Mohegan Tribe (collectively, the
"Gaming Authorities")). No consent, approval, authorization or order of,
or filing, registration, qualification, license or permit of or with, (A)
any court or governmental or tribal agency, body or administrative agency
(including, but not limited to, any Gaming Authorities, but except as the
securities or Blue Sky laws of various states may require) or (B) any
other person is required for (1) the execution, delivery and performance
by each Issuer of this Agreement or any of the other Operative Documents
to which it is a party or (2) the issuance and sale of the Notes and the
transactions contemplated hereby and thereby, except such as have been
or will be obtained and made on or prior to the Closing Date.
xv. There is (A) no action, suit, investigation or proceeding
before or by any court, arbitrator or governmental or tribal agency, body
or official, domestic or foreign (including, but not limited to, any
Gaming Authorities), now pending or, to the best knowledge of the Issuers,
threatened or contemplated to which any of the Issuers or the Manager is
or may be a party or to which the business or property of any of the
Issuers or the Manager, is or may be subject, (B) no statute, rule,
regulation or order that has been enacted, adopted or issued by any
governmental or tribal agency (including, but not limited to, any Gaming
Authorities) or, to the best knowledge of the Issuers, that has been
proposed by any governmental or tribal body (including, but not limited
to, any Gaming Authorities) and (C) no injunction, restraining order or
order of any nature by a federal, tribal or state court or foreign court
of competent jurisdiction to which any of the Issuers or the Manager is
or may be subject or to which the business, assets or property of any of
the Issuers or the Manager is or may be subject, that, in the case of
clauses (A), (B) and (C) above, (1) is required to be disclosed in the
Preliminary Offering Memorandum and the Offering Memorandum and that is
not so disclosed or (2) could reasonably be expected to have a Material
Adverse Effect.
xvi. No action has been taken with respect to the Issuers or the
Manager and no statute, rule, regulation or order has been enacted,
adopted or issued by any governmental or tribal agency that prevents the
issuance of the Notes or prevents or suspends the use of the Offering
Memorandum; no injunction, restraining order or order of any nature by a
federal, tribal or state court of competent jurisdiction has been issued
that prevents the issuance of the Notes or prevents or suspends the sale
of the Notes in any jurisdiction referred to in Section 4(e) hereof; and
every request of any securities authority or agency of any jurisdiction
for additional information has been complied with in all material
respects.
xvii. There is (A) no significant unfair labor practice complaint
pending against any of the Issuers or the Manager or, to the best
knowledge of the Issuers, threatened against any of them, before the
National Labor Relations Board, any state, local or tribal labor
relations board or any foreign labor relations board, and no significant
grievance or significant arbitration proceeding arising out of or under
any collective bargaining agreement is so pending against any of the
Issuers or the Manager or, to the best knowledge of the Issuers,
threatened against any of them and (B) no material strike, labor dispute,
slowdown or stoppage pending against any of the Issuers or the Manager
nor, to the best knowledge of the Issuers, threatened against any of
them. None of the Issuers or the Manager has violated (1) any federal,
tribal, state or local law or foreign law relating to discrimination
in hiring, promotion or pay of employees, (2) any applicable wage or
hour laws or (3) any provision of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or the rules and regulations
thereunder, except those violations that could not reasonably be expected
to have a Material Adverse Effect.
xviii. Except as would not have a Material Adverse Effect or otherwise
require disclosure in the Offering Memorandum, (A) none of the Issuers or
the Manager has been or is in violation of any federal, state or local
laws and regulations relating to pollution or protection of human health
or the environment, including, without limitation, laws and regulations
relating to emissions, discharges, releases or threatened releases of
toxic or hazardous substances, materials or wastes, or petroleum and
petroleum products ("Materials of Environmental Concern"), or otherwise
relating to the protection of human health and safety, or the use,
treatment, storage, disposal, transport or handling of Materials of
Environmental Concern (collectively, "Environmental Laws"),
which violation includes, but is not limited to, noncompliance with, or
lack of, any permits or other environmental authorizations; (B) there
are no circumstances, either past, present or that are reasonably
foreseeable, that may lead to any such violation in the future; (C) none
of the Issuers or the Manager has received any communication (written or
oral), whether from a governmental authority or otherwise, alleging
any such violation; (D) there is no pending or threatened claim,
action, investigation or notice (written or oral) by any person or
entity alleging potential liability of the Issuers or the Manager (or
against any person or entity for whose acts or omissions the Issuers or
the Manager is or may reasonably be expected to be liable, either
contractually or by operation of law) for investigatory, cleanup, or
other response costs, or natural resources or property damages, or
personal injuries, attorney's fees or penalties relating to (1) the
presence, or release into the environment, of any Materials of
Environmental Concern at any location, or (2) circumstances forming the
basis of any violation or potential violation, of any Environmental Law
(collectively, "Environmental Claims"); and (E) there are no past or
present actions, activities, circumstances, conditions, events or
incidents that could form the basis of any Environmental Claim.
xix. In the ordinary course of business, the Issuers and the
Manager, as appropriate, (A) conduct a periodic review of the effect of
Environmental Laws on the business, operations and properties of the
Issuers and the Manager, in the course of which, or as a result of which,
the Issuers and the Manager have identified and evaluated associated costs
and liabilities (including, without limitation, any capital or operating
expenditures required for cleanup, closure of properties or compliance
with Environmental Laws or any permit, license or approval, any related
constraints on operating activities, and any potential liabilities to
third parties); and (B) have conducted environmental investigations of,
and have reviewed reasonably available information regarding, the
business, properties and operations of the issuers and the Manager, and
of other properties within the vicinity of their business, properties
and operations, as appropriate for the circumstances of each such
property and operation; on the basis of such reviews, investigations
and inquiries, the Issuers and the Manager have reasonably concluded
that any costs and liabilities associated with such matters would not
have, singularly or in the aggregate, a Material Adverse Effect, or
otherwise require disclosure in the Offering Memorandum.
xx. Each of the Issuers, the Manager and their respective
key employees has such permits, licenses, franchises and authorizations
of governmental, tribal or regulatory authorities ("permits"), including,
without limitation, under any applicable Environmental Laws and any
applicable gaming laws, as are necessary to own, lease and operate the
properties and to conduct businesses of each of the Issuers and the
Manager, except where the failure to have such permits could not
reasonably be expected to have a Material Adverse Effect; each of the
Issuers, the Manager and their respective key employees has fulfilled
and performed all of its material obligations with respect to such
permits and no event has occurred which allows, or after notice or
lapse of time would allow, revocation or termination thereof or results
in any other material impairment of the rights of the holder of any such
permit; and, except as described in the Offering Memorandum, such permits
contain no restrictions that are materially burdensome to any of the
Issuers, the Manager or their respective key employees, as the case may
be. Neither of the Issuers has any reason to believe that the Issuers,
the Manager, the Authority and their respective key employees will
not obtain the permits necessary for the completion of the expansion of
the Mohegan Sun Casino as described in the Offering Memorandum on a
timely basis.
xxi. Each of the Issuers and the Manager has (A) good and marketable
title to all of the properties and assets described in the Offering
Memorandum as owned by it, free and clear of all liens, charges,
encumbrances and restrictions (except for Permitted Liens and taxes not
yet payable), (B) peaceful and undisturbed possession under all material
leases to which any of them is a party as lessee and each of which lease
is valid and binding and no default exists thereunder, except for defaults
that could not reasonably be expected to have a Material Adverse Effect,
(C) all permits and has made all declarations and filings with, all
federal, tribal, state and local authorities, all self-regulatory
authorities and all courts and other tribunals necessary to engage in
the business conducted by any of them in the manner described in the
Offering Memorandum and (D) no reason to believe that any governmental
body or agency is considering limiting, suspending or revoking any such
permits. All such permits are valid and in full force and effect
and each of the Issuers and the Manager is in compliance in all
material respects with the terms and conditions of all such permits
and with the rules and regulations of the regulatory authorities having
jurisdiction with respect thereto. All material leases to which any of
the Issuers or the Manager is a party are valid and binding and no default
by any of the Issuers or the Manager, as the case may be, has occurred
and is continuing thereunder and, to the best knowledge of the Issuers,
no material defaults by the landlord are existing under any such lease,
except those defaults that could not reasonably be expected to have a
Material Adverse Effect.
xxii. Each of the Issuers and the Manager owns, possesses or has the
right to employ all patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, software,
systems or procedures), trademarks, service marks and trade names,
inventions, computer programs, technical data and information
(collectively, the "Intellectual Property") presently employed by it in
connection with the businesses now operated by it or that are proposed
to be operated by it, free and clear of and without violating any right,
claimed right, charge, encumbrance, pledge, security interest, restriction
or lien of any kind of any other person, and none of the Issuers or the
Manager has received any notice of infringement of or conflict with
asserted rights of others with respect to any of the foregoing. The use of
the Intellectual Property in connection with the business operations of
any of the Issuers or the Manager does not infringe on the rights of
any person, except such in fringements as could not reasonably be
expected to have a Material Adverse Effect.
xxiii. All material tax returns required to be filed by any of the
Issuers or the Manager in all jurisdictions have been so filed and all
such returns are true, complete and correct in all material respects. All
material taxes, including withholding taxes, penalties and interest,
assessments, fees and other charges due and payable or claimed to be due
from such entities have been paid, other than (A) those being contested
in good faith by appropriate proceedings, timely instituted, and
diligently pursued and for which adequate reserves have been provided on
the books and records of the relevant entity, in accordance with
generally accepted accounting principles or (B) those currently payable
without penalty or interest.
xxiv. Except as disclosed in the Offering Memorandum, no relationship,
direct or indirect, exists between any of the Issuers or the Manager on
the one hand, and the directors, officers, stockholders or members,
customers or suppliers of any of the Issuers or the Manager on the other
hand, which would be required by the Act to be described in the Offering
Memorandum if the Offering Memorandum were a prospectus included in a
registration statement on Form S-1 filed with the Commission.
xxv. The Issuers and the Manager have (A) initiated a review and
assessment of all areas within their business and operations (including
those affected by suppliers, vendors and customers) that could be
adversely affected by the "Year 2000 Problem" (that is, the risk that
computer applications used by either Issuer (or suppliers, vendors and
customers) may be unable to recognize and perform properly date-sensitive
functions involving certain dates prior to and any date after December
31, 1999), (B) developed a plan and timeline for addressing the Year
2000 Problem on a timely basis and (C) to date, has implemented that
plan in accordance with that timetable. Based on the foregoing, to the
best knowledge of the Issuers, the Issuers believe that all computer
applications (including those of the Authority and the Mohegan Sun
Casino) that are material to their business and operations are reasonably
expected on a timely basis to be able to perform properly date-sensitive
functions for all dates before and after January 1, 2000 (that is, be
"Year 2000 Compliant"), except to the extent that a failure to do so
could not reasonably be expected to have Material Adverse Effect.
xxvi. None of the Issuers or the Manager is an "investment company"
or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended (the "Investment
Company Act").
xxvii. There are no holders of securities of any of the Issuers or
the Manager who, by reason of the execution by either Issuer of this
Agreement or any other Operative Document to which they are a party or
the consummation by either Issuer of the transactions contemplated hereby
and thereby, have the right to request or demand that either Issuers
register under the Act or analogous foreign laws and regulations
securities held by them.
xxviii. None of the Issuers or the Manager has (A) taken, directly or
indirectly, any action designed to, or that might reasonably be expected
to, cause or result in stabilization or manipulation of the price of any
security of any of the Issuers or the Manager to facilitate the sale or
resale of the Notes or (B) since the date of the Preliminary Offering
Memorandum (1) sold, bid for, purchased or paid any person any
compensation for soliciting purchases of the Notes or (2) paid or agreed
to pay to any person any compensation for soliciting another to purchase
any other securities of any of the Issuers or the Manager.
xxix. The accountants who have certified or will certify the
financial statements included or to be included as part of the Offering
Memorandum are independent accountants as required by the Act. The
historical financial statements, together with related schedules and
notes thereto, comply as to form in all material respects with the
requirements applicable to registration statements on Form S-1 under the
Act and present fairly in all material respects the financial position
results of operations of the Issuers at the dates and for the periods
indicated. Such financial statements have been prepared in accordance
with generally accepted accounting principles applied on a consistent
basis throughout the periods presented. The as adjusted financial
statements included in the Offering Memorandum have been prepared on a
basis consistent with such historical statements of the Issuer, except
for the adjustments specified therein, and give effect to assumptions
made on a reasonable basis and present fairly in all material respects
the historical and proposed transactions contemplated by this Agreement
and the other Operative Documents; and such as adjusted financial
statements comply as to form in all material respects with the
requirements applicable to as adjusted financial statements included in
registration statements on Form S-1 under the Act, except as expressly
stated therein. The other financial and statistical information and
data included in the Offering Memorandum derived from the historical and
as adjusted financial statements, are accurately presented in all
material respects and prepared on a basis consistent with the financial
statements, historical and as adjusted, included in the Offering
Memorandum and the books and records of the Issuers.
xxx. No registration under the Act of the Notes is required for the
sale of the Notes to the Initial Purchasers as contemplated hereby or for
the Exempt Resales assuming (A) that the purchasers who buy the Notes in
the Exempt Resales are Eligible Purchasers and (B) that the
representations and warranties of the Initial Purchasers in Section 5(b)
hereof are true and that the Initial Purchasers have complied with
the covenants set forth in Section 5(b) hereof and (C) that none of the
Initial Purchasers is an affiliate of any Issuer. No form of general
solicitation or general advertising (as defined in Regulation D under
the Act) was used by any of the Issuers or the Manager or their respective
representatives (other than the Initial Purchasers, as to which the
Issuers make no representation or warranty) in connection with the
offer and sale of any of the Notes or in connection with Exempt Resales,
including, but not limited to, articles, notices or other communications
published in any newspaper, magazine, or similar medium or broadcast over
television or radio, or any seminar or meeting whose attendees have been
invited by any general solicitation or general advertising. No securities
of the same class as the Notes have been issued and sold by any of the
Issuers or the Manager within the six-month period immediately prior to
the date hereof.
xxxi. The execution and delivery of this Agreement, the other
Operative Documents and the sale of the Notes to be purchased by Eligible
Purchasers will not involve any prohibited transaction within the meaning
of Section 406 of ERISA or Section 4975 of the Internal Revenue Code of
1986. The representation made by the Issuers in the preceding sentence
is made in reliance upon and subject to the accuracy of, and compliance
with, the representations and covenants made or deemed made by Eligible
Purchasers as set forth in the Offering Memorandum under the caption
"Transfer Restrictions."
xxxii. The statistical and market-related data included in the Offering
Memorandum are based on or derived from sources which the Issuers believe
are reliable and accurate in all material respects.
xxxiii. Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its date, and each amendment or supplement thereto, as
of its date, contains the information specified in, and meets the
requirements of, Rule 144A(d)(4) under the Act.
xxxiv. The Indenture is not required to be qualified under the Trust
Indenture Act.
xxxv. Subsequent to the respective dates as of which information is
given in the Offering Memorandum and up to the Closing Date, except as
set forth in the Offering Memorandum, (A) none of the Issuers or the
Manager has incurred any liabilities or obligations, direct or
contingent, which are material, individually or in the aggregate, to
the Issuers and the Manager, taken as a whole, nor entered into any
transaction not in the ordinary course of business, (B) there has not
been any change or development which, singly or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect, (C) there
has been no dividend or distribution of any kind declared, paid or made
by any of the Issuers or the Manager on any class of their capital stock,
membership units or partnership units, as applicable and (D) there has
been decision or judgment in the nature of litigation adverse to any of
the Issuers or the Manager.
xxxvi. None of the execution, delivery and performance of this
Agreement, the issuance and sale of the Notes, the application of the
proceeds from the issuance and sale of the Notes and the consummation of
the transactions contemplated thereby as set forth in the Offering
Memorandum, will violate Regulations T, U or X promulgated by the Board
of Governors of the Federal Reserve System or analogous foreign laws and
regulations.
xxxvii. Neither Issuer intends to, nor believes that it will, incur
debts beyond its ability to pay such debts as they mature. The present
fair saleable value of the assets of the Issuers exceeds the amount that
will be required to be paid on or in respect of its existing debts and
other liabilities (including contingent liabilities) as they become
absolute and matured. The assets of the Issuers do not constitute
unreasonably small capital to carry out its business as conducted or as
proposed to be conducted. Upon the issuance of the Notes, the present
fair saleable value of the assets of the Issuers will exceed the amount
that will be required to be paid on or in respect of its existing debts
and other liabilities (including contingent liabilities) as they become
absolute and matured. Upon the issuance of the Notes, the assets of the
Issuers will not constitute unreasonably small capital to carry out their
business as now conducted, including the capital needs of the Issuers,
taking into account the projected capital requirements and capital
availability.
xxxviii. Except pursuant to this Agreement, there are no contracts,
agreements or understandings between either Issuer and any other person
that would give rise to a valid claim against either Issuer or the Initial
Purchasers for a brokerage commission, finder's fee or like payment in
connection with the issuance, purchase and sale of the Notes.
xxxix. There exist no conditions that would constitute a default (or
an event which with notice or the lapse of time, or both, would constitute
a default) under any of the Operative Documents.
xl. Each certificate signed by any officer of either Issuer and
delivered to the Initial Purchasers or counsel for the Initial Purchasers
shall be deemed to be a representation and warranty by such Issuer, as
the case may be, to the Initial Purchasers as to the matters covered
thereby.
Each Issuer acknowledges that the Initial Purchasers and, for purposes
of the opinions to be delivered to the Initial Purchasers pursuant to Section
8 hereof, counsel for the Issuers and counsel for the Initial Purchasers,
will rely upon the accuracy and truth of the foregoing representations and
hereby consent to such reliance.
(b) Each of the Initial Purchasers, severally and not jointly,
represents, warrants and covenants to the Issuers and agrees that:
i. Such Initial Purchaser is a QIB which owns and
invests on a discretionary basis at least $25.0 million of
securities of issuers that are not affiliated with the
dealer, with such knowledge and experience in financial and
business matters as are necessary in order to evaluate the
merits and risks of an investment in the Notes.
ii. Such Initial Purchaser (A) is not acquiring the
Notes with a view to any distribution thereof that would
violate the Act or the securities laws of any state of the
United States or any other applicable jurisdiction and (B)
will be reoffering and reselling the Notes only to QIBs
which, in the case of dealers, own and invest on a discretionary
basis at least $25.0 million of securities of issuers that
are not affiliated with the dealer, in reliance on the
exemption from the registration requirements of the Act provided
by Rule 144A.
iii. No form of general solicitation or general
advertising (within the meaning of Regulation D under the Act)
has been or will be used by such Initial Purchaser or any
of its representatives in connection with the offer and
sale of any of the Notes, including, but not limited to,
articles, notices or other communications published in
any newspaper, magazine, or similar medium or broadcast
over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or
general advertising.
iv. Such Initial Purchaser agrees that, in connection
with the Exempt Resales, it will solicit offers to buy the
Notes only from, and will offer to sell the Notes only to,
Eligible Purchasers. Such Initial Purchaser further (A)
agrees that it will offer to sell the Notes only to, and
will solicit offers to buy the Notes only from Eligible
Purchasers that the Initial Purchaser reasonably believes
are QIBs which, in the case of dealers, own and invest on a
discretionary basis at least $25.0 million of securities of
issuers that are not affiliated with the dealer, and (B)
acknowledges and agrees that, in the case of such QIBs, that
such Notes will not have been registered under the Act and
may be resold, pledged or otherwise transferred only to (1)
the Company, Finance or any of their respective subsidiaries,
(2) inside the United States to a QIB which, in the case of
dealer, own and invest on a discretionary basis at least
$25.0 million of securities of issuers that are not affiliated
with the dealer, in a transaction meeting the require
ments of Rule 144A, (3) inside the United States to an
"Institutional Accredited Investor" as defined in Rule
501(a)(1), (2), (3) or (7) under the Act that, which in the
case of a dealer, owns and invests on a discretionary basis,
at least $25 million of securities that are not affiliated
with the dealer and in the case of all other Institutional
Accredited Investors, at least $5 million that, prior to such
transfer, furnishes (or has furnished on its behalf by U.S.
broker-dealer) to the Trustee, a signed letter containing
certain representations and agreements relating to the
registration of transfer of such Notes (the form of which can be
obtained from the Trustee), (4) pursuant to an exemption from
registration provided by Rule 144 under the Act (if available)
or (5) pursuant to an effective registration statement
under the Act and (C) acknowledges that it will, and each
subsequent holder is required to, notify any purchaser of the
security evidenced thereby of the resale restrictions set
forth in (B) above.
v. Such Initial Purchaser has not offered or sold, and,
prior to the date six months after the date of the issue
of the Notes, will not offer or sell any Notes to persons in the
United Kingdom except to persons whose ordinary activities involve
them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their business or other
wise in circumstances which do not constitute an offer to the public
in the United Kingdom for the purposes of the Public Offers of
Securities Regulations 1995; it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 with respect
to anything done by it in relation to the Notes in, from or otherwise
involving the United Kingdom; and it has only issued or passed on and
will only issue or pass on in the United Kingdom any document
received by it in connection with the issue or sale of the Notes to a
person who is a kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996
(as amended) or is a person to whom such documents may otherwise law
fully be issued or passed on.
The Initial Purchasers acknowledge that the Issuers and, for
purposes of the opinions to be delivered to the Initial Purchasers
pursuant to Section 8 hereof, counsel for the Issuers and counsel
for the Initial Purchasers will rely upon the accuracy and truth
of the foregoing representations and hereby consents to such
reliance.
6. Indemnification.
(a) The Issuers, jointly and severally, agree to indemnify
and hold harmless (i) each of the Initial Purchasers, (ii) each
person, if any, who controls such Initial Purchaser within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act and (iii) the officers, directors, partners, employees,
representatives and agents of such Initial Purchaser or any controlling
person to the fullest extent lawful, from and against any and all
losses, liabilities, claims, damages and expenses whatsoever
(including but not limited to reasonable attorneys' fees and any
and all expenses whatsoever incurred in investigating, preparing
or defending against any investigation or litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid
in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, liabilities,
claims, damages or expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Preliminary Offering
Memorandum or the Offering Memorandum, or in any supplement
thereto or amendment thereof, or arise out of or are based upon
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that neither Issuer will
be liable in any such case to the extent, but only to the extent,
that any such loss, liability, claim, damage or expense arises out
of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance
upon and in conformity with information relating to such Initial
Purchaser furnished to the Issuers in writing by or on behalf of
such Initial Purchaser expressly for use therein. This indemnity
agreement will be in addition to any liability which the Issuers
may otherwise have, including under this Agreement; provided,
however, that the indemnification contained in this paragraph (a)
with respect to the Preliminary Offering Memorandum shall not
inure to the benefit of any Initial Purchaser (or to the benefit
of any person controlling any Initial Purchaser) on account of any
such loss, liability, claim, damage or expense arising from the
sale of the Notes by such Initial Purchaser to any person if a
copy of the Offering Memorandum, as it may be amended or supplemented
shall have not been delivered or sent to such person, at or
prior to the written confirmation of such sale, and the untrue
statement or alleged untrue statement or omission or alleged
omission of a material fact contained in the Preliminary Offering
Memorandum was corrected in the Offering Memorandum, as it may
have been amended or supplemented; provided that the Issuers have
delivered the Offering Memorandum, as it may be amended or supplemented,
to such Initial Purchaser in requisite quantity on a timely basis to permit
such delivery or sending.
(b) Each of the Initial Purchasers, severally and not
jointly, agrees to indemnify and hold harmless (i) the Issuers,
(ii) each person, if any, who controls the Issuers within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, and (iii) the respective officers, directors, partners,
employees, representatives and agents of the Issuers, against any
losses, liabilities, claims, damages and expenses whatsoever
(including but not limited to reasonable attorneys' fees and any
and all expenses whatsoever incurred in investigating, preparing
or defending against any investigation or litigation, commenced
or threatened, or any claim whatsoever and any and all amounts
paid in settlement of any claim or litigation), joint or several,
to which they or any of them may become subject under the Act,
the Exchange Act or otherwise, insofar as such losses, liabilities,
claims, damages or expenses (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Preliminary
Offering Memorandum or the Offering Memorandum, or in any amendment
thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading, in each case to the extent, but
only to the extent, that any such loss, liability, claim, damage
or expense arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with information relating
to such Initial Purchaser (and not with respect to the information
provided by the other Initial Purchaser) furnished to the Issuers in
writing by or on behalf of such Initial Purchaser expressly for use
therein; provided, however, that in no case shall such Initial Purchaser
be liable or responsible for any amount in excess of the discounts and
commissions received by such Initial Purchaser, as set forth on the cover
page of the Offering Memorandum. This indemnity will be in addition to any
liability which such Initial Purchaser may otherwise have, including under
this Agreement.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under such
subsection, notify each party against whom indemnification is to
be sought in writing of the commencement thereof (but the failure
so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 6 except to the
extent that it has been prejudiced in any material respect by
such failure or from any liability which it may otherwise have).
In case any such action is brought against any indemnified party,
and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered
to the indemnified party promptly after receiving the aforesaid notice
from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party. Notwithstanding the
foregoing, the indemnified party or parties shall have the right to employ
its or their own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of such indemnified party or parties unless
(i) the employment of such counsel shall have been authorized in writing by
the indemnifying parties in connection with the defense of such action, (ii)
the indemnifying parties shall not have employed counsel to take charge of
the defense of such action within a reasonable time after notice of
commencement of the action, or (iii) such indemnified party or parties shall
have reasonably concluded that there may be defenses available to it
or them which are different from or additional to those available to one
or all of the indemnifying parties (in which case the indemnifying party or
parties shall not have the right to direct the defense of such action on
behalf of the indemnified party or parties), in any of which events such
fees and expenses of counsel shall be borne by the indemnifying parties;
provided, however, that the indemnifying party under subsection (a) or (b)
above shall only be liable for the legal expenses of one counsel
(in addition to any local counsel) for all indemnified parties in
each jurisdiction in which any claim or action is brought. Any
thing in this subsection to the contrary notwithstanding, an
indemnifying party shall not be liable for any settlement of any
claim or action effected without its prior written consent, provided that
such consent was not unreasonably withheld.
7. Contribution. In order to provide for contribution in circumstances
in which the indemnification provided for in Section 6 is for any reason held
to be unavailable from an indemnifying party or is insufficient to hold
harmless a party indemnified thereunder, the Issuers, on the one hand, and
the Initial Purchasers, on the other hand, shall contribute to the aggregate
losses, liabilities, claims, damages and expenses of the nature
contemplated by such indemnification provision (including any investigation,
legal and other expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claims asserted, but
after deducting in the case of losses, liabilities, claims, damages and
expenses suffered by the Issuers, any contribution received by the Issuers
from persons, other than the Initial Purchasers, who may also be liable for
contribution, including persons who control the Issuers within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act) to which the
Issuers and the Initial Purchasers may be subject, in such proportion as is
appropriate to reflect the relative benefits received by the Issuers, on the
one hand, and the Initial Purchasers, on the other hand, from the offering of
the Notes or, if such allocation is not permitted by applicable law or
indemnification is not available as a result of the indemnifying party not
having received notice as provided in Section 6, in such proportion as is
appropriate to reflect not only the relative benefits referred to above but
also the relative fault of the Issuers, on the one hand, and the Initial
Purchasers, on the other hand, in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations. The
relative benefits received by the Issuers, on the one hand, and the Initial
Purchasers, on the other hand, shall be deemed to be in the same proportion
as (a) the total proceeds from the offering of Notes (net of discounts but
before deducting expenses) received by the Issuers and (b) the discounts
and commissions received by the Initial Purchasers, respectively,
in each case as set forth in the table on the cover page of the Offering
Memorandum. The relative fault of the Issuers, on the one hand, and of the
Initial Purchasers, on the other hand, shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Issuers or the Initial Purchasers and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Issuers and the Initial
Purchasers agree that it would not be just and equitable if contribution
pursuant to this Section 7 were determined by pro rata allocation (even if
the Initial Purchasers were treated as one entity for such purpose) or by any
other method of allocation which does not take into account the equitable
considerations referred to above. Notwithstanding the provisions of this
Section 7, (i) in no case shall any Initial Purchaser be required to
contribute any amount in excess of the amount by which the discounts and
commissions applicable to the Notes purchased by such Initial Purchaser
pursuant to this Agreement exceeds the amount of any damages which such
Initial Purchaser has otherwise been required to pay by reason of any untrue
or alleged untrue statement or omission or alleged omission and (ii) no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of this
Section 7, (a) each person, if any, who controls the Initial Purchasers
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act and (b) the respective officers, directors, partners, employees,
representatives and agents of the Initial Purchasers or any controlling
person shall have the same rights to contribution as the Initial Purchasers,
and (a) each person, if any, who controls the Issuers within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act and (b) the
respective officers, directors, partners, employees, representatives and
agents of the Issuers shall have the same rights to contribution as the
Issuers, subject in each case to clauses (i) and (ii) of this Section
7. Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party
in respect of which a claim for contribution may be made against another
party or parties under this Section 7, notify such party or parties from whom
contribution may be sought, but the failure to so notify such party or parties
shall not relieve the party or parties from whom contribution may be sought
from any obligation it or they may have under this Section 7 or otherwise.
No party shall be liable for contribution with respect to any action or claim
settled without its prior written consent, provided that such written consent
was not unreasonably withheld. The Initial Purchasers' obligations to
contribute pursuant to this Section 7 are several in proportion to the
respective principal amount of Notes purchased by each of the Initial
Purchasers hereunder and not joint.
8. Conditions of Initial Purchasers' Obligations. The several obligations
of the Initial Purchasers to purchase and pay for the Notes, as provided
herein, shall be subject to the satisfaction of the following conditions:
(a) All of the representations and warranties of the Issuers
contained in this Agreement shall be true and correct on the
date hereof and on the Closing Date with the same force and effect
as if made on and as of the date hereof and the Closing
Date, respectively. Each Issuer shall have performed or complied
with all of the agreements herein contained and required to be
performed or complied with by it at or prior to the Closing Date.
(b) The Offering Memorandum shall have been printed and
copies distributed to the Initial Purchasers not later than 2:00
p.m., New York City time, on the day following the date of this
Agreement or at such later date and time as to which the Initial
Purchasers may agree, and no stop order suspending the qualification
or exemption from qualification of the Notes thereof in any
jurisdiction referred to in Section 4(e) shall have been issued
and no proceeding for that purpose shall have been commenced or
shall be pending or threatened.
(c) No action shall have been taken with respect to the
Issuers or the Manager and no statute, rule, regulation or order
shall have been enacted, adopted or issued by any governmental
agency which would, as of the Closing Date, prevent the issuance
of the Notes thereof; no action, suit or proceeding shall have
been commenced and be pending against or affecting or, to the
best knowledge of the Issuers, threatened against, any of the
Issuers or the Manager before any court or arbitrator or any
governmental or tribal body, agency or official (including, but
not limited to, any Gaming Authorities) that, if adversely
determined, could reasonably be expected to result in a Material
Adverse Effect; and no stop order shall have been issued prevent
ing the use of the Offering Memorandum, or any amendment or
supplement thereto, or which could reasonably be expected to have a
Material Adverse Effect.
(d) Since the dates as of which information is given in the
Offering Memorandum, (i) there shall not have been any material
adverse change, whether or not arising in the ordinary course of
business, or any change or any development that is reasonably
likely to result in a material adverse change, in the capital
stock, membership units or partnership units, as applicable, or
the long-term debt, or material increase in the short-term debt,
of any of the Issuers or the Manager from that set forth in the
Offering Memorandum, (ii) no dividend or distribution of any kind
shall have been declared, paid or made by any of the Issuers or
the Manager on any class of its capital stock, membership units
or partnership units, as applicable and (iii) none of the Issuers
or the Manager shall have incurred any liabilities or obligations,
direct or contingent, that are material, individually or in the
aggregate, to the Issuers, taken as a whole, or the Manager,
taken as a whole, respectively, and that are required to be disclosed
on a balance sheet or notes thereto in accordance with generally
accepted accounting principles and are not disclosed on the latest
balance sheet or notes thereto included in the Offering Memorandum.
Since the date hereof and since the dates as of which information
is given in the Offering Memorandum, there shall not have occurred
any material adverse change, or any development that is reasonably
likely to result in a material adverse change, in the business, prospects,
financial condition or results of operation of the Issuers and the
Manager, taken as a whole.
(e) The Issuers' 12 % Senior Notes due 2003 (the "Senior
Notes") tendered pursuant to the tender offer and consent solicitation
for the Senior Notes shall have been accepted for purchase by the
Issuers in compliance with the Offer to Purchase and Consent
Solicitation Statement, as in effect on the date hereof (the
"Statement"). The supplemental indenture to the indenture under
which the Senior Notes were issued (the "Supplemental Indenture")
containing the Proposed Amendments, including the Change of Control
Amendment (each, as defined in the Statement) shall have been
executed and be effective as of the date hereof. The Officers'
Certificate referred to Section 3(b) of the Supplemental
Indenture shall have been delivered by each of the Issuers and
the Supplemental Indenture shall be operative prior to Closing.
(f) The Initial Purchasers shall have received certificates,
dated the Closing Date, signed on behalf of each Issuer,
in form and substance satisfactory to the Initial Purchasers,
confirming, as of the Closing Date, the matters set forth in
paragraphs (a), (b), (c) and (d) of this Section 8 and that, as
of the Closing Date, the obligations of the such Issuer to be
performed hereunder on or prior thereto have been duly performed.
(g) The Initial Purchasers shall have received on the Closing
Date an opinion, dated the Closing Date, in form and substance
satisfactory to the Initial Purchasers and counsel for the
Initial Purchasers, of Latham & Watkins ("Latham"), special counsel
for the Issuers; Dorsey & Whitney, special Indian gaming
counsel to the Issuers; Rome McGuigan Sabonosh P.C., special
Connecticut counsel to the Issuers; and an opinion of Latham
relating to certain tax matters to the effect set forth in Exhibits
B-1, B-2, B-3 and B-4, respectively, hereto.
(h) At the time this Agreement is executed and at the Closing
Date, the Initial Purchasers shall have received from
PricewaterhouseCoopers LLP, independent public accountants, dated
as of the date of this Agreement and as of the Closing Date,
comfort letters addressed to the Initial Purchasers and in form
and substance satisfactory to the Initial Purchasers and counsel
for the Initial Purchasers with respect to the financial state
ments and certain financial information of the Issuers contained
in the Offering Memorandum.
(i) The Initial Purchasers shall have received an opinion,
dated the Closing Date, in form and substance reasonably satisfactory
to the Initial Purchasers, of Skadden, Arps, Slate, Meagher & Flom LLP
("Skadden"), counsel for the Initial Purchasers, covering such matters
as are customarily covered in such opinions.
(j) Skadden shall have been furnished with such documents,
in addition to those set forth above, as they may reasonably
require for the purpose of enabling them to review or pass upon
the matters referred to in this Section 8 and in order to evidence
the accuracy, completeness or satisfaction in all material
respects of any of the representations, warranties or conditions
herein contained.
(k) Prior to the Closing Date, the Issuers shall have
furnished to the Initial Purchasers such further information,
certificates and documents as the Initial Purchasers may reasonably
request.
(l) The Issuers and the Trustee shall have entered into the
Indenture and the Security Agreement and the Initial Purchasers
shall have received counterparts, conformed as executed, thereof.
(m) The Notes shall have been approved for trading on PORTAL.
(n) All opinions, certificates, letters and other documents
required by this Section 8 to be delivered by the Issuers will be
in compliance with the provisions hereof only if they are reason
ably satisfactory in form and substance to the Initial Purchasers.
The Issuers shall furnish the Initial Purchasers with such
conformed copies of such opinions, certificates, letters and
other documents as it shall reasonably request.
(o) On the Closing Date, an amount of the net proceeds from
the Offering equal to two semi-annual interest payments on the
Notes shall paid directly to the Securities Intermediary (as
defined the Security Agreement) to fund the Interest Reserve
Account and the Senior Notes shall be accepted for purchase.
(p) All proceeding taken in connection with the sale of the
Notes as herein contemplated shall be reasonably satisfactory in
form and substance to the Initial Purchasers and to Skadden.
9. Initial Purchasers' Information. The Issuers acknowledge
that the statements with respect to the offering of the Notes
set forth in the fourth full paragraph on page ii, the first
clause of the fifth sentence of the first paragraph under the
caption "Risk Factor Trading Market for the Notes " and the fifth
sentence of the fifth paragraph and the sixth paragraph under the
caption "Plan of Distribution " in the Offering Memorandum
constitute the only information relating to any of the Initial
Purchasers furnished to the Issuers by or on behalf of the Initial
Purchasers for use in the Offering Memorandum.
10. Survival of Representations and Agreements. All representations
and warranties, covenants and agreements of the Initial Purchasers
and the Issuers contained in this Agreement, including the
agreements contained in Sections 4(f) and 11(d), the indemnity
agreements contained in Section 6 and the contribution
agreements contained in Section 7, shall remain operative and in
full force and effect regardless of any investigation made by or
on behalf of any Initial Purchaser, any controlling person
thereof, or by or on behalf of the Issuers or any controlling
person thereof, and shall survive delivery of and payment for the
Notes to and by the Initial Purchasers. The representations
contained in Section 5 and the agreements contained in Sections
4(f), 6, 7 and 11(d) shall survive the termination of this
Agreement, including any termination pursuant to Section 11.
11. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective upon execution
and delivery of a counterpart hereof by each of the parties
hereto.
(b) The Initial Purchasers shall have the right to terminate
this Agreement at any time prior to the Closing Date by notice by
telephone, telex, or telegraph, confirmed in writing by letter, to
the Issuers from the Initial Purchasers, without liability (other
than with respect to Sections 6 and 7) on the Initial Purchasers'
part to the Issuers if, on or prior to such date, (i) the Issuers
shall have failed, refused or been unable to perform in any
material respect any agreement on their part to be performed
hereunder, (ii) any other condition to the obligations of the
Initial Purchasers hereunder as provided in Section 8 which is
qualified as to the materiality is not fulfilled when and as required
and any condition not so qualified is not fulfilled when and as
required in any material respect, (iii) in the reasonable judgment
of the Initial Purchasers, any material adverse change shall have
occurred since the respective dates as of which information is
given in the Offering Memorandum in the condition (financial or
otherwise), business, properties, assets, liabilities, prospects,
net worth, results of operations or cash flows of the Issuers,
taken as a whole, other than as set forth in the Offering
Memorandum, or (iv)(A) any domestic or international event
or act or occurrence has materially disrupted, or in the
opinion of the Initial Purchasers will in the immediate future
materially disrupt, the market for the Issuers' securities
or for securities in general; or (B) trading in securities gener-
ally on the New York Stock Exchange, the American Stock Exchange,
the Chicago Board of Options Exchange, the Chicago Mercantile
Exchange, the Chicago Board of Trade or the Nasdaq National
Market shall have been suspended or materially limited, or minimum
or maximum prices for trading shall have been established, or
maximum ranges for prices for securities shall have been
required, on such exchange or the Nasdaq National Market, or by
such exchange or other regulatory body or governmental authority
having jurisdiction; or (C) a banking moratorium shall have been
declared by federal or state authorities, or a moratorium in
foreign exchange trading by major international banks or persons
shall have been declared; or (D) there is an outbreak or escala-
tion of armed hostilities involving the United States on or after
the date hereof, or if there has been a declaration by the United
States of a national emergency or war, the effect of which shall
be, in the Initial Purchasers' judgment, to make it inadvisable
or impracticable to proceed with the offering or delivery of the
Notes on the terms and in the manner contemplated in the Offering
Memorandum; or (E) there shall have been such a material adverse
change in general economic, political or financial conditions or
if the effect of international conditions on the financial markets
in the United States shall be such as, in the Initial Purchasers'
judgment, makes it inadvisable or impracticable to proceed with the
delivery of the Notes as contemplated hereby.
(c) If on the Closing Date one or more of the Initial Purchasers
shall fail or refuse to purchase the Notes which it or they has agreed
to purchase hereunder on such date and the aggregate principal amount
of the Notes which such defaulting Initial Purchaser or Initial Purchasers,
as the case may be, agreed but failed or refused to purchase is not more
than one-tenth of the aggregate principal amount of the Notes to be
purchased on such date by all Initial Purchasers, each non-defaulting
Initial Purchaser shall be obligated severally, in the proportion which the
principal amount the Notes set forth opposite its name in Exhibit A
bears to the aggregate principal amount of the Notes which all the
non-defaulting Initial Purchasers have agreed to purchase or
in such other proportion as Bear Sterns may specify, to purchase
the Notes which such defaulting Initial Purchaser or Initial
Purchasers, as the case may be, agreed but failed or refused to
purchase on such date; provided that in no event shall the aggregate
principal amount of the Notes which any Initial Purchaser
has agreed to purchase pursuant to Section 3 hereof be increased
pursuant to this Section 11 by an amount in excess of one-ninth
of such principal amount of the Notes without the written consent
of such Initial Purchaser. If on the Closing Date any Initial
Purchaser or Initial Purchasers shall fail or refuse to purchase
the Notes and the aggregate principal amount of the Notes with
respect to which such default occurs is more than one-tenth of
the aggregate principal amount of the Notes to be purchased by
all Initial Purchasers and arrangements satisfactory to the Initial
Purchasers and the Issuers for purchase of such the Notes
are not made within 48 hours after such default, this Agreement
will terminate without liability on the part of any
non-defaulting Initial Purchaser and the Issuers. In any such
case which does not result in termination of this Agreement,
either Bear Stearns or the Issuers shall have the right to postpone
the Closing Date, but in no event for longer than seven
days, in order that the required changes, if any, in the Offering
Memorandum or any other documents or arrangements may be
effected. Any action taken under this paragraph shall not relieve
a defaulting Initial Purchaser from liability in respect of any
default of such Initial Purchaser under this Agreement.
(d) Any notice of termination pursuant to this Section 11
shall be by telephone or facsimile and, in either case, confirmed
in writing by letter.
(e) If this Agreement shall be terminated pursuant to any
of the provisions hereof (otherwise than pursuant to clause (iv)
of Section 11(b), in which case each party will be responsible
for its own expenses), or if the sale of the Notes provided for
herein is not consummated because any condition to the obligations
of the Initial Purchasers set forth herein is not satisfied
or because of any refusal, inability or failure on the part of
the Issuers to perform any agreement herein or comply with any
provision hereof, the Issuers shall reimburse the Initial Purchasers
for all out-of-pocket expenses (including the reasonable fees and
expenses of the Initial Purchasers' counsel), incurred by the Initial
Purchasers in connection herewith.
12. Notice. All communications hereunder, except as may be
otherwise specifically provided herein, shall be in writing and,
if sent to the Initial Purchasers shall be mailed, delivered,
telecopied and confirmed in writing or sent by a nationally recognized
overnight courier service guaranteeing delivery on the
next business day to Bear, Stearns & Co. Inc., Merrill Lynch,
Pierce, Fenner & Smith Incorporated and Salomon Smith Barney
Inc., c/o Bear, Stearns & Co. Inc., 245 Park Avenue, New York,
New York 10167, Attention: Corporate Finance Department, telecopy
number: (212) 272-3092, with a copy to Skadden, Arps, Slate,
Meagher & Flom, LLP, 300 South Grand Avenue, Los Angeles, California
90071, Attention: Nicholas Saggese, Esq., telecopy number:
(213) 687-5600; and if sent to the Issuers, shall be mailed,
delivered, telecopied and confirmed in writing or sent by a
nationally recognized overnight courier service guaranteeing
delivery on the next business day to Waterford Gaming, L.L.C. and
Waterford Gaming Finance Corp., 914 Hartford Turnpike, Waterford,
Connecticut 06358, Attention: Chief Financial Officer, telecopy
number: (860) 447-8554, with a copy to Latham & Watkins, 885
Third Avenue, Suite 1000, New York, New York 10022, Attention:
Raymond Lin, Esq., telecopy number: (212) 751-4864.
13. Parties. This Agreement shall inure solely to the benefit
of, and shall be binding upon, the Initial Purchasers and the
Issuers and the controlling persons and agents referred to in
Sections 6 and 7, and their respective successors and assigns,
and no other person shall have or be construed to have any legal
or equitable right, remedy or claim under or in respect of or by
virtue of this Agreement or any provision herein contained. The
term "successors and assigns" shall not include a purchaser, in
its capacity as such, of Notes from the Initial Purchasers.
14. Construction. This Agreement shall be construed in accordance
with the internal laws of the State of New York, including,
without limitation, Section 5-1401 of the New York General Obligation
Law. TIME IS OF THE ESSENCE IN THIS AGREEMENT.
15. Captions. The captions included in this Agreement are in
cluded solely for convenience of reference and are not to be
considered a part of this Agreement.
16. Counterparts. This Agreement may be executed in various
counterparts which together shall constitute one and the same
instrument.
[Signature page to follow]
If the foregoing correctly sets forth the understanding among
the Initial Purchasers and the Issuers please so indicate in the
space provided below for that purpose, whereupon this letter shall
constitute a binding agreement among us.
Very truly yours,
WATERFORD GAMING, L.L.C.
By: __________________________
Name:
Title:
WATERFORD GAMING FINANCE CORP.
By: __________________________
Name:
Title:
Accepted and agreed to as of
the date first above written:
BEAR, STEARNS & CO. INC.
By:_________________________________
Name:
Title:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
By:_________________________________
Name:
Title:
SALOMON SMITH BARNEY INC.
By:_________________________________
Name:
Title:
Exhibit A
Principal
Amount of
Initial Purchaser
Notes
Bear, Stearns & Co. Inc. $78,125,000
Merrill, Lynch, Pierce, Fenner & Smith
Incorporated 40,625,000
Salomon Smith Barney Inc. 6,250,000
Total 125,000,000
Exhibit B-1
Form of Opinion of Latham & Watkins
1. Each Issuer is duly incorporated or organized, as
applicable, and is validly existing as a corporation or limited
liability company, as applicable, and in good standing under the
laws of the State of Delaware, with all corporate or limited
liability company power and authority to own, lease and operate
its properties, and to conduct its business as described in the
Offering Memorandum and is duly qualified and in good standing or
in existence as a foreign limited liability company or foreign
corporation, as applicable, and is authorized to do business in
each jurisdiction in which such Issuer owns or leases property or
conducts business.
2. Each Issuer has all requisite corporate or limited liability
company power and authority, as applicable, to enter into and
perform its obligations under this Agreement and each of the
other Operative Documents to which it is a party and to
consummate the transactions on the Closing Date contemplated
hereby and thereby, including, without limitation, the corporate
power and authority to issue, sell and deliver the Notes provided
herein.
3. All of the shares of capital stock of Finance have been duly
authorized, validly issued, and are fully paid and nonassessable
and, to the knowledge of such counsel, none of the issued and
outstanding shares of capital stock of Finance were issued in
violation of any preemptive or similar rights. All of the shares
of capital stock of Finance and the Company's partnership
interest in the Manager are owned by the Company, to the
knowledge of such counsel, free and clear of any perfected
security interests, claims, liens, limitation on voting rights or
encumbrances, except as provided in the Partnership Agreement or
the agreement dated March [ ], 1999, relating to the termination
of the Omnibus Agreement as contemplated in the Memorandum of
Understanding.
4. This Agreement has been duly authorized, executed and
delivered by each Issuer.
5. The Indenture has been duly authorized, executed and
delivered by each Issuer, and is (assuming the due authorization,
execution and delivery of the Indenture by the Trustee) the
legally valid and binding agreement of each Issuer, enforceable
against each of them in accordance with its terms, except to the
extent that (a) enforcement thereof may be limited by (i) the
effect of bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to or
affecting the rights and remedies of creditors and (ii) the
effect of general principles of equity whether enforcement is
considered in a proceeding at law or in equity and the discretion
of the court before which any proceeding therefore may be
brought; and (b) the waiver of rights and defenses contained in
Section 4.16 of the Indenture may be deemed unenforceable.
6. The Notes have been duly authorized and when executed,
issued and authenticated in accordance with the terms of the
Indenture and delivered to and paid for by the Initial Purchasers
in accordance with the terms hereof and thereof, the Notes will
be legally valid and binding obligations of each Issuer,
enforceable against each Issuer in accordance with their terms,
except to the extent that (a) enforcement thereof may be limited
by (i) the effect of bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
relating to or affecting the rights and remedies of creditors and
(ii) the effect of general principles of equity whether
enforcement is considered in a proceeding at law or in equity and
the discretion of the court before which any proceeding therefore
may be brought; and (b) the waiver of rights and defenses
contained in Section 4.16 of the Indenture may be deemed
unenforceable.
7. The Security Agreement has been duly authorized, executed
and delivered by each Issuer, and is the legally valid and
binding agreement of each Issuer, enforceable against each of
them in accordance with its terms, except to the extent that (a)
enforcement thereof may be limited by (i) the effect of
bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to or affecting
the rights and remedies of creditors and (ii) the effect of
general principles of equity whether enforcement is considered in
a proceeding at law or in equity and the discretion of the court
before which any proceeding therefore may be brought; and (b) the
enforceability of indemnification and contribution provisions may
be limited by federal and state securities laws and policies
underlying such laws. Such counsel may state that no opinion is
given in this paragraph 7 with respect to the creation or
perfection of a security interest which is covered by Paragraph
13.
8. The Notes and the Indenture conform in all material respects
to the descriptions thereof contained in the Offering Memorandum
under the heading "Description of Notes."
9. Neither (a) the issuance of the Notes, (b) the performance
by the Issuers of their respective obligations under the
Operative Documents nor (c) consummation by the Issuers of the
transactions described in the Offering Memorandum under the
caption "Use of Proceeds," conflicts with, results in a breach
of, or constitutes a default under (or an event that with notice
or the lapse of time, or both would constitute a default under)
or requires a consent under, or results in an imposition of a
lien or incumbrance on any indebtedness of either Issuer pursuant
to (A) the terms of any indenture or other material agreement or
instrument that has been filed as an exhibit to the Issuers' 10-K
and to which either of the Issuers is a party or bound, (B) any
federal or New York statute, rule or regulation or Delaware
General Corporate Law or the Delaware Limited Liability Company
Act to which either of the Issuers is subject or by which either
of them is bound, or to which any of the properties of the
Issuers is subject, which statute, rule or regulation, in the
experience of such counsel, is normally applicable to
transactions of the type contemplated under the Operative
Documents, or to our knowledge, any order of any federal, New
York or Delaware court or governmental agency or body having
jurisdiction over the Issuers or any of their properties, except
that such counsel need express no opinion with respect to gaming
or Indian consents, approvals, authorizations or orders, or (C)
any of the provisions of the certificate of incorporation,
certificate of formation, by-laws, limited liability company
agreement or partnership agreement of the Issuers or the Manager
as in effect on the date of the opinion or (iv) to the best of
such counsel's knowledge, any judgment, order or decree of any
court or governmental agency or authority having jurisdiction
over either Issuer or any of their assets or properties, except
in the case of (A) and (B), for consents, violations, defaults
and breaches as would not have a Material Adverse Effect.
Assuming compliance with applicable state securities and Blue Sky
laws, as to which such counsel need express no opinion, no
consent, approval, authorization or order of, or filing,
registration, qualification, license or permit of or with, (a)
any federal or New York court or governmental agency, body or
administrative agency or the Delaware Court of chancery or (b)
any other person is required for (i) the execution, delivery and
performance by the Issuers of this Agreement or any of the other
Operative Documents to which it is a party or (ii) the issuance
and sale of the Notes and the transactions contemplated hereby
and thereby, except such as have been obtained and made or have
been disclosed in the Offering Memorandum provided, however that
such counsel need express no opinion with respect to laws
governing gaming activities or any tribal law.
10. To the best of such counsel's knowledge, there is no
current, pending or threatened action, suit or proceeding before
any court or governmental agency, authority or body or any
arbitrator involving the Issuers or the Manager or to which any
of their respective property is subject of a character required
to be disclosed in the Offering Memorandum which is not
adequately disclosed therein.
11. The offer, issuance, sale and delivery of the Notes to the
Initial Purchasers and assuming compliance with the transfer
restrictions, the reoffer, resale and delivery by the Initial
Purchasers in the manner and to the persons contemplated by the
Purchase Agreement and the Offering Memorandum do not require
registration under the Act or qualification of the Indenture
under the Trust Indenture Act of 1939.
12. Neither Issuer is, and upon the receipt of the proceeds of
the Offering will be, an "investment company" within the meaning
of the Investment Company Act. Waterford Group L.L.C. is not,
and following the distribution of the proceeds of the Offering in
accordance with the section of the Final Offering Memorandum
caption "Use of Proceeds" will not be an "investment company"
with the meaning of the Investment Company Act.
13. The Security Agreement is sufficient to create in favor of
the Trustee for the benefit of the holders of the Notes, to
secure the performance by the Issuers of the Obligations (as
defined in the Security Agreement), a valid security interest in
all of the Issuers' right, title and interest in and to all
"security entitlements" arising from the Pledged Collateral (as
defined in the Security Agreement) (such security entitlements,
the "Pledged Security Entitlements") and the "proceeds" (as
defined in Section 9-306 of the Uniform Commercial Code as in
effect in the State of New York (the "NY UCC")) thereof. The
provisions of the Security Agreement are effective to perfect the
security interest of the Trustee in the Pledged Security
Entitlements and assuming that the Trustee, on behalf of the
Holders, has obtained the Pledged Security Entitlement to the
Pledged Collateral without notice of any "adverse claim" (as
defined in Section 8-102 of the NY UCC) in respect of the Pledged
Security Entitlements, such a perfected security interest in
favor of the Trustee under the Security Agreement in the Issuers'
right, title and interest in and to the Pledged Security
Entitlements will have priority over any other security interest
in the Pledged Security Entitlements under the NY UCC, except as
hereafter stated. Such counsel may assume that the Securities
Account exists, that each Issuer has sufficient rights therein
for the security interest to attach, and that "value" has been
given, as defined in Section 1-201(44) of the NY UCC; such
counsel need express no opinion as to the nature or extent of
each Issuer's rights in, or title to, any of the Pledged Security
Entitlements; or as to the nature or extent of the rights of the
"securities intermediary" (as defined in the NY UCC) in, or title
to, any financial assets underlying the Pledged Security
Entitlements; such counsel may state that the perfection of a
security interest in "proceeds" (as defined in the NY UCC) of
collateral is governed and restricted by Section 9-306 of the NY
UCC; such counsel may state that the law of a "securities
intermediary's jurisdiction" governs, among other things, the
rights and duties of a "securities intermediary" and the
"entitlement holder" arising out of a "security entitlement" and
whether an adverse claim can be asserted against a person who
acquired a "security entitlement" from a "securities
intermediary" (as each such term is defined in the NY UCC; such
counsel may assume that the Securities Intermediary will comply
with its obligations under Section 9 of the Security and Control
Agreement; such counsel may state that an entitlement holder's
property interests with respect to financial assets are subject
to Sections 8-503 and 8-511 of the NY UCC(g); such counsel need
express no opinion with respect to the security interest of the
Secured Party in any of the following types of property: (i) any
option or similar obligation issued by a clearing corporation to
its participants, (ii) any commodity contract; such counsel's
opinion may be limited to the NY UCC and Federal Book Entry
Regulations, and such opinion need not address (I) laws of
jurisdictions other than New York and the Federal Book Entry
Regulations, (II) collateral of a type not subject to the NY UCC
or the Federal Book Entry Regulations, (III) under NY UCC Section
9-103 or 8-110, what law governs perfection or priority of the
security interests granted in the collateral and (IV) what law
governs perfection or priority of security interests granted in
Federal Security Entitlements; such counsel need express no
opinion except to the extent that the Securities Account
constitutes a "securities account" within the meaning of NY UCC
Section 8-501(a) and with respect to each security entitlement,
may assume that the underlying security or other financial asset
has been endorsed to the securities intermediary or in blank or
has been credited to a securities account in the name of the
securities intermediary; such counsel need express no opinion
with respect to the priority of the security interest of the
Trustee in the Pledged Security Entitlements against any of the
following: (I) pursuant to Section 9-301(1) of the NY UCC, a
lien creditor who attached or levied prior to the perfection of
the security interest of the Trustee, (II) pursuant to Section 9-
301(4) of the NY UCC, a lien creditor with respect to future
advances, (III) pursuant to Section 9-312(7) of the NY UCC,
another secured creditor to the extent that provision limits the
priority afforded future advances, (IV) pursuant to Section 9-
312(6) of the NY UCC, another secured party with a prior
perfected security interest in other property of either Issuer to
the extent that the Pledged Security Entitlements are proceeds of
such other property; such counsel may state that pursuant to
Section 9-115 of the NY UCC, the security interest of the Trustee
will be subordinate to any security interest now or hereafter
granted by the Company in favor of a "securities intermediary"
and will be of equal priority with any other secured party who
has or obtains control; if and to the extent the securities
intermediary is a "clearing corporation" as defined in Section 8-
102(a)(5), such counsel may state that pursuant to Section 8-111
of the NY UCC, any rule adopted by a clearing corporation
governing the rights and obligations among the clearing
corporation and its participants is effective even if the rule
conflicts with the NY UCC and affects the rights of the Trustee.
To the extent that the opinions expressed in numbered
paragraph 13 relate to Federal Security Entitlements, such
opinion may be subject to the following limitations,
qualifications and exceptions:
(a) such counsel may state that pursuant to the Federal
Book-Entry Regulations, the Secretary of the Treasury may
waive provisions of the Federal Book-Entry Regulations and
express no opinion on the effect of any such waiver on the
opinions expressed therein;
(b) such counsel's opinion may be limited to Federal
Book-Entry Regulations as published in the Code of Federal
Regulations or the Federal Register, without regard to any
interpretations, operating circulars or other communications
from the Department of the Treasury, the Board of Governors
of the Federal Reserve System or any Federal Reserve Bank.
(c) such counsel may state that pursuant to Section 9-
115 of the UCC, the security interest of the Trustee may be
subordinate to any security interest now or hereafter
granted by the Company in favor of a "securities
intermediary" and will be of equal priority with any other
secured party who has or obtains control and pursuant to
section 357.12(C) of the Federal Book-Entry Regulations, the
security interest of the Trustee will be subordinate to a
security interest in favor of the United States or in favor
of any other person if it is marked on the books and records
of a federal reserve bank;
(d) such counsel may state that its opinion with
respect to the security interest of the Trustee is limited
to the Federal Book-Entry Regulations and the UCC and
pursuant to Section 357.11 of the Book-Entry Regulations,
the law of any securities intermediaries' jurisdiction
governs, among other things, the rights and duties of the
securities intermediary and the entitlement holder arising
out of a security entitlement and whether an adverse claim
can be asserted against a person who acquires a security
entitlement from the securities intermediary.
14. In addition, such counsel shall state that it has
participated in conferences with officers and other
representatives of the Issuers, representatives of the
independent certified public accountants of the Issuers and the
Initial Purchasers and their representatives at which the
contents of the Offering Memorandum and related matters were
discussed and, although it did not independently verify such
information and is not passing upon, and does not assume any
responsibility for, the accuracy, completeness or fairness of the
statements contained in the Offering Memorandum during the course
of such participation, no facts have come to its attention which
led it to believe that the Offering Memorandum, as of its date or
the Closing Date, contained an untrue statement of a material
fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading
(it being understood that such counsel need express no belief or
opinion with respect to financial statements and other financial
and statistical data included therein).
Exhibit B-2
Form of Opinion of Dorsey & Whitney
1. None of the issuance and sale of the Notes or the
performance of the Issuers' obligations pursuant to this Agree-
ment, the Security Agreement or the Indenture will violate any
Federal Indian Law or Tribal Law to which either Issuer is sub-
ject or by which either of them is bound or to which any of the
properties of the Issuers are subject.
2. Except as such as have been obtained or made pursuant to
Federal Indian Law or Tribal Law, no authorization, approval,
consent or order of any federal or tribal authority with
jurisdiction over gaming is required to be obtained by the Issu-
ers in connection with the sale by the Issuers of the Notes to
the Initial Purchasers or the pledge of the collateral pursuant
to the Security Agreement.
3. There is no requirement under Federal Indian Law or Tribal
Law that any holder of the Notes, solely in its capacity as a
holder of the Notes, to apply for or receive any individual
license, any individual certificate or any other authorization
from any federal or tribal authority to acquire or hold Notes
under the Indenture.
4. To the best of our knowledge, each of the Issuers and the
Manager has such Permits as are required under Federal Indian Law
and Tribal Law to conduct their operations in the manner
described in the Offering Memorandum.
5. The statements contained in the Offering Memorandum under
the captions "Risk Factors Highly Regulated Industries" and
"Government Regulation" insofar as they purport to summarize Fed-
eral Indian Law or Tribal Law, are accurate in all material re-
spects.
6. None of the Agreement, the Security Agreement, the
Indenture, the Notes, the Development Services Agreement dated as
of February 7, 1999, by and between the Authority and the Manager
(the "Development Services Agreement"), the Relinquishment
Agreement dated as of February 7, 1999, by and between the
Authority and the Manager (the "Relinquishment Agreement"), and
Note Purchase Agreement dated as of September 29, 1995, by and
between the Authority and Sun International does not violate any
Federal Indian Law or Tribal Law. On February 4, 1999, Judge J.
Guernsey of the Gaming Disputes Court of the Mohegan Tribe of
Indians of Connecticut entered on Order for Declaratory Judgment
with determined, inter alia, that the Development Services
Agreement and the Relinquishment Agreement "...constitute the
laws of the Tribe, are in proper form and are binding, the
Development Services Agreement has been approved by the Secretary
of the Interior pursuant to 25 USC Sec. 81 and both Agreements
are valid and enforceable against the Tribe and the [Authority]
under Tribal and Federal law, without any further action by the
[National Indian Gaming Commission] or the [Bureau of Indian
Affairs] or the Secretary of the Interior."
Exhibit B-3
Form of Opinion of Rome McGuigan Sabonosh P.C.
1. None of the issuance and sale of the Notes or the
performance of the Issuers' obligations pursuant to the Agree-
ment, the Security Agreement, the Notes or the Indenture will
violate any Connecticut statute, rule or regulation with respect
to gaming to which either of the Issuers is subject or by which
either of them is bound or to which any of the properties of the
Issuers are subject.
2. No authorization, approval, consent or order of any
Connecticut authority with jurisdiction over gaming is required
to be obtained by the Issuers, which has not been obtained, in
connection with the sale by the Issuers of the Notes to the
Initial Purchasers or the pledge of the collateral pursuant to
the Security Agreement.
3. There is no requirement under any Connecticut statute, rule
or regulation with respect to gaming which requires that any
holder of the Notes, solely in its capacity as a holder of the
Notes, to apply for or to receive any individual license, any
individual certificate or any other authorization from any
Connecticut authority to acquire or hold Notes under the
Indenture.
4. Each of the Issuers and the Manager has such Permits from
all Connecticut regulatory or governmental officials, bodies and
tribunals, with respect to engaging in gaming operations, as are
necessary to own, lease and operate its respective properties and
to conduct its business in the manner described in the Offering
Memorandum.
5. The statements contained under the captions "Government
Regulation" and "Risk Factors Highly Regulated Industries" in
the Offering Memorandum, insofar as they purport to summarize
Connecticut law, are correct in all material respects.
6. Each of the Agreement, the Indenture, the Notes, the
Security Agreement, the Restated Partnership Agreement of Trading
Cove Associates, as amended by the First Amendment thereto dated
October 22, 1996; the Amended and Restated Omnibus Financing
Agreement dated as of September 10, 1997, by and among the
Manager, the Company and Sun International, as amended to the
date of such opinion, does not violate any Connecticut statute,
rule or regulation with respect to gaming.
Exhibit B-4
Form of Opinion of Latham & Watkins Regarding Certain Tax
Matters
1. The Company will, for federal income tax purposes, be
disregarded as an entity separate from its owner and not treated
as an association, or a publicly traded partnership, taxable as a
corporation.
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
OF
WATERFORD GAMING, L.L.C.
A Delaware Limited Liability Company
________________________________________________________________
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
OF
WATERFORD GAMING, L.L.C.
This AMENDED AND RESTATED LIMITED LIABILITY COMPANY
AGREEMENT (the "Agreement") of Waterford Gaming, L.L.C. (the
"Company") is effective as of March 17, 1999.
RECITALS:
WHEREAS, Slavik Suites, Inc., a Michigan corporation
("Slavik") and LMW Investments, Inc., a Connecticut corporation
("LMW") formed the Company by filing a Certificate of Formation
(the "Certificate") with the Delaware Secretary of State on
September 30, 1996.
WHEREAS, Slavik and LMW formed Waterford Group L.L.C.,
a Delaware Limited Liability Company (the "Member") to succeed to
their interests in the Company and each have assigned their
respective interests in the Company to the Member in connection
with the issuance of $125.0 million of 9 1/2% Senior Notes due 2010
(the "Senior Notes") pursuant to an Indenture dated as of March
17, 1999 between the Company and Waterford Gaming Finance Corp.,
a Delaware corporation, as joint and several obligors, and State
Street Bank and Trust Company as Trustee.
NOW, THEREFORE, the Member hereto agrees as follows:
Formation of Limited Liability Company. The Company
was formed as a limited liability company pursuant to the
provisions of the Delaware Limited Liability Company Act, 6 Del.
C 18-101, et seq., as it may be amended from time to time, and
any successor to such statute (the "Act"). The rights and
obligations of the Member and the administration and termination
of the Company shall be governed by the Agreement and the Act.
The Agreement shall be considered the "Limited Liability Company
Agreement" of the Company within the meaning of Section 18-101(7)
of the Act. To the extent this Agreement is inconsistent in any
respect with the Act, this Agreement shall control.
Members. Waterford Group L.L.C. is the sole member of
the Company.
Purpose. The Company has been established solely for
the purposes of (i) holding the partnership interests in Trading
Cove Associates, a Connecticut general partnership ("TCA"), (ii)
holding the 15% subordinated notes due 2003 and the completion
guarantee subordinated notes due 2003, each issued by the Mohegan
Tribal Gaming Authority, (iii) engaging in activities in
connection with its role as a managing general partner of TCA,
(iv) issuing the Senior Notes and (v) engaging in those
activities as the Member may reasonably deem necessary or
advisable to carry out the foregoing purposes of the Company.
For so long as any of the Senior Notes remain outstanding and
have not been defeased in accordance with the terms of the
Indenture under which the Senior Notes were issued, the Company
shall not conduct any business activities or pursue any purpose
other than those activities and purposes described in the
preceding sentence.
Name. The name of the Company shall be "Waterford
Gaming, L.L.C."
Registered Agent and Principal Office. The registered
office and registered agent of the Company in the State of
Delaware shall be as the Member may designate from time to time.
The Company may have such other offices as the Member may
designate from time to time. The mailing address of the Company
shall be 914 Hartford Turnpike, Waterford, Connecticut 06385.
Term of Company. The term of the Company commenced
upon filing the Certificate and shall end, and the Company shall
dissolve, on September 30, 2020 unless its business and affairs
are earlier wound up following dissolution at such time as this
Agreement may specify.
Management of Company. All decisions relating to the
business, affairs, and properties of the Company shall be made by
the Member. The Member may appoint a President and one or more
Vice Presidents and such other officers of the Company as the
Member may deem necessary or advisable to manage the day-to-day
business affairs of the Company (the "Officers"). The Member may
also appoint managers who are not officers. The Officers and
managers shall serve at the pleasure of the Member. To the
extent delegated by the Member, the Officers and managers shall
have the authority to act on behalf of, bind, and execute and
deliver documents in the name and on behalf of the Company. No
such delegation shall cause the Member to cease to be a Member.
Distributions. For so long as any of the Senior Notes
remain outstanding and have not been defeased in accordance with
the terms of the Indenture under which the Senior Notes were
issued, the Company shall not make any distribution to the Member
that is prohibited by the covenant "Limitation on Restricted
Payments." Commencing on the date that none of the Senior Notes
remain outstanding or undefeased in accordance with the terms of
the Indenture under which the Senior Notes were issued, each
distribution of cash or other property by the Company shall be
made 100% to the Member. Each item of income, gain, loss,
deduction, and credit of the Company shall be allocated 100% to
the Member.
Capital Accounts. A capital account shall be
maintained for the Member in accordance with Treasury Regulations
Section 1.704-1(b)(2)(iv).
Dissolution and Winding Up. The Company shall dissolve
and its business and affairs shall be wound up pursuant to a
written instrument executed by the Member.
Amendments. This Agreement may be amended or modified
from time to time only by a written instrument executed by the
Member.
Governing Law. The validity and enforceability of this
Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware without regard to otherwise
governing principles of conflicts of law.
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the Agreement Date.
MEMBER
WATERFORD GROUP L.L.C.,
a Delaware limited liability
company
By: SLAVIK SUITES, INC.
Its member
By:____________________________
Its: ___________________________
and
By: LMW INVESTMENTS INC.,
Its member
By:____________________________
Its:___________________________
COMPANY
WATERFORD GAMING L.L.C.,
a Delaware limited liability
company
By: WATERFORD GROUP L.L.C.
Its member
By: SLAVIK SUITES, INC.
Its member
By:__________________________
Its:___________________________
and
By: LMW Investments, Inc.,
Its member
By: __________________________
Its:___________________________
AGREEMENT RELATING TO DEVELOPMENT SERVICES
This AGREEMENT RELATING TO DEVELOPMENT SERVICES ("Agreement")
dated as of February 9, 1998, between TRADING COVE ASSOCIATES, a
Connecticut general partnership ("TCA") and SUN INTERNATIONAL
MANAGEMENT LIMITED, a British Virgin Island corporation ("SIML").
PRELIMINARY STATEMENT
The following is a recital of certain facts upon which this
Agreement is based:
The Mohegan Tribe of Indians of Connecticut, a federally
recognized Indian Tribe (the "Tribe") and its instrumentality, The
Mohegan Tribal Gaming Authority (the "Authority") has entered into
a certain Development Services Agreement dated February 7, 1998
(the "Development Services Agreement") with TCA pursuant to the
terms of which the Tribe and the Authority have granted to TCA the
exclusive right and obligation to provide development services in
respect of the design, construction, equipment and opening of the
"Project", as that term is defined in the Development Services
Agreement.
TCA is entering into this subcontract with SIML pursuant to
which SIML will, on behalf of TCA, perform certain of the duties
and obligations as Subcontractor to the "Developer" under the
Development Services Agreement.
The Amended and Restated Partnership Agreement of TCA dated as
of September 21, 1994, as amended, provides for TCA to enter into
this Agreement.
NOW THEREFORE, the parties hereto agree as follows:
1. Services to be Provided. TCA hereby retains SIML as a
Subcontractor and SIML hereby agrees to perform all of the services
subcontracted to SIML by TCA in fulfillment of the duties and
obligations under the Development Services Agreement.
Notwithstanding the foregoing, nothing herein shall be interpreted
to mean or imply that TCA has assigned the Development Services
Agreement to SIML.
2. Costs and Expenses. TCA has or will hire employees in
order to fulfill its obligations under the Development Services
Agreement provided that no such employees will be hired without the
consent and approval of SIML and SIML's local construction manager,
Wolman Construction, L.L.C. ("Wolman"). TCA will be responsible
for the salary and all other costs associated with such employees.
Furthermore, all reasonable costs and expenses incurred by SIML and
Wolman and their respective affiliates as Subcontractors relating
to the development of the Project will be direct obligations of TCA
which costs and expenses will be paid as requests for payment are
submitted to TCA with such information as may be reasonably
requested by TCA to verify such payment requests. All salary,
fringe benefits and other costs and expenses associated with TCA's
employees described herein, and the costs and expenses of SIML,
Wolman and their affiliates described herein are herein
collectively referred to as "Project Costs and Expenses."
3. Fees and Payment Terms. In consideration of the services
to be provided hereunder, TCA shall pay to SIML a fee (the
"Development Services Fee") equal to 3% of the total Development
Costs of the Project less all Project Costs and Expenses. For
purpose hereof, the term "Development Costs of the Project" shall
be understood to include all so-called hard and soft costs incurred
by the Authority with respect to the construction of the Project
except land acquisition costs and interest expense. TCA agrees to
pay the Development Services Fee in installments due on December
31, 1999 (the "First Payment"), December 31, 2000 (the "Second
Payment") and on the Completion Date, as defined in the Development
Services Agreement (the "Third Payment"). The First Payment will
be in an amount equal to TCA's reasonable best estimate of what
one-third (1/3) of the Development Services Fee will be based upon
its review of the Authority's and TCA's development budgets
applicable to the Project. The Second Payment will be in an amount
equal to TCA's reasonable best estimate of two-thirds (2/3) of the
Development Services Fee based upon the then most current
development budgets of the Authority and TCA with respect to the
Project minus the First Payment. The Third Payment shall be in an
amount equal to the actual Development Services Fee minus the First
Payment and the Second Payment. Notwithstanding the foregoing, in
the event that the Development Costs of the Project are not fully
known by the date of the Third Payment, the Third Payment will also
be based upon TCA's reasonable best estimate with a final payment
being made by TCA to SIML or a refund being paid by SIML to TCA
when the actual Development Costs of the Project are finally
determined.
4. Payment Limitation. Notwithstanding anything herein to
the contrary contained, TCA's obligation to pay the Development
Services Fee to SIML hereunder shall be limited to the extent that
TCA has funds available to make the payments provided for in
Section 3 hereof, consistent with the limitations and
prioritizations set forth in the Omnibus Termination Agreement
dated March 18, 1999.
5. Indemnification. SIML its affiliates, parents,
subsidiaries, controlling shareholders and officers and directors
(collectively, the "Indemnified Parties") shall not be liable to
TCA by reason of any act performed for or on behalf of TCA
hereunder, or in the furtherance of TCA business, or any omission
to act, except for acts or omissions that constitute a material
breach of any provision of this Agreement, gross negligence, fraud
or bad faith. TCA shall indemnify, defend and hold harmless the
Indemnified Parties from any claim, demand or liability, and from
any loss, cost or expense, including, but not limited to,
attorneys' fees and court costs, which may be made or imposed upon
them by reason of any act performed for or on behalf of TCA or in
furtherance or TCA's business, or any omission to act, except for
acts and omissions that constitute a material breach of any
provision of this Agreement, gross negligence, fraud or bad faith.
Notwithstanding anything contained herein to the contrary, the
parties agree that if the assets of TCA are insufficient to satisfy
the obligation set forth in this section, the partners of TCA shall
bear the indemnification liability set forth herein in proportion
to their respective percentage interest in TCA and, in no event,
shall the Indemnified Parties have the right to assert claims
pursuant to this section against partners of TCA in excess of each
such partner's percentage interest in TCA.
6. Third Party Beneficiary. This Agreement is exclusively
for the benefit of the parties hereto and it may not be enforced by
any party other than the parties to this Agreement and shall not
give rise to any liability to any third party other than the
authorized successors and assigns of the parties pursuant to
Section 6 hereof.
7. Assignments. Neither party may assign its rights and/or
obligations under this Agreement, except: (i) to an affiliate of
such party, or (ii) with the prior written consent of all parties
hereto. Any assignment shall be subject to and made in accordance
with applicable gaming, securities or other laws.
8. Authorization; Representations and Warranties. Each
party represents and warrants to the other that:
(a) The execution, delivery, and performance by it of this
Agreement and the transactions contemplated herein have been duly
authorized by all necessary action, and the individual(s) executing
this Agreement on its behalf are duly authorized to do so;
(b) It is duly organized and in good standing under the laws
of the jurisdiction of its formation; and
(c) The execution, delivery and performance of this Agreement
does not and shall not violate any existing agreement, bylaw,
statute, rule, regulation and/or ordinance applicable to such party
or its execution, delivery and/or performance of this Agreement.
9. Notices. All notices hereunder shall be deemed properly
given upon (i) receipt by the addressee by personal delivery or
facsimile transmission, (ii) two (2) business days after delivery
by an overnight express delivery service for the next business day
delivery, or (iii) if mailed, upon the first to occur of receipt or
the expiration of five (5) business days after deposit in United
States Postal Service certified mail, postage prepaid, addressed to
the parties at the addresses appearing below. Such addresses may
be changed by notice given in the same manner.
If to TCA: Len Wolman
c/o LMW Investments, Inc.
914 Hartford Turnpike
P.O. Box 715
Waterford, CT 06385
Telecopy No. (860) 447-8554
With a copy to: Honigman Miller Schwartz & Cohn
2290 First National Building
Detroit, Michigan 48226-3583
Attn: Sheldon P. Winkelman, Esq.
Telecopy No. (313) 465-7607
If to SIML: Howard ("Butch") Kerzner
Sun International
Executive Offices
Atlantis, Coral Towers
Paradise Island, The Bahamas
Telecopy No. (242) 363-4581
With a copy to: Charles Adamo, Esq.
Sun International
Executive Offices
Atlantis, Coral Towers
Paradise Island, The Bahamas
Telecopy No. (242) 363-4581
10. Amendments. This Agreement may be amended or modified
only by written instrument executed by all of the parties hereto.
11. Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of
New York.
12. Severability. If any provision hereof shall be
judicially determined to be illegal, or if the application thereof
to any party or in any circumstance shall, to any extent, be
judicially determined to be invalid or unenforceable, the remainder
of this Agreement, or the application of such provision to parties
or in circumstances other than those to which it has been
judicially determined to be invalid or unenforceable, shall not be
affected thereby, and each provision of this Agreement shall be
valid and enforceable to the fullest extent permitted by law.
13. Counterparts. This Agreement may be executed by
facsimile and in any number of counterparts, each of which shall
constitute an original and all of which together shall constitute
one and the same Agreement.
14. Further Assurances. The parties will execute and deliver
such further instruments and undertake such further actions as may
be required to carry out the intent and purposes of this Agreement.
15. Successors and Assigns. Subject to the restrictions on
transferability contained in Paragraph 6 hereof, this Agreement
shall be binding upon, and shall inure to the benefit of, the
parties hereto and their respective successors and assigns.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the day and year first written above.
TRADING COVE ASSOCIATES,
By: SUN COVE LIMITED
By:___________________
Name:
Title:
By: WATERFORD GAMING., L.L.C.,
By:______________________
Name:
Title:
SUN INTERNATIONAL MANAGEMENT LIMITED,
By:_______________________
Name:
Title:
LOCAL CONSTRUCTION SERVICES AGREEMENT
This LOCAL CONSTRUCTION SERVICES AGREEMENT ("Agreement") dated
as of February 9, 1998, between SUN INTERNATIONAL MANAGEMENT
LIMITED, a British Virgin Island corporation ("SIML") and WOLMAN
CONSTRUCTION, L.L.C., a Connecticut limited liability company
("Wolman").
PRELIMINARY STATEMENT
The following is a recital of certain facts upon which this
Agreement is based:
The Mohegan Tribe of Indians of Connecticut, a federally
recognized Indian Tribe (the "Tribe") and its instrumentality, The
Mohegan Tribal Gaming Authority (the "Authority") has entered into
a certain Development Services Agreement dated February 7, 1998
(the "Development Services Agreement") with Trading Cove Associates
("TCA") pursuant to the terms of which the Tribe and the Authority
have granted to TCA the exclusive right and obligation to provide
development services in respect of the design, construction,
equipment and opening of the "Project", as that term is defined in
the Development Services Agreement.
Concurrently herewith, TCA is entering into an Agreement
Relating to Development Services with SIML (the "Agreement Relating
to Development Services") pursuant to which SIML will, as a
Subcontractor to TCA, perform certain of the duties and obligations
of the "Developer" under the Development Services Agreement. SIML
wishes to retain the services of Wolman as a subcontractor to
assist SIML in meeting its subcontract obligations under the
Agreement Relating to Development Services.
NOW THEREFORE, the parties hereto agree as follows:
1. Services to be Provided. SIML hereby subcontracts Wolman
and Wolman hereby agrees to perform and to hold itself available to
provide local construction management services reasonably
subcontracted to Wolman by SIML in order to facilitate the
fulfillment of the duties and obligations under the Agreement
Relating to Development Services.
2. Costs and Expenses. SIML agrees to cause TCA to
reimburse Wolman for all reasonable costs and expenses incurred by
Wolman and its affiliates as Subcontractors relating to the
development of the Project which costs and expenses will be paid as
requests for payment are submitted to TCA with such information as
may be reasonably requested by TCA to verify such payment requests.
3 Fee and Payment Terms. In consideration of the services
to be provided hereunder, SIML shall pay to Wolman a fee (the
"Wolman Fee") equal to 20.83% of the Development Services Fee which
SIML is to receive from TCA under the Agreement Relating to
Development Services. SIML agrees to pay Wolman the Wolman Fee
ratably as and when SIML receives its Development Services Fee from
TCA under the Agreement Relating to Development Services.
4. Payment Direction. SIML hereby directs TCA to pay
directly to Wolman the Wolman Fee ratably out of the Development
Services Fee at such time as all or any portion of the Development
Services Fee is payable by TCA to SIML under the Agreement Relating
to Development Services.
5. Indemnification. Wolman and its affiliates, parents,
subsidiaries and controlling members (collectively, the
"Indemnified Parties") shall not be liable to SIML by reason of any
act performed for or on behalf of SIML hereunder, or in the
furtherance of SIML business, or any omission to act, except for
acts or omissions that constitute a material breach of any
provision of this Agreement, gross negligence, fraud or bad faith.
SIML shall indemnify, defend and hold harmless the Indemnified
Parties from any claim, demand or liability, and from any loss,
cost or expense, including, but not limited to, attorneys' fees and
court costs, which may be made or imposed upon them by reason of
any act performed for or on behalf of SIML or in furtherance of
SIML's business, or any omission to act, except for acts and
omissions that constitute a material breach of any provision of
this Agreement, gross negligence, fraud or bad faith.
6. Third Party Beneficiary. This Agreement is exclusively
for the benefit of the parties hereto and it may not be enforced by
any party other than the parties to this Agreement and shall not
give rise to any liability to any third party other than the
authorized successors and assigns of the parties pursuant to
Section 7 hereof.
7. Assignments. Neither party may assign its rights and/or
obligations under this Agreement, except: (i) to an affiliate of
such party, or (ii) with the prior written consent of all parties
hereto. Any assignment shall be subject to and made in accordance
with applicable gaming, securities or other laws.
8. Authorization; Representations and Warranties. Each
party represents and warrants to the other that:
(a) The execution, delivery, and performance by it of this
Agreement and the transactions contemplated herein have been duly
authorized by all necessary action, and the individual(s) executing
this Agreement on its behalf are duly authorized to do so;
(b) It is duly organized and in good standing under the laws
of the jurisdiction of its formation; and
(c) The execution, delivery and performance of this Agreement
does not and shall not violate any existing agreement, bylaw,
statute, rule, regulation and/or ordinance applicable to such party
or its execution, delivery and/or performance of this Agreement.
9. Notices. All notices hereunder shall be deemed properly
given upon (i) receipt by the addressee by personal delivery or
facsimile transmission, (ii) two (2) business days after delivery
by an overnight express delivery service for the next business day
delivery, or (iii) if mailed, upon the first to occur of receipt or
the expiration of five (5) business days after deposit in United
States Postal Service certified mail, postage prepaid, addressed to
the parties at the addresses appearing below. Such addresses may
be changed by notice given in the same manner.
If to Wolman: Len Wolman
c/o Wolman Construction, L.L.C.
914 Hartford Turnpike
P.O. Box 715
Waterford, CT 06385
Telecopy No. (860) 447-8554
With a copy to: Honigman Miller Schwartz & Cohn
2290 First National Building
Detroit, Michigan 48226-3583
Attn: Sheldon P. Winkelman, Esq.
Telecopy No. (313) 465-7607
If to SIML: Howard ("Butch") Kerzner
Sun International
Executive Offices
Atlantis, Coral Towers
Paradise Island, The Bahamas
Telecopy No. (242) 363-4581
With a copy to: Charles Adamo, Esq.
Sun International
Executive Offices
Atlantis, Coral Towers
Paradise Island, The Bahamas
Telecopy No. (242) 363-4581
10. Amendments. This Agreement may be amended or modified
only by written instrument executed by all of the parties hereto.
11. Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of
New York.
12. Severability. If any provision hereof shall be
judicially determined to be illegal, or if the application thereof
to any party or in any circumstance shall, to any extent, be
judicially determined to be invalid or unenforceable, the remainder
of this Agreement, or the application of such provision to parties
or in circumstances other than those to which it has been
judicially determined to be invalid or unenforceable, shall not be
affected thereby, and each provision of this Agreement shall be
valid and enforceable to the fullest extent permitted by law.
13. Counterparts. This Agreement may be executed by
facsimile and in any number of counterparts, each of which shall
constitute an original and all of which together shall constitute
one and the same Agreement.
14. Further Assurances. The parties will execute and deliver
such further instruments and undertake such further actions as may
be required to carry out the intent and purposes of this Agreement.
15. Successors and Assigns. Subject to the restrictions on
transferability contained in Paragraph 7 hereof, this Agreement
shall be binding upon, and shall inure to the benefit of, the
parties hereto and their respective successors and assigns.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the day and year first written above.
SUN INTERNATIONAL MANAGEMENT LIMITED
By:______________________________
Name:
Title:
WOLMAN CONSTRUCTION, L.L.C.
By:_____________________________
Name:
Title:
ACKNOWLEDGEMENT AND AGREEMENT
The undersigned acknowledges the payment direction contained
in paragraph 4 above and agrees to act in accordance with such
direction.
TRADING COVE ASSOCIATES
By: SUN COVE LIMITED
By:___________________
Name:
Title:
By: WATERFORD GAMING, L.L.C.
By:______________________
Name:
Title:
ESCROW DEPOSIT AGREEMENT
THIS AGREEMENT, dated as of the 3rd day of March, 1999 (the
"Agreement"), is by and among the Mohegan Tribal Gaming Authority
(the "Issuer") and First Union National Bank, as Defeasance Agent
(the "Defeasance Agent").
WHEREAS, the Issuer issued $90,000,000 in principal amount
of its Subordinated Notes (the "Notes") pursuant to a Note
Purchase Agreement by and between the Issuer and Sun
International Hotels Limited ("Sun International") dated as of
September 29, 1995 (the "Note Purchase Agreement"). All
capitalized terms used herein and not otherwise defined shall
have the meanings ascribed thereto in the Note Purchase
Agreement.
WHEREAS, $90,000,000 in principal amount of the Notes
remains outstanding, all of which are currently held by Sun
International and Waterford Gaming, LLC ("Waterford Gaming", and
together with Sun International the "Note Holders") in the
amounts set forth opposite their names on the signature pages
hereto.
WHEREAS, the Issuer has elected to provide for a Covenant
Defeasance of the Notes pursuant to Section 12.03 of the Note
Purchase Agreement and has delivered or will deliver to First
Union National Bank as Trustee for the Senior Secured Notes, a
certificate calling for the redemption of the Notes on January 1,
2000.
WHEREAS, Section 12.04(a) of the Note Purchase Agreement
provides that Issuer must irrevocably deposit with an agent,
which may be the Defeasance Agent, in trust, for the benefit of
the Note Holders, cash in United States dollars, non-callable
Government Securities, or a combination thereof, in such amounts
as will be sufficient, in the opinion of a nationally recognized
firm of independent public accountants as evidenced by a
certificate delivered to the Defeasance Agent, to pay the
principal of, premium, if any, and interest on the outstanding
Notes on the stated maturity date or on the applicable redemption
date, as the case may be and the Issuer must specify whether the
Notes are being defeased to maturity or to a particular
redemption date.
WHEREAS, the Issuer and the Note Holders have agreed that
the obligations of Section 12.04(a) of the Note Purchase
Agreement are satisfied by the deposit of sums pursuant to two
(2) side letters dated February 22, 1999 attached hereto ("Side
Letters").
WHEREAS, Defeasance Agent has agreed to accept, hold, and
disburse the funds deposited with it and the earnings thereon in
accordance with the terms of this Agreement and the Side Letters.
WHEREAS, in order to establish the escrow of funds for the
covenant defeasance of the Notes and to effect the provisions of
the Note Purchase Agreement and the Side Letters, the parties
hereto have entered into this Agreement.
STATEMENT OF AGREEMENT
NOW THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto, for themselves, their successors and assigns,
hereby agree as follows:
1. Definitions. The following terms shall have the
following meanings when used herein:
"Defeasance Funds" shall mean the funds deposited with
Defeasance Agent pursuant to this Agreement, together with any
interest and other income thereon, which funds shall include,
without limitation, the initial sum of One Hundred Forty Million
Three Hundred Thousand Dollars ($140,300,000).
"Redemption Date" shall mean January 1, 2000.
"Joint Written Direction" shall mean a written direction
executed by the Representatives and directing Defeasance Agent to
disburse all or a portion of the Defeasance Funds or to take or
refrain from taking an action pursuant to this Agreement.
"Representatives" shall mean authorized representatives of
the Issuer and the Note Holders.
2. Appointment of and Acceptance by Defeasance Agent. The
Issuer hereby appoints Defeasance Agent to serve as defeasance
agent hereunder. Defeasance Agent hereby accepts such appointment
and, upon receipt by wire transfer of the Defeasance Funds in
accordance with Section 3 below, agrees to hold, invest and
disburse the Defeasance Funds in accordance with this Agreement.
3. Creation of Defeasance Funds. On March 3, 1999, Issuer
will transfer the sum of One Hundred Forty Million Three Hundred
Thousand Dollars ($140,300,000) to Defeasance Agent, by wire
transfer of immediately available funds, to the following
account:
First Union National Bank
Charlotte, North Carolina
ABA # [053000219]
Credit: D/5000000016439 Trust Ops
FFC: A/C #9572832469 Mohegan/Sun ESC
ATTN: CT-9750 Hartford
4. Disbursements of Defeasance Funds.
a. Joint Written Direction. Defeasance Agent shall
disburse Defeasance Funds, at any time and from
time to time, in accordance with a Joint Written
Direction of the Issuer and the Note Holders.
b. Redemption Date. On the Redemption Date,
Defeasance Agent shall apply the Defeasance Funds
to the redemption of the Notes in accordance with
and at the price set forth in the Side Letters
without any further instruction or direction, by
payment to the holders of the Notes as set forth
on the registration books of the Issuer on the
15th day immediately preceding the Redemption
Date. Any payment due on a date other than a
banking day shall be made on the next banking day.
Any balance of the Defeasance Funds remaining
after redemption of the Notes as aforesaid shall
be remitted by the Defeasance Agent to the Issuer.
5. Disbursement Into Court. If, at any time, there shall
exist any dispute between Issuer or Note Holders with respect to
the holding or disposition of any portion of the Defeasance Funds
or any other obligations of Defeasance Agent hereunder, or if at
any time Defeasance Agent is unable to determine, to Defeasance
Agent's sole satisfaction, the proper disposition of any portion
of the Defeasance Funds or Defeasance Agent's proper actions with
respect to its obligations hereunder, or if the Representatives
have not within 30 days of the furnishing by Defeasance Agent of
a notice of resignation pursuant to Section 7 hereof, appointed a
successor Defeasance Agent to act hereunder, then Defeasance
Agent may, in its sole discretion, take either or both of the
following actions:
a. suspend the performance of any of its obligations
(including without limitation any disbursement obligations) under
this Agreement until such dispute or uncertainty shall be
resolved to the sole satisfaction of Defeasance Agent or until a
successor Defeasance Agent shall have been appointed (as the case
may be); provided however, that Defeasance Agent shall continue
to invest the Defeasance Funds in accordance with Section 6
hereof; and/or
b. petition (by means of an interpleader action or any
other appropriate method) any court of competent jurisdiction in
any venue convenient to Defeasance Agent, for instructions with
respect to such dispute or uncertainty, and to the extent
required by law, pay into such court, for holding and disposition
in accordance with the instructions of such court, all funds held
by it in the Defeasance Funds, after deduction and payment to
Defeasance Agent of all fees and expenses (including court costs
and attorneys' fees) payable to, incurred by, or expected to be
incurred by Defeasance Agent in connection with the performance
of its duties and the exercise of its rights hereunder.
Defeasance Agent shall have no liability to Issuer, Note
Holders, their respective shareholders or any other person with
respect to any such suspension of performance or disbursement
into court, specifically including any liability or claimed
liability that may arise, or be alleged to have arisen, out of or
as a result of any delay in the disbursement of funds held in the
Defeasance Funds or any delay in or with respect to any other
action required or requested of Defeasance Agent.
6. Investment of Funds. Defeasance Agent shall invest the
Defeasancee Funds in the manner set forth in Schedule 1 attached
hereto. Each of the Issuer and the Note Holders agree that said
investments will provide sufficient funds to redeem the Notes in
full on the Redemption Date. In the event, for any reason that
it becomes necessary to reinvest any Defeasance Funds, Defeasance
Agent shall do so as the Representatives jointly shall direct;
provided, however, that no investment or reinvestment may be made
except in Government Securities, in accordance with the terms of
the Note Purchase Agreement.
If Defeasance Agent has not received a Joint Written
Direction at any time that an investment decision must be made,
Defeasance Agent shall invest the Defeasance Funds, or such
portion thereof as to which no Joint Written Direction has been
received, in overnight Government Securities. Each of the
foregoing investments shall be made in the name of Defeasance
Agent. Notwithstanding anything to the contrary contained
herein, Defeasance Agent may, without notice to the
Representatives, sell or liquidate any of the foregoing
investments at any time if the proceeds thereof are required for
any release of funds permitted or required hereunder, and
Defeasance Agent shall not be liable or responsible for any loss,
cost or penalty, resulting from any such sale or liquidation.
With respect to any funds received by Defeasance Agent for
deposit into the Defeasance Funds or any Joint Written Direction
received by Defeasance Agent with respect to investment of any
funds in the Defeasance Funds after ten o'clock, a.m., Hartford,
Connecticut, time, Defeasance Agent shall not be required to
invest such funds or to effect such investment instruction until
the next day upon which banks in Hartford, Connecticut are open
for business.
7. Resignation and Removal of Defeasance Agent.
Defeasance Agent may resign from the performance of its duties
hereunder at any time by giving ten (10) days' prior written
notice to the Representatives or may be removed, with or without
cause, by the Representatives, acting jointly by furnishing a
Joint Written Direction to Defeasance Agent, at any time by the
giving of ten (10) days' prior written notice to Defeasance
Agent. Such resignation or removal shall take effect upon the
appointment of a successor Defeasance Agent as provided herein
below. Upon any such notice of resignation or removal, the
Representatives jointly shall appoint a successor Defeasance
Agent hereunder, which shall be a commercial bank, trust company
or other financial institution with a combined capital and
surplus in excess of $10,000,000. Upon the acceptance in writing
of any appointment as Defeasance Agent hereunder by a successor
Defeasance Agent, such successor Defeasance Agent shall thereupon
succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Defeasance Agent, and the
retiring Defeasance Agent, shall be discharged from its duties
and obligations under this Agreement, but shall not be discharged
from any liability for actions taken as Defeasance Agent
hereunder prior to such succession. After any retiring
Defeasance Agent's resignation or removal, the provisions of this
Agreement shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Defeasance Agent under
this Agreement. The retiring Defeasance Agent shall transmit all
records pertaining to the Defeasance Funds and shall pay all
funds held by it in the Defeasance Funds to the successor
Defeasance Agent, after making copies of such records as the
retiring Defeasance Agent deems advisable and after deduction and
payment to the retiring Defeasance Agent of all fees and expenses
(including court costs and attorneys' fees) payable to, incurred
by, or expected to be incurred by the retiring Defeasance Agent
in connection with the performance of its duties and the exercise
of its rights hereunder.
8. Liability of Defeasance Agent.
a. Defeasance Agent shall have no liability or obligation
with respect to the Defeasance Funds except for Defeasance
Agent's willful misconduct or gross negligence. Defeasance
Agent's sole responsibility shall be for the safekeeping,
investment, and disbursement of the Defeasance Funds in
accordance with the terms of this Agreement. Defeasance Agent
shall have no implied duties or obligations and shall not be
charged with knowledge or notice of any fact or circumstance not
specifically set forth herein. Defeasance Agent may rely upon any
instrument, not only as to its due execution, validity and
effectiveness, but also as to the truth and accuracy of any
information contained therein, which Defeasance Agent shall in
good faith believe to be genuine, to have been signed or
presented by the person or parties purporting to sign the same
and to conform to the provisions of this Agreement. In no event
shall Defeasance Agent be liable for incidental, indirect,
special, consequential or punitive damages. Defeasance Agent
shall not be obligated to take any legal action or commence any
proceeding in connection with the Defeasance Funds, any account
in which Defeasance Funds are deposited, this Agreement or the
Note Purchase Agreement, or to appear in, prosecute or defend any
such legal action or proceeding. Defeasance Agent may consult
legal counsel selected by it in the event of any dispute or
question as to the construction of any of the provisions hereof
or of any other agreement or of its duties hereunder, or relating
to any dispute involving any party hereto, and shall incur no
liability and shall be fully indemnified from any liability
whatsoever in acting in accordance with the opinion or
instruction of such counsel. Issuer and Note Holders, jointly
and severally, shall promptly pay, upon demand, the reasonable
fees and expenses of any such counsel.
(b) The Defeasance Agent is authorized, in its sole
discretion, to comply with orders issued or process entered by
any court with respect to the Defeasance Funds, without
determination by the Defeasance Agent of such court's
jurisdiction in the matter. If any portion of the Defeasance
Funds is at any time attached, garnished or levied upon under any
court order, or in case the payment, assignment, transfer,
conveyance or delivery of any such property shall be stayed or
enjoined by any court order, or in case any order, judgment or
decree shall be made or entered by any court affecting such
property or any part thereof, then and in any such event, the
Defeasance Agent is authorized, in its sole discretion, to rely
upon and comply with any such order, writ, judgment or decree
which it is advised by legal counsel selected by it is binding
upon it without the need for appeal or other action; and if the
Defeasance Agent complies with any such order, writ, judgment or
decree, it shall not be liable to any of the parties hereto or to
any other person or entity by reason of such compliance even
though such order, writ, judgment or decree may be subsequently
reversed, modified, annulled, set aside or vacated.
9. Indemnification of Defeasance Agent. From and at all
times after the date of this Agreement, Issuer, shall, to the
fullest extent permitted by law and to the extent provided
herein, indemnify and hold harmless Defeasance Agent and each
director, officer, employee, attorney, agent and affiliate of
Defeasance Agent (collectively, the "Indemnified Parties")
against any and all actions, claims (whether or not valid),
losses, damages, liabilities, costs and expenses of any kind or
nature whatsoever (including without limitation reasonable
attorneys' fees, costs and expenses) incurred by or asserted
against any of the Indemnified Parties from and after the date
hereof, whether direct, indirect or consequential, as a result of
or arising from or in any way to any demand, suit, action or
proceeding (including any inquiry or investigation) by any
person, including without limitation Issuer or Note Holders,
whether threatened or initiated, asserting a claim for any legal
or equitable against any person under any statute or regulation,
including, but not limited to, any federal or state securities
laws, or under any common law or equitable cause or otherwise,
arising from or in connection with the negotiation, preparation,
execution, performance or failure of performance of this
Agreement or any transactions contemplated herein, whether or not
any such Indemnified Party is a party to any such action,
proceeding, suit or the target of any such inquiry or
investigation; provided, however, that no Indemnified Party shall
have the right to be indemnified hereunder for any liability
finally determined by a court of competent jurisdiction, subject
to no further appeal, to have resulted solely from the gross
negligence or willful misconduct of such Indemnified Party. If
any such action or claim shall be brought or asserted against any
Indemnified Party, such Indemnified Party shall promptly notify
Issuer and Note Holders in writing, and Issuer and Note Holders
shall assume the defense thereof, including the employment of
counsel and the payment of all expenses. Such Indemnified Party
shall, in its sole discretion, have the right to employ separate
counsel (who may be selected by such Indemnified Party in its
sole discretion) in any such action and to participate in the
defense thereof, and the fees and expenses of such counsel shall
be paid by such Indemnified Party, except that Issuer shall be
required to pay such fees and expenses if (a) Issuer agrees to
pay such fees and expenses, or (b) Issuer shall fail to assume
the defense of such action or proceeding or shall fail, in the
sole discretion of such Indemnified Party, to employ counsel
satisfactory to the Indemnified Party in any such action or
proceeding, (c) Issuer or Note Holders is the plaintiff in any
such action or proceeding or (d) the named parties to any such
action or proceeding (including any potential parties) include
both Indemnified Party and Issuer, and Indemnified Party shall
have been advised by counsel that there may be one or more legal
defenses available to it which are different from or additional
to those available to Issuer. Issuer shall be jointly and
severally liable to pay fees and expenses of counsel pursuant to
the preceding sentence, except that any obligation to pay under
clause (a) shall apply only to the party so agreeing. All such
fees and expenses payable by Issuer pursuant to the foregoing
sentence shall be paid from time to time as incurred, both in
advance of and after the final disposition of such action or
claim. All of the foregoing losses, damages, costs and expenses
of the Indemnified Parties shall be payable by Issuer upon demand
by such Indemnified Party. The obligations of Issuer under this
Section 9 shall survive any termination of this Agreement, and
the resignation or removal of Defeasance Agent shall be
independent of any obligation of the Defeasance Agent.
10. Fees and Expenses of Defeasance Agent. Issuer shall
compensate Defeasance Agent for its services hereunder in
accordance with Schedule A attached hereto and, in addition,
shall reimburse Defeasance Agent for all of its reasonable
out-of-pocket expenses, including attorneys' fees, travel
expenses, telephone and facsimile transmission costs, postage
(including express mail and overnight delivery charges), copying
charges and the like. All of the compensation and reimbursement
obligations set forth in this Section 10 shall be payable by
Issuer upon demand by Defeasance Agent. The obligations of
Issuer under this Section 10 shall survive any termination of
this Agreement and the resignation or removal of Defeasance
Agent.
11. Representations and Warranties.
a. Issuer makes the following representations and
warranties to Defeasance Agent:
(i) Issuer is duly established and validly existing as an
instrumentality of the Mohegan Tribe of Indians of Connecticut,
and has full power and authority to execute and deliver this
Agreement and to perform its obligations hereunder,
(ii) This Agreement has been duly and validly authorized,
executed and delivered by the Issuer, and constitutes a valid and
binding agreement of Issuer, enforceable in accordance with its
terms.
(iii) The execution, delivery, and performance by Issuer of
this Agreement is in accordance with the Note Purchase Agreement
and will not violate, conflict with, or cause a default under the
governing instruments of Issuer, any applicable law or
regulation, any court order or administrative ruling or decree to
which Issuer is a party or any of its property is subject, or any
agreement, contract, indenture, or other binding arrangement,
including without limitation the Note Purchase Agreement, to
which Issuer is a party or any of its property is subject.
(iv) Roland Harris and each of the other officers of the
Management Board of the Issuer has been duly appointed to act as
the representative of Issuer hereunder and has full power and
authority to execute, deliver, and perform this Agreement, to
execute and deliver any Joint Written Direction, to amend, modify
or waive any provision of this Agreement and to take any and all
other actions under this Agreement, all without further consent
or direction from, or notice to, Issuer or any other party.
(v) No party other than the parties hereto have, or shall
have, any lien, claim or security interest in the Defeasance
Funds or any part thereof. No financing statement under the
Uniform Commercial Code is on file in any jurisdiction claiming a
security interest in or describing (whether specifically or
generally) the Defeasance Funds or any part thereof.
(vi) All of the representations and warranties of Issuer
contained herein are true and complete as of the date hereof and
will be true and complete at the time of any disbursement from
the Defeasance Funds.
(vii) The Note Holders are the holders of Notes, in the
amounts set forth on the signature pages hereto, and the
registration books maintained by the Issuer pursuant to Section
10.04 of the Note Purchase Agreement reflect that fact.
12. Consent to Jurisdiction and Venue. In the event that
any party hereto commences a lawsuit or other proceeding relating
to or arising from this Agreement, the parties hereto agree that
the state courts of the State of Connecticut shall have
jurisdiction over any such proceeding. The parties hereto waive
any objection to such venue. The parties hereto consent to and
agree to submit to the jurisdiction of any of the courts
specified herein and agree to accept service or process to vest
personal jurisdiction over them in any of these courts.
13. Notice. All notices and other communications hereunder
she be in writing and shall be deemed to have been validly
served, given or delivered five (5) days after deposit in the
United States mails, by certified mail with return receipt
requested and postage prepaid, when delivered personally, one (1)
day after delivery to any overnight courier, or when transmitted
by facsimile transmission facilities, and addressed to the party
to be notified as follows:
If to Issuer at: Mohegan Tribal Gaming Authority
One Mohegan Sun Boulevard
Uncasville, Connecticut 06382
ATTENTION: Roland Harris, Chairman
Facsimile Number (860) 204-6153
With a copy to: ATTENTION: Jeffrey Hartmann, Chief
Financial Officer
Facsimile Number: (860) 204-7167
If to Note Holders at: a) Sun International Hotels Limited
Executive Offices, Coral Towers
PO Box N-4777, Paradise Island
Nassau, The Bahamas
ATTENTION: Charles Adamo, Esq.
Facsimile Number: (242) 363-3703
b) Waterford Gaming, L.L.C.
914 Hartford Turnpike
PO Box 715
Waterford, Connecticut 06385
ATTENTION: Len Wolman
Facsimile Number. (860) 437-7752
If to Defeasance Agent: First Union National Bank,
as Defeasance Agent
Corporate Trust Operations
10 State House Square
2nd Floor
Hartford, Connecticut 06103
ATTENTION: W. Jeffrey Kramer
Facsimile Number: (860) 247-1356
or to such other address as each party may designate for itself
by like notice.
14. Amendment or Waiver. This Agreement may be changed,
waived, discharged or terminated only by a writing signed by the
Representatives and Defeasance Agent. No delay or omission by
any party in exercising any right with respect hereto shall
operate as a waiver. A waiver on any one occasion shall not be
construed as a bar to, or waiver of, any right or remedy on any
future occasion.
15. Severability. To the extent any provision of this
Agreement is prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition
or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
16. Governing Law. This Agreement shall be construed and
interpreted in accordance with the internal laws of the State of
Connecticut without giving effect to the conflict of laws
principles thereof.
17. Entire Agreement. This Agreement constitutes the
entire agreement between the parties relating to the holding,
investment and disbursement of the Defeasance Funds and sets
forth in their entirety the obligations and duties of Defeasance
Agent with respect to the Defeasance Funds.
18. Binding Effect. All of the terms of this Agreement, as
amended from time to time, shall be binding upon, inure to the
benefit of and be enforceable by the respective heirs, successors
and assigns of Issuer, Note Holders, the Representatives and
Defeasance Agent.
19. Execution in Counterparts. This Agreement and any
Joint Written Direction may be executed in two or more
counterparts, which when so executed shall constitute one and the
same agreement or direction.
20. Termination. Upon the first to occur of the
disbursement of all amounts in the Defeasance Funds pursuant to
Joint Written Directions or the disbursement of all amounts in
the Defeasance Funds into court pursuant to Section 5 hereof,
this Agreement shall terminate and Defeasance Agent shall have no
further obligation or liability whatsoever with respect to this
Agreement or the Defeasance Funds.
21. Dealings. The Defeasance Agent and any stockholder,
director, officer or employee of the Defeasance Agent may buy,
sell, and deal in any of the securities of the Issuer or Note
Holders and become pecuniary interested in any transaction in
which the Issuer or Note Holders may be interested, and contract
and lend money to the Issuer or Note Holders and otherwise act as
fully and freely as though it were not Defeasance Agent under
this Agreement. Nothing herein shall preclude the Defeasance
Agent from acting in any other capacity for the Issuer or Note
Holders or for any other entity.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed under seal as of the date first above
written.
Defeasance Agent: Issuer:
FIRST UNION NATIONAL BANK Mohegan Tribal Gaming
Authority An instrumentality
of the Nation
By:________________________ By:_______________________
The undersigned acknowledge that the Authority has entered into
the foregoing and confirms the principal amounts of the Notes
held by each.
Amount: 15% Notes CG Notes Sun International Hotels
$ 850,000 $ 7,000,000
19,150,000 15,000,000
$20,000,000 10,000,000
5,000,000
8,000,000
$ 45,000,000
SUN INTERNATIONAL HOTELS LIMITED
A Bahaminan Corporation
By:_____________________________
Name:
Title:
Amount: 15% Notes CG Notes
$ 850,000 2,500,000
19,150,000 2,500,000
$ 20,000,000 $5,000,000
WATERFORD GAMING LLC
A Delaware limited liability company
By:__________________________________
Name:
Title:
SCHEDULE 1
INVESTMENT OF DEFEASANCE FUNDS
