EXHIBIT 10.11
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").
A. 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.
B. 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.
C. 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.
D. 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.
E. 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").
F. 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.
G. 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
-2-
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.
-3-
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
-4-
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
-5-
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.
-6-
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
-7-
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
-8-
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.
-9-
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:/s/ W. Jeffrey Kramer By:/s/ Jayne Fawcett
______________________ _____________________________
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 Limited,
---------- -------- a Bahamian Corporation
$ 850,000 $ 7,000,000 By: /s/ Charles Adamo
19,150,000 15,000,000 ---------------------------
----------- 10,000,000 Name:
$20,000,000 5,000,000 Title:
8,000,000
----------
$45,000,000
-10-
Amount:15% Notes CG Notes
--------- --------
WATERFORD GAMING LLC
850,000 2,500,000 A Delaware limited liability company
19,150,000 2,500,000
---------- ---------- By:_________________________________
$20,000,000 $5,000,000 Name:
Title:
-11-
SCHEDULE 1
INVESTMENT OF DEFEASANCE FUNDS
-12-