Exhibit 10.4
CASH ACCUMULATION ACCOUNT CONTRIBUTION AGREEMENT
Among
U.S. Bank, N.A., as Disbursement Agent,
U.S. Bank, N.A., as Trustee,
The Chukchansi Economic Development Authority,
The Picayune Rancheria of Chukchansi Indians
(solely with respect to its obligations under Section 9)
and
Cascade Entertainment Group, LLC
dated as of
October 8, 2002
TABLE OF CONTENTS
Page
1. Definitions..........................................................................................2
1.1 Defined Terms..............................................................................2
1.2 Index of Additional Defined Terms..........................................................8
1.3 Interpretation.............................................................................9
2. Establishment of Securities Accounts; Appointment of Disbursement Agent;
Related Provisions...................................................................................9
2.1 Appointment of the Disbursement Agent......................................................9
2.2 Establishment of Manager Security Account..................................................9
2.3 Control of Manager Security Account........................................................9
2.4 Cash Equivalents..........................................................................11
2.5 Waiver of Set-Off Rights..................................................................11
2.6 Cooperation...............................................................................11
3. Procedures for Manager Security Account Disbursements...............................................11
3.1 Tax Distributions from the Manager Security Account.......................................11
3.2 Distributions to Pay Manager's Expenses...................................................12
3.3 Delivery of Certificates..................................................................12
3.4 Loans of Funds to Authority...............................................................13
3.5 Final Disbursement of Funds in Manager Security Account Upon
Satisfaction of Release Condition.........................................................13
4. Loan of Funds to Manager............................................................................14
4.1 Contingent Interest Account Loan to Manager...............................................14
4.2 Repayment from Manager to Authority.......................................................15
5. Grant of Security Interest and Related Provisions...................................................15
5.1 Assignment, Pledge and Grant of Security Interest (in favor of Trustee)...................15
5.2 Secured Obligations.......................................................................16
5.3 Delivery of Manager Repayment Note........................................................16
5.4 Manager's Continuing Liability............................................................16
5.5 Representations and Warranties of Manager.................................................17
5.6 Appointment of Trustee as Attorney-in-Fact................................................17
5.7 Trustee May Perform.......................................................................18
5.8 Continuing Assignment and Security Interest...............................................18
6. Remedies Upon Event of Default......................................................................18
6.1 Remedies..................................................................................18
6.2 Costs and Expenses........................................................................19
6.3 Application of Proceeds...................................................................19
6.4 Remedies Cumulative; Delay Not Waiver.....................................................20
7. Responsibilities of Disbursement Agent..............................................................20
7.1 Conditions to Disbursements from the Manager Security Account.............................20
7.2 Method of Disbursement from the Manager Security Account..................................20
7.3 Transfer of Funds at Direction of Trustee.................................................20
8. Certain Covenants of Manager........................................................................20
8.1 Permitted Replacement Manager.............................................................20
8.2 Deposits into Manager Security Account....................................................20
8.3 Perfection and Further Assurances.........................................................21
9. Waiver of Sovereign Immunity, Arbitration and Non-Impairment........................................22
9.1 Irrevocable Waiver of Sovereign Immunity..................................................22
9.2 Designation of Applicable Courts and Jurisdictions........................................23
9.3 Additional Waivers as to Tribal Courts....................................................23
9.4 Agreement not to Contest..................................................................23
9.5 Arbitration...............................................................................23
9.6 Non-Impairment............................................................................25
10. Alteration of Obligations...........................................................................25
11. Obligations Absolute; Waiver........................................................................26
12. Bankruptcy and Related Proceedings..................................................................27
13. Limitation of Liability; Indemnification and Insurance..............................................27
13.1 Limitation of Disbursement Agent's Liability..............................................27
13.2 Indemnification of Disbursement Agent.....................................................28
13.3 Insurance.................................................................................28
14. Termination.........................................................................................28
14.1 Termination of Security Interest..........................................................28
14.2 Termination of Agreement..................................................................29
15. Substitution or Resignation of the Disbursement Agent...............................................29
15.1 Procedure.................................................................................29
15.2 Successor Disbursement Agent by Merger, etc...............................................30
15.3 Eligibility; Disqualification.............................................................30
16. Notices and Certificates............................................................................30
17. Statement of Manager Security Account...............................................................30
18. Miscellaneous.......................................................................................30
18.1 Waiver....................................................................................30
18.2 Invalidity................................................................................31
18.3 No Authority..............................................................................31
18.4 Assignment................................................................................31
18.5 Benefit...................................................................................31
18.6 Time......................................................................................31
18.7 Choice of Law.............................................................................31
18.8 Entire Agreement; Amendments..............................................................31
18.9 Notices...................................................................................31
18.10 Authority Authorization...................................................................32
18.11 Counterparts..............................................................................32
18.12 Right to Consult Counsel..................................................................32
CASH ACCUMULATION ACCOUNT CONTRIBUTION AGREEMENT
THIS
CASH ACCUMULATION ACCOUNT CONTRIBUTION AGREEMENT (this
"Agreement") is dated as of October 8, 2002, by and among U.S. Bank, N.A., a
national banking association, as disbursement agent (together with any
successor disbursement agent permitted hereunder, the "Disbursement Agent"),
U.S. Bank, N.A., a national banking association, as trustee under the
Indenture (as defined below) (together with its successors and assigns from
time to time under the Indenture, the "Trustee"), the
Chukchansi Economic
Development Authority (the "Authority"), a wholly owned unincorporated
enterprise of The Picayune Rancheria of Chukchansi Indians (the "Tribe"), the
Tribe (solely with respect to its obligations under Section 9) and Cascade
Entertainment Group, LLC, a California limited liability company (together
with any Permitted Replacement Manager, the "Manager").
RECITALS
A. Senior Notes. Concurrently herewith, the Authority is issuing
$153,000,000 aggregate principal amount of its 14 1/2% Senior Notes due 2009
(together with all notes issued in exchange or replacement therefore, the
"Initial Senior Notes"), pursuant to the Indenture. In addition, the Authority
may issue up to $25,000,000 aggregate principal amount of its Senior Notes
(other than the Initial Senior Notes) pursuant to the Indenture in accordance
with Sections the provisions thereof (collectively with the Initial Senior
Notes, the "Senior Notes").
B. Proceeds of the Senior Notes. The Authority will use the net
proceeds from the sale of the Senior Notes, together with the net proceeds
from the sale of certain payment-in-kind notes issued concurrently therewith,
for (among other things) the design, development, construction, equipping,
pre-opening and operation of a casino, hotel and related amenities to be
constructed by the Authority (the "Facility") upon the Tribe's rancheria
located near Coarsegold, California.
C. Benefit of Manager. The Manager has entered into a Development
Agreement and a Management Agreement with the Authority for the purposes of
facilitating the design, development, construction, equipping and management
of the Facility, each of which agreements provides for payment to the Manager
of certain fees representing portions of the development costs or revenues of
the Facility. As a result, the Manager will significantly benefit from the
development, construction and operation of the Facility.
D. Purpose. The parties have entered into this Agreement in order to
(a) provide for certain security arrangements in favor of the Trustee (for the
benefit of the Holders) and (b) set forth the conditions upon which, and the
manner in which (i) funds will be disbursed from the Manager Security Account
to the Shortfall Account (each as defined below) and (ii) funds will be
disbursed from the Manager Security Account for payment of certain tax
distributions to the Manager's members.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Definitions.
1.1 Defined Terms. The terms defined in this Section 1 shall
have the meanings herein specified:
"Adjustment Event" means any adjustment by the Internal
Revenue Service (or state or local tax authority) in respect of any income
inclusion arising from or attributable to the income described in clause (A)
of the definition of Manager Minimum Tax Payment Amount which adjustment
becomes a final "determination" under section 1313 of the Code (or similar
state or local tax law).
"Affiliate" has the meaning ascribed thereto in the
Indenture.
"Annual Support Threshold Amount" means, for any calendar
year, as determined by the Tax Amounts CPA, an amount equal to the sum of
(i) Two Million Dollars ($2,000,000); provided that if the
Initial Opening Date occurs during such Interest Payment Year, then such
amount shall be reduced to equal the product of Two Million Dollars and a
fraction, the numerator of which is the number of days from the Initial
Opening Date to the end of such Interest Payment Year, and the denominator of
which is 365; plus
(ii) the product of (A) the aggregate taxable income of the
Manager arising from or attributable to the Management Agreement for such
Interest Payment Year (or, if such Annual Support Threshold Amount is
calculated with respect to a First Interest Payment Date then two times the
aggregate taxable income of the Manager arising from or attributable to the
Management Agreement for the first six months of such Interest Payment Year)
and (B) the Applicable Income Tax Rate prevailing for such calendar year.
"Applicable Income Tax Rate" means an amount equal to the
sum of (1) the highest marginal Federal income tax rate applicable to an
individual plus (2) an amount equal to the sum of the highest marginal state
and local income tax rates applicable to any individual resident in
New York,
New York multiplied by a factor equal to 1 minus such highest marginal Federal
income tax rate.
"Bankruptcy Law" has the meaning ascribed thereto in the
Cash Collateral and Disbursement Agreement.
"Business Day" has the meaning ascribed thereto in the
Indenture.
"Cash Accumulation Account" has the meaning ascribed thereto
in the Cash Collateral and Disbursement Agreement.
"Cash Accumulation Account Shortfall" means, at any time of
determination, the Required Cash Accumulation Amount less the amount in the
Cash Accumulation Account at such time.
"Cash Collateral and Disbursement Agreement" has the meaning
ascribed thereto in the Indenture.
"Cash Equivalents" has the meaning ascribed thereto in the
Indenture.
"Claim" means any claim, demand, action or cause of action
arising under this Agreement or under the Collateral Documents, as any of the
foregoing may be amended or modified from time to time, or in any way
connected with or related or incidental to any of the foregoing, whether now
existing or hereafter arising and whether sounding in tort, contract or
otherwise.
"Collateral Documents" has the meaning ascribed thereto in
the Indenture.
"Contingent Interest Notes" has the meaning ascribed thereto
in the Cash Collateral and Disbursement Agreement.
"Default" means any event that is, or with the passage of
time or the giving of notice or both would be, an Event of Default.
"Development Agreement" has the meaning ascribed thereto in
the Indenture.
"Development Fees" means any fees payable by the Authority
to the Manager pursuant to the Development Agreement.
"Enterprise" means the Gaming business owned and operated by
the Authority in the Facility, and which shall include any other lawful
commercial activity allowed in the Facility including, but not limited to the
sale of alcohol, tobacco, gifts and souvenirs; or any ancillary non-Gaming
activity within the Facility generally related to Gaming.
"Event of Default" means the occurrence and continuance of
an Event of Default under the Indenture or under the Manager Agreement.
"First Interest Payment Date" means the first Interest
Payment Date to occur during a calendar year.
"Gaming" means any and all activities defined as class II
and class III Gaming (as defined in the Indian Gaming Regulatory Act of 1988).
"Governmental Action" means any resolution, ordinance,
statute, regulation, order or decision regardless of how constituted having
the force of law or legal authorization of the Tribe, the Authority or any
instrumentality or agency of the Tribe.
"Gross Gaming Revenue (Win)" means the net win from Gaming
which is the difference between Gaming wins and losses before deducting costs
and expenses.
"Gross Revenue" means all revenues of any nature derived
directly or indirectly from the Enterprise including, without limitation,
Gross Gaming Revenue (Win), food beverage sales, and other rental or other
receipts from lessees, sublessees, licensees and concessionaires (but not the
gross receipts of such lessees, sublessees, licensees or concessionaires,
provided that such lessees, sublessees, and licensees and concessionaires are
not subsidiaries or Affiliates of Manager), and revenue recorded for
Promotional Allowances, but excluding any taxes the Tribe is allowed to assess
pursuant to Section 7 of the Management Agreement.
"Holders" means the holders from time to time of the Senior
Notes.
"Indenture" means the Indenture dated as of the date hereof,
among the Authority, the Tribe and the Trustee, relating to the Senior Notes.
"Initial Operating Date" has the meaning ascribed thereto in
the Indenture.
"Intercreditor Agreement" has the meaning ascribed thereto
in the Indenture.
"Interest Payment Year" means, for any Interest Payment
Date, the twelve month period following the immediately preceding Second
Interest Payment Date.
"Management Agreement" has the meaning ascribed thereto in
the Indenture.
"Management Fees" means any fees payable by the Authority to
the Manager pursuant to the Management Agreement.
"Manager Agreement" means that certain Manager Agreement
between the Manager and the Trustee dated the date hereof.
"Manager Minimum Tax Payment Amount" means, as determined by
the Tax Amounts CPA, an amount equal to the product of (A) the aggregate
taxable income of the Manager arising from or attributable to the Management
Agreement for the period commencing with the date hereof continuing to and
including the date in respect of which the Manager Minimum Tax Payment Amount
is being determined (taking into account any True-up Amount) and (B) the
Applicable Income Tax Rate. For purposes of calculating the "Manager Minimum
Tax Payment Amount", the taxable income described in Clause (A) above that is
attributable to any particular taxable year shall be multiplied by the
Applicable Income Tax Rate prevailing for such year.
"Manager Operating Expenses" means all expenses incurred by
Manager that are directly attributable to the development, design,
construction or operation of the Facility, together with a commercially
reasonable allocation of Overhead to the Facility (it being agreed that so
long as Manager's only business consists of the development, design,
construction or operation of the Facility, it shall be commercially reasonable
for Manager to allocate all of its Overhead to the Facility); provided,
however, that Manager Operating Expenses exclude the following items:
(a) overhead, except as permitted above; and
(b) with respect to any payment made by Manager to
any Affiliate of Manager, any amount that exceeds the amount that Manager
reasonably would be expected to pay to a party other than an Affiliate for the
provision of the services or products to be provided by such Affiliate.
"Manager Tax Payment" means a payment from the Manager
Security Account to the Manager in the amount equal to the excess of (A) the
Manager Minimum Tax Payment Amount over (B) the cumulative amount of cash
payments previously made pursuant to Section 3.1 hereof.
"Net Revenues" means the sum of "Net Revenues (Gaming)" and
"Net Revenues (Other)."
"Net Revenues (Gaming)" means Gross Gaming Revenue (Win), of
the Enterprise from Gaming less all Gaming related operating expenses
(including interest expense, depreciation, amortization and the other
operating expenses set forth in the Management Agreement), excluding the
Management Fee, and less the retail value of any Promotional Allowances, and
less the following revenues actually received by the Authority and included in
Gross Revenues:
(a) any gratuities or service charges added to a
customer's ▇▇▇▇;
(b) any credits or refunds, for items previously
included in Gross Revenues, made to customers, guest or patrons;
(c) any sums and credits received by the Enterprise
for lost or damaged merchandise;
(d) without duplication of any Operating Expense,
any sales taxes, excise taxes, gross receipt taxes, admission taxes,
entertainment taxes, tourist taxes or charges received from patrons and passed
on to a governmental or quasi governmental entity;
(e) any proceeds from the sale or other disposition
of furnishings and equipment or other capital assets;
(f) any fire and extended coverage insurance
proceeds other than for business interruption;
(g) any condemnation awards other than for
temporary condemnation;
(h) any proceeds of financing or refinancing; and
(i) any interest on bank account(s).
"Net Revenues (Other)" means all Gross Revenues of the
Enterprise for all other sources in support of Gaming not included in "Net
Revenues (Gaming)," such as food and beverage, entertainment, and retail, less
all non-Gaming related operating expenses (including interest expense,
depreciation, amortization and the other operating expenses set forth in the
Management Agreement), excluding the Management Fee and less the retail value
of Promotional Allowances, if any, and less the following revenues actually
received by the Enterprise and included in Gross Revenues:
(a) any gratuities or service charges added to a
customer's ▇▇▇▇;
(b) any credits or refunds made to customers,
guests or patrons;
(c) any sums and credits received by the Enterprise
for lost or damaged merchandise;
(d) any sales taxes, excise taxes, gross receipt
taxes, admission taxes, entertainment taxes, tourist taxes or charges received
from patrons and passed on to a governmental or quasi governmental entity;
(e) any proceeds from the sale or other disposition
of furnishings and equipment or other capital assets;
(f) any fire and extended coverage insurance
proceeds other than for business interruption;
(g) any condemnation awards other than for
temporary condemnation;
(h) any proceeds of financing or refinancing; and
(i) any interest or bank account(s).
"
New York UCC" means the Uniform Commercial Code as the same
may, from time to time, be in effect in the State of
New York.
"NIGC Net Revenues" means the sum of (i) Net Revenues and
(ii) any interest on bank account(s). This provision is consistent with 25
U.S.C. ss.2703(9), which states that: "The term `net revenues' means gross
revenues of an Indian gaming activity less amounts paid out as, or paid for,
prizes and total operating expenses, excluding management fees."
"Officers' Certificate" means a certificate signed by two
officers of the Authority or the Manager, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Authority or the Manager.
"Overhead" means the costs and expenses incurred by Manager
in operating its business other than those costs and expenses that are
directly attributable to the development, design or construction of any
project (including the Facility).
"Permitted Replacement Manager" has the meaning ascribed
thereto in the Indenture.
"Person" has the meaning ascribed thereto in the Indenture.
"Promotional Allowances" means the retail value of
complimentary food, beverages, merchandise, and tokens for gaming, provided to
patrons as promotional items.
"Quarterly Payment Date" means each March 31, May 31, August
31 and December 15.
"Release Condition" has the meaning ascribed thereto in the
Intercreditor Agreement.
"Required Cash Accumulation Amount" means, at the time of
determination, (a) an amount in cash equal to $3.0 million, multiplied by the
number of completed full fiscal quarters since the Initial Operating Date,
less (b) any amounts that shall have been disbursed from the Cash Accumulation
Account to make prepayments on the Senior Notes pursuant to Section 3.10 of
the Indenture and in accordance with the terms of Section 7.2.3 of the Cash
Collateral and Disbursement Agreement.
"Second Interest Payment Date" means the second Interest
Payment Date to occur during a calendar year.
"Senior Note Obligations" has the meaning ascribed thereto
in the Cash Collateral and Disbursement Agreement.
"Shortfall Account" has the meaning ascribed thereto in the
Cash Collateral and Disbursement Agreement.
"Subordinated PIK Notes" means the Subordinated Pay-In-King
Notes due 2009 with Contingent Interest of the Authority.
"Tax Amounts CPA" means any nationally recognized
independent public accounting firm jointly selected by the Manager and the
Authority.
"Total Manager Compensation Cap" means an amount equal to
thirty percent (30%) of the NIGC Net Revenues during the six-month period
preceding the First Interest Payment Date, or the 12-month period preceding
the Second Interest Payment Date, as the case may be.
"True-up Amount" means, in respect of a particular taxable
year, an amount determined by the Tax Amounts CPA equal to the difference
between (1) the aggregate Manager Tax Payments actually distributed in respect
of such taxable year pursuant to Section 3.1 hereof and (2) the Manager Tax
Payments permitted to be distributed in respect of such year, provided,
however, that if there is an Adjustment Event, clause (1) will mean the
aggregate Manager Tax Payments actually distributed in respect of such taxable
year pursuant to Section 3.1 hereof as adjusted by the aggregate True-up
Amounts and clause (2) will mean the aggregate Manager Tax Payments permitted
to be distributed in respect of such year as adjusted to take into account the
results of the Adjustment Event. Within forty-five days following the
immediately preceding calendar year or within ten days of an Adjustment Event,
the Manager shall cause the Tax Amounts CPA to 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 Manager under this
Agreement, the Manager Minimum Tax Payment Amount shall be increased by such
True-up Amount. In the case of a True-up Amount due to the Manager Security
Account, the Manager Minimum Tax Payment Amount shall be decreased by such
True-up Amount.
"UCC" means: (i) with respect to the creation and attachment
of any security interest, (x) if the creation and attachment of the security
interest contemplated herein is capable of being subject to the
New York UCC,
the
New York UCC or (y) if the creation and attachment of the security
interest contemplated herein is excluded from coverage under the
New York UCC
by virtue of Section 9-109 thereof and is governed by the Uniform Commercial
Code as in effect in a jurisdiction other than the State of
New York, the
Uniform Commercial Code as in effect in such other jurisdiction and (ii) with
respect to the perfection, the effect of perfection or non-perfection and
priority of the security interest, (x) if the creation and attachment of the
security interest contemplated herein is capable of being subject to the
New
York UCC, the Uniform Commercial Code of the jurisdiction specified by the
mandatory choice of law rules set forth in the
New York UCC or (y) if the
creation and attachment of the security interest contemplated herein is
excluded from coverage under the New York UCC by virtue of Section 9-109
thereof and is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, the Uniform Commercial Code of
the jurisdiction specified by the mandatory choice of law rules set forth in
the Uniform Commercial Code as in effect in such other jurisdiction.
1.2 Index of Additional Defined Terms. In addition, the
terms listed in the left column below shall have the respective meanings
ascribed to such terms in the Section of this Agreement listed opposite such
terms in the right column below:
Defined Term Section
------------ -------
AAA.............................................................................9.5
Agreement..............................................................Introduction
Applicable Courts...............................................................9.2
Authority..............................................................Introduction
Authority Assets.............................................................9.1(d)
Authority Cash Accumulation Account Certificate...............................3.3.1
Benefited Party..................................................................11
Collateral......................................................................5.1
Disbursement Agent.....................................................Introduction
Entitlement Order...............................................................2.3
Facility..............................................................B of Recitals
Facility Obligations.............................................................10
Final Disbursement of Funds Certificate.........................................3.5
Financial Assets................................................................2.3
First Interest Payment Date Shortfall...........................................4.1
Holders...............................................................A of Recitals
Indenture.............................................................A of Recitals
Initial Senior Notes..................................................A of Recitals
Management Fee Disbursement Authorization.......................................3.5
Management Fees Note............................................................4.1
Manager................................................................Introduction
Manager's Expense Disbursement Request..........................................3.2
Manager Repayment Note........................................................3.4.2
Manager Security Account........................................................2.2
Manager Security Account Balance..............................................3.3.2
Manager Security Account Certification........................................3.3.2
Manager Security Contribution Amount..........................................3.4.1
Obligation Documents.............................................................10
Obligee..........................................................................10
Permitted Claims................................................................9.1
Second Interest Payment Date Shortfall..........................................4.1
Secured Obligations.............................................................5.2
Security Entitlements ..........................................................2.3
Senior Notes..........................................................A of Recitals
Tribal Party....................................................................9.1
Tribe..................................................................Introduction
Trustee................................................................Introduction
1.3 Interpretation. Unless otherwise required by the context
in which any term appears, the singular shall include the plural and the
masculine shall include the feminine and neuter. All references to "Sections"
or "Exhibits" shall be to Sections of or Exhibits to this Agreement, and
references to paragraphs shall be to separate paragraphs of the section or
subsection in which the reference occurs. The titles of the Sections herein
have been inserted as a matter of convenience of reference only, and shall not
control or affect the meaning or construction of any of the terms or
provisions hereof.
2. Establishment of Securities Accounts; Appointment of Disbursement
Agent; Related Provisions.
2.1 Appointment of the Disbursement Agent. Subject to
Section 6.1 hereof, the Disbursement Agent is hereby appointed by the Manager,
the Authority and the Trustee as disbursement agent hereunder, and the
Disbursement Agent hereby agrees to act as such and to accept all cash,
payments, other amounts and Cash Equivalents to be delivered to or held by the
Disbursement Agent pursuant to the terms of this Agreement. The Disbursement
Agent shall hold and safeguard the Manager Security Account (and the cash,
instruments and securities on deposit therein) during the term of this
Agreement and shall treat the Manager Security Account and the cash,
instruments, and securities in the Manager Security Account as funds,
instruments and securities pledged by the Manager to the Trustee (for the
ratable benefit of the Holders), to be held in accordance with the provisions
hereof.
2.2 Establishment of Manager Security Account. The
Disbursement Agent hereby establishes at its offices located at ▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇ ▇▇▇▇▇ the Manager Security Account as account number
▇▇▇▇▇▇▇▇ (the "Manager Security Account"), which shall be maintained as a
special, segregated and irrevocable collateral account at all times until such
Manager Security Account is closed as set forth in Section 3.5, unless earlier
termination is otherwise provided for herein.
2.3 Control of Manager Security Account. The Disbursement
Agent hereby agrees and confirms that it has established the Manager Security
Account as set forth and defined in this Agreement. The Disbursement Agent and
the Manager agree that (a) the Disbursement Agent is acting as a "securities
intermediary" (within the meaning of Section 8-102(14) of the UCC) with
respect to the Manager Security Account and the "financial assets" (within the
meaning of Section 8-102(a)(9) of the UCC, the "Financial Assets") credited to
the Manager Security Account; (b) the Manager Security Account established by
the Disbursement Agent is and will be maintained as a "securities account"
(within the meaning of Section 8-501 of the UCC); (c) the Manager is an
"entitlement holder" (within the meaning of Section 8-102(a)(7) of the UCC) in
respect of the Financial Assets credited to the Manager Security Account and
with respect to the Manager Security Account and the Disbursement Agent shall
so note in its records pertaining to such Financial Assets and Manager
Security Account; and (d) all Financial Assets in registered form or payable
to or to order of and credited to the Manager Security Account shall be
registered in the name of, payable to or to the order of, or specially
endorsed to, the Disbursement Agent, or in blank, or credited to another
securities account maintained in the name of the Disbursement Agent, as
applicable, and in no case will any Financial Asset credited to the Manager
Security Account be registered in the name of, payable to or to the order of,
or endorsed to, the Manager except to the extent the foregoing have been
subsequently endorsed by the Manager to the Disbursement Agent or in blank.
Each item of property (including a security, security entitlement, investment
property, instrument or obligation, share, participation, interest or other
property whatsoever) credited to the Manager Security Account shall be treated
as a Financial Asset. Until this Agreement terminates in accordance with the
terms hereof, the Trustee shall have "control" (within the meaning of Section
8-106(d)(2) of the UCC) of the Manager's "security entitlements" (within the
meaning of Section 8-102(a)(17) of the UCC, "Security Entitlements") with
respect to the Manager Security Account and the Financial Assets credited to
the Manager Security Account. All property delivered to the Disbursement Agent
by or on behalf of the Manager pursuant to this Agreement will be promptly
credited to the Manager Security Account and shall be treated as Financial
Assets. If at any time the Disbursement Agent shall receive from the Trustee
any "entitlement order" (within the meaning of Section 8-102(8) of the UCC, an
"Entitlement Order") relating to the Manager Security Account or Financial
Assets credited to the Manager Security Account, the Disbursement Agent shall
comply with such Entitlement Order without further consent by the Manager or
any other Person. In the event that the Disbursement Agent receives
conflicting Entitlement Orders relating to the Manager Security Account or
Financial Assets credited to the Manager Security Account from the Trustee and
any other Person (including, without limitation, the Manager), the
Disbursement Agent shall comply with the Entitlement Orders originated by the
Trustee. Each of the Manager and Disbursement Agent agrees that it has not and
will not execute and deliver, or otherwise become bound by, any agreement
under which it agrees with any Person other than the Trustee to comply with
Entitlement Orders originated by such Person relating to the Manager Security
Account or Financial Assets credited to the Manager Security Account. Except
for the claims and interests of the Manager and the Trustee in the Manager
Security Account and the Financial Assets credited to the Manager Security
Account, neither Disbursement Agent nor the Manager knows of any claim to, or
interest in, the Manager Security Account or Financial Assets credited to the
Manager Security Account. If Disbursement Agent or the Manager obtains
knowledge that any Person has asserted a lien, encumbrance or adverse claim
against the Manager Security Account or Financial Assets credited to the
Manager Security Account, such party will promptly notify the Trustee thereof.
In the event that the Disbursement Agent has or subsequently obtains by
agreement, operation of law or otherwise a lien or security interest in the
Manager Security Account, any Security Entitlement carried therein or credited
thereto or any Financial Asset that is the subject of any such Security
Entitlement, the Disbursement Agent agrees that such lien or security interest
shall be subordinate to the lien and security interest of the Trustee. The
Financial Assets standing to the credit of the Manager Security Account will
not be subject to deduction, set-off, banker's lien or any other right, and
the Disbursement Agent shall not grant, permit or consent to any other right
or interest in such Financial Assets, in favor of any Person (including the
Disbursement Agent) other than the Trustee.
2.4 Cash Equivalents. The Disbursement Agent shall invest
any money held in the Manager Security Account in such Cash Equivalents as
directed in writing by the Manager from time to time (or, if the Trustee shall
have notified the Disbursement Agent that the Trustee is exercising its right
to direct investments in accordance with Section 6.1 hereof, only by and at
the discretion of the Trustee). In the event that the Disbursement Agent has
not received any such written directions, the Disbursement Agent shall be
under no obligation to invest any such money. Any income or gain realized as a
result of any such investment shall be held as part of the Manager Security
Account and reinvested as provided in this Agreement until released in
compliance with the terms of this Agreement. Any income tax payable on account
of any such income or gain shall be paid as set forth in Section 3.1. The
Disbursement Agent shall have no liability for any loss resulting from any
such investment other than solely by reason of its willful misconduct or gross
negligence or bad faith or from failure to exercise such care in the custody
of any such investments as it does for accounts held by other customers or in
the custody of its own investments. Any such investment may be sold (without
regard to maturity date) by the Disbursement Agent (as directed in writing by
the Manager) to make any distribution required by this Agreement. In addition,
if an Event of Default has occurred and is continuing, the Disbursement Agent
shall liquidate and sell any investment if so directed in writing by the
Trustee.
2.5 Waiver of Set-Off Rights. The Disbursement Agent hereby
acknowledges the Trustee's security interests as set forth below and waives
any security interest or other lien in the Collateral and further waives any
right to set-off the Collateral now or in the future against any indebtedness
of the Manager. The waivers set forth in this Section 2.5 are of rights which
may exist now or hereafter in favor of the Disbursement Agent in the
individual capacity, and not of any such rights which may exist now or
hereafter in favor of the Disbursement Agent in its capacity as Disbursement
Agent for the Trustee. Nothing in this Section 2.5 shall be construed as
waiving, limiting or diminishing any rights of the Trustee vis-a-vis the
Manager.
2.6 Cooperation. The Disbursement Agent is hereby directed
to cooperate with the Trustee in the exercise of its rights in the Collateral
provided for herein. The Trustee may take all necessary action to preserve and
protect the security interests created hereby as a lien and encumbrance upon
such Collateral and, upon demand, the Manager and the Disbursement Agent will
execute and deliver to the Trustee such instruments and documents as the
Trustee may reasonably deem necessary or advisable to confirm or perfect the
rights of the Trustee under this Agreement and the Trustee's interest in the
Collateral. If an Event of Default has occurred and is continuing, as further
set forth in Section 6.1, the Disbursement Agent shall disburse funds from the
Manager Security Account only as directed by the Trustee.
3. Procedures for Manager Security Account Disbursements.
3.1 Tax Distributions from the Manager Security Account.
Subject to the provisions of the Intercreditor Agreement, the Manager may,
from time to time, deliver to the Disbursement Agent a certificate in the form
of Exhibit A requesting that one or more Manager Tax Payments be made from the
Manager Security Account in the amounts set forth on such certificate, and
certifying that such payment is in accordance with the terms hereof and as to
the other matters set forth therein (with an attached certification by the Tax
Amounts CPA in the form attached as Schedule 1 thereto). Within five days
following the first Quarterly Payment Date following the receipt of such
certificates, the Disbursement Agent shall transfer funds equal to each such
Manager Tax Payment from the Manager Security Account to the payees or
accounts specified on the Manager's certificate.
3.2 Distributions to Pay Manager's Expenses. Provided that
no Default or Event of Default has occurred and is continuing at such time,
the Manager may, from time to time, deliver to the Disbursement Agent a
certificate in the form of Exhibit B (the "Manager's Expense Disbursement
Request") setting forth a reasonably detailed description of Manager Operating
Expenses, including the amount thereof, that the Manager has incurred, but for
which the Manager has not theretofor requested a disbursement from the Manager
Security Account in accordance with this Section 3.2, and requesting that the
Disbursement Agent disburse the amount of such Manager Operating Expenses to
the Manager; provided, however, that:
(a) prior to the Initial Operating Date, the
Manager Operating Expenses may not be higher than the amount on deposit in the
Manager Security Account on the date of such request;
(b) during each full calendar year beginning with
the calendar year that commences on January 1st of the year after the Initial
Operating Date, the Manager shall not request a disbursement under this
Section 3.2 if the sum of the amount of such disbursement plus the aggregate
amount of the disbursements that the Manager has theretofor requested during
such calendar year under this Section 3.2 exceeds $3,400,000; and
(c) during the partial calendar year that begins on
the Initial Operating Date and ends on December 31 of the year in which the
Initial Operating Date occurs, the Manager shall not request a disbursement
under this Section 3.2 if the sum of the amount of such disbursement plus the
aggregate amount of the disbursements that the Manager has theretofor
requested during such partial calendar year exceeds the product of (i)
$3,400,000 and (ii) a fraction, the numerator of which is the number of days
between the Initial Operating Date and the last day of such calendar year, and
the denominator of which is 365.
Within three Business Days after receiving such certificate, provided that no
Default or Event of Default has occurred and is continuing at such time, the
Disbursement Agent shall transfer to the Manager the amount of funds requested
by the Manager, unless the balance of the Manager Security Account at such
time is less than the requested amount, in which case the Disbursement Agent
shall transfer to the Manager an amount equal to such balance.
3.3 Delivery of Certificates.
3.3.1 Certificate of Authority Regarding Cash
Accumulation Account Balances. The Authority shall, on the seventh Business
Day of each calendar quarter after the Initial Operating Date, deliver to the
Trustee, the Disbursement Agent and the Manager a certificate in the form of
Exhibit C (the "Authority Cash Accumulation Account Certificate") certifying
as to (a) the amount of the Required Cash Accumulation Amount as of such date,
(b) the balance in the Cash Accumulation Account as of such date, (c) whether
a Cash Accumulation Account Shortfall exists as of such date, and (d) the
amount and calculation of the Cash Accumulation Account Shortfall, if any.
3.3.2 Certificate of Manager Regarding Cash
Accumulation Account Balances. On the eighth Business Day of each calendar
quarter after the Initial Operating Date, the Manager shall deliver to the
Disbursement Agent a certificate in the form of Exhibit D (with the Authority
Cash Accumulation Account Certificate attached thereto) (a "Manager Security
Account Certification") certifying as to the total amount of funds in the
Manager Security Account as of such date (the "Manager Security Account
Balance") and the other matters set forth therein. The Disbursement Agent may
rely on each of the foregoing certificates of the Manager and the Authority in
determining the amounts of the Cash Accumulation Account Shortfall and the
Manager Security Account Balance.
3.4 Loans of Funds to Authority
3.4.1 Disbursement of Funds into the Shortfall
Account. On the tenth Business Day of each calendar quarter after the Initial
Operating Date of the Facility, the Disbursement Agent shall transfer from the
Manager Security Account to the Shortfall Account an amount equal to the
lesser of the Manager Security Account Balance or the Cash Accumulation
Account Shortfall (the "Manager Security Contribution Amount").
3.4.2 Crediting of Loan Amounts. The disbursement
of the Manager Security Contribution Amount from the Manager Security Account
to the Shortfall Account shall constitute a loan from the Manager to the
Authority. Concurrently with such disbursement, the Manager Security Account
Contribution Amount shall be added to the outstanding amount due on the
Manager Repayment Note in the form attached hereto as Exhibit E (the "Manager
Repayment Note") which shall be executed and delivered by the Authority
concurrently with the execution of this Agreement. The amount of each such
loan under the Manager Repayment Note and all repayments on the Manager
Repayment Note shall be noted by the Trustee on the grids attached to the
Manager Repayment Note, provided that failure to make any such notation shall
not diminish the obligation of the Authority to repay all amounts due on the
Manager Repayment Note.
3.4.3 Conditions to Repayment from Authority to
Manager. Any loan made from the Manager to the Authority pursuant to this
Section shall be subject to the terms and conditions of the Manager Repayment
Note, provided that repayment of such loan shall be made only as set forth in
the Intercreditor Agreement. Any repayment of amounts due under the Manager
Repayment Note shall be made to the Manager Security Account unless and until
the Disbursement Agent shall have disbursed the remaining funds in the Manager
Security Account in accordance with Section 3.5, after which time repayments
may be made directly from the Shortfall Account to any account specified by
the Manager, provided the applicable conditions hereunder and under the
Indenture and the Intercreditor Agreement have been satisfied.
3.5 Final Disbursement of Funds in Manager Security Account
Upon Satisfaction of Release Condition. On the first date that the Release
Condition has been satisfied or the Secured Obligations (as defined in Section
5.2) have been paid in full in immediately available funds, the Manager may
provide or cause to be provided to the Disbursement Agent and the Trustee:
(a) an Officers' Certificate in the form of Exhibit
F (the "Final Disbursement of Funds Certificate") attached hereto to the
effect that the Release Condition has been satisfied or the Secured
Obligations have been paid in full in immediately available funds; and
(b) if the Release Condition has been satisfied
under the Indenture, a certificate of the Authority in the form of Schedule 1
attached to Exhibit F, confirming the related matters set forth therein.
If the Manager has certified that the Secured Obligations have been paid in
full, the Manager shall request that the Trustee provide the Disbursement
Agent with a certificate in the form of Schedule 2 to Exhibit F. If the
Trustee agrees with such determination, the Trustee shall provide such
certificate to Disbursement Agent within two Business Days of such request.
The Disbursement Agent may rely on each of the foregoing certificates in
determining whether or not the Release Condition has been satisfied under the
Indenture or the Secured Obligations have been paid in full. Following such
determination, the Disbursement Agent shall, upon the direction of the Manager
pursuant to a Disbursement Authorization in the form of Exhibit G attached
hereto (a "Management Fee Disbursement Authorization"), disburse all remaining
funds in the Manager Security Account, if any, in the manner directed by the
Manager.
4. Interest Account Loans.
4.1 Interest Account Loan. After the Initial Operating Date,
the Authority shall, after each Interest Payment Date, deliver to the
Disbursement Agent a certificate in the form of Exhibit S to the Cash
Collateral and Disbursement Agreement (with an attached certification by the
Manager in the form of Schedule 1 thereto) requesting a disbursement from the
Contingent Interest Account in the amount stated thereon if:
(a) in the case of a First Interest Payment Date,
the following difference (the "First Interest Payment Date Shortfall") is a
positive number with respect to such First Interest Payment Date. The
difference of:
(i) one-half of Annual Support Threshold
Amount for the respective Interest Payment Year; less
(ii) the amount of Management Fees that
were paid to the Manager or paid into the Manager Security Account during the
six-month period immediately preceding such First Interest Payment Date; or
(b) in the case of a Second Interest Payment Date,
the following difference (the "Second Interest Payment Date Shortfall") is a
positive number with respect to such Second Interest Payment Date. The
difference of:
(i) (A) the Annual Support Threshold
Amount for the respective Interest Payment Year; less (B) any amount received
by the Manager under Section 7.4.3 of the Cash Collateral and Disbursement
Agreement for the immediately preceding First Interest Payment Date; less
(ii) the amount of Management Fees that
were accrued by the Manager during the twelve-month period immediately
preceding such Second Interest Payment Date.
However, in no event shall the total amount of Management
Fees paid to the Manager, plus loans made to the Manager pursuant to this
Section 4.1, plus Contingent Interest paid to the holders of the Contingent
Interest Notes or deposited into the Contingent Interest Account (excluding
amounts loaned under the Management Fees Note), plus development fees paid
pursuant to the Development Agreement, in each case during the six-month
period preceding the First Interest Payment Date or the 12-month period
preceding the Second Interest Payment Date, as the case may be, exceed the
Total Manager Compensation Cap for such period.
The Authority will complete such certificate(s) so that the
amount requested to be disbursed is the First Interest Payment Date Shortfall
or the Second Interest Payment Date Shortfall, as applicable. The Disbursement
Agent shall, within two Business Days after receiving such request, transfer
such amounts specified on such certificate (up to the balance in the
Contingent Interest Account attributable to the Subordinated PIK Notes) to the
Manager Security Account. Each such disbursement shall constitute a loan from
the Authority to the Manager. Concurrently with such disbursement, the amount
of such disbursement shall be added to the outstanding amount due on the
Management Fees Note in the form attached hereto as Exhibit H (the "Management
Fees Note") which shall be executed by the Manager and delivered to the
Authority (and than the Trustee) concurrently with the execution of this
Agreement. The amount of each such loan under the Management Fees Note and all
repayments on the Management Fees Note shall be noted by the Trustee on the
grids attached to the Management Fees Note, provided that failure to make any
such notation shall not diminish the obligation of the Manager to repay all
amounts due on the Management Fees Note.
4.2 Repayment from Manager to Authority. Any loan made from
the Authority to the Manager pursuant to this Section shall be subject to the
terms and conditions of the Management Fees Note. Any repayment of amounts due
under the Management Fees Note shall be made to the Contingent Interest
Account (as defined in the Cash Collateral and Disbursement Agreement);
provided the applicable conditions hereunder and under the Indenture and the
Intercreditor Agreement have been satisfied.
5. Grant of Security Interest and Related Provisions.
5.1 Assignment, Pledge and Grant of Security Interest (in
favor of Trustee). To secure the timely payment and performance of the Secured
Obligations (as defined below) the Manager does hereby assign, grant and
pledge to, and subject to a security interest in favor of, the Trustee (for
the ratable benefit of the Holders), all the estate, right, title and interest
of the Manager, whether now owned or hereafter acquired, in, to and under:
(a) the Manager Security Account and all Financial
Assets and other assets therein, and all Security Entitlements with respect
thereto; provided, however, that notwithstanding anything to the contrary
contained herein, such security interest shall not extend to any amounts paid
from the Manager Security Account to the Manager or its members pursuant to
the terms of this Agreement;
(b) all Management Fees and Development Fees paid
or payable to the Manager, and all rights to be paid such Management Fees and
Development Fees pursuant to the terms of the Management Agreement or the
Development Agreement or otherwise;
(c) this Agreement, the Manager Repayment Note
executed pursuant hereto and any other instrument evidencing payment
obligations of the Authority to the Manager; and
(d) the proceeds (including cash and noncash
proceeds) of all of the foregoing collateral, including, without limitation,
(i) all rights of the Manager to receive monies due and to become due under or
pursuant to such collateral; (ii) all rights of the Manager to receive the
return of any premiums for, or proceeds of, any insurance, indemnity, warranty
or guaranty with respect to such collateral or to receive any condemnation
proceeds; and (iii) to the extent not included in the foregoing, all proceeds
receivable or received when any and all of the foregoing collateral is sold,
collected, exchanged or otherwise disposed of, whether voluntarily or
involuntarily (all of the collateral described in the foregoing clauses (a)
through (d) being herein collectively referred to as the "Collateral").
5.2 Secured Obligations. Without limiting the generality of
the foregoing, this Agreement and all of the Collateral secure the payment and
performance when due of (a) all Senior Note Obligations and (b) all
obligations of the Manager under this Agreement, the Intercreditor Agreement
and the Manager Agreement (collectively, the "Secured Obligations").
5.3 Delivery of Manager Repayment Note. To further evidence
the security interest of the Trustee in the Manager Repayment Note, the
Manager and the Authority shall each deliver, and the Manager shall pledge to
the Trustee, the original of the Manager Repayment Note and each other
instrument evidencing payment obligations of the Authority to the Manager
promptly, and in any event within one Business Day following execution of the
same, in each case duly endorsed without recourse and accompanied by duly
executed records of transfer and assignment, all in form and substance
reasonably satisfactory to the Trustee.
5.4 Manager's Continuing Liability. Notwithstanding anything
to the contrary contained herein, the Manager shall remain liable under the
Management Agreement to perform all of the obligations undertaken by it
thereunder, all in accordance with and pursuant to the terms and provisions
thereof, and the Trustee shall have no obligation or liability under any of
the Management Agreement by reason of or arising out of this Agreement, nor
shall the Trustee be required or obligated in any manner to perform or fulfill
any obligations of the Manager thereunder or to make any payment or inquiry as
to the nature or sufficiency of any payment received by it, or present or file
any claim or take any action to collect or enforce the payment of any amounts
which may have been assigned to it or to which it may be entitled at any time.
5.5 Representations and Warranties of Manager. The Manager
represents and warrants as of the date hereof as follows:
(a) The Manager is a limited liability company
organized solely under the laws of the State of California.
(b) Manager has not assigned any of its rights
under the Management Agreement or any of the Collateral except as provided in
this Agreement.
(c) Manager has not authenticated and is not aware
of any effective financing statement, security agreement or other record
similar in effect covering all or any part of the Collateral, except such as
may have been filed pursuant to this Agreement.
(d) Except as permitted by this Agreement, the
Manager lawfully possesses the Collateral and has full right, title and
interest in and to all payment and other rights purported to be granted to it
under the Management Agreement, not subject to any mortgages, liens, charges,
or encumbrances. Subject to applicable law, the Manager has full power and
lawful authority to grant and assign the Collateral hereunder.
5.6 Appointment of Trustee as Attorney-in-Fact. The Manager
hereby constitutes and appoints the Trustee, acting for and on behalf of
itself and each successor or assign of the Trustee, the true and lawful
attorney-in-fact of the Manager, with full power and authority in the place
and stead of the Manager and in the name of the Manager, the Trustee or
otherwise to, upon the occurrence and during the continuance of an Event of
Default, enforce all rights, interests and remedies of the Manager with
respect to the Collateral, including, without limitation, the right
(a) to ask, require, demand, receive and give
acquittance for any and all monies and claims for monies due and to become due
under or arising out of the Management Agreement or any of the other
Collateral, including without limitation, any insurance policies;
(b) to elect remedies thereunder and to endorse any
checks or other instruments or orders in connection therewith;
(c) to file any Claims or take any action or
institute any proceedings in connection therewith which the Trustee may
reasonably deem to be necessary or advisable;
(d) to pay, settle or compromise all bills and
claims which may be or become liens or security interests against any or all
of the Collateral, or any part thereof, unless a bond or other security
satisfactory to the Trustee has been provided; and
(e) upon foreclosure, to do any and every act which
the Manager may do on its behalf with respect to the Collateral or any part
thereof;
provided, however, that the Trustee shall not exercise any such rights except
upon the occurrence and continuation of an Event of Default. This power of
attorney is a power coupled with an interest and shall be irrevocable.
5.7 Trustee May Perform. Upon the occurrence and during the
continuance of an Event of Default, if the Manager fails to perform any
agreement contained herein in a timely manner, the Trustee may itself perform,
or cause performance of, such agreement, and the reasonable expenses of the
Trustee incurred in connection therewith shall be part of the Secured
Obligations secured hereby.
5.8 Continuing Assignment and Security Interest. This
Agreement shall create a continuing assignment of, and security interest in,
the Collateral and shall (a) remain in full force and effect, subject to
Section 14.1, until payment in full of the Secured Obligations; (b) be binding
upon the Manager, its successors and assigns; provided, however, that the
obligations of the Manager, its successors and assigns hereunder may not be
assigned without the prior written consent of the Trustee except to a
Permitted Replacement Manager; and (c) inure, together with the rights and
remedies of the Trustee, to the benefit of the Trustee and its successors,
transferees and assigns. Without limiting the generality of the foregoing but
subject to the terms of the Indenture and the Intercreditor Agreement, the
Trustee may assign or otherwise transfer all or any part of or interest in
this Agreement or other evidence of indebtedness held by it to any other
Person to the extent permitted by and in accordance with the Indenture and the
Intercreditor Agreement, and such other Person shall thereupon become vested
with all or an appropriate part of the benefits in respect thereof granted to
the Trustee herein or otherwise. The release of the security interest in any
or all of the Collateral, the taking or acceptance of additional security, or
the resort by the Trustee to any security it may have in any order it may deem
appropriate, shall not affect the liability of any Person on the indebtedness
secured hereby. If this Agreement shall be terminated or revoked by operation
of law, the Manager will indemnify and save the Trustee harmless from any loss
which may be suffered or incurred by the Trustee in acting hereunder prior to
the receipt by the Trustee, its successors, transferees, or assigns of notice
of such termination or revocation.
6. Remedies Upon Event of Default.
6.1 Remedies. If any Event of Default has occurred and is
continuing, the Trustee may (a) proceed to protect and enforce the rights
vested in it by this Agreement, including but not limited to, the right to
cause all revenues pledged hereby as security and all other monies pledged
hereunder to be paid directly to it, and to enforce its rights hereunder to
such payments and all other rights hereunder by such appropriate judicial
proceedings as it shall deem most effective to protect and enforce any of such
rights, either at law or in equity or otherwise, whether for specific
enforcement of any covenant or agreement contained herein, or in aid of the
exercise of any power herein granted, or for any foreclosure hereunder and
sale under a judgment or decree in any judicial proceeding, or to enforce any
other legal or equitable right vested in it by this Agreement or by law; (b)
cause any action at law or suit in equity or other proceeding to be instituted
and prosecuted to collect or enforce any Secured Obligations or rights
hereunder or included in the Collateral, or to foreclose or enforce any other
agreement or other instrument by or under or pursuant to which such Secured
Obligations are issued or secured, subject in each case to the provisions and
requirements thereof; (c) sell or otherwise dispose of any or all of the
Collateral or cause the Collateral to be sold or otherwise disposed of in one
or more sales or transactions, at such prices and in such manner as the
Trustee may deem commercially reasonable, and for cash or on credit or for
future delivery, without assumption of any credit risk at any broker's board
or at public or private sale, with or without a warranty of title, without
demand of performance or notice of intention to sell or of time or place of
sale (except such notice as is required by applicable statute and cannot be
waived), it being agreed that the Trustee may be a purchaser on its own behalf
at any such public sale and that the Trustee, or any other Person who may be a
bona fide purchaser for value and without notice of any claims of any or all
of the Collateral so sold shall thereafter hold the same absolutely free from
any claim or right of whatsoever kind, including any equity of redemption, of
the Manager, any such demand, notice or right and equity being hereby
expressly waived and released to the extent permitted by law; (d) incur
reasonable expenses, including reasonable attorneys' fees, reasonable
consultants' fees, and other costs appropriate to the exercise of any right or
power under this Agreement; (e) perform any obligation of the Manager
hereunder and make payments, purchase, contest or compromise any encumbrance,
charge or lien, and pay taxes and expenses without, however, any obligation to
do so; (f) in connection with any acceleration and foreclosure, collect all
rents and income from the Collateral and apply the same to reimburse the
Trustee for any cost or expenses incurred hereunder, and to the payment or
performance of the Manager's obligations hereunder or any of the Secured
Obligations of the Authority and apply the balance to the Senior Notes and any
remaining excess balance to whomsoever is legally entitled thereto; (g) secure
the appointment of a receiver of the Collateral or any part thereof; (h)
direct the Disbursement Agent to stop payment of any disbursements being made
at such time or to be made from the Manager Security Account, and direct all
further disbursements of funds from the Manager Security Account; or (i)
exercise any other or additional rights or remedies granted to a secured party
under the UCC. If pursuant to applicable law prior notice of any such action
is required to be given to the Manager, the Manager hereby acknowledges that
the minimum time required by such applicable law, or if no minimum time is
specified, ten Business Days, shall be deemed a reasonable notice period.
6.2 Costs and Expenses. All reasonable costs and expenses
(including reasonable attorneys' fees and expenses) incurred by the Trustee in
connection with any such suit or proceeding or in connection with the
performance by the Trustee of any of the Manager's agreements contained in the
Management Agreement or any other agreement to which the Manager is a party or
any exercise of its rights or remedies hereunder, pursuant to the terms of
this Agreement, together with interest thereon (to the extent permitted by
law) computed at a rate per annum equal to the Default Rate from the date on
which such costs or expenses are incurred to the date of payment thereof,
shall constitute additional indebtedness secured by this Agreement and shall
be paid by the Manager to the Trustee on demand.
6.3 Application of Proceeds. Upon the occurrence and during
the continuation of an Event of Default, the proceeds of any sale of or other
realization upon, all or any part of the Collateral shall be applied: first,
to all fees, costs and expenses incurred by and due and owing to the Trustee
under the Indenture and to the Disbursement Agent hereunder (such fees, costs
and expenses shall be reimbursed on a pro rata basis based on the total
amounts owing to the Trustee and the Disbursement Agent in the event that such
proceeds are not sufficient to pay the same in full); second, to accrued and
unpaid interest on the Secured Obligations (including any interest which, but
for the provisions of Bankruptcy Law, would have accrued on such amounts);
third, to the principal amounts of the Secured Obligations outstanding; and
fourth, to, or as directed by, the Manager.
6.4 Remedies Cumulative; Delay Not Waiver.
6.4.1 No right, power or remedy herein conferred
upon or reserved to the Trustee is intended to be exclusive of any other
right, power or remedy and every such right, power and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right,
power 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. Resort to any or all
security now or hereafter held by the Trustee may be taken concurrently or
successively and in one or several consolidated or independent judicial
actions or lawfully taken nonjudicial proceedings, or both.
6.4.2 No delay or omission of the Trustee to
exercise any right or power accruing upon the occurrence and during the
continuance of any Event of Default as aforesaid shall impair any such right
or power or shall be construed to be a waiver of any such Event of Default or
an acquiescence therein; and every power and remedy given by this Agreement
may be exercised from time to time, and as often as shall be deemed expedient,
by the Trustee.
7. Responsibilities of Disbursement Agent. The Disbursement Agent
agrees to perform the following duties during the term of this Agreement:
7.1 Conditions to Disbursements from the Manager Security
Account. The Disbursement Agent shall disburse funds from the Manager Security
Account only upon satisfaction of the applicable conditions to disbursement
set forth herein.
7.2 Method of Disbursement from the Manager Security
Account. Upon satisfaction of the applicable conditions to disbursement set
forth herein, the Disbursement Agent shall disburse funds from the Manager
Security Account as specified in the applicable disbursement request or
certificate.
7.3 Transfer of Funds at Direction of Trustee.
Notwithstanding anything to the contrary in this Agreement, from and after the
date the Disbursement Agent receives notice from the Trustee or the Manager
that an Event of Default exists until such time as the Disbursement Agent
receives notice from the Trustee that such Event of Default no longer exists,
the Disbursement Agent shall only withdraw or transfer amounts in the Manager
Security Account at the direction of the Trustee.
8. Certain Covenants.
8.1 Permitted Replacement Manager. The Manager (a) shall not
sell, assign, transfer or convey all or any portion of its obligations under
the Development Agreement, the Management Agreement, this Agreement or any of
its other obligations with respect to the Facility to any entity that is not a
Permitted Replacement Manager without the prior written consent of the
Trustee, and (b) shall not resign from or otherwise cease to perform any of
such obligations until such time as a Permitted Replacement Manager has
assumed such obligations.
8.2 Deposits into Manager Security Account. Until the first
time as the Release Condition is satisfied (a) the Authority shall pay all
Management Fees and Development Fees directly to the Manager Security Account,
and (b) if the Authority pays any Management Fees or Development Fees to the
Manager, then within two Business Days thereafter the Manager shall deposit
the amount of such Management Fees or such Development Fees into the Manager
Security Account.
8.3 Perfection and Further Assurances.
8.3.1 The Manager agrees that from time to time, at
the expense of the Manager, the Manager shall promptly execute and deliver all
records, instruments and documents, and use commercially reasonable efforts to
take all actions, that may be reasonably necessary, or that the Trustee may
reasonably request, in order to perfect and protect the assignment and
security interest granted or intended to be granted hereby or to enable the
Trustee to exercise and enforce its rights and remedies hereunder with respect
to any Collateral. Without limiting the generality of the foregoing, the
Manager shall (a) if any Collateral shall be evidenced by a promissory note or
other instrument (other than checks) in excess of $5,000, deliver and pledge
to the Trustee such note duly endorsed without recourse, and accompanied by
duly executed records of transfer or assignment, all in form and substance
reasonably satisfactory to the Trustee; and (b) execute and deliver to the
Trustee such financing or continuation statements, or amendments thereto, and
such other records, instruments, documents, endorsements or notices, as may be
reasonably necessary or desirable or as Trustee may reasonably request, in
order to perfect and preserve the assignments and security interests granted
or purported to be granted hereby.
8.3.2 Manager hereby authorizes the Trustee to file
one or more financing or continuation statements and other records with
respect to all or any part of the Collateral (including any amendments
thereto, or continuation or termination statements thereof), without the
signature or other authorization of the Manager, in such form and in such
offices as the Trustee reasonably determines appropriate to perfect or
maintain the perfection of the security interest of the Trustee hereunder. The
Manager acknowledges and agrees that it is not authorized to, and will not,
authenticate or file, or authorize the filing of, any financing statements or
other record with respect to the Collateral (including any amendments thereto,
or continuation or termination statements thereof), without the express prior
written approval and authorization by the Trustee, consenting to the form and
substance of such filing or record. The Manager approves, authorizes and
ratifies any filing or recording of records made by or on behalf of Trustee in
connection with the perfection of the security interest in favor of the
Trustee.
8.3.3 The Manager shall pay all filing,
registration and recording fees and all refiling, re-registration and
re-recording fees, and all reasonable expenses incident to the execution and
acknowledgment of this Agreement, any assurance, and all federal, state,
county and municipal stamp taxes and other taxes, duties, imports, assessments
and charges arising out of or in connection with the execution or
authentication and delivery of this Agreement, any agreement supplemental
hereto, any financing statements, and any instruments of further assurance.
8.3.4 The Manager shall, promptly upon request,
provide to the Trustee all information and evidence it may reasonably request
concerning the Collateral to enable the Trustee to enforce the provisions of
this Agreement.
9. Waiver of Sovereign Immunity, Arbitration and Non-Impairment.
9.1 Irrevocable Waiver of Sovereign Immunity. Each of the
Authority and the Tribe (each a "Tribal Party") hereby unconditionally and
irrevocably waives its sovereign immunity and any and all defenses based
thereon with respect to any claim, demand, dispute, action or cause of action
arising under or in any way connected with or related or incidental to this
Agreement or the Senior Notes, as the same may be amended or modified from
time to time, whether now existing or hereafter arising and whether sounding
in tort, contract or otherwise (collectively "Permitted Claims"). Such waiver
shall extend (a) to permit the interpretation, enforcement and the seeking of
legal or equitable relief and remedies (whether through an award or granting
of specific performance, injunction, mandamus, damages or otherwise) by the
parties hereto (and their successors and assigns permitted hereunder) through
arbitration proceedings as herein provided, and (b) to permit judicial actions
to compel, enter judgment upon, enforce, modify or vacate any award or interim
injunctive relief related to the arbitration proceedings in any of the
Applicable Courts described in Section 9.2 below.
In connection with the foregoing waiver of sovereign
immunity by any Tribal Party:
(a) Duration. The duration of such waiver shall
commence on the date hereof and continue with respect to each Tribal Party
until one year after all obligations of such Tribal Party hereunder have been
completely performed and any amounts, if any, owed hereunder from the
Authority have been indefeasibly paid in full;
(b) Grantees. The grantee(s) of the waiver are the
Trustee, together with its successors and assigns hereunder;
(c) Scope. The scope of the waiver applies to all
Permitted Claims;
(d) Property and Funds. The only assets or rights
against which any award, judgment or other order for relief arising from this
waiver may be enforced are "Authority Assets" as defined in the "Ordinance of
the Picayune Rancheria Establishing and Governing the
Chukchansi Economic
Development Authority," as amended by an amendment thereto adopted on July 13,
2002 by Resolution No. 2002-27 of the Tribe's Tribal Counsel ("Tribal
Counsel"), and an amendment thereto adopted on July 30, 2002 by Resolution No.
2002-37, whether held in the name of the Authority, the Tribe or any branch,
department, agency, instrumentality, division, subsidiary, authority,
enterprise, corporation, business or other entity directly or indirectly owned
or controlled in whole or in part by either the Authority or the Tribe.
Notwithstanding the foregoing, any revenues or other property transferred by
the Authority to any other Tribal Party in compliance with the Senior Notes
shall, upon transfer, no longer constitute Authority Assets;
(e) Jurisdictions. The courts with jurisdiction
with respect to the Permitted Claims are the Applicable Courts (as defined in
Section 9.2 below) (subject to the obligation of each Tribal Party to submit
to arbitration as provided herein); and
(f) Governing Law. The law applicable to the waiver
and the Permitted Claims shall be the internal laws of the State of New York,
except where application of the uniform commercial code of the State of New
York will not recognize a lien and the perfection of a lien on any Authority
Assets as security for any performance of a Tribal Party hereunder, and the
uniform commercial code of the Tribe will recognize the lien or the perfection
of the lien, in which case the law of the Tribe, as applicable, that
recognizes the lien and perfection shall apply.
9.2 Designation of Applicable Courts and Jurisdictions. Each
Tribal Party hereby irrevocably consents to the following courts,
jurisdictions and venues for the judicial actions described in Section 9.1
above (the "Applicable Courts"): (a) the United States District Court for the
Southern District of New York, and all courts to which any appeal therefrom
may be available; (b) any court of the State of New York, and all courts to
which any appeal therefrom may be available; (c) if none of the foregoing
courts shall have or accept jurisdiction, then any other federal or state
court, and all courts to which any appeal therefrom may be available; and (d)
if none of the foregoing courts shall have or accept jurisdiction, then any
court of the Tribe (in the case of any Permitted Claim to which the Tribe or
the Authority is a party).
9.3 Additional Waivers as to Tribal Courts. Each of the
Tribal Parties hereby unconditionally and irrevocably waives the jurisdiction
of any tribal courts now or hereafter existing or created with respect to any
Permitted Claim, except as provided in clause (d) of Section 9.2 above. Each
of the Tribal Parties unconditionally and irrevocably waives the application
of any rule or doctrine relating to exhaustion of tribal remedies or comity
that might otherwise require a Permitted Claim be heard in a tribal court.
9.4 Agreement not to Contest. In connection with any
Permitted Claim, each of the Tribal Parties agrees it will not dispute before
or in any court, arbitration panel or other forum, the validity and binding
effect of its waiver of sovereign immunity, consent to arbitration
proceedings, consent to judicial proceedings, or waivers of the right to
assert application of any rules or doctrines of exhaustion of tribal remedies
or comity with respect to tribal court, all to the extent contained herein.
9.5 Arbitration. All Permitted Claims must be resolved by
binding arbitration under the commercial arbitration rules of the American
Arbitration Association (the "AAA"), as modified by this Section 9.5.
Notwithstanding any other provision of this Article 9, an arbitrator shall not
have the power to compel, negate, assume, usurp or in any manner affect any
Governmental Action unless any Governmental Action or failure to take any
Governmental Action constitutes a breach of this Agreement by the Tribe or the
Authority.
(a) Commencement of Proceedings. An arbitration
proceeding may be commenced only by the Tribe, the Authority, the Trustee, or
to the extent remedies may be enforced directly by a Holder, by the filing of
a Statement of Claim (within the meaning of the AAA rules) with the AAA and
serving a copy thereof on the other parties affected by the Permitted Claim. A
single arbitrator shall hear the Permitted Claim, and shall be selected in
accordance with the rules of the AAA.
(b) Qualification of Arbitrators. No person shall
be eligible to serve as an arbitrator if the person is related to, affiliated
with or has represented in a legal capacity any party to the arbitration
proceeding or any party to this Agreement or the Collateral Documents. The
arbitrator shall be an attorney admitted to practice and in good standing
before the highest court of a state, who is experienced in advising clients in
connection with commercial borrowings or the issuance of debt securities.
(c) Discovery. Any party shall be permitted to
engage in any discovery permitted under the rules of the AAA. However, all
discovery shall be completed within 90 days following the initial filing of
the Statement of Claim.
(d) Hearing. The hearing on the arbitration shall
be held in the City of Los Angeles, California, and commence and be completed
no more than 30 days after the close of discovery, and the arbitrator shall
render an award in writing within 30 days of the completion of the hearing,
which shall contain findings of facts and conclusions of law. The parties
hereto further agree that any arbitrator appointed hereunder may award interim
injunctive relief before the final arbitration award. Any controversy
concerning whether an issue is arbitrable shall be determined by the
arbitrator.
(e) Enforcement. Proceedings to enter judgment
upon, enforce, modify or vacate any award or interim injunctive relief may be
commenced in any of the Applicable Courts. Any such proceedings shall be
governed (a) by the Federal Arbitration Act, if the matter will be heard in
federal court, or (b) by the applicable state arbitration code, if the matter
will be heard in state court, and (c) by the tribal arbitration code adopted
by Resolution No. 2001-34 of the Tribal Council, as amended by an amendment
thereto adopted on July 30, 2002 by Tribal Council Resolution No. 2002-39, if
the matter will be heard in a tribal court, provided that the standards of
review of the award in all cases shall be consistent with the Federal
Arbitration Act.
(f) Prohibition on Punitive Damages. Each party
hereto agrees that each party has equal bargaining power and that each has
freely entered into this Agreement after such consultation with its attorneys
as it has deemed advisable, and that notwithstanding any other provision
herein, no arbitrator shall have the power to award punitive damages and any
such award shall be null and void and of no effect.
(g) Validity of Arbitration Provisions. Each party
hereto agrees that these arbitration provisions are valid, binding and
enforceable, and, to the extent permitted by law, waives any defense or claim
to the contrary.
(h) Full Faith and Credit. The Tribal Parties and
the tribal courts of the Tribe now or hereafter existing shall give full faith
and credit to any award, order or decree rendered in any arbitration or by any
federal or state court in accordance with this Section 9.5, and, to the extent
reasonably necessary, shall issue such orders and exercise such legal powers
as may reasonably be necessary to effectuate the same. The Tribe shall cause
the police powers of the Tribe to be available to secure and support any such
enforcement efforts with respect to the Tribe or the Authority, and all police
or other law enforcement officials of the Tribe to carry out any orders that
may be entered by the Tribe or its tribal court pursuant to this Section 9.5.
The Tribal Parties agree that judgment enforcement remedies generally
available throughout the State of New York may be applied on lands held by or
in trust for or under the control of the Tribe with respect to any matter that
is a proper subject of arbitration under this Section 9.5.
9.6 Non-Impairment. Neither any Tribal Party nor any of its
Affiliates will: (a) adopt, enact, promulgate or otherwise place into effect
any law or legal requirement that impairs or interferes, or could impair or
interfere, in any manner, with any right or remedy of another party hereunder
or their successors and assigns (it being understood and agreed that any such
law or legal requirement that is adopted, enacted, promulgated or otherwise
placed into effect without the prior written consent of any affected party,
successor or assign shall be void and of no effect); or (b) demand, impose or
receive any tax, charge, assessment, fee or other imposition or impose any
regulatory or licensing requirement against a party, their successors or
assigns, except in connection with licensing required by the Compact entered
into between the Tribe and the State of California, as amended from time to
time.
10. Alteration of Obligations. The Manager and the Authority each
acknowledge and agree that none of the following shall release, impair,
reduce, diminish or otherwise affect any of their respective obligations under
this Agreement: (a) any alteration, compromise, acceleration or extension of,
or any change to, (i) the Authority's obligations to complete the development,
construction and equipping of the Facility and to commence operation thereof
or (ii) the payment or performance by the Authority under any debt instrument
or other financing, including without limitation the Secured Obligations
secured hereby, for the development, construction, equipping or operation of
the Facility (the foregoing, collectively, the "Facility Obligations"), in
each case in such manner, upon such terms and at such times as any Person
(including, without limitation, the Trustee or any Holder) (each such Person,
an "Obligee") deems best, and without notice to the Manager; (b) the release
of the Authority from any or all of the Facility Obligations by acceptance of
a deed in lieu of foreclosure or otherwise, as to all or any portion of the
Facility Obligations; (c) the release, substitution or addition of any one or
more guarantors or endorsers of the Manager Security Contribution Amounts or
Facility Obligations; (d) the acceptance of additional or substitute security
for the Manager Security Contribution Amounts or Facility Obligations; or (e)
the release or subordination of any security for the Manager Security
Contribution Amounts or Facility Obligations. No exercise (including, without
limitation, foreclosure of the Facility or any portion thereof) or
non-exercise of any right under any document relating to the Facility
Obligations (collectively, the "Obligation Documents") by an Obligee, no
dealing by an Obligee hereunder or under any Obligation Document or any other
document with the Manager, the Authority or any other Person, and no change,
impairment or release of all or any portion of the Manager Security
Contribution Amounts or Facility Obligations or suspension of any right or
remedy of an Obligee against any other Person, including, without limitation,
the Authority or any other such guarantor, endorser or other Person, shall in
any way affect any of the obligations of the Manager hereunder or under any
security furnished by the Manager or give the Manager any recourse against an
Obligee (including, without limitation, the Trustee). If an Obligee has
exculpated or hereafter exculpates the Authority or the Manager from liability
in whole or in part, or has agreed or hereafter agrees to look solely to the
Facility or any other property for the satisfaction of the Authority's Secured
Obligations, such exculpation and agreement shall not affect the obligations
of the Manager hereunder. The Manager further acknowledges that any such
exculpation or agreement that has been given or that is hereafter given to the
Authority with respect to the Senior Notes, the Indenture or any Collateral
Document has been given or is given in reliance upon the covenants of the
Manager contained herein.
11. Obligations Absolute; Waiver. The obligations of the Manager
hereunder shall be unconditional, absolute and continuing and, without
limiting the generality of the foregoing, shall not be released, discharged or
otherwise affected by and shall survive, and the Manager hereby waives and
relinquishes all rights and remedies accorded by applicable law to sureties or
guarantors and agrees not to assert or take advantage of any such rights or
remedies except for the rights expressly provided to the Manager hereunder,
including without limitation (a) any right to require any holder or recipient
of the benefit of any of the Facility Obligations (including, without
limitation, the Trustee or the Holders) (each a "Benefited Party") to proceed
against the Authority or any other Person or entity or to proceed against or
exhaust any security held by a Benefited Party at any time or to pursue any
other remedy in the power of a Benefited Party before proceeding against the
Manager; (b) the defense of the statute of limitations in any action hereunder
or in any action for the collection or performance of the Manager Security
Contribution Amounts or Facility Obligations; (c) any defense that may arise
by reason of the incapacity, lack of authority, death or disability of any
other Person or the failure of a Benefited Party to file or enforce a claim
against the estate (in administration, bankruptcy or any other proceeding) of
any other Person; (d) appraisal, valuation, stay, extension, marshaling of
assets, redemption, exemption, diligence, demand, presentment, protest and
notice of any kind, including, without limitation, notice of the existence,
creation or incurring of any new or additional indebtedness or obligation or
of any action, non-action, performance or failure to perform on the part of a
Benefited Party, the Authority, any endorser or creditor of the Authority or
the Manager or on the part of any other Person under this or any other
instrument in connection with any obligation or evidence of indebtedness held
by a Benefited Party as collateral or in connection with any Manager Security
Contribution Amounts or Facility Obligations; (e) any defense based upon any
exercise of remedies, including without limitation, foreclosure of the
Facility, or upon an election of remedies by a Benefited Party, including,
without limitation, an election to proceed by non-judicial rather than
judicial foreclosure, which destroys or otherwise impairs the subrogation
rights of the Manager, the right of the Manager to proceed against the
Authority or any other person for reimbursement, or both; (f) any defense
based upon any statute or rule of law which provides that the obligation of a
surety must be neither larger in amount nor in other respects more burdensome
than that of the principal; (g) any duty on the part of a Benefited Party to
disclose to the Manager any facts a Benefited Party may now or hereafter know
about the Authority or any other Person, regardless of whether a Benefited
Party has reason to believe that any such facts materially increase the risk
beyond that which the Manager intends to assume, or has reason to believe that
such facts are unknown to the Manager, or has a reasonable opportunity to
communicate such facts to the Manager, since the Manager acknowledges that the
Manager is fully responsible for being and keeping informed of the financial
condition of the Authority or any other Person and of all circumstances
bearing on the risk of non-payment of any Manager Security Contribution
Amounts or Facility Obligations; (h) any defense arising because of the
election of a Benefited Party, in any proceeding instituted under the
Bankruptcy Law, of the application of Section 1111(b)(2) of the Bankruptcy
Law; (i) any defense based upon any borrowing or grant of a security interest
under Section 364 of the Bankruptcy Law; (j) except as may be expressly set
forth herein, any claim or other rights which it may now or hereafter acquire
against the Authority or any other Person that arises from the existence or
performance of the Manager's obligations under this Agreement or any other
Obligation Document, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution, indemnification, any right to
participate in any claim or remedy by a Benefited Party against the Authority
or any collateral which a Benefited Party now has or hereafter acquires,
whether or not such claim, remedy or right arises in equity or under contract,
statute or common law, by any payment made hereunder or otherwise, including,
without limitation, the right to take or receive from the Authority or any
other Person or entity, directly or indirectly, in cash or other property or
by set-off or in any other manner, payment or security on account of such
claim or other rights; (k) any rights which it may acquire by way of
contribution under this Agreement or any Obligation Document, by any payment
made hereunder or otherwise, including, without limitation, the right to take
or receive from any other Person, directly or indirectly, in cash or other
property or by set-off or in any other manner, payment or security on account
of such contribution rights; (l) any defense based on one-action laws and any
other anti-deficiency protections granted to guarantors by applicable law; (m)
any merger or consolidation of the Authority into or with any other Person, or
any sale, lease or transfer of any or all of the assets of the Authority to
any other Person; (n) any circumstance which might constitute a defense
available to, or a discharge of, the Authority, the Manager or a surety; (o)
any lack of genuiness, validity, regularity, enforceability or value of any
Manager Security Contribution Amounts, this Agreement or any Obligation
Document; and (p) any other fact or circumstance, including, without
limitation, any construction delays or any contests or claims relating to the
construction of the Facility. The Manager acknowledges and agrees that any
nonrecourse or exculpation provided for in any Obligation Document, or any
other provision of an Obligation Document limiting each respective Benefited
Party's recourse to specific collateral or limiting such Benefited Party's
right to enforce a deficiency judgment against the Authority, shall have
absolutely no application to the Manager's liability under this Agreement. To
the extent that any Benefited Party (including, without limitation, the
Trustee) collects or receives any sums or payments from the Authority or from
any guarantor, endorser or other Person under any Obligation Document or
realized from any security, such Benefited Party shall have the right, but not
the obligation, to apply such amounts first to that portion of the Authority's
indebtedness and obligations, if any, to such Benefited Party that is not
covered by this Agreement, regardless of the manner in which any such payments
or amounts are characterized by the Person making payment.
12. Bankruptcy and Related Proceedings. The obligations of the
Manager under this Agreement shall not be altered, limited or affected by or
as a result of any action taken by the Authority in any proceeding, voluntary
or involuntary, involving the bankruptcy, reorganization, insolvency,
receivership, or liquidation of the Authority, or by any defense which the
Authority may have by reason of any order, decree or decision of any court or
administrative body resulting from any such proceeding.
13. Limitation of Liability; Indemnification and Insurance.
13.1 Limitation of Disbursement Agent's Liability. The
Disbursement Agent's responsibility and liability under this Agreement shall
be limited as follows: (a) the Disbursement Agent does not represent, warrant
or guaranty to the Trustee or the Holders the performance of the Authority or
the Manager; (b) the Disbursement Agent shall have no responsibility to the
Authority, the Manager, the Trustee or the Holders as a consequence of
performance by the Disbursement Agent hereunder except for any gross
negligence or willful misconduct of the Disbursement Agent; (c) the Manager
and the Authority shall remain solely responsible for all aspects of their
respective businesses and conduct in connection with the Facility; and (d) the
Disbursement Agent is not obligated to supervise, inspect or inform the
Manager, the Authority, the Trustee or any third party of any aspect of the
construction and operation of the Facility. The Disbursement Agent shall have
no duties or obligations hereunder except as expressly set forth herein, shall
be responsible only for the performance of such duties and obligations, shall
not be required to take any action otherwise than in accordance with the terms
hereof and shall not be in any manner liable or responsible for any loss or
damage arising by reason of any act or omission to act by it hereunder or in
connection with any of the transactions contemplated hereby, including, but
not limited to, any loss that may occur by reason of forgery, false
representations, the exercise of its discretion, or any other reason, except
for its gross negligence or willful misconduct.
13.2 Indemnification of Disbursement Agent. The Manager
shall indemnify, hold harmless and defend the Disbursement Agent and its
officers, directors, agents and employees from and against any and all claims,
actions, obligations, liabilities and expenses, including defense costs,
investigative fees and costs, legal fees, and claims for damages, arising from
the Disbursement Agent's performance under this Agreement, except to the
extent that such liability, expense or claim is attributable to the gross
negligence or willful misconduct of the Disbursement Agent.
13.3 Insurance. The Disbursement Agent, at its sole cost and
expense, shall purchase and maintain throughout the term of this Agreement,
the following insurance policies:
(a) Comprehensive general liability insurance, with
minimum limits of $2,000,000 combined single limit per occurrence, covering
all property damage arising out of its operation under this Agreement.
(b) Workers' compensation insurance covering all of
its employees and volunteers.
Said policies shall provide for 30 days' prior written notice to the Manager,
the Trustee and the Authority of cancellation or material change. If any of
such insurance is written on a claims made form, following termination of this
Agreement, coverage shall survive for the maximum reporting period available
at each anniversary date of such insurance, or not less than five years,
whichever is greater. The limits of coverage required under subparagraph (a)
above shall not in any way limit the liability of the Manager or the Trustee
under this Agreement.
14. Termination.
14.1 Termination of Security Interest. Upon the indefeasible
payment in full in immediately available funds of the Secured Obligations or
upon the first date that the Release Condition is satisfied (each as certified
to the Disbursement Agent pursuant to Section 3.5), the security interest
granted hereby shall automatically terminate and all rights to the Collateral
shall revert to the Manager; provided, however, that the security interest
granted in (x) the Manager Repayment Note and all other Collateral described
in clause (c) of Section 5.1 and (y) all Collateral described in clause (d) of
Section 5.1 with respect to Collateral described in clause (c) of Section 5.1
shall continue until the termination of this Agreement under Section 14.2.
Upon any such termination of security interests, the Trustee will, at
Manager's expense, authenticate and deliver to the Manager such records
(including, without limitation, termination statements under the UCC) as the
Manager shall reasonably request to evidence such termination.
14.2 Termination of Agreement. This Agreement shall
terminate automatically upon payment in full in immediately available funds of
the Secured Obligations; provided, however, that the obligations of the
Manager under Section 13 and the obligations of the Manager and the Authority
under the Manager Repayment Note shall survive termination of this Agreement.
15. Substitution or Resignation of the Disbursement Agent.
15.1 Procedure. A resignation or removal of the Disbursement
Agent and appointment of a successor Disbursement Agent shall become effective
only upon the successor Disbursement Agent's acceptance of appointment as
provided in this Section 15.
15.1.1 The Disbursement Agent may resign in writing
at any time and be discharged from all duties hereunder upon 30 days' written
notice to all parties hereto. The Trustee or the Holders of a majority in
principal amount of the then outstanding Senior Notes may remove the
Disbursement Agent by so notifying the Disbursement Agent and the Manager in
writing, if:
(a) the Disbursement Agent fails to comply with
Section 13.3;
(b) the Disbursement Agent is adjudged a bankrupt
or an insolvent or an order for relief is entered with respect to the
Disbursement Agent under any Bankruptcy Law;
(c) a custodian or public officer takes charge of
the Disbursement Agent or its property; or
(d) the Disbursement Agent becomes incapable of
acting.
15.1.2 If the Disbursement Agent resigns or is
removed or if a vacancy exists in the office of Disbursement Agent for any
reason, then the Trustee shall, and the Holders of a majority in principal
amount of the then outstanding Senior Notes (if such Holders provided a notice
pursuant to Section 15.1.1 or if there is no Trustee capable of acting at such
time) may promptly appoint a successor Disbursement Agent. Within one year
after any successor Disbursement Agent appointed by the Trustee takes office,
the Holders of a majority in principal amount of the then outstanding Senior
Notes may appoint a successor Disbursement Agent to replace the successor
Disbursement Agent appointed by the Trustee.
15.1.3 If a successor Disbursement Agent does not
take office within 60 days after the retiring Disbursement Agent resigns or is
removed, then the retiring Disbursement Agent, the Trustee, or the Holders of
at least 10% in principal amount of the then outstanding Senior Notes may
petition any court of competent jurisdiction for the appointment of a
successor Disbursement Agent.
15.1.4 A successor Disbursement Agent shall deliver
a written acceptance of its appointment to the retiring Disbursement Agent and
to the Trustee. Thereupon, the resignation or removal of the retiring
Disbursement Agent shall become effective, and the successor Disbursement
Agent shall have all the rights, powers and duties of the Disbursement Agent
under this Agreement. The retiring Disbursement Agent shall promptly transfer
all property held by it as Disbursement Agent to the successor Disbursement
Agent.
15.2 Successor Disbursement Agent by Merger, etc. If the
Disbursement Agent consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor
Disbursement Agent.
15.3 Eligibility; Disqualification. The Disbursement Agent
shall at all times be a bank chartered under the laws of the United States of
America or of any state thereof that is authorized under such laws to exercise
corporate trust power, that is subject to supervision or examination by
federal or state authorities and that has a combined capital and surplus of at
least $100 million as set forth in its most recent published annual report of
condition and a Thomson's Bank Watch rating of B or better.
16. Notices and Certificates. Each of the Manager and the Trustee
shall deliver to the Disbursement Agent, within five Business Days upon any of
its respective officers becoming aware of any Default or Event of Default, an
Officers' Certificate specifying such Default or Event of Default. The
certificate delivered by the Manager shall also specify what action the
Manager is taking or proposes to take with respect thereto. The Disbursement
Agent may rely upon the facts set forth in the certificates delivered pursuant
to this Agreement, without further inquiry. If the Disbursement Agent receives
conflicting certificates or notices with respect to the existence of an Event
of Default, the Disbursement Agent shall act in reliance on any certificate or
notice of the Trustee with respect to the existence of an Event of Default,
and in the absence of any such certificate or notice of the Trustee the
Disbursement Agent shall act in reliance on any certificate or notice from the
Manager to the effect that an Event of Default exists or that facts that
constitute an Event of Default exist, unless such party has delivered a
subsequent notice or certificate to the Disbursement Agent to the effect that
such Event of Default or such facts do not exist.
17. Statement of Manager Security Account. Upon the request of the
Manager or the Trustee from time to time, the Disbursement Agent shall deliver
to the Manager and the Trustee an account statement prepared by the
Disbursement Agent in a form satisfactory to the Manager and the Trustee
setting forth with reasonable particularity the balance of funds then in the
Manager Security Account and the manner in which such funds are invested;
provided, however, that the Disbursement Agent shall not be required to
provide such statements more often than weekly. The parties hereto irrevocably
instruct the Disbursement Agent that on the first date upon which the balance
in the Manager Security Account is reduced to zero, the Disbursement Agent
shall deliver to the Trustee and the Manager a notice that the balance in the
Manager Security Account has been reduced to zero.
18. Miscellaneous.
18.1 Waiver. Any party hereto may specifically waive any
breach of this Agreement by any other party, but no such waiver shall be
deemed to have been given unless such waiver is in writing, signed by the
waiving party and specifically designates the breach waived, nor shall any
such waiver constitute a continuing waiver of similar or other breaches.
18.2 Invalidity. If, for any reason whatsoever, any one or
more of the provisions of this Agreement shall be held or deemed to be
inoperative, unenforceable or invalid in a particular case or in all cases,
such circumstances shall not have the effect of rendering any of the other
provisions of this Agreement inoperative, unenforceable or invalid, and the
inoperative, unenforceable or invalid provision shall be construed as if it
were written so as to effectuate, to the maximum extent possible, the parties'
intent.
18.3 No Authority. The Disbursement Agent shall not have any
authority to, and shall not make any warranty or representation or incur any
obligation on behalf of, or in the name of, the Trustee.
18.4 Assignment. This Agreement is personal to the parties
hereto, and the rights and duties of any party hereunder shall not be
assignable except with the prior written consent of the other parties. In any
event, this Agreement shall inure to and be binding upon the parties and their
successors and permitted assigns.
18.5 Benefit. The parties hereto and their respective
successors and assigns, but no others, shall be bound hereby and entitled to
the benefits hereof.
18.6 Time. Time is of the essence of each provision of this
Agreement.
18.7 Choice of Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York including
without limitation, Section 5-1401 of the New York General Obligations Law;
provided, however that with respect to the creation, attachment, perfection or
priority of the security interest in any Collateral, the governing law shall
be the applicable UCC as set forth in the definition of the term "UCC".
18.8 Entire Agreement; Amendments. This Agreement, together
with the Indenture, the Intercreditor Agreement and the Collateral Documents,
contains the entire agreement among the parties with respect to the subject
matter hereof and supersedes any and all prior agreements, understandings and
commitments, whether oral or written. This Agreement may be amended only by a
writing signed by duly authorized representatives of all parties.
18.9 Notices. All notices and other communications required
or permitted to be given or made under this Agreement shall be in writing and
shall be deemed to have been duly given and received, regardless of when and
whether received, either: (a) on the day of hand delivery; or (b) on the day
sent, when sent by United States certified mail, postage and certification fee
prepaid, return receipt requested, or via facsimile, addressed as follows:
To the Disbursement Agent:
U.S. Bank, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To the Trustee:
U.S. Bank, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To the Authority:
The
Chukchansi Economic Development Authority
▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Tribal Chairman
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To the Manager:
Cascade Entertainment Group, LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as the specified entity most recently may have
designated in writing in accordance with this Section to the others.
18.10 Authority Authorization. The Authority hereby
authorizes and empowers the Manager to execute any and all certificates,
consents or other documents required by this Agreement on behalf of the
Authority and any other document on behalf of the Authority reasonably
requested by the Trustee or Disbursement Agent in connection with this
Agreement. In each case, the Authority acknowledges that such document, once
executed, shall be binding on the Authority as if such document had been, in
fact, executed by the Authority.
18.11 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
18.12 Right to Consult Counsel. Each of the Disbursement
Agent and the Trustee may, if any of them deems necessary or appropriate,
consult with and be advised by counsel in respect of their duties hereunder.
Each of the Disbursement Agent or the Trustee shall be entitled to rely upon
the advice of its counsel in any action taken in its capacity as the
Disbursement Agent or the Trustee as the case may be, hereunder and shall be
protected from any liability of any kind for actions taken in reasonable
reliance upon such opinion of its counsel. The Manager agrees to pay all such
reasonable counsel fees.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have each caused this
Agreement to be duly executed by their duly authorized officers, all as of the
day and year first above written.
U.S. BANK, N.A.,
as Disbursement Agent
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
Title: Vice President
U.S. BANK, N.A.,
as Trustee
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
Title: Vice President
CASCADE ENTERTAINMENT GROUP, LLC
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President/CEO
THE
CHUKCHANSI ECONOMIC
DEVELOPMENT AUTHORITY
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chairperson
THE Picayune Rancheria of Chukchansi
Indians (solely with respect to
its obligations under Section 9)
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chairperson
TABLE OF EXHIBITS
-----------------
Exhibit
-------
A Form of Manager Tax Payment Certificate
B Form of Manager's Expenses Disbursement Request
C Form of Authority Cash Accumulation Account Certificate
D Form of Manager Security Account Certification
E Form of Manager Repayment Note
F Form of Final Disbursement of Funds Certificate
G Form of Management Fee Disbursement Request
H Form of Management Fees
Exhibit E
TO
CASH ACCUMULATION ACCOUNT CONTRIBUTION AGREEMENT
form of MANAGER REPAYMENT NOTE
THIS NOTE AND THE RIGHTS OF THE MANAGER OR ANY OTHER HOLDER OF THIS NOTE ARE
SUBJECT TO THE TERMS OF THE
CASH ACCUMULATION ACCOUNT CONTRIBUTION AGREEMENT
(AS DEFINED BELOW) PURSUANT TO WHICH THIS NOTE AND SUCH RIGHTS ARE MADE
EXPRESSLY SUBORDINATE TO THE RIGHTS OF THE TRUSTEE, THE HOLDERS (AS DEFINED
THEREIN) AND CERTAIN OTHER PARTIES.
THIS NOTE AND THE RIGHTS OF THE MANAGER OR ANY OTHER HOLDER OF THIS NOTE ARE
SUBJECT TO THE TERMS OF THE INTERCREDITOR AGREEMENT (AS DEFINED BELOW)
PURSUANT TO WHICH THIS NOTE AND SUCH RIGHTS ARE MADE EXPRESSLY SUBORDINATE TO
THE RIGHTS OF THE SENIOR NOTES TRUSTEE, THE SENIOR NOTE HOLDERS, THE PIK NOTES
HOLDER (EACH AS DEFINED THEREIN) AND CERTAIN OTHER PARTIES.
THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR U.S. FEDERAL INCOME
TAX PURPOSES. UPON THE REQUEST OF THE MANAGER OR ANY OTHER HOLDER OF THIS
NOTE, THE AUTHORITY SHALL MAKE AVAILABLE TO THE MANAGER OR ANY OTHER HOLDER OF
THIS NOTE, (I) THE ISSUE PRICE OF THE NOTE, (II) THE AMOUNT OF ORIGINAL ISSUED
DISCOUNT IN RESPECT THEREOF, (III) THE ISSUE DATE OF THE NOTE, AND (IV) THE
YIELD TO MATURITY OF THE NOTE, IN EACH CASE AS DETERMINED UNDER THE ORIGINAL
ISSUE DISCOUNT RULES OF THE U.S. INTERNAL REVENUE CODE. PLEASE CONTACT THE
CHIEF FINANCIAL OFFICER OF THE MANAGER AT ▇▇▇-▇▇▇-▇▇▇▇.
$__0_______ October 8, 2002
1. Principal. For value received, the
Chukchansi Economic Development
Authority (the "Authority"), a wholly owned unincorporated enterprise of The
Picayune Rancheria of Chukchansi Indians of California, unconditionally
promises to pay, in cash, to the order of Cascade Entertainment Group, LLC, a
California limited liability company ("Manager"), in the manner and at the
place hereinafter provided in Section 3 hereof, the outstanding principal
amount of this note (this "Note"), together with accrued and unpaid interest,
on September 15, 2009. The outstanding principal amount of this Note shall
equal the amount loaned to the Authority from time to time pursuant to the
Cash Accumulation Account Contribution Agreement (the "
Cash Accumulation
Account Contribution Agreement"), dated as of October 8, 2002, among Manager,
the Authority and the U.S. Bank, N.A. (the "Trustee") together with any
accrued and unpaid Interest added to the principal amount hereof pursuant to
Section 2 hereof.
2. Interest.
2.01 Interest.
Interest on the unpaid principal amount of this Note outstanding from
time to time shall accrue at a rate equal to the weighted average interest
rate accruing on the amount contributed by the Manager to the Shortfall
Account pursuant to Section 3.4 of the
Cash Accumulation Account Contribution
Agreement, if any, from the date any such amount is deemed loaned hereunder
until September 15, 2009 and, except as set forth in this Section 2.01 and
Section 3.02 hereof, shall not be payable until September 15, 2009. Interest
shall be computed on the basis of a 360-day year of twelve 30-day months. The
outstanding principal amount of this note shall increase on each April 1 and
October 1 (each, an "Interest Payment Date") of each year beginning on April
1, 2003, or if any such day is not a Business Day, on the preceding Business
Day, by an amount equal to the Interest accrued thereon from and including the
immediately preceding Interest Payment Date, or, if none have occurred, since
the date any such amount is loaned hereunder, to, and including, such Interest
Payment Date unless such Interest is paid in cash pursuant to the following
sentence of this Section 2.01. If, on any Interest Payment Date after the
Initial Operating Date, the aggregate amount of cash and Cash Equivalents in
the Cash Accumulation Account is at least equal to the Required Cash
Accumulation Amount, the Authority shall pay, in cash, the amount of Interest
that has accrued on this Note since the immediately preceding Interest Payment
Date to, but not including, such Interest Payment Date in arrears in
compliance with Section 3 hereof.
3. Payments
3.01. Payments of Principal and Interest. All payments of principal
and Interest in respect of this Note shall be made in lawful money of the
United States of America in immediately available funds to Manager. All
payments in respect of this Note must be received by Manager prior to 12:00
noon, New York City time, on the Business Day on which such payment is due
pursuant to the terms of this Note.
3.02. Payments for Taxes. Notwithstanding anything to the contrary
herein, within five days following each Quarterly Payment Date, the Authority
shall make a cash payment to Manager with respect to this Note in an amount
equal to the excess of (A) the Minimum Tax Payment Amount over (B) the sum of
(x) the cumulative amount of cash payments with respect to Interest pursuant
to Section 2 hereof, and (y) the cumulative amount of cash payments previously
made pursuant to this Section 3.02. Any payments made pursuant to this Section
3.02, shall be treated as payments of accrued Interest with respect to this
Note and shall reduce, as applicable, the accrued Interest with respect to
this Note.
3.03. Subordination. Payments under this Note shall be made only as
and when such payments are permitted under the
Cash Accumulation Account
Contribution Agreement and the Intercreditor Agreement. Each holder of this
Note shall be subject to, and shall comply with, the obligations of Manager
under the
Cash Accumulation Account Contribution Agreement and the
Intercreditor Agreement.
4. Prepayment
4.01 Optional Prepayment. The Authority may prepay this Note at any
time without prepayment penalty by depositing the outstanding principal amount
(or portion thereof being prepaid) together with any secured and unpaid
interest through and including the prepayment date in an account specified in
writing by the Manager.
5. Covenants.
5.01 Payment of this Note. The Authority shall pay or cause to be
paid the principal and Interest, if any, on this Note on the dates and in the
manner provided in this Note.
5.02 Stay, Extension and Usury Laws. The Authority covenants (to the
extent that it may lawfully do so) that it shall not at any time insist upon,
plead or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Note; and the Authority (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that
it shall not, by resort to any such law, hinder, delay or impede the execution
of any power herein granted Manager, but shall suffer and permit the execution
of every such power as though no such law has been enacted.
6. Defaults and Remedies.
6.01 An Event of Default shall occur if:
(1) The Authority defaults in the payment when due of Interest on this
Note and such default continues for a period of 30 days;
(2) The Authority defaults in the payment when due of principal of, or
premium, if any, on this Note when the same becomes due and payable
at maturity, upon redemption or otherwise; and
(3) An Event of Default occurs and is continuing under the Indenture
unless such Event of Default on the Indenture is waived or rescinded.
6.02 Acceleration. If any Event of Default occurs and is continuing,
all amounts outstanding under this Note shall be due and payable immediately
without further action or notice. Manager may by written notice to the
Authority rescind an acceleration and its consequences if the rescission would
not conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal, Interest or premium that has become due
solely because of the acceleration) have been cured or waived.
If an Event of Default occurs by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Authority with the
intention of avoiding payment of the premium that the Authority would have had
to pay if the Authority then had elected to prepay this Note pursuant to
Section 4 hereof, then, upon acceleration of this Note, an equivalent premium
shall also become and be immediately due and payable, to the extent permitted
by law, anything in this Note to the contrary notwithstanding.
6.03 Other Remedies. If an Event of Default occurs and is continuing,
Manager may pursue any available remedy to collect the payment of principal or
accreted value, as applicable, premium, if any, and Interest on this Note or
to enforce the performance of any provision of this Note. A delay or omission
by Manager in exercising any right or remedy accruing upon an Event of Default
shall not impair the right or remedy or constitute a waiver of or acquiescence
in the Event of Default. All remedies are cumulative to the extent permitted
by law.
6.04 Waiver of Past Defaults. Manager may waive an existing Default
or Event of Default and its consequences hereunder. 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 Note, but no such
waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.
6.05 Undertaking for Costs. In any suit for the enforcement of any
right or remedy under this Note, a court in its discretion may require the
filing by any party litigant in the suit of an undertaking to pay the costs of
the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made
by the party litigant. This Section 6 does not apply to a suit by Manager.
10. Definitions.
Defined terms used herein but not otherwise defined shall have the
meaning set forth in the Cash Accumulation Account Contribution Agreement.
"Adjustment Event" means any adjustment by the Internal Revenue
Service (or state or local tax authority) in respect of any income inclusion
arising from or attributable to the income described in clause (A) of the
definition of Minimum Tax Payment Amount which adjustment becomes a final
"determination" under section 1313 of the Code (or similar state or local tax
law).
"Applicable Income Tax Rate" means an amount equal to the sum of (1)
the highest marginal Federal income tax rate applicable to an individual plus
(2) an amount equal to the sum of the highest marginal state and local income
tax rates applicable to any individual resident in New York, New York
multiplied by a factor equal to 1 minus such highest marginal Federal income
tax rate.
"Authority" has the meaning ascribed thereto in Section 1 hereof.
"Business Day" means any day other than a Legal Holiday.
"Cash Accumulation Account" has the meaning ascribed thereto in the
Cash Accumulation Account Contribution Agreement.
"Cash Equivalents" has the meaning ascribed thereto in the Indenture.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Event of Default" has the meaning ascribed thereto in Section 6.01
hereof.
"Indenture" means the Indenture dated as of the date hereof among the
Authority, the Tribe and U.S. Bank, N.A., as trustee, relating to the Senior
Notes.
"Interest" means all amounts of interest payable on this Note.
"Initial Operating Date" has the meaning ascribed thereto in the
Indenture.
"Intercreditor Agreement" has the meaning ascribed thereto in the
Indenture.
"Interest Payment Date" has the meaning ascribed thereto in Section
2.01 hereof.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized
by law, regulation or executive order to remain closed.
"Manager" has the meaning set forth in Section 1.
"Minimum Tax Payment Amount" means, as determined by the Tax Amounts
CPA, an amount equal to the product of (A) the cumulative amount of income on
this Note, for the period commencing with the date hereof and continuing to
and including the applicable Quarterly Payment Date (taking into account any
True-up Amounts) and (B) the Applicable Income Tax Rate.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
limited liability company, government or any agency or political subdivision
thereof or any other entity.
"Quarterly Payment Date" has the meaning ascribed thereto in the
Indenture.
"Required Accumulation Amount" has the meaning ascribed thereto in
the Cash Accumulation Account Contribution Agreement.
"Senior Notes" has the meaning ascribed thereto in the Cash
Accumulation Account Contribution Agreement.
"Shortfall Account" has the meaning ascribed thereto in the Cash
Accumulation Account Contribution Agreement.
"Tax Amounts CPA" means any nationally recognized independent public
accounting firm jointly selected by the Manager and the Authority.
"True-up Amount" means, in respect of a particular taxable year, an
amount determined by the Tax Amounts CPA equal to the difference between (1)
the amount described in Section 3.02(B) hereof actually distributed in respect
of such taxable year and (2) the Minimum Tax Payment Amount permitted to be
distributed in respect of such year, provided, however, that if there is an
Adjustment Event, clause (1) will mean the amount described in Section 3.02(B)
hereof, as adjusted by the aggregate True-up Amounts and clause (2) will mean
the Minimum Tax Payment Amount as adjusted to take into account the results of
the Adjustment Event. Within forty-five days following the immediately
preceding calendar year or within ten days of an Adjustment Event, 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 a holder of this Note, the Minimum Tax Payment Amount
payable on the immediately following Quarterly Payment Date after payment of
any accrued and unpaid interest on the notes shall be increased by such
True-up Amount. If the available cash is not sufficient to pay the Minimum Tax
Payment Amount payable on the Quarterly Payment Date, the amount unpaid shall
be carried over and increase the Minimum Tax Payment Amount payable on the
following Quarterly Payment Date. In the case of a True-up Amount due to the
Authority, the amounts payable on the immediately following Quarterly Payment
Date shall be reduced by such True-up Amount and the excess, if any, of the
True-up Amount over such Minimum Tax Payment Amount shall be applied to reduce
the immediately following Minimum Tax Payment Amount until such True-up Amount
is entirely offset.
"Trustee" has the meaning set forth in Section 1.
11. Miscellaneous.
11.01 Notices. Any notice or communication by Manager or Authority to
the other is duly given if in writing and delivered in person or mailed by
first class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address:
If to Manager:
Cascade Entertainment Group, LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
If to the Authority:
The
Chukchansi Economic Development Authority
▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Tribal Chairman
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Manager or the Authority, by notice to the other, may designate
additional or different addresses for subsequent notices or communications.
All notices and communications shall be deemed to have been duly
given at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and the
next Business Day after timely delivery to the courier, if sent by overnight
air courier guaranteeing next day delivery.
11.03 No Personal Liability. None of the Authority or any past,
present or future officer or office holder, employee, agent, representative,
member of the Authority, as such, shall have any liability for any obligations
of the Authority under this Note or for any claim based on, in respect of, or
by reason of, such obligations or their creation. By accepting this Note,
Manager waives and releases all such liability. The waiver and release are
part of the consideration for issuance of this Note.
11.04 Governing Law. THE INTERNAL LAW OF THE STATE OF NEW YORK,
INCLUDING, WITHOUT LIMITATION SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW SHALL GOVERN AND BE USED TO CONSTRUE THIS NOTE.
11.05 No Adverse Interpretation of Other Agreements. This Note may
not be used to interpret any other indenture, loan or debt agreement of any
other Person. Any such indenture, loan or debt agreement may not be used to
interpret this Note.
11.06 Assignment. The Authority may not sell, assign or transfer any
of its rights or obligations under this Note.
11.07 Severability. In case any provision in this Note shall be
invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
11.08 Counterpart Originals. The parties may sign any number of
copies of this Note. Each signed copy shall be an original, but all of them
together represent the same agreement.
11.09 Table of Contents, Headings, etc. The Table of Contents and
Headings of the Articles and Sections of this Note have been inserted for
convenience of reference only, are not to be considered a part of this Note
and shall in no way modify or restrict any of the terms or provisions hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Note to be
duly executed and delivered as of the day and year first above written.
THE
CHUKCHANSI ECONOMIC
DEVELOPMENT AUTHORITY
By:_______________________________
Name:
Title:
CASCADE ENTERTAINMENT GROUP, LLC
By:_______________________________
Name:
Title:
EXHIBIT H
TO CASH ACCUMULATION ACCOUNT CONTRIBUTION AGREEMENT
Form of Management Fees Note
THIS NOTE AND THE RIGHTS OF THE AUTHORITY OR ANY OTHER HOLDER OF THIS NOTE ARE
SUBJECT TO THE TERMS OF THE CASH COLLATERAL AND DISBURSEMENT AGREEMENT (AS
DEFINED BELOW) PURSUANT TO WHICH THIS NOTE AND SUCH RIGHTS ARE MADE EXPRESSLY
SUBORDINATE TO THE RIGHTS OF THE TRUSTEE, THE HOLDERS (AS DEFINED THEREIN) AND
CERTAIN OTHER PARTIES.
THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR U.S. FEDERAL INCOME
TAX PURPOSES. UPON THE REQUEST OF ANY HOLDER OF THIS NOTE, THE AUTHORITY SHALL
MAKE AVAILABLE TO THE HOLDER OF THIS NOTE, (I) THE ISSUE PRICE OF THE NOTE,
(II) THE AMOUNT OF ORIGINAL ISSUED DISCOUNT IN RESPECT THEREOF, (III) THE
ISSUE DATE OF THE NOTE, AND (IV) THE YIELD TO MATURITY OF THE NOTE, IN EACH
CASE AS DETERMINED UNDER THE ORIGINAL ISSUE DISCOUNT RULES OF THE U.S.
INTERNAL REVENUE CODE. PLEASE CONTACT THE CHIEF FINANCIAL OFFICER OF THE
MANAGER AT ▇▇▇-▇▇▇-▇▇▇▇.
$__0______ October 8, 2002
1. Principal. For value received, Cascade Entertainment Group, LLC, a
California limited liability company ("Manager"), unconditionally
promises to pay, in cash, to the order of the
Chukchansi Economic
Development Authority (the "Authority"), a wholly-owned unincorporated
enterprise of The Picayune Rancheria of Chukchansi Indians of California
(the "Tribe"), in the manner and at the place hereinafter provided in
Section 3 hereof, the outstanding principal amount of this note (this
"Note"), together with accrued and unpaid interest, on September 15,
2009. The outstanding principal amount of this Note shall equal the
amount loaned to the Manager from time to time pursuant to the Cash
Collateral and Disbursement Agreement (the "Cash Collateral and
Disbursement Agreement"), dated as of October 8, 2002, among U.S. Bank,
N.A., as disbursement agent, U.S. Bank, N.A. (the "Trustee"),
Professional Associates Construction Services, Inc., as the independent
construction consultant, the Authority and the Tribe together with any
accrued and unpaid Interest added to the principal amount hereof
pursuant to Section 2 hereof.
2. Interest.
2.01 Interest.
Interest on the unpaid principal amount of this Note
outstanding from time to time shall accrue at a rate equal to one percent (1%)
per annum simple interest, and, except as set forth in this Section 2.01 and
Section 3.02 hereof, shall not be payable until September 15, 2009. Interest
shall be computed on the basis of a 360-day year of twelve 30-day months. The
outstanding principal amount of this note shall increase on each April 1 and
October 1 (each, an "Interest Payment Date") of each year, or if any such day
is not a Business Day, on the following Business Day, by an amount equal to
the Interest accrued thereon from and including the immediately preceding
Interest Payment Date, or, if none have occurred, since the date any such
amount is loaned hereunder, to, and including, such Interest Payment Date
unless such Interest is paid in cash pursuant to the following sentence of
this Section 2.01.
3. Payments
3.01. Payments of Principal and Interest. All payments of principal
and Interest in respect of this Note shall be made in lawful money of the
United States of America in immediately available funds to the Authority. All
payments in respect of this Note must be received by the Authority prior to
12:00 noon, New York City time, on the Business Day on which such payment is
due pursuant to the terms of this Note.
4. Prepayment
4.01 Optional Prepayment. The Manager may prepay this Note at any
time without prepayment penalty by depositing the outstanding principal amount
(or portion thereof being prepaid) together with any secured and unpaid
interest through and including the prepayment date in an account specified in
writing by the Authority.
5. Mandatory Repayment
5.01 Mandatory Repayment. The Manager must repay all or a portion of
the amounts borrowed on this Note, together with accrued but unpaid interest,
if any, on any Interest Payment Date to the extent that as of such Interest
Payment Date, the amount of management fees accrued in the immediately
preceding twelve months exceeded $2.0 million. Such mandatory repayment amount
will be equal to the lesser of such excess amount and the principal and
interest outstanding under this Note and will be repaid into the Contingent
Interest Account.
6. Covenants.
6.01 Payment of this Note. The Manager shall pay or cause to be paid
the principal and Interest, if any, on this Note on the dates and in the
manner provided herein.
6.02 Stay, Extension and Usury Laws. The Manager covenants (to the
extent that it may lawfully do so) that it shall not at any time insist upon,
plead or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Note; and the Manager (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that
it shall not, by resort to any such law, hinder, delay or impede the execution
of any power herein granted the Authority, but shall suffer and permit the
execution of every such power as though no such law has been enacted.
7. Defaults and Remedies.
7.01 An Event of Default shall occur if:
(1) The Manager defaults in the payment when due of Interest on
this Note and such default continues for a period of 30
days; and
(2) The Manager defaults in the payment when due of principal
of, or premium, if any, on this Note when the same becomes
due and payable at maturity or otherwise.
7.02 Acceleration. If any Event of Default occurs and is continuing,
all amounts outstanding under this Note shall be due and payable immediately
without further action or notice. The Authority may by written notice to the
Manager rescind an acceleration and its consequences if the rescission would
not conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal, Interest or premium that has become due
solely because of the acceleration) have been cured or waived.
If an Event of Default occurs by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Manager with the
intention of avoiding payment of the premium that the Manager would have had
to pay if the Manager then had elected to prepay this Note pursuant to Section
4 hereof, then, upon acceleration of this Note, an equivalent premium shall
also become and be immediately due and payable, to the extent permitted by
law, anything in this Note to the contrary notwithstanding.
7.03 Other Remedies. If an Event of Default occurs and is continuing,
the Authority may pursue any available remedy to collect the payment of
principal or accreted value, as applicable, premium, if any, and Interest on
this Note or to enforce the performance of any provision of this Note. A delay
or omission by the Authority in exercising any right or remedy accruing upon
an Event of Default shall not impair the right or remedy or constitute a
waiver of or acquiescence in the Event of Default. All remedies are cumulative
to the extent permitted by law.
7.04 Waiver of Past Defaults. The Authority may waive an existing
Default or Event of Default and its consequences hereunder. 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 Note,
but no such waiver shall extend to any subsequent or other Default or impair
any right consequent thereon.
7.05 Undertaking for Costs. In any suit for the enforcement of any
right or remedy under this Note, a court in its discretion may require the
filing by any party litigant in the suit of an undertaking to pay the costs of
the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made
by the party litigant. This Section 7 does not apply to a suit by the
Authority.
8. Definitions.
Defined terms used herein but not otherwise defined shall
have the meaning set forth in the Cash Collateral and Disbursement Agreement.
"Authority" has the meaning ascribed thereto in Section 1
hereof.
"Business Day" means any day other than a Legal Holiday.
"Default" means any event that is or with the passage of
time or the giving of notice or both would be an Event of Default.
"Event of Default" has the meaning ascribed thereto in
Section 7.01 hereof.
"Indenture" means the Indenture dated as of the date hereof
among the Authority, the Tribe and U.S. Bank, N.A., as trustee, relating to
the Senior Notes.
"Interest" means all amounts of interest payable on this
Note.
"Interest Payment Date" has the meaning ascribed thereto in
Section 2.01 hereof.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York or at a place of payment are
authorized by law, regulation or executive order to remain closed.
"Manager" has the meaning set forth in Section 1.
"Person" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization, limited liability company, government or any agency or political
subdivision thereof or any other entity.
"Senior Notes" has the meaning ascribed thereto in the Cash
Collateral and Disbursement Agreement.
"Trustee" has the meaning set forth in Section 1.
9. Miscellaneous.
9.01 Notices. Any notice or communication by Manager or Authority to
the other is duly given if in writing and delivered in person or mailed by
first class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address:
If to Manager:
Cascade Entertainment Group, LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
If to the Authority:
The
Chukchansi Economic Development Authority
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▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Tribal Chairman
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Manager or the Authority, by notice to the other, may designate
additional or different addresses for subsequent notices or communications.
All notices and communications shall be deemed to have been duly
given at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and the
next Business Day after timely delivery to the courier, if sent by overnight
air courier guaranteeing next day delivery.
9.03 No Personal Liability. None of the Manager or any past, present
or future officer or office holder, employee, agent, representative, member of
the Manager, as such, shall have any liability for any obligations of the
Manager under this Note or for any claim based on, in respect of, or by reason
of, such obligations or their creation. By accepting this Note, the Authority
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of this Note.
9.04 Governing Law. THE INTERNAL LAW OF THE STATE OF NEW YORK,
INCLUDING, WITHOUT LIMITATION SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW SHALL GOVERN AND BE USED TO CONSTRUE THIS NOTE.
9.05 No Adverse Interpretation of Other Agreements. This Note may not
be used to interpret any other indenture, loan or debt agreement of any other
Person. Any such indenture, loan or debt agreement may not be used to
interpret this Note.
9.06 Assignment. The Manager may not sell, assign or transfer any of
its rights or obligations under this Note.
9.07 Severability. In case any provision in this Note shall be
invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
9.08 Counterpart Originals. The parties may sign any number of copies
of this Note. Each signed copy shall be an original, but all of them together
represent the same agreement.
9.09 Table of Contents, Headings, etc. The Table of Contents and
Headings of the Articles and Sections of this Note have been inserted for
convenience of reference only, are not to be considered a part of this Note
and shall in no way modify or restrict any of the terms or provisions hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Note
to be duly executed and delivered as of the day and year first above written.
CASCADE ENTERTAINMENT GROUP, LLC
By:_____________________________
Name:
Title:
THE CHUKCHANSI ECONOMIC
DEVELOPMENT AUTHORITY
By:_____________________________
Name:
Title: