EXHIBIT - 4.6
SECURITY AND CONTROL AGREEMENT
WATERFORD GAMING, L.L.C., a Delaware limited liability company, and
WATERFORD GAMING FINANCE CORP., a Delaware corporation (each, a "Pledgor" and
collectively, the "Pledgors"), U.S. BANK NATIONAL ASSOCIATION, as trustee (in
that capacity, the "Trustee") for the registered holders from time to time (the
"Holders") of the Notes (as defined herein) issued by the Pledgors under the
Indenture referred to below, and U.S. BANK NATIONAL ASSOCIATION, as securities
intermediary (in that capacity, the "Securities Intermediary"), hereby enter
into this SECURITY AND CONTROL AGREEMENT (this "Security Agreement") as of and
on June 11, 2003.
All references herein to the "UCC" are to the Uniform Commercial Code in
effect in the State of New York. Capitalized terms not otherwise defined herein
have the meaning given them in the Indenture referred to below.
RECITALS
A. The Pledgors and the Trustee have entered into an Indenture dated as
of the date hereof (as amended, restated, supplemented or otherwise
modified from time to time, the "Indenture"), under which the Pledgors
are issuing on the date hereof $155,000,000 in aggregate principal
amount of 8.625% Senior Notes due 2012 (together with any notes that
may from time to time be issued in substitution therefor, the
"Notes").
B. The Pledgors have agreed that (i) on the date hereof, $6,684,375 of
the net proceeds from the Notes' sale (the "Interest Reserve") will be
paid directly to the Securities Intermediary and (ii) the Pledgors
shall pay to the Securities Intermediary all Required XXX True-Up
Payments, as provided in the Indenture.
C. The Securities Intermediary has agreed to use the Interest Reserve and
all other amounts received from the Pledgors in accordance with the
foregoing paragraph to purchase Investment Grade Securities,
Government Securities or other Cash Equivalents (the "Pledged
Securities") and to place the Pledged Securities in, or credit the
Pledged Securities to, an account (the "Securities Account")
maintained by the Trustee with the Securities Intermediary for the
benefit of the Holders of the Notes.
D. The Trustee has opened an account with the Securities Intermediary, at
the Securities Intermediary's office at Xxxxxxx Square, 000 Xxxxxx
Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000, Attention: Corporate Trust
Services, which account bears Account No. 121774-015, is in the name
of " U.S. Bank National Association as Trustee for Waterford Gaming,
L.L.C. and Waterford Gaming Finance Corp.," and will serve as the
Securities Account. The Securities Account is the "Interest Reserve
Account" to which the Indenture and the Offering Memorandum for the
Notes make reference.
E. It is a condition to the issuance of the Notes that the Pledgors
(i) grant to the Trustee for its benefit and the ratable benefit
of the Holders of the Notes a security interest in the Pledged
Securities and related collateral to secure the Pledgors' payment
and performance of their Obligations (as defined below), and (ii)
execute and deliver this Security Agreement to evidence that
security interest.
NOW, THEREFORE, in consideration of the mutual promises herein and the
benefits to be received therefrom, each Pledgor, the Trustee, and the Securities
Intermediary agree as follows:
SECTION 1. Grant of Security Interest.
The Pledgors hereby grant to the Trustee, for its benefit and for the ratable
benefit of the Holders of the Notes, a continuing first priority security
interest in and to all of the Pledgors' right, title and interest in, to and
under the following (wherever located), whether investment property, general
intangibles, other rights, interests, claims, or otherwise (collectively, the
"Pledged Collateral"): (a) the Securities Account, all "Financial Assets" (as
defined in UCC ss. 8-102(a)(9)) held therein (including the Pledged Securities),
and all "Securities Entitlements" (as defined in UCC ss. 8-102(a)(17)) with
respect thereto, (b) any successor or other account into which Financial Assets
held in the Securities Account may be transferred or held at any time and all
Security Entitlements with respect thereto, and (c) all proceeds of any of the
foregoing (including, without limitation, proceeds that constitute property of
the types described in clauses (a) and (b) of this Section 1).
SECTION 2. Security for Obligations.
This Security Agreement and the security interest granted hereby secure (i) the
Pledgors' prompt and complete payment of all amounts due, either at maturity or
upon acceleration, under the Notes and (ii) the Pledgors' timely and full
payment and performance of all other obligations under the Notes, the Indenture,
and this Security Agreement (collectively, the "Obligations").
SECTION 3. Delivery of Pledged Securities; Maintenance of Securities Account.
(a) Upon the Securities Intermediary's acquisition of Pledged Securities or
Security Entitlements thereto, the Securities Intermediary shall promptly
make appropriate book entries indicating that the Trustee is the sole
"Entitlement Holder" (as defined in UCC ss. 8-102(a)(7)) with respect to
all Pledged Collateral and all Securities Entitlements thereto. Subject to
the other terms and conditions of this Security Agreement, all funds or
other property held by the Trustee under this Security Agreement shall be
held in the Securities Account and be subject to the Trustee's exclusive
dominion and control (including "control" as defined in UCC ss. 8-106 and
ss. 9-106), for the benefit of the Trustee and for the ratable benefit of
the Holders of the Notes, and segregated from all other funds or other
property otherwise held by the Trustee.
(b) The Securities Intermediary shall cause all securities or other property
underlying any Financial Assets credited to the Securities Account,
including, without limitation, all Pledged Securities, to be registered in
the name of the Securities Intermediary, endorsed to the Securities
Intermediary or in blank, or credited to another securities account
maintained in the name of the Securities Intermediary. In no case will any
Financial Asset credited to the Securities Account be registered in the
name of, payable to the order of, or specially endorsed to the Pledgors (or
to either of them), unless it has been specially endorsed to the Securities
Intermediary or in blank.
(c) So long as no Event of Default has occurred and is continuing, Waterford
Gaming, L.L.C. may direct the Securities Intermediary with respect to the
selection of Investment Grade Securities, Government Securities, or other
Cash Equivalents to be held in the Securities Account. The Securities
Intermediary will comply with those directions, except that (i) if any such
direction conflicts with an Entitlement Order issued by the Trustee in
accordance with Section 6(a) below, the Securities Intermediary shall
comply with the Trustee's Entitlement Order, and (ii) all Financial Assets
in the Securities Account will remain subject to the Trustee's security
interest granted herein and to all other terms hereof.
(d) The Securities Intermediary shall not disburse or dispose of any Pledged
Collateral except in accordance with the terms hereof.
(e) Concurrently with the execution and delivery of this Security Agreement,
the Trustee and the Securities Intermediary are delivering to the Pledgors
and Deutsche Bank Securities, Inc. and Bear, Xxxxxxx & Co. Inc., as the
Notes' initial purchasers, a certificate, in the form of Exhibit A hereto,
duly executed by an officer of each of the Trustee and the Securities
Intermediary, confirming that (i) the Trustee has established and will
maintain the Securities Account with the Securities Intermediary, and (ii)
the Securities Intermediary has received the Interest Reserve, has used the
Interest Reserve to acquire Pledged Securities or a Securities Entitlement
thereto, and has credited the same to the Securities Account, in accordance
with this Security Agreement.
(f) Concurrently with the execution and delivery of this Security Agreement,
the Pledgors shall deliver to the Trustee executed copies of proper
financing statements, which the Trustee shall cause to be duly filed in the
office of the Secretary of State of Delaware, covering the Pledged
Collateral described in this Security Agreement.
SECTION 4. Entitlement Orders; Subordination of Lien, Waiver of Set-Off, etc.
(a) The Trustee shall, in accordance with and subject to all applicable laws,
be the sole Entitlement Holder of, and except as otherwise provided in
Section 3(c) hereof, have the sole power to originate "Entitlement Orders"
(as defined in UCC ss. 8-102(a)(8)) with respect to, the Pledged
Collateral. The Securities Intermediary shall immediately comply with
Entitlement Orders issued by the Trustee with respect to the Pledged
Collateral without further consent of the Pledgors or any other Person. The
Pledgors shall have the rights specified in Section 6(a).
(b) The Securities Intermediary agrees that any security interest in any of the
Pledged Collateral that it has or may in the future acquire shall be
subordinate to the Trustee's security interest created hereby. The
Financial Assets held in the Securities Account will not be subject to
deduction, setoff, banker's lien, or any other right in favor of any Person
other than the Trustee (except that the Securities Intermediary may set off
or deduct all amounts due to it as customary fees for the routine operation
and maintenance of the Securities Account and for the customary fees owed
to the Trustee).
(c) In the event of any conflict between this Security Agreement (or any term
thereof) and any other agreement, the terms of this Security Agreement
shall prevail.
(d) The Securities Intermediary hereby confirms and agrees that:
(i) It has not entered into any agreement (other than this Security
Agreement and the Indenture) with the Pledgors with respect to the
Securities Account;
(ii) It has not granted, and until the termination of this Security
Agreement will not grant, control (including without limitation,
"control" as defined in UCC ss. 8-106 and ss. 9-106) over or with
respect to any Pledged Collateral to any Person other than the
Trustee. It has not entered into, and until the termination of this
Security Agreement will not enter into, any agreement with any Person
in which it agrees to comply with Entitlement Orders, relating to the
Pledged Collateral, from any Person other than the Trustee or which
purports to limit or condition its obligation under this Section 4 to
comply with the Trustee's Entitlement Orders;
(iii)Each item of property (whether an item of investment property, a
financial asset, a security, an instrument, or cash) credited to the
Securities Account will be treated as a "financial asset" within the
meaning of Section 8-102(a)(9) of the UCC; and
(iv) The Securities Account is a "securities account" (as defined in
Section 8-501 of the UCC).
SECTION 5. Adverse Claims.
The Securities Intermediary does not know of any claim to, or interest in, any
Pledged Collateral other than those of the Trustee and the Pledgors. If any
Person asserts or attempts to enforce any Lien or adverse claim (including by
means of writ, garnishment, judgment, warrant of attachment, execution or
similar process) against any Pledged Collateral, the Securities Intermediary
will promptly notify the Trustee and the Pledgors.
SECTION 6. Disbursements.
(a) Upon the Trustee's receipt of a written request from Waterford Gaming,
L.L.C. that is substantially in the form of Exhibit B, attached hereto (a
"Cash Disbursement Request"), the Trustee will promptly instruct the
Securities Intermediary (i) to liquidate sufficient assets in the
Securities Account so that net proceeds therefrom will fund the amount
requested in the Cash Disbursement Request, and (ii) to transfer those net
proceeds as indicated therein. Neither the Trustee nor the Securities
Intermediary shall be liable for any loss incurred upon the liquidation of
assets in the Securities Account.
(b) Any Cash Disbursement Request must be received no later than five Business
Days before the disbursement date requested therein (which date must be a
Business Date), must include the certifications in Exhibit B, and (as
applicable) must be accompanied by the additional documentation referred to
therein.
(c) The Trustee need not inquire into or verify the truth or accuracy of any
statement in a Cash Disbursement Request.
(d) Nothing in this Security Agreement shall afford the Pledgors (i) any right
to issue Entitlement Orders with respect to any Pledged Collateral except
as provided in Section 3(c) or (ii) except as expressly provided in Section
6(a) hereof (or as required by applicable law), any other right with
respect to the Pledged Collateral.
(e) Nothing in this Section 6 shall limit the Trustee's rights and powers under
this Security Agreement.
SECTION 7. Pledgors' Representations and Warranties.
The Pledgors hereby severally represent and warrant that, as of the date hereof:
(a) The Pledgors' execution and delivery of, and their performance of their
obligations under, this Security Agreement will not (i) contravene any
provision of applicable law or statute, either Pledgor's organization
documents, any material agreement or other material instrument binding upon
either Pledgor or any of their affiliates, or any judgment, order or decree
of any governmental or tribal body, agency or court having jurisdiction
over either Pledgor or any of its affiliates, or (ii) result in the
creation or imposition of any Lien on assets of either Pledgor, except for
the security interest granted to the Trustee herein. Except as described in
the Offering Memorandum, no consent, approval, authorization or order of,
qualification with, or other action by any governmental, tribal, or
regulatory body or agency or any third party is required for (i) either
Pledgor's execution, delivery or performance of this Security Agreement,
(ii) either Pledgor's grant of, or the perfection and maintenance of, the
security interest created hereby (including its first priority nature,
assuming compliance by the Securities Intermediary with its obligations in
this Security Agreement), or (iii) (except for any consents, approvals,
authorizations, or order required to be obtained by the Trustee (or the
Holders) for reasons other than the consummation of the transactions
contemplated by this Security Agreement) the Trustee's exercise of its
rights or remedies with respect to the Pledged Collateral. Notwithstanding
the foregoing, a breach of any of the representations and warranties in
this Section 7(a) will not constitute a default under this Security
Agreement unless that breach causes a material adverse effect on (i) the
validity or enforceability of this Security Agreement or any other material
agreement executed in connection herewith, and (ii) the Pledgors' ability
to perform their material obligations under the Notes and the Indentures.
(b) The Pledgors have duly and validly authorized, executed, and delivered this
Security Agreement. Assuming the Trustee's and Security Intermediary's due
authorization, execution and delivery of this Security Agreement and its
enforceability against the Trustee and the Securities Intermediary in
accordance with its terms, this Security Agreement constitutes the
Pledgors' valid and binding agreement, enforceable against each of them,
jointly and severally, in accordance with its terms, except as (i) may be
limited by bankruptcy, insolvency, fraudulent transfer, preference,
reorganization, moratorium, or similar laws now or hereafter in effect
relating to or affecting creditors' rights or remedies generally, (ii) the
availability of equitable remedies may be limited by equitable principles
of general applicability and the discretion of the court considering the
matter, (iii) the exculpation provisions and rights to indemnification
hereunder may be limited by federal and state securities laws and public
policy considerations, and (iv) the waiver of rights and defenses in and
other provisions of Sections 13(b), 16.11, and 16.15 hereof may be limited
by applicable law.
(c) The Pledgors are the legal and beneficial owners of the Pledged Securities
and other Pledged Collateral. The Pledgors own the Pledged Securities and
other Pledged Collateral free and clear of any Lien or claim of any person
or entity, except for the security interest granted to the Trustee herein.
No financing statement or other instrument similar in effect covering the
Pledgors' interest in the Pledged Securities is on file in any public
office, other than any financing statement filed under this Security
Agreement.
(d) Upon the Trustee's acquisition of a Security Entitlement in the Pledged
Collateral in accordance herewith, and the Securities Intermediary's
performance of its obligations hereunder, the security interest granted to
the Trustee herein will constitute a first priority perfected security
interest in the Pledged Collateral (except, with respect to proceeds, only
to the extent permitted by UCC ss. 9-315), enforceable (except insofar as
enforcement may be affected by general equitable principles whether
considered in a proceeding in equity or at law) as such against all
creditors of the Pledgors and against any Person purporting to purchase any
of the Pledged Collateral from the Pledgors. All filings and actions
necessary to perfect and protect that security interest have been duly
taken.
(e) There are no legal or governmental proceedings pending or, to the best of
either Pledgors' knowledge, threatened, to which the Pledgors or any of
their subsidiaries is a party or relating to any property of the Pledgors
or any subsidiary, that would materially adversely affect the Pledgors'
power or ability to perform their obligations under this Security
Agreement, the Notes, or the Indenture.
(f) No law or governmental regulation (including, without limitation,
Regulations T, U and X of the Board of Governors of the Federal Reserve
System) applicable to the Pledgors prohibits the grant of the security
interest to the Trustee hereunder.
(g) Waterford Gaming, L.L.C. and Waterford Gaming Finance Corp. each maintain
their chief executive offices at 000 Xxxxxxxx Xxxxxxxx, Xxxxxxxxx,
Xxxxxxxxxxx 00000. Neither Pledgor will, until the Termination Date (as
defined below), change the location of its chief executive offices without
giving at least 30 days' prior written notice to the Trustee.
(h) Waterford Gaming, L.L.C. has been duly organized as a limited liability
company solely under the laws of Delaware and remains duly existing as
such. Waterford Gaming Finance Corp. has been duly organized as a
corporation solely under the laws of Delaware and remains duly existing as
such. Neither of the Pledgors has filed any certificates of domestication,
transfer or continuance in any other jurisdiction.
(i) Each Pledgor has taken all actions necessary or desirable to establish the
Trustee's "control" (within the meanings of Sections 8-106 and 9-106 of the
UCC) over any portion of the Pledged Collateral constituting Securities,
Securities Accounts or Securities Entitlements (each as defined in the
UCC).
(j) No Event of Default (as defined herein) exists.
SECTION 8. Pledgor's Covenants.
In addition to its other agreements herein, each Pledgor covenants and agrees
with the Trustee and the Holders of the Notes that from and after the date
hereof until the Termination Date:
(a) It will, promptly upon request by the Trustee, execute and deliver or cause
to be executed and delivered, or use its commercially reasonable efforts to
procure, all assignments, instruments and other documents, in form and
substance reasonably satisfactory to the Trustee, and take any other action
that is necessary or desirable to perfect, continue the perfection of, or
protect the first priority of the Trustee's security interest in the
Pledged Collateral, to protect the Pledged Collateral against rights,
claims, or interests asserted by third persons (other than any rights,
claims or interests created by the Trustee), to enable the Trustee to
enforce its rights and remedies hereunder, and to effect the purposes of
this Security Agreement. The Pledgors will promptly pay all reasonable
costs incurred in connection with any of the foregoing; and
(b) It will not (and will not purport to) (i) sell or otherwise dispose of, or
grant any option or warrant with respect to, any of the Pledged Collateral
or its beneficial interest therein, or (ii) create or permit to exist any
Lien or other adverse interest in or with respect to its beneficial
interest in any of the Pledged Collateral (other than the security interest
granted herein); and
(c) It will not (i) enter into any agreement or understanding that restricts or
inhibits or purports to restrict or inhibit the Trustee's rights or
remedies hereunder, including, without limitation, the Trustee's right to
dispose of the Pledged Collateral as provided herein, or (ii) fail to pay
or discharge any tax, assessment or levy of any nature with respect to its
beneficial interest in the Pledged Collateral later than five days before
the date of any proposed sale under any judgment, writ or warrant of
attachment with respect to its beneficial interest; and
(d) It and the other Pledgor will at all times remain the sole beneficial
owners of the Pledged Collateral (subject to the security interest granted
to the Trustee herein); and
(e) it shall not change such Pledgor's name, identity, corporate structure
(e.g. by merger, consolidation, change in corporate form or otherwise),
chief executive office, type of organization or jurisdiction of
organization or establish any trade names unless it shall have (a) notified
the Trustee in writing at least thirty (30) days prior to any such change
or establishment, identifying such new proposed name, identity, corporate
structure, chief executive office, jurisdiction of organization or trade
name and providing such other information in connection therewith as the
Trustee may reasonably request and (b) taken all actions necessary or
advisable to maintain the continuous validity, perfection and the same or
better priority of the Trustee's security interest in the Pledged
Collateral granted or intended to be granted and agreed to hereby.
Each Pledgor hereby authorizes the filing of any financing statements or
continuation statements, and amendments to financing statements, or any similar
document in any jurisdictions and with any filing offices as the Trustee may
determine, in its sole discretion, are necessary or advisable to perfect the
security interest granted to the Trustee herein. Such financing statements may
describe the Pledged Collateral in the same manner as described herein or may
contain an indication or description of collateral that describes such property
in any other manner as the Trustee may determine, in its sole discretion, is
necessary, advisable or prudent to ensure the perfection of the security
interest in the Pledged Collateral granted to the Trustee herein.
SECTION 9. Securities Intermediary's Representations, Warranties and Covenants.
The Securities Intermediary represents and warrants that it is, as of the date
hereof, and it agrees that for so long as it maintains the Securities Account
and acts as securities intermediary under this Security Agreement it shall be, a
"Securities Intermediary" (as defined in the UCC and in 31 C.F.R. ss. 357.2). In
furtherance of the foregoing, and in addition to its other representations,
warranties, and agreements herein, the Securities Intermediary hereby:
(a) represents and warrants that it is a corporation that, in the ordinary
course of its business, maintains securities accounts for others and is
acting in that capacity with respect to the Securities Account;
(b) covenants that, as Securities Intermediary hereunder and with respect to
the Securities Account, it shall not take any action inconsistent with, and
represents and warrants that it is not and so long as this Security
Agreement remains in effect will not become party to any agreement whose
terms are inconsistent with, this Security Agreement;
(c) agrees to treat any item of property credited to the Securities Account as
a financial asset within the meaning of UCC ss. 8-102(a)(9);
(d) agrees, so long as it serves as Securities Intermediary under this Security
Agreement, to maintain the Securities Account as a securities account and
maintain appropriate books and records in respect thereof in accordance
with its usual procedures and subject to the terms of this Security
Agreement;
(e) agrees, with the other parties to this Security Agreement, that its
jurisdiction, for purposes of UCC ss. 8-110(e) and 31 C.F.R. 357.11(b) as
it pertains to this Security Agreement, the Securities Account and Security
Entitlements relating thereto, shall be the State of New York.
(f) agrees that it will maintain the Securities Account, at its office at the
address set forth in the Recitals hereof, segregated from all other
accounts, and will not change the name on the account or its account number
without the Trustee's prior written consent.
SECTION 10. Power of Attorney.
In addition to all of the powers granted to the Trustee under the Indenture,
each Pledgor hereby appoints and constitutes the Trustee its attorney-in-fact,
with full authority in its place and its name to take, from time to time in the
Trustee's discretion, any action and to execute any instrument that the Trustee
may deem necessary or advisable to accomplish the purposes of this Security
Agreement. The Trustee's authority under this Section 10 shall include, without
limitation, the authority to endorse and negotiate any checks or instruments
representing proceeds of Pledged Collateral in the name of the Pledgors, execute
and give receipt for any certificate of ownership or any document constituting
Pledged Collateral, transfer title to any item of Pledged Collateral, sign the
Pledgors' names on all financing statements (to the extent permitted by
applicable law) or any other documents deemed necessary or appropriate by the
Trustee to preserve, protect or perfect the security interest in the Pledged
Collateral and to file the same, prepare, file and sign the Pledgors's name on
any notice of Lien, and to take any other actions arising from or incident to
the powers granted to the Trustee in this Security Agreement. This power of
attorney is coupled with an interest and is irrevocable. Notwithstanding
anything to the contrary herein, the Trustee has no duty or obligation to
exercise any of the powers in this Section 10.
SECTION 11. No Assumption of Duties; Reasonable Care.
The Trustee and the Securities Intermediary undertake to perform only those
duties that are specifically set forth herein. This Security Agreement does not,
and may not be interpreted to, impose any implied duties or obligations on
either of them. Except as provided by applicable law or by the Indenture, the
Trustee shall be deemed to have exercised reasonable care in the custody and
preservation of the Pledged Collateral if the Trustee accords the Pledged
Collateral treatment substantially similar to that which the Trustee accords
similar property held by the Trustee for similar accounts, it being understood
that the Trustee shall not have any responsibility for (i) ascertaining or
taking action with respect to calls, conversions, exchanges, maturities or other
matters relative to any Pledged Collateral, whether or not the Trustee has or is
deemed to have knowledge of those matters, (ii) investing or reinvesting any
Pledged Collateral, or (iii) any loss on any investment.
SECTION 12. Indemnity.
Each Pledgor shall jointly and severally indemnify, hold harmless and defend
each of the Trustee and the Securities Intermediary and their respective
directors, officers, employees, attorneys, and agents (each, an "Indemnified
Person") from and against any and all claims, actions, obligations, liabilities
and expenses, including reasonable defense costs, reasonable investigative fees
and costs and reasonable legal fees and expenses and damages, arising from the
performance by the Trustee and the Securities Intermediary of their respective
obligations under this Security Agreement. The Pledgors shall, upon demand by
any Indemnified Person, promptly pay or reimburse that Indemnified Person for
all such expenses, costs, fees and damages. Notwithstanding the foregoing, the
Pledgors (i) shall not be obligated to indemnify any Indemnified Person from any
claim, action, obligation, liability or expense against or incurred by that
Indemnified Person that is judicially determined (the determination having
become final) to be directly attributable to the gross negligence or willful
misconduct of that Indemnified Person, and (ii) shall, upon that final judicial
determination, be entitled to recover from that Indemnified Person all amounts
theretofore paid hereunder.
SECTION 13. Remedies Upon Event of Default.
As used herein, "Event of Default" means (i) any Event of Default as that term
is defined in the Indenture, and (ii) any breach by either Pledgor of its
representations, warranties, covenants, or agreements herein. If any Event of
Default shall occur before the Termination Date and be continuing:
(a) The Trustee and the Holders of the Notes shall have, in addition to all
other rights given by law, by this Security Agreement, or by the Indenture,
all of the rights and remedies with respect to the Pledged Collateral of a
secured party under the UCC. In addition, with respect to any Pledged
Collateral that shall then be in or shall thereafter come into the
possession or custody or under the control of the Trustee, the Trustee may,
upon the direction of a majority in aggregate principal amount of the
Holders of the Notes, sell or cause the same to be sold at any broker's
board or at public or private sale, in one or more sales or lots, for cash
or on credit or for future delivery, without assumption of any credit risk.
The purchaser of any or all Pledged Collateral so sold shall thereafter
hold the same absolutely, free from any claim, encumbrance or right of any
kind whatsoever of, or created by or through, the Pledgors. The Trustee
shall give the Pledgors notice of the time and place of any public sale of
the Pledged Collateral as is feasible and reasonable under the
circumstances, except no notice of sale shall be required if the Trustee
determines, in its reasonable judgment, that (i) an immediate sale is
necessary because the Pledged Collateral threatens to decline speedily in
value or (ii) the Pledged Collateral is or becomes of a type regularly sold
on a recognized market. To the extent permitted by applicable law, the
Pledgors agree that any sale of the Pledged Collateral conducted in
conformity with reasonable commercial practices of banks, insurance
companies, commercial finance companies, or other financial institutions
disposing of property similar to the Pledged Collateral shall be deemed to
be commercially reasonable. Subject to the other provisions of this Section
13(a), notice mailed to the Pledgors as provided in Section 16.1 hereof at
least 10 days before the time of the sale or disposition shall constitute
reasonable notice. The Trustee or any Holder of Notes may, in its own name
or in the name of a designee or nominee, buy any of the Pledged Collateral
at any public sale and, if permitted by applicable law, at any private
sale. All expenses (including court costs and reasonable attorneys' fees,
expenses and disbursements) of, or incident to, the enforcement of any of
the provisions hereof shall be recoverable from the proceeds of the sale or
other disposition of the Pledged Collateral.
(b) Each Pledgor shall use its reasonable best efforts to do or cause to be
done all reasonably necessary or appropriate acts to make a sale of all or
portion of the Pledged Collateral under this Section 13 valid and binding
and in compliance with any applicable requirements of law. The Pledgors
agree that a breach of any of their covenants in this Section 13 will cause
irreparable injury to the Trustee and the Holders of the Notes, that the
Trustee and the Holders of the Notes would have no adequate remedy at law
in respect of such a breach and, as a consequence, that each of their
covenants in this Section 13 shall be specifically enforceable against
them. The Pledgors hereby waive and agree not to assert any defenses
against an action for specific performance of these covenants except for a
defense that no Event of Default has occurred.
(c) The Trustee may, without notice to the Pledgors except as required by law
and at any time or from time to time, charge, setoff and otherwise apply
all or any part of the Obligations against the Securities Account or any
part thereof.
SECTION 14. Expenses.
The Pledgors shall promptly upon demand pay to each of the Trustee and the
Securities Intermediary any and all reasonable expenses, including, without
limitation, the reasonable fees, expenses and disbursements of counsel, experts
and agents, that either the Trustee or the Securities Intermediary may incur in
connection with (a) the review, negotiation and administration of this Security
Agreement, (b) the maintenance of the Securities Account and the custody,
preservation, or sale of, collection from, or other realization upon, any of the
Pledged Collateral, (c) the exercise or enforcement of any of the rights of the
Trustee and the Holders of the Notes hereunder, (d) the Pledgors' failure to
perform or observe any of the provisions hereof, or (e) any claim covered by
Section 12 hereof.
SECTION 15. Security Interest Absolute.
All rights of the Trustee and the Holders of the Notes and the security interest
granted to the Trustee hereunder, and all obligations of the Pledgors hereunder,
shall be absolute and unconditional under all circumstances, including but not
limited to:
(a) any lack of validity or enforceability of the Indenture or any other
agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment or performance of, or in
any other term of, any of the Obligations, or any other amendment or waiver
of or any consent to any departure from the Indenture;
(c) any taking, exchange, surrender, release or non-perfection of any other
collateral or any taking, release, amendment, or waiver of any provision of
any guaranty for all or any of the Obligations;
(d) any change, restructuring or termination of the corporate structure or
existence of the Pledgors or any of their affiliates; or
(e) to the extent permitted by applicable law, any other circumstance that
might otherwise constitute a defense available to, or a discharge of, the
Pledgors in respect of the Obligations or of this Security Agreement.
SECTION 16. Miscellaneous Provisions.
Section 16.1 Notices.
Any notice or communication given hereunder shall be sufficiently given if in
writing and delivered in person or mailed by first class mail, commercial
courier service or telecopier communication, addressed as follows:
if to the Pledgors:
Waterford Gaming, L.L.C.
Waterford Gaming Finance Corp.
000 Xxxxxxxx Xxxxxxxx
X.X. Xxx 000
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Chief Executive Officer
Telecopier: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxx
Telecopier: (000) 000-0000
if to the Trustee:
U.S. Bank National Association
Xxxxxxx Square
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Corporate Trust Services
(Waterford Gaming, L.L.C./Waterford Gaming
Financing Corp. 2003 Security and
Control Agreement)
Telecopier: (000) 000-0000
if to the Securities Intermediary:
U.S. Bank National Association
Xxxxxxx Square
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Corporate Trust Services
(Waterford Gaming, L.L.C./Waterford Gaming
Financing Corp. 2003 Security and
Control Agreement)
Telecopier: (000) 000-0000
Section 16.2 No Adverse Interpretation of Other Agreements.
This Security Agreement may not be used to interpret another agreement or
document of the Pledgors or any of their affiliates. No other agreement or
document (other than the Indenture) may be used to interpret this Security
Agreement.
Section 16.3 Severability.
The provisions of this Security Agreement are severable, and if any clause or
provision shall be held invalid, illegal or unenforceable in whole or in part in
any jurisdiction, then the invalidity or unenforceability shall affect in that
jurisdiction only that clause or provision, or part thereof, and shall not in
any manner affect the clause or provision in any other jurisdiction or any other
clause or provision of this Security Agreement in any jurisdiction.
Section 16.4 Headings.
The headings in this Security Agreement are included for convenience of
reference only, are not to be considered a part hereof, and do not modify or
restrict any of the terms or provisions hereof.
Section 16.5 Counterpart Originals; Photocopies.
This Security Agreement may be signed in two or more counterparts, each of which
shall be deemed an original, but all of which shall together constitute one and
the same agreement. A photocopy or other reproduction of this Security Agreement
or any financing statement covering the Pledged Collateral or any part thereof
shall be sufficient as a financing statement where permitted by law.
Section 16.6 Benefits of Security Agreement.
Nothing in this Security Agreement, express or implied, shall give to any
person, other than the parties hereto, their successors hereunder, and (subject
to the provisions of the Indenture) the Holders of the Notes, any legal or
equitable right, remedy or claim. There shall be no third-party beneficiaries of
this Security Agreement. No Holder of Notes shall have any independent rights
hereunder, other than those rights granted to individual Holders of the Notes
under the Indenture
Section 16.7 Amendments, Waivers and Consents.
Any amendment of this Security Agreement and any consent to any departure by the
Pledgors from any provision of this Security Agreement shall be effective only
if made or duly given in compliance with all of the terms and provisions of the
Indenture. Neither the Trustee nor any Holder of Notes shall be deemed, by any
act, delay, indulgence, omission or otherwise, to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default or in
any breach of any of the terms and conditions hereof. A failure to exercise, a
delay in exercising, or a waiver of any right, power or privilege hereunder by
the Trustee or any Holder of Notes shall not preclude any subsequent exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided are cumulative, may be exercised singly or
concurrently, and are not exclusive of any rights or remedies provided by law.
Section 16.8 Interpretation of Agreement.
Acceptance of or acquiescence in a course of performance rendered under this
Security Agreement shall not be relevant to determine the meaning of this
Security Agreement, even though the accepting or acquiescing party had knowledge
of the nature of the performance and opportunity for objection.
Section 16.9 Continuing Security Interest; Termination.
(a) This Security Agreement shall create a continuing security interest in and
to the Pledged Collateral, shall be binding upon the Pledgors, their
transferees, successors and assigns, shall inure, together with the rights
and remedies of the Trustee hereunder, to the benefit of the Trustee, the
Securities Intermediary, the Holders of the Notes and their respective
successors, transferees and assigns, and shall remain in full force and
effect until the Termination Date. On or as soon as practicable after the
Termination Date, the Trustee shall, at the expense of the Pledgors, take
any reasonable action necessary to release the security interest created
hereby, including the execution and delivery of any termination statement
prepared and delivered to it by the Pledgors. Any redelivery of the Pledged
Collateral hereunder to the Pledgors shall be without warranty by or
recourse to the Trustee in its capacity as such, except as to the absence
of any Liens on the Pledged Collateral created by or arising through the
Trustee, and shall be at the reasonable expense of the Pledgors.
(b) This Security Agreement shall terminate on the earlier of (i) the day on
which all of the Pledgor's outstanding obligations under the Notes and the
Indenture have been paid in full or (ii) if, as of the end of any Reference
Period (as defined in the Indenture) beginning as of the end of the second
fiscal quarter following the Issue Date, the Issuers deliver to the Trustee
an Officers' Certificate to the effect that the Leverage Ratio (as defined
in the Indenture) of the Issuers is less than or equal to 3.0 to 1.0 (the
date of such termination, the "Termination Date").
(c) Notwithstanding the foregoing, the Pledgors' obligations under Sections 12
and 14 shall survive this Security Agreement's termination.
Section 16.10 Survival of Representations and Covenants.
All of the Pledgors' representations, warranties and covenants herein shall
survive execution and delivery of this Security Agreement, and (subject to
Section 16.9(c) above) shall terminate only upon the termination of this
Security Agreement.
Section 16.11 Waivers.
The Pledgors waive presentment and demand for payment of any of the Obligations,
protest and notice of dishonor or default with respect to any of the
Obligations, and all other notices to which the Pledgors might otherwise be
entitled, except as otherwise expressly provided herein or in the Indenture.
Section 16.12 Authority of the Trustee and Securities Intermediary.
(a) Each of the Trustee and Securities Intermediary may exercise all rights and
powers granted hereunder, together with any powers reasonably incident
hereto. The Trustee and the Securities Intermediary may perform any of
their respective duties hereunder or in connection with the Pledged
Collateral by or through agents or employees and shall be entitled to
retain counsel and to act in reliance upon the advice of counsel concerning
their rights, powers and duties hereunder. The Trustee and the Securities
Intermediary shall not be responsible for the validity, effectiveness or
sufficiency hereof or of any document or security furnished in accordance
herewith. The Trustee, the Securities Intermediary and their respective
directors, officers, employees, attorneys and agents may conclusively rely
on any communication, instrument or document reasonably believed by them to
be genuine and correct and to have been signed or sent by the proper person
or persons.
(b) The Pledgors acknowledge that, as between the Pledgors and the Trustee,
with respect to any action or inaction by the Trustee in connection with
the performance of its duties hereunder, the Trustee shall be conclusively
presumed to be acting as agent for the Holders of the Notes with full and
valid authority so to act or refrain from acting, and the Pledgors may not
make any inquiry respecting that authority.
(c) No provision of this Security Agreement shall require either the Trustee or
the Securities Intermediary to expend or risk its own funds or otherwise
incur any financial liability in the performance of its duties or the
exercise of any of its rights and powers hereunder.
Section 16.13 Removal or Resignation of the Securities Intermediary.
The Securities Intermediary may resign by notice to, or be removed by notice
from, the Trustee at any time, except that in either case the Securities
Intermediary's duties hereunder shall not terminate until the Trustee has
appointed a successor Securities Intermediary, who has accepted the appointment
(by delivery of an agreement substantially in the form hereof), and until all
assets held by the retiring Securities Intermediary have been transferred to the
successor Securities Intermediary in accordance with the Trustee's instruction.
Section 16.14 Final Expression.
This Security Agreement, together with the Indenture and any other agreement
executed in connection herewith, is intended by the parties as a final
expression of this Security Agreement and is intended as a complete and
exclusive statement of the terms and conditions thereof, subject to any
amendment duly made in accordance herewith.
Section 16.15 CHOICE OF LAW;
SUBMISSION TO JURISDICTION;
WAIVER OF JURY TRIAL; WAIVER OF DAMAGES.
(a) THIS SECURITY AGREEMENT, THE SECURITIES ACCOUNT, AND THE SECURITIES
ENTITLEMENTS RELATED THERETO SHALL BE GOVERNED BY THE LAW OF THE STATE OF
NEW YORK INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW. ANY DISPUTE ARISING FROM, RELATED TO, OR IN
CONNECTION WITH ANY OF THE FOREGOING, OR THE RELATIONSHIP AMONG OR THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO, SHALL LIKEWISE BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK. REGARDLESS OF ANY PROVISION OF ANY OTHER
AGREEMENT, FOR PURPOSES OF THE UCC, NEW YORK SHALL BE DEEMED TO BE THE
SECURITIES INTERMEDIARY'S JURISDICTION.
(b) THE PLEDGORS AGREE THAT THE TRUSTEE MAY, IN ITS CAPACITY AS TRUSTEE OR IN
THE NAME AND ON BEHALF OF ANY HOLDER OF NOTES, PROCEED AGAINST THE PLEDGORS
(OR EITHER OF THEM) OR THE PLEDGED COLLATERAL IN ANY COURT HAVING PERSONAL
OR IN REM JURISDICTION OVER THE PLEDGORS OR THE PLEDGED COLLATERAL, AS THE
CASE MAY BE, TO ENABLE THE TRUSTEE TO ASSERT A CLAIM OR EXERCISE ITS RIGHTS
AND REMEDIES UNDER THIS SECURITY AGREEMENT. EACH PLEDGOR AGREES THAT IT
WILL NOT ASSERT ANY COUNTERCLAIM, SETOFF, OR CROSSCLAIM AGAINST THE TRUSTEE
IN ANY PROCEEDING BROUGHT BY THE TRUSTEE UNDER THIS SECURITY AGREEMENT OR
THE INDENTURE OTHER THAN A COUNTERCLAIM, SETOFF, OR CROSSCLAIM THAT, IF NOT
ASSERTED IN THAT PROCEEDING, COULD NOT OTHERWISE BE BROUGHT OR ASSERTED.
THE PLEDGORS WAIVE ANY OBJECTION BASED ON THE GROUNDS OF IMPROPER VENUE OR
FORUM NON CONVENIENS TO THE TRUSTEE'S COMMENCEMENT AND PROSECUTION OF SUCH
A PROCEEDING IN ANY COURT IN THE CITY OF NEW YORK.
(c) EACH PLEDGOR AGREES THAT NEITHER ANY HOLDER OF NOTES, THE TRUSTEE, THE
SECURITIES INTERMEDIARY, OR ANY OTHER INDEMNIFIED PERSON SHALL BE LIABLE TO
EITHER PLEDGOR FOR LOSSES ARISING FROM, RELATING TO, OR IN CONNECTION WITH
THIS SECURITY AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY, OR THE
DUTIES IMPOSED HEREUNDER, UNLESS A COURT DETERMINES (SUCH DETERMINATION
HAVING BECOME FINAL) THAT THE LOSSES RESULTED FROM THE BAD FAITH, GROSS
NEGLIGENCE, OR WILLFUL MISCONDUCT OF THE HOLDER OF NOTES, THE TRUSTEE, THE
SECURITIES INTERMEDIARY, OR ANY INDEMNIFIED PERSON (AS THE CASE MAY BE).
(d) TO THE EXTENT PERMITTED BY LAW, THE PLEDGORS WAIVE THE POSTING OF ANY BOND
OTHERWISE REQUIRED OF THE TRUSTEE OR ANY HOLDER OF NOTES IN CONNECTION WITH
ANY JUDICIAL PROCEEDING TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER,
ENTERED AGAINST THE PLEDGORS (OR EITHER OF THEM) RELATING TO THIS SECURITY
AGREEMENT OR ANY RELATED AGREEMENT OR DOCUMENT OR TO ENFORCE BY SPECIFIC
PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR PERMANENT
INJUNCTION, THIS SECURITY AGREEMENT OR ANY RELATED AGREEMENT OR DOCUMENT
AGAINST THE PLEDGORS.
IN WITNESS WHEREOF, the Pledgors, the Trustee and the Securities
Intermediary have each caused this Security Agreement to be duly executed and
delivered as of the date first above written.
Pledgors:
WATERFORD GAMING, L.L.C.
By: ____________________________
Name:
Title:
WATERFORD GAMING FINANCE CORP.
By: ____________________________
Name:
Title:
Trustee:
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:_____________________________
Securities Intermediary:
U.S. BANK NATIONAL ASSOCIATION,
as Securities Intermediary
By:_____________________________
EXHIBIT A
CERTIFICATE
In accordance with Section 3(e) of the Security Agreement, dated as of June 11,
2003 (the "Security Agreement"), by and among Waterford Gaming L.L.C. and
Waterford Gaming Finance Corp. (collectively, the "Pledgors"), U.S. Bank
National Association, as indenture trustee (the "Trustee") for the holders of
the Pledgors' 8.625% Senior Notes due 2012 (the "Notes"), and U.S. Bank National
Association, as securities intermediary (the "Securities Intermediary"), the
undersigned officers of the Trustee and the Securities Intermediary, on behalf
of the Trustee and the Securities Intermediary respectively, hereby make the
following certifications to the Pledgors and the initial purchasers of the
Notes. Capitalized terms used and not defined in this certificate have the
meanings given them in the Security Agreement or in the documents referenced
therein.
1. Substantially contemporaneously with the execution and delivery of this
Certificate, the Trustee has established and will maintain the Securities
Account with the Securities Intermediary. The Securities Intermediary has
received $6,684,375 from the net proceeds from the sale of the Notes and has
used those funds to purchase Pledged Securities (or intends to do so as soon as
practicable). The Securities Intermediary has made or will (upon purchase of the
Pledged Securities) make appropriate book entries in its records establishing
that the Pledged Securities and the Trustee's Securities Entitlement thereto
have been credited to and are held in the Securities Account.
2. The Trustee has established and maintained and will maintain the
Securities Account, all Securities Entitlements thereto, and all rights with
respect to the Pledged Collateral solely in its capacity as Trustee and has not
asserted and will not assert any claim to or interest in the Pledged Collateral
except in that capacity.
3. The Trustee and the Securities Intermediary have acquired their Security
Entitlements to the Pledged Securities for value and without notice of any
adverse claim thereto. Without limiting the generality of the foregoing, neither
the Pledged Securities nor the Security Entitlements thereto of the Securities
Intermediary and the Trustee are, to their knowledge, subject to any Lien
granted by either of them in favor of any securities intermediary or any other
Person.
4. Each signatory represents and warrants that he or she is duly authorized
to execute this certificate.
IN WITNESS WHEREOF, the undersigned officers have executed this Certificate
on behalf of the Trustee and the Securities Intermediary, respectively, this
11th day of June 2003.
U.S. BANK NATIONAL ASSOCIATION,
As Trustee
By:__________________________________
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION,
As Securities Intermediary
By:__________________________________
Name:
Title:
EXHIBIT B
REQUEST FOR A CASH DISBURSEMENT
[Letterhead of Waterford Gaming, L.L.C.]
[date]
U.S. Bank National Association, Trustee
Xxxxxxx Square
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Corporate Trust Services
Ladies and Gentlemen:
The undersigned refers to the Security and Control Agreement, dated June
11, 2003 (the "Security Agreement") among the undersigned and Waterford Gaming
Finance Corp. (each, a "Pledgor" and collectively, the "Pledgors") and you in
your separate capacities as Trustee under the Indenture identified in the
Security Agreement's Recitals and as Securities Intermediary under the Security
Agreement. Capitalized terms not otherwise defined herein have the meaning given
them in the Security Agreement or, as applicable, in the Indenture.
The undersigned hereby requests, in accordance with Section 6(a) of the
Security Agreement, that you cause sufficient assets in the Securities Account
to be liquidated to generate net proceeds of $__________ and that you make
available to the undersigned a Cash Disbursement (the "Cash Disbursement") in
that amount on ____________, ____, which day is a Business Day.
The undersigned hereby certifies that the representations and warranties in
the Security Agreement are true on the date hereof and will be true on the date
of the Cash Disbursement requested herein, and that no Default or Event of
Default has occurred and is continuing on the date hereof.
The undersigned hereby further certifies that the Cash Disbursement will be
applied to the use and in the amount indicated below [check one]:
For the payment of interest on the Notes on the regular Interest
Payment Date falling on ____________, ____, in the amount of
$_________. The undersigned hereby certifies that the Pledgors have
applied or will apply all [other cash resources] to that interest
payment, as required by the Indenture. The proceeds of this Cash
Disbursement Request should be paid directly to you to be applied to
that interest payment.
To fund a [Legal/Covenant] Defeasance, to occur on ________ __, ____.
The undersigned hereby certifies that the Pledgors have applied or
will apply all [other cash resources] to the [Legal/Covenant]
Defeasance and that all conditions precedent to the [Legal/Covenant]
Defeasance have been satisfied. The proceeds of this Cash Disbursement
Request should be paid directly to you to be applied to that
defeasance.
To make a Permitted XXX Distribution, to occur on ________ __, ____.
The undersigned hereby certifies that all conditions precedent to the
making of a Permitted XXX Distribution have been satisfied. A copy of
the accountants' letter confirming that this Permitted XXX
Distribution is permitted under the Indenture is attached hereto. The
proceeds of this Cash Disbursement Request should be transferred as
indicated on the attached wire transfer instructions.
To withdraw from the Securities Account, on the regular Interest
Payment Date falling on ____________, ____, or on ____________, ____,
a date on which Notes will be redeemed in accordance with the
Indenture, assets in excess of the XXX Required Balance. A copy of the
accountants' letter confirming the XXX Required Balance on that date
is attached. The proceeds of this Cash Disbursement Request should be
transferred as indicated on the attached wire transfer instructions.
To be released to the Pledgors, because all Notes have been paid and
all obligations with respect to the Notes and the Indenture have been
discharged or the Leverage Ratio of the Pledgors as of the end of any
Reference Period is less than or equal to 3 to 1.
Very truly yours,
WATERFORD GAMING, L.L.C.
By: ________________________________
Name:
Title:
