SECURITY AND CONTROL AGREEMENT
WATERFORD GAMING, L.L.C., a Delaware limited liability
company, and WATERFORD GAMING FINANCE CORP., a Delaware corpora
tion (each, a "Pledgor" and collectively, the "Pledgors"), STATE
STREET BANK AND TRUST COMPANY, as trustee (in that capacity, the
"Trustee") for the registered holders from time to time (the
"Holders") of the Notes (as defined herein) issued by the Pledg
ors under the Indenture referred to below, and STATE STREET BANK
AND TRUST COMPANY, as securities intermediary (in that capacity,
the "Securities Intermediary"), hereby enter into this SECURITY
AND CONTROL AGREEMENT (this "Security Agreement") as of and on
March 17, 1999.
All references herein to the "UCC" are to the Uniform
Commercial Code in effect in the State of New York. Capitalized
terms not otherwise defined herein have the meaning given them in
the Indenture referred to below.
RECITALS
A. The Pledgors and the Trustee have entered into
that certain Indenture dated as of the date hereof (as amended,
restated, supplemented or otherwise modified from time to time,
the "Indenture"), under which the Pledgors are issuing on the
date hereof $125,000,000 in aggregate principal amount of 9-1/2%
Senior Notes due 2010 (together with any notes that may from time
to time be issued in substitution therefor, the "Notes").
B. The Pledgors have agreed that (i) on the date
hereof , $11,875,000 of the net proceeds from the Notes' sale
(the "Interest Reserve") will be paid directly to the Securities
Intermediary, (ii) the Pledgors shall pay to the Securities
Intermediary, upon receipt, the first $15 million in Mohegan Note
Transfer Proceeds and (iii) the Pledgors shall pay to the Securi
ties Intermediary all Required True-Up Payments, as provided in
the Indenture.
C. The Securities Intermediary has agreed to use the
Interest Reserve and all other amounts received from the Pledgors
in accordance with the foregoing paragraph to purchase Investment
Grade Securities, Government Securities or other Cash Equivalents
(the "Pledged Securities") and to place the Pledged Securities
in, or credit the Pledged Securities to, an account (the "Securi
ties 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 Securi
ties Intermediary, at the Securities Intermediary's office at
Xxxxxxx Square, 000 Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000,
which account bears Account No. 121774-011, is in the name of
"State Street Bank and Trust Company as Trustee for Waterford
Gaming, L.L.C. and Waterford Gaming Finance Corp.," and will
serve as the Securities Account. The Securities Account is the
"Interest Reserve Account" to which the Indenture and the Offer
ing Memorandum for the Notes make reference.
E. It is a condition to the issuance of the Notes
that the Pledgors (i) grant to the Trustee for its benefit and
the ratable benefit of the Holders of the Notes a security
interest in the Pledged Securities and related collateral to
secure the Pledgors' payment and performance of their Obligations
(as defined below), and (ii) execute and deliver this Security
Agreement to evidence that security interest.
NOW, THEREFORE, in consideration of the mutual promises
herein and the benefits to be received therefrom, each Pledgor,
the Trustee, and the Securities Intermediary agree as follows:
SECTION 1. Grant of Security Interest. The Pledgors
hereby grant to the Trustee, for its benefit and for the ratable
benefit of the Holders of the Notes, a continuing first priority
security interest in and to all of the Pledgors' right, title and
interest in, to and under the following (wherever located),
whether investment property, general intangibles, other rights,
interests, claims, or otherwise (collectively, the "Pledged
Collateral"): (a) the Securities Account, all "Financial Assets"
(as defined in UCC 8-102(a)(9)) held therein (including the
Pledged Securities), and all "Securities Entitlements" (as
defined in UCC 8-102(a)(17)) with respect thereto, (b) any
successor or other account into which Financial Assets held in
the Security Account may be transferred or held at any time and
all Security Entitlements with respect thereto, and (c) all
proceeds of any of the foregoing (including, without limitation,
proceeds that constitute property of the types described in
clauses (a) and (b) of this Section 1).
SECTION 2. Security for Obligations. This Security
Agreement and the security interest granted hereby secure (i) the
Pledgors' prompt and complete payment of all amounts due, either
at maturity or upon acceleration, under the Notes and (ii) the
Pledgors' timely and full payment and performance of all other
obligations under the Notes, the Indenture, and this Security
Agreement (collectively, the "Obligations").
SECTION 3. Delivery of Pledged Securities; Maintenance
of Securities Account.
(a) Upon the Securities Intermediary's acquisition
of Pledged Securities or Security Entitlements thereto, the
Securities Intermediary shall promptly make appropriate book
entries indicating that the Trustee is the sole "Entitlement
Holder" (as defined in UCC 8-102(a)(7)) with respect to all
Pledged Collateral and all Securities Entitlements thereto.
Subject to the other terms and conditions of this Security
Agreement, all funds or other property held by the Trustee under
this Security Agreement shall be held in the Securities Account
and be subject to the Trustee's exclusive dominion and control
(including "control" as defined in UCC 9-115(l)(e)), for the
benefit of the Trustee and for the ratable benefit of the Holders
of the Notes, and segregated from all other funds or other
property otherwise held by the Trustee.
(b) The Securities Intermediary shall cause all
securities or other property underlying any Financial Assets
credited to the Securities Account, including, without limita
tion, all Pledged Securities, to be registered in the name of the
Securities Intermediary, endorsed to the Securities Intermediary
or in blank, or credited to another securities account maintained
in the name of the Securities Intermediary. In no case will any
Financial Asset credited to the Securities Account be registered
in the name of, payable to the order of, or specially endorsed to
the Pledgors (or to either of them), unless it has been specially
endorsed to the Securities Intermediary or in blank.
(c) So long as no Event of Default has occurred and
is continuing, Waterford Gaming, L.L.C. may direct the Securities
Intermediary with respect to the selection of Investment Grade
Securities, Government Securities, or other Cash Equivalents to
be held in the Security Account. The Securities Intermediary
will comply with those directions, except that (i) if any such
direction conflicts with an Entitlement Order issued by the
Trustee in accordance with Section 6(a) below, the Securities
Intermediary shall comply with the Trustee's Entitlement Order,
and (ii) all Financial Assets in the Security Account will remain
subject to the Trustee's security interest granted herein and to
all other terms hereof.
(d) The Securities Intermediary shall not disburse
or dispose of any Pledged Collateral except in accordance with
the terms hereof.
(e) Concurrently with the execution and delivery of
this Security Agreement, the Trustee and the Securities Interme
diary are delivering to the Pledgors and to Bear Xxxxxx & Co.
Inc., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated, and
Xxxxxxx Xxxxx Barney Inc., as the Notes' initial purchasers, a
certificate, in the form of Exhibit A hereto, duly executed by an
officer of each of the Trustee and the Securities Intermediary,
confirming that (i) the Trustee has established and will maintain
the Securities Account with the Securities Intermediary, and (ii)
the Securities Intermediary has received the Interest Reserve,
has used the Interest Reserve to acquire Pledged Securities or a
Securities Entitlement thereto, and has credited the same to the
Securities Account, in accordance with this Security Agreement.
(f) Concurrently with the execution and delivery of
this Security Agreement, the Pledgors shall deliver to the
Trustee executed copies of proper financing statements, which the
Trustee shall cause to be duly filed in the office of the Secre
tary of State of Connecticut, covering the Pledged Collateral
described in this Security Agreement.
SECTION 4. Entitlement Orders; Subordination of Lien,
Waiver of Set-Off, etc.
(a) The Trustee shall, in accordance with and
subject to all applicable laws, be the sole Entitlement Holder
of, and have the sole power to originate "Entitlement Orders" (as
defined in UCC 8-102(a)(8)) with respect to, the Pledged
Collateral. The Securities Intermediary shall immediately comply
with Entitlement Orders issued by the Trustee with respect to the
Pledged Collateral without further consent of the Pledgors or any
other Person.
(b) The Securities Intermediary agrees that any
security interest in any of the Pledged Collateral that it has or
may in the future acquire shall be subordinate to the Trustee's
security interest created hereby. The Financial Assets held in
the Securities Account will not be subject to deduction, setoff,
banker's lien, or any other right in favor of any Person other
than the Trustee (except that the Securities Intermediary may set
off or deduct all amounts due to it as customary fees for the
routine operation and maintenance of the Securities Account and
for the customary fees owed to the Trustee).
(c) In the event of any conflict between this
Security Agreement (or any term thereof) and any other agreement,
the terms of this Security Agreement shall prevail.
(d) The Securities Intermediary hereby confirms and
agrees that:
(i) It has not entered into any agreement
(other than this Security Agreement and the Indenture)
with the Pledgors with respect to the Securities Ac
count;
(ii) It has not granted, and until the
termination of this Security Agreement will not grant,
control (including without limitation, "control" as
defined in UCC 9-115(l)(e)) over or with respect to
any Pledged Collateral to any Person other than the
Trustee. It has not entered into, and until the termi
nation of this Security Agreement will not enter into,
any agreement with any Person in which it agrees to
comply with Entitlement Orders, relating to the Pledged
Collateral, from any Person other than the Trustee or
which purports to limit or condition its obligation
under this Section 4 to comply with the Trustee's
Entitlement Orders.
SECTION 5. Adverse Claims. The Securities Intermediary
does not know of any claim to, or interest in, any Pledged
Collateral other than those of the Trustee and the Pledgors. If
any Person asserts or attempts to enforce any Lien or adverse
claim (including by means of writ, garnishment, judgment, warrant
of attachment, execution or similar process) against any Pledged
Collateral, the Securities Intermediary will promptly notify the
Trustee and the Pledgors.
SECTION 6. Disbursements.
(a) Upon the Trustee's receipt of a written request
from Waterford Gaming, L.L.C. that is substantially in the form
of Exhibit B, attached hereto (a "Cash Disbursement Request"),
the Trustee will promptly instruct the Securities Intermediary
(i) to liquidate sufficient assets in the Securities Account so
that net proceeds therefrom will fund the amount requested in the
Cash Disbursement Request, and (ii) to transfer those net pro
ceeds as indicated therein. Neither the Trustee nor the Securi
ties Intermediary shall be liable for any loss incurred upon the
liquidation of assets in the Securities Account.
(b) Any Cash Disbursement Request must be received
no later than five Business Days before the disbursement date
requested therein (which date must be a Business Date), must
include the certifications in Exhibit B, and (as applicable) must
be accompanied by the additional documentation referred to
therein.
(c) The Trustee need not inquire into or verify the
truth or accuracy of any statement in a Cash Disbursement Request.
(d) Nothing in this Security Agreement shall afford
the Pledgors (i) any right to issue Entitlement Orders with
respect to any Pledged Collateral or (ii) except as expressly
provided in Section 6(a) hereof (or as required by applicable
law), any other right with respect to the Pledged Collateral.
(e) Nothing in this Section 6 shall limit the
Trustee's rights and powers under this Security Agreement.
SECTION 7. Pledgors' Representations and Warranties.
The Pledgors hereby severally represent and warrant that, as of
the date hereof:
(a) The Pledgors' execution and delivery of, and
their performance of their obligations under, this Security
Agreement will not (i) contravene any provision of applica
ble law or statute, either Pledgor's organization documents,
any material agreement or other material instrument binding
upon either Pledgor or any of their affiliates, or any
judgment, order or decree of any governmental or tribal
body, agency or court having jurisdiction over either
Pledgor or any of its affiliates, or (ii) result in the
creation or imposition of any Lien on assets of either
Pledgor, except for the security interest granted to the
Trustee herein. Except as described in the Offering
Memorandum, no consent, approval, authorization or order of,
qualification with, or other action by any governmental,
tribal, or regulatory body or agency or any third party is
required for (i) either Pledgor's execution, delivery or
performance of this Security Agreement, (ii) either
Pledgor's grant of, or the perfection and maintenance of,
the security interest created hereby (including its first
priority nature, assuming compliance by the Securities
Intermediary with its obligations in this Security
Agreement), or (iii) (except for any consents, approvals,
authorizations, or order required to be obtained by the
Trustee (or the Holders) for reasons other than the
consummation of the transactions contemplated by this
Security Agreement) the Trustee's exercise of its rights or
remedies with respect to the Pledged Collateral.
Notwithstanding the foregoing, a breach of any of the
representations and warranties in this Section 7(a) will not
constitute a default under this Security Agreement unless
that breach causes a material adverse effect on (i) the
validity or enforceability of this Security Agreement or any
other material agreement executed in connection herewith,
and (ii) the Pledgors' ability to perform their material
obligations under the Notes and the Indentures.
(b) The Pledgors have duly and validly authorized,
executed, and delivered this Security Agreement. Assuming
the Trustee's and Security Intermediary's due authorization,
execution and delivery of this Security Agreement and its
enforceability against the Trustee and the Securities
Intermediary in accordance with its terms, this Security
Agreement constitutes the Pledgors' valid and binding
agreement, enforceable against each of them, jointly and
severally, in accordance with its terms, except as (i) may
be limited by bankruptcy, insolvency, fraudulent transfer,
preference, reorganization, moratorium, or similar laws now
or hereafter in effect relating to or affecting creditors'
rights or remedies generally, (ii) the availability of
equitable remedies may be limited by equitable principles of
general applicability and the discretion of the court
considering the matter, (iii) the exculpation provisions and
rights to indemnification hereunder may be limited by
federal and state securities laws and public policy
considerations, and (iv) the waiver of rights and defenses
in and other provisions of Sections 13(b), 16.11, and 16.15
hereof may be limited by applicable law.
(c) The Pledgors are the legal and beneficial owners
of the Pledged Securities and other Pledged Collateral. The
Pledgors own the Pledged Securities and other Pledged
Collateral free and clear of any Lien or claim of any person
or entity, except for the security interest granted to the
Trustee herein. No financing statement or other instrument
similar in effect covering the Pledgors' interest in the
Pledged Securities is on file in any public office, other
than any financing statement filed under this Security
Agreement.
(d) Upon the Trustee's acquisition of a Security
Entitlement in the Pledged Collateral in accordance
herewith, and the Securities Intermediary's performance of
its obligations hereunder, the security interest granted to
the Trustee herein will constitute a first priority
perfected security interest in the Pledged Collateral
(except, with respect to proceeds, only to the extent
permitted by UCC 9-306), enforceable (except insofar as
enforcement may be affected by general equitable principles
whether considered in a proceeding in equity or at law) as
such against all creditors of the Pledgors and against any
Person purporting to purchase any of the Pledged Collateral
from the Pledgors. All filings and actions necessary to
perfect and protect that security interest have been duly
taken.
(e) There are no legal or governmental proceedings
pending or, to the best of either Pledgors' knowledge,
threatened, to which the Pledgors or any of their
subsidiaries is a party or relating to any property of the
Pledgors or any subsidiary, that would materially adversely
affect the Pledgors' power or ability to perform their
obligations under this Security Agreement, the Notes, or the
Indenture.
(f) No law or governmental regulation (including,
without limitation, Regulations T, U and X of the Board of
Governors of the Federal Reserve System) applicable to the
Pledgors prohibits the grant of the security interest to the
Trustee hereunder.
(g) Waterford Gaming, L.L.C. and Waterford Gaming
Finance Corp. each maintain their chief executive offices at
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) No Event of Default (as defined herein) exists.
SECTION 8. Pledgor's Covenants. In addition to its
other agreements herein, each Pledgor covenants and agrees with
the Trustee and the Holders of the Notes that from and after the
date hereof until the Termination Date:
(a) It will, promptly upon request by the Trustee,
execute and deliver or cause to be executed and delivered,
or use its commercially reasonable efforts to procure, all
assignments, instruments and other documents, in form and
substance reasonably satisfactory to the Trustee, and take
any other action that is necessary or desirable to perfect,
continue the perfection of, or protect the first priority of
the Trustee's security interest in the Pledged Collateral,
to protect the Pledged Collateral against rights, claims, or
interests asserted by third persons (other than any such
rights, claims or interests created by the Trustee), to
enable the Trustee to enforce its rights and remedies
hereunder, and to effect the purposes of this Security
Agreement. The Pledgors will promptly pay all reasonable
costs incurred in connection with any of the foregoing.
(b) it will not (and will not purport to) (i) sell
or otherwise dispose of, or grant any option or warrant with
respect to, any of the Pledged Collateral or its beneficial
interest therein, or (ii) create or permit to exist any Lien
or other adverse interest in or with respect to its
beneficial interest in any of the Pledged Collateral (other
than the security interest granted herein); and
(c) it will not (i) enter into any agreement or
understanding that restricts or inhibits or purports to
restrict or inhibit the Trustee's rights or remedies
hereunder, including, without limitation, the Trustee's
right to dispose of the Pledged Collateral as provided
herein, or (ii) fail to pay or discharge any tax, assessment
or levy of any nature with respect to its beneficial
interest in the Pledged Collateral later than five days
before the date of any proposed sale under any judgment,
writ or warrant of attachment with respect to its beneficial
interest; and
(d) it and the other Pledgor will at all times remain
the sole beneficial owners of the Pledged Collateral
(subject to the security interest granted to the Trustee
herein).
SECTION 9. Securities Intermediary's Representations,
Warranties and Covenants. The Securities Intermediary represents
and warrants that it is, as of the date hereof, and it agrees
that for so long as it maintains the Securities Account and acts
as securities intermediary under this Security Agreement it shall
be, a "Securities Intermediary" (as defined in the UCC and in 31
C.F.R. 357.2). In furtherance of the foregoing, and in addition
to its other representations, warranties, and agreements herein,
the Securities Intermediary hereby:
(a) represents and warrants that it is a corporation
that, in the ordinary course of its business, maintains
securities accounts for others and is acting in that
capacity with respect to the Securities Account;
(b) covenants that, as Securities Intermediary
hereunder and with respect to the Securities Account, it
shall not take any action inconsistent with, and represents
and warrants that it is not and so long as this Security
Agreement remains in effect will not become party to any
agreement whose terms are inconsistent with, this Security
Agreement;
(c) agrees to treat any item of property credited to
the Securities Account as a financial asset within the
meaning of UCC 8-102(a)(9);
(d) agrees, so long as it serves as Securities
Intermediary under this Security Agreement, to maintain the
Securities Account as a securities account and maintain
appropriate books and records in respect thereof in
accordance with its usual procedures and subject to the
terms of this Security Agreement;
(e) agrees, with the other parties to this Security
Agreement, that its jurisdiction, for purposes of UCC
8-110(e) and 31 C.F.R. 357.11(b) as it pertains to this
Security Agreement, the Securities Account and Security
Entitlements relating thereto, shall be the State of New
York.
(f) agrees that it will maintain the Securities
Account, at its office at the address set forth in the Recitals
hereof, segregated from all other accounts, and will not change
the name on the account or its account number without the
Trustee's prior written consent.
SECTION 10. Power of Attorney. Upon the occurrence
and continuation of an Event of Default, in addition to all of
the powers granted to the Trustee under the Indenture, each
Pledgor hereby appoints and constitutes the Trustee its attorney-
in-fact, with full authority in its place and its name to take,
from time to time in the Trustee's discretion, any action and to
execute any instrument that the Trustee may deem necessary or
advisable to accomplish the purposes of this Security Agreement.
The Trustee's authority under this Section 10 shall include,
without limitation, the authority to endorse and negotiate any
checks or instruments representing proceeds of Pledged Collateral
in the name of the Pledgors, execute and give receipt for any
certificate of ownership or any document constituting Pledged
Collateral, transfer title to any item of Pledged Collateral,
sign the Pledgors' names on all financing statements (to the
extent permitted by applicable law) or any other documents deemed
necessary or appropriate by the Trustee to preserve, protect or
perfect the security interest in the Pledged Collateral and to
file the same, prepare, file and sign the Pledgors's name on any
notice of Lien, and to take any other actions arising from or
incident to the powers granted to the Trustee in this Security
Agreement. This power of attorney is coupled with an interest
and is irrevocable. Notwithstanding anything to the contrary
herein, the Trustee has no duty or obligation to exercise any of
the powers in this Section 10.
SECTION 11. No Assumption of Duties; Reasonable Care.
The Trustee and the Securities Intermediary undertake to perform
only those duties that are specifically set forth herein. This
Security Agreement does not, and may not be interpreted to,
impose any implied duties or obligations on either of them.
Except as provided by applicable law or by the Indenture, the
Trustee shall be deemed to have exercised reasonable care in the
custody and preservation of the Pledged Collateral if the Trustee
accords the Pledged Collateral treatment substantially similar to
that which the Trustee accords similar property held by the
Trustee for similar accounts, it being understood that the
Trustee shall not have any responsibility for (i) ascertaining or
taking action with respect to calls, conversions, exchanges,
maturities or other matters relative to any Pledged Collateral,
whether or not the Trustee has or is deemed to have knowledge of
such matters, (ii) investing or reinvesting any Pledged
Collateral, or (iii) any loss on any investment.
SECTION 12. Indemnity. Each Pledgor shall jointly and
severally indemnify, hold harmless and defend each of the Trustee
and the Securities Intermediary and their respective directors,
officers, employees, attorneys, and agents (each, an "Indemnified
Person") from and against any and all claims, actions,
obligations, liabilities and expenses, including reasonable
defense costs, reasonable investigative fees and costs and
reasonable legal fees and expenses and damages, arising from the
performance by the Trustee and the Securities Intermediary of
their respective obligations under this Security Agreement. The
Pledgors shall, upon demand by any Indemnified Person, promptly
pay or reimburse that Indemnified Person for all such expenses,
costs, fees and damages. Notwithstanding the foregoing, the
Pledgors (i) shall not be obligated to indemnify any Indemnified
Person from any claim, action, obligation, liability or expense
against or incurred by that Indemnified Person that is judicially
determined (the determination having become final) to be directly
attributable to the gross negligence or willful misconduct of
that Indemnified Person, and (ii) shall, upon that final judicial
determination, be entitled to recover from that Indemnified
Person all amounts theretofore paid hereunder.
SECTION 13. Remedies Upon Event of Default. As used
herein, "Event of Default" means (i) any Event of Default as that
term is defined in the Indenture, and (ii) any breach by either
Pledgor of its representations, warranties, covenants, or
agreements herein. If any Event of Default shall occur before
the Termination Date and be continuing:
(a) The Trustee and the Holders of the Notes shall
have, in addition to all other rights given by law, by this
Security Agreement, or by the Indenture, all of the rights
and remedies with respect to the Pledged Collateral of a
secured party under the UCC. In addition, with respect to
any Pledged Collateral that shall then be in or shall
thereafter come into the possession or custody or under the
control of the Trustee, the Trustee may, upon the direction
of a majority in aggregate principal amount of the Holders
of the Notes, sell or cause the same to be sold at any
broker's board or at public or private sale, in one or more
sales or lots, for cash or on credit or for future delivery,
without assumption of any credit risk. The purchaser of any
or all Pledged Collateral so sold shall thereafter hold the
same absolutely, free from any claim, encumbrance or right
of any kind whatsoever of, or created by or through, the
Pledgors. The Trustee shall give the Pledgors such notice
of the time and place of any public sale of the Pledged
Collateral that is feasible and reasonable under the
circumstances, except no notice of sale shall be required if
the Trustee determines, in its reasonable judgment, that (i)
an immediate sale is necessary because the Pledged
Collateral threatens to decline speedily in value or (ii)
the Pledged Collateral is or becomes of a type regularly
sold on a recognized market. To the extent permitted by
applicable law, the Pledgors agree that any sale of the
Pledged Collateral conducted in conformity with reasonable
commercial practices of banks, insurance companies,
commercial finance companies, or other financial
institutions disposing of property similar to the Pledged
Collateral shall be deemed to be commercially reasonable.
Subject to the other provisions of this Section 13(a),
notice mailed to the Pledgors as provided in Section 18.1
hereof at least 10 days before the time of the sale or
disposition shall constitute reasonable notice. The Trustee
or any Holder of Notes may, in its own name or in the name
of a designee or nominee, buy any of the Pledged Collateral
at any public sale and, if permitted by applicable law, at
any private sale. All expenses (including court costs and
reasonable attorneys' fees, expenses and disbursements) of,
or incident to, the enforcement of any of the provisions
hereof shall be recoverable from the proceeds of the sale or
other disposition of the Pledged Collateral.
(b) Each Pledgor shall use its reasonable best
efforts to do or cause to be done all such other acts as may
be necessary to make a sale of all or portion of the Pledged
Collateral under this Section 13 valid and binding and in
compliance with any applicable requirements of law. The
Pledgors agree that a breach of any of their covenants in
this Section 13 will cause irreparable injury to the Trustee
and the Holders of the Notes, that the Trustee and the
Holders of the Notes would have no adequate remedy at law in
respect of such breach and, as a consequence, that each of
their covenants in this Section 13 shall be specifically
enforceable against them. The Pledgors hereby waive and
agree not to assert any defenses against an action for
specific performance of these covenants except for a defense
that no Event of Default has occurred.
(c) The Trustee may, without notice to the Pledgors
except as required by law and at any time or from time to
time, charge, setoff and otherwise apply all or any part of
the Obligations against the Securities Account or any part
thereof.
SECTION 14. Expenses. The Pledgors shall promptly
upon demand pay to each of the Trustee and the Securities
Intermediary any and all reasonable expenses, including, without
limitation, the reasonable fees, expenses and disbursements of
counsel, experts and agents, that either the Trustee or the
Securities Intermediary may incur in connection with (a) the
review, negotiation and administration of this Security
Agreement, (b) the maintenance of the Securities Account and the
custody, preservation, or sale of, collection from, or other
realization upon, any of the Pledged Collateral, (c) the exercise
or enforcement of any of the rights of the Trustee and the
Holders of the Notes hereunder, (d) the Pledgors' failure to
perform or observe any of the provisions hereof, or (e) any claim
covered by Section 12 hereof.
SECTION 15. Security Interest Absolute. All rights of
the Trustee and the Holders of the Notes and the security
interest granted to the Trustee hereunder, and all obligations of
the Pledgors hereunder, shall be absolute and unconditional under
all circumstances, including but not limited to:
(a) any lack of validity or enforceability of the
Indenture or any other agreement or instrument relating
thereto;
(b) any change in the time, manner or place of
payment or performance of, or in any other term of, any of
the Obligations, or any other amendment or waiver of or any
consent to any departure from the Indenture;
(c) any taking, exchange, surrender, release or non-
perfection of any other collateral or any taking, release,
amendment, or waiver of any provision of any guaranty for
all or any of the Obligations;
(d) any change, restructuring or termination of the
corporate structure or existence of the Pledgors or any of
their affiliates; or
(e) to the extent permitted by applicable law, any
other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Pledgors in respect of
the Obligations or of this Security Agreement.
SECTION 16. Miscellaneous Provisions.
Section 16.1 Notices. Any notice or communication
given hereunder shall be sufficiently given if in writing and
delivered in person or mailed by first class mail, commercial
courier service or telecopier communication, addressed as
follows:
if to the Pledgors:
Waterford Gaming, L.L.C.
Waterford Gaming Finance Corp.
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:
State Street Bank and Trust Company
Xxxxxxx Square
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Corporate Trust Administration
(Waterford Gaming, L.L.C./Waterford Gaming
Financing Corp. 1999 Security and Control
Agreement)
Telecopier: (000) 000-0000
if to the Securities Intermediary:
State Street Bank and Trust Company
Xxxxxxx Square
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Corporate Trust Administration
(Waterford Gaming, L.L.C./Waterford Gaming
Financing Corp. 1999 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 such invalidity or
unenforceability shall affect in that jurisdiction only such
clause or provision, or part thereof, and shall not in any manner
affect such clause or provision in any other jurisdiction or any
other clause or provision of this Security Agreement in any
jurisdiction.
Section 16.4 Headings. The headings in this Security
Agreement are included for convenience of reference only, are not
to be considered a part hereof, and do not modify or restrict any
of the terms or provisions hereof.
Section 16.5 Counterpart Originals; Photocopies. This
Security Agreement may be signed in two or more counterparts,
each of which shall be deemed an original, but all of which shall
together constitute one and the same agreement. A photocopy or
other reproduction of this Security Agreement or any financing
statement covering the Pledged Collateral or any part thereof
shall be sufficient as a financing statement where permitted by
law.
Section 16.6 Benefits of Security Agreement. Nothing
in this Security Agreement, express or implied, shall give to any
person, other than the parties hereto, their successors
hereunder, and (subject to the provisions of the Indenture) the
Holders of the Notes, any legal or equitable right, remedy or
claim. There shall be no third-party beneficiaries of this
Security Agreement. No Holder of Notes shall have any
independent rights hereunder, other than those rights granted to
individual Holders of the Notes under the Indenture
Section 16.7 Amendments, Waivers and Consents. Any
amendment of this Security Agreement and any consent to any
departure by the Pledgors from any provision of this Security
Agreement shall be effective only if made or duly given in
compliance with all of the terms and provisions of the Indenture.
Neither the Trustee nor any Holder of Notes shall be deemed, by
any act, delay, indulgence, omission or otherwise, to have waived
any right or remedy hereunder or to have acquiesced in any
Default or Event of Default or in any breach of any of the terms
and conditions hereof. A failure to exercise, a delay in
exercising, or a waiver of any right, power or privilege
hereunder by the Trustee or any Holder of Notes shall not
preclude any subsequent exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently,
and are not exclusive of any rights or remedies provided by law.
Section 16.8 Interpretation of Agreement. Acceptance
of or acquiescence in a course of performance rendered under this
Security Agreement shall not be relevant to determine the meaning
of this Security Agreement, even though the accepting or
acquiescing party had knowledge of the nature of the performance
and opportunity for objection.
Section 16.9 Continuing Security Interest;
Termination.
(a) This Security Agreement shall create a
continuing security interest in and to the Pledged
Collateral, shall be binding upon the Pledgors, their
transferees, successors and assigns, shall inure, together with
the rights and remedies of the Trustee hereunder, to the benefit
of the Trustee, the Securities Intermediary, the Holders of the
Notes and their respective successors, transferees and assigns,
and shall remain in full force and effect until the Termination
Date. On or as soon as practicable after the Termination Date,
the Trustee shall, at the expense of the Pledgors, take any
reasonable action necessary to release the security interest
created hereby, including the execution and delivery of any
termination statement prepared and delivered to it by the
Pledgors. Any redelivery of the Pledged Collateral hereunder to
the Pledgors shall be without warranty by or recourse to the
Trustee in its capacity as such, except as to the absence of any
Liens on the Pledged Collateral created by or arising through the
Trustee, and shall be at the reasonable expense of the Pledgors.
(b) This Security Agreement shall terminate on the
day (the "Termination Date") on which all of the Pledgor's
outstanding obligations under the Notes have been paid in full.
(c) Notwithstanding the foregoing, the Pledgors'
obligations under Sections 12 and 14 shall survive this Security
Agreement's termination.
Section 16.10 Survival of Representations and
Covenants. All of the Pledgors' representations, warranties and
covenants herein shall survive execution and delivery of this
Security Agreement, and (subject to Section 16.9(c) above) shall
terminate only upon the termination of this Security Agreement.
Section 16.11 Waivers. The Pledgors waive presentment
and demand for payment of any of the Obligations, protest and
notice of dishonor or default with respect to any of the
Obligations, and all other notices to which the Pledgors might
otherwise be entitled, except as otherwise expressly provided
herein or in the Indenture.
Section 16.12 Authority of the Trustee and Securities
Intermediary.
(a) Each of the Trustee and Securities Intermediary
may exercise all rights and powers granted hereunder, together
with any powers reasonably incident hereto. The Trustee and the
Securities Intermediary may perform any of their respective
duties hereunder or in connection with the Pledged Collateral by
or through agents or employees and shall be entitled to retain
counsel and to act in reliance upon the advice of counsel
concerning their rights, powers and duties hereunder. The
Trustee and the Securities Intermediary shall not be responsible
for the validity, effectiveness or sufficiency hereof or of any
document or security furnished in accordance herewith. The
Trustee, the Securities Intermediary and their respective
directors, officers, employees, attorneys and agents may
conclusively rely on any communication, instrument or document
reasonably believed by them to be genuine and correct and to have
been signed or sent by the proper person or persons.
(b) The Pledgors acknowledge that, as between the
Pledgors and the Trustee, with respect to any action or inaction
by the Trustee in connection with the performance of its duties
hereunder, the Trustee shall be conclusively presumed to be
acting as agent for the Holders of the Notes with full and valid
authority so to act or refrain from acting, and the Pledgors may
not make any inquiry respecting such authority.
(c) No provision of this Security Agreement shall
require either the Trustee or the Securities Intermediary to
expend or risk its own funds or otherwise incur any financial
liability in the performance of its duties or the exercise of any
of its rights and powers hereunder.
Section 16.13 Removal or Resignation of the Securities
Intermediary. The Securities Intermediary may resign by notice
to, or be removed by notice from, the Trustee at any time, except
that in either case the Securities Intermediary's duties
hereunder shall not terminate until the Trustee has appointed a
successor Securities Intermediary, who has accepted the
appointment (by delivery of an agreement substantially in the
form hereof), and until all assets held by the retiring
Securities Intermediary have been transferred to the successor
Securities Intermediary in accordance with the Trustee's
instruction.
Section 16.14 Final Expression. This Security
Agreement, together with the Indenture and any other agreement
executed in connection herewith, is intended by the parties as a
final expression of this Security Agreement and is intended as a
complete and exclusive statement of the terms and conditions
thereof, subject to any amendment duly made in accordance
herewith.
Section 16.15 CHOICE OF LAW; SUBMISSION TO
JURISDICTION; WAIVER OF JURY TRIAL; WAIVER OF DAMAGES.
(a) THIS SECURITY AGREEMENT, THE SECURITIES ACCOUNT,
AND THE SECURITIES ENTITLEMENTS RELATED THERETO SHALL BE GOVERNED
BY THE LAW OF THE STATE OF NEW YORK INCLUDING, WITHOUT
LIMITATION, SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS
LAW. ANY DISPUTE ARISING FROM, RELATED TO, OR IN CONNECTION WITH
ANY OF THE FOREGOING, OR THE RELATIONSHIP AMONG OR THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO, SHALL LIKEWISE BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK. REGARDLESS OF ANY PROVISION OF
ANY OTHER AGREEMENT, FOR PURPOSES OF THE UCC, NEW YORK SHALL BE
DEEMED TO BE THE SECURITIES INTERMEDIARY'S JURISDICTION.
(b) THE PLEDGORS AGREE THAT THE TRUSTEE MAY, IN ITS
CAPACITY AS TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY HOLDER OF
NOTES, PROCEED AGAINST THE PLEDGORS (OR EITHER OF THEM) OR THE
PLEDGED COLLATERAL IN ANY COURT HAVING PERSONAL OR IN REM
JURISDICTION OVER THE PLEDGORS OR THE PLEDGED COLLATERAL, AS THE
CASE MAY BE, TO ENABLE THE TRUSTEE TO ASSERT A CLAIM OR EXERCISE
ITS RIGHTS AND REMEDIES UNDER THIS SECURITY AGREEMENT. EACH
PLEDGOR AGREES THAT IT WILL NOT ASSERT ANY COUNTERCLAIM, SETOFF,
OR CROSSCLAIM AGAINST THE TRUSTEE IN ANY PROCEEDING BROUGHT BY
THE TRUSTEE UNDER THIS SECURITY AGREEMENT OR THE INDENTURE OTHER
THAN A COUNTERCLAIM, SETOFF, OR CROSSCLAIM THAT, IF NOT ASSERTED
IN THAT PROCEEDING, COULD NOT OTHERWISE BE BROUGHT OR ASSERTED.
THE PLEDGORS WAIVE ANY OBJECTION BASED ON THE GROUNDS OF IMPROPER
VENUE OR FORUM NON CONVENIENS TO THE TRUSTEE'S COMMENCEMENT AND
PROSECUTION OF SUCH A PROCEEDING IN ANY COURT IN THE CITY OF NEW
YORK.
(c) EACH PLEDGOR AGREES THAT NEITHER ANY HOLDER OF
NOTES, THE TRUSTEE, THE SECURITIES INTERMEDIARY, OR ANY OTHER
INDEMNIFIED PERSON SHALL BE LIABLE TO EITHER PLEDGOR FOR LOSSES
ARISING FROM, RELATING TO, OR IN CONNECTION WITH THIS SECURITY
AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY, OR THE DUTIES
IMPOSED HEREUNDER, UNLESS A COURT DETERMINES (SUCH DETERMINATION
HAVING BECOME FINAL) THAT THE LOSSES RESULTED FROM THE BAD FAITH,
GROSS NEGLIGENCE, OR WILLFUL MISCONDUCT OF THE HOLDER OF NOTES,
THE TRUSTEE, THE SECURITIES INTERMEDIARY, OR ANY INDEMNIFIED
PERSON (AS THE CASE MAY BE).
(d) TO THE EXTENT PERMITTED BY LAW, THE PLEDGORS
WAIVE THE POSTING OF ANY BOND OTHERWISE REQUIRED OF THE TRUSTEE
OR ANY HOLDER OF NOTES IN CONNECTION WITH ANY JUDICIAL PROCEEDING
TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER, ENTERED AGAINST THE
PLEDGORS (OR EITHER OF THEM) RELATING TO THIS SECURITY AGREEMENT
OR ANY RELATED AGREEMENT OR DOCUMENT OR TO ENFORCE BY SPECIFIC
PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR
PERMANENT INJUNCTION, THIS SECURITY AGREEMENT OR ANY RELATED
AGREEMENT OR DOCUMENT AGAINST THE PLEDGORS.
IN WITNESS WHEREOF, the Pledgors, the Trustee and the
Securities Intermediary have each caused this Security Agreement
to be duly executed and delivered as of the date first above
written.
Pledgors:
WATERFORD GAMING, L.L.C.
By: ____________________________
Name:
Title:
WATERFORD GAMING FINANCE CORP.
By: ____________________________
Name:
Title:
Trustee:
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:_____________________________
Xxxxxx X. Xxxx
Vice President
Securities Intermediary:
STATE STREET BANK AND TRUST COMPANY,
as Securities Intermediary
By:_____________________________
Xxxxxx X. Xxxx
Vice President
EXHIBIT A
CERTIFICATE
In accordance with Section 3(e) of the Security
Agreement, dated as of March 17, 1999 (the "Security Agreement"),
by and among Waterford Gaming L.L.C. and Waterford Gaming Finance
Corp. (collectively, the "Pledgors"), State Street Bank and Trust
Company, as indenture trustee (the "Trustee") for the holders of
the Pledgors' 9-1/2% Senior Notes due 2010 (the "Notes"), and State
Street Bank and Trust Company, as securities intermediary (the
"Securities Intermediary"), the undersigned officers of the
Trustee and the Securities Intermediary, on behalf of the Trustee
and the Securities Intermediary respectively, hereby make the
following certifications to the Pledgors and the initial
purchasers of the Notes. Capitalized terms used and not defined
in this certificate have the meanings given them in the Security
Agreement or in the documents referenced therein.
1. Substantially contemporaneously with the execution
and delivery of this Certificate, the Trustee has established and
will maintain the Securities Account with the Securities
Intermediary. The Securities Intermediary has received
$11,875,000 from the net proceeds from the sale of the Notes and
has used those funds to purchase Pledged Securities (or intends
to do so as soon as practicable). The Securities Intermediary
has made or will (upon purchase of the Pledged Securities) make
appropriate book entries in its records establishing that the
Pledged Securities and the Trustee's Securities Entitlement
thereto have been credited to and are held in the Securities
Account.
2. The Trustee has established and maintained and
will maintain the Securities Account, all Securities Entitlements
thereto, and all rights with respect to the Pledged Collateral
solely in its capacity as Trustee and has not asserted and will
not assert any claim to or interest in the Pledged Collateral
except in that capacity.
3. The Trustee and the Securities Intermediary have
acquired their Security Entitlements to the Pledged Securities
for value and without notice of any adverse claim thereto.
Without limiting the generality of the foregoing, neither the
Pledged Securities nor the Security Entitlements thereto of the
Securities Intermediary and the Trustee are, to their knowledge,
subject to any Lien granted by either of them in favor of any
securities intermediary or any other Person.
4. Each signatory represents and warrants that he or
she is duly authorized to execute this certificate.
IN WITNESS WHEREOF, the undersigned officers have
executed this Certificate on behalf of the Trustee and the
Securities Intermediary, respectively, this 17th day of March
1999.
STATE STREET BANK AND TRUST COMPANY,
As Trustee
By:___________________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
As Securities Intermediary
By:___________________________________
Name:
Title:
EXHIBIT B
REQUEST FOR A CASH DISBURSEMENT
[Letterhead of Waterford Gaming, L.L.C.]
[date]
State Street Bank and Trust Company, Trustee
Xxxxxxx Square
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Corporate Trust Administration
Ladies and Gentlemen:
The undersigned refers to the Security and Control
Agreement, dated March 17, 1999 (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 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 Dividend, to occur on ________ __,
____. The undersigned hereby certifies that all
conditions precedent to the making of a Permitted
Dividend have been satisfied. A copy of the
accountants' letter confirming that this Permitted
Dividend 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 ____________, ____,
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
have been discharged.
Very truly yours,
WATERFORD GAMING, L.L.C.
By:
________________________________
Name:
Title:
