Exhibit 10.3
ESCROW AND DISBURSEMENT AGREEMENT
This ESCROW AND DISBURSEMENT AGREEMENT (this "Agreement"), dated as of
July 8, 1998, among United States Trust Company of New York, as trustee under
the Indenture, as defined below (in such capacity, the "Trustee"), United States
Trust Company of New York, as escrow agent (in such capacity, the "Escrow
Agent"), Epic Resorts, LLC, a Delaware limited liability company (the
"Company"), and Epic Capital Corp. ("Capital Corp." and, together with the
Company, the "Note Issuers").
RECITALS
A. Pursuant to the Indenture, dated as of July 8, 1998 (the
"Indenture"), among the Note Issuers, the Subsidiary Guarantors party thereto
and the Trustee, the Note Issuers are issuing $130,000,000 aggregate principal
amount of their 13% Senior Secured Notes due 2005 (the "Notes").
B. As security for their obligations under the Notes and the
Indenture, the Note Issuers hereby grant to the Trustee, for the benefit of the
Trustee and the holders of the Notes, a security interest in and lien upon,
subject to and pending disbursement pursuant to this Agreement, the Collateral
(as defined herein).
C. The parties have entered into this Agreement in order to set
forth the conditions upon which, and the manner in which, funds will be
disbursed from the Escrow Account (as defined herein) and released from the
security interest and lien described above.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINED TERMS. In addition to any other defined terms used
herein, the following terms shall constitute defined terms for purposes of this
Agreement and shall have the meanings set forth below:
APPLIED means that disbursed funds have been applied (i) to the
payment of interest on the Notes, (ii) to the payment of principal of and
premium, if any, on the Notes, upon a repurchase or redemption thereof in
accordance with Section 3.07, Section 3.08 or Section 4.14 of the Indenture, or
(iii) to any combination of the foregoing.
AVAILABLE FUNDS means (A) the sum of (i) the Initial Escrow Amount and
(ii) interest earned or dividends paid on the funds and investments in the
Escrow Account (including holdings of Cash Equivalents), less (B) the aggregate
disbursements previously made pursuant to this Agreement.
CASH EQUIVALENTS means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof, (iii) demand deposits
(including without limitation, interest bearing deposit accounts), certificates
of deposit, time deposits and Eurodollar time deposits with maturities of one
year or less from the date of acquisition, bankers' acceptances with maturities
not exceeding one year and overnight bank deposits, in each case with any
commercial bank having capital and surplus in excess of $500 million, (iv)
repurchase obligations for underlying securities of the types described in
clauses (ii) and (iii) entered into with any financial institution meeting the
qualifications specified in clause (iii) above, (v) commercial paper rated A-1
or the equivalent thereof by Moody's or S&P and in each case maturing within one
year after the date of acquisition, (vi) investment funds investing 95% of their
assets in securities of the types described in clauses (i)-(v) above, (vii)
readily marketable direct obligations issued by any state of the United States
of America or any political subdivision thereof having one of the two highest
rating categories obtainable from either Moody's or S&P and (viii) indebtedness
or preferred stock issued by persons with a rating of A or higher from S&P or A2
or higher from Moody's
COLLATERAL shall have the meaning given in Section 6(a) hereof.
CONTROL has the meaning given in Section 8-106 of the UCC.
ESCROW ACCOUNT shall mean a securities account as defined in Section
8-501 of the UCC established pursuant to Section 2 hereof.
ESCROW ACCOUNT STATEMENT shall have the meaning given in Section 2(g)
hereof.
INITIAL ESCROW AMOUNT shall mean $16,900,000 of the net proceeds from
offering of the Notes.
INTEREST PAYMENT DATE means December 15, 1998.
ISSUE DATE means July 8, 1998.
MOODY'S means Xxxxx'x Investors Service, Inc. or its successors.
OFFICER'S CERTIFICATE means a certificate signed by the President and
by the Chief Financial Officer of the Company.
PAYMENT NOTICE AND DISBURSEMENT REQUEST means a notice sent by the
Trustee to the Escrow Agent notifying the Escrow Agent of the Interest Payment
Date or other payment date in respect of the Notes and requesting a disbursement
of funds from the Escrow Account, in substantially the form of Exhibit A hereto.
Each Payment Notice and Disbursement Request shall be signed by an authorized
signatory of the Trustee designated in a certificate of the Trustee setting
forth specimen signatures of authorized signatories delivered to the Escrow
Agent.
SECURITIES ENTITLEMENTS has the meaning given it in Section 8-102 of
the UCC.
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S&P means Standard and Poor's Ratings Services or its successors.
UCC means the Uniform Commercial Code in effect in the State of New
York on the date hereof.
2. ESCROW ACCOUNT; ESCROW AGENT.
(a) APPOINTMENT OF ESCROW AGENT. The Note Issuers and the Trustee
hereby appoint the Escrow Agent, and the Escrow Agent hereby accepts
appointment, as escrow agent, under the terms and conditions of this Agreement.
(b) ESTABLISHMENT OF ESCROW ACCOUNT. Concurrently with the execution
and delivery hereof, the Escrow Agent shall establish the Escrow Account in the
name of UNITED STATES TRUST COMPANY OF NEW YORK, IN ITS CAPACITY AS ESCROW AGENT
FOR THE BENEFIT OF THE TRUSTEE AND THE HOLDERS OF THE 13% SENIOR SECURED NOTES
DUE 2005 ISSUED BY EPIC RESORTS, LLC AND EPIC CAPITAL CORP. Subject to Section
3, Section 5 and the other terms and conditions of this Agreement, all funds
accepted by the Escrow Agent pursuant to this Agreement shall be held for the
Trustee for the benefit of the Trustee and the holders of the Notes. The Note
Issuers and the Trustee direct, and the Escrow Agent agrees that, all such funds
and Cash Equivalents shall be held in the Escrow Account until disbursed in
accordance with the terms hereof. The Escrow Account, and the funds and Cash
Equivalents held therein, shall be under the Control of the Trustee for the
benefit of the Trustee and the holders of the Notes. Concurrently with the
execution and delivery hereof, the Note Issuers shall deliver, or shall
authorize the Initial Purchaser (as defined in the Indenture) to deliver, the
Initial Escrow Amount to the Escrow Agent for deposit into the Escrow Account.
(c) MAINTENANCE OF MINIMUM BALANCE IN ESCROW ACCOUNT. At all times
subsequent to the Interest Payment Date, and until the date of maturity,
redemption or defeasance of the Notes, the Note Issuers shall maintain in the
Escrow Account funds sufficient to make the next required interest payment on
the Notes (the "Minimum Balance"). The Minimum Balance shall be $8,450,000
unless the Note Issuers certify in an Officer's Certificate that such next
interest payment is a lesser amount. Failure to maintain the Minimum Balance,
which failure shall continue for 60 days following written notice of such
failure by the Trustee, shall constitute an Event of Default under the
Indenture.
(d) ESCROW AGENT COMPENSATION. The Note Issuers shall pay to the
Escrow Agent such compensation for services to be performed by it under this
Agreement as the Note Issuers and the Escrow Agent may agree in writing from
time to time. In the event that the Note Issuers shall fail to pay to the
Escrow Agent such compensation, and such failure shall continue for 30 days
after notice thereof, the Escrow Agent shall be entitled to disburse from the
Escrow Account at such time all such amounts due to the Escrow Agent (including
the reasonable expenses described in the next succeeding paragraph).
The Note Issuers shall reimburse the Escrow Agent upon request for all
reasonable expenses, disbursements, and advances incurred or made by the Escrow
Agent in
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implementing any of the provisions of this Agreement, including compensation
and the reasonable expenses and disbursements of its counsel, except any such
expense, disbursement, or advance as may arise from its gross negligence or
willful misconduct.
(e) INVESTMENT OF FUNDS IN ESCROW ACCOUNT. Funds deposited in the
Escrow Account shall be invested and reinvested upon the following terms and
conditions:
(i) PERMITTED INVESTMENTS. Funds deposited or held in the
Escrow Account shall be initially invested by the Escrow Agent in cash
items (including, without limitation, interest bearing deposit accounts)
and Cash Equivalents in accordance with the Note Issuers' written
instructions to the Escrow Agent. Thereafter, the Escrow Agent shall
invest all funds (including proceeds of any such investments at maturity
and interest earned and dividends paid on any such investments) in the
Escrow Account in Cash Equivalents designated by the Note Issuers in
writing from time to time; provided, however, that the Note Issuers shall
only designate investment of funds in Cash Equivalents maturing in an
amount sufficient to, and/or generating interest income sufficient to, when
added to the balance of funds held in the Escrow Account; PROVIDED,
FURTHER, HOWEVER, that any such written instruction shall specify the
particular investment to be made, shall state that such investment is
authorized to be made hereby, shall contain the certification referred to
in Section 2(e)(ii), if required, and shall be executed by an Officer of
each Note Issuer. The Escrow Agent shall not be liable for losses on any
investments made by it pursuant to and in compliance with this Section. In
the absence of qualifying instructions form the Note Issuers that meet the
requirements of this Section 2(e), the Escrow Agent shall have no
obligation to invest funds held in the Escrow Account.
(ii) SECURITY INTEREST IN INVESTMENTS. No investment of
funds in the Escrow Account shall be made unless the Note Issuers have
certified to the Escrow Agent and the Trustee that, upon such investment,
the Trustee will have a first priority perfected security interest in the
applicable investment. A certificate as to a class of investments need not
be issued with respect to individual investments in securities in that
class if the certificate applicable to the class remains accurate with
respect to such individual investments, which continued accuracy the Escrow
Agent may conclusively assume. On the date hereof, and within ten days of
each anniversary of the Issue Date thereafter until the date upon which the
balance of the Available Funds shall have been reduced to zero and the
termination of this Agreement, each of the Trustee and the Escrow Agent
shall receive an Opinion of Counsel (as such term is defined in the
Indenture) to the Note Issuers, dated the date hereof or thereof, as the
case may be, to the effect that the Escrow Agreement creates a valid and
enforceable security interest in the Collateral in favor of the Trustee for
the benefit of the holders of the Notes and such opinion shall meet the
requirements of Section 314(b) of the Trust Indenture Act of 1939, as
amended (the TIA).
(iii) INTEREST AND DIVIDENDS. All interest earned and
dividends paid on funds invested in Cash Equivalents shall be deposited in
the Escrow Account as additional Collateral in favor of the Trustee for the
benefit of the holders of the Notes (subject to Section 3 and Section 5)
and, if not required to be disbursed in accordance
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with the terms hereof, shall be reinvested in accordance with the terms
hereof at the Note Issuers' written instruction.
(iv) LIMITATION ON ESCROW AGENT'S RESPONSIBILITIES. The
Escrow Agent's sole responsibilities under this Section 2 shall be (a) to
follow the Note Issuers' written instructions given in accordance with
Section 2(d)(i) hereof, (B) to invest and reinvest funds pursuant to this
Section 2(d) and (C) to use reasonable efforts to reduce to cash such Cash
Equivalents as may be required to fund any disbursement in accordance with
Section 3 hereof. Except as provided in Section 6, the Escrow Agent shall
have no other responsibilities with respect to performing or maintaining
the perfection of the Trustee's security interest in the Collateral and
shall not be required to file any instrument, document or notice in any
public office at any time or times. In connection with clause (C) above
and subject to the following sentence, the Escrow Agent shall not be
required to reduce to cash any Cash Equivalents to fund any disbursement or
payment in accordance with Section 3 in the absence of written instructions
signed by an Officer of each Note Issuer specifying the particular
investment to liquidate. If no such written instructions are received, the
Escrow Agent may liquidate those Cash Equivalents having the lowest
interest rate per annum or if none such exist, those having the nearest
maturity.
(f) SUBSTITUTION OF ESCROW AGENT. The Escrow Agent may resign by
giving not less than 30 days prior written notice to the Note Issuers and the
Trustee. Such resignation shall take effect upon the later to occur of (i)
delivery of all funds and Cash Equivalents maintained by the Escrow Agent
hereunder and copies of all books, records, plans and other documents in the
Escrow Agent's possession relating to such funds or Cash Equivalents or this
(which approvals shall not be unreasonably withheld or delayed) and (ii) the
date the Note Issuers, the Trustee and such successor escrow agent enter into
this Agreement or any written successor agreement; and the Escrow Agent shall
thereupon be discharged of all obligations under this Agreement and shall have
no further duties, obligations or responsibilities in connection herewith. If a
successor escrow agent has not been appointed or has not accepted such
appointment within 30 days after notice of resignation is given to the Note
Issuers, the Escrow Agent may apply to a court of competent jurisdiction for the
appointment of a successor escrow agent.
(g) ESCROW ACCOUNT STATEMENT. Each month, the Escrow Agent shall
deliver to the Note Issuers and the Trustee a statement signed by the Escrow
Agent in a form reasonably satisfactory to the Note Issuers and the Trustee
setting forth with reasonable particularity the balance of funds then in the
Escrow Account and the manner in which such funds are invested (an "Escrow
Account Statement"). The parties hereto irrevocably instruct the Escrow Agent
that on the first date upon which the balance in the Escrow Account (including
the holdings of all Cash Equivalents) is reduced to zero, the Escrow Agent shall
deliver to the Note Issuers and to the Trustee a notice that the balance in the
Escrow Account has been reduced to zero.
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3. DISBURSEMENTS.
(a) PAYMENT NOTICE AND DISBURSEMENT REQUEST DISBURSEMENTS. The
Trustee shall, not less than five (5) Business Days (as defined in the
Indenture) prior to the Interest Payment Date or to a date of redemption or
purchase pursuant to Section 3.07, Section 3.08 or Section 4.14 of the Indenture
in respect of the Notes, submit to the Escrow Agent a completed Payment Notice
and Disbursement Request substantially in the form of Exhibit A hereto.
The Escrow Agent's disbursement pursuant to any Payment Notice and
Disbursement Request shall be subject to the satisfaction of the applicable
conditions set forth in Section 3(b) hereof. Provided such Payment Notice and
Disbursement Request is not rejected by it, the Escrow Agent as soon as
reasonably practicable on the Interest Payment Date shall disburse the funds
requested in such Payment Notice and Disbursement Request by wire or book-entry
transfer of immediately available funds to the account of the Trustee for the
benefit of the Trustee and the holders of the Notes. The Escrow Agent shall
notify the Trustee as soon as reasonably possible (but not later than two (2)
Business Days from the date of receipt of the Payment Notice and Disbursement
Request) if any Payment Notice and Disbursement Request is rejected and the
reasons therefor. In the event such rejection is based upon nonsatisfaction of
the condition in Section 3(b)(A) below, the Trustee shall thereupon resubmit the
Payment Notice and Disbursement Request with appropriate changes.
(b) CONDITIONS PRECEDENT TO DISBURSEMENT. The Escrow Agent's payment
of any disbursement shall be made only if: (A) the Trustee shall have submitted,
in accordance with the provisions of Section 3(a) herein, a completed Payment
Notice and Disbursement Request to the Escrow Agent substantially in the form of
Exhibit A with blanks appropriate filled in and (B) the Escrow Agent shall not
have received any notice from the Trustee that as a result of an Event of
Default (as defined in the Indenture) the indebtedness represented by the Notes
has been accelerated and has become due and payable (in which event the Escrow
Agent shall apply all Available Funds as required by Section 6(c)(iii) hereof).
(c) DISTRIBUTION OF AMOUNTS IN EXCESS OF MINIMUM BALANCE. Subsequent
to the Interest Payment Date, and so long as no Event of Default (as defined in
the Indenture) has occurred and is continuing, the Escrow Agent shall upon
receipt of an Officer's Certificate of the type referenced in Section 2(c) and
the written request of the Company, disburse funds in the Escrow Account in
excess of the Minimum Balance to or on the order of the Company.
4. ESCROW AGENT; LIMITATION OF THE ESCROW AGENT'S LIABILITY;
RESPONSIBILITIES OF THE ESCROW AGENT. The Escrow Agent's responsibility and
liability under this Agreement shall be limited as follows: (i) the Escrow
Agent does not represent, warrant or guaranty to the holders of the Notes or the
Trustee from time to time as a consequence of performance or non-performance by
the Escrow Agent hereunder, except for any gross negligence or willful
misconduct of the Escrow Agent; (iii) the Note Issuers shall remain solely
responsible for all aspects of the Note Issuers' business and conduct; and (iv)
the Escrow Agent is not obligated to supervise, inspect, or inform the Note
Issuers or any third party of any matter referred to above.
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No implied covenants or obligations shall be inferred from this
Agreement against the Escrow Agent, nor shall the Escrow Agent be bound by
provisions of any agreement beyond the specific terms hereof. Specifically and
without limiting the foregoing, the Escrow Agent shall in no event have any
liability in connection with its investment, reinvestment or liquidation, in
good faith and in accordance with the directions of the Note Issuers and the
terms hereof, of any funds or Cash Equivalents held by it hereunder, including
without limitation, any liability for any delay not resulting from gross
negligence or willful misconduct in such investment, reinvestment or
liquidation, or for any loss of principal or income incident to any such delay.
The Escrow Agent shall be entitled to rely upon any judicial order or
judgment, upon any written opinion of counsel or upon any certification,
instruction, notice, or other writing delivered to it by the Note Issuers or the
Trustee in compliance with the provisions of this Agreement without being
required to determine the authenticity or the correctness of any fact stated
therein or the propriety or validity of service thereof. The Escrow Agent may
act in reliance upon any instrument comporting with the provisions of this
Agreement or signature believed by it to be genuine and may assume that any
person purporting to give notice or receipt or advice or make any statement or
execute any document in connection with the provisions hereof has been duly
authorized to do so.
At any time the Escrow Agent may request in writing an instruction in
writing from the Note Issuers, and may at its own option include in such request
the course of action it proposes to take and the date on which it proposes to
act, regarding any matter arising in connection with its duties and obligations
hereunder; PROVIDED, HOWEVER, that the Escrow Agent shall state in such request
that it believes in good faith that such proposed course of action is consistent
with another identified provision of this Agreement. The Escrow Agent shall not
be liable to the Note Issuers for acting without the Note Issuers' consent in
accordance with such a proposal on or after the date specified therein if (i)
the specified date is at least two (2) Business Days after the Note Issuers
receive the Escrow Agent's request for instructions and its proposed course of
action, and (ii) prior to so acting, the Escrow Agent has not received the
written instructions requested from the Note Issuers.
The Escrow Agent may act pursuant to the written advice of counsel
chosen by it with respect to any matter relating to this Agreement and (subject
to clause (ii) of the first paragraph of this Section) shall not be liable for
any action taken or omitted in accordance with such advice.
The Escrow Agent shall not be called upon to advise any person as to
selling or retaining, or taking or refraining from taking any action with
respect to, any securities or other property deposited hereunder.
In the event of any ambiguity in the provisions of this Agreement with
respect to any funds or property deposited hereunder, the Escrow Agent shall be
entitled to refuse to comply with any and all claims, demands or instructions
with respect to such property or funds, and the Escrow Agent shall not be or
become liable for its failure or refusal to comply with conflicting claims,
demands or instructions. The Escrow Agent shall be entitled to refuse to act
until either any conflicting or adverse claims or demands shall have been
finally determined by a
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court of competent jurisdiction or settled by agreement between the
conflicting claimants as evidence in a writing, satisfactory to the Escrow
Agent, or the Escrow Agent shall have received security or an indemnity
satisfactory to the escrow Agent sufficient to save the Escrow Agent harmless
from and against any and all loss, liability or expense which the Escrow
Agent may incur by reason of its acting. The Escrow Agent may in addition
elect in its sole option to commence an interpleader action or seek other
Judicial relief or orders as the Escrow Agent may deem necessary.
No provision of this Agreement shall require the Escrow Agent to expend or risk
its own funds or otherwise incur any financial liability in the performance of
any of its duties hereunder.
5. INDEMNITY. The Note Issuers shall, jointly and severally,
indemnify, hold harmless and defend the Escrow Agent and its directors,
officers, agents, employees and controlling persons, 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 arising from the Escrow Agent's performance or non-performance, or in
connection with its acceptance or appointment as Escrow Agent, under this
agreement, except to the extent that such liability, expense or claim is
directly attributable to the gross negligence or willful misconduct of any of
the foregoing persons. In connection with any claim, action, obligation,
liability or expense for which indemnification is sought by the Escrow Agent
hereunder, the Escrow Agent shall be entitled to recover its costs from the Note
Issuers and from funds available in the Escrow Account as provided in Section
2(d). The provisions of this Section shall survive any termination,
satisfaction or discharge of this Agreement as well as the resignation or
removal of the Escrow Agent.
6. GRANT OF SECURITY INTEREST: INSTRUCTIONS TO ESCROW AGENT. (a)
The Note Issuers hereby irrevocably grant a first priority security interest in
and lien on, and pledges, assigns and sets over to the Trustee for the benefit
of the Trustee and the holders of the Notes, all of the Note Issuers' right,
title and interest in the Escrow Account and all property now or hereafter
placed or deposited in, or delivered to the Escrow Agent for placement or
deposit in, the Escrow Account, including without limitation, all funds held and
Cash Equivalents held therein, all Securities Entitlements arising with respect
thereto, as well as all rights of the Note Issuers under this Agreement, and all
proceeds of any and all of the foregoing collateral (collectively, the
"Collateral"), in order to secure all obligations and indebtedness of the Note
Issuers under the Notes and any other obligation, now or hereafter arising, of
every kind and nature, owed by the Note Issuers under the Indenture to the
holders of the Notes or to the Trustee. The Note Issuers shall take all actions
necessary on its part to insure the continuance of a first priority security
interest in the Collateral in favor of the Trustee for the benefit of the
Trustee and holders of the Notes in order to secure all such obligations and
indebtedness.
(b) The Note Issuers irrevocably instruct the Escrow Agent to comply
with any and all instructions, directions or entitlement orders originated by
the Trustee regarding the disposition of the Escrow Account, all Cash
Equivalents now or hereafter deposited therein, and all Securities Entitlements
arising with respect thereto, without further consent by the Note Issuers,
PROVIDED that the Escrow Agent may comply with directions of the Note Issuers on
investment of cash and Cash Equivalents as provided in Section 2(d). The Escrow
Agent and the
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Note Issuers agree to treat any and all cash, securities and other property
held in or credited to the Escrow Account from time to time as financial
assets under Article 8 of the UCC. The Note Issuers hereby direct the Escrow
Agent, and the Escrow Agent hereby agrees, to permit the Trustee to exercise
the rights that comprise the financial assets (as defined in Article 8 of the
UCC) credited to the Escrow Account from time to time. The Note Issuers and
the Escrow Agent agree that no person other than the Trustee has Control of
the Escrow Account, the Cash Equivalents now or hereafter deposited therein
and the Securities Entitlements arising with respect thereto, and further
covenant and agree not to grant Control over any such Collateral to any other
person until this Agreement is terminated. The Escrow Agent hereby
acknowledges and agrees that it will hereafter follow the instructions of the
Trustee with regard to the Escrow Account and the Cash Equivalents now or
hereafter deposited therein; it being acknowledged that notwithstanding the
grant of Control to the Trustee, the Note Issuers may direct the Escrow Agent
to make investments in accordance with Section 2(d) hereof.
(c) The Note Issuers and the Trustee hereby irrevocably instruct the
Escrow Agent to, and the Escrow Agent will, (i)(A) maintain sole dominion and
control over funds in the Escrow Account for the benefit of the Trustee to the
extent specifically required herein, (B) maintain, or cause its agent within the
State of New York to maintain, possession of all certificated Cash Equivalents
purchased hereunder that are physically possessed by the Escrow Agent in order
for the Trustee to enjoy a continuous perfected first priority securing interest
therein under the law of the State of New York (the Note Issuers hereby agreeing
that in the event any certificated Cash Equivalents are in the possession of the
Note Issuers or a third party, the Note Issuers shall use their best efforts to
deliver all such certificates to the Escrow Agent), (C)(i) maintain the
Collateral free and clear of all liens, security interests, safekeeping or other
charges, demands and claims against the Escrow Agent of any nature now or
hereafter existing in favor of anyone other than the Trustee or holders of the
Notes; (ii) promptly notify the Trustee if the Escrow Agent receives written
notice that any person other than the Trustee or holders of the Notes has a lien
or security interest upon any portion of the Collateral (other than any claim
which Escrow Agent may have against the Escrow Account for unpaid fees and
expenses) and (iii) in addition to disbursing amounts held in escrow pursuant to
any Payment Notice and Disbursement Requests given to it by the Trustee pursuant
to Section 3, upon receipt of written notice from the Trustee of the
acceleration of the maturity of the Notes or the failure by the Note Issuers to
pay principal on the Notes, and direction from the Trustee to disburse all
Available Funds to the Trustee, as promptly as practicable, after following the
procedures set forth in Section 3, disburse all funds held in the Escrow Account
to the Trustee and transfer title to all Cash Equivalents held by the Escrow
Agent hereunder to the Trustee. The lien and security interest provided for by
this Section 6 shall automatically terminate and cease as to, and shall not
extend or apply to, and the Trustee shall have no security interest in, any
funds disbursed by the Escrow Agent to the Note Issuers pursuant to this
Agreement to the extent not inconsistent with the terms hereof. The Escrow
Agent shall act solely as the Trustee's agent in connection with the duties
under this Section 6, notwithstanding any other provision contained int his
Agreement, without any right to receive compensation from the Trustee and
without any authority to obligate the Trustee or to compromise or pledge its
security interest hereunder.
(d) Any money and Cash Equivalents collected by the Trustee pursuant
to Section 6(c)(iii) shall be applied as provided in the Indenture.
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(e) Upon demand, the Note Issuers will execute and deliver to the
Trustee such instruments and documents as the Trustee may reasonably deem
necessary or advisable to confirm or perfect the rights of the Trustee under
this Agreement and the Trustee's interest in the Collateral. The Trustee will
take all necessary action to preserve and protect the security interest created
hereby as a lien and encumbrance upon the Collateral.
(f) The Note Issuers hereby appoint the Trustee as its
attorney-in-fact with full power of substitution to do any act which the Note
Issuers are obligated herein to do, and the Trustee may exercise such rights
as the Note Issuers might exercise with respect to the Collateral and to take
any action int he Note Issuers' name to protect the Trustee's security
hereunder.
7. TERMINATION. This Agreement shall terminate automatically ten
(10) days following disbursements of all funds remaining in the Escrow Account
(including Cash Equivalents), unless sooner terminated by agreement of the
parties hereto (in accordance with the terms hereof and not in violation of the
Indenture); PROVIDED, HOWEVER, that the obligations of the Note Issuers under
Section 5 (and any existing claims thereunder) shall survive termination of this
Agreement or the resignation of the Escrow Agent; and PROVIDED FURTHER, that
until such tenth day, the Note Issuers will cause this Agreement or any
permitted successor agreement) to remain in effect and will cause there to be an
escrow agent (including any permitted successor thereto) acting hereunder (or
under any such permitted successor agreement). In addition to the rights
provided under Section 6(c)(iii) hereof, upon an Event of Default and for so
long as such Event of Default continues, the Trustee may exercise in respect of
the Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party under
the UCC or other applicable law, and the Trustee may also upon obtaining
possession of the Collateral as set forth herein, without notice to the Note
Issuers except as specified below, sell the Collateral or any part thereof in
one or more parcels at public or private sale, at any exchange, broker's board
or at any of the Trustee's offices or elsewhere, for cash, on credit or for
future delivery, and upon such other terms as the Trustee may deem commercially
reasonable. The Note Issuers acknowledge and agree that any such private sale
may result in prices and other terms less favorable to the seller than if such
were a public sale. The Note Issuers agree that, to the extent notice of sale
shall be required by law, at least ten (10) days notice to the Note Issuers of
the time and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. The Trustee shall not
be obligated to make any sale regardless of notice of sale having been given.
The Trustee may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
8. MISCELLANEOUS.
(a) WAIVER. Any party hereto may specifically waive any reach of
this Agreement by any other party, but no such waiver shall be deemed to have
been given unless such waiver is in writing, signed by the waiving party and
specifically designating the breach waived, nor shall any such waiver constitute
a continuing waiver of similar or other breaches.
10
(b) INVALIDITY. If for any reason whatsoever any one or more of the
provisions of this Agreement shall be held or deemed to be inoperative,
unenforceable or invalid in a particular case or in all cases, such
circumstances shall not have the effect of rendering any of the other provisions
of this Agreement inoperative, unenforceable or invalid, and the inoperative,
unenforceable or invalid provision shall be construed as if it were written so
as to effectuate, to the maximum extent possible, the parties' intent.
(c) ASSIGNMENT. This Agreement is personal to the parties hereto,
and the rights and duties of any party hereunder shall not be assignable except
with the prior written consent of the other parties. Notwithstanding the
foregoing, this Agreement shall inure to and be binding upon the parties and
their successors and permitted assigns.
(d) BENEFIT. The parties hereto and their successors and permitted
assigns, but no others, shall be bound hereby and entitled to the benefits
hereof; PROVIDED, HOWEVER, that the holders of the Notes and their permitted
assigns shall be entitled to the benefits hereof and to enforce this Agreement.
(e) TIME. Time is of the essence of each provision of this
Agreement.
(f) ENTIRE AGREEMENT: AMENDMENTS. This Agreement and the Indenture
contain the entire agreement among the parties with respect to the subject
matter hereof and supersede any and all prior agreements, understandings and
commitments, whether oral or written. This Agreement may be amended only in
accordance with Article 9 of the Indenture and further by a writing signed by a
duly authorized representative of each party hereto.
(g) NOTICES. All notices and other communications required or
permitted to be given or made under this Agreement shall be in writing and
shall be deemed to have been duly given and received, regardless of when and
whether received, either: (a) on the day of hand delivery; (b) three (3)
Business Days following the day sent, when sent by United States certified
mail, postage and certification fee prepaid, return receipt requested,
addressed as follows; (c) when transmitted by telecopy with verbal
confirmation of receipt by the telecopy operator; or (d) one Business Day
following the day timely delivered to a next-day air courier:
To Escrow Agent:
United States Trust Company of New York
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Corporate Trust Department
Telecopy: 212/852-1626/27/32
Telephone: 212/000-0000
11
To the Trustee:
United States Trust Company of New York
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Corporate Trust Department
Telecopy: 212/852-1626/27/32
Telephone: 212/000-0000
To the Note Issuers:
Epic Resorts, LLC
Epic Capital Corp.
0000 Xxxxx Xxxxxx
Xxxxx 000
Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Telecopy: 610/000-0000
Telephone: 610/000-0000
or at such other address as the specified entity most recently may have
designated in writing in accordance with this Section.
(h) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(i) CAPTIONS. Captions in this Agreement are for convenience only
and shall not be considered or referred to in resolving questions of
interpretation of this Agreement.
(j) CHOICE OF LAW. The existence, validity, construction, operation
and effect of any and all terms and provisions of this Agreement shall be
determined in accordance with and governed by the laws of the State of New York.
The parties to this Agreement hereby agree that jurisdiction over such parties
and over the subject matter of any action or proceeding arising under this
Agreement may be exercised by a competent Court of the State of New York, or by
a United States Court, sitting in New York City. The Note Issuers hereby submit
to the personal jurisdiction of such courts, hereby waive personal service of
process upon it and consent that any such service of process may be made by
certified or registered mail, return receipt requested, directed to the Note
Issuers at their address last specified for notices hereunder, and service so
made shall be deemed completed five (5) days after the same shall have been so
mailed, and hereby waive the right to a trial by jury in any action or
proceeding with the Escrow Agent. All actions and proceedings brought by the
Note Issuers against the Escrow Agent relating to or arising from, directly or
indirectly, this Agreement shall be litigated only in courts within the State of
New York.
12
(k) The Note Issuers hereby represent and warrant that this Agreement
has been duly authorized, executed and delivered on its behalf and constitutes
the legal, valid and binding obligation of the Note Issuers. The execution,
delivery and performance of this Agreement by the Note Issuers does not violate
any applicable law or regulation to which the Note Issuers are subject and does
not require the consent of any governmental or other regulatory body to which
the Note Issuers are subject, except for such consents and approvals as have
been obtained and are in full force and effect.
IN WITNESS WHEREOF, the parties have executed and delivered this
Escrow and Disbursement Agreement as of the date first above written.
UNITED STATES TRUST COMPANY OF NEW YORK,
as Escrow Agent
By: /s/ [ILLEGIBLE]
------------------------------------
Name:
Title:
EPIC RESORTS, LLC
by: EPIC MEMBERSHIP CORP., its Managing
Member
By: /s/ X.X. Xxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
EPIC CAPITAL CORP.
By: /s/ X.X. Xxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
By: /s/ [ILLEGIBLE]
-----------------------------------
Name:
Title:
13
EXHIBIT A
FORM OF PAYMENT, NOTICE AND DISBURSEMENT REQUEST
(Letterhead of the Trustee)
[Date]
United States Trust Company of New
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxx X. Xxxxx
Re: Disbursement Request No.
(indicate whether revised)
Ladies and Gentlemen:
We refer to the Escrow and Disbursement Agreement, dated as of July 8,
1998 as amended and supplemented to the date hereof (the "Escrow Agreement"),
among you (the "Escrow Agent"), the undersigned as Trustee, Epic Resorts, LLC, a
Delaware limited liability company (the "Company") and Epic Capital Corp.
("Capital Corp." and, together with the Note Issuers, the "Company").
Capitalized terms used herein shall have the meaning given in the Escrow
Agreement.
This letter constitute a Payment Notice and Disbursement Request under
the Escrow Agreement.
[Choose one of the following, as applicable.]
[The undersigned hereby notifies you that a scheduled interest payment
in the amount of $_______ is due and payable on _______________, 19___, and
requests a disbursement of funds contained in the Escrow Account in such amount
to the Trustee.]
[The undersigned hereby notifies you that a scheduled interest payment
in the amount of $_______ is due and payable on _______________, 19___, which
amount exceeds the amount of remaining Available Funds in the Escrow Account.
Accordingly, you are hereby requested to disburse all remaining funds contained
in the Escrow Account to the Trustee such that the balance in the Escrow Account
is reduced to zero.]
[The undersigned hereby notifies you that a payment of $_______ is due
and payable on _______________, 19___, in connection with a repurchase or
redemption of Notes, plus accrued interest, if any, pursuant to the provisions
of [Section 3.07] [Section 3.08] [Section 4.14] of the Indenture and requests a
disbursement of funds contained in the Escrow account in such amount. [The
undersigned hereby notifies you that a payment of $______ is due and payable on
____________, 19___ in connection with a repurchase or redemption of Notes, plus
accrued Interest, if any, pursuant to the provisions of [Section 3.07] [Section
4.14] of the Indenture, which amount exceeds the amount of remaining Available
Funds in the Escrow
account. Accordingly, you are hereby requested to disburse to the Trustee
all remaining funds contained in the Escrow Account such that the balance in
the Escrow account is reduced to zero.]
[The undersigned hereby notifies you that Notes equaling $______ in
aggregate principal amount have been retired or defeased and authorizes you to
release $_______ of funds in the Escrow Account to the Note Issuers (to an
account designated by the Note Issuers in writing), which amount represents the
interest payments on such Retired Notes.]
In connection with the requested disbursement, the undersigned hereby
notifies you that:
1. The Notes have not, as a result of an Event of Default (as
defined in the Indenture), been accelerated and become due and payable.
2. All prior disbursements from the Escrow Account have been
Applied.
3. [Add wire instructions.]
The Escrow Agent is entitled to rely on the foregoing in disbursing
funds relating to this Payment Notice and Disbursement Request.
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
By:
------------------------------------
Name:
Title:
2
