EXECUTION COPY
MANAGEMENT SERVICES AGREEMENT
MANAGEMENT SERVICES AGREEMENT ("Agreement") dated as of September 29,
1995, by and between TRADING COVE ASSOCIATES, a Connecticut general
partnership ("Trading Cove"), SUN INTERNATIONAL MANAGEMENT LIMITED, a
British Virgin Island corporation ("SIML"), WATERFORD GAMING, L.L.C., a
Delaware Limited Liability company ("Waterford"), XXXXXX SUITES, INC., a
Michigan corporation ("Xxxxxx"), and LMW INVESTMENTS, INC., a Connecticut
corporation ("LMW" and together with SIML, Waterford and Xxxxxx, the
"Management Services Companies").
Recitals:
1. The Mohegan Nation (the "Mohegan Tribe") and Trading Cove are
parties to certain Management Agreements as defined in the Amended and
Restated Partnership Agreement of Trading Cove Associates, dated September
21, 1994 (the "TCA Partnership Agreement"), pursuant to which Trading Cove
is required to perform various services on behalf of the Mohegan Tribe,
including organizational, planning, development, management, marketing,
administrative and supervisory services (hereinafter collectively, the
"Services"), for an agreed compensation. Trading Cove wishes to subcontract
some of its obligations under the Management Agreements. Capitalized terms
used but not otherwise defined in this Agreement shall have the meanings
set forth in the TCA Partnership Agreement.
2. The TCA Partnership Agreement provides, in part, that Trading Cove
would enter into a subcontract with an entity to be formed by an affiliate of
Sun Cove, Ltd., a Connecticut corporation, as to a 50% interest, and the
Waterford Hotel Group, Inc., a Connecticut corporation, an affiliate of
Xxxxxx Suites, Inc., a Michigan corporation, and LMW Investments, Inc., a
Connecticut corporation, as to a 50% interest, to perform certain of the
Services.
3. Trading Cove and Sun-Waterford, a Connecticut corporation, entered
into a Management Services Agreement dated February 6, 1995, as contemplated
in recital number 2 above (the "Original Management Services Agreement").
4. The TCA Partnership has been amended by the First Amendment thereto
dated November 8, 1996, which amendment provides, among other things for the
termination of the Original Management Services Agreement, and the execution
of a new subcontract agreement by the parties hereto.
5. Trading Cove and the Management Services Companies desire to enter
into this Management Services Agreement to set forth the services being
subcontracted by Trading Cove pursuant to the Management Agreements and
the compensation to be paid therefor to the Management Services Companies.
NOW THEREFORE, the parties hereto agree as follows:
1. Engagement of Management Services Company. Trading Cove hereby
subcontracts to the Management Services Companies its obligations under the
Management Agreements to perform the following portions of the Services:
(a) Certain supervisory duties with respect to the manner in which
management duties, responsibilities and functions will be carried out with
respect to the Facility (as defined in the TCA Partnership Agreement) in
conformance with the Management Agreements and to the extent directed by
Trading Cove;
(b) Making available adequate advice and support to assist in the
day-to-day supervision of all aspects and functions required to implement
the management decisions and supervision of the day-to-day operation of the
Facility; and,
(c) To meet with the Partners of Trading Cove on a regular basis, but
no less often than quarterly or as otherwise requested by the Partners.
The Management Services Companies shall also meet the Partners of Trading
Cove as reasonably requested by such Partners to discuss any issues, concerns
or disagreements which may arise from time to time regarding the relationship
with the Mohegan Tribe or the obligations under the Management Agreements.
The Management Services Companies shall give serious consideration to all such
concerns or problems brought to its attention and, to the extent possible in
the best business judgment of the Management Services Companies shall address
such concerns or problems in such a manner so as to minimize such problems
or concerns.
It is understood and agreed that the Management Services Company will not
be expected or required to perform active managerial functions or to
implement operational activities of and decisions of Trading Cove.
2. Management Services Fee. In consideration of the services to be
rendered by the Management Services Companies hereunder, Trading Cove shall
pay to the Management Services Companies an annual management services fee
(the "Management Services Fee") in the aggregate amount of 1.0% of the gross
revenues of the Facility, but in no event during any fiscal year, greater
than the sum of 25% of the Excess Cash generated during such fiscal year
plus 25% of the annual Organizational and Administrative Fee and the Marketing
and Casino Operations Fee.
3. Allocation of Payments. From November 9, 1996, all amounts of the
Management Services Fee in excess of operating expenses up to the $2,000,000
per fiscal year of the Facility determined pursuant to that certain Letter
Agreement dated October 19, 1996, among Sun Cove, Ltd, Xxxxxx and LMW shall
be distributed as follows:
(i) If the Facility's annual operating income plus depreciation,
amortization, and other non-cash charges ("EBITDA") is equal to or less than
$200,000,000 in any fiscal year of the Facility, then 50% to SIML and 50% to
Waterford.
(ii) If the Facility's EBITDA is greater than $200,000,000 but not
more than $225,000,000 in any fiscal year of the Facility, then 50% to SIML,
and the first $500,000 of the remaining 50% shall be distributed (x) 67.796%
to Xxxxxx and (y) 32.204% to LMW, and the balance of such 50% in excess of
$500,000, if any, to Waterford.
(iii) If the Facility's EBITDA is greater than $225,000,000 in any
fiscal year of the Facility, then 50% to SIML, and the first $1,000,000 of
the remaining 50% shall be distributed (x) 67.796% to Slavik and (y) 32.204%
to LMW, and the balance of such 50% in excess of $1,000,000, if any, to
Waterford.
4. Payment Terms.
(a) Within thirty (30) days after the end of each calendar month of
operations, Trading Cove shall calculate and pay to the Management Services
Companies the Management Services Fee for the previous month's operations in
accordance with Paragraphs 2 and 3. The Management Services Fee and the
portion thereof to which each of the Management Services Companies is
entitled shall be finally determined annually in accordance with Paragraphs
2 and 3 within thirty (30) days after the end of the year for which the
Management Services Fee is calculated, and the account of the Management
Services Companies shall be adjusted to reflect any overpayment or
underpayment of Fees during the previous year. To the extent that such
accounting determines that the Management Services Companies are entitled
to an additional amount, such amount shall be paid by Trading Cove on the
first day of the month immediately following the completion of such
accounting. To the extent that such accounting demonstrates that the
Management Services Companies, or any of them, have been overpaid, such
overpayment shall be deducted by Trading Cove from the next payment(s)
due by Trading Cove to the Management Services Companies.
(b) For purposes of Paragraph 2, 3 and 4, reference to any year shall
mean the fiscal year of the Facility.
(c) Trading Cove's obligations to make payment to the Management
Services Companies hereunder is conditioned upon payment to Trading Cove of
the amounts due it from the Mohegan Tribe under the Management Agreements.
Accordingly, Trading Cove shall be obligated to pay to the Management Services
Companies amounts due hereunder only to the extent that and in proportion to
amounts which Trading Cove receives from the Mohegan Tribe under the Management
Agreements.
5. Term of Agreement. This Agreement shall become immediately effective
and shall continue until: (a) terminated for cause as set forth in Paragraph
6; (b) termination of both Management Agreements; or (c) termination of Trading
Cove as an ongoing business entity.
6. Termination; Events of Default. This Agreement may be terminated by
any party with respect to itself by written notice to the other parties for
cause as set forth below. Any Management Services Company shall have cause
to terminate this Agreement if Trading Cove shall have failed to pay to such
Management Services Company the Management Services Fee as and when due as
provided herein and such failure shall not have been cured within thirty (30)
days thereafter. Trading Cove shall have cause to terminate this Agreement
if the Management Services Companies shall have substantially failed to perform
the services described in Paragraph 1 hereof and such failure shall not have
been cured within thirty (30) days thereafter. Any party hereto shall have
cause to terminate this Agreement in the event of:
(a) The filing, whether voluntary or involuntary, of a petition in
bankruptcy against any other party hereto;
(b) An assignment by any other party hereto for the benefit of its
creditors;
(c) Dissolution or insolvency of any other party hereto;
(d) The assignment, or the attempted assignment, by any other party
hereto of its rights and/or obligations hereunder in violation of Paragraph
8 hereof; or
(e) Fraud, gross negligence or other willful misconduct of any
other party hereto in connection with this Agreement or the obligations of such
party hereunder.
7. Indemnification. The Management Services Companies their respective
affiliates, parents, subsidiaries, controlling shareholders, officers,
directors and employees (collectively, the "Indemnified Parties") shall not
be liable to Trading Cove by reason of any act performed for or on behalf of
Trading Cove hereunder, including, without limitation, the Services, or in
the furtherance of Trading Cove business, or any omission to act, except for
acts or omissions that constitute a material breach of any provision of this
Agreement, gross negligence, fraud or bad faith. Trading Cove shall indemnify,
defend and hold harmless the Indemnified Parties from any claim, demand or
liability, and from any loss, cost or expense, including, but not limited to,
attorneys' fees and court costs, which may be made or imposed upon them by
reason of any act performed for or on behalf of Trading Cove or in furtherance
of Trading Cove's business, or any omission to act, except for acts and
omissions that constitute a material breach of any provision of this Agreement,
gross negligence, fraud or bad faith. Notwithstanding anything herein to
the contrary contained, the parties agree that if the assets of Trading Cove
are insufficient to satisfy the obligations set forth in the preceding
sentence, the partners of Trading Cove shall bear the indemnification liability
set forth in the preceding sentence in proportion to their respective
percentage interests in Trading Cove and, in no event, shall the Indemnified
Parties have the right to assert claims under the preceding sentence against
partners of Trading Cove in excess of each such partner's percentage interest
in Trading Cove.
8. Assignments. No party may assign its rights and/or obligations under
this Agreement, except: (i) to an Affiliate of such party, or (ii) with the
prior written consent of all parties hereto. Any assignment shall be subject
to and made in accordance with applicable gaming, securities or other laws.
9. Authorization; Representations and Warranties. Each party represents
and warrants to the other that:
(a) The execution, delivery, and performance by it of this Agreement
and the transactions contemplated herein have been duly authorized by all
necessary action, and the individual(s) executing this Agreement on its
behalf are duly authorized to do so;
(b) It is duly organized and in good standing under the laws of
the jurisdiction of its formation; and
(c) The execution, delivery and performance of this Agreement does
not and shall not violate any existing agreement, bylaw, statute, rule,
regulation and/or ordinance applicable to such party or its execution,
delivery and/or performance of this Agreement.
10. Notices: All notices hereunder shall be deemed properly given upon
(i) receipt by the addressee by personal delivery or facsimile transmission,
(ii) two (2) business days after delivery by an overnight express delivery
service for the next business day delivery, or (iii) if mailed, upon the
first to occur of receipt or the expiration of five (5) business days after
deposit in United States Postal Service certified mail, postage prepaid,
addressed to the parties at the addresses appearing below. Such addresses may
be changed by notice given in the same manner.
If to Trading Cove: Xxx Xxxxxx
c/o LMW Investments, Inc.
000 Xxxxxxxx Xxxxxxxx
P. O. Xxx 000
Xxxxxxxxx, XX 00000
Telecopy No. (000) 000-0000
With Copy To: Honigman, Miller, Xxxxxxxx and Xxxx
0000 Xxxxx Xxxxxxxx Xxxxxxxx
Xxxxxxx, XX 00000
Att'n: Xxxxxxx X. Xxxxxxxxx, Esq.
Telecopy No. (000) 000-0000
With Copy To: Xxxxxx ("Xxxxx") Xxxxxxx
Sun International
Executive Offices
Coral Towers
Paradise Island, the Bahamas
Telecopy No. (000) 000-0000
If to Waterford Gaming: Xxx Xxxxxx
c/o LMW Investments, Inc.
000 Xxxxxxxx Xxxxxxxx
P. O. Xxx 000
Xxxxxxxxx, XX 00000
Telecopy No. (000) 000-0000
With Copy To: Xxxxxx Suites, Inc.
00000 X. Xxxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxxxxx Xxxxx, XX 00000
Att'n: Del X. Xxxxxx
Telecopy No. (000) 000-0000
11. Amendments. This Agreement may be amended or modified only by
written instrument executed by all of the parties hereto.
12. Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of New York.
13. Severability. If any provision hereof shall be judicially determined
to be illegal, or if the application thereof to any party or in any
circumstance shall, to any extent, be judicially determined to be invalid or
unenforceable, the remainder of this Agreement, or the application of such
provision to parties or in circumstances other than those to which it has
been judicially determined to be invalid or unenforceable, shall not be
affected thereby, and each provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same Agreement.
15. Further Assurances. The parties will execute and deliver such
further instruments and undertake such further actions as may be required to
carry out the intent and purposes of this Agreement.
16. Successors and Assigns. Subject to the restrictions on
transferability contained in Paragraph 8 hereof, this Agreement shall be
binding upon, and shall inure to the benefit of, the parties hereto and
their respective successors and assigns.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on
September 10, 1997, to be effective the day and year first above written.
TRADING COVE ASSOCIATES,
By: SUN COVE, LTD.,
By:/s/Xxxxxx Xxxxxxx
Name:
Title:
By: WATERFORD GAMING, L.L.C.,
By: /s/Xxx Xxxxxx
Name:
Title:
XXXXXX SUITES, INC.
By:/s/Xxx Xxxxxx
Name:
Title:
WATERFORD GAMING, L.L.C.
By:/s/Xxx Xxxxxx
Name:
Title:
SUN INTERNATIONAL MANAGEMENT
LIMITED,
By:/s/Xxxxxxx Xxxxx
Name:
Title:
LMW INVESTMENTS, INC.,
By:/s/Xxx Xxxxxx
Name:
Title:
