Execution Copy
OMNIBUS FINANCING AGREEMENT dated as of September 21, 1995, between
Trading Cove Associates ("TCA") and Sun International Hotels Limited
("SIHL").
WHEREAS, TCA has entered into a Management Agreement with the Mohegan
Tribe of Indians of Connecticut, pursuant to which TCA will construct and manage
a casino complex in Montville, Connecticut (the "Project");
WHEREAS, SIHL indirectly owns a 50% partnership interest in TCA;
WHEREAS, in connection with the Project, the Mohegan Gaming Authority (the
"Authority") proposes to issue $175 million of senior notes (the "Senior
Notes");
WHEREAS, in order to enable the Authority to sell the Senior Notes, SIHL
has been requested to (i) acquire $38.3 million of subordinated notes of the
Authority (the "Original Subordinated Notes") pursuant to a note purchase
agreement to be dated the same date as the closing of the sale of the Senior
Notes (the "Note Purchase Agreement"), (ii) provide a completion guarantee,
pursuant to which SIHL will guarantee that the Project will be completed (the
"Completion Guarantee"), (iii) arrange for a pledge 750,000 shares of SIHL stock
with a market value of approximately $43 million as collateral for its
obligation under the Completion Guarantee and (iv) post a letter of credit in an
amount up to $15 million to support its obligation under the Completion
Guarantee (the "Letter of Credit");
WHEREAS, if SIHL becomes obligated to pay funds under the Completion
Guarantee, the Authority is obligated to issue to SIHL certain subordinated
notes (the "Guarantee Subordinated Notes") having the same terms as the Original
Subordinated Notes except that the annual interest rate thereon shall be prime
plus one percent (the "Base Interest Rate"); the first $15 million of Guarantee
Subordinated Notes shall be "First Tranche Guarantee Sub Notes" and any
additional Guarantee Subordinated Notes shall be "Second Tranche Guarantee Sub
Notes"; and
WHEREAS, SIHL and TCA are party to a letter agreement dated May 12, 1995
(the "Letter Agreement").
NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein, TCA and SIHL agree as follows:
1. Termination of Letter Agreement. The Letter Agreement is hereby
terminated.
2. Payments Relating to the Original Subordinated Notes. Interest on the
Original Subordinated Notes shall be payable by the Authority on the outstanding
principal balance thereof at an annual rate of fifteen percent (15%). Such
interest shall be paid in accordance with the Note Purchase Agreement.
Additional amounts
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with respect to the Original Subordinated Notes (the "Original Additional
Payments") shall be payable to the holders thereof by TCA on the outstanding
principal balance of such Original Subordinated Notes at an annual rate of
eleven and one-half percent (11 1/2%). The Original Additional Payments shall be
payable on the interest payment dates provided in the Original Subordinated
Notes directly from funds TCA would have received as its Management Fee. Subject
to the priorities set forth in Section 10 of this Agreement, to the extent that
TCA does not receive sufficient Management Fees to pay the full amount of any
Original Additional Payment when due, TCA shall pay the entire Management Fee it
receives as partial payment of the Original Additional Payment and such portion
of the Original Additional Payment not paid shall be deferred until TCA receives
sufficient Management Fees.
3. Acquisition of Original Subordinated Notes. The Original Partners of
TCA shall have the right at any time to purchase without premium from SIHL a
participating interest (the "Participating Interest") in the Original
Subordinated Notes. The total percentage Participating Interest in the Original
Subordinated Notes which may be acquired shall not exceed the Original Partners'
Percentage Interest in TCA.
4. Reimbursement of Financing Costs. If the Original Subordinated Notes
are purchased by SIHL, TCA shall reimburse SIHL for the out-of-pocket expenses
(without premium) incurred solely for the purpose of arranging the purchase of
the Original Subordinated Notes. Such reimbursement shall not in any case exceed
two and one-half percent (2 1/2%) of the principal issue amount of the Original
Subordinated Notes.
5. Completion Guarantee Fee. If SIHL executes and delivers the Completion
Guarantee, TCA shall pay to SIHL a completion guarantee fee ("Completion
Guarantee Fee") equal to two percent (2%) of the total development costs of the
Project (all so-called hard and soft costs with respect to construction of the
Project, except land acquisition costs). The Completion Guarantee Fee shall be
payable from funds TCA would have received as its Management Fee with priority
as set forth in Section 10.
6. Letter of Credit Fee. Upon the posting of the Letter of Credit, and on
each anniversary such Letter of Credit is outstanding, TCA shall pay to SIHL a
fee equal to the costs incurred by SIHL or its affiliates in posting such Letter
of Credit plus 1% of the principal amount thereof; provided, however, the fee
payable to SIHL by TCA shall not exceed for any one year 2% of the undrawn and
outstanding principal amount of such Letter of Credit.
7. Payments Related to First Tranche Guarantee Sub Notes. Interest on the
First Tranche Guarantee Sub Notes shall be payable by the Authority on the
outstanding principal balance thereof at the Base Interest Rate. Such interest
shall be paid in accordance with the Note Purchase Agreement. Additional amounts
with respect to the First Tranche Guarantee Sub Notes (the "First Tranche
Additional Payments") shall be payable to the holders thereof by TCA on the
outstanding principal balance of such First Tranche Guarantee Sub Notes at an
annual rate equal to the difference between 26 1/2% and the Base Interest Rate.
The First Tranche Additional Payments shall be payable on the interest payment
dates provided in the First Tranche Guarantee Sub Notes. If on such interest
payment date the Authority is not permitted to pay accrued interest on the First
Tranche Guarantee Sub Notes
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due to restrictions in the indenture for the Authority's Senior Notes, TCA shall
pay to the holder of the First Tranche Guarantee Sub Notes such accrued interest
(the "Deferred Interest Amount"); provided, however, if and when the Authority
does pay to the holder of First Tranche Guarantee Sub Notes any Deferred
Interest Amounts, TCA's obligation to pay any First Tranche Additional Payments
shall be reduced by the Deferred Interest Amounts previously paid by TCA; it
being the agreed upon principal that the holder of any First Tranche Guarantee
Sub Notes shall be entitled to an annual return of 26 1/2% on the principal
amount of such First Tranche Guarantee Sub Notes and that to the extent TCA paid
amounts otherwise payable to the Authority, once the Authority pays such amounts
an accounting shall be made, and repayments made to TCA as necessary, to that
the holders of the First Tranche Guarantee Sub Notes do not receive excess
payments. The First Tranche Additional Payments and Deferred Interest Amounts
shall be payable on the interest payment dates provided in the First Tranche
Guarantee Sub Notes directly from funds TCA would have received as its
Management Fee. Subject to the priorities set forth in Section 10 of this
Agreement, to the extent that TCA does not receive sufficient Management Fees to
pay the full amount of any First Tranche Additional Payment or Deferred Interest
Amount when due, TCA shall pay the entire Management Fee it receives as partial
payment of the First Tranche Additional Payment or Deferred Interest Amount and
such portion of the First Tranche Additional Payment or Deferred Interest Amount
not paid shall be deferred until TCA receives sufficient Management Fees.
8. Payments Related to Second Tranche Guarantee Sub Notes. Interest on the
Second Tranche Guarantee Sub Notes shall be payable by the Authority on the
outstanding principal balance thereof at the Base Interest Rate. Such interest
shall be paid in accordance with the Note Purchase Agreement. Additional
payments with respect to the Second Tranche Guarantee Sub Notes (the "Second
Tranche Additional Payments") shall be payable to the holders thereof by TCA on
the outstanding principal balance of such Second Tranche Guarantee Sub Notes at
an annual rate equal to the difference between 26 1/2% and the Base Interest
Rate. The Second Tranche Additional Payments shall be payable on the interest
payment dates provided in the Second Tranche Guarantee Sub Notes directly from
funds TCA would have received as its Management Fee. Subject to the priorities
set forth in Section 10 of this Agreement, to the extent that TCA does not
receive sufficient Management Fees to pay the full amount of any Second Tranche
Additional Payment when due, TCA shall pay the entire Management Fee it receives
as partial payment of the Second Tranche Additional Payment and such portion of
the Second Tranche Additional Payment not paid shall be deferred until TCA
receives sufficient Management Fees.
9. TCA Acquisition of First Tranche Guarantee Sub Notes. Subject to the
priorities set forth in Section 10 of this Agreement, on each of the first,
second and third anniversary of the issuance of the First Tranche Guarantee Sub
Notes, TCA shall acquire from the holders of the First Tranche Guarantee Sub
Notes one third of the outstanding principal amount of such First Tranche
Guarantee Sub Notes at a purchase price equal to the outstanding principal
amount thereof plus all accrued and unpaid interest thereon.
10. Priorities. The parties agree that payments required to be made by TCA
out of Management Fees shall be prioritized as follows:
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(a) First, to return capital contributions made by the Partners of
TCA after the closing of the sale of the Original Subordinated Notes;
(b) Second, to pay Original Additional Payments;
(c) Third, to pay Deferred Interest Amounts and First Tranche
Additional Payments on a pari passu basis;
(d) Fourth, to pay Second Tranche Additional Payments;
(e) Fifth, to return capital contributions made by the Partners of
TCA before the closing of the sale of the Original Subordinated Notes; provided,
however, such Partners shall use such funds to acquire outstanding First Tranche
Guarantee Sub Notes from the holders thereof;
(f) Sixth, to pay the Development Fee;
(g) Seventh, to pay the Management Services Fee;
(h) Eighth, to pay the Completion Guarantee Fee;
(i) Ninth, to pay the Partners, pro rata based on their respective
Percentage Interest, an amount equal to state and federal income tax obligations
calculated in accordance with Section 3.03a.(1) of the Partnership Agreement;
(j) Tenth, to acquire the First Tranche Guarantee Sub Notes in
accordance with Section 9;
(k) Eleventh, to pay the Organizational and Administrative Fee and
the Marketing and Casino Operations Fee on a pari passu basis; and
(l) Twelfth, to the distribution of Excess Cash to the Partners, pro
rata based on their respective Percentage interest, as specified in Section 3.03
of the Partnership Agreement.
The obligation of TCA and its Partners under this Section 10 shall
be limited to applying or directing its receipts from the Authority or Project
to the payments in the priority herein set forth. The Partners of TCA shall have
no personal recourse liability to make any of the payments provided for in this
Section 10 of the Agreement.
11. Capitalized Terms. Capitalized words and terms used hereinbefore not
defined in this Agreement shall take on the definitions set forth in the Amended
and Restated Partnership Agreement of TCA (the "Partnership Agreement").
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12. Conflicts. If provisions of this Agreement should conflict with those
of the Partnership Agreement, then the provisions of this Agreement shall
prevail.
SUN INTERNATIONAL HOTELS LIMITED
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
TRADING COVE ASSOCIATES
RJH Development Corp.,
a New York Corporation
By: ________________________________
Name:
Title:
Xxxxxx Suites, Inc.
a Michigan corporation
By: /s/ Del X. Xxxxxx
--------------------------------
Name: DEL X. XXXXXX
Title: EXECUTIVE VICE PRESIDENT
LMW Investments, Inc.
a Connecticut corporation
By: /s/ Xxx Xxxxxx
--------------------------------
Name: XXX XXXXXX
Title: PRESIDENT
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