Exhibit 10.14
CASH COLLATERAL AND DISBURSEMENT
AGREEMENT
among
U.S. BANK NATIONAL
ASSOCIATION,
as the Disbursement
Agent,
U.S. BANK NATIONAL
ASSOCIATION,
as the Trustee,
and
DIAMOND JO WORTH, LLC
and
DIAMOND JO WORTH CORP.,
together, as the Issuers
Dated as of July 19,
2005
TABLE OF CONTENTS
i
ii
iii
CASH COLLATERAL AND DISBURSEMENT
AGREEMENT
THIS CASH COLLATERAL AND
DISBURSEMENT AGREEMENT (as amended, supplemented or otherwise
modified from time to time, this “ Agreement ”)
is dated as of July 19, 2005, by and among U.S. Bank National
Association, having an office at 60 Livingston Avenue, St. Paul,
Minnesota 55107, as trustee (together with its successors and
assigns, the “ Trustee ”) under the Indenture
(as defined below), U.S. Bank National Association, as disbursement
agent (together with its successors and assigns, the “
Disbursement Agent ”), Diamond Jo Worth, LLC, a
Delaware limited liability company (the “ Company
”), and Diamond Jo Worth Corp., a Delaware corporation
(“ DJW Corp. ” and, together with the Company,
the “Issuers” ).
R E C I T A
L S
A.
Notes . The Issuers have issued Forty Million
Dollars ($40,000,000) in aggregate principal amount of their 11%
Senior Secured Notes due 2012 (the “ Original Notes
” and, together with any additional Notes issued under the
Indenture and any new notes issued in exchange for the Original
Notes or such additional Notes, the “ Notes ”)
concurrently herewith. The Notes have been issued pursuant to
the provisions of an Indenture (as amended, supplemented or
otherwise modified from time to time, the “ Indenture
”) dated the date hereof, among the Issuers and the Trustee,
on behalf of itself and the holders of the Notes. Net
proceeds from the issuance of Notes will be disbursed as
follows: (a) Thirty Four Million Two Hundred Thousand
Dollars ($34,200,000.00) (the “ Construction Proceeds
”) will be deposited contemporaneously with the execution of
this Agreement into Account No. 790235001 held at the
Disbursement Agent (said account, or any substitute account
selected in accordance with the terms of this Agreement, is
referred to herein as the “ Construction Disbursement
Account ”), to be maintained by the Disbursement Agent
pursuant to Section 2 of this Agreement; and
(b) Three Million Three Hundred Thousand Dollars ($3,300,000)
(the “ Interest Reserve Proceeds ,” which,
together with the Construction Proceeds shall be referred to herein
as the “ Proceeds ”), will be deposited
contemporaneously with the execution of this Agreement into Account
No. 790235002, held at the Disbursement Agent (said account,
or any substitute account selected in accordance with the terms of
this Agreement, is referred to herein as the “ Interest
Reserve Account ”), to be maintained by the Disbursement
Agent pursuant to Section 2 of this
Agreement.
B.
Collateral and Collateral
Assignment . As
security for their obligations under the Notes and the Indenture,
the Issuers have granted security interests to the Trustee, on
behalf of itself and the holders of Notes, in certain assets and
have collaterally assigned certain contracts to the Trustee.
As further security for their obligations under the Notes and the
Indenture, the Issuers also have granted pursuant to the Pledge
Agreement a security interest to the Trustee, on behalf of itself
and the holders of the Notes, in all of the Issuers’ right,
title and interest in the Construction Disbursement Account, the
Interest Reserve Account and the Disbursed Funds Account (as
defined herein) and any Proceeds or other amounts held in any such
accounts.
C.
Purpose . The parties intend that portions of the
Proceeds and the other amounts deposited from time to time in the
Construction Disbursement Account be used for the design,
development, construction, equipping and operation of the Facility
(as defined herein), all in accordance with this Agreement and the
Indenture. The parties have entered into this
Agreement
1
in order to set forth the conditions upon which,
and the manner in which, funds will be disbursed in order to permit
the Company to design, develop, construct, equip and operate the
Facility and to pay certain Debt Financing Costs when due and
payable under the Notes.
AGREEMENT
NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as
follows:
1.
Definitions.
1.1
Defined Terms
. In this Agreement (including
the preamble and Recitals), the terms defined in this
Section 1 shall have the meanings herein specified,
such definitions to be equally applicable to both the singular and
plural forms of any of the terms defined:
“ Accounts ”
means the Interest Reserve Account and the Construction
Disbursement Account.
“ Additional Contract
Certificate ” means the Officer’s Certificate of
the Issuers in the form of Exhibit F-2 attached
hereto.
“ Additional Revenue
” means revenue (including, without limitation, investment
income (loss), less any losses or costs associated therewith,
earned on amounts in the Construction Disbursement Account)
generated by the Issuers (other than from disposition of its
assets), but only to the extent that such revenue is held by the
Issuers, free and clear of any claims of any other parties
whatsoever, other than claims of the Trustee and holders of the
Notes; provided , however , that as of any date of
measurement, Additional Revenue also shall include investment
income (loss), less any losses or costs associated therewith, which
the Issuers reasonably determine (with the reasonable concurrence
of the Disbursement Agent) will be earned on funds in the
Construction Disbursement Account through the reasonably
anticipated date of Opening, taking into account the current and
future reasonably anticipated rates of return on Cash Equivalents
in the Construction Disbursement Account and the reasonably
anticipated times and amounts of draws therefrom for the payment of
Construction Expenses or in connection with permitted amendments to
the Construction Disbursement Budget (as applicable).
“ Advance Disbursements
” means a disbursement from the Construction Disbursement
Account to the Issuers pursuant to Section 7.3 and in
accordance with the Construction Disbursement Budget,
notwithstanding the fact that not all certifications and lien
releases have been obtained and other disbursement conditions have
not been satisfied; provided , however , that the
aggregate amount of Advance Disbursements outstanding at any time
shall not exceed One Million Five Hundred Thousand Dollars
($1,500,000).
“ Advance Disbursement
Certificate ” means an Officer’s Certificate from
the Issuers in the form of Exhibit D-2 attached
hereto.
“ Advance Disbursement
Officer’s Certificate ” has the meaning set forth
in Section 6.2.3 .
2
“ Affiliate ” has
the meaning given in the Indenture.
“ Agreed Permits
” has the meaning given in Attachment A to
Exhibit B-1 attached hereto.
“ Applicable Permits
” means the national, state and local license authorizations,
certifications, filings, recordings, permits or other approvals
with or of any Governmental Instrumentality, including, without
limitation, environmental, construction, operating or occupancy
permits and any agreements, consents or approvals that are required
for the design, construction, operation or maintenance of the
Facility in accordance with the Operative Documents. Without
limiting the foregoing, Applicable Permits also include
Construction Period permits for temporary construction utilities
and temporary sanitary facilities, dump permits, road use permits,
permits related to the use, storage and disposal of hazardous
materials introduced to the Property for or in connection with the
performance of the design, construction, operation or maintenance
of the Facility, and permits issued pursuant to any building,
mechanical, electrical, plumbing or similar codes.
“ Architect ”
means Kittrell Garlock and Associates, AIA, Ltd., d/b/a KGA
Architecture, and its successors identified by notice from the
Company to the Disbursement Agent.
“ Architect Agreement
” means the Standard Form of Agreement Between Owner and
Architect (AIA Document B141-1997 edition) for the Facility,
executed by the Architect and the Company, dated March 1, 2005
(as amended, modified or supplemented from time to time in
accordance with this Agreement).
“ Available Funds
” means, at any given time, the sum of (a) the balance
of the Construction Disbursement Account (taking into account any
additional amounts deposited by the Issuers in the Construction
Disbursement Account pursuant to clause (ii) of
Section 7.6 ), (b) so long as there is no Default
or Event of Default, Additional Revenue expected to be earned from
and after such time, (c) the net proceeds of any FF&E
Financing that the Issuers have incurred or reasonably expect to
incur as permitted under the Indenture, less all amounts previously
drawn upon from such FF&E Financing, and (d) the net
proceeds available for loan under any Senior Credit Facility that
the Issuers enter into or reasonably expect to enter into as
permitted under the Indenture, less all amounts previously drawn
upon from such Senior Credit Facility.
“ Business Day ”
means each Monday, Tuesday, Wednesday, Thursday and Friday which is
not a day on which banking institutions in New York, New York, are
authorized or obligated by law or executive order to
close.
“ Cash Equivalents
” has the meaning given in the Indenture.
“ Collateral ”
has the meaning given in the Indenture.
“ Construction Contract
” means the Standard Form of Agreement Between Owner and
Contractor (AIA Document A111-1997 edition) and General Conditions
of the Contract for Construction (AIA Document A201-1997 edition)
for the construction of the Facility, executed
3
by the General Contractor and the Company, dated
June 6, 2005 (as amended, modified or supplemented from time
to time in accordance with this Agreement).
“ Construction Disbursement
Budget ” means the Initial Construction Disbursement
Budget, as the same may be amended, modified or supplemented from
time to time in accordance with this Agreement.
“ Construction Disbursement
Budget Amendment Certificate ” means an Officer’s
Certificate from the Issuers in the form of Exhibit E
attached hereto.
“ Construction Disbursement
Certificate ” means an Officer’s Certificate from
the Issuers in the form of Exhibit D-1 attached
hereto.
“ Construction Disbursement
Officer’s Certificate ” has the meaning set forth
in Section 6.2.2 .
“ Construction
Documents ” means the Construction Contract, the
Architect Agreement, and any other Contract entered into by the
Company on, prior to or after the Issue Date with respect to
construction of all or any portion of the Facility (other than the
Financing Agreements and the documents evidencing or securing the
FF&E Financing or a Senior Credit Facility), as the same may be
amended, modified or supplemented from time to time as permitted
thereunder and in accordance with this Agreement.
“ Construction Expenses
” means expenses incurred in connection with the design,
development, engineering, construction, installation or equipping
of the Facility in accordance with the Construction Disbursement
Budget, excluding, however (a) any such expenses paid on or
prior to the Issue Date, (b) any Debt Financing Costs and
(c) any Issue Fees and Expenses.
“ Construction Period
” means the period from the Issue Date to and including the
date of the Opening.
“ Contract
” means a contract to which the Company is a party pertaining
to the design, development, engineering, installation or
construction of all or any portion of the Facility, including,
without limitation, any contract, license and performance and
payment bond or guarantee, if any; provided , however
, such term shall not include any of the Subcontracts, the
Subcontractors, the Financing Agreements or any of the documents
evidencing or securing the FF&E Financing or any Senior Credit
Facility.
“ Contract Amendment
Certificate ” is an Officer’s Certificate from the
Issuers in the form of Exhibit F-1 attached
hereto.
“ Contractor ”
means a party to a Contract other than the Company.
“ Control Account
Agreement ” means one or more Deposit Account Control
Agreements dated as of even date herewith by and among the Trustee,
the Issuers, and the institution at which the Disbursed Funds
Account is held.
4
“ Debt Financing Costs
” means all principal, interest, premium fees and other
amounts payable or accrued from time to time under the
Notes.
“ Default ” means
any event, omission or failure of a condition that is, or with the
passage of time or the giving of notice or both could be, an Event
of Default.
“ Disbursed Funds
Account ” means Account No. 2013837 and Account
No. 201162, each held at American Trust (ABA Number
073900522), in the name of the Company, or any substitute account
selected by the Issuers in accordance with this Agreement, which
account shall be funded from disbursements from the Construction
Disbursement Account pursuant to this Agreement and shall be
pledged as collateral to the Trustee pursuant to the Control
Account Agreement, for the benefit of itself and the holders of the
Notes, and, with respect to at least one such account, from which
the Company shall have general check writing authority.
“ Disbursement ”
means any disbursement of funds pursuant to a Disbursement
Request.
“ Disbursement
Agent’s Closing Certificate ” is an Officer’s
Certificate from the Disbursement Agent in the form of
Exhibit B-2 attached hereto.
“ Disbursement Request
” means any Initial Disbursement Request, Construction
Disbursement Request, Interest Disbursement Request, Advance
Disbursement Request and any other request for disbursement from
the Accounts made pursuant to this Agreement.
“ Facility ”
means the design, development, construction, equipping and
commencement of operations of the improvements described in the
Construction Documents and in accordance therewith.
“ Facility Cost
Schedule ” means an itemized schedule in the form of
Schedule 1 to the Construction Disbursement
Officer’s Certificate, a form of which is attached hereto as
Schedule 1 to Attachment A to Exhibit D-1
.
“ FF&E
Financing ” has the meaning given in the
Indenture.
“ Final Plans ”
means Plans which (a) have received all required approvals
from all Governmental Instrumentalities required to approve such
Plans prior to commencement of that portion of the Facility
reflected in such Plans; (b) contain sufficient specificity to
permit the completion of the work or improvement reflected in such
Plans and collectively contain sufficient specificity to permit
completion of the Facility; (c) are consistent with
constructing the Facility to include the Minimum Facilities;
(d) have been signed by an architect licensed to practice
architecture in the State of Iowa; and (e) have been delivered
to the Disbursement Agent.
“ Financing Agreements
” means, collectively, this Agreement, the Indenture, the
Security Documents, the Notes and any other loan or security
agreement entered into on, prior to or after the Issue Date with or
for the benefit of the Trustee to finance all or any portion of the
Facility, as each of the same may be amended, modified or
supplemented from time to time as permitted thereunder and in
accordance with the terms and conditions of this
Agreement.
5
“ First Disbursement
Request ” means the first Disbursement Request (other
than an Interest Disbursement Request) made pursuant to this
Agreement.
“ First Disbursement
Officer’s Certificate ” has the meaning set forth
in Section 6.2.4 .
“ Gaming Laws ”
has the meaning given in the Indenture.
“ Gaming Licenses
” has the meaning given in the Indenture.
“ General Contractor
” means Henkel Construction.
“ Governmental
Instrumentality ” means any national, state or local
government (whether domestic or foreign), any political subdivision
thereof or any other governmental, quasi-governmental, judicial,
public or statutory instrumentality, authority, body, agency,
bureau or entity (including any Gaming Authority, any zoning
authority, the FDIC, the Comptroller of the Currency or the Federal
Reserve Board, any central bank or any comparable authority) or any
arbitrator with authority to bind a party at law.
“ Hard Costs ”
means the costs and expenses in respect of supplying goods,
materials and labor for the construction of improvements relating
to the Facility or other amounts payable pursuant to the
Construction Documents.
“ Initial Construction
Disbursement Budget ” means the itemized schedule, in the
form attached as Exhibit 1 to the First Disbursement
Officer’s Certificate, setting forth on a line item-basis all
of the costs which the Company anticipates to expend from and after
the Issue Date in connection with the design, development,
engineering, construction, installation, equipping and commencement
of operations of the Facility, including all Construction Expenses
but excluding all Debt Financing Costs, which costs in the
aggregate shall not exceed the Available Funds.
“ Initial Disbursements
Certificate ” means an Officer’s Certificate from
the Issuers in the form attached hereto as Exhibit A
.
“ Interest Disbursement
Certificate ” means an Officer’s Certificate from
the Issuers in the form attached hereto as Exhibit C
.
“ Interest Payment Date
” has the meaning given in the Notes.
“ Issue Fees and
Expenses ” means fees and expenses incurred on or before
the Issue Date by the Issuers or for which the Issuers are liable
in connection with the offering of the Notes.
“ Issue Date” has
the meaning given in the Indenture.
“ Issuers’ Closing
Certificate ” means an Officer’s Certificate from
the Issuers in the form of Exhibit B-1 attached
hereto.
“ Issuer’s Closing
Officer’s Certificate ” has the meaning set forth
in Section 6.2.1 .
6
“ Lien ” has the
meaning given in the Indenture.
“ Manager ” means
Peninsula Gaming, LLC and its permitted successors and assigns
identified by notice from the Issuers to the Disbursement
Agent.
“ Material
Construction Document ” means any of the Construction
Contract, the Architect Agreement, and without duplication, any
other Contract with a total contract amount in excess of
$100,000.
“ Minimum Facilities
” means a casino offering not less than 500 slot
machines.
“ Officer’s
Certificate ” means a certificate signed by one of the
following officers of the Person on whose behalf or for whose
benefit the certificate is being executed or delivered: the
Chairman of the Board, Chief Executive Officer, President, Chief
Financial Officer, Executive Vice President, Vice President,
Treasurer or Assistant Treasurer.
“ Opening ” means
the time when the Facility shall have been opened to the general
public, is receiving customers in the ordinary course of business
and has received, and has in full force and effect, all material
Permits required for operation.
“ Operative Documents
” means the Financing Agreements and the Construction
Documents.
“ Permits ” has
the meaning given in the Indenture.
“ Person ” means
any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company,
trust, unincorporated organization, government or any agency or
political subdivision thereof, or any other entity.
“ Plans ” means
the plans, specifications, working drawings, design documents and
any change orders relating thereto, which may be amended by the
Company as necessary or appropriate, that collectively:
(a) provide for and detail the manner of construction of
improvements for the Facility; (b) call for construction which
will permit the Opening to occur; (c) call for construction
which will cause the Facility to be completed for a total cost
consistent with the Construction Disbursement Budget and the line
items set forth therein, taking into consideration the availability
of Available Funds, including Realized Savings; (d) are
consistent with constructing the Facility to include the Minimum
Facilities; (e) have been signed by an architect who is
licensed to practice architecture in the State of Iowa; and
(f) to the extent such Plans are amended, such Plans are
consistent with previous Plans and are reasonably inferable
therefrom, as the same may be amended or supplemented from time to
time.
“ Pledge Agreement
” means each of the Security Agreement and/or Control Account
Agreement among any of the Disbursement Agent, the Trustee and the
Issuers relating to the Trustee’s security interest in the
Accounts and the Disbursed Funds Account and the proceeds
thereof.
“ Property ”
means the real property located in Worth County, Iowa, on which the
Issuers will construct the Facility, as more particularly described
in Exhibit I hereto.
7
“ Property Documents
” means each easement or material agreement affecting the
Property or the Company’s use thereof.
“ Realized Savings
” means the excess of the amount budgeted in the Construction
Disbursement Budget for a line item over the amount of funds
expended or owed by the Company to complete the tasks set forth in
such line item and for the materials and services used to complete
such tasks, so long as the terms for such tasks are final and
unconditional (other than the satisfactory completion of such
tasks), including without limitation the execution of fixed price
purchase orders to acquire the materials that are the subject of
such line item (as applicable); provided , however ,
that Realized Savings for any line item shall be deemed to be zero
(i) if such savings are obtained in a manner that materially
detracts from the overall value, quality and amenities of the
Facility and (ii) unless and until the Issuers have delivered
a fully executed Construction Disbursement Budget Amendment
Certificate (together with all exhibits thereto) which includes
such Realized Savings.
“ Remaining Costs
” means, at any given time, the amount of Construction
Expenses (including Retainage Amounts) set forth in the
Construction Disbursement Budget that remain unpaid at such time
(including amounts that have not yet accrued at such
time).
“ Reserved Construction
Amount ” means the amount (exclusive of any Retainage
Amounts) necessary as of the date of the Final CDA Disbursement to
complete the Facility in accordance with the Final Plans and
containing the Minimum Facilities, including punch list
items.
“ Retainage Amounts
” means, at any given time, amounts which have accrued and
are owing under the terms of a Contract for work or services to the
Company already provided but which at such time (and in accordance
with the terms of the Contract) are being withheld from payment to
the respective Contractor until certain subsequent events (e.g.,
completion benchmarks or required release to a Subcontractor) have
been achieved under the Contract.
“ Security Agreement
” means that certain Security Agreement dated as of even date
herewith, made by the Issuers in favor of the Trustee, acting in
the capacity of collateral agent for the benefit of itself and the
holders of the Notes.
“ Security Documents
” has the meaning given in the Indenture.
“ Senior Credit
Facility ” has the meaning given in the
Indenture.
“ Soft Costs ”
means all costs and expenses (other than Hard Costs) set forth in
the Construction Disbursement Budget, including without limitation
pre-opening costs.
“ Subcontracts ”
has the meaning given in the Construction Contract.
“ Subcontractors
” means the Persons performing the obligations under the
Subcontracts.
“ Title Insurer ”
means Chicago Title Insurance Company.
8
“ Title Policy ”
means the lender’s policy or policies of title insurance to
be provided by the Title Insurer to the Trustee with respect to the
Property, together with all endorsements thereto, in the form
attached hereto as Exhibit H .
“ Trustee’s Closing
Certificate ” is the Officer’s Certificate from the
Trustee in the form of Exhibit B-3 attached
hereto.
1.2
Additional Defined
Terms . In
addition, the terms listed below in the left column below shall
have the respective meanings assigned to such terms in the
Section of this Agreement listed opposite such terms in the
right column below. All other capitalized terms not defined
herein, but defined in the Indenture, shall have the meanings
ascribed to them in the Indenture.
|
Defined Terms
|
|
Section
|
|
|
|
|
|
Advance Disbursement Request
|
|
4.1
|
|
Agreement
|
|
Introduction
|
|
Company
|
|
Introduction
|
|
Construction Disbursement Account
|
|
A of Recitals
|
|
Construction Disbursement Request
|
|
4.1
|
|
Construction Proceeds
|
|
A of Recitals
|
|
Disbursement Agent
|
|
Introduction
|
|
Event of Default
|
|
9
|
|
Final CDA Disbursement
|
|
7.5.1
|
|
GMP
|
|
7.6
|
|
GMP Change Order
|
|
7.6
|
|
Indenture
|
|
A of Recitals
|
|
Initial Disbursements
|
|
7.1
|
|
Initial Disbursement Request
|
|
4.1
|
|
Interest Disbursement Request
|
|
4.1
|
|
Interest Reserve Account
|
|
A of Recitals
|
|
Interest Reserve Proceeds
|
|
A of Recitals
|
|
Issuers
|
|
Introduction
|
|
Maximum GMP
|
|
7.6
|
|
Notes
|
|
A of Recitals
|
|
Original Notes
|
|
A of Recitals
|
|
Proceeds
|
|
A of Recitals
|
|
Trustee
|
|
Introduction
|
1.3
Rules of
Interpretation .
The following rules of interpretation shall apply
herein.
1.3.1
The singular includes the plural and
the plural includes the singular.
1.3.2
The word “or” is not
exclusive.
1.3.3
A reference to a Person includes its
permitted successors and permitted assigns.
9
1.3.4
Accounting terms have the meanings
assigned to them by U.S. GAAP (as defined in the Indenture), as
applied by the accounting entity to which they refer.
1.3.5
The words “ include
,” “ includes ” and “
including ” are not limiting.
1.3.6
A reference in a document to an
Article, Section, Exhibit, Schedule, Annex, Attachment or Appendix
is to the Article, Section, Exhibit, Schedule, Annex, Attachment or
Appendix of such document unless otherwise indicated.
Exhibits, Schedules, Annexes or Appendices to any document shall be
deemed incorporated by reference in such document.
1.3.7
References to any document,
instrument or agreement (a) shall include all exhibits,
schedules and other attachments thereto, (b) shall include all
documents, instruments or agreements issued or executed in
replacement thereof, and (c) shall mean such document,
instrument or agreement, or replacement or predecessor thereto, as
amended, modified and supplemented from time to time and in effect
at any given time.
1.3.8
The words “ hereof
,” “ herein ” and “ hereunder
” and words of similar import when used in any document shall
refer to such document as a whole and not to any particular
provision of such document.
1.3.9
References to “ days
” shall mean calendar days, unless the term “Business
Days” shall be used.
2.
Establishment of
Accounts .
2.1
Appointment of Disbursement
Agent . The Trustee
and the Issuers hereby appoint U.S. Bank National Association as
the Disbursement Agent, and U.S. Bank National Association hereby
accepts such appointment as the Disbursement Agent, in each case
upon the terms and conditions set forth in this Agreement.
The Disbursement Agent agrees to act in good faith at all
times.
2.2
Establishment of
Accounts .
Concurrently with the execution and delivery hereof, the
Disbursement Agent shall establish the Accounts at the Disbursement
Agent and credit thereto, in accordance with the provisions of
Recital A hereof, the Proceeds. All funds in the
Accounts and the Disbursed Funds Account shall be held in trust and
not commingled with any deposit or commercial bank account.
All funds accepted by the Disbursement Agent pursuant to this
Agreement shall be held in the appropriate Account or the Disbursed
Funds Account for the benefit of the Issuers subject to the terms
and conditions of this Agreement and the Pledge Agreement
(including, without limitation, the rights of the Trustee hereunder
and thereunder). The Disbursement Agent may, upon the request
of the Issuers, establish sub-accounts for accounting purposes
within the Accounts and the Disbursed Funds Account, it being
understood and agreed that the creation of such sub-accounts shall
in no way affect the pledge in favor of the Trustee in the Accounts
and the Disbursed Funds Account hereunder.
2.3
Pledge Agreement
. Pursuant to the Pledge
Agreement, the Issuers have granted to the Trustee, for the benefit
of the holders of the Notes, a first priority security interest in
the Accounts and the Disbursed Funds Account and all funds and
assets from time to time deposited therein, and all products and
proceeds thereof. The Disbursement Agent shall note in its
records
10
that all funds and other assets in the Accounts
and the Disbursed Funds Account have been pledged to the Trustee
and that the Disbursement Agent is holding such items as agent for
the Trustee, as secured party. The Disbursement Agent shall
maintain dominion and control over the Accounts and the Disbursed
Funds Account and the funds and assets therein solely for the
benefit of the Trustee, as secured party, and for no other parties
or Persons; provided , however , that the Issuers
shall be able to obtain disbursements from the Accounts and the
Disbursed Funds Account in accordance with the terms hereof and
upon such disbursement to the Issuers, such pledge and security
interest shall be extinguished and released with respect to the
amount so disbursed. Accordingly, it is the intention of the
parties that all such funds and assets shall not be within the
bankruptcy “estate” (or corresponding term used in the
bankruptcy or insolvency laws governing the Disbursement Agent) of
the Disbursement Agent. All such funds and all earnings
accruing from time to time thereon shall be held in the applicable
Account or the Disbursed Funds Account until disbursed or
transferred in accordance with the terms hereof.
2.4
Investment of Funds in
Accounts . All
funds from time to time credited to and contained in each of the
Construction Disbursement Account (other than those to be disbursed
pursuant to the Initial Disbursement Request, which shall be so
disbursed on the Issue Date) and the Interest Reserve Account shall
be invested only in Cash Equivalents from time to time by written
instructions by the Issuers delivered to the Disbursement Agent,
pending disbursement of such funds pursuant to this Agreement;
provided , however , that the Disbursement Agent
shall have concluded that such investments conform with the
requirements of the Indenture and each Pledge Agreement and that
appropriate steps have been taken with respect to each such
investment so as to assure the continuing perfection of the
Trustee’s first priority security interest in such
investment. For purposes of determining the steps to be taken
in order to achieve and maintain such perfection, the Disbursement
Agent shall have the right to require the delivery of, and to rely
upon, an opinion of counsel to the Issuers or the Disbursement
Agent (the reasonable expense of which shall be paid by the
Issuers) specifying (A) that the counsel is familiar with the
legal requirements applicable to the perfection of security
interests in said investments and (B) the steps required to
perfect and maintain a first priority security interest in favor of
the Trustee in such investments. If no such investment
instructions are received by the Disbursement Agent, after the
occurrence and during a continuance of a Default or Event of
Default, such funds shall be invested in Cash Equivalents selected
by the Disbursement Agent in conformity with the requirements of
the Indenture and the Pledge Agreement. The Disbursement
Agent shall not be liable for any investment, reinvestment or
similar losses, fees, taxes or charges or for the availability or
liquidity of funds in the Accounts as a result of any investments
made or reduced to cash in accordance with this Agreement, and the
Disbursement Agent is hereby authorized to direct the Securities
Intermediary (as defined in the Pledge Agreement) in writing
(i) to purchase Cash Equivalents in accordance herewith and
(ii) to reduce to cash any Cash Equivalents (without regard to
maturity) in any Account in order to make any application or
disbursement required hereunder.
2.5
Agency . The Disbursement Agent shall act solely
as the Trustee’s agent in connection with its duties under
this Agreement, notwithstanding any other provision contained
herein, without any authority to obligate the Trustee outside of
the scope of the authority set forth in this Agreement or to
compromise or pledge its security interest hereunder;
provided , however , that the Disbursement Agent is
authorized to make disbursements from the Accounts on behalf of the
Trustee pursuant to the terms of this Agreement. The Issuers
acknowledge and
11
agree that in no event shall the Trustee or the
holders of the Notes be liable for, nor shall the obligations of
the Issuers under the Indenture, the Notes or the other Security
Documents be affected or diminished as a consequence of, any action
or inaction of the Disbursement Agent with respect to the Accounts
or the Disbursed Funds Account or any funds or other assets
credited thereto or deposited herein.
2.6
Waiver of Set-off
Rights . The
Disbursement Agent hereby acknowledges the Trustee’s security
interest as set forth in this Agreement and the Pledge Agreement
and waives any and all security interests, claims, encumbrances,
liens and rights of set off which it may have in the Accounts or
the Disbursed Funds Account or any funds or other assets credited
thereto or deposited therein (including any and all rights of
offset, deduction and lien), whether statutory or otherwise
afforded by law, agreement or otherwise) and further waives any
right to set-off said funds, assets or investments now or in the
future against any indebtedness of the Issuers to the Disbursement
Agent. The waivers set forth in this Section are of
rights which may exist now or hereafter in favor of the
Disbursement Agent in its individual capacity, and not of any such
rights which may exist now or hereafter in favor of the
Disbursement Agent in its capacity as agent for the Trustee.
Nothing in this Section shall be construed as waiving,
limiting or diminishing any rights of the Trustee or the Issuers
against the Disbursement Agent or one another. Nothing in
this Section shall constitute, or be deemed to constitute, a
waiver or abridgement of the security interests, claims,
encumbrances, liens and rights of set off held by the Trustee in
the Accounts and the Disbursed Funds Account.
3.
Disbursements from
Accounts .
3.1
Conditions to
Disbursement . The
Disbursement Agent shall disburse funds from the Accounts only upon
satisfaction of the applicable conditions to disbursement set forth
herein.
3.2
Method of Disbursement
. Upon satisfaction (or a
written waiver by the Trustee) of the applicable conditions to
disbursement set forth herein, the Disbursement Agent shall
disburse funds from the applicable Account as specified in the
applicable Disbursement Request.
3.3
Disbursement Agent’s Compensation .
So long as the Trustee also serves as Disbursement Agent hereunder,
the Disbursement Agent shall not, except as otherwise provided in
Section 13 , be entitled to any fee for its services
hereunder. If the Trustee is not also serving as Disbursement
Agent hereunder, the Disbursement Agent shall be entitled to such
reasonable fee payable by the Issuers as is set forth in the
separate agency agreement with the Trustee. The Disbursement
Agent hereunder (whether or not serving as the Trustee) shall be
entitled to reimbursement for its reasonable expenses (including,
without limitation, the reasonable fees and expenses of the
Disbursement Agent’s counsel after the occurrence and during
the continuance of a Default or an Event of Default) as
compensation for services performed under this Agreement. The
Disbursement Agent shall receive such payments without the
requirement of obtaining any further consent or action on the part
of the Issuers with respect to the payment; provided ,
however , that, without limiting the foregoing, the
Disbursement Agent shall provide written itemization of requested
reimbursement of such expenses within thirty (30) days of receiving
a written request therefor from the Issuers. Disbursements
for each calendar month shall be made on the first day of the
subsequent calendar month. The provisions of this
Section 3.3 shall survive the termination of this
Agreement.
12
3.4
Transfer of Funds to the
Trustee . Upon the
receipt of written notice executed by the Trustee, which states
that (a) an Event of Default hereunder has occurred and is
continuing and (b) the Trustee is entitled to the funds in the
Accounts and the Disbursed Funds Account (a copy of which notice
shall be sent by the Trustee to the Issuers concurrently
therewith), the Disbursement Agent shall, without need for further
authorization or notice to the Issuers, deliver to the Trustee all
funds in the Accounts and the Disbursed Funds Account.
4.
Agreements of the Issuers, the Disbursement Agent and the
Trustee . The Issuers, the Disbursement Agent and the
Trustee severally agree as follows:
4.1
Disbursement Requests and
Disbursements .
(a)
The Issuers shall concurrently with
the execution and delivery of this Agreement have the right to
submit to the Disbursement Agent, with a copy to the Trustee, the
Initial Disbursement Certificate, requesting the disbursement of
funds from the Construction Disbursement Account (the “
Initial Disbursement Request ”).
(b)
The Issuers or, as set forth in
Section 5.1 , the Trustee (with a copy provided to the
Issuers), shall have the right to submit to the Disbursement Agent,
with a copy to the Trustee, the Interest Disbursement Certificate,
requesting the disbursement of funds from the Interest Reserve
Account to pay the interest due on the Notes (an “
Interest Disbursement Request ”) on the applicable
Interest Payment Date.
(c)
In accordance with
Section 7.2 or Section 7.3 , the Issuers
shall have the right from time to time during the course of this
Agreement, to submit to the Disbursement Agent, with a copy to the
Trustee, a Construction Disbursement Certificate (a “
Construction Disbursement Request ”) or an Advance
Disbursement Certificate (an “ Advance Disbursement
Request ”).
(d)
The Disbursement Agent shall review
each Disbursement Request submitted pursuant to
Sections 4.1(a) through (c) above to
determine that they meet the requirements of Sections 7.1
and 7.2 of this Agreement and conform to the forms of
Exhibits A , C , D-1 and D-2
respectively, but the Disbursement Agent shall have no obligation
to review any attachments, exhibits and certificates required
thereby (as the case may be) or to inquire whether any condition
certified to has been satisfied. If the Disbursement Agent
has determined that the requirements of Sections 7.1 and
7.2 of this Agreement have been met and that such
Disbursement Request conforms to the forms of
Exhibits A , C , D-1 and D-2 , as
applicable, then the Disbursement requested shall be made by the
Disbursement Agent. Except as to the Initial Disbursement,
which shall be made on the Issue Date, the Disbursement Agent shall
notify the Issuers and the Trustee as soon as reasonably possible
(and in any event within two (2) Business Days after the
Disbursement Agent receives the required documents) if any
Disbursement Request, or any portion thereof, is disapproved and
the reason(s) therefor.
(e)
Provided that a Disbursement Request
submitted in accordance with Sections 4.1(a) or
(c) above is not disapproved by the Disbursement Agent
in accordance with this Agreement, then, within two
(2) Business Days following submission of such Disbursement
Request, the Disbursement Agent shall disburse to the Disbursed
Funds Account the funds
13
requested in such Disbursement Request (other
than those to be disbursed pursuant to the Initial Disbursement
Request, which shall be disbursed on the Issue Date). The
Issuers shall withdraw funds from and write checks on the Disbursed
Funds Account solely for the purpose of paying Construction
Expenses identified on such Disbursement Request.
(f)
Provided that an Interest
Disbursement Request submitted in accordance with
Section 4.1(b) above is not disapproved by the
Disbursement Agent in accordance with this Agreement, then, within
two (2) Business Days following submission of such Interest
Disbursement Request, the Disbursement Agent shall disburse to the
Trustee the funds requested in such Interest Disbursement
Request.
(g)
The Trustee may waive any condition
to a disbursement requested in a Disbursement Request.
4.2
Insufficient Available
Funds . The Issuers
shall promptly, and in no event later than two (2) Business
Days following knowledge thereof, notify the Trustee and the
Disbursement Agent in writing if at any time the Issuers reasonably
believe that there are insufficient Available Funds (a) to
permit the Opening or (b) to complete construction of the
Facility in accordance with the Final Plans and/or the Construction
Disbursement Budget (as in effect at such time). Such notice
shall specify in reasonable detail (i) the amount of such
deficiency and (ii) the steps which the Issuers intend to take
to cure such deficiency and the anticipated timing
thereof.
5.
Interest Reserve
.
5.1
Interest Disbursements
. Ten (10) days prior to
each of the first two (2) Interest Payment Dates, the Issuers
shall deliver to the Disbursement Agent an Interest Disbursement
Request, setting forth the amount required to be paid and the
Interest Payment Date upon which such payment is due and
payable. Subject to Section 4.1(d) , on each such
Interest Payment Date, the Disbursement Agent shall liquidate Cash
Equivalents (to the extent required) held in the Interest Reserve
Account and disburse to the Trustee the amounts described in the
Interest Disbursement Request as due and payable on that date;
provided , however , that the Trustee may direct in
writing the Disbursement Agent to liquidate Cash Equivalents (to
the extent required) and disburse to the Trustee the amounts
necessary to pay the amounts required to be paid on the Notes in
the event that the Issuers fail to timely deliver the Interest
Disbursement Request, in which case the obligations of the Issuers
under this Section 5.1 shall be deemed performed. In the
event there are insufficient funds in the Interest Reserve Account
to pay the amount set forth in an Interest Disbursement Request or
direction so given by the Trustee, the Issuers shall, not less than
three (3) Business Days prior to the applicable Interest
Payment Date, deposit immediately available funds into the Interest
Reserve Account in an amount equal to such deficiency. The
Issuers acknowledge that the Issuers’ failure to provide
notice or deposit funds referenced in this Section shall not
in any way exonerate or diminish the Issuers’ obligation to
make all payments under the Notes as and when due.
5.2
Interest Reserve Account
Amounts . Upon
payment in full of each of the first two (2) interest payments
due on the Notes, the Disbursement Agent shall transfer any funds
and/or Cash Equivalents in the Interest Reserve Account to the
Construction Disbursement Account and
14
such funds and/or Cash Equivalents shall be
deemed Additional Revenue; provided , however , that
if the Final CDA Disbursement has been made pursuant to
Section 7.5 prior to the second Interest Payment Date,
any funds remaining in the Interest Reserve Account shall be
disbursed to the Disbursed Funds Account.
6.
Certain Covenants .
6.1
Notice of Opening . Promptly after (but in any event
within seven days after) the date of Opening, the Issuers shall
deliver an Officer’s Certificate to the Disbursement Agent
and the Trustee to the effect that the Opening has
occurred.
6.2
Issuers’ Officer’s
Certificates .
6.2.1
For Closing
Certificate . The
Issuers shall attach to the Issuers’ Closing Certificate
delivered to the Disbursement Agent and the Trustee an
Issuers’ Officer’s Certificate for Issuers’
Closing Certificate in the form of Attachment A to
Exhibit B-1 attached hereto (including all required
exhibits and attachments thereto) (the “ Issuers’
Closing Officer’s Certificate ”), executed and
completed as to the information required therein.
6.2.2
For Construction Disbursement
Certificate . The
Issuers shall attach to each Construction Disbursement Certificate
delivered to the Disbursement Agent and the Trustee an
Issuers’ Officer’s Certificate for Construction
Disbursement Certificate in the form of Attachment A to
Exhibit D-1 (including all required exhibits and
attachments thereto) (the “ Construction Disbursement
Officer’s Certificate ”), executed and completed as
to the information required therein.
6.2.3
For Advance Disbursement
Certificate . The
Issuers shall attach to each Advance Disbursement Certificate
delivered to the Disbursement Agent and the Trustee an
Issuers’ Officer’s Certificate for Advance Disbursement
Certificate in the form of Attachment A to Exhibit D-2
(including all required exhibits and attachments thereto) (the
“ Advance Disbursement Officer’s Certificate
”), executed and completed as to the information required
therein.
6.2.4
For First Disbursement
Request . The
Issuers shall attach to the First Disbursement Request (whether
made pursuant to an Initial Disbursements Certificate, Advance
Disbursement Certificate or Construction Disbursement Certificate)
delivered to the Disbursement Agent and the Trustee a First
Disbursement Officer’s Certificate in the form of
Exhibit D-3 (including all required exhibits and
attachments thereto) (the “ First Disbursement
Officer’s Certificate ”), executed and completed as
to the information required therein.
6.2.5
No Review Obligation
. Neither the Trustee nor the
Disbursement Agent shall have any obligation to review any
Officer’s Certificates or other documents attached to the
Issuer’s Closing Certificate, the Construction Disbursement
Certificate or the Advance Disbursement Certificate or to
investigate a