-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FYLL9zegChzVVk1iEFebNRcsGq1vJlFrh6AAbQ/3QINFFKyjiMzJwoGqphRV6zL1 khR2uKkwBxeIMc1ftUDjRw== 0000912057-96-011417.txt : 19960604 0000912057-96-011417.hdr.sgml : 19960604 ACCESSION NUMBER: 0000912057-96-011417 CONFORMED SUBMISSION TYPE: S-1/A PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 19960603 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MOHEGAN TRIBAL GAMING AUTHORITY CENTRAL INDEX KEY: 0001005276 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MEMBERSHIP SPORTS & RECREATION CLUBS [7997] IRS NUMBER: 061436334 FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: S-1/A SEC ACT: 1933 Act SEC FILE NUMBER: 033-80655 FILM NUMBER: 96576276 BUSINESS ADDRESS: STREET 1: 27 CHURCH LANE CITY: UNCASVILLE STATE: CT ZIP: 06382 BUSINESS PHONE: 2038480545 S-1/A 1 S-1A As filed with the Securities and Exchange Commission on June 3, 1996 REGISTRATION NO. 33-80655 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------- AMENDMENT NO. 3 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------- MOHEGAN TRIBAL GAMING AUTHORITY (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Not Applicable 7999 06-1436334 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.) Roland Harris Chairman, Management Board 67 Sandy Desert Road 67 Sandy Desert Road Uncasville, Connecticut 06382 Uncasville, Connecticut 06382 (860) 848-0545 (860) 848-0545 (Address, including zip code, and telephone number, (Name, address, including zip code, and telephone including area code, of Registrant's principal executive offices) number including area code, of agent for service)
------------ COPY TO: Lewis B. Rome, Esq. Rome, McGuigan, Sabanosh & Klebanoff, P.C. One State Street Hartford, Connecticut 06103 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective. If any of the Securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: /X/ If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / CALCULATION OF REGISTRATION FEE - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- Proposed maximum Proposed maximum Title of each class of Amount to be offering price aggregate Amount of securities to be registered registered per unit(2) offering price(2) registration fee - -------------------------------------------------------------------------------------------------------------- 13 1/2% Senior Secured Notes due 2002(1) $175,000,000(1) 100% $175,000,000 $60,345 - -------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------
(1) Includes aggregate principal amount of outstanding Series A Senior Secured Notes and Series B Senior Secured Notes to be issued in exchange for outstanding Series A Senior Secured Notes pursuant to the Exchange Offer to which this Registration Statement relates. (2) Estimated solely for purposes of calculating the registration fee. ------------ The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- MOHEGAN TRIBAL GAMING AUTHORITY CROSS-REFERENCE SHEET BETWEEN ITEMS OF FORM S-1 AND THE PROSPECTUS PURSUANT TO ITEM 501(B) OF REGULATION S-K.
ITEM IN FORM S-1 LOCATION IN PROSPECTUS ---------------- ---------------------- 1. Forepart of the Registration Statement and Outside Front Cover Page of Prospectus. . . . . . . . . . . . . . . . . . . Cover Page of Registration Statement; Cross Reference Sheet; Front Cover Page 2. Inside Front and Outside Back Cover Pages of Prospectus . . . Inside Front and Outside Back Cover Pages; Additional Information 3. Summary Information, Risk Factors and Ratio of Earnings to Fixed Charges. . . . . . . . . . . . . . . . . . . . . . . Prospectus Summary; Risk Factors; Business and Property 4. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . Use of Proceeds 5. Determination of Offering Price . . . . . . . . . . . . . . . Front Cover Page; The Exchange Offer 6. Dilution. . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable 7. Selling Security Holders. . . . . . . . . . . . . . . . . . . Not Applicable 8. Plan of Distribution. . . . . . . . . . . . . . . . . . . . . Front Cover Page; The Exchange Offer; Plan of Distribution 9. Description of Securities to be Registered. . . . . . . . . . Description of the Senior Notes 10. Interests of Named Experts and Counsel. . . . . . . . . . . . Not Applicable 11. Information With Respect to the Registrant. . . . . . . . . . Front Cover Page; Prospectus Summary; Risk Factors; Business and Property; Mohegan Tribe of Indians of Connecticut 12. Disclosure of Commission Position on Indemnification for Securities Act Liabilities. . . . . . . . Not Applicable
EXPLANATORY NOTE This Registration Statement contains two forms of prospectuses: one to be used in connection with the Exchange Offer and one to be used in a contemplated shelf offering of Series B Senior Notes in connection with resales by broker/dealers. The two prospectuses are identical in all respects except that (i) the front and back cover pages of the prospectus that would be used in the shelf offering refer only to the Series B Senior Notes, (ii) the section of the prospectus entitled "Plan of Distribution" that would be used in the shelf offering refers only to sales of Series B Senior Notes to be effected by broker/dealers and (iii) all descriptions of the Exchange Offer and of the Series A Senior Notes would be deleted from the prospectus to be used in the shelf offer. Each of the front and back cover pages and the prospectus section entitled "Plan of Distribution" that would be included in the prospectus to be used in the shelf offer, which pages are not included in the prospectus to be used in the Exchange Offer, are marked "Alternative Prospectus Page." Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State. SUBJECT TO COMPLETION, DATED JUNE 3, 1996 MOHEGAN TRIBAL GAMING AUTHORITY Offer to Exchange its 13 1/2% Series B Senior Secured Notes due 2002 With Cash Flow Participation Interest which have been registered under the Securities Act of 1933, as amended, for any and all outstanding 13 1/2% Series A Senior Secured Notes due 2002 With Cash Flow Participation Interest THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JULY 12, 1996, UNLESS EXTENDED. The Mohegan Tribal Gaming Authority (the "Authority"), an instrumentality of the Mohegan Tribe of Indians of Connecticut (the "Tribe"), hereby offers, upon the terms and subject to the conditions set forth in this Prospectus and the accompanying Letter of Transmittal (the "Letter of Transmittal") to exchange (the "Exchange Offer") $175 million aggregate principal amount of its 13 1/2% Series B Senior Secured Notes due November 15, 2002 (the "Series B Senior Notes"), which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to a Registration Statement of which this Prospectus is a part, for an equal principal amount of its outstanding 13 1/2% Series A Senior Secured Notes due November 15, 2002 (the "Series A Senior Notes"), which were sold on September 29, 1995 to institutional accredited investors and qualified institutional buyers pursuant to an exemption from registration under the Securities Act (the "Offering") and of which an aggregate of $175 million principal amount is outstanding. The form and terms of the Series B Senior Notes are the same as the form and terms of the Series A Senior Notes, except that (i) the Series B Senior Notes have been registered under the Securities Act and, therefore, will not bear legends restricting their transfer pursuant to the Securities Act, and (ii) following consummation of the Exchange Offer, holders of the Series B Senior Notes generally will not be entitled to the rights of holders of the Series A Senior Notes under the Registration Rights Agreement dated as of September 29, 1995 among the Authority and the holders of Series A Senior Notes identified therein. See "The Exchange Offer--Registration Rights Agreement," "--Consequences of Failure to Exchange" and "--Plan of Distribution; Resales of the Series B Senior Notes." The Series B Senior Notes will evidence the same debt as the Series A Senior Notes (which they will replace) and will be issued under, and be entitled to the benefits of, the Indenture governing the Series A Senior Notes, dated as of September 29, 1995 (the "Indenture"). The Series A Senior Notes and the Series B Senior Notes are sometimes referred to herein collectively as the "Senior Notes." See "The Exchange Offer" and "Description of the Senior Notes." The Authority will accept for exchange any and all Series A Senior Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on July 12, 1996, unless extended by the Authority in its sole discretion (the "Expiration Date"). Tenders of the Series A Senior Notes may be withdrawn at any time prior to the Expiration Date. The Exchange Offer is subject to certain customary conditions. See "The Exchange Offer." THE SERIES A SENIOR NOTES MAY BE TENDERED ONLY IN DENOMINATIONS OF $1,000 OR INTEGRAL MULTIPLES THEREOF. ---------------- SEE "RISK FACTORS" BEGINNING ON PAGE 17 HEREIN FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY HOLDERS OF SERIES A SENIOR NOTES IN EVALUATING THE EXCHANGE OFFER AND BY PROSPECTIVE PURCHASERS OF SERIES B SENIOR NOTES ISSUED BY THE AUTHORITY IN THE EXCHANGE OFFER. ---------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE DATE OF THIS PROSPECTUS IS JUNE __ , 1996. (COVER PAGE CONTINUED) EXCEPT AS OTHERWISE INDICATED, CERTAIN CAPITALIZED TERMS USED IN THIS PROSPECTUS HAVE THE MEANINGS ASSIGNED TO THEM IN THE GLOSSARY AND INDEX OF DEFINED TERMS BEGINNING ON PAGE 134 HEREOF. Fixed interest will be payable on the Series B Senior Notes at the rate of 13 1/2% per annum, semi-annually in arrears on November 15 and May 15 of each year, commencing May 15, 1996. Cash Flow Participation Interest (as defined herein) will be payable on the Series B Senior Notes, on each such interest payment date, in an aggregate amount equal to 5.0% of the Authority's Cash Flow (as defined herein) for the six-month period ending on September 30 or March 31 (each a "Semi-annual Period") most recently completed prior to such interest payment date up to a limit, calculated on a cumulative basis with respect to each period consisting of two consecutive Semi-annual Periods ending on September 30, of $250 million of the Authority's Cash Flow; PROVIDED that no Cash Flow Participation Interest shall be payable with respect to any period prior to the earlier of the first day the Mohegan gaming and entertainment complex being constructed by the Authority in southeastern Connecticut (the "Mohegan Sun Casino") commences operations and October 31, 1996. The aggregate amount of Cash Flow Participation Interest payable in any Semi-annual Period will be reduced pro rata for reductions in the outstanding principal amount of Senior Notes occurring prior to the close of business on the record date immediately preceding such payment of Cash Flow Participation Interest. The payment of Cash Flow Participation Interest may be deferred if such payment would cause the Authority's Fixed Charge Coverage Ratio (as defined herein) for the four consecutive fiscal quarters last completed to be less than 2.0:1 and is subject to other limitations and restrictions described herein. The Series B Senior Notes will not be redeemable at the option of the Authority prior to November 15, 1999 (except as otherwise required by any governmental authority, commission or other agency with authority to regulate the Mohegan Sun Casino), after which time the Series B Senior Notes will be redeemable, in whole or in part, at the option of the Authority at the redemption prices set forth herein plus accrued and unpaid interest and liquidated damages, if any, to the date of redemption. Upon the occurrence of any of certain specific events described in the Indenture that effect (or could effect) a change of control of the Authority, each holder of Senior Notes will have the right to require the Authority to repurchase such holder's Senior Notes at 101% of the principal amount thereof plus accrued and unpaid interest and liquidated damages, if any, to the repurchase date, subject to certain limitations and restrictions described herein. Within 120 days after the last day of each fiscal year of the Authority, beginning with the fiscal year ending September 30, 1997, the Authority will be required to offer to purchase, at the prices set forth herein, outstanding Senior Notes in a principal amount equal to the sum of (i) 50% of the Authority's Excess Cash Flow (as defined herein), (ii) 100% of the amount of Deferred Subordinated Interest (as defined herein) for such fiscal year and (iii) accrued and unpaid interest and liquidated damages, if any. The Series B Senior Notes (and any Series A Senior Notes not tendered in the Exchange Offer) will be senior secured obligations of the Authority and will rank PARI PASSU in right of payment with any existing and future senior Indebtedness (as defined herein) of the Authority, including without limitation, approximately $40 million of equipment lease financing to be incurred by the Authority (the "Equipment Financing"). In addition, prior to opening the Mohegan Sun Casino the Authority expects to incur approximately $12.5 million of senior indebtedness for working capital purposes (the "Working Capital Financing"), which may be secured by the same collateral that secures the Senior Notes, on a PARI PASSU basis with the Senior Notes. The Senior Notes will rank senior to all existing and future subordinated indebtedness of the Authority, including $40 million principal amount of Subordinated Notes due 2003 (the "Subordinated Notes") acquired by Sun International Hotels Limited ("Sun International") concurrently with the completion of the Offering and any additional subordinated notes that may be issued to Sun International pursuant to the $50 million secured completion guarantee provided by Sun International to fund any cost overruns incurred in connection with completion of the Mohegan Sun Casino (the "Secured Completion Guarantee"). Payment of principal on the Subordinated Notes is subordinate to the prior payment in full of all obligations on all of the Senior Notes, other than (i) certain redemptions required by a Gaming Regulatory Authority if a holder is required to be found suitable and is found unsuitable and (ii) repurchases of Subordinated Notes using funds not accepted by holders of Senior Notes in an Excess Cash Purchase Offer. The Series A Senior Notes are, and the Series B Senior Notes will be, secured by note collateral consisting primarily of a leasehold mortgage on the Mohegan Sun Casino, a security interest in the personal property of the Mohegan Sun Casino (with certain exceptions described herein), a pledge of certain cash collateral accounts and an assignment of cash generated by the Mohegan Sun Casino. Additional Indebtedness, including senior Indebtedness, may be incurred from time to time, subject to certain restrictions. Based on an interpretation by the staff of the Securities and Exchange Commission (the "Commission") set forth in no-action letters issued to third parties, the Authority believes that, except as otherwise described (COVER PAGE CONTINUED) EXCEPT AS OTHERWISE INDICATED, CERTAIN CAPITALIZED TERMS USED IN THIS PROSPECTUS HAVE THE MEANINGS ASSIGNED TO THEM IN THE GLOSSARY AND INDEX OF DEFINED TERMS BEGINNNING ON PAGE 134 HEREOF. herein, Series B Senior Notes issued pursuant to the Exchange Offer in exchange for Series A Senior Notes may be offered for resale, resold and otherwise transferred by any holder thereof (other than any such holder which is an "affiliate" of the Authority within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act; PROVIDED that such Series B Senior Notes are acquired in the ordinary course of such holder's business and that such holder does not intend to participate and has no arrangement or understanding with any person to participate in the distribution of such Series B Senior Notes. Prior to consummation of this Exchange Offer, there has been no public market for the Series B Senior Notes (or the Series A Senior Notes). The Series A Senior Notes are not, and the Series B Senior Notes are not expected to be, listed on any securities exchange or authorized for trading on the Nasdaq system. The Authority does not presently expect that an active market for the Series B Senior Notes (or the Series A Senior Notes) will develop. To the extent that an active market for the Series B Senior Notes (or the Series A Senior Notes) does develop, the market value thereof will depend on many factors, including, among other things, prevailing interest rates, general economic conditions, the Authority's financial condition, the construction and results of operations of the Mohegan Sun Casino and other factors. Such conditions may cause the Series B Senior Notes (or the Series A Senior Notes), to the extent that they are traded, to trade at a discount. See "Risk Factors--Absence of Public Trading." The Authority has agreed to pay the costs and expenses of the Exchange Offer. ADDITIONAL INFORMATION The Authority has filed with the Commission a registration statement on Form S-1 (the "Registration Statement") under the Securities Act with respect to the Series B Senior Notes offered hereby. This Prospectus, which is part of the Registration Statement, does not contain all the information set forth in the Registration Statement and the exhibits and schedules thereto, certain items of which are omitted in accordance with the rules and regulations of the Commission. Statements made in this Prospectus as to the contents of any contract, agreement or other document referred to are not necessarily complete. With respect to each such contract, agreement or other document filed as an exhibit to the Registration Statement, reference is hereby made to such exhibit for a more complete description of the matter involved and each such statement shall be deemed qualified in its entirety by such reference. For further information with respect to the Authority, the Tribe and the Series B Senior Notes, reference is hereby made to the Registration Statement and such exhibits and schedules filed as a part thereof, which may be inspected, without charge, at the Public Reference Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the Commission located at Seven World Trade Center, 13th Floor, New York, New York 10048 and at Room 3190, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of all or any portion of the Registration Statement may be obtained from the Public Reference Section of the Commission, upon payment of prescribed fees. ------------------------------- ENFORCEABILITY OF CIVIL LIABILITIES THE AUTHORITY, AS AN INSTRUMENTALITY OF THE TRIBE, A FEDERALLY-RECOGNIZED INDIAN TRIBE, INTENDS TO ASSERT THE DEFENSE OF SOVEREIGN IMMUNITY IN ANY SUIT BROUGHT WITHOUT THEIR CONSENT. ALTHOUGH THE TRIBE AND THE AUTHORITY HAVE CONSENTED TO SUIT AND HAVE GRANTED A LIMITED WAIVER OF ANY SOVEREIGN IMMUNITY DEFENSE THEY MAY HAVE IN CONNECTION WITH THE SENIOR NOTES, THE INDENTURE AND THE DOCUMENTS RELATED TO THE NOTE COLLATERAL, INCLUDING SUITS AGAINST THE AUTHORITY TO ENFORCE THE OBLIGATION TO REPAY THE SENIOR NOTES, THE TRUSTEE AND THE HOLDERS OF THE SENIOR NOTES COULD BE PRECLUDED FROM JUDICIALLY ENFORCING THEIR RIGHTS AND REMEDIES IF SUCH WAIVER OR CONSENT IS HELD TO BE INEFFECTIVE. THE TRIBE AND THE AUTHORITY HAVE NOT WAIVED THE DEFENSE OF SOVEREIGN IMMUNITY WITH RESPECT TO ANY PRIVATE CIVIL SUITS FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS. ACCORDINGLY, THE HOLDERS OF THE SENIOR NOTES MAY NOT HAVE AN EFFECTIVE REMEDY AGAINST THE TRIBE OR THE AUTHORITY FOR VIOLATIONS OF THE SECURITIES ACT. IN ADDITION, THE GAMING DISPUTES COURT OF THE TRIBE HAS BEEN VESTED WITH EXCLUSIVE JURISDICTION FOR THE TRIBE OVER DISPUTES WITH RESPECT TO THE MOHEGAN SUN CASINO, INCLUDING ALL DISPUTES RELATING TO THE SENIOR NOTES OR THE INDENTURE. FEDERAL COURTS MAY NOT HAVE JURISDICTION OVER DISPUTES NOT ARISING UNDER FEDERAL LAW AND STATE COURTS MAY NOT HAVE JURISDICTION OVER DISPUTES ARISING ON THE TRIBE'S RESERVATION. MOREOVER, FEDERAL AND STATE COURTS, UNDER THE DOCTRINE OF COMITY AND EXHAUSTION OF REMEDIES, MAY BE REQUIRED TO DEFER TO THE JURISDICTION OF THE GAMING DISPUTES COURT OR REQUIRE A PLAINTIFF TO EXHAUST ITS REMEDIES IN THE GAMING DISPUTES COURT BEFORE BRINGING ANY ACTION IN A FEDERAL OR STATE COURT. -2- PROSPECTUS SUMMARY THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS. EXCEPT AS OTHERWISE INDICATED, CERTAIN CAPITALIZED TERMS USED IN THIS PROSPECTUS HAVE THE MEANINGS ASSIGNED TO THEM IN THE GLOSSARY AND INDEX OF DEFINED TERMS BEGINNING ON PAGE 132 HEREOF. THE MOHEGAN SUN CASINO The Mohegan Tribal Gaming Authority (the "Authority"), an instrumentality of the Mohegan Tribe of Indians of Connecticut (the "Tribe"), is developing a gaming and entertainment complex (the "Mohegan Sun Casino") on an approximately 240-acre site located in southeastern Connecticut (the "Site"). The Authority has engaged Trading Cove Associates ("TCA"), an affiliate of Sun International Hotels Limited ("Sun International"), to manage the development, construction, operation and marketing of the Mohegan Sun Casino. The Mohegan Sun Casino, scheduled to open in the fourth quarter of 1996, will include approximately 150,000 square feet of gaming space and is designed to accommodate approximately 3,000 slot machines and 180 table games. The Mohegan Sun Casino is expected to commence operations with a minimum of 2,500 slot machines and 180 table games, and will feature a 600-seat buffet, four specialty theme restaurants, a coffee shop, a food court, several bars, an entertainment area featuring children's recreational facilities and parking for approximately 7,500 cars. Once completed, the Mohegan Sun Casino and the currently operating Foxwoods Resort & Casino ("Foxwoods"), which is owned and operated by the Mashantucket Pequot Tribe (the "Pequot Tribe"), will be the only two casinos offering slot machines and table games in the northeastern United States that are currently legally authorized outside of Atlantic City, New Jersey. The Site for the Mohegan Sun Casino is located approximately one mile from the interchange of Interstate 395 and Connecticut Route 2A (which is expected to be widened to a four-lane expressway), just outside Montville, Connecticut, and approximately 10 miles west of Foxwoods. As part of its integrated development plan, the Authority is constructing a four-lane access road (with its own exit) from Route 2A, giving patrons of the Mohegan Sun Casino direct access to Interstate 395 and to Interstate 95, the main highway connecting Boston, Providence and New York. The Site, together with all buildings constructed and to be constructed thereon and improvements thereto, including the Mohegan Sun Casino, are and will be owned by the United States in trust for the Tribe. Such real property, and the additional parcel of land adjacent to the Site that was acquired by the Tribe in its own name for expansion of the access road leading to the Mohegan Sun Casino, are and will be leased by the Tribe to the Authority under a long-term land lease. The Mohegan Sun Casino will incorporate an historical northeastern Indian theme which will be conveyed through architectural features and the use of natural design elements such as timber, stone and water. Guests will enter the Mohegan Sun Casino through one of four major entrances, each of which will be distinguished by a separate seasonal theme--winter, spring, summer and fall-- emphasizing the importance of the seasonal changes to tribal life. The Authority believes that the Mohegan Sun Casino's location, ease of access and unique design, together with Sun International's development and gaming expertise, should enable the Mohegan Sun Casino to capture a significant share of the gaming market in the northeastern United States. -3- MARKET The market for the Mohegan Sun Casino will be primarily day-trip customers from New England and New York who reside within 150 miles of the Mohegan Sun Casino. According to market research reports, in 1994 there were approximately 2.6 million adults living within 50 miles of the Site, 10.2 million adults within 100 miles of the Site and 21.8 million adults within 150 miles of the Site. The metropolitan areas of Hartford, New Haven, Springfield, Worcester, Boston and Providence are within one to two hours driving time by interstate highway to the Mohegan Sun Casino. The Authority believes that the success of Foxwoods supports the conclusion that the northeastern United States is an attractive market in which to establish a casino. Foxwoods is currently the largest gaming facility in the United States in terms of the number of total gaming positions and, the Authority believes, is one of the most profitable casinos in the United States. THE MANAGER Partners of TCA have been working with the Tribe since 1992 and assisted the Tribe in obtaining federal recognition, negotiating a gaming compact with the State of Connecticut and obtaining numerous governmental approvals for the Mohegan Sun Casino. TCA's partners and their affiliates have extensive experience in the development, construction, marketing and management of casinos and hotels throughout the world. A wholly-owned subsidiary of Sun International is a Managing Partner of, and owns a 50% interest in, TCA. The remaining partners of TCA are primarily engaged in hotel management and real estate development. The senior management of Sun International has been actively engaged in the gaming and lodging industries for the last 25 years. Prior to establishing Sun International in 1993, Mr. Solomon Kerzner, the Chairman and Chief Executive Officer of Sun International, and his management team were responsible for the development and operation of several world-renowned resorts and casinos including Sun City, The Lost City and The Carousel Casino and Entertainment World (the "Carousel") in South Africa. Sun City, which was developed over a 14-year period starting in 1979, currently covers approximately 620 acres and features four hotels with a total of 1,300 rooms and 55,000 square feet of gaming space with 1,300 slot machines and 40 table games. Sun City caters to approximately 2.0 million tourists annually. The most recent addition to Sun City is The Lost City, a highly themed, $300 million destination resort based upon a legend of a lost African civilization. The Carousel, located 65 miles from Johannesburg, is a 500,000 square foot Victorian-themed entertainment facility featuring 65,000 square feet of gaming space with 1,800 slot machines and 70 table games and caters to over 4.0 million visitors annually. In 1993, Mr. Kerzner established Sun International to acquire from Resorts International, Inc. the Paradise Island businesses, which are located in The Commonwealth of the Bahamas and include the Paradise Island Resort and Casino. After acquiring these businesses, Sun International spent approximately $140 million over a seven-month period redeveloping the property into an ocean-themed destination resort that was relaunched as the Atlantis Resort and Casino ("Atlantis"). Atlantis features 1,147 hotel rooms and 30,000 square feet of gaming space with 800 slot machines and 75 table games. Sun International currently owns interests in and operates nine resort and gaming facilities, including Atlantis, four casinos in France and four hotel properties in the Indian Ocean. On March 1, 1996, Sun International redesignated its two series of Ordinary Shares as one series of Ordinary Shares, which trade on the New York Stock Exchange (the "NYSE") under the symbol "SIHLF." Based upon the closing price of its Ordinary Shares on May 1, 1996, Sun International had an equity market capitalization of approximately $1.24 billion. -4- In connection with the Offering, Sun International purchased $40 million of Subordinated Notes. See "--Investment by Sun International." In addition, subject to certain qualifications and limitations, Sun International has undertaken to cause the Mohegan Sun Casino to be Completed (as defined herein) and, pursuant to the Secured Completion Guarantee, has guaranteed the payment of all project costs owing prior to such completion up to a maximum amount of $50 million. To the extent Sun International advances funds under the Secured Completion Guarantee, the Authority will issue to Sun International additional subordinated notes in a principal amount equal to the funds so advanced. All existing and future indebtedness of the Authority to Sun International is, and will be, subordinated to Sun International's obligations under the Secured Completion Guarantee. See "Material Agreements--Secured Completion Guarantee." THE TRIBE AND THE AUTHORITY The Tribe is a federally-recognized Indian tribe, whose federal recognition became effective May 15, 1994. Although it only recently received federal recognition, the Tribe has lived in a cohesive community since time immemorial in what is today southeastern Connecticut. The Tribe historically has cooperated with the United States and is proud of the fact that members of the Tribe have fought on the side of the United States in every war from the Revolutionary War to Desert Storm. The Tribe believes that this philosophy of cooperation exemplifies its approach to developing the Mohegan Sun Casino. This philosophy of cooperation, rather than confrontation, has enabled the Tribe to create a unique alliance among local, state and federal officials to achieve its goal of building the Mohegan Sun Casino. The Tribe established the Authority, which has perpetual life, with exclusive constitutional power to conduct and regulate its gaming activities. Under the Indian Gaming Regulatory Act of 1988, as amended ("IGRA"), federally-recognized Indian tribes are permitted to conduct casino gaming operations on tribal land, subject to, among other things, the negotiation of a tribal-state compact with the affected state. The Tribe and the State of Connecticut have entered into such a compact, which has been approved by the Secretary of the Interior (the "Mohegan Compact"). The Mohegan Compact and related agreements require that certain payments based on slot machine revenues be made to the State of Connecticut. Such payments, however, are not required to be made if the State of Connecticut legalizes any gaming operation with slot machines or other commercial casino games, other than those conducted by the Tribe or the Pequot Tribe on tribal lands. See "Business and Property-- Competition." SOURCES AND USES OF FUNDS The cost of developing, constructing, equipping and opening the Mohegan Sun Casino is expected to total approximately $312.5 million, which consists of $300 million of project development costs and $12.5 million of initial working capital. The estimated sources and uses of funds for the Mohegan Sun Casino through the scheduled opening date in the fourth quarter of 1996, as revised since the Offering to reflect updated cost estimates, are as follows (in millions):
SOURCES ------- Series A Senior Notes . . . . . . . . . . . . . . . . . $175.0 Equipment Financing (a) . . . . . . . . . . . . . . . . 40.0 Subordinated Notes (b) . . . . . . . . . . . . . . . . 40.0 Secured Completion Guarantee (c) . . . . . . . . . . . 45.0 Sources for Project Costs . . . . . . . . . . . . . . . $300.0 -5- Working Capital Financing (d) . . . . . . . . . . . . . 12.5 Total Sources. . . . . . . . . . . . . . . . . . . $312.5 ------ ------ USES (E) -------- Acquisition of the Site. . . . . . . . . . . . . . . . $29.7 Construction Costs . . . . . . . . . . . . . . . . . . 176.0 Furniture, Fixtures and Equipment . . . . . . . . . . . 18.6 Gaming Equipment . . . . . . . . . . . . . . . . . . . 28.1 Capitalized Interest (f) . . . . . . . . . . . . . . . 18.8 Pre-Opening Expenses . . . . . . . . . . . . . . . . . 18.5 Organizational and Financing Fees and Expenses . . . . 10.3 Contingency (g) . . . . . . . . . . . . . . . . . . . . -- Total Project Costs . . . . . . . . . . . . . . . . . . $300.0 ------ ------ Initial Working Capital . . . . . . . . . . . . . . . . 12.5 Total Uses . . . . . . . . . . . . . . . . . . . . $312.5 ------ ------
- -------------- (a) The Authority has entered into an agreement that provides for up to $40 million of equipment financing (the "Equipment Financing") representing financing for approximately 2,500 slot machines and certain other equipment. The Mohegan Sun Casino will be designed to accommodate an additional 500 slot machines, which the Indenture permits to be financed through Additional Lease Financing (as defined in the Indenture). (b) Concurrently with the closing of the Offering, the Subordinated Notes were purchased by Sun International for $38.3 million in cash and the exchange of $1.7 million of outstanding indebtedness of the Authority. (c) Sun International has provided a $50 million secured completion guarantee (the "Secured Completion Guarantee") to fund any cost overruns. The obligations of Sun International under the Secured Completion Guarantee are secured by an irrevocable letter of credit in the amount of $15 million and a pledge of 1,500,000 Ordinary Shares of Sun International. Because the costs of constructing, equipping and opening the Mohegan Sun Casino are expected to exceed the net proceeds of the Offering and the sale of the Subordinated Notes and the $40 million of Equipment Financing available to the Authority, the Authority currently anticipates that approximately $45 million will be drawn under the Secured Completion Guarantee. The Secured Completion Guarantee is subject, however, to a number of important qualifications, exceptions and limitations. See "Risk Factors--Limitations Under the Secured Completion Guarantee." (d) The Authority has entered into an agreement with a third party lender for a $12.5 million senior working capital line of credit for the Mohegan Sun Casino (the "Working Capital Financing"). The Indenture permits the Working Capital Financing to be secured by the Note Collateral on a PARI PASSU basis with the Senior Notes. -6- (e) The Authority believes that the construction budget for the Mohegan Sun Casino, as revised since the Offering to reflect updated cost estimates, changes to the project and unanticipated site conditions (the "Construction Budget"), is reasonable. The Authority has entered into a guaranteed maximum price construction contract for the construction of the Mohegan Sun Casino for a price not in excess of the costs set forth in the Construction Budget. Given the risks inherent in the construction process, however, actual construction costs may be significantly higher. See "Risk Factors-- Potential Inability to Commence Operations as Scheduled." (f) Net of interest income anticipated to be earned on the funds in the Escrow Account (as defined herein). (g) Due to the availability of funds under the Secured Completion Guarantee, no specific funds have been allocated herein as contingency. DEVELOPMENT AND CONSTRUCTION The Authority and TCA have developed a master plan for the Site that integrates all major aspects of gaming and entertainment design. The master plan places particular emphasis on creating direct highway access, providing convenient parking, designing an attractively themed facility and developing a variety of non-gaming entertainment amenities. Morse Diesel International ("Morse Diesel") is serving as general contractor for the Mohegan Sun Casino and the Authority has entered into a guaranteed maximum price contract with Morse Diesel for the construction of the Mohegan Sun Casino. Sun International, which has substantial development experience, is overseeing the development of the Mohegan Sun Casino. Construction of the Mohegan Sun Casino was commenced after the closing of the Offering, at which time the Site was purchased and conveyed to the United States in trust for the Tribe and leased to the Authority. See "Business and Property--Design and Construction." REGULATORY APPROVALS A number of federal, state and tribal governmental licenses and approvals are required to open and operate the Mohegan Sun Casino. Prior to consummation of the Offering, the Tribe's management agreement with TCA (the "Management Agreement") was approved by the Chairman of the National Indian Gaming Commission (the "NIGC") and the documentation related to the Senior Notes was approved by the Bureau of Indian Affairs of the Department of the Interior (the "BIA"). No further approvals from the NIGC are required with respect to the construction, financing, management and operations of the Mohegan Sun Casino; however, the NIGC may have the authority, under certain circumstances, to require modifications of the Management Agreement or to void the Management Agreement if it is not being implemented in accordance with the conditions specified upon approval or if TCA or the Authority fails to comply with applicable laws and regulations. See "Risk Factors--Highly Regulated Industry." Prior to opening the Mohegan Sun Casino, each of the partners of TCA and certain employees of the Mohegan Sun Casino must be licensed by relevant tribal and state authorities. Each of the partners of TCA has applied for and received temporary gaming licenses from the Commissioner of Revenue Services of the State of Connecticut. See "Risk Factors--Transkei Investigation." As each employee who is required to be licensed is hired, the Authority or TCA will cause such employee to apply for all required licenses. A number of federal and state approvals are required to construct the access roads to the Mohegan Sun Casino. The Department of Transportation of the State of Connecticut ("DOT") or the Authority has obtained all requisite permits and approvals for the construction of the access road from Route 2A. -7- The Authority and TCA believe that they will be able to acquire all other necessary licenses, permits and approvals in order to construct, open and operate the Mohegan Sun Casino. However, no assurances can be given that any or all of the licenses, permits and/or approvals described above will be issued or that any or all of such licenses, permits and/or approvals will be issued without certain conditions or restrictions that could adversely affect the construction and operation of the Mohegan Sun Casino or the development of the adjacent roadways. The failure to obtain any of these licenses, permits or approvals in a timely manner may delay, restrict or prevent the Mohegan Sun Casino from opening as contemplated herein. -8- THE EXCHANGE OFFER Registration Rights Agreement. . . To finance the development, construction, equipping and opening of the Mohegan Sun Casino, on September 29, 1995 the Authority sold the Series A Senior Notes to Bear, Stearns & Co. Inc. and Donaldson, Lufkin & Jenrette Securities Corporation, as initial purchasers (the "Initial Purchasers"), for resale to qualified institutional buyers and/or to certain institutional accredited investors within the meaning of Rule 501 under the Securities Act. In connection therewith, the Authority and the Initial Purchasers entered into a Registration Rights Agreement dated as of September 29, 1995 (the "Registration Rights Agreement"), which grants the holders of the Series A Senior Notes certain exchange and registration rights. The Exchange Offer made hereby is intended to satisfy such exchange and registration rights. Each holder who tenders Series A Senior Notes and receives Series B Senior Notes in exchange therefor pursuant to the Exchange Offer shall cease to have any further exchange or registration rights under the Registration Rights Agreement. The Registration Rights Agreement provides that the Authority may be required, under certain circumstances specified therein, in lieu of or in addition to the foregoing, to file with the Commission (and use its best efforts to cause to become effective) a shelf registration statement with respect to the Senior Notes. Holders of Series A Senior Notes, if any, who are not permitted, by law or any policy of the Commission, to participate in the Exchange Offer and who satisfy certain other conditions will be eligible to sell their Series A Senior Notes pursuant to a resale prospectus when and if filed by the Authority as part of an amendment to the Registration Statement of which this Prospectus is a part. See "The Exchange Offer--Registration Rights Agreement," "--Consequences of Failure to Exchange" and "--Resales of the Series B Senior Notes." Liquidated Damages . . . . . . . . The Registration Rights Agreement obligates the Authority to pay liquidated damages to the holders of Senior Notes under certain circumstances if the Authority fails to comply with the registration requirements thereof. Pursuant to the Registration Rights Agreement, the Authority agreed to file a registration statement under the Securities Act to effect the Exchange Offer no later than 30 days after consummation of the Offering. As a result of the Authority's failure to file the Registration Statement of which this Prospectus is a part within such 30-day period and because such Registration Statement was not declared effective by the Commission on or before the Effectiveness Target Date (as defined in the Registration Rights Agreement), in connection with the May 15, 1996, interest payment in respect of the Senior Notes, the -9- Authority paid to the holders of Senior Notes an aggregate of $95,000 (which equals approximately $0.54 per $1,000 principal amount of Senior Notes) in liquidated damages. As of June 5, 1996, the Authority had accrued additional liquidated damages in the amount of $26,250. See "--Interest Payment Dates," "The Exchange Offer-- Registration Rights Agreement." The Exchange Offer . . . . . . . . The Authority is offering to exchange $175 million aggregate principal amount of Series B Senior Notes for an equal principal amount of Series A Senior Notes. The Authority will issue the Series B Senior Notes on the earliest practicable date following the Expiration Date (as defined herein). Expiration Date. . . . . . . . . . The Exchange Offer will terminate at 5:00 p.m., New York City time, on July 12, 1996, unless extended by the Authority in its sole discretion (if and as extended, the "Expiration Date"). Procedures for Tendering Series A Senior Notes. . . . . . . Each holder of Series A Senior Notes wishing to accept the Exchange Offer must complete, sign and date the accompanying Letter of Transmittal in accordance with the instructions contained herein and therein, and mail or otherwise deliver such Letter of Transmittal together with the Series A Senior Notes and any other required documentation to the Exchange Agent (as defined herein) at the address set forth herein. By executing the Letter of Transmittal, a holder will make certain representations to the Authority. See "The Exchange Offer-Registration Rights Agreement" and "-Procedures for Tendering." Special Procedures for Beneficial Owners. . . . . . . . . Any beneficial owner whose Series A Senior Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact such registered holder promptly and instruct such registered holder to tender on such beneficial owner's behalf. A form of Instruction to Registered Holder from Beneficial Owner is enclosed with this Prospectus for the convenience of such beneficial owners. See "The Exchange Offer-- Guaranteed Delivery Procedures." Withdrawal Rights. . . . . . . . . Tenders may be withdrawn at any time prior to the Expiration Date. Acceptance of Series A Senior Notes and Delivery of Series B Senior Notes . . . . . . The Authority will accept for exchange any and all Series A Senior Notes that are properly tendered in the Exchange Offer, and not withdrawn, prior to the Expiration Date. The Series B -10- Senior Notes issued pursuant to the Exchange Offer will be delivered on the earliest practicable date following the Expiration Date. See "The Exchange Offer--Terms of the Exchange Offer." Exchange Agent . . . . . . . . . . First Fidelity Bank, n/k/a First Union Bank of Connecticut, is serving as exchange agent (the "Exchange Agent") in connection with the Exchange Offer. Federal Income Tax Considerations . . . . . . . . The exchange of Series A Senior Notes for Series B Senior Notes pursuant to the Exchange Offer should not be a taxable exchange for federal income tax purposes. See "Material Federal Income Tax Considerations." SERIES B SENIOR NOTES Securities Offered . . . . . . . . $175,000,000 in aggregate principal amount of Series B Senior Secured Notes due 2002. Maturity . . . . . . . . . . . . . November 15, 2002. Fixed Interest . . . . . . . . . . 13 1/2% per annum, payable semi-annually in arrears. Interest Payment Dates . . . . . . May 15 and November 15, commencing May 15, 1996. Cash Flow Participation Interest . . . . . . . . . . . . . Cash Flow Participation Interest (as defined herein) is payable on the Senior Notes, on November 15 and May 15 of each year, in an aggregate amount equal to 5.0% of the Authority's Cash Flow (as defined herein) for the six-month period ending on March 31 and September 30 (each, a "Semi-annual Period") most recently completed prior to such interest payment date, up to a limit, calculated on a cumulative basis with respect to each two consecutive Semi-annual Periods ending on September 30, of $250 million of the Authority's Cash Flow; provided that no Cash Flow Participation Interest shall be payable with respect to any period prior to the earlier of the first day the Mohegan Sun Casino commences operations and October 31, 1996. Payment of all or a portion of any installment of Cash Flow Participation Interest may be deferred if (a) the payment of such portion of Cash Flow Participation Interest will cause the Authority's Fixed Charge Coverage Ratio (as defined herein) for the four consecutive fiscal quarters last completed prior to such interest payment date to be less than 2.0:1 on a pro forma basis after giving effect to the assumed payment of such Cash Flow Participation Interest but before giving effect to any interest on the Subordinated Notes which is then not payable in cash and (b) the principal of the Senior Notes corresponding -11- to such Cash Flow Participation Interest has not then matured and become due and payable (at stated maturity, upon acceleration, upon maturity of repurchase obligation or otherwise). The aggregate amount of Cash Flow Participation Interest payable in any Semi-annual Period will be reduced pro rata for reduction in the outstanding principal amount of Senior Notes prior to the close of business on the record date immediately preceding such payment of Cash Flow Participation Interest. The payment of Cash Flow Participation Interest is subject to certain restrictions set forth herein. See "Description of Senior Notes--Principal, Maturity and Interest." No Sinking Fund. . . . . . . . . . There will be no mandatory sinking fund payments for the Series B Senior Notes. Mandatory Redemption . . . . . . . None. Optional Redemption. . . . . . . . The Series B Senior Notes will not be redeemable at the option of the Authority prior to November 15, 1999 (except as otherwise required by a Gaming Regulatory Authority (as defined herein)). Thereafter, the Series B Senior Notes will be redeemable, in whole or in part, at the option of the Authority at the redemption prices set forth herein, together with accrued and unpaid interest and liquidated damages, if any, through the redemption date. Security . . . . . . . . . . . . . The Series B Senior Notes will be (and the Series A Senior Notes currently are) secured by the Note Collateral, consisting of, among other things (i) a first priority leasehold mortgage (the "Leasehold Mortgage") on the 25-year ground lease from the Tribe to the Authority with respect to the Site (the "Lease"), (ii) a first priority security interest in all of the Authority's furniture, trade fixtures and equipment, accounts receivable, general intangibles, inventory and other personal property (other than personal property permitted to be financed and secured, as described elsewhere herein, or personal property that is not permitted by applicable law to secure the Senior Notes), (iii) a first priority security interest in the proceeds of the Series A Senior Notes which will remain deposited in an escrow account until such proceeds have been disbursed (the "Escrow Account"), (iv) a first priority security interest in all funds at any time on deposit in the Replacement Reserve Account, the Cash Maintenance Account and the Interest and Excess Cash Flow Account (as each is defined herein) and (v) an assignment of material construction contracts pursuant to which the Mohegan Sun Casino is to be constructed. In addition, all cash generated by the Mohegan Sun Casino will be deposited into an account controlled by the Trustee for the benefit of the holders of the Senior Notes (the "Trustee") pending distribution in accordance with the terms of -12- the Indenture for the Senior Notes (the "Indenture"). The payment of any management fee to TCA and distributions to the Tribe (other than a minimum payment of $50,000 per month) will be subordinate to the payment of all interest and principal then due on the Senior Notes. The Leasehold Mortgage excludes any interest in the fee title to the Site, the improvements constructed or to be constructed thereon and any rights appurtenant to the fee title. Upon any foreclosure of the Leasehold Mortgage, the Trustee would succeed to the rights of the Authority under the Lease; however, restrictions under IGRA prohibit the use of the Mohegan Sun Casino as a gaming facility by any person other than the Tribe or an instrumentality of the Tribe, such as the Authority. Certain other limitations on the enforcement of remedies may also make less effective the rights of the holders of the Senior Notes in the event of a default thereunder. See "Risk Factors--Potential Inability to Realize on Note Collateral" and "Material Agreements--Leasehold Mortgage Deed." The Authority may require the Trustee to release portions of the Site from the lien of the Leasehold Mortgage in order to finance or develop amenities and other non-gaming facilities on the Site. Ranking. . . . . . . . . . . . . . The Series B Senior Notes will be senior obligations of the Authority and will rank PARI PASSU in right of payment with other senior indebtedness that the Authority is permitted to incur under the terms of the Indenture, including Series A Senior Notes not tendered in the Exchange Offer. The Indenture prohibits the Authority from incurring any such senior indebtedness, other than up to $40 million of capital lease or purchase money obligations, which includes the Equipment Financing, and up to $25 million of Working Capital Financing, which may be secured by the Note Collateral on a PARI PASSU basis with the Senior Notes. The Senior Notes are and will be senior in right of payment to all subordinated indebtedness of the Authority, including the Subordinated Notes. The Authority may not incur aggregate development costs for the Mohegan Sun Casino in excess of $325 million without further prior approval of the NIGC. Change of Control. . . . . . . . . Upon a Change of Control (as defined herein), subject to certain limitations, each holder of Senior Notes will have the right, at such holder's option, to require the Authority to repurchase such holder's Senior Notes at 101% of the principal amount thereof plus accrued and unpaid interest and liquidated damages, if any, to the date of repurchase. There can be no assurance that sufficient funds will be available at the time a Change of Control occurs to enable the Authority to make all required repurchases. See "Description of Senior -13- Notes--Repurchase at the Option of Holders-- Change of Control." Excess Cash Purchase Offer . . . . Within 120 days after the last day of each fiscal year of the Authority, beginning with the fiscal year ending September 30, 1997, the Authority will be required to make an offer to purchase (an "Excess Cash Purchase Offer") outstanding Senior Notes in an amount equal to the sum of (i) 50% of the Excess Cash Flow (as defined herein) for such fiscal year, (ii) 100% of the amount of the Deferred Subordinated Interest (as defined herein) for such fiscal year and (iii) accrued interest to the purchase date and liquidated damages, if any, on such principal at the purchase prices set forth below (expressed as a percentage of the principal amount). To the extent the Excess Cash Purchase Offer is not accepted by the holders of the Senior Notes, the Authority is required to offer to repurchase outstanding Subordinated Notes in such amount. See "Description of Senior Notes--Repurchase at the Option of Holders-- Excess Cash Purchase Offer." YEAR % ---- ----- 1997 113.5 1998 112.0 1999 110.0 2000 105.0 2001 100.0 Other Offers to Purchase . . . . . Under certain circumstances, the Authority may be required to make an offer to purchase outstanding Senior Notes following certain asset sales. In addition, the Authority may be required to purchase outstanding Senior Notes following certain events of loss. See "Description of Senior Notes--Repurchase at the Option of Holders--Asset Sales" and "-- Event of Loss." Covenants. . . . . . . . . . . . . The Indenture contains restrictions on, among other things, the making of certain payments, the incurrence of liens, incurrence of additional indebtedness, asset sales, the leasing and dedication of leased property, transactions with affiliates, mergers and consolidations or the transfer of all or substantially all of the Authority's assets and business activities. See "Description of Senior Notes--Certain Covenants." Secured Completion Guarantee . . . The completion of the Mohegan Sun Casino and payment of all project costs owing prior to such completion up to an aggregate maximum limitation of $50 million is guaranteed on a secured basis, subject to certain important qualifications and exceptions, by Sun International pursuant to the Secured Completion Guarantee. Sun International's obligation to complete the Mohegan Sun Casino does not take effect until -14- and unless the net proceeds of the Offering, the proceeds from the sale of the Subordinated Notes and the amounts available pursuant to the Equipment Financing and the Working Capital Financing are insufficient to meet the costs of acquiring the Site and developing, constructing and opening the Mohegan Sun Casino. In addition, Sun International's obligations under the Secured Completion Guarantee may be suspended as a result of any force majeure event or other event outside the control of the Authority or Sun International, which makes completion of the Mohegan Sun Casino physically impossible, commercially impracticable or unlawful. The Secured Completion Guarantee terminates on September 30, 1997, or earlier upon the occurrence of certain events. See "Material Agreements--Secured Completion Guarantee." To the extent Sun International advances funds under the Secured Completion Guarantee, the Authority will issue to Sun International additional subordinated notes in a principal amount equal to the funds so advanced. The obligations of Sun International under the Secured Completion Guarantee are secured in part, by an irrevocable letter of credit in the amount of $15 million, the entire amount of which is expected to be drawn to fund the costs of completion. See "--Sources and Uses of Funds." In addition, Sun International Investments Limited, the owner of approximately 55% of Sun International's equity shares ("SIIL"), has secured Sun International's obligations under the Secured Completion Guarantee with a pledge of 1,500,000 Ordinary Shares of Sun International. Based upon the closing price of Sun International's Ordinary Shares on the NYSE on May 1, 1996, such shares had a market value of approximately $64.1 million. The share pledge will be released upon termination of the Secured Completion Guarantee. No assurance can be given that funds available under the Secured Completion Guarantee, including the collateral securing such guarantee, will be sufficient to cover all amounts required to complete the Mohegan Sun Casino. In addition, the value of the pledged shares is subject to fluctuations as market prices change. See "Risk Factors-- Limitations Under the Secured Completion Guarantee." Required Deposits. . . . . . . . . The Indenture requires the Authority to deposit cash on a monthly basis into (i) a Cash Maintenance Account and (ii) an Interest and Excess Cash Flow Account. Up to $6 million per year is required to be deposited into the Cash Maintenance Account up to a maximum deposit of $36 million. The amount equal to the accrued interest on the Senior Notes and the Subordinated Notes and 50% of Excess Cash Flow is required to be deposited into the Interest and Excess Cash Flow -15- Account. The Interest and Excess Cash Flow Account will fund interest payments on the Senior Notes and any Excess Cash Purchase Offers. In addition, pursuant to the Management Agreement the Authority and TCA have agreed to deposit on a monthly basis up to an aggregate of $3 million per year into the Replacement Reserve Account to fund replacement capital expenditures. The cash in each of these accounts will be collateral security for the Senior Notes. See "Risk Factors--Ability to Realize on Note Collateral." INVESTMENT BY SUN INTERNATIONAL As a result of federal Indian gaming law prohibiting any non-Indian entity, including TCA or its partners, from owning an equity interest in an Indian casino, Sun International structured its investment in the Mohegan Sun Casino in the form of a deferred interest subordinated loan. Sun International purchased, concurrently with and as a condition to the closing of the Offering, $40 million in aggregate principal amount of Subordinated Notes. Sun International financed such purchase with borrowings under a bank credit agreement. If, as is currently anticipated, Sun International is required to advance funds under the Secured Completion Guarantee, the Authority will issue to Sun International additional subordinated notes in a principal amount equal to the amount so advanced. Interest on the Subordinated Notes will be deferred and not paid in cash until (i) at least $87.5 million in aggregate principal amount of the Senior Notes have been retired (or offered to be retired pursuant to Excess Cash Purchase Offers) and (ii) the Authority achieves a Fixed Charge Coverage Ratio of at least 2.5:1 for the prior four fiscal quarters. Deferred interest on the Subordinated Notes may be paid only if the current interest may be paid in cash and the Authority achieves a Fixed Charge Coverage Ratio of at least 4.0:1 for the prior four fiscal quarters. Interest may also be paid in connection with any redemption or repurchase described below. The Subordinated Notes may not be accelerated until all obligations under the Senior Notes have been paid in full. Default under the Senior Notes will not of itself constitute a default under the Subordinated Notes. Payment of principal of the Subordinated Notes is subordinate to the prior payment in full of all obligations on all of the Senior Notes, other than (i) certain redemptions required by a Gaming Regulatory Authority if a holder is required to be found suitable and is found unsuitable and (ii) repurchases of Subordinated Notes using funds not accepted by holders of Senior Notes in an Excess Cash Purchase Offer. See "Material Agreements--Note Purchase Agreement." RISK FACTORS See "Risk Factors" for a discussion of certain factors that should be considered by holders of Series A Senior Notes in evaluating the Exchange Offer and by prospective purchasers of Series B Senior Notes issued by the Authority in the Exchange Offer. -16- RISK FACTORS HIGH DEGREE OF LEVERAGE At the time the Exchange Offer is consummated (or shortly thereafter), the Authority expects to have aggregate long-term senior indebtedness of approximately $215 million, consisting of $175 million of Senior Notes and $40 million of Equipment Financing, and aggregate long-term subordinated indebtedness of $40 million. In addition, prior to the time the Mohegan Sun Casino commences operations the Authority expects to incur $12.5 million of Working Capital Financing. Based on a recently revised estimate of construction costs, the Authority expects development, construction, equipping and opening costs for the Mohegan Sun Casino to be approximately $312.5 million, which exceeds the proceeds of the foregoing by $45 million and represents an increase of approximately $52.5 million over previously estimated costs. The remaining $45 million currently projected to be needed to complete the Mohegan Sun Casino is expected to be provided by draws under the $50 million Secured Completion Guarantee provided by Sun International, which will have the effect of increasing the Authority's outstanding subordinated indebtedness by the amount of such draws. See "--Limitations Under the Secured Completion Guarantee" and "Material Agreements--Secured Completion Guarantee." The Authority's high degree of leverage could have significant consequences for the holders of the Senior Notes, including, without limitation, the following: (i) a substantial portion of the Authority's cash flow from operations will be dedicated to payment of such indebtedness, including payments to the Replacement Reserve Account, the Interest and Excess Cash Flow Account and the Cash Maintenance Account; (ii) the Authority's ability to obtain future additional financing for working capital, capital expenditures and other purposes may be impaired; and (iii) the Authority may be vulnerable to an economic downturn which may hamper the Mohegan Sun Casino's ability to meet expected operating results. POTENTIAL INABILITY TO REALIZE ON NOTE COLLATERAL Although the Authority's obligation to repay the Senior Notes is secured by the Note Collateral, there are substantial restrictions on the Trustee's ability to realize value by foreclosing on any of the Note Collateral. Under IGRA and the rules and regulations of the NIGC, only the Tribe or a tribal instrumentality, such as the Authority, is permitted to have a proprietary interest in gaming operations. Consequently, if the Trustee (as the mortgagee under the Leasehold Mortgage) were to foreclose on the Leasehold Mortgage following an event of default under the Indenture (an "Event of Default"), the Trustee would not be permitted to conduct, and could not assign the Lease to any person (other than the Tribe or a tribal instrumentality) for the purpose of conducting, gaming operations. The Trustee, however, may use the land under the Lease, or assign the Lease to another person for value, for other commercial purposes, subject to compliance with the terms of the Lease (including the payment of rent thereunder). It is unlikely that such other commercial use will produce revenues sufficient to retire any significant amounts under the Senior Notes. Accordingly, in the event of a default under the Senior Notes and a foreclosure by the Trustee on the Leasehold Mortgage, it is not anticipated that sufficient funds will be available to satisfy any judgment entered against the Authority in favor of the Trustee or the holders of the Senior Notes. In addition, other than through the assets of the Authority, the Tribe has no obligation for the repayment of the Senior Notes and none of the Tribe's assets, including cash distributions paid by the Authority to the Tribe and the Tribe's ownership interest in the Site and the Mohegan Sun Casino, will be subject to attachment, execution or similar process for the payment of any judgment that may be entered against the Tribe or the Authority. Any foreclosure of the Leasehold Mortgage may subject the tenant thereof to the risk of contingent environmental liabilities. See "--Possible Environmental Liabilities." Furthermore, the ability of the Trustee and/or the holders of the Senior Notes to foreclose on any of the Note Collateral, upon the occurrence of an Event of Default or otherwise, will be subject to the provisions of the documents governing the Note Collateral and, in certain instances, to perfection and priority issues and to practical -17- problems associated with realization of security interests. Upon the occurrence of an Event of Default, the Trustee may deem it not to be in the best interests of the holders of the Senior Notes to foreclose upon the Leasehold Mortgage or other non-cash Note Collateral, thereby enabling the Mohegan Sun Casino to continue to operate. In such event, as a practical matter, the only Note Collateral available to the Trustee for payment to the holders of Senior Notes would be the Replacement Reserve Account, the Cash Maintenance Account, the Interest and Excess Cash Flow Account and such funds as may be available after all expenses of the Mohegan Sun Casino, including any amortizing payments on the Equipment Financing and the Working Capital Financing, and the Minimum Priority Payment (as defined herein) have been paid. See "Description of Senior Notes-- Ranking and Security." In addition, the ability of the holders of the Senior Notes to realize upon the Note Collateral will be dependent upon the availability of a court or other forum with appropriate jurisdiction over the Tribe and the Authority necessary to enforce such foreclosure rights. See "-- Difficulties in Enforcing Obligations" and "Government Regulation--Tribal Law and Legal Systems." The Note Collateral also will secure, on a PARI PASSU basis with the Senior Notes, the Working Capital Financing. Even if the Trustee elects to foreclose on the Note Collateral, the actions of the Trustee and the amount the Trustee ultimately may realize on the Note Collateral for the benefit of the Senior Note holders may be limited by the actions of the Working Capital Financing lender. In addition, the Indenture permits future development on the Site, including hotels, to be separately financed. To finance such developments, the Authority may require the Trustee to release portions of the Leasehold Mortgage collateral, thereby reducing the value of the Note Collateral. Such future developments and the revenues therefrom are not expected to be collateral for the Senior Notes. See "Description of Senior Notes--Security." DIFFICULTIES IN ENFORCING OBLIGATIONS The Authority, as an instrumentality of the Tribe, a federally-recognized Indian tribe, intends to assert the defense of sovereign immunity in any suit brought without their consent. Each of the Tribe and the Authority, however, has consented to suit and has granted a limited waiver of any sovereign immunity defense it may have in connection with the Senior Notes, the Indenture and the documents related to the Note Collateral, including suits against the Authority to enforce its obligation to repay the Senior Notes. Generally, waivers of the defense of sovereign immunity have been held to be enforceable against Indian tribes such as the Tribe; however, in the event that such waiver or consent is held to be ineffective, the Trustee and the holders of the Senior Notes could be precluded from judicially enforcing their rights and remedies. The Tribe and the Authority, however, have not waived their sovereign immunity defense with respect to private civil suits for violations of the federal securities laws. Accordingly, the holders of the Senior Notes may not have any remedy against the Tribe or the Authority for violations of federal securities laws. The Tribe has established the Gaming Disputes Court of the Mohegan Tribe and vested it with exclusive jurisdiction for the Tribe over disputes with respect to the Mohegan Sun Casino, including all disputes relating to the Senior Notes or the Indenture and all disputes or controversies related to gaming between any person and the Authority, the Tribe or TCA. The Gaming Disputes Court may be the only forum with jurisdiction over any suits brought against the Tribe or the Authority. The Gaming Disputes Court has been authorized by the Tribe's Constitution to consist of at least four judges, none of whom may be members of the Tribe, and each of whom must be either a retired federal judge or a Connecticut Attorney Trial Referee (who are attorneys appointed by the Connecticut Supreme Court). Appeals of the decisions of the trial branch of the Gaming Disputes Court are heard by the appellate branch of the Gaming Disputes Court. Matters as to which applicable federal or state courts have jurisdiction may be brought in such courts. However, the federal courts may not have jurisdiction over disputes not arising under federal law, and the state courts may not have jurisdiction over any disputes arising on the Tribe's reservation. Moreover, the federal and state courts, under the doctrines of comity and exhaustion of tribal remedies, may be required to defer to the jurisdiction of the Gaming Disputes Court, or to require that any plaintiff exhaust its remedies in the Gaming Disputes Court before bringing any action in the federal or state -18- court. Thus, there may be no federal or state court forum with respect to a dispute relating to the Senior Notes, the Indenture or documents governing or relating to gaming. In addition, the Authority may not be a "person" under the federal Bankruptcy Act, and, consequently, may not be able to become a debtor under the federal bankruptcy laws. Thus, no assurance can be given that, if an Event of Default occurs, any forum will be available to the holders of the Senior Notes other than the Gaming Disputes Court. Because the Tribal Constitution and the laws of the Tribe have only been recently established, there are no guiding precedents for the interpretation of Tribal law. Any execution of a judgment of the Gaming Disputes Court will require the cooperation of the Tribe's officials in the exercise of their police powers. Thus, to the extent that a judgment of the Gaming Disputes Court must be executed on Tribal lands, the practical realization of any benefit of such a judgment will be dependent upon the willingness and ability of the Tribal officials to carry out such judgment. The Tribe is permitted to amend the provisions of its Constitution that establish the Authority and the Gaming Disputes Court with the approval of two-thirds of the members of the Tribal Council and a ratifying vote of a two-thirds majority of all votes cast, with at least 40% of the registered voters of the Tribe voting. However, prior to the enactment of any such amendment by the Tribal Council, any non-tribal party will have the opportunity to seek a ruling from the Appellate Division of the Gaming Disputes Court that the proposed amendment would constitute an impermissible impairment of contract. The Tribe's Constitution prohibits the Tribe from enacting any law that would impair the obligations of contracts entered into in furtherance of the development, construction, operation and promotion of Gaming on Tribal lands. Amendments to this provision of the Tribe's Constitution require the affirmative vote of 75% of all registered voters of the Tribe. Amendment to any of such provisions of the Tribe's Constitution could adversely affect the ability of the holders of Senior Notes to enforce the obligations of the Authority on the Senior Notes. COMPETITION The gaming industry is characterized by intense competition among entities that, in many instances, have greater resources than will the Authority. Because the Mohegan Sun Casino will be marketed primarily to the day- trip customer, it expects to compete primarily with other casinos within 150 miles and, to a lesser extent, with casinos in Atlantic City, New Jersey. Currently, Foxwoods is the only casino in operation within 150 miles of the Site. However, Foxwoods is located approximately 10 miles from the Site and is currently the largest gaming facility in the United States in terms of the number of total gaming positions. In addition, Foxwoods offers a number of amenities that the Mohegan Sun Casino does not currently plan to offer in its initial development, including hotels and extensive entertainment facilities. Foxwoods has been in operation for nearly four years and the Authority believes that Foxwoods' successful operation has enabled it to build financial resources that are currently substantially greater than the Authority's or the Tribe's. Although the Authority believes Foxwoods' profitability indicates that there is substantial market demand for gaming in the northeastern United States, there can be no assurance that the population base within 150 miles of the Site will support both Foxwoods and the Mohegan Sun Casino. Currently, outside of Atlantic City, New Jersey, casino gaming in the northeastern United States may be conducted only by federally-recognized Indian tribes operating under IGRA. In addition to the Pequot Tribe, which operates Foxwoods, a federally-recognized tribe in Rhode Island and a federally-recognized tribe in Massachusetts each are currently seeking to establish gaming operations. In addition, a number of tribes in New England are seeking federal recognition in order to establish gaming operations. The Authority cannot predict whether any of these tribes will be successful in establishing gaming operations, and if established, whether such gaming operations will have a material adverse effect on the proposed operations by the Authority. In addition, a number of states, including Connecticut, have investigated legalizing casino gaming by non-Indians in one or more locations. However, under the Mohegan Compact and the tribal-state compact between the Pequot Tribe and the State of Connecticut, and agreements related thereto, if Connecticut legalizes any gaming operations other than pursuant to IGRA (I.E., by an Indian tribe on Indian land) with slot machines or other -19- commercial casino games, the Pequot Tribe and the Tribe will no longer be required to make payments related to slot machine revenues. In 1995, the State of Connecticut made a request for proposals for the possible development of a casino in Bridgeport, Connecticut, but in November 1995, the Connecticut legislature declined to adopt special legislation authorizing such casino operations. The Authority is unable to predict whether the Connecticut legislature will consider other gaming initiatives or reconsider the Bridgeport proposal, or the ultimate outcome of any such deliberations. Although the Mohegan Sun Casino will be dependent primarily upon gaming customers residing within 150 miles of the Mohegan Sun Casino, the Authority also will compete for customers with casinos in Atlantic City, New Jersey, many of which have greater resources and greater name recognition than the Mohegan Sun Casino. POTENTIAL INABILITY TO COMMENCE OPERATIONS AS SCHEDULED Construction projects such as the Mohegan Sun Casino are inherently subject to significant development and construction risks, including, but not limited to, labor disputes, shortages of material and skilled labor, weather interference, unforeseen engineering problems, unforeseen environmental problems (including asbestos, lead and hazardous waste removal), fire, natural disasters, geological, construction, demolition, excavation, regulatory and/or equipment problems and unanticipated cost increases, any of which could give rise to delays or cost overruns. Such risks may be compounded by the Authority's decision to construct the Mohegan Sun Casino utilizing an accelerated construction schedule under which construction begins before final plans are completed. To reduce the risk of cost overruns, the Authority has entered into a guaranteed maximum price contract with Morse Diesel, the general contractor, for the construction of the Mohegan Sun Casino. The maximum price of such contract, however, is subject to modification based upon the occurrence of certain events, such as certain design change orders and costs associated with certain types of construction delays, including, in certain cases, force majeure events. Unforeseen delays in obtaining required road construction and other permits could delay the completion of the Mohegan Sun Casino. See "--Highly Regulated Industry." Construction in the northeastern United States is also subject to a number of weather related risks. An earlier than expected winter, a delayed spring, unexpected rain, storms or other bad weather may have the effect of delaying completion and/or increasing the costs of the construction. There is no assurance that the Mohegan Sun Casino will commence operations on schedule or that construction costs for the Mohegan Sun Casino will not exceed budgeted amounts. The $312.5 million estimated cost of developing, constructing, equipping and opening the Mohegan Sun Casino exceeds the proceeds of the sale of the Senior Notes and the Subordinated Notes and funds available or expected to be made available pursuant to the Equipment Financing and the Working Capital Financing. Accordingly, the Authority anticipates drawing approximately $45 million under the Secured Completion Guarantee. See "--Limitations Under Secured Completion Guarantee" and "Material Agreements--Secured Completion Guarantee." Failure to complete the Mohegan Sun Casino within the budget or on schedule may have a material adverse effect on the results of operations and financial condition of the Authority. The Authority may not obligate itself to pay development costs in excess of $325 million without the further consent of the NIGC. No assurance can be given that if expenditures in excess of $325 million are required for completion of the Mohegan Sun Casino, such NIGC consent can be obtained. LIMITATIONS UNDER THE SECURED COMPLETION GUARANTEE Sun International has executed the Secured Completion Guarantee under which it has guaranteed, subject to certain important limitations, completion of the Mohegan Sun Casino and payment of all design, construction and opening costs prior to such completion up to a maximum aggregate amount of $50 million. Because Sun International has given its Secured Completion Guarantee, the Authority has not budgeted any funds as contingency in the event of a cost overrun. To pay the revised estimated $312.5 million cost of completing -20- and opening the Mohegan Sun Casino, the Authority expects to draw approximately $45 million under the Secured Completion Guarantee. Accordingly, no assurance can be given that funds available under the Guarantee, including the collateral securing such guarantee, will be sufficient to cover all amounts required to complete the Mohegan Sun Casino. The Secured Completion Guaratee is subject to a number of important qualifications, exceptions and limitations. Sun International's obligation to provide funds pursuant to the Secured Completion Guarantee does not take effect until and unless the proceeds of the Offering, the sale of the Subordinated Notes, the Equipment Financing and the Working Capital Financing are insufficient to meet the costs of acquiring the Site and developing, constructing and completing the Mohegan Sun Casino. In addition, Sun International's obligations under the Secured Completion Guarantee are suspended during the pendency of any force majeure event (a "Force Majeure Event"), which includes fire or other casualty; governmental preemptions in connection with a national emergency; breakdowns, accident or other acts of God; acts of war, insurrection, civil strife and commotion; certain failures of supply; any enactment, promulgation or amendment of any statute, rule, order or regulation of any legislature or governmental agency or any subdivision thereof; any litigation not caused by Sun International, or any other event that occurs after the date of the Secured Completion Guarantee outside of the control of the Authority or Sun International; in each case which shall make it physically impossible, unlawful or commercially impracticable to cause the Mohegan Sun Casino to be completed. The legalization of casino gaming at any other location in New England, including Bridgeport, however, will not be deemed to constitute a Force Majeure Event. The Secured Completion Guarantee terminates upon the earliest to occur of (i) any action by the United States Congress, the Authority, the Tribe, the Tribe's council or any other entity of the Tribe, any legislature that has jurisdiction or any governmental agency, the result of which is that gaming as currently proposed to be conducted at the Mohegan Sun Casino is substantially diminished, (ii) September 30, 1997, (iii) the time immediately prior to the acceleration of all or any portion of the amounts due under the Senior Notes, (iv) the Management Agreement or the Lease shall have been terminated or become unenforceable in any material respect, (v) the Senior Notes shall have been repaid in full and (vi) the Authority shall have repudiated the Management Agreement. See "Material Agreements--Secured Completion Guarantee." The obligations of Sun International under the Secured Completion Guarantee are secured in part by an irrevocable letter of credit in the amount of $15 million. In addition, SIIL has secured Sun International's obligations under the Secured Completion Guarantee with a pledge of 1,500,000 Ordinary Shares of Sun International. As a result of the recent increases in the Construction Budget, approximately $45 million, including the entire amount available under the letter of credit, is expected to be drawn to fund construction of the Mohegan Sun Casino. See "Prospectus Summary--Sources and Uses of Funds." If, as is anticipated, the entire amount under the letter of credit is drawn, Sun International's remaining obligations under the Secured Completion Guarantee will be secured only by the pledged Sun International shares. Based upon the closing price of Sun International's Ordinary Shares on the NYSE on May 1, 1996, such shares had a market value of approximately $64.1 million. No assurance can be given as to the amount of proceeds, if any, that the Trustee would realize upon a foreclosure and sale of such shares in order to satisfy the obligations under the Secured Completion Guarantee. The market price of the Sun International stock is subject to change from time to time. If the Secured Completion Guarantee is called upon, the value of the pledged Sun International stock may decrease as the result of Sun International's requirement to make additional investments in the Mohegan Sun Casino or if such shares are required to be sold to fund the Secured Completion Guarantee. The terms of the pledge agreement provide that the Trustee may foreclose upon the pledged shares only after obtaining a final judgment from a court of competent jurisdiction that Sun International has breached its obligations under the Secured Completion Guarantee. Accordingly, there may be a substantial delay in realizing any proceeds from the share pledge. The share pledge will be released upon termination of the Secured Completion Guarantee. POSSIBLE ENVIRONMENTAL LIABILITIES Under various federal, state and local environmental laws, ordinances and regulations, a current or previous owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances or chemical releases at such property, and may be held liable to a governmental entity or to third parties for property damage, personal injury and for investigation and cleanup costs incurred by such parties in -21- connection with the contamination. Such laws typically impose cleanup responsibility and liability without regard to whether the owner knew of or caused the presence of the contaminants, and the liability under such laws has been interpreted to be joint and several unless the harm is divisible and there is a reasonable basis for allocation of responsibility. The costs of investigation, remediation or removal of such substances may be substantial, and the presence of such substances, or the failure to properly remediate such property, may adversely affect the owner's ability to rent such property or to borrow using such property as collateral. In addition, the owner or former owners of a site may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from a site. The Site was formerly occupied by United Nuclear Corporation ("UNC"), a naval products manufacturer of, among other things, nuclear reactor fuel components. UNC's facility was officially decommissioned on June 8, 1994 when the Nuclear Regulatory Commission ("NRC") confirmed that all licensable quantities of special nuclear material ("SNM") had been removed from the Site and that any residual SNM contamination was remediated in accordance with the NRC approved decommissioning plan. From 1991 through 1993, UNC commissioned an environmental consultant to perform a series of environmental audits and reports on the Site. The environmental audits and soil sampling programs detected, among other things, volatile organic chemicals, heavy metals and fuel hydrocarbons in the soil and groundwater. Extensive remediation of contaminated soils and additional investigations were completed. By letter dated March 20, 1995, the State of Connecticut Department of Environmental Protection approved the remediation report for the Site. Although the Site currently meets all applicable federal, state and local remediation requirements, no assurance can be given that the various environmental reports or any other existing environmental studies with respect to the Site revealed all environmental liabilities, that any prior owners or tenants of the Site did not create any material environmental condition not known to the Authority, that future laws, ordinances or regulations will not impose any material environmental liability, or that a material environmental condition does not otherwise exist on the Site. Future remediation may be necessary if excavation and construction exposes contaminated soil which has otherwise been deemed isolated and not subject to cleanup requirements. Certain federal, state and local laws, regulations and ordinances govern the removal, encapsulation or disturbance of asbestos-containing materials ("ACMs") when such materials are in poor condition or in the event of building remodeling, renovation or demolition. Such laws may impose liability for release of ACMs and may entitle third parties to seek recovery from owners or operators of real properties for personal injury associated with ACMs. In December 1994 UNC hired an asbestos contractor who removed all exposed asbestos insulations. In addition, it is contemplated that ACMs will be removed as part of the construction of the Mohegan Sun Casino. However, no assurance can be given that additional future asbestos removal will not be necessary. UNCERTAINTY OF FUTURE OPERATING RESULTS The Mohegan Sun Casino is a development stage entity that has not commenced operations and, accordingly, is subject to all of the risks inherent in the establishment of a new business enterprise. Although the Authority has engaged the management services of TCA, a partnership whose partners have substantial experience in the development and management of resorts and gaming facilities, the ability of the Authority to meet its debt service obligations will be entirely dependent upon the future financial performance of the Mohegan Sun Casino, which is subject to financial, economic, political, competitive, regulatory and other factors, many of which are beyond its control. While the Authority expects that its operating cash flow will be sufficient to cover its expenses, including interest costs, there can be no assurance with respect thereto. If the Authority is unable to generate sufficient cash flow, it could be required to reduce or delay planned capital expenditures, dispose of certain assets, and/or seek to restructure some or all of its debt. There can be no assurance that any of these alternatives could be effected, if at all, on satisfactory terms. -22- HIGHLY REGULATED INDUSTRY Gaming on Indian land is regulated by federal, state and tribal governments and may be adversely affected by changes in the law. There is currently legislation proposed in the United States Congress to place a moratorium on new Indian casinos. If such legislation passes before the Mohegan Sun Casino is completed and if such legislation does not exclude projects under construction, such legislation would have a material adverse effect on the ability of the Authority to repay the Senior Notes. There is also legislation proposed in the United States Congress to modify other provisions of IGRA and future litigation may be expected to challenge the constitutionality of the Act as it presently exists. See "Government Regulation--The Indian Gaming Regulatory Act of 1988." In addition, from time to time, various governmental officials have proposed to tax casino gaming or to otherwise restrict or limit casino gaming. No assurance can be given that such legislation or other legislation in the future will not have a material adverse effect on the operations or the proposed operations of the Mohegan Sun Casino. In addition, under federal law, gaming on Indian land is dependent on the permissibility under state law of certain forms of gaming or similar activities. If the State of Connecticut were to make various forms of gaming illegal or against public policy, then such action may have an adverse effect on the ability of the Authority to conduct gaming. Connecticut currently permits, among other things, a state lottery, Jai-Alai fronton betting and off-track betting parlors. The Authority believes that Connecticut is unlikely to make gaming against public policy due to the amount of payments derived from gaming activities currently being received by the State. The NIGC approved the Management Agreement on September 29, 1995 and no further approvals from the NIGC are required with respect to the construction, financing, management and operations of the Mohegan Sun Casino; however, the NIGC retains jurisdiction to require modifications of or to void a previously approved agreement to the extent the NIGC receives information indicating that such agreement is not being implemented in accordance with the conditions specified upon approval (which may include environmental standards) or if the parties thereto fail to comply with applicable laws and regulations. In addition, any renewal and extension of term of the Management Agreement will require further approval of the NIGC. The Authority does not expect that it or the Tribe will incur material liability to TCA in the event the NIGC exercises its limited authority to re-review the Management Agreement or if legislative changes are enacted that affect the terms of the Management Agreement; however, the NIGC's modification or voiding of the Management Agreement, or the failure of the NIGC to approve any renewal or extension of the same, could have a material adverse effect on the results of operations of the Mohegan Sun Casino. Prior to opening the Mohegan Sun Casino, each of the partners of TCA and certain employees of the Mohegan Sun Casino must be licensed by relevant tribal and state authorities. Each of the partners of TCA has applied for and received temporary gaming licenses from the Commissioner of Revenue Services of the State of Connecticut. As each employee who is required to be licensed is hired, the Authority or TCA will cause such employee to apply for all required licenses. A number of federal and state approvals are required to construct the access roads to the Mohegan Sun Casino. DOT or the Authority has obtained all requisite permits and approvals for the construction of the access road off of Route 2A. During a special session of the Connecticut State Senate held to consider the approval of a gaming facility in Bridgeport, Connecticut, which was to be owned and operated by the Pequot Tribe, the Tribe testified before the Connecticut Senate Public Safety Committee that, if the Bridgeport Casino project were approved, the Authority would no longer be required to make slot revenue payments to the State of Connecticut. Shortly after the Tribe's testimony, it was reported in certain Connecticut newspapers that officials of the State of Connecticut disagreed with the Tribe's position and had stated that regulatory approvals required for the construction of the Mohegan Sun Casino may be delayed. The Connecticut State Senate rejected the Bridgeport casino project on November 16, 1995. Although the Authority has received from the State of Connecticut substantially all of the permits required to construct the Mohegan Sun Casino and adjacent roadways as planned, there can be no assurance that any of such permits will not be revoked or that any additional permits that may be required will be granted in a timely manner. -23- The Authority and TCA believe that they will be able to acquire all other necessary licenses, permits and approvals in order to construct, open and operate the Mohegan Sun Casino. However, no assurances can be given that any or all of the licenses, permits and/or approvals described above will be issued or that any or all of such licenses, permits and/or approvals will be issued without certain conditions or restrictions that could adversely affect the construction and operation of the Mohegan Sun Casino or the development of the adjacent roadways. The failure to obtain any of these licenses, permits or approvals in a timely manner may delay, restrict or prevent the Mohegan Sun Casino from opening as contemplated herein. See "Government Regulation." LACK OF EXPERIENCED PERSONNEL The Authority anticipates that approximately 4,000 full time employees will be required to operate the Mohegan Sun Casino. Although the Authority and TCA believe that they will be able to attract and train qualified individuals to operate the Mohegan Sun Casino, there is no assurance that they will be able to do so. In addition, the Authority and TCA will be obligated to give preference in hiring first to qualified members of the Tribe (and qualified spouses and children of members of the Tribe), and second to members of other Indian tribes. There is no assurance that the Authority will be able to hire qualified individuals satisfying such criteria. If the Authority is able to hire qualified individuals satisfying these criteria, the costs of hiring such individuals could be significantly higher than if the Authority was not bound by these hiring criteria. See "Material Agreements--Management Agreement." RELIANCE UPON TCA The Mohegan Sun Casino's profitability will be largely dependent upon the efforts and skills of TCA, which has exclusive responsibility for developing, marketing and managing the Mohegan Sun Casino. No assurance can be given that the operating results achieved by Sun International or the other partners of TCA in their other projects will be achieved by the Mohegan Sun Casino. TRANSKEI INVESTIGATION Shortly after the Connecticut legislature declined to adopt special legislation authorizing casino operations in Bridgeport, the Connecticut press reported that Connecticut Governor Rowland had made statements questioning the suitability of Sun International and Mr. Solomon Kerzner, its Chairman and Chief Executive Officer, to hold a gaming license in Connecticut and to participate in the management of the Mohegan Sun Casino. Such statements were based on matters that occurred in 1986 in the Transkei, a former "tribal homeland" that was regarded by South Africa as an independent country but not recognized by the international community, relating to an alleged improper payment of $450,000 made to George Matanzima, then Prime Minister of the Transkei, who was overthrown by a military coup in 1988. Prior to the press report, the Transkei matter had been disclosed to the Tribe and the Authority, the NIGC and the Connecticut State Police and, following an investigation, the NIGC and the Tribe approved Sun International and Mr. Kerzner as a partner in TCA. In addition, the State of Connecticut issued to Mr. Kerzner a temporary gaming license as part of its ordinary licensing procedures. In April 1994, as part of South Africa's new constitutional process, the Transkei was reincorporated into South Africa and the Attorney General of the Transkei is now an official of the South African judicial system. In October 1995, Mr. Kerzner, although not officially notified, learned that the Attorney General of the Transkei had requested that the South African police investigate the 1986 payment. A recent report of the investigating police officer, made available to the attorneys for the companies involved in accordance with South African law, states that, in allowing the payment to be made, Mr. Kerzner acted without any personal benefit in an effort to protect what Mr. Kerzner believed to be legitimate rights of the companies involved, which rights were being threatened by Matanzima. The police report also describes Matanzima's action as being tantamount to commercial extortion. It has recently been reported in the press that the same South African police officer in charge of the investigation stated that the Attorney General of the Transkei had decided that Mr. Kerzner will not -24- be charged but that one of the companies in which Mr. Kerzner was chairman and chief executive officer at the time may be charged with infringing provisions of the Transkei penal code. Sun International has no interests in such company. Despite such reports, until the case is officially closed, the Authority is unable to predict the ultimate outcome of this matter. The Transkei events, which occurred nearly 10 years ago, have not affected the ability of Sun International or Mr. Kerzner to be licensed in the jurisdictions in which Sun International operates. After disclosure to all applicable licensing authorities of the facts surrounding the Transkei matter, and following investigations, Sun International and Mr. Kerzner were issued and currently hold gaming licenses in The Bahamas and France, and companies in southern Africa of which Mr. Kerzner has been chairman and chief executive officer, including Sun Bop, hold gaming licenses in South Africa, including the Transkei region. Although at this time the Transkei matter has not affected the licensing qualifications of Mr. Kerzner or Sun International, no assurance can be given that Mr. Kerzner's or Sun International's licensing qualifications, including with respect to the Mohegan Sun Casino, will not be affected in the future. Any adverse change in Mr. Kerzner's or Sun International's licensing qualifications could have a material adverse affect on the operations of the Mohegan Sun Casino. LACK OF PUBLIC MARKET FOR THE SECURITIES The Senior Notes are the Authority's first issuance of securities, have no established trading market and may not be widely distributed. Pursuant to the Exchange Offer, the Authority is offering to exchange freely tradeable registered Series B Senior Notes for the outstanding Series A Senior Notes, but the Authority does not intend to apply to list either the Series A Senior Notes or the Series B Senior Notes on any stock exchange or for quotation through the National Association of Securities Dealers Automated Quotation System. The Senior Notes are expected to be eligible for trading in the Private Offering, Resale and Trading through Automatic Linkages market. There can be no assurance, however, that a trading market for the Senior Notes will develop or will provide liquidity to the holders thereof. Historically, the market for non-investment grade debt has been subject to disruptions that have caused substantial volatility in the prices of securities similar to the Senior Notes. There can be no assurance that, if a market for the Senior Notes were to develop, such a market would not be subject to similar disruptions. See "The Exchange Offer--Registration Rights Agreement." -25- THE EXCHANGE OFFER REGISTRATION RIGHTS AGREEMENT To finance the development, construction, equipping and opening of the Mohegan Sun Casino, the Authority on September 29, 1995 sold the Series A Senior Notes to Bear, Stearns & Co. Inc. and Donaldson, Lufkin & Jenrette Securities Corporation, as Initial Purchasers, for resale to qualified institutional buyers and/or to certain institutional accredited investors within the meaning of Rule 501 under the Securities Act. In connection therewith, the Authority and the Initial Purchasers entered into a Registration Rights Agreement which grants the holders of the Series A Senior Notes certain exchange and registration rights. Pursuant to the Registration Rights Agreement, the Authority agreed to file with the Commission a registration statement under the Securities Act with respect to an offer to exchange the Series B Senior Notes for the Series A Senior Notes (the "Exchange Offer Registration Statement") no later than 30 days following the date of the Registration Rights Agreement (the "Closing Date"), to use its best efforts to cause such registration statement to become effective under the Securities Act at the earliest possible time, but in no event later than 120 days after the Closing Date and, upon effectiveness of such registration statement, to commence the Exchange Offer and use its best efforts to issue, on or prior to the expiration of 30 business days following the date on which the Exchange Offer Registration Statement is declared effective by the Commission, Series B Senior Notes in exchange for all Series A Senior Notes properly tendered in the Exchange Offer and not withdrawn. The Authority also agreed to include in this Prospectus certain information necessary to allow a broker- dealer who holds Series A Senior Notes that were acquired for its own account as a result of market-making activities or other ordinary course trading activities (other than Series A Senior Notes acquired directly from the Authority) to exchange such Series A Senior Notes pursuant to the Exchange Offer and to satisfy the prospectus delivery requirements in connection with resales of Series B Senior Notes received by such broker-dealer in the Exchange Offer and to maintain the effectiveness of the Exchange Offer Registration Statement for such purposes for one year. See "Plan of Distribution." In addition, the Authority agreed, pursuant to the Registration Rights Agreement, to file a shelf registration statement (the "Shelf Registration Statement") pursuant to Rule 415 under the Securities Act (which may be an amendment to the Exchange Offer Registration Statement of which this Prospectus is a part), registering for resale (i) any Series A Senior Notes held by persons who are not permitted by law or any policy of the Commission to participate in the Exchange Offer, (ii) any Series B Senior Notes acquired in the Exchange Offer by any holder who must comply with the Prospectus delivery requirements of the Securities Act in connection with the resales of such Series B Senior Notes and for which this Prospectus is not appropriate or available for such resales by such holder or (iii) any Series A Senior Notes held by a broker-dealer which were acquired directly from the Authority or one of its affiliates. To participate in such a shelf registration, any such holder of Senior Notes must furnish to the Authority, in writing, within 20 business days after receipt of a request therefor, such information specified in Item 507 of Regulation S-K under the Securities Act. The Authority agreed to file with the Commission the Shelf Registration Statement (which may be an amendment to the Exchange Offer Registration Statement of which this Prospectus is a part) no later than 30 days after receipt of notice from a holder described above that a Shelf Registration Statement is required and to use its best efforts to keep such Shelf Registration Statement continually effective, supplemented and amended to the extent necessary to ensure that it is available for resales of Senior Notes for a period of at least three years following the Closing Date. If (i) the Authority fails to file any of the registration statements required by the Registration Rights Agreement on or before the date specified for such filing, (ii) any of such registration statements is not declared effective by the Commission on or prior to the date specified for such effectiveness (the "Effectiveness Target Date"), (iii) the Authority fails to consummate the Exchange Offer within 30 business days after the Effectiveness Target Date with respect to the Exchange Offer Registration Statement or (iv) the Shelf Registration Statement or the Exchange Offer Registration Statement is declared effective but thereafter ceases to be effective or usable -26- for its intended purpose without being succeeded immediately by a post effective amendment to such registration statement that cures such failure and that is itself declared effective within a five business day period (each such event referred to in clauses (i) through (iv) above, a "Registration Default"), the Authority has agreed to pay as liquidated damages to each holder of Senior Notes to which such registration statement or amendment relates, for the first 90-day period immediately following the occurrence of such failure, an amount equal to $.05 per week per $1,000 principal amount of Series A Senior Notes constituting the Senior Notes held by such holder for each week or portion thereof that such Registration Default continues. The amount of liquidated damages increases by an additional $.05 per week per $1,000 principal amount of Series A Senior Notes constituting the Senior Notes held by such holder for each subsequent 90-day period until the applicable registration statement or amendment is declared effective or again becomes effective, as the case may be, up to a maximum amount of liquidated damages of $.50 per week per $1,000 principal amount of Series A Senior Notes constituting the Senior Notes held by such holder. As a result of the Authority's failure to file the Registration Statement of which this Prospectus is a part within 30 days after the Closing Date and because such Registration Statement was not declared effective by the Commission on or before the Effectiveness Target Date, in connection with the May 15, 1995 interest payment in respect of the Senior Notes, the Authority was obligated to pay to the holders of Senior Notes an aggregate of $95,000 in liquidated damages (which equals approximately $0.54 per $1,000 principal amount of Senior Notes). As of June 5, 1996, the Authority had accrued additional liquidated damages in the amount of $26,250. Additional liquidated damages will be payable in the event the Authority fails to consummate the Exchange Offer within 30 days after the effectiveness of the Exchange Offer Registration Statement. Accrued liquidated damages will be paid by the Authority on November 15, 1996, the next date on which interest on the Senior Notes becomes due and payable. A copy of the Registration Rights Agreement has been filed as an exhibit to the Exchange Offer Registration Statement of which this Prospectus is a part. This Prospectus covers the offer and sale of the Series B Senior Notes pursuant to the Exchange Offer made hereby and the resale of Series B Senior Notes received in the Exchange Offer by any broker-dealer who holds Series A Senior Notes acquired for its own account as a result of market-making activities or other trading activities (other than Series A Senior Notes acquired directly from the Authority or one of its affiliates). Except as set forth above, after consummation of the Exchange Offer, holders of Senior Notes will have no registration or exchange rights under the Registration Rights Agreement. See "-Consequences of Failure to Exchange," and "-Resales of the Series B Senior Notes." CONSEQUENCES OF FAILURE TO EXCHANGE Series A Senior Notes which are not exchanged for Series B Senior Notes pursuant to the Exchange Offer and are not included in a resale prospectus which, if required, may be filed as part of an amendment to the Registration Statement of which this Prospectus is a part, will remain restricted securities. Accordingly, such Series A Senior Notes may be resold (i) to the Authority (upon redemption thereof or otherwise), (ii) so long as the Series A Senior Notes are eligible for resale pursuant to Rule 144A, to a person whom the seller reasonably believes is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act, purchasing for its own account or for the account of a qualified institutional buyer to whom notice is given that the resale, pledge or other transfer is being made in reliance on Rule 144A, (iii) in an offshore transaction in accordance with Regulation S under the Securities Act, (iv) pursuant to an exemption from registration in accordance with Rule 144 (if available) under the Securities Act, (v) in reliance on another exemption from the registration requirements of the Securities Act, or (vi) pursuant to an effective registration statement under the Securities Act, in each case in accordance with any applicable securities laws of any state of the United States and subject to certain requirements of the registrar or co-registrar being met, including receipt by the registrar or co-registrar of a certification and (in the case of (v)) an opinion of counsel reasonably acceptable to the Authority and the registrar. TERMS OF THE EXCHANGE OFFER Upon the terms and subject to the conditions set forth in the Prospectus and in the accompanying Letter of Transmittal, the Authority will accept any and all Series A Senior Notes validly tendered and not withdrawn -27- prior to the Expiration Date. The Authority will issue $1,000 principal amount of Series B Senior Notes in exchange for each $1,000 principal amount of outstanding Series A Senior Notes accepted in the Exchange Offer. Holders may tender some or all of their Series A Senior Notes pursuant to the Exchange Offer; however, the Series A Senior Notes may be tendered only in integral multiples of $1,000 principal amount. The form and terms of the Series B Senior Notes are the same as the form and terms of the Series A Senior Notes except that (i) the Series B Senior Notes have been registered under the Securities Act and therefore will not bear legends restricting their transfer pursuant to the Securities Act, and (ii) except as otherwise described above, holders of the Series B Senior Notes will not be entitled to the rights of holders of Series A Senior Notes under the Registration Rights Agreement. The Series B Senior Notes will evidence the same debt as the Series A Senior Notes (which they replace) and will be issued under, and be entitled to the benefits of, the Indenture, which governs all of the Senior Notes. As of the date of this Prospectus, $175 million in aggregate principal amount of Series A Senior Notes were outstanding. Solely for reason of administrative convenience (and for no other purpose), the Authority has fixed the close of business on the effective date of this prospectus, 1996 as the record date for the Exchange Offer for purposes of determining the persons to whom this Prospectus and the Letter of Transmittal will be mailed initially. Only a registered holder of Series A Senior Notes (or such holder's legal representative or attorney-in-fact) as reflected on the records of the Trustee under the Indenture may participate in the Exchange Offer. There will be no fixed record date for determining registered holders of the Series A Senior Notes entitled to participate in the Exchange Offer. Holders of the Series A Senior Notes do not have any appraisal or dissenters' rights in connection with the Exchange Offer under either the Stock Corporation Act of the State of Connecticut or the Indenture. The Authority intends to conduct the Exchange Offer in accordance with the applicable requirements of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations of the Commission thereunder. The Authority shall be deemed to have accepted validly tendered Series A Senior Notes when, as and if the Authority has given oral or written notice thereof to the Exchange Agent. The Exchange Agent will act as agent for the tendering holders of the Series A Senior Notes for the purposes of receiving the Series B Senior Notes from the Authority. If any tendered Series A Senior Notes are not accepted for exchange because of an invalid tender, the occurrence of certain other events set forth herein or otherwise, certificates for any such unaccepted Series A Senior Notes will be returned, without expense, to the tendering holder thereof as promptly as practicable after the Expiration Date. Holders who tender Series A Senior Notes in the Exchange Offer will not be required to pay brokerage commissions or fees or, subject to the instructions in the Letter of Transmittal, transfer taxes with respect to the exchange of the Series A Senior Notes pursuant to the Exchange Offer. The Authority will pay all charges and expenses, other than certain applicable taxes, in connection with the Exchange Offer. See "-Fees and Expenses." EXPIRATION DATE; EXTENSIONS; AMENDMENTS The term "Expiration Date" shall mean 5:00 p.m., New York City time, on July 12, 1996, unless the Authority, in its sole discretion, extends the Exchange Offer, in which case the term "Expiration Date" shall mean the latest date and time to which the Exchange Offer is extended. In order to extend the Exchange Offer, the Authority will notify the Exchange Agent of any extension by oral or written notice and will make a public announcement thereof, each prior to 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. -28- The Authority reserves the right, in its sole discretion, (i) to delay accepting any Series A Senior Notes, (ii) to extend the Exchange Offer, (iii) if any of the conditions set forth below under "-Conditions of the Exchange Offer" shall not have been satisfied, to terminate the Exchange Offer, by giving oral or written notice of such delay, extension or termination to the Exchange Agent, or (iv) to amend the terms of the Exchange Offer in any manner. Any such delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by a public announcement thereof. If the Exchange Offer is amended in a manner determined by the Authority to constitute a material change, the Authority will promptly disclose such amendment by means of a prospectus supplement that will be distributed to the registered holders of the Series A Senior Notes, and the Authority will extend the Exchange Offer for a period of five to 10 business days, as required by law, depending upon the significance of the amendment and the manner of disclosure to the registered holders, if the Exchange Offer would otherwise expire during such five to 10 business day period. Without limiting the manner in which the Authority may choose to make public announcement of any delay, extension, termination or amendment of the Exchange Offer, the Authority shall not have an obligation to publish, advertise, or otherwise communicate any such public announcement, other than by making a timely release thereof to the Dow Jones News Service. PROCEDURES FOR TENDERING Only a registered holder of the Series A Senior Notes may tender such Series A Senior Notes in the Exchange Offer. To tender in the Exchange Offer, a holder must complete, sign and date the Letter of Transmittal, have the signatures thereon guaranteed if required by the Letter of Transmittal, and mail or otherwise deliver such Letter of Transmittal to the address set forth below under "-Exchange Agent" for receipt by the Exchange Agent prior to the Expiration Date. In addition, either (i) certificates for such Series A Senior Notes must be received by the Exchange Agent from Holders of Definitive Notes along with the Letter of Transmittal, or (ii) a timely confirmation of a book- entry transfer (a "Book-Entry Confirmation") of such Series A Senior Notes, if such procedure is available, into the Exchange Agent's account at The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedures for book-entry transfer described below, must be received by the Exchange Agent prior to the Expiration Date, or (iii) the holder must comply with the guaranteed delivery procedures described below. To be tendered effectively, the Letter of Transmittal and all other required documents must be received by the Exchange Agent at the address set forth below under "-Exchange Agent" prior to the Expiration Date. The tender by a holder will constitute an agreement between such holder and the Authority in accordance with the terms and subject to the conditions set forth herein and in the Letter of Transmittal. THE METHOD OF DELIVERY OF THE SERIES A SENIOR NOTES AND THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR SERIES A SENIOR NOTES SHOULD BE SENT TO THE AUTHORITY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTION FOR SUCH HOLDERS. Any beneficial owner whose Series A Senior Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact the registered holder promptly and instruct such registered holder to tender on such beneficial owner's behalf. See the "Instruction to Registered Holder from Beneficial Owner" included with the Letter of Transmittal. If such beneficial owner wishes to tender on such owner's own behalf, such owner must, prior to completing and executing the Letter of Transmittal and delivering such owner's Series A Senior Notes, either make appropriate arrangements to register -29- ownership of the Series A Senior Notes in such beneficial owner's name or obtain properly completed bond powers from the registered holder. The transfer of registered ownership may take considerable time. Signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, must be guaranteed by an Eligible Institution (as defined below) unless the Series A Senior Notes tendered pursuant thereto are tendered (i) by a registered holder who has not completed the box entitled "Special Delivery Instructions" on the Letter of Transmittal, or (ii) for the account of an Eligible Institution. In the event that signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, are required to be guaranteed, such guarantee must be by a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Exchange Act (each an "Eligible Institution"). If the Letter of Transmittal is signed by a person other than the registered holder of any Series A Senior Notes listed therein, such Series A Senior Notes must be endorsed or accompanied by a properly completed bond power, signed by such registered holder as such registered holder's name appears on such Series A Senior Notes, with signatures guaranteed by an Eligible Institution. If the Letter of Transmittal or any Series A Senior Notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing and evidence satisfactory to the Authority of their authority to so act must be submitted with the Letter of Transmittal. All questions as to the validity, form, eligibility (including time of receipt), acceptance and withdrawal of tendered Series A Senior Notes will be determined by the Authority in its sole discretion, which determination will be final and binding. The Authority reserves the absolute right to reject any and all Series A Senior Notes not properly tendered or any Series A Senior Notes the Authority's acceptance of which would, in the opinion of counsel for the Authority, be unlawful. The Authority also reserves the right to waive any defects, irregularities or conditions of tender as to particular Series A Senior Notes. The Authority's interpretation of the terms and conditions of the Exchange Offer (including the instructions in the Letter of Transmittal) will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of the Series A Senior Notes must be cured within such time as the Authority shall determine. Although the Authority intends to notify holders of defects or irregularities with respect to tenders of the Series A Senior Notes, neither the Authority, the Exchange Agent nor any other person shall incur any liability for failure to give such notification. Tenders of the Series A Senior Notes will not be deemed to have been made until such defects or irregularities have been cured or waived. Any Series A Senior Notes that are not validly tendered and as to which the defects or irregularities have not been cured or waived, or if Series A Senior Notes are submitted in a principal amount greater than the principal amount of Series A Senior Notes being tendered by such tendering holder, such unaccepted or non-exchanged Series A Senior Notes will be returned by the Exchange Agent to the tendering holders (or, in the case of Series A Senior Notes returned by book-entry transfer into the Exchange Agent's account at the Book-Entry Transfer Facility pursuant to the book-entry transfer procedures described below, such unaccepted or non-exchanged Series A Senior Notes will be credited to an account maintained with such Book- Entry Transfer Facility), unless otherwise provided in the Letter of Transmittal, as soon as practicable following the Expiration Date. By tendering, each registered holder will be deemed to represent to the Authority that, among other things, (i) the Series B Senior Notes to be acquired by the holder and any beneficial owner(s) of the Series A Senior Notes ("Beneficial Owner(s)") in connection with the Exchange Offer are being acquired by the Holder and such Beneficial Owner(s) in the ordinary course of business of the holder and any Beneficial Owner(s), (ii) the holder and each Beneficial Owner are not participating, do not intend to participate, and have no arrangement or understanding with any person to participate, in a distribution of the Series B Senior Notes, (iii) the holder and each Beneficial Owner acknowledge and agree that (x) any person participating in the Exchange Offer for the -30- purpose of distributing the Series B Senior Notes must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction with respect to the Series B Senior Notes acquired by such person and cannot rely on the position of the Staff of the Commission set forth in no-action letters that are discussed herein under "-Resales of the Series B Senior Notes," and (y) any broker-dealer that receives Series B Senior Notes for its own account in exchange for Series A Senior Notes pursuant to the Exchange Offer must deliver a prospectus in connection with any resale of such Series B Senior Notes and, by so acknowledging, the holder or Beneficial Owner shall not be deemed to admit that, by delivering a prospectus, it is an "underwriter" within the meaning of the Securities Act, (iv) neither the holder nor any Beneficial Owner is an "affiliate" of the Authority as defined under Rule 405 of the Securities Act, except as otherwise disclosed to the Authority in writing, and (v) the holder and each Beneficial Owner understands that a secondary resale transaction described in clause (iii) above should be covered by an effective registration statement containing the selling security holder information required by Item 507 of Regulation S-K of the Commission. The Authority has no obligation to register any of the Series B Senior Notes under the Securities Act in connection with any such resale thereof. BOOK-ENTRY TRANSFER The Exchange Agent will make a request to establish an account with respect to the Series A Senior Notes at the Book-Entry Transfer Facility, for purposes of the Exchange Offer, within two business days after the date of this Prospectus, and any financial institution that is a participant in the Book- Entry Transfer Facility's system may make book-entry delivery of Series A Senior Notes by causing the Book-Entry Transfer Facility to transfer such Series A Senior Notes into the Exchange Agent's account at the Book-Entry Transfer Facility in accordance with such Book-Entry Transfer Facility's procedures for transfer. However, although delivery of Series A Senior Notes may be effected through book-entry transfer at the Book-Entry Transfer Facility, the Letter of Transmittal, with any required signature guarantees and any other documents, must be transmitted to and received by the Exchange Agent at the address set forth below under "-Exchange Agent" on or prior to the Expiration Date or the guaranteed delivery procedures described below must be complied with. GUARANTEED DELIVERY PROCEDURES Holders who wish to tender their Series A Senior Notes and (i) whose Series A Senior Notes are not immediately available, or (ii) who cannot deliver their Series A Senior Notes, the Letter of Transmittal or any other required documents to the Exchange Agent prior to the Expiration Date, may effect a tender if: (1) The tender is made through an Eligible Institution; (2) Prior to the Expiration Date, the Exchange Agent receives from such Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery (by mail or hand delivery) setting forth the name and address of the holder, the certificate number(s) of such Series A Senior Notes and the principal amount of the Series A Senior Notes being tendered, stating that the tender is being made thereby and guaranteeing that, within five business days after the Expiration Date, the Letter of Transmittal together with the certificate(s) representing the Series A Senior Notes (or a Book-Entry Confirmation) and any other documents required by the Letter of Transmittal will be delivered by the Eligible Institution to the Exchange Agent; and (3) Such properly completed and executed Letter of Transmittal, as well as the certificate(s) representing all tendered Series A Senior Notes in proper form for transfer (or a Book-Entry Confirmation) and all other documents required by the Letter of Transmittal are received by the Exchange Agent within five business days after the Expiration Date. Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be sent to holders who wish to tender their Series A Senior Notes according to the guaranteed delivery procedures set forth above. -31- WITHDRAWAL OF TENDERS Except as otherwise provided herein, tenders of Series A Senior Notes may be withdrawn at any time prior to the Expiration Date. To withdraw Series A Senior Notes previously tendered in the Exchange Offer, a written or facsimile transmission notice of withdrawal must be received by the Exchange Agent at its address set forth herein prior to the Expiration Date. Any such notice of withdrawal must (i) specify the name of the person having deposited the Series A Senior Notes to be withdrawn (the "Depositor"), (ii) identify the Series A Senior Notes to be withdrawn (including the certificate number or numbers and principal amount of such Series A Senior Notes), and (iii) be signed by the holder in the same manner as the original signature on the Letter of Transmittal by which such Series A Senior Notes were tendered (including any required signature guarantees). All questions as to the validity, form and eligibility (including time of receipt) of such notices will be determined by the Authority in its sole discretion, which determination shall be final and binding on all parties. Any Series A Senior Notes so withdrawn will be deemed not to have been validly tendered for purposes of the Exchange Offer and no Series B Senior Notes will be issued with respect thereto unless the Series A Senior Notes so withdrawn are properly retendered prior to the Expiration Date. Properly withdrawn Series A Senior Notes may be retendered by following one of the procedures described above under "-Procedures for Tendering" at any time prior to the Expiration Date. Any Series A Senior Notes which have been tendered but which are not accepted for exchange due to the rejection of the tender due to uncured defects or the prior termination of the Exchange Offer, or which have been validly withdrawn, will be returned to the holder thereof (unless otherwise provided in the Letter of Transmittal), as soon as practicable following the Expiration Date or, if so requested in the notice of withdrawal, promptly after receipt by the Authority of notice of withdrawal without cost to such holder. CONDITIONS OF THE EXCHANGE OFFER Notwithstanding any other term of the Exchange Offer, the Authority shall not be required to accept for exchange, or exchange the Series B Senior Notes for any Series A Senior Notes, and may terminate the Exchange Offer as provided herein before the acceptance of such Series A Senior Notes, if: (a) any action or proceeding is instituted or threatened in any court or by or before any governmental agency with respect to the Exchange Offer which, in the reasonable judgment of the Authority, might materially impair the ability of the Authority to proceed with the Exchange Offer or materially impair the contemplated benefits of the Exchange Offer to the Authority, or any material adverse development has occurred in any existing action or proceeding with respect to the Authority; or (b) any change, or any development involving a prospective change, in the business or financial affairs of the Authority has occurred which, in the reasonable judgment of the Authority, might materially impair the ability of the Authority to proceed with the Exchange Offer or materially impair the contemplated benefits of the Exchange Offer to the Authority; or (c) any law, statute, rule or regulation is proposed, adopted or enacted, which, in the reasonable judgment of the Authority, might materially impair the ability of the Authority to proceed with the Exchange Offer or materially impair the contemplated benefits of the Exchange Offer to the Authority; or (d) any governmental approval has not been obtained, which approval the Authority, in its reasonable discretion, shall deem necessary for the consummation of the Exchange Offer as contemplated hereby. -32- All of the foregoing conditions must be satisfied or (other than the receipt of any governmental approvals described in clause (d) above) waived prior to consummation of the Exchange Offer. If the Authority determines that any of the foregoing conditions are not satisfied, the Authority may (i) refuse to accept any Series A Senior Notes and return all tendered Series A Senior Notes to the tendering holders, (ii) extend the Exchange Offer and retain all Series A Senior Notes previously tendered, subject however, to the rights of holders to withdraw such Series A Senior Notes (see "--Withdrawal of Tenders") or (iii) waive such unsatisfied conditions with respect to the Exchange Offer (to the extent it may lawfully do so) and accept all validly tendered Series A Senior Notes which have not been withdrawn. If any waiver described in the foregoing clause (iii) constitutes a material change to the Exchange Offer, the Authority will promptly disclose such waiver by means of a prospectus supplement that will be distributed to the registered holders and will extend the Exchange Offer for a period of five to 10 business days, depending upon the significance of the change and the manner of disclosure to the registered holders, if the Exchange Offer would otherwise expire during such five to 10 business day period. EXCHANGE AGENT First Fidelity Bank, n/k/a First Union Bank of Connecticut, has been appointed as Exchange Agent for the Exchange Offer. Questions and requests for assistance, requests for additional copies of this Prospectus or of the Letter of Transmittal and requests for Notices of Guaranteed Delivery and other documents should be directed to the Exchange Agent addressed as follows: First Union Bank of Connecticut 10 State House Square Hartford, Connecticut 06103-3698 Attn: W. Jeffrey Kramer Vice President, Corporate Trust In addition, questions and requests may be directed to the Exchange Agent by telephone at (860) 247-1353 or by facsimile at (860) 247-1356. FEES AND EXPENSES The expenses of soliciting tenders will be borne by the Authority. The principal solicitation is being made by mail; however, additional solicitation may be made by telegraph, telephone or in person by authorized representatives of the Authority and its affiliates. The Authority has not retained any dealer-manager in connection with the Exchange Offer and will not make any payments to brokers, dealers or others soliciting acceptance of the Exchange Offer. The Authority, however, will pay the Exchange Agent reasonable out-of-pocket expenses in connection therewith. The expenses to be incurred in connection with the Exchange Offer will be paid by the Authority and are estimated in the aggregate to be approximately $220,000. Such expenses include fees and expenses of the Exchange Agent and Trustee, accounting and legal fees and printing costs, among others. The Authority will pay all transfer taxes, if any, applicable to the exchange of the Series A Senior Notes pursuant to the Exchange Offer. If, however, a transfer tax is imposed for any reason other than the exchange of the Series A Senior Notes pursuant to the Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. ACCOUNTING TREATMENT The carrying value of the Series A Senior Notes is not expected to be materially different from the fair value of the Series B Senior Notes at the time of the exchange. Accordingly, no gain or loss for accounting -33- purposes will be recognized by the Authority. The expenses of the Exchange Offer will be amortized over the term of the Series B Senior Notes. RESALES OF THE SERIES B SENIOR NOTES With respect to resales of the Series B Senior Notes, based on an interpretation by the staff of the Commission set forth in no-action letters issued to third parties, the Authority believes that, except as described below, a holder (other than a person that is an "affiliate" of the Authority within the meaning of Rule 405 under the Securities Act) who exchanges Series A Senior Notes for Series B Senior Notes in the ordinary course of business and who is not participating, does not intend to participate, and has no arrangement or understanding with any person to participate, in the distribution of the Series B Senior Notes will be allowed to resell the Series B Senior Notes to the public without further registration under the Securities Act and without delivering to the purchasers of the Series B Senior Notes a prospectus that satisfies the requirements of Section 10 thereof. However, if any holder acquires Series B Senior Notes in the Exchange Offer with the intention or for the purpose of distributing, or participating in a distribution of, the Series B Senior Notes, such holder cannot rely on the position of the staff of the Commission enunciated in EXXON CAPITAL HOLDINGS CORPORATION (available May 13, 1988) or similar no-action letters and, in the absence of an exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. Accordingly, such a secondary resale transaction should be covered by an effective registration statement containing the information with respect to the selling holder that is required by Item 507 of Regulation S-K. The Authority has no obligation to register any of the Series B Senior Notes under the Securities Act in connection with any such resale thereof. As contemplated by the no-action letters described above and the Registration Rights Agreement, each holder participating in the Exchange Offer is required to represent to the Authority in the Letter of Transmittal that (i) the Series B Senior Notes are being acquired by the holder in the ordinary course of business, (ii) the holder is not participating, does not intend to participate, and has no arrangement or understanding with any person to participate, in a distribution of the Series B Senior Notes, and (iii) the holder acknowledges that if such holder participates in the Exchange Offer with the intention or for the purpose of distributing the Series B Senior Notes, such holder must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale of the Series B Senior Notes and cannot rely on the above no-action letters. Notwithstanding the registration of the Series B Senior Notes in the Exchange Offer, holders who are "affiliates," as defined under Rule 405 of the Securities Act, of the Authority may publicly offer for sale or resell Series B Senior Notes only in compliance with the provisions of Rule 144 under the Securities Act, excluding the two-year holding period imposed by Rule 144(d), or another available exemption from registration. At the date of this Prospectus, none of the registered holders of the Series A Senior Notes was believed by the Authority to be such an "affiliate." -34- USE OF PROCEEDS The Exchange Offer is intended to satisfy certain of the Authority's obligations under the Registration Rights Agreement and the Authority will not receive any cash proceeds from the issuance of the Series B Senior Notes offered hereby. In consideration for issuing the Series B Senior Notes as contemplated in this Prospectus, the Authority will receive in exchange Series A Senior Notes in like principal amount, the form and terms of which are identical in all material respects to the form and terms of the Series B Senior Notes, except as otherwise described herein under "The Exchange Offer -- Terms of the Exchange Offer." The Series A Senior Notes surrendered in exchange for the Series B Senior Notes will be retired and canceled and cannot be reissued. Accordingly, the issuance of the Series B Senior Notes will not result in any increase in the indebtedness of the Authority. Proceeds from the sale of the privately placed Series A Senior Notes have been and will be used to acquire the Site, to develop, construct, equip and open the Mohegan Sun Casino and to pay related fees and expenses. -35- CAPITALIZATION The following table sets forth the capitalization of the Authority as of March 31, 1996 and as adjusted to give effect to the Equipment Financing and the Working Capital Financing.
MARCH 31, 1996 ACTUAL AS ADJUSTED (IN MILLIONS) (IN MILLIONS) ------------- ------------- Restricted Cash . . . . . . . . . . . . . . . . $134.4 $186.9(a) ------------- ------------- ------------- ------------- Senior Notes (b) . . . . . . . . . . . . . . . 175.0 175.0 Equipment Financing . . . . . . . . . . . . . -- 40.0 Working Capital Financing (c) . . . . . . . . . -- 12.5 ------------- ------------- Total Senior Debt . . . . . . . . . . 175.0 227.5 Subordinated Notes (d) . . . . . . . . . . . . 40.0 84.7 Other Long-Term Debt . . . . . . . . . . . . . .3 .3 ------------- ------------- Total Capitalization . . . . . . . . $215.3 $312.5 ------------- ------------- ------------- -------------
- ------------------- (a) Reflects the estimated cash balance after giving effect to the Equipment Financing and the Working Capital Financing. The net proceeds of the Offering and of the issuance of the Subordinated Notes, less amounts expended through the date of this Prospectus, are currently held in an Escrow Account pending disbursement. The Authority has arranged for the Working Capital Financing to be available prior to the opening of the Mohegan Sun Casino. See note (c) below. (b) See "Description of the Senior Notes" for further description of the terms and conditions of the Senior Notes. (c) The Authority has signed a commitment letter with a third party lender for the Working Capital Financing. (d) Adjusted amount gives effect to the anticipated issuance of additional subordinated notes in connection with the anticipated draw of approximately $45 million under the Secured Completion Guarantee to fund recent estimated cost increases in the Construction Budget. See "Material Agreements--Note Purchase Agreement" for a description of the terms and conditions of the Subordinated Notes. -36- THE MANAGER TRADING COVE ASSOCIATES The Authority has engaged TCA, a Connecticut general partnership, to manage the development, construction, operation and marketing of the Mohegan Sun Casino. Partners of TCA have been working with the Tribe since 1992 and assisted the Tribe in obtaining federal recognition, negotiating the Mohegan Compact with the State of Connecticut and obtaining numerous governmental approvals for the Mohegan Sun Casino. TCA's partners and their affiliates have extensive experience in the development, construction, marketing and management of casinos and resorts throughout the world. The two managing partners of TCA are (i) Sun Cove Limited, a wholly-owned subsidiary of Sun International, which owns 50% of TCA, and (ii) LMW Investments, Inc., an entity controlled by Len Wolman. See "-- Management of TCA." LMW Investments, Inc. and the other partners of TCA are primarily engaged in hotel management and real estate development. MANAGEMENT OF TCA AND SUN INTERNATIONAL TCA, drawing upon the gaming and resort expertise of Sun International and its other partners, has assembled an experienced management team to oversee the development and operation of the Mohegan Sun Casino. TCA's management team, led by Mr. Solomon Kerzner (see "--Certain Information Regarding Sun International Hotels Limited"), includes: John R. Allison, 48 -- Executive Vice President--Chief Financial Officer of Sun International. Mr. Allison joined SII in December 1987 as Chief Financial Officer--Southern African operations and served in this position until February 1994. Prior to joining SII, he was the Group Financial Director of Kimberly-Clark (South Africa) Limited for four years. He is a fellow of the Institute of Chartered Accountants in England and Wales and a member of the South African Institute of Chartered Accountants. Kevin DeSanctis, 42 -- Executive Vice President; President--Gaming of Sun International. Mr. DeSanctis recently joined Sun International. Prior to joining Sun International, Mr. DeSanctis served as Executive Vice President and Chief Operating Officer of Hemmeter Enterprises since April 1994. From 1991 to 1994 Mr. DeSanctis served as President and Chief Operating Officer of the Trump Plaza Hotel and Casino. From August 1989 to February 1991, Mr. DeSanctis served as Vice President of Casino Operations of The Mirage Hotel and Casino in Las Vegas, Nevada. Prior to August 1989, Mr. DeSanctis served in various positions in the casino industry. William Katz, 44 -- Executive Vice President--Project Development of Sun International. Mr. Katz joined Sun International in September 1994 as Vice President--Project Development for Americas & Caribbean. From 1993 to September 1994, Mr. Katz was Operations Manager for Beauchamp Construction Company, Coral Gables, Florida. From 1991 to 1993, Mr. Katz was Project Executive for Morse Diesel International, Fort Lauderdale, Florida. From 1989 to 1991, Mr. Katz was Project Executive for Stoltz, Inc, Miami, Florida. Howard B. Kerzner, 32 -- Executive Vice President--Corporate Development of Sun International. Mr. Kerzner joined Sun International in September 1992 as Director--Corporate Development. Previously Mr. Kerzner worked for Lazard Freres & Co. from September 1991 to 1992. Prior to that time Mr. Kerzner worked for the First Boston Corporation. Mr. Howard Kerzner is Mr. Solomon Kerzner's son. Len Wolman, 40 -- President and Chief Executive Officer of Waterford Hotel Group, Inc. and founder of LMW Investments, Inc. Mr. Wolman joined Waterford in 1986 when the company had only one -37- property under management. Currently, Waterford has eighteen properties under management in nine states. Waterford currently operates franchises with Marriott, Sheraton, Choice and Hospitality Franchise Systems. Prior to operating Waterford Hotel Group, Mr. Wolman gained experience with major operators including Westin, Hyatt, Four Seasons and Holiday Inn. CERTAIN INFORMATION REGARDING SUN INTERNATIONAL HOTELS LIMITED BACKGROUND OF THE MANAGEMENT OF SUN INTERNATIONAL The senior management of Sun International has been actively engaged in the gaming and lodging industries over the past 25 years. Mr. Solomon Kerzner, the Chairman and Chief Executive Officer of Sun International, founded South Africa's two largest hotel and resort companies and became involved in the gaming industry in 1977. In 1969, Mr. Kerzner established Southern Sun Hotels Limited ("Southern Sun") which grew from six properties in 1969 to 29 properties by 1983. Southern Sun's properties included resorts, city hotels, and casino resorts primarily in southern Africa and the Indian Ocean. In 1983, Mr. Kerzner began to focus primarily on the casino and resort industry and established Sun International Limited to acquire Southern Sun's two gaming operations in southern Africa and three resort hotels in the Indian Ocean (subsequently, such interests were transferred into Sun International Incorporated ("SII")). SII manages 27 casino resorts in southern Africa and for the year ended June 30, 1994 the company generated revenues of approximately $540 million and consolidated net income of approximately $125 million. The commercial success of SII is reflected in the strong financial performance of Sun Bop, the publicly-traded corporation that owns 12 casino resorts in South Africa including Sun City, The Lost City and the Carousel. Mr. Kerzner and his management team have been responsible for the development of a number of world renowned resort hotel and casino properties. In 1979, Mr. Kerzner pioneered the concept of the total gaming resort that would appeal to all market segments by developing Sun City. Sun City was designed to cater to a broad public market by offering gaming entertainment and a wide variety of non-gaming entertainment experiences. Sun City was developed in a remote area approximately 100 miles northwest of Johannesburg, South Africa. Today, Sun City covers some 620 acres and attracts over 2.0 million visitors annually. The facilities at Sun City include: four hotels with approximately 1,300 rooms; two Gary Player designed 18-hole golf courses; an entertainment center that includes a 6,000-seat indoor Superbowl and Africa's largest convention facility; a 46-acre man-made lake for watersports; and approximately 55,000 square feet of gaming space with 1,300 slot machines and 40 table games. In 1992, Sun City was expanded to include The Lost City. TCA believes that The Lost City, a $300 million development, is one of the best examples of the ability and talent of Mr. Kerzner's management team to develop and construct a highly themed and unique resort. The Lost City is a recreation of a forgotten African civilization that has been recently rediscovered. The Lost City covers approximately 60 acres and at its center includes The Palace, a 350-room luxury hotel. The resort also includes a jungle in which over one million trees were transplanted, the Valley of the Waves, which includes a wave pool, adventure rides and sand beaches, and a bridge that intermittently rumbles to simulate an earthquake. In 1993, Mr. Kerzner established Sun International to acquire from Resorts International, Inc. the Paradise Island businesses, including the Paradise Island Resort and Casino. In May 1995, Sun International became Mr. Kerzner's primary vehicle for the development and establishment of gaming and resort operations. Sun International currently owns interests in and operates nine resorts and gaming facilities, including Atlantis, four casinos in France and four hotels properties in the Indian Ocean. -38- SUN INTERNATIONAL PROPERTIES PARADISE ISLAND. Sun International acquired its properties on Paradise Island, located in the Bahamas, in May 1994 and has completed an approximately $140 million redevelopment program to create the 1,147-room Atlantis Resort and Casino, which is a themed resort based upon the wonders of the ocean. In addition to refurbishing the guest rooms and redeveloping and extending the common areas, a 14-acre salt water marine life habitat was created that showcases over 100 species of marine life, waterfalls, lagoons, adventure walks and a walk-through clear acrylic tunnel submerged in a predator lagoon. The gaming facility at Atlantis includes a 30,000 square foot casino with 75 table games and 800 slot machines. The fast-tracked redevelopment plan was substantially completed by the end of 1994 after only seven months of construction. Results to date have exceeded management's expectation with average occupancy and room rates of 85% and $125, respectively, for the first six months of 1995, as compared to 74% and $87, respectively, for the first six months of 1994. In addition to Atlantis, Sun International owns the Ocean Club Golf & Tennis Resort, a luxury resort with 71 guest rooms, villas and cabanas that was completely renovated in the redevelopment program, an 18-hole championship golf course, and Paradise, a 100-room hotel catering to value conscious tourists. FRANCE. Sun International owns an equity interest in, and pursuant to a technical services agreement assists in the management of, four casinos in France in the cities of Nice, Cassis, Carry-le-Rouet and Chamonix that cater primarily to the local market. These casinos operate a total of approximately 520 slot machines and 53 table games. INDIAN OCEAN. Sun International owns an equity interest in, and manages, four hotels on the islands of Mauritius and the Comores located in the Indian Ocean. These resorts cater primarily to European tourists in the mid-priced to luxury segments. In total, Sun International currently manages 825 rooms in the Indian Ocean under long-term management contracts. Two new hotels with 589 additional rooms which Sun International will manage are under construction. Both hotels are scheduled to open during 1996. OWNERSHIP OF SUN INTERNATIONAL Sun International is a Bahamian corporation formed in 1993 that is publicly traded in the United States (NYSE:SIHLF). Approximately 55% of Sun International is owned by SIIL, a private holding company in which each of Caledonia Investments plc, Safmarine & Rennies Holdings Limited and a trust for the Kerzner family controls approximately a one-third interest. An aggregate of approximately 5% of Sun International is owned by certain funds managed by Fidelity Management and Research Company and by Oaktree Capital Management, LLC. At May 1, 1996, the closing price on the NYSE for Sun International Ordinary Shares was $42 3/4 per share. At such prices, Sun International had an equity market capitalization of approximately $1.24 billion. Equity market capitalization, however, is subject to fluctuation as market prices change. -39- SUN INTERNATIONAL FINANCIAL RESULTS The following table presents selected consolidated financial data for Sun International as of and for the year ended June 30, 1993, the six months ended December 31, 1993, the two years ended December 31, 1994 and 1995 and the three months ended March 31, 1995 and 1996. Such data has been derived from consolidated financial statements of Sun International that have been audited by Arthur Andersen LLP, independent certified public accountants. Notwithstanding the inclusion in this Prospectus of selected Sun International financial statements in connection with the Secured Completion Guarantee, neither the Authority nor Sun International believes that such information enhances a potential investor's understanding of the merits and risks of participating in the Exchange Offer. Although Sun International has provided the Secured Completion Guarantee, it is not an obligor or guarantor of the Senior Notes. No assurance can be given that the operating results achieved by Sun International, or the other partners of TCA, will be achieved by the Mohegan Sun Casino.
YEAR SIX MONTHS YEAR ENDED THREE MONTHS ENDED ENDED ENDED DECEMBER 31, MARCH 31, JUNE 30, DECEMBER 31, ----------- --------- 1993 1993 1994(1) 1995(2) 1995 1996 ---- ---- ------- ------- ---- ---- (in thousands, except per share data) SELECTED OPERATING DATA: Gross Revenues . . . . . . . . . . . . . . . . 0 3,141 79,957 223,214 56,961 66,768 Operating Expenses . . . . . . . . . . . . . . 21 2,449 96,181 190,950 46,923 55,019 Operating Income (loss) . . . . . . . . . . . (21) 692 (19,441) 22,990 10,038 11,749 Net Income (loss)(3) . . . . . . . . . . . . . (727) 967 (16,475) 18,359 8,435 12,817 Earnings (loss) per share of Class A and B Common Stock, before accretion of redemption value(4) . . . . . . . . . . . . -- -- (1.06) 0.87 -- -- Earnings (loss) per share of Class A and B Common Stock, after accretion of (0.08) 0.11 (1.12) 0.79 0.45 0.52 redemption value(4) . . . . . . . . . . . . Average number of shares outstanding(4). . . . 8,852 8,852 15,482 21,194 18,852 24,851 THREE MONTHS ENDED DECEMBER 31, MARCH 31, ----------- -------- 1994(1) 1995(2) 1995 1996 ------- ------- ------- ------- (in thousands) SELECTED BALANCE SHEET DATA: Current Assets . . . . . . . . . . . . 57,610 41,959 45,395 190,595 Noncurrent Assets . . . . . . . . . . 259,065 328,468 281,053 328,968 Current Liabilities . . . . . . . . . 85,135 55,120 76,390 42,428 Noncurrent Liabilities . . . . . . . . 75,000 116,153 81,283 1,049 Redeemable Common Stock (5). . . . . . 62,020 63,543 62,936 -- Total Shareholders' Equity (5) . . . . 94,520 135,611 106,389 476,086
- ------------------- (1) Sun International completed the refurbishment and redevelopment program on Paradise Island in December 1994. As a result, the financial data for fiscal year 1994 are not comparable to the financial data for fiscal year 1995. (2) On May 1, 1995, Sun International purchased from SIIL substantially all of SIIL's businesses and business opportunities. The purchase was treated as a reorganization of entities under common control and, as such, was accounted for in a manner similar to a pooling of interests. Accordingly, the financial information set forth herein has been restated to include the results of SIIL's businesses for the period presented. -40- (3) Included in Net Income for fiscal year 1995 is a non-recurring gain of $900,000 resulting from the sale of Paradise Island Airlines. (4) All share and per share information has been restated to reflect a two-for- one stock split effected on October 31, 1995. (5) On March 1, 1996, Sun International redesignated its two series of Ordinary Shares as one series of Ordinary Shares and sold 8,440,000 shares in a public offering. Sun International financed its purchase of the Subordinated Notes by borrowing funds under a bank credit agreement. -41- BUSINESS AND PROPERTY THE MOHEGAN SUN CASINO The Authority, an instrumentality of the Tribe with perpetual life, is developing the Mohegan Sun Casino, a gaming and entertainment complex on the approximately 240-acre Site located in southeastern Connecticut. The Mohegan Sun Casino is expected to open in the fourth quarter of 1996. Once completed, the Mohegan Sun Casino and the currently operating Foxwoods, which is owned and operated by the Pequot Tribe, will be the only two casinos offering slot machines and table games in the northeastern United States that are currently legally authorized outside of Atlantic City, New Jersey. The Mohegan Sun Casino is being constructed on a wooded site overlooking the Thames River. The historical northeastern Indian theme will be conveyed through architectural features and the use of natural design elements such as timber, stone and water. The Mohegan Sun Casino will be separated into four themed quadrants, each of which will have its own unique entrance and will be designed to reflect a separate seasonal theme-winter, spring, summer and fall- emphasizing the importance of the seasonal changes to tribal life. The approximately 625,000 square foot facility will include approximately 150,000 square feet of gaming space, and is designed to accommodate approximately 3,000 slot machines and 180 table games. The Mohegan Sun Casino is expected to commence operations with a minimum of 2,500 slot machines and 180 table games. The quality and variety of the food service will be a hallmark of the Mohegan Sun Casino which will include a 600-seat buffet, four specialty theme restaurants, a coffee shop and a large food court. Multiple full service and floor service bars will be located throughout the facility. For non-gaming entertainment, the Mohegan Sun Casino will offer a children's recreation area and child care facilities. Parking at the Mohegan Sun Casino will be provided through surface parking spaces and underground valet parking spaces, totalling approximately 7,500 spaces. Traffic will enter the grounds via a newly constructed four-lane access road to Route 2A and will be directed to the valet parking drop-off zones or to the self-park surface lots which will be connected to the main building by shuttle bus service. A separate loading and parking area will be established for bus groups. The Site for the Mohegan Sun Casino, located approximately one mile from the interchange of I-395 and Connecticut Route 2A (which is expected to be widened to a four-lane expressway), is just outside Montville, Connecticut, approximately 10 miles west of Foxwoods. As part of its integrated development plan, the Authority will construct a four-lane access road (with its own exit) from Route 2A, giving patrons of the Mohegan Sun Casino direct access to Interstate 395 and Interstate 95, the main highway connecting Boston, Providence and New York. The Authority and TCA have developed a master plan for the Site that integrates all major aspects of gaming and entertainment design. The master plan places particular emphasis on creating direct highway access, providing convenient parking, designing an attractively themed facility and developing a variety of non-gaming entertainment amenities. The Authority believes that the Mohegan Sun Casino's location, ease of access and unique design, together with the development, marketing and gaming expertise of Sun International, should enable the Mohegan Sun Casino to capture a significant share of the gaming market in the northeastern United States. MARKET The market for the Mohegan Sun Casino will be primarily day-trip customers from New England and New York who reside within 150 miles of the Mohegan Sun Casino. According to market research reports, in 1994 there were approximately 2.6 million adults living within 50 miles of the Site, 10.2 million adults within 100 miles of the Site and 21.8 million adults within 150 miles of the Site. The metropolitan areas of Hartford, -42- New Haven, Springfield, Worcester, Boston and Providence are within one to two hours driving time by interstate highway to the Mohegan Sun Casino. New York City is approximately three hours driving time from the Site. Access from Long Island, New York is available through passenger and vehicle ferry to New London, Connecticut, which is approximately 20 miles from the Mohegan Sun Casino. MARKETING STRATEGY The Authority intends to employ a comprehensive marketing program to establish the Mohegan Sun Casino as a premier entertainment facility for the entire family. The Mohegan Sun Casino will seek to distinguish itself by emphasizing a uniquely themed gaming environment, a superior food experience in a variety of settings, ease of access and attention to personal service. The Authority believes that its primary target market will be adults living within 100 miles (or approximately one to two hours driving time) and secondarily, the population living between 100 and 150 miles (or approximately two to three hours driving time) of the Mohegan Sun Casino, which includes most of the New York City and Boston metropolitan areas. The Authority does not intend to market heavily to visitors outside its primary target market unless it expands the Mohegan Sun Casino to include lodging facilities. Consistent with its emphasis on the day-trip market, the Authority expects to organize regular bus routes and private limousine service to the major metropolitan areas in its vicinity to attract gaming patrons at all levels of play. Although the Mohegan Sun Casino will seek to accommodate premium high-stakes players, it does not initially expect to spend significant resources targeting the more demanding and costly premium player market. The Authority expects that it will seek to create market awareness and customer loyalty through a wide variety of activities that will include: public relations programs, print and broadcast advertisements, direct mail promotions, slot players clubs, bus stop signage and billboard signage. In addition to the fun and excitement of casino action, the Authority expects to promote superior customer service and the quality and value of its food offerings to attract repeat patrons. Also, the Authority expects to promote the Mohegan Sun Casino through special events to be held from time to time at the Mohegan Sun Casino. DESIGN AND CONSTRUCTION Initial phases of the construction of the Mohegan Sun Casino are underway at the Site. The Site was formerly a manufacturing facility operated by UNC and will be substantially redeveloped, with many of the existing buildings (consisting of 350,000 square feet) to be renovated and incorporated into the approximately 625,000 square foot complex. The Site will also include indoor valet parking and surface parking for a total of approximately 7,500 cars, tour bus parking and unloading zones, and access roads, including a four-lane direct access road from the Mohegan Sun Casino to Route 2A. Although the plan for the Mohegan Sun Casino does not currently call for any lodging facilities, there is ample room on the 240-acre site for hotels and other entertainment amenities. The Site, together with all buildings constructed or to be constructed thereon and improvements thereto, including the Mohegan Sun Casino, are and will be owned by the United States in trust for the Tribe. Such real property, and the additional parcel of land adjacent to the Site that was acquired by the Tribe in its own name for expansion of the access road leading to the Mohegan Sun Casino, are and will be leased by the Tribe to the Authority under a long-term land lease. See "Material Agreements--Land Lease." -43- PROJECT DEVELOPMENT The Authority and TCA have assembled an experienced team of architectural, design and construction firms to develop and build the Mohegan Sun Casino. Pursuant to agreements between TCA and the Authority, TCA will coordinate and supervise the conceptual planning, design and construction of the Mohegan Sun Casino. See "Material Agreements--Development Agreement" and "--Management Agreement." TCA will rely heavily upon Sun International's demonstrated expertise in designing and developing casino resorts. Morse Diesel is serving as the general contractor for the Mohegan Sun Casino and the Authority has entered into a guaranteed maximum price contract with Morse Diesel for the construction of the Mohegan Sun Casino. Construction of the Mohegan Sun Casino is expected to be completed by the fourth quarter of 1996. TCA's partners have demonstrated an ability to successfully fast-track their own respective projects. Sun International's management team built the $300 million Lost City project in only 26 months and substantially completed the $140 million reconstruction of Atlantis in only seven months, despite the fact that the hotel remained open throughout the reconstruction period. The following is a brief description of the design, construction and engineering professionals selected to assist in the development and construction of the Mohegan Sun Casino: MORSE DIESEL INTERNATIONAL has been selected as the general contractor for the Mohegan Sun Casino. Founded in 1936, Morse Diesel is a leading construction firm in the northeastern United States. Morse Diesel has successfully completed world class projects including the Sears Tower and the United Center (the arena for the Chicago Bulls and Chicago Blackhawks) in Chicago, the Philadelphia Convention Center and the Marriott Marquis in New York City. DESIMONE, CHAPLIN AND DOBRYN CONSULTING ENGINEERS, P.C. ("DCD") has been selected as the structural engineer for the Mohegan Sun Casino. DCD has provided structural engineering services to architects, owners and developers for over 25 years. DCD's major casino projects include the Crystal Palace and the Paradise Island Hotel & Casino in The Bahamas, and the Sands Hollywood Hotel and Casino and Trump Plaza in Atlantic City. Since 1969, DCD has been involved in the construction of over 25 major hotels including the Embassy Suites Hotel and the Sheraton New Yorker in New York City. LEHR ASSOCIATES CONSULTING ENGINEERS ("LEHR") has been selected to provide mechanical/electrical/plumbing and fire/life protection design services for the Mohegan Sun Casino. LEHR has provided such services for over 25 years, including in connection with the Atlantis Resort and Casino project on Paradise Island. LEHR's other casino projects include Bally's Park Place and Casino Hotel, the Dunes Hotel and Casino, Resorts International, the Sands Hotel and Casino, the Tropicana Hotel and Casino and Trump's Castle Hotel and Casino, all in Atlantic City. LEHR has received several awards for engineering excellence, and numerous members of LEHR have been published in leading engineering publications and are recognized as technical experts in their respective disciplines. BRENNAN BEER GORMAN has been selected to coordinate the architectural design of the Mohegan Sun Casino. Major recent projects include the Barclay's Bank headquarters in New York City, the new Jakarta Stock Exchange complex and the Peninsula hotel complex in Bangkok, Thailand. Recent hotel renovations by Brennan Beer Gorman include the Ritz Carlton in Washington, D.C., the St. Regis Hotel, the Essex House and Sherry Netherland hotels in New York City. ROCKWELL ARCHITECTURE, PLANNING AND DESIGN, P.C. ("Rockwell") has been selected to coordinate the interior design of the Mohegan Sun Casino. Led by David Rockwell, Rockwell is well known for its innovative entertainment architecture, and has been the recipient of numerous awards. Rockwell's client list includes: The Walt Disney Company, Planet Hollywood, Giorgio Armani, CBS, Loews Hotels, McDonald's, Marvel Comics, -44- Sony Theaters and Caesars Palace. High profile restaurant and club designs include: the Monkey Bar and Restaurant, Nobu, Vong, The Whiskey at the Paramount Hotel and Tatou, all in New York, as well as most of the Planet Hollywood restaurants worldwide. Rockwell has also been involved in major mixed-use/entertainment projects including: New York City's Forty-Second Street Development Project, the World Trade Center Plaza Competition, Disney BoardWalk at Walt Disney World, Kids' Place and the proposed Caesars Forum III, both in Las Vegas. DAVID JACOBSEN ASSOCIATES, PA ("DJA") has been selected to design the layout of the casino. DJA has been servicing the gaming industry with architectural design since 1956--beginning with The New Frontier in Las Vegas. DJA provided architectural and interior design services to all but two of the casino hotels in Atlantic City. DJA has completed 60 casino, casino-hotel and riverboat/dockside projects including Trump's Castle Hotel and Casino, Trump Plaza Hotel and Casino, Sands Hotel and Casino, in Atlantic City, and Circus, Caesars Palace, and the Cal-Neva Lodge in Nevada. EDWARD D. STONE, JR. AND ASSOCIATES ("EDSA") has been selected to provide landscape planning for the Mohegan Sun Casino. Formed in 1960, EDSA is one of the leading planning and landscape architectural firms in the world, and has been recognized with more than 120 awards for its design excellence and environmental sensitivity. EDSA has extensive experience in the design of resort, hotel and golf community developments in the United States and internationally including: the Atlantis Resort and Casino in The Bahamas, the Grand Cypress Resort in Florida, the Four Seasons Resort in Nevis, the Hyatt Regency Aruba Resort and Casino, El Conquistador in Puerto Rico, and the PGA Resort Community in Florida. CLOSE, JENSEN & MILLER ("CJM") has been selected as the civil engineers for the design of the roadways leading from I-395 to the Mohegan Sun Casino, as well as the layout of the parking facilities. CJM has provided a wide scope of professional consulting services in civil engineering design, land survey and planning since 1926 and its specialties include site design, roadway engineering and traffic and structural design. CJM has served the DOT as Consulting Liaison Engineers for review and management of bridge repair and replacement projects since 1983. REGULATORY APPROVALS A number of federal, state and tribal governmental licenses and approvals are required to open and operate the Mohegan Sun Casino. Prior to opening the Mohegan Sun Casino, each of the partners of TCA and certain employees of the Mohegan Sun Casino must be licensed by relevant tribal and state authorities. Each of the partners of TCA has applied for and received temporary gaming licenses from the Commissioner of Revenue Services of the State of Connecticut. As each employee who is required to be licensed is hired, the Authority or TCA will cause such employee to apply for all required licenses. See "Risk Factors--Transkei Investigation." A number of federal and state approvals are required to construct the access roads to the Mohegan Sun Casino. DOT or the Authority has obtained all requisite permits and approvals for the construction of the access road off of Route 2A. During a special session of the Connecticut State Senate held to consider the approval of a gaming facility in Bridgeport, Connecticut, which was to be owned and operated by the Pequot Tribe, the Tribe testified before the Connecticut Senate Public Safety Committee that, if the Bridgeport Casino project were approved, the Authority would no longer be required to make slot revenue payments to the State of Connecticut. Shortly after the Tribe's testimony, it was reported in certain Connecticut newspapers that officials of the State of Connecticut disagreed with the Tribe's position and had stated that regulatory approvals required for the construction of the Mohegan Sun Casino may be delayed. The Connecticut State Senate rejected the Bridgeport casino project on November 16, 1995. Although the Authority has obtained from the State of Connecticut substantially all of the permits required to complete construction of the Mohegan Sun Casino as planned, there -45- can be no assurance that any of such permits will not be revoked or that any additional permits that may be required will be granted in a timely manner. The Authority and TCA believe that they will be able to acquire all other necessary licenses, permits and approvals in order to construct, open and operate the Mohegan Sun Casino. However, no assurances can be given that any or all of the licenses, permits and/or approvals described above will be issued or that any or all of such licenses, permits and/or approvals will be issued without certain conditions or restrictions that could adversely affect the construction and operation of the Mohegan Sun Casino or the development of the adjacent roadways. The failure to obtain any of these licenses, permits or approvals in a timely manner may delay, restrict or prevent the Mohegan Sun Casino from opening as contemplated herein. COMPETITION The gaming industry is characterized by intense competition among entities that, in many instances, have greater resources than will the Authority. Because the Mohegan Sun Casino will be marketed primarily to the day-trip customer, it expects to compete primarily with other casinos within 150 miles, and to a lesser extent, with casinos in Atlantic City, New Jersey. The Authority believes the Mohegan Sun Casino will compete with other gaming entities on the basis of its superior location, with direct access to a heavily trafficked state highway as well as the main highway connecting Boston, Providence and New York, and its unique tribal and "seasonal" atmosphere. Currently, Foxwoods is the only casino in operation within 150 miles of the Site. However, Foxwoods is located approximately 10 miles from the Site and is the largest gaming facility in the United States in terms of the number of total gaming positions. In addition, Foxwoods offers a number of amenities that the Mohegan Sun Casino does not currently plan to offer in its initial development, including hotels and extensive entertainment facilities. Foxwoods has been in operation for nearly four years and the Authority believes that Foxwoods' successful operation has enabled it to build financial resources that are currently substantially greater than the Authority's or the Tribe's. Currently, outside of Atlantic City, New Jersey, casino gaming in the northeastern United States may be conducted only by federally-recognized Indian tribes operating under IGRA. In addition to the Pequot Tribe, which operates Foxwoods, a federally-recognized tribe in Rhode Island and a federally-recognized tribe in Massachusetts are each currently seeking to establish gaming operations. In addition, a number of tribes in New England are seeking federal recognition in order to establish gaming operations. The Authority cannot predict whether any of these tribes will be successful in establishing gaming operations, and if established, whether such gaming operations will have a material adverse effect on the proposed operations by the Authority. In addition, a number of states, including Connecticut, have investigated legalizing casino gaming by non-Indians in one or more locations. However, under the Mohegan Compact and the tribal-state compact between the Pequot Tribe and the State of Connecticut, and agreements related thereto, if Connecticut legalizes any gaming operations other than pursuant to IGRA (I.E., by an Indian tribe on Indian land) with slot machines or other commercial casino games, the Pequot Tribe and the Tribe will no longer be required to make payments related to slot machine revenues. In 1995, the State of Connecticut made a request for proposals for the possible development of a casino in Bridgeport, Connecticut, but in November 1995, the Connecticut legislature declined to adopt special legislation authorizing such casino operations. The Authority is unable to predict whether the Connecticut legislature will reconsider the Bridgeport proposal, or whether and when it may consider other gaming initiatives. Although the Mohegan Sun Casino will be dependent primarily upon gaming customers residing within 150 miles of the Mohegan Sun Casino, the Authority also will compete for customers with casinos in Atlantic City, New Jersey, many of which have greater resources and greater name recognition than the Mohegan Sun Casino. -46- EMPLOYEES; TRAINING As of April 1, 1996, the Authority had approximately 60 employees, all of whom have administrative or managerial responsibilities. When the Mohegan Sun Casino commences operations, approximately 4,000 full-time employees will be required. Pursuant to its Management Agreement with the Authority, TCA will be solely responsible for recruiting and training the Authority's employees to operate the Mohegan Sun Casino. In recruiting personnel, TCA is obligated to give preference, first to qualified members of the Tribe (and qualified spouses and children of members of the Tribe) and second to members of other Indian tribes. TCA believes that it will be able to hire and train employees in order to operate the Mohegan Sun Casino and that the relative proximity of Atlantic City will enable it to find a large pool of trained and licensable employees to fill all skilled and operating management positions. See "Material Agreements-- Management Agreement." TCA will develop and implement training programs to teach Mohegan Sun Casino employees necessary technical skills as well as to instill a commitment to the highest levels of service in the industry. TCA will utilize Sun International's established training programs to train Mohegan Sun Casino employees, thereby ensuring adherence to the high quality standards that prevail in Sun International's casino resorts. LEGAL PROCEEDINGS Neither the Tribe nor the Authority is a party to any pending material litigation. ENVIRONMENTAL MATTERS Under various federal, state and local environmental laws, ordinances and regulations, a current or previous owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances or chemical releases at such property, and may be held liable to a governmental entity or to third parties for property damage, personal injury and for investigation and cleanup costs incurred by such parties in connection with the contamination. Such laws typically impose cleanup responsibility and liability without regard to whether the owner knew of or caused the presence of the contaminants, and the liability under such laws has been interpreted to be joint and several unless the harm is divisible and there is a reasonable basis for allocation of responsibility. The costs of investigation, remediation or removal of such substances may be substantial. In addition, the owner or former owners of a site may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from a site. The Site was formerly occupied by UNC, a naval products manufacturer of, among other things, nuclear reactor fuel components. UNC's facility was officially decommissioned on June 8, 1994 when the NRC confirmed that all licensable quantities of SNM had been removed from the Site and that any residual SNM contamination was remediated in accordance with the NRC approved decommissioning plan. From 1991 through 1993, UNC commissioned an environmental consultant to perform a series of environmental audits and reports on the Site. The environmental audits and soil sampling programs detected, among other things, volatile organic chemicals, heavy metals and fuel hydrocarbons in the soil and groundwater. The Connecticut Department of Environmental Protection (the "DEP") reviewed the environmental audits and reports and established cleanup goals to achieve direct exposure criteria for residential use of the Site (the most conservative cleanup levels) and to eliminate sources of groundwater contamination. In December 1994, the DEP approved UNC's November 1994 Remedial Plan which determined that although the groundwater beneath the Site was contaminated, it met the applicable groundwater criteria given the classification of the groundwater under the Site, and as such, groundwater remediation was unnecessary. The November 1994 Remedial Plan also determined that certain soils contained contamination in excess of the clean-up criteria, requiring soil remediation. Extensive remediation of contaminated soils and additional investigation were completed to achieve the DEP's cleanup criteria and demonstrate that the remaining soils complied with applicable cleanup criteria. The -47- Permitting, Enforcement and Remediation division of the DEP Bureau of Water Management has reviewed and approved the cleanup activities at the Site. By letter dated March 20, 1995, the DEP approved the remediation report for Site. Although the Site currently meets all applicable federal, state and local remediation requirements, no assurance can be given that the various environmental reports or any other existing environmental studies with respect to the Site revealed all environmental liabilities, that any prior owners or tenants of the Site did not create any material environmental condition not known to the Authority, that future laws, ordinances or regulations will not impose any material environmental liability, or that a material environmental condition does not otherwise exist on the Site. Future remediation may be necessary if excavation and construction exposes contaminated soil which has otherwise been deemed isolated and not subject to cleanup requirements. In addition, if after new construction a building is within fifteen feet of the water table, ventilation equipment may be necessary, given the present levels of contamination in the groundwater. As part of the DEP's approval, UNC must continue to perform post-closure groundwater monitoring at the Site to insure the adequacy of the cleanup. This long term groundwater monitoring is not expected to require mitigation other than maintaining existing monitoring wells. UNC is financially responsible for the post-closure groundwater monitoring and such monitoring should not interfere with the development and enjoyment of the Site. The Phase I Reports did locate several underground storage tanks ("USTs") and above the ground storage tanks ("ASTs") on the Site. By June 1995 all but two ASTs had been removed, and such remaining ASTs are exempt from state and federal regulations because of use and size. Some of the USTs were cleaned, decontaminated and removed in compliance with state and federal laws. Other USTs were abandoned in place or are believed to have been removed during prior construction on the Site. Investigation did not locate any leaking USTs. There is one federal and state permitted solid waste landfill located within one-half mile of the Site. The landfill has only been in operation since 1993 and is permitted to accept ash disposal. The landfill is somewhat upgradient from the Site, so if contaminants from the landfill were to reach groundwater, such contaminants could migrate to the Site. Certain federal, state and local laws, regulations and ordinances govern the removal, encapsulation or disturbance of asbestos-containing materials ("ACMs") when such materials are in poor condition or in the event of building remodeling, renovation or demolition. Such laws may impose liability for release of ACMs and may provide the right for third parties to seek recovery from owners or operators of real properties for personal injury associated with ACMs. In December 1994, UNC hired an asbestos contractor who removed all exposed asbestos insulations. In addition, it is contemplated that ACMs will be removed as part of the construction of the Mohegan Sun Casino. However no assurance can be given that additional future asbestos removal will not be necessary. See "Business and Property--Design and Construction." The DEP is currently in the process of drafting newly proposed soil remediation standards and ground water quality standards and criteria (the "Clean-up Standard Regulations"). In the past, the DEP has made remedial decisions on a case-by-case basis with the goal of eliminating or minimizing sources of pollution, eliminating risks to human health, and restoring water quality consistent with the Water Quality Standards. The Clean-up Standard Regulations are meant to codify those same standards and goals to make the clean-up process as clear and predictable as possible. The Site has been the subject of extensive environmental investigations for both nuclear material and non-nuclear contaminants including, among other things, volatile organic chemicals, heavy metals and fuel hydrocarbons in the soil and groundwater. Substantial remediation of the Site was completed from 1991 until January 1995. According to the data gathered in the Phase III Environmental Site Assessment Remediation Report dated January 1995, as amended March 1995, (the "Phase III Assessment") which was commissioned by UNC, -48- remediation is complete and is consistent with the most recent February 16, 1995 draft proposal for the Connecticut Clean-up Standard Regulations. However, no assurance can be given that the Phase III Report or any other existing environmental studies with respect to the Project Site reveal all environmental liabilities, or that future laws, ordinances or regulations, including but not limited to the currently proposed Clean-up Standard Regulations, will not impose any material environmental liability, or that a material environmental condition does not otherwise exist as to the Site. In June 1995 the Tribe and TCA commissioned a Draft Environmental Assessment of the Mohegan Sun Casino ("Environmental Assessment"). The Environmental Assessment concludes that for EPA Clean Air Act general SIP conformity purposes, emissions from the Mohegan Sun Casino are projected to be below the DE MINIMIS level of 50 tons/year for nitrogen oxides ("NOx") or volatile organic compounds ("VOCs") and accordingly, should not cause significant air quality impacts. The Environmental Assessment's projection is based in part on the Tribe's and TCA's pollution prevention plans and ability to obtain emission reduction credits to offset emissions. Connecticut Light and Power Company has indicated to the Tribe that it has sufficient Nox emission credits that it will make available to the Tribe to offset emissions related to the Mohegan Sun Casino. In addition to federal, state and local laws relating to hazardous or toxic substances, construction and proposed operation of the Mohegan Sun Casino must comply with the National Environmental Policy Act ("NEPA"). A provision of NEPA, 42 U.S.C. Section 4332(2)(C), requires that, prior to taking any federal action that may significantly affect the quality of the human environment, the responsible federal agency must prepare an environmental impact statement ("EIS") describing and quantifying, to the extent possible, such affects. NEPA applies to the construction and proposed operation of the Mohegan Sun Casino because of the NIGC and the BIA approvals required in connection therewith. See "Government Regulation--NIGC and BIA Approvals." An EIS is not required, however, if the responsible federal agency, based on an environmental assessment, issues a "Finding of No Significant Impact" ("FONSI"). On September 29, 1995, the NIGC and the BIA jointly issued a FONSI with respect to the construction and operation of the Mohegan Sun Casino. -49- MOHEGAN TRIBE OF INDIANS OF CONNECTICUT GENERAL The Mohegan Tribe of Indians of Connecticut is a federally-recognized Indian tribe, whose federal recognition became effective May 15, 1994. The Tribe currently has approximately 1,100 members. Although it only recently received federal recognition, the Tribe has lived in a cohesive community since time immemorial in what is today southeastern Connecticut. The Tribe historically has cooperated with the United States and is proud of the fact that members of the Tribe have fought on the side of the United States in every war from the Revolutionary War to Desert Storm. The Tribe believes that this philosophy of cooperation exemplifies its approach to developing the Mohegan Sun Casino. Although the Tribe is a sovereign entity, it has sought to work with, and gain the support of, local communities in establishing the Mohegan Sun Casino. For example, the Tribe gave up its claim to extensive tracts of land that have been guaranteed by various treaties in consideration for certain agreements in the Mohegan Compact. As a result, local residents and businesses whose property values had been clouded by this dispute were able to gain clear title to their property. In addition, the Tribe has been sensitive to the concerns of the local community in developing the Mohegan Sun Casino. This philosophy of cooperation, rather than confrontation, has enabled the Tribe to build a unique alliance among local, state and federal officials to achieve its goal of building the Mohegan Sun Casino. In addition to the Tribe's beneficial interest in the Site, the Tribe also owns a 0.40 acre parcel, which is the site of the Mohegan Church (the "Church Parcel"), and a parcel of land adjacent to the Site to be used for the expansion of the access road leading to the Mohegan Sun Casino. The Church Parcel is the only remnant of the Tribe's original reservation, a reservation which was acknowledged and set apart for the Tribe by the Crown Colony of Connecticut and subsequently by the State of Connecticut, through a series of official actions beginning in 1638. GOVERNANCE OF THE TRIBE The Tribe's Constitution, as amended on April 12, 1996, provides for the governance of the Tribe by a Tribal Council (the "Council"), consisting of nine members, and a Council of Elders (the "Elders"), consisting of seven members. All members of the Council and the Elders serve terms of five years. On February 22, 1992, Chief Ralph Sturges was elected to the position of Lifetime Chief of the Tribe. On October 20, 1995, Chief Sturges resigned from the Council but he remains Lifetime Chief of the Tribe, a traditional religious and ceremonial position. Roland Harris has been elected to succeed Chief Sturges as Council Chair. A special election was held following Chief Sturges's resignation from the Council to fill the vacancy created by his resignation. The legislative and executive powers of the Tribe are vested in the Council. The members of the Council are elected by the registered voters of the Tribe and must be at least 21 years of age prior to the date of the election. The powers of the Council are set forth in the Tribe's Constitution, as amended, and include the legislative and executive powers to establish a departmental structure for the executive branch and to establish governmental sub-divisions and agencies and delegate appropriate powers to such subdivisions and agencies. The terms of each of the Council members ends on October 5, 2000. Presently the members of the Council are as follows: -50- TRIBAL COUNCIL NAME AGE ---- --- Mark Brown . . . . . . . . . . . . . . . . . . . . . . 38 Jayne Fawcett . . . . . . . . . . . . . . . . . . . . . 59 Carlisle Fowler . . . . . . . . . . . . . . . . . . . . 66 Courtland Fowler . . . . . . . . . . . . . . . . . . . 68 Roland Harris . . . . . . . . . . . . . . . . . . . . . 55 Loretta Roberge . . . . . . . . . . . . . . . . . . . . 64 Maynard Strickland . . . . . . . . . . . . . . . . . . 51 Shirley Walsh . . . . . . . . . . . . . . . . . . . . . 48 Glen R. LaVigne . . . . . . . . . . . . . . . . . . . . 35 The Tribe's Council of Elders presently consists of six elected members, each of whom is a registered voter of the Tribe, is at least 55 years of age and was elected by the registered voters of the Tribe. The seventh member of the present Elders was appointed by the Tribal Council. In the future, all seven members of the Elders will be elected by registered voters of the Tribe and will be required to be at least 55 years of age. Any case or controversy arising under the Tribe's Constitution must be submitted to the Elders for determination, except those matters which relate to the Mohegan Sun Casino, including the Senior Notes, which are required to be submitted to the Gaming Disputes Court. The decision of the Elders on such matters is final. The Elders are not permitted to issue advisory opinions. The term of each of the Elders expires on October 2, 1998. Presently, the members of the Elders are as follows: COUNCIL OF ELDERS NAME AGE ---- --- Pauline Brown . . . . . . . . . . . . . . . . . . . . . 66 Carlton Eichelberg . . . . . . . . . . . . . . . . . . 65 Everett Eichelberg . . . . . . . . . . . . . . . . . . 61 Melissa Fawcett . . . . . . . . . . . . . . . . . . . . 35 Margaret LaVigne . . . . . . . . . . . . . . . . . . . 65 Dorothy Long . . . . . . . . . . . . . . . . . . . . . 68 Laurence Schultz . . . . . . . . . . . . . . . . . . . 63 MOHEGAN TRIBAL GAMING AUTHORITY On July 15, 1995, the Tribe established the Mohegan Tribal Gaming Authority. The Mohegan Constitution provides that the Authority shall exercise all governmental and proprietary powers of the Tribe over all gaming-related development. The Gaming Ordinance of the Tribe, under which the Authority was established, obligates the Authority, among other things, to (i) distribute its net revenues as provided by the Indenture, the Management Agreement and related agreements and (ii) to the extent the Authority has residual net income after making the distributions required by subclause (i) above, provide a fair return to the Tribe (as determined by the Authority in its sole discretion) on the Tribe's investment, consistent with the development and operation of a legal and profitable Gaming Enterprise (which is defined to include the Mohegan Sun Casino and any and all other gaming related developments), the terms of any applicable management or financing agreements and, when practical, with the employment of members of the Tribe in the operation of the Gaming Enterprise. In addition, for so long as any Senior Notes are outstanding, the Indenture restricts the Authority's discretion to use or distribute funds held by it or for its benefit, except as expressly provided therein or in the Collateral Documents. The Indenture covenants prohibit the Authority from making any payment or distribution to the Tribe (or any agency or instrumentality thereof) or any general distribution to members of the Tribe (other than payments expressly permitted by the Indenture) unless and until all distributions required by subclause (i) above have been made and the Authority is not, and upon making such distribution will not be, in default under the Indenture. The Authority has two major functions. The first, delegated to the Authority's Management Board (the "Management Board"), is to direct the development, operation, management, promotion and construction of the gaming enterprise and all related development. The Management Board consists of the nine members of the Council. Presently, the members of the Authority's Management Board are the same as the members of the Council. The Management Board also selects tribal representatives to a Business Board which oversees the business aspects of the gaming operation (the "Business Board"). The Business Board is established under the Management Agreement and consists of two members appointed by the Tribe and two members appointed by TCA. Although the Management Agreement gives TCA the exclusive right and obligation to develop, manage, operate and maintain Class III gaming at the Mohegan Sun Casino, ultimate management authority over gaming operations is vested in the Authority and the Tribe. The Management Agreement also contains numerous -51- restrictions on TCA's independent authority. TCA is required to operate the Mohegan Sun Casino in compliance with all tribal legal requirements and other applicable laws and TCA and all of its executive officers must be licensed by the Tribe pursuant to the Tribal Gaming Ordinance. General oversight responsibility and decision-making authority with respect to certain key business matters are delegated specifically to the Business Board. Additionally, certain responsibilities delegated to TCA are subject to the prior approval of the Authority (E.G., selection of a General Manager and adoption of the operating and capital budgets for the Mohegan Sun Casino). The second major function of the Authority is to regulate gaming. The Management Board appoints an independent Director of Regulation to ensure the integrity of the gaming operation through the promulgation and enforcement of appropriate regulation. The Director of Regulation serves at the pleasure of the Management Board and employs a staff that is responsible for performing background investigation into gaming license applicants. The Director is responsible for issuance and revocation of gaming licenses. EXECUTIVE OFFICERS AND MEMBERS OF THE MANAGEMENT BOARD The following table provides information as of April 9, 1996 with respect to each of (i) the executive officers of the Authority and (ii) the members of the Management Board. Name Age Position ---- --- -------- Roland Harris . . . . . . . 55 Chairman and member, Management Board Jayne Fawcett . . . . . . . 59 Vice Chairman and member, Management Board William J. Valardo . . . . 41 Executive Vice President and General Manager George T. Papanier . . . . 38 Senior Vice President and Chief Financial Officer Mitchell Grossinger Etess . 38 Senior Vice President, Marketing Carlisle Fowler . . . . . . 66 Treasurer and member, Management Board Loretta Roberge . . . . . . 64 Corresponding Secretary and member, Management Board Shirley Walsh . . . . . . . 48 Recording Secretary and member, Management Board Mark Brown . . . . . . . . 38 Member, Management Board Courtland Fowler . . . . . 68 Member, Management Board Maynard Strickland . . . . 51 Member, Management Board Glen R. LaVigne . . . . . . 35 Member, Management Board Roland Harris has been Chairman and a member of the Management Board since October 1995. Mr. Harris is the founder and president of the firm Harris and Clark, Inc.--Civil Engineers, Land Surveyors & Land Planners, which has performed services for the Authority. See "--Certain Relationships and Related Party Transactions." Mr. Harris has served as First Selectman and CEO of the Town of Griswold, Connecticut and also as its Planning and Zoning Commissioner. He has served as Deputy Chief of the Griswold Fire Department and as Fire Marshall and Inspector of the Town of Griswold. Prior to assuming the Chairmanship of the Management -52- Board, Mr. Harris served as the Tribal Planner. In addition to his duties as Chairman, Mr. Harris also is a member of the Business Board and Director of the Tribe's Housing Authority. Jayne Fawcett has been Vice Chairman of the Management Board since December 1995 and a member of the Management Board since July 15, 1995. Ms. Fawcett worked as a social worker for the State of Connecticut in 1987 and recently retired from teaching after 27 years of service. Ms. Fawcett was Chairman of the Constitutional Review Board from 1992 to 1993. In addition, she serves as an alternate on the Business Board and oversees the Tribe's public relations. Ms. Jayne Fawcett is the mother of Melissa Fawcett, who is serving on the Constitutional Review Board. William J. Valardo has been Executive Vice President, General Manager of the Authority since October 1995 and has 20 years of experience in gaming operations. Prior to his employment with the Authority, Mr. Valardo was Chief Operating Officer for River City, a riverboat gaming joint venture in New Orleans, Louisiana. From 1991 to 1994, Mr. Valardo served as Senior Vice President, Casino Operations at Trump Plaza Hotel and Casino in New Jersey. Mr. Valardo opened the Mirage in Las Vegas and was Vice President, Table Games from 1989 to 1991. Mr. Valardo also worked as Assistant Casino Manager and Pit Manager for Caesars Tahoe and Caesars Palace. George T. Papanier, who has been Senior Vice President Finance and the Chief Financial Officer of the Authority since October 1995, has 17 years of experience in the casino and hotel industry. Prior to joining the Authority, Mr. Papanier worked for Hemmeter Enterprises from November 1994 to July 1995 as its Vice President of Operations and prior thereto was Vice President of Finance for Trump Plaza Hotel and Casino. Mr. Papanier also held various financial management positions at Bally's Grand, Golden Nugget and Sands Hotel and Casino. Mr. Papanier is a certified public accountant. Mitchell Grossinger Etess has been Senior Vice President, Marketing since November 1995 and has 16 years experience in the casino and hotel industry. Prior to his employment with the Authority, Mr. Etess was Vice President at Players Island and, from 1989 to 1994, was Senior Vice President of Marketing and Hotel Operations at Trump Plaza Hotel and Casino. Prior thereto, Mr. Etess held various management positions in the casino and hotel industry. Carlisle Fowler has been the Treasurer and a member of the Management Board since July 15, 1995 and has been active in the Tribe's government for over 20 years. Prior to his retirement in 1989, Mr. Fowler was an electronics technician for the State of Connecticut and operated his own electronics business. Mr. Fowler serves on the Business Board and on the Finance Committee of the Management Board. Mr. Carlisle Fowler is the brother of Mr. Courtland Fowler. Loretta Roberge has been Corresponding Secretary and a member of the Management Board since July 15, 1995. Mrs. Roberge has served as a paraprofessional at the Mohegan School for 24 years, working with children with special needs. Active in the Tribe's community all her life, Mrs. Roberge previously served as secretary of the Management Board. She presently chairs the Finance Committee, co-chairs the Glad and Sad Committee and is a member of the Cemetery Committee of the Tribe. Mrs. Loretta Roberge is the sister of Ms. Margaret LaVigne, who is serving on the Constitutional Review Board. Shirley Walsh has been the Recording Secretary of the Management Board since October 1995 and has been a member of the Management Board since July 15, 1995. Mrs. Walsh has worked for the Tribe in various capacities for almost four years. Prior to that time, she was employed for 13 years by a local certified public accountant. Mrs. Walsh chaired the Tribe's Election Committee from 1994 to 1995 and serves on the Bingo, Glad and Sad and the Wigwam Committees of the Tribe. Mark Brown has been a member of the Management Board since October 1995 and serves as the security liaison for the Council. Prior to joining the Council, he served as a law enforcement officer for eight years. Mr. -53- Brown worked with the Tribe's historian during the period in which the Tribe was working to obtain federal recognition and also served on the Constitutional Review Board from 1993 to 1994. Mr. Brown is the son of Ms. Pauline Brown, who is serving on the Constitutional Review Board. Mr. Brown has co-chaired the Tribe's Wigwam Committee for the past two years and also serves on its Cemetery Committee. Courtland Fowler has been a member of the Management Board since July 15, 1995 and was a major contributor to the cultural research that led to the federal recognition of the Tribe. Mr. Fowler continues to lend his expertise to the Cultural Resources Department. Mr. Fowler was previously employed as a chemical operator and assistant foreman at Pfizer until his retirement in 1990. He has served as Vice Chairman of the Management Board, as a member of the Constitutional Review Board and as a member of the Tribe's Cemetery Committee. Mr. Fowler also was on the committee that drafted the first constitution of the Tribe. Mr. Courtland Fowler is the brother of Mr. Carlisle Fowler. Maynard Strickland has been a member of the Management Board since October 1995. During the past 20 years, Mr. Strickland owned and operated several restaurants in Norwich, Connecticut and in Florida. Mr. Strickland is actively engaged in developing the Tribe's bingo facility to be housed in the Mohegan Sun Casino. Mr. Strickland was born and raised in the Tribe community, continuing a long family tradition of tribal involvement. Glenn R. LaVigne has been a member of the Management Board since January 1996. Mr. LaVigne has been employed by the Town of Montville, Connecticut since 1979 and oversees building and maintenance for Montville's seven municipal buildings. Mr. Glenn LaVigne is the son of Ms. Margaret LaVigne, who is serving on the Constitutional Review Board. EXECUTIVE COMPENSATION During the Authority's fiscal year ended September 28, 1995, Chief Ralph Sturges served as the Chairman of the Management Board, in a capacity similar in many respects to chief executive officer of the Authority. Neither Chief Sturges nor any other person who served during fiscal 1995 as an executive officer of the Authority received compensation from the Authority for such period. Roland Harris currently serves as the Chairman of the Management Board and also serves as an executive officer of the Tribe and as a member of the Tribal Council. Mr. Harris receives compensation from the Tribe for the performance of his duties on behalf of the Tribe; however, Mr. Harris currently receives no remuneration from the Authority. After the Mohegan Sun Casino commences operations, the Authority may compensate Mr. Harris for services he performs for the Authority although there are no current arrangements or undertakings regarding any such compensation. Each of George Pappanier, Senior Vice President and Chief Financial Officer, and William Valardo, Executive Vice President and General Manager, is receiving a salary from the Authority equal to $150,000 and $275,000 per year, respectively. No written employment contract exists between the Authority and either of Messrs. Pappanier or Volardo and the Authority does not currently contemplate entering into any such contract with either of these individuals. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS On October 7, 1995, the Authority entered into an agreement pursuant to which Harris and Clark, Inc. agreed to provide surveyance, civil engineering and professional design services to the Authority for fees not to exceed $344,430. Roland Harris, Chairman of the Management Board of the Authority, is the founder and president of the Harris and Clark, Inc. As of December 31, 1995, the Authority had paid approximately $202,000 in fees to Harris and Clark, Inc. pursuant to such agreement. The Authority believes that the terms and conditions of this transaction are no less favorable than the Authority could have obtained at that time from unaffiliated third parties. GAMING DISPUTES COURT On July 20, 1995, the Council enacted a Tribal Ordinance creating the Gaming Disputes Court (the "Gaming Disputes Court"). The Gaming Disputes Court is composed of a trial and an appellate branch. A single judge presides over cases at the trial level. Trial court decisions can be appealed to the appellate branch where they will be heard by a panel of three judges, one of whom will be the Chief Judge, and none of whom shall have presided over the case below. Decisions of the appellate branch are final and no further appeal is available in the Gaming Disputes Court. -54- The Mohegan Constitution and the tribal ordinance establishing the Gaming Dispute Court give the Court exclusive jurisdiction for the Tribe over all disputes related to gaming on the Site. This includes jurisdiction over all disputes or controversies related to gaming between any person or entity and the Authority, the Tribe, or TCA. The Gaming Disputes Court has jurisdiction over all disputes arising out of the Authority's regulatory powers, including licensing actions. By ordinance, the Tribe has adopted the substantive law of the State of Connecticut as the applicable law of the Gaming Dispute Court. The Tribe has also adopted all of Connecticut's rules of civil and appellate procedure, professional and judicial conduct to govern the Gaming Disputes Court. Judges of the Gaming Disputes Court are chosen by the Tribal Council from a publicly available list of eligible retired federal judges and Connecticut Attorney Trial Referees appointed by the Chief Justice of the Connecticut Supreme Court pursuant to Connecticut General Statute 52-434(a)(4), all of whom must remain licensed to practice law in the State of Connecticut. Judges are appointed sequentially from the list as cases are filed with the clerk of the Gaming Disputes Court. The Chief Judge of the Gaming Disputes Court, who serves as the Gaming Disputes Court's administrative superintendent, is chosen by the Tribal Council from the list of eligible judges and serves a five-year term. Judges of the Gaming Disputes Court are subject to discipline and removal for cause pursuant to the rules of the Gaming Disputes Court. The Chief Judge is vested with the sole authority to revise the rules of the Gaming Disputes Court. Judges are compensated by the Tribal Council at an agreed rate of pay commensurate with their duties and responsibilities and such rate cannot be diminished during a judge's tenure. The present members of the Gaming Disputes Court are: Neal Ossen, Chief Judge (acting) . . . Partner, Ossen & Murphy, Attorney Trial Referee, District of Hartford; member of panel of Bankruptcy trustees, District of Connecticut, Chairman, Division C, National Conference of Commissioners on Uniform State Laws. Professional practice of 27 years with emphasis in commercial litigation and bankruptcy. T. Steven Bliss, Judge . . . . . . . . Of counsel to Resha, Smith & Goldberg, P.C., Attorney Trial Referee, Danbury Judicial District. Professional practice of 25 years with emphasis in general litigation. Carl E. Cella, Judge . . . . . . . . . Partner, Cella McKeon & Williams, P.C. Attorney Trial Referee, District of New Haven; Professional practice of 30 years with emphasis on property, casualty and personal injury litigation. Robert R. Petrucelli, Judge. . . . . . Partner, Palmesi, Kaufman, Goldstein and Petrucelli, P.C., Attorney Trial Referee, District of Fairfield; Panel of Arbitrators to American Arbitration Association; Professional practice of 35 years with emphasis in general civil litigation and commercial law. Mark J. Rosen, Judge . . . . . . . . . Partner, Zeisler & Zeisler, Attorney Trial Referee, District of Fairfield. Author of nine books in the areas of collection, foreclosure, replevin and secured creditor's rights. Professional practice of 20 years with emphasis in commercial litigation, commercial workouts and administrative law and proceedings. The Tribe has constitutionally authorized the Authority to stipulate for judgment before the Gaming Disputes Court, and to bind the Tribe and the Authority thereby. Under this power, the Authority has stipulated -55- for judgment before the Gaming Disputes Court for the enforcement of the remedies in the Indenture. Under the Constitution of the Tribe, that stipulation is the law of the Tribe. -56- GOVERNMENT REGULATION GENERAL In addition to a variety of generally applicable state and federal laws governing business operations, the Authority is also subject to extensive regulation by special federal, state and tribal laws and regulations applicable to commercial relationships with Indians generally, as well as Indian gaming and the management and financing of Indian casinos. In addition, the Authority is regulated by federal and state laws and regulations applicable to the gaming industry generally and to the distribution of gaming equipment. The following description of the regulatory environment in which gaming takes place and in which the Authority will operate is intended to be a summary and is not intended to be a complete recitation of all applicable law. Moreover, because the regulatory environment is dynamic and evolving, it is impossible to predict how certain provisions will be ultimately interpreted or how they may affect the Authority. Changes in such laws or regulations could have a material adverse impact on the Authority's operations. See "Risk Factors." TRIBAL LAW AND LEGAL SYSTEMS APPLICABILITY OF STATE AND FEDERAL LAW. Federally-recognized Indian tribes are independent governments, subordinate to the United States, with sovereign powers, except as those powers may have been limited by treaty or by the United States Congress. The power of Indian tribes to enact their own laws to regulate gaming derives from the exercise of tribal sovereignty. Indian tribes maintain their own governmental systems and often their own judicial systems. Indian tribes have the right to tax persons and enterprises conducting business on Indian lands, and also have the right to require licenses, and to impose other forms of regulations and regulatory fees on persons and businesses operating on their lands. Absent the consent of the Tribe or the United States Congress, the laws of the State of Connecticut do not apply to the Tribe or the Authority. Under the federal law that recognizes the Tribe, the Tribe consented to the extension of Connecticut criminal law and Connecticut state traffic controls over the Site. WAIVER OF SOVEREIGN IMMUNITY; JURISDICTION; EXHAUSTION OF TRIBAL REMEDIES. Indian tribes generally enjoy sovereign immunity from unconsented suit similar to that of the states and the United States. In order for an Indian tribe (or an agency or instrumentality of an Indian tribe, such as the Authority) to be subject to suit (other than by the United States), the tribe must have effectively waived its sovereign immunity with respect to the matter in dispute. Further, in most commercial disputes with Indian tribes, the jurisdiction of the federal courts, which are courts of limited jurisdiction, may be difficult or impossible to obtain. A commercial dispute is unlikely to present a federal question, and some courts have ruled that an Indian tribe as a party is not a citizen of any state for purposes of establishing diversity jurisdiction in the federal courts. State courts may also lack jurisdiction over suits brought by non-Indians against Indian tribes in Connecticut. The remedies available against an Indian tribe also depend, at least in part, upon the rules of comity requiring initial exhaustion of remedies of tribal tribunals and, as to some judicial remedies, the tribe's consent to jurisdictional provisions contained in the disputed agreements. The United States Supreme Court has held that where a tribal court exists, the jurisdiction in that forum must first be exhausted before any dispute can be properly heard by federal courts which would otherwise have jurisdiction. Where a dispute as to the existence of jurisdiction in the tribal forum exists, the tribal court must first rule as to the limits of its own jurisdiction. In connection with the Offering, the Tribe agreed, and has constitutionally granted the Authority the power, to waive its sovereign immunity, and the Authority has agreed to waive its sovereign immunity, for the limited purpose of any suit by the Trustee under the Indenture or, as to the Authority, under certain circumstances by the holders of the Senior Notes to enforce repayment of the Senior Notes. The Tribe also adopted a constitutional restraint against any action by the Tribe or its officers which impairs contractual obligations. In the -57- event that such waiver of sovereign immunity is held to be ineffective, the Trustee and the Note holders could be precluded from judicially enforcing their rights and remedies against the Tribe or the Authority. In the event that the waiver of the rule requiring exhaustion of tribal remedies is held to be ineffective, the Trustee and the Note holders could be subjected to substantial delay, cost and expense while seeking such remedies in the Gaming Disputes Court or other tribunals of the Tribe. In addition, unless the decisions of the Gaming Disputes Court or other tribunals of the Tribe violate applicable state or federal law, there might be no effective right to appeal such decisions in state or federal court. THE INDIAN GAMING REGULATORY ACT OF 1988 REGULATORY AUTHORITY. The terms and conditions of the Management Agreement, as well as the operation of casinos and of all gaming on Indian land, are subject to the Indian Gaming Regulatory Act of 1988, 25 U.S.C. 2701 ET SEQ. ("IGRA"). IGRA is administered by the National Indian Gaming Commission ("NIGC"), an independent agency, within the U.S. Department of Interior, exercising primary federal regulatory responsibility over Indian gaming. The NIGC has exclusive authority to issue regulations governing tribal gaming activities, approve tribal ordinances for regulating Class II and Class III Gaming (as described below), approve management agreements for gaming facilities, conduct investigations, and generally monitor tribal gaming. Certain responsibilities under IGRA (such as the approval of per capita distribution plans to tribal members, and the approval of transfer of lands into trust status for gaming) are retained by the BIA. The BIA also has responsibility to review and approve land leases and other agreements relating to Indian lands. See "--BIA Approvals." Criminal enforcement is the exclusive responsibility of the United States Department of Justice, except to the extent such enforcement responsibility is shared with the State of Connecticut under the Mohegan Compact and under the federal law that recognizes the Tribe. The NIGC is empowered to inspect and audit all Indian gaming facilities, to conduct background checks on all persons associated with Indian gaming, to hold hearings, issue subpoenas, take depositions, adopt regulations and assess fees and impose civil penalties for violations of IGRA. IGRA also provides for federal criminal penalties for illegal gaming on Indian land and for theft from Indian gaming facilities. In 1993, the NIGC published rules implementing certain provisions of IGRA. These rules govern, among other things, the submission and approval of tribal gaming ordinances or resolutions, and require an Indian tribe to have the sole proprietary interest in and responsibility for the conduct of any gaming. Tribes are required to issue gaming licenses only under articulated standards, to conduct or commission financial audits of their gaming enterprises, to perform or commission background investigations for primary management officials and key employees, and to maintain facilities in a manner that adequately protects the environment and the public health and safety. The 1993 rules also set out a review procedure for tribal licensing of all gaming operation employees. Reporting requirements applicable to tribes are articulated, requiring the report of specified information, including that derived from background investigations, to the NIGC. TRIBAL ORDINANCES. Under IGRA, except to the extent otherwise provided in a tribal-state compact, Indian tribal governments have primary regulatory authority over Class III Gaming on land within the tribe's jurisdiction. Therefore, the Authority's gaming operations, and persons engaged in gaming activities, are guided by and subject to the provisions of the Tribe's ordinances and regulations regarding gaming. IGRA requires that the NIGC review tribal gaming ordinances, and authorizes the NIGC to approve such ordinances only if they meet certain requirements relating to (i) the ownership, security, personnel background, recordkeeping, and auditing of a tribe's gaming enterprises; (ii) the use of the revenues from such gaming; and -58- (iii) the protection of the environment and the public health and safety. The Tribe adopted its gaming ordinance on July 24, 1994, and the NIGC approved the gaming ordinance on November 8, 1994. CLASSES OF GAMING. IGRA classifies games that may be conducted on Indian lands into three categories. "Class I Gaming" includes social games solely for prizes of minimal value, or traditional forms of Indian gaming engaged in by individuals as part of, or in connection with, tribal ceremonies or celebrations. "Class II Gaming" includes bingo, pulltabs, lotto, punch boards, tip jars, instant bingo, and certain other games similar to bingo, if those games are played at the same location as bingo is played. "Class III Gaming" includes all other forms of gaming, such as slot machines, video casino games (E.G., video slots, video blackjack and video poker), so-called "table games" (E.G., blackjack, craps, roulette), and other commercial gaming (E.G., sports betting and parimutuel wagering). Class I Gaming on Indian lands is within the exclusive jurisdiction of the Indian tribes and is not subject to the provision of IGRA. Class II Gaming is permitted on Indian lands if (i) the state in which the Indian lands lies permits such gaming for any purpose by any person, organization or entity; (ii) the gaming is not otherwise specifically prohibited on Indian lands by federal law; (iii) the gaming is conducted in accordance with a tribal ordinance or resolution which has been approved by the NIGC; (iv) an Indian tribe has sole proprietary interest and responsibility for the conduct of gaming; (v) the primary management officials and key employees are tribally licensed; and (vi) several other requirements are met. Class III Gaming is permitted on Indian lands if the conditions applicable to Class II Gaming are met and, in addition, the gaming is conducted in conformance with the terms of a written agreement between the tribal government and the government of the state within whose boundaries the tribe's lands lie (a "Tribal-State Compact"). TRIBAL-STATE COMPACTS. IGRA requires states to negotiate in good faith with Indian tribes that seek to enter into Tribal-State Compacts for the conduct of Class III Gaming. Such Tribal-State Compacts may include provisions for the allocation of criminal and civil jurisdiction between the state and the Indian tribe necessary for the enforcement of such laws and regulations, taxation by the Indian tribe of such activity in amounts comparable to those amounts assessed by the state for comparable activities, remedies for breach, standards for the operation of such activity and maintenance of the gaming facility, including licensing, and any other subjects that are directly related to the operation of gaming activities. The terms of Tribal-State Compacts vary from state to state; however, Tribal-State Compacts within one state tend to be substantially similar. Tribal-State Compacts usually specify the types of permitted games, establish technical standards for video gaming machines, set maximum and minimum machine payout percentages, entitle the state to inspect casinos, require background investigations and licensing of casino employees, and may require the tribe to pay a portion of the state's expenses for establishing and maintaining regulatory agencies. Some Tribal-State Compacts are for set terms, while others are for indefinite duration. The Mohegan Compact was entered into in May 1994 and was approved by the Secretary of the Interior on December 14, 1994, does not have a specific term and will remain in effect until terminated by written agreement of both parties, or the provisions are modified as a result of a change in applicable law. See "Risk Factors--Highly Regulated Industry." Tribal-State Compacts have been the subject of litigation in several states, including Alabama, California, Florida, Kansas, Michigan, Mississippi, New Mexico, New York, Oklahoma, Oregon, Rhode Island, South Dakota, Wisconsin and Washington. Among the issues litigated is the constitutionality of the provision of IGRA which entitles tribes to sue in federal court to force states to negotiate Tribal-State Compacts. The Supreme Court has recently ruled, in SEMINOLE TRIBE OF FLORIDA V. FLORIDA, 116 S. Ct. 114 (1996), that Congress lacks the power to abrogate state immunity to permit tribes to sue in federal court to enforce the compacting requirements of IGRA. While, on a similar basis, a federal district court in Washington previously held the Class III provisions of IGRA to be unconstitutional, that decision was never subject to appellate review and the constitutionality of the IGRA survives the Supreme Court decision unimpaired, except that tribes may not avail themselves of the provision to sue unconsenting states to secure a compact. On April 15, 1996, the Supreme Court -59- disposed of the remaining cases consistently with the SEMINOLE decision, and without further addressing the IGRA provisions. To the extent that they have jurisdiction to do so, appellate courts in the Ninth and Tenth Circuits may address the same issues on remand from the Supreme Court, and future litigation may be expected to call into question the constitutionality of IGRA, either in whole or in part, in view of the partial invalidity of the remedial scheme. There has also been litigation challenging the authority of governors, under state law, to enter into Tribal-State Compacts. Federal courts have upheld the authority of the governors of Louisiana and Mississippi to enter into compacts, while the highest state courts of New Mexico, Kansas and Rhode Island have held that the governors of those states did not have authority to enter into such compacts without the consent or authorization of the legislatures of those states. In the New Mexico, Kansas and Rhode Island cases, the courts held that compacting is a legislative function under the respective state constitutions. The court in a second New Mexico case has held that state law does not permit casino-style gaming. In Connecticut, there has been no litigation challenging the governor's authority to enter into the Mohegan Compact. If such a suit were filed, however, the Authority does not believe that the precedent in New Mexico or Kansas cases would apply. On May 18, 1994, the Connecticut Attorney General issued a formal opinion that concluded that "existing [state] statutes provide the Governor with the authority to negotiate and execute the . . . [Mohegan] Compact". The Attorney General therefore declined to follow the Kansas case. In addition, the United States Court of Appeals for the Second Circuit Court has held, in a case brought by the Pequot Tribe, that Connecticut law authorizes casino gaming. After execution of the Mohegan Compact in May 1994, the Connecticut Legislature passed a law to require future gaming compacts to be approved by the legislature, but that law does not apply to previously executed compacts such as the Mohegan Compact. The Authority's operation of gaming is subject to the requirements and restrictions contained in the Mohegan Compact. The Mohegan Compact authorizes the Tribe to conduct most forms of Class III Gaming. POSSIBLE CHANGES IN FEDERAL LAW. Several bills have been introduced in Congress which would amend IGRA. To this date, no such bill has passed either house of Congress. If IGRA were amended, the amendment could change the governmental structure and requirements within which the Tribe could conduct gaming. NIGC AND BIA APPROVALS The Authority will construct and operate the Mohegan Sun Casino on lands held in trust for the Tribe by the United States of America, which are leased by the Tribe to the Authority. Such leases, and modifications or amendments to such lease, must be and were approved by the BIA pursuant to 25 U.S.C. Section 415 and 25 C.F.R. Section 162. In addition, 25 U.S.C. Section 81 ("Section 81"), a federal statute originally passed in 1871, requires that all contracts "by any person with any tribe of Indians" which are "relative to their lands" must be approved by the Secretary of the Interior. The remedies pursuant to Section 81 enable the federal courts to find agreements which violate this statute to be void AB INITIO, and to grant full restitution of all amounts paid to the non-Indian party by the tribe. Prior to the passage of IGRA, the BIA took the position that management contracts for Indian gaming facilities did not require BIA approval. Nevertheless, beginning in the early 1980s federal courts held that gaming management contracts did require such approval, and several such agreements were set aside by federal courts because they lacked approval. In 1988, with the passage of IGRA, the approval of gaming management agreements and collateral agreements between Indian tribes and gaming managers became the province of the NIGC, but the BIA continues to have some residual Section 81 jurisdiction. The full scope of required review and approval pursuant to this statute is not fully or precisely defined. The regulations and guidelines which the NIGC and the BIA use to interpret their respective responsibilities regarding Section 81 are incomplete and -60- evolving. Both Section 81 and IGRA have been the subject of litigation and may be subject to further judicial or legislative interpretation. CONSTRUCTION PERMITS FOR THE MOHEGAN SUN CASINO AND ROADWAYS STATE TRAFFIC COMMISSION The Site lies northwest of Connecticut Route 2A. The Authority will construct an interchange off of Connecticut Route 2A for access to the Mohegan Sun Casino. The Site lies to the east of Connecticut Route 32. Sandy Desert Road, a town road, extends from Route 32 approximately 1,000 feet to the Site. The Authority will construct an extension of Sandy Desert Road through the Site to connect the same to the Route 2A interchange. The interchange primarily traverses land owned or controlled by the DOT. The extension of Sandy Desert Road will bisect the Site and cross other adjacent land owned by an affiliate of the Tribe. That portion of the extension of Sandy Desert Road which is adjacent to but not on the Site will not be a part of the Tribe's reservation. Portions of Sandy Desert Road up to the Site will be used and maintained as a part of the Montville municipal road system, and the interchange will be used and maintained as a part of the state road systems. The Tribe has received a permit ("STC Permit") from the State Traffic Commission of the State of Connecticut ("STC") for the construction of the interchange off of Connecticut Route 2A and for the extension of Sandy Desert Road. The STC Permit requires that the developer construct a number of improvements to existing roads, including establishing a full interchange on Route 2A, and widening a portion of Route 2A from two-lanes to four-lanes with a median divided highway. The STC Permit also requires the Authority to review various traffic operations after opening of the Mohegan Sun Casino and to submit a report to the STC summarizing the results. If the STC determines that operational deficiencies exist as a result of the added traffic from the Mohegan Sun Casino, the Authority may be required to mitigate such operational deficiencies as determined by the STC. Prior to performing any work within the state highway right of way, an encroachment permit must be obtained from the DOT. The Authority has obtained such encroachment permit. ENVIRONMENTAL PROTECTION The State of Connecticut is required under the federal Clean Air Act to develop and submit to the United States Environmental Protection Agency ("EPA") a State Implementation Plan ("SIP") which outlines measures needed to achieve attainment of federal ambient air quality standards by certain required dates. The State of Connecticut has submitted a SIP which is under review by the EPA. The Tribe must also comply with the requirements of the federal Clean Air Act. The Tribe has committed to conform with the SIP as such requirements would apply to similar activities conducted elsewhere in the State of Connecticut. The DEP has confirmed that such conformity with the SIP would satisfy the Tribe's obligations under the Clean Air Act, provided that the EPA approves the SIP. In addition to the SIP, DEP evaluates the potential direct emissions from a facility. New emission sources must meet new source performance standards. A permit is required if total emissions could reach certain minimum levels. New source owners must apply even if no permit will be required. Total emissions at the Mohegan Sun Casino are not expected to reach the minimum levels. However, the Authority will apply for such permit as required. -61- Finally, in order to construct the new access road off of a state highway, a developer is required to obtain a permit if the indirect air quality impacts are expected to be "significant." The indirect air quality impacts of the Mohegan Sun Casino are not expected to be "significant," and, accordingly, no such permit should be required. The Tribe must also comply with the requirements of the federal Clean Water Act. Any person whose activity may result in any discharge into navigable water, including wetlands and watercourses, and natural and manmade ponds, must obtain a permit and/or a certification that the discharge is consistent with the Clean Water Act. The Authority has preliminarily determined that all discharges will be consistent with the Clean Water Act, and believes that such certification and/or permit will be issued. Neither the shoreline nor the tidal wetlands on or adjacent to the Site are expected to be negatively impacted by construction and operation of the Mohegan Sun Casino. However, because the Site is located within 1,000 feet of tidal wetlands, the Tribe must comply with the Connecticut Coastal Area Management Program as part of its federal compliance with the Federal Coastal Zone Management Act. The Authority expects that construction of the Mohegan Sun Casino will comply with applicable policies and will have no adverse impacts to coastal resources. In order to construct the interchange off of Route 2A and the extension of Sandy Desert Road, the Authority will be required to comply with the Connecticut Coastal Area Management Program and the federal Clean Water Act, including the regulations promulgated under the National Pollution Discharge Elimination System. Such compliance is confirmed by the DEP through the issuance of permits pursuant to the DEP's regulations. The Authority believes that all such permits will be timely issued to the DOT or the Authority. No assurances can be given that any or all of the permits and/or approvals described above will be issued or that any or all of such permits and/or approvals will be issued without certain conditions or restrictions that could adversely affect the construction and operation of the Mohegan Sun Casino or the development of the adjacent roadways. It was reported in certain Connecticut newspapers that officials of the State of Connecticut had stated that regulatory approvals required for the construction of the Mohegan Sun Casino may be delayed. See "Business and Property--Regulatory Approvals." Although the Authority has received from the State of Connecticut substantially all of the permits required to construct the Mohegan Sun Casino and adjacent roadways as planned, there can be no assurance that any of such permits will not be revoked or that any additional permits that may be required will be granted in a timely manner. LICENSING Prior to opening the Mohegan Sun Casino, each of the partners of TCA and certain employees of the Mohegan Sun Casino must be licensed by relevant tribal and state authorities. Each of the partners of TCA has applied for and received temporary gaming licenses from the Commissioner of Revenue Services of the State of Connecticut. As each employee who is required to be licensed is hired, the Authority or TCA will cause such employee to apply for all required licenses. See "Risk Factors--Transkei Investigation." -62- MATERIAL AGREEMENTS The following discussion summarizes significant terms of certain material agreements to which the Tribe and the Authority are parties. This summary does not purport to be complete and is qualified in its entirety by reference to each of the agreements described herein, copies of which will be made available upon request without charge by writing to the Authority at 67 Sandy Desert Road, Uncasville, CT 06382, Telecopy: (860) 848-0545, attn: Roland Harris and Carlisle Fowler, Business Board Members, and Chief Ralph Sturges. Capitalized terms used but not otherwise defined herein shall have the meaning ascribed to such terms in the agreement being described (unless otherwise indicated). TRIBAL-STATE MOHEGAN COMPACT Presently, the Tribe is not engaged in any gaming activities. The Tribe and the State of Connecticut entered into The Mohegan Tribe--State of Connecticut Gaming Mohegan Compact (the "Mohegan Compact") to authorize and regulate Class III Gaming operations on lands owned by the Tribe. The Mohegan Compact is substantively similar to the agreement governing Class III Gaming of the Pequot Tribe in the State of Connecticut. The Mohegan Compact provides, among other things, that: (1) The Tribe agrees to submit all gaming-related operation and development to the regulation of the State of Connecticut Gaming Commission, in order to attempt to insure the fair and honest operation of gaming activities and to maintain the integrity of all activities conducted in regard to Class III gaming. The Tribe further agrees to adopt certain standards of operation and management of all gaming operations and to regulate the same through a Tribal gaming agency. (2) The Tribe may conduct, on the Site, games of chance, including: Blackjack, Poker, Dice, Money-Wheels, Roulette, Baccarat, Chuck-a-Luck, Pai Gow, Over and Under, Horse Race Game, Acey-ducey, Beat the Dealer, Bouncing Ball, Slot Machines, video facsimile games and Pari-mutuel betting. (3) Law enforcement matters relating to Class III Gaming activities will be under the jurisdiction of the State of Connecticut and the Tribe. (4) All gaming employees will obtain and maintain a gaming license issued by the State of Connecticut gaming agency. Documentation relating to personal and family history, personal and business references, criminal convictions, business activities, financial affairs, gaming industry experience, gaming school education and general education, as well as photographs and fingerprints, will be submitted to the State of Connecticut gaming agency. State and federal criminal record checks will be conducted on all applicants. (5) Any enterprise providing gaming services or gaming equipment to the Tribe will be required to hold a current valid registration issued by the State of Connecticut gaming agency. (6) The State of Connecticut will annually assess the Tribe for the costs attributable to its regulation of the Tribe's gaming operations and for the provision of law enforcement in accordance with the Mohegan Compact. (7) The Tribe shall have each of its Class III Gaming operations audited on an annual basis by an independent certified public accountant and shall include any additional procedures required by the State of Connecticut gaming agency, such additional procedures to be performed at the sole expense of the State of Connecticut gaming agency. (8) In order to beneficially effect health and safety, the Tribe shall enact fire, building, sanitary and health ordinances and regulations no less rigorous than laws and regulations of the State of Connecticut. -63- (9) Service of alcoholic beverages within any gaming facility will be subject to regulation by the State of Connecticut. (10) The Tribe waived any defense which it may have by virtue of sovereign immunity in respect to any action in United States District Court to enforce the Mohegan Compact. In addition, the Tribe and the State of Connecticut entered into a memorandum of understanding (the "Memorandum") setting forth certain matters regarding the implementation of the Mohegan Compact. The Memorandum provides that: (1) So long as there is no change in state law to permit the operation of slot machines or other commercial casino games by any other person (other than the Pequot Tribe under IGRA), the Tribe will contribute to the State of Connecticut on a monthly basis a sum equal to twenty-five percent (25%) of gross operating revenues derived from the slot machines operated by the Tribe, which amount shall be reduced by the amounts set forth in (2) and (3) hereof. (2) The payment of the State of Connecticut is to be reduced by $5,000,000 in the second year of the Tribe's gaming operations, by $2,500,000 in the third year of the Tribe's gaming operations, and by $2,500,000 in the fourth year of the Tribe's gaming operations. This represents the settlement of the land claims of the Tribe. (3) The Tribe's payment is to be reduced by $3,000,000 in the first year following the completed transfer of Fort Shantok State Park to the United States to be held in trust for the Tribe. (4) For each fiscal year commencing July 1, the minimum contribution of the Tribe to the State of Connecticut shall be the LESSER of (a) thirty percent (30%) of gross revenues from slot machines, or (b) the greater of (i) twenty-five percent (25%) of gross revenues from slot machines or (ii) $80,000,000. On December 5, 1994, the Secretary of the Interior approved the Mohegan Compact in accordance with the IGRA. AGREEMENT WITH THE TOWN OF MONTVILLE As a part of its review of the Tribe's land in trust application to the BIA, the United States Secretary of the Interior (the "Secretary of the Interior") reviewed the impact on the State as well as local authorities of accepting the land in trust. In order to minimize the impact to the Town of Montville (the "Town") resulting from the removal of the land to be taken into trust from the Town's tax rolls and jurisdiction, on June 16, 1994, the Tribe and the Town entered into an agreement (the "Town Agreement"), whereby the Tribe agreed to pay to the Town an annual payment of $500,000 derived from gaming revenues and a one-time payment of $3,000,000 towards improvements in the Town's water system. The annual payment is payable commencing one year after the commencement of slot machine gaming activities; the one-time payment is payable one year after the commencement of slot machine gaming activities. In addition, the Town Agreement provides that the Tribe will use and compensate the Town accordingly for the Town's disposal system and the Town's wastewater collection and treatment system, and that the Tribe will cooperate with the Town in its development regarding traffic patterns and planning and zoning issues. Finally, the Town Agreement provides that the Tribe will make payments in lieu of taxes to the Town on lands that the Tribe may acquire outside of the currently contemplated 700-acre reservation. -64- LAND LEASE LEASED PROPERTY; TERM. The Tribe and the Authority have entered into a land lease (the "Lease"), pursuant to which the Tribe leases to the Authority certain land located in the Town of Montville, Connecticut (the "Leased Property"), which land is held by the United States of America in trust for the Tribe, and all buildings, improvements and related facilities (E.G., the Mohegan Sun Casino and related developments) constructed or installed on the Leased Property during the term of the Lease (collectively, the "Improvements"). The Lease also covers an additional parcel of land adjacent to the Site that is held by the Tribe in its own name (and is not part of the Tribe's reservation) and was acquired for expansion of the access road leading to the Mohegan Sun Casino. Upon the termination of the Lease, the Authority will be required to surrender to the Tribe possession of the Improvements, excluding any equipment, furniture, trade fixtures or other personal leased property which may be removed by the Authority in accordance with the terms of the Lease. The initial term of the Lease is for 25 years. Provided that the Authority is not in default under the Lease, the Authority has the right to extend the term of the Lease for one additional 25-year term upon notice to the Tribe not more than two years, nor less than one year, prior to the expiration of the initial term. All terms and conditions of the Lease (excluding the Authority's option to extend the term of the Lease) will remain in effect during any extended term thereof. Subject to the provisions of any Permitted Mortgage, the Tribe has the right to terminate the Lease as to any portion of the Leased Property, provided that such released portion shall not be used to conduct any gaming operations. RENT; EXPENSES; DEFAULT. Under the terms of the Lease, the Authority is required to pay to the Tribe annual rent in the amount of $1.00. In the event the Authority assigns its interest in the Lease to the Tribe (assuming the Tribe subsequently fails to merge its lessee and lessor interests under the Lease) or to any other instrumentality of the Tribe, the Lease and this annual rent obligation would remain in effect. For any period when the Tribe or another agency or instrumentality of the Tribe is not the tenant under the Lease (for example, upon the foreclosure of the Leasehold Mortgage by the Trustee), the annual rent would increase to 8% of the tenant's gross revenues from the premises, payable monthly in arrears, based on the gross revenues of the prior month. The Lease is a "net" lease; accordingly, the Authority is responsible for the payment of all costs of owning, operating, constructing, maintaining, repairing, replacing and insuring the Leased Property, including, without limitation, the payment of all taxes, fees, assessments or other charges which may be levied against the Leased Property or the Authority's interest therein by the Tribe or any other governmental authority. The Tribe has agreed that it will not impose any new or additional taxes, fees, assessments or other charges on the Leased Property or the Authority other than those specified in the Lease or non-discriminatory charges for utilities or other governmental services supplied by the Tribe to the Leased Property or the Authority. The Mohegan Constitution includes a provision prohibiting the impairment of contracts. The Authority will be in default of its obligations under the Lease upon any (i) failure to pay when due any amount required to be paid by the Authority under the Lease (except for any amount for which the Authority will indemnify the Tribe under the terms of the Lease), which failure continues for 30 days after written notice thereof from the Tribe to the Authority and any Permitted Mortgagee (as defined in the Lease), (ii) failure to observe or perform any other covenant or obligation of the Authority under the Lease excluding certain obligations under the Lease, which failure continues for 60 days (or such other longer period as may be reasonably required to cure such default) after written notice from the Tribe to the Authority and any Permitted Mortgagee; or (iii) pledge, encumbrance or conveyance by the Authority of its interest in the Lease in violation of the terms of the Lease. Notwithstanding the foregoing, the Authority will not be in default under the Lease -65- if, in connection with any good faith dispute, it deposits funds in escrow or obtains a bond that prevents any foreclosure of the leasehold estate. USE OF LEASED PROPERTY. Under the Lease, the Authority may use the Leased Property solely for the construction and operation of the Resort (as defined in the Indenture), unless prior approval is obtained from the Tribe for any proposed alternative use. Similarly, no construction or alteration of any building or improvement located on the Leased Property by the Authority may be made unless complete and final plans and specifications therefor have been approved by the Tribe. Following foreclosure of any mortgage on the Authority's interest under the Lease (including the Leasehold Mortgage) or any transfer of such interest to the holder of such mortgage in lieu of foreclosure, the Leased Property may be used for any lawful purposes, subject only to applicable codes and governmental regulations. Under the Lease, the Authority has the obligation to construct and maintain access roads required to permit reasonable access to the Leased Property and the non-exclusive right to construct, install, maintain, repair, replace, use and operate the same. The Authority also has the right to acquire, construct, install, maintain, repair, replace, use and operate such electric power, water, sanitary and storm sewer and other utilities reasonably required for the development and operation of the Leased Property subject to the approval of the Secretary of the Interior or to the extent required by law, which utilities must be designed and constructed in accordance with plans approved by the Tribe. The Tribe has the non-exclusive right to operate and use access roads and utilities constructed or installed by the Authority (and to construct, install and grant easements with respect to access roads and utilities to serve other property of the Tribe, including areas of the Leased Property not occupied or retained by the Authority as to which the Lease is terminated), provided that such use, operation, construction or installation does not unreasonably interfere with the Authority's use of the Leased Property. In addition, the Tribe has certain entry and inspection rights with respect to the Leased Property and the activities thereon and the option to perform the obligations of the Authority under the Lease if the Authority fails to do so after reasonable prior notice to the Authority and all Permitted Mortgagees. PERMITTED MORTGAGES AND RIGHTS OF PERMITTED MORTGAGEES; ASSIGNMENT; AMENDMENT OF LEASE. The Authority may not mortgage, pledge or otherwise encumber its leasehold estate in the Leased Property except through a Permitted Mortgage. Under the Lease, a "Permitted Mortgage" is defined to include the Leasehold Mortgage securing the obligations of the Authority under the Senior Notes and the Trustee for the Senior Notes is a Permitted Mortgagee. See "-- Leasehold Mortgage Deed." A Permitted Mortgage also includes any other mortgage granted by the Authority that provides, among other things, that (i) the Tribe has the right to notice of, and to cure, any default of the Authority thereunder, (ii) the Tribe has the right to prior notice of the Permitted Mortgagee's intention to foreclose on such Permitted Mortgage and the right to purchase such mortgage in lieu of any foreclosure, and (iii) such Permitted Mortgage is subject and subordinate to any and all access and utility easements granted by the Tribe under the Lease. As provided in the Lease, Permitted Mortgagees have the right, but not the obligation, without the Tribe's consent, to (i) cure any default of the Authority within any applicable cure period under the Lease, (ii) acquire and convey, transfer, assign and exercise any right, remedy or privilege of the Authority under the Lease or applicable law in accordance with the provisions of the applicable Permitted Mortgage, and (iii) rely on any provisions of the Lease that are for the benefit of Permitted Mortgagees. In addition, the Tribe has agreed that it will provide notice of any default by the Authority of its obligations under the Lease to each Permitted Mortgagee so as to allow, but not require, the Permitted Mortgagee to cure such default within 60 days following such notice in the name, and on behalf, of the Authority. Provided that current payments are made to the Tribe under the Lease during such 60-day period, the Tribe may not terminate the Lease. Any payment or performance by a Permitted Mortgagee in accordance with the foregoing provisions will not be construed as an agreement by such Permitted Mortgagee to assume personal liability under the Lease (except to the extent that a Permitted Mortgagee actually becomes the lessee under the Lease); however, in the event that a Permitted Mortgagee -66- transfers the leasehold estate to a third party purchaser, then such purchaser shall be required to assume personal liability under the Lease and the Permitted Mortgagee shall automatically be released from all liability thereunder. Under the Lease, the Tribe and the Secretary of the Interior have consented to the assignment and transfer by the Authority of its interest in the Lease to any Permitted Mortgagee pursuant to (i) a foreclosure by any Permitted Mortgagee, (ii) a transfer in lieu of foreclosure, (iii) the exercise of any right or remedy granted by the applicable Permitted Mortgage or (iv) any purchase by a third party at a foreclosure or other sale. Any Permitted Mortgagee who, after a default by the Authority under the terms of a Permitted Mortgage, succeeds to the Authority's interest under the Lease shall have the right to assign or sublet the Leased Property without obtaining the consent of the Tribe or the Secretary of the Interior; in the alternative, prior to any foreclosure or transfer in lieu of foreclosure of the Authority's interest under the Lease, any Permitted Mortgagee, upon notice to the Tribe, shall have the right to take possession of and sublease all or any part of the Leased Property for the account of the Authority and to exercise, in the name of the Authority, the rights and privileges of the Authority under the Lease. Following any assignment of the Authority's interest under the Lease by a Permitted Mortgagee, any assignee shall be required to assume the Authority's obligations under the Lease and the Permitted Mortgagee shall automatically be released from all liability, if any, under the Lease. In no event, however, shall any Permitted Mortgagee (or any assignee, sublessee, purchaser or transferee of any Permitted Mortgagee) be permitted to transfer any interest in the Lease or its leasehold interest in the Leased Property to any person or entity engaged by the Tribe or the Authority to manage a gaming enterprise under IGRA. Except as provided in the Lease and subject to any restrictions of any Permitted Mortgage, the Authority may not assign or transfer all or any part of its interest under the Lease without the prior consent of the Tribe. The Authority may, however, without obtaining the consent of the Tribe or the Secretary of the Interior, sublease all or any portion of the Leased Property to any entity that is, directly or indirectly, owned or controlled by the Tribe. Pursuant to the terms of the Lease, any material amendments to the Lease are subject to the prior written approval of each Permitted Mortgagee. In addition to changes in the rental rate and the term of the Lease, material amendments also include changes in the circumstances that trigger a termination of the Lease or any other change which materially and adversely affects the rights of any Permitted Mortgagee thereunder or the value of the Leased Property. The Tribe and the Authority have agreed to execute any further amendments to the Lease that may be reasonably required by a Permitted Mortgagee or a prospective mortgagee to carry out the provisions of the Lease. The Tribe has agreed that, so long as any Permitted Mortgage remains outstanding with respect to the Leased Property, it will not without the prior written consent of the Permitted Mortgagee (i) accept any surrender of the Leased Property or termination of the Lease, whether voluntary or involuntary, or upon a failure of any condition of the Lease, or (ii) exercise, or accept the exercise of, any right or option of the Authority to terminate the Lease or to purchase the Tribe's reversionary interest thereunder. The requirement that the Tribe obtain the consent of each Permitted Mortgagee in connection with the foregoing matters, however, shall not apply to the Tribe's assertion of its rights upon a default by the Authority under the Lease. Furthermore, the Tribe has agreed that, so long as any Permitted Mortgage remains outstanding with respect to the Leased Property, it will not (i) terminate the Lease nor the Authority's right to possession of the Leased Property, (ii) exercise any right of re-entry, (iii) take possession of and/or relet the Leased Property or any portion thereof, or (iv) enforce any other right or remedy which may materially and adversely affect the rights of any Permitted Mortgagee under the applicable Permitted Mortgage, unless such Permitted Mortgagee has failed to cure the Authority's defaults under the Lease. COMPLIANCE WITH LAW; INSURANCE; INDEMNIFICATION. The Authority has agreed to comply with all applicable tribal and governmental laws, regulations, codes and ordinances applicable to its use and occupancy of the Leased Property. The Tribe has agreed that it will not impose any additional requirements that would materially and adversely affect the Authority's use of the Leased Property for the purposes contemplated by the Lease. During the term of the Lease, the Authority is responsible for maintaining, repairing and replacing the -67- Leased Property and all Improvements thereon and ensuring that the same is in good, safe and habitable condition. The Authority also is required to maintain "all-risk" property insurance in an amount equal to the full replacement value of all Improvements located on the Leased Property and comprehensive general liability insurance against claims for injury, death or property damage occurring in or on the Leased Property with a combined single limit of $2 million per occurrence, together with an umbrella policy of liability insurance providing additional coverage of at least $5 million per occurrence. All insurance policies maintained by the Authority are required to name the Tribe and any Permitted Mortgagee as additional insureds and loss payees, as appropriate. In addition, such policies must be in form and substance reasonably satisfactory to the Tribe and such Permitted Mortgagees and may not be cancelled or modified without 30 days' prior notice thereto. Subject to the terms of any Permitted Mortgage, which terms are subject to approval by the Tribe, all insurance proceeds received as a result of damage or destruction shall be applied first to cost of restoration of any Improvements located on the Leased Property, with the remainder, if any, payable to the Authority or to any Permitted Mortgagee, to the extent required by such Permitted Mortgage. The Authority has agreed to indemnify and hold harmless the Tribe, its members, officers, agents and employees against all liability, claims, obligations, suits, damages, penalties, costs, charges and expenses (including attorneys' fees) that may be imposed upon the Tribe or such individuals by reason of (i) any work or things done in, on or about the Leased Property and/or any Improvement located thereon, (ii) any use, nonuse, possession, occupation, condition, operation or maintenance of the Leased Property and/or Improvements located thereon, (iii) any negligence on the part of the Authority or any of its agents, contractors, employees, subtenants, licensees or invitees, (iv) any accident, injury or damage to any person or property occurring in, on or about the Leased Property and/or any Improvements located thereon; (v) the failure of the Authority to perform or comply with the terms and conditions of the Lease; and (vi) any tax attributable to the execution, delivery of recording of the Lease or any modification thereof. In the event that any action or proceeding is brought against the Tribe and/or any indemnified individual in connection with any of the foregoing, the Authority will have the obligation to protect and defend the Tribe and/or such indemnified individual at its sole expense and by counsel reasonably satisfactory to the Tribe. DISPUTE RESOLUTION AND CONSENT TO SUIT. The Lease expressly provides that the Tribe has not consented to the enforcement, levy or any other execution of any judgment for money or other damages against any assets of the Tribe, except that the Tribe and the Authority have each consented to the enforcement and execution of any judgment, whether obtained as the result of judicial, administrative or arbitration proceedings, against any assets of the Authority, in connection with any judicial, administrative or arbitration proceeding commenced for the purposes of interpreting or enforcing the obligations of the Tribe or the Authority pursuant to the Lease. Subject to the foregoing limitation, each of the Tribe and the Authority has waived sovereign immunity from unconsented suit, whether pursuant to a judicial, administrative or arbitration proceeding, to permit the commencement, maintenance and enforcement of any action, brought by any person with standing to maintain such action, to enforce or interpret the terms of the Lease and to enforce or execute any judgment resulting therefrom. The Tribe and the Authority have agreed that during any dispute, controversy or claim arising out of the Lease, the Authority shall remain in possession of the Leased Property and the Tribe and the Authority shall continue their performance of the terms of the Lease. In addition, the Tribe and the Authority have agreed that, during the pendency of any such dispute, controversy or claim, the Authority shall be entitled to injunctive relief so as permit the Authority to maintain possession of the Leased Property in the event of any threatened eviction in connection therewith. LEASEHOLD MORTGAGE DEED NOTE COLLATERAL. The Authority has executed an Open-End Construction-- Permanent Leasehold Mortgage Deed, Assignment of Leases and Rents and Security Agreement (the "Mortgage") in favor of the Trustee whereby the Authority has granted to the Trustee a first priority lien on (i) the Lease, (ii) the Authority's leasehold interest in the Leased Property, the Improvements now or hereafter constructed on the Leased Property and all rights, -68- privileges, benefits, easements, rights of way, and other appurtenances benefitting the Leased Property (the "Appurtenant Rights") under the Lease, (iii) all other right, title, interest and claim of the Authority under the Lease, and (iv) all goods, furnishings, equipment, trade fixtures, inventory, supplies, building and other construction materials and other personal property constituting a part of or used in connection with the operation of the business on the Leased Property (the "Personal Property"). Additionally, the Authority has granted to the Trustee a first priority lien on (i) all insurance proceeds, condemnation proceeds and other proceeds relative to the disposition of the foregoing, (ii) all leases, subleases, licenses, concessions, and other space agreements for any portion of the Leased Property or the Improvements (the "Space Leases"), (iii) all maps, plans, specifications, surveys, studies, tests, reports, data and drawings relating to the development of the Leased Property, (iv) all licenses, permits, variances, special permits, franchises, certificates, rulings, approvals, waivers, orders, rights and agreements from governmental authorities relating to the Leased Property, EXCLUDING Gaming Permits, (v) all monies or other property arising from or used in connection with the Authority's operation of the Leased Property, and (vi) all accounts receivable and other benefits from the Leased Property. For purposes of the Mortgage, a "Gaming Permit" is defined as any license, franchise, permit or other authorization on the date of the Indenture required to own, lease, operate or otherwise conduct casino gaming at the Leased Property, which cannot be mortgaged, pledged or assigned as security for the obligations of the Authority under IGRA, the regulations of all applicable gaming authorities and other applicable laws. The Mortgage expressly excludes any interest in (i) the fee title and reversionary interest of the United States and the Tribe in the Leased Property, the Improvements, and the Appurtenant Rights, and (ii) any Personal Property, to the extent that the Authority is permitted to enter into a financing agreement for such Personal Property under the Indenture and such financing agreement prohibits the Authority from maintaining a security interest in the Personal Property covered thereby but only while the debt evidenced by such financing agreement remains unsatisfied. Nothing contained in the Mortgage shall be construed to authorize the Trustee to conduct gaming operations on the Leased Property. Further, nothing contained in the Mortgage shall be construed to grant to the Trustee any interest in any manager's interest in any management agreement for the operation of all or any portion of the Leased Property. GENERAL COVENANTS AND WARRANTIES. The Authority warrants, represents and/or covenants to the Trustee as to the following matters: (1) The Authority shall pay and perform all obligations under the Indenture, the Mortgage or any other document related thereto. (2) The Authority represents and warrants to the Trustee as follows: (a) the Authority is the owner of the leasehold interest under the Lease and is the owner of the Personal Property, has the right and authority to grant the Mortgage, and that the collateral subject to the Mortgage is free and clear of any encumbrances except for Permitted Encumbrances; (b) the Authority is not bound by any indenture, contract or agreement, or governmental, judicial or administrative restriction which prohibits the execution, delivery or performance of the obligations under the Indenture, the Mortgage or any other document related thereto; (c) the Indenture, the Mortgage and other documents related thereto have been duly authorized executed and delivered by the Authority; -69- (d) all applicable rules and regulations affecting the Leased Property permit the use and occupancy thereof for Class II and Class III Gaming and related purposes, and the Authority has obtained the necessary consents, permits and licenses to operate the Improvements for said purposes; and (e) the Trustee may peaceably and quietly enjoy the collateral in accordance with the Mortgage, neither the Authority nor any affiliate of the Authority is insolvent or subject to any bankruptcy or similar proceedings, all costs related to construction of the improvements and acquisition of the Personal Property is or shall be paid when due, the Authority shall conduct its operations so as not to lose any right to conduct gaming operations at the Leased Property, no material part of the collateral has been damaged, destroyed, condemned or abandoned, and each representation and warranty in the Senior Notes, the Indenture, the Mortgage and any other document related thereto is true and correct in all material respects. (3) The Mortgage constitutes a security agreement, and the Authority grants to the Trustee a security interest in the Personal Property. (4) The Authority shall not commit waste on the Leased Property and shall cause the Leased Property to be maintained and in compliance with applicable governmental regulations. (5) The Authority shall pay all taxes (not including income taxes of the Trustee), assessments and other governmental charges on the Leased Property before the same become delinquent and shall pay any mechanics statutory or other lien on the Leased Property; provided that the Authority shall have the right to contest in good faith the imposition of any such governmental charges or the validity of any such lien. (6) The Authority shall maintain insurance as required by the Indenture, and any proceeds of insurance shall be disbursed as provided in the Indenture. (7) The Authority shall pay all utilities charges and other service fees for the Leased Property. (8) If the Authority fails to observe any of the foregoing, the Trustee shall have the option to perform the same at the Authority's expense. (9) Except as permitted by the Indenture, the Authority shall not permit any sale, transfer or encumbrance of the Lease or the Personal Property without the prior written consent of the Trustee, not to be unreasonably withheld or delayed. (10) The Authority assigns to the Trustee the Space Leases now or hereafter entered into, and the Authority shall perform all obligations of the Authority under the Space Leases and shall cause the lessees under such Space Leases to perform all obligations of such lessees under such Space Leases. (11) The Authority shall not permit hazardous substances to be placed on the Leased Property, except for incidental storage or use of hazardous substances in the ordinary course of the Authority's business and in compliance with applicable environmental regulations. (12) The Authority shall indemnify and hold the Trustee harmless from any loss due to a default by the Authority under the Mortgage, any construction on the Leased Property, any negligence by the Authority or any injury to any person on the Leased Property or any adjacent property, except if the same results directly from the gross negligence or willful misconduct of the Trustee. (13) The Authority shall comply with all obligations of the Authority under the Lease, and, upon any default of the Authority thereunder, the Trustee may perform such obligations at the Authority's expense. -70- (14) In the event of bankruptcy of the Authority, the Authority shall not elect to terminate or permit termination of the Lease without the Trustee's consent. TAKING OF LEASED PROPERTY. In the event of condemnation of the Authority's interest in the Leased Property, the proceeds of any such condemnation shall be disbursed in accordance with the Indenture. DEFAULT AND REMEDIES. An Event of Default, as defined under the Indenture, constitutes an Event of Default under the Mortgage. Upon an Event of Default, the entire indebtedness secured by the Mortgage may be accelerated, and the Trustee has the right to pursue any of the following remedies: (1) The Trustee may foreclose on the Mortgage in the manner provided by the laws of the State of Connecticut, may have a receiver appointed to operate and manage the Leased Property and collect the revenues, and may exercise all rights of a secured creditor under the Uniform Commercial Code as adopted by the laws of the State of Connecticut. (2) The Trustee may take possession of the Leased Property and operate the Leased Property or may, with or without taking possession, receive all revenues from the Leased Property and apply the same to costs of the Trustee, operating expenses and the indebtedness secured by the Mortgage. (3) The Trustee shall, have the right to sell or otherwise dispose of the Authority's leasehold interest and the Personal Property in a commercially reasonable manner and apply the proceeds thereof to the indebtedness secured by the Mortgage. (4) The Trustee may specifically enforce any of the provisions of the Mortgage. Nothing contained in the Mortgage permits the Trustee to transfer the Authority's leasehold interest to any manager of the gaming enterprise in violation of IGRA, or authorize any sale or other disposition of the fee title or reversionary interest of the United States in the Leased Property, the Improvements or the Appurtenant Rights. The Authority has waived any constitutional or statutory rights to notice and hearing before any sale or other disposition of the collateral. Further, the Authority has acknowledged that the rights, powers and remedies of the Trustee under the Mortgage are cumulative and may be exercised concurrently or separately. Upon any such disposition of the Authority's leasehold interest or of the Personal Property, the proceeds shall be used first to pay costs incurred in connection with such disposition, second to pay the indebtedness secured by the Mortgage, and third to pay any balance to the Authority. RIGHTS OF THE TRIBE. If an Event of Default occurs, the Trustee shall not have the right to accelerate the indebtedness, to foreclose the mortgage or to dispose of the collateral unless the Trustee shall have provided the Tribe with notice of such default under the Lease and provided the Tribe with an opportunity to cure such default within sixty (60) days (or if such default cannot with diligence be cured within such sixty day period, within a reasonable time) thereafter. Such limitation shall not apply to a monetary default by the Authority, provided that the Trustee shall provide the Tribe with notice of such monetary default and any payment made by the Tribe on behalf of the Authority shall be accepted by the Trustee as if it had been made by the Authority. Before the Trustee may foreclose the mortgage or dispose of the collateral, the Trustee must provide the Tribe with the notice and opportunity to cure as provided above and provide the Tribe with notice of intent to foreclose this Mortgage or dispose of the collateral and allow a period of sixty (60) days within which the Tribe shall have the right (but not the obligation) to purchase the Senior Notes, the Indenture, the Mortgage and all other documents executed and deliver in connection therewith for an amount equal to the outstanding -71- indebtedness; provided that such purchase shall be consummated within ninety (90) days after such notice of intent to foreclose the Mortgage or dispose of the collateral is given to the Authority. PARTIAL RELEASE OF LEASED PROPERTY. Provided that no Event of Default has occurred and is continuing under the Indenture and subject to certain conditions set forth therein, the Authority may require the Trustee to release the lien of the Mortgage as to a portion of the Leased Property, provided that, no such released portion of the Leased Property shall be used to conduct any gaming operations. MISCELLANEOUS. The Mortgage shall be governed by and interpreted in accordance with federal law (to the extent applicable) and the law of the Tribe, and to the extent required to supplement applicable federal law and tribal law, the substantive laws of the State of Connecticut (except its choice of law rules and except that the Trustee's rights and remedies set forth in the Mortgage and the lien of the Mortgage shall in any event be lawful and enforceable in accordance with the terms thereof). The Mortgage is subject and subordinate to any and all access and utility easements granted by the Tribe pursuant to the Lease, and the Trustee shall execute such additional documents to confirm such subordination as shall be reasonably required by the Authority. The liability of the officers, agents and employees of the Authority shall be limited to the extent provided in the Indenture. The Authority waives sovereign immunity from unconsented suit to interpret or enforce the provisions of the Mortgage. To the extent permitted by applicable law, the Authority waives the right to trial by jury in any action arising out of the Senior Notes, the Indenture, the Mortgage or any other documents executed in connection therewith. The Tribe, as landlord under the Lease, has consented to the Mortgage. DEVELOPMENT AGREEMENT GENERAL. The Tribe and TCA have entered into an Amended and Restated Gaming Facility Construction and Development Agreement (the "Development Agreement") providing for the design, construction, furnishing and site development of the Mohegan Sun Casino by TCA. The Tribe has assigned its rights and obligations in this agreement to the Authority. TCA and the Authority have consented to this assignment. EXCLUSIVE RIGHTS OF TCA; CONDITIONS TO TCA'S OBLIGATION. Subject to certain design and budget approval rights retained by the Authority and the Management Board under the Development Agreement, the Authority has granted to TCA the exclusive right to design, engineer, construct, furnish and develop the Mohegan Sun Casino and any related facilities that are owned by the Authority. The obligation of TCA to perform under the Development Agreement is conditioned upon the satisfaction of certain conditions including, without limitation, (i) NIGC and/or BIA approval (as appropriate) of the Development Agreement, the Management Agreement (as hereinafter defined), the Indenture, the Senior Notes, the Subordinated Notes, the Note Purchase Agreement (as hereinafter defined) and any other related collateral agreements requiring such approval(s); (ii) the ownership of the site designated for the development of the Mohegan Sun Casino by the United States in trust for the Tribe and the Tribe's control thereof; and (iii) the receipt by TCA of all required governmental licenses. Under the Development Agreement, the date five days following the date upon which these and certain other conditions and obligations of the Authority and TCA have been satisfied is designated as the "Effective Date," and TCA and the Authority have each agreed to use its best efforts to satisfy all such conditions and obligations as of the earliest possible date. -72- BUSINESS BOARD. Under the Development Agreement, certain decision-making authority and oversight duties are delegated to a board comprised of an equal number of representatives of the Authority and TCA (the "Business Board"). The Business Board is responsible for various matters, including, without limitation, the selection of architects and/or engineers (the "Architect"), the selection of one or more contractors and/or construction managers, the establishment of design, construction and furnishing budgets, and the procurement of trade fixtures, furnishings and equipment ("Furnishings"). In addition, the Business Board is responsible for establishing a program implementing TCA's and the Authority's objectives, schedule requirements and design criteria with respect to the Mohegan Sun Casino. CONSTRUCTION BUDGETS; FUNDING REQUIREMENTS; COST OVERRUNS. With the assistance of the Architect, the Business Board is responsible for the preparation of budgets for the design, construction and furnishing of the Mohegan Sun Casino, which will be subject to the approval of the Management Board. This budget is subject to revision from time to time by TCA, in its capacity as Manager under the Management Agreement (as hereinafter defined) and with prior notice to the Management Board, to reflect unpredicted significant changes or events or to include significant, additional or unanticipated expenses. Business Board approval is required, however, for any individual or cumulative budget modification that constitutes an increase of 5% or more over the approved budget for any specific design package. In addition, the Authority's representatives on the Business Board may require Management Board approval of any other budget adjustment that varies from the terms of the Development Agreement. TCA has agreed to assist the Authority in obtaining from one or more third parties funding necessary for the design, construction, equipping, start-up and working capital costs of the Mohegan Sun Casino. All funds, including, without limitation, proceeds from the issuance of the Senior Notes and the Subordinated Notes, will be deposited in a development account designated exclusively for satisfying the Authority's and TCA's obligations under design and construction agreements with third parties and to cover related costs, including the lease or purchase costs of furnishings, consulting fees, supplies, utility costs, landscaping, parking, curb cuts, access enhancements, off-site road improvements, architectural and engineering fees, TCA's attorneys' fees and closing costs. The Authority has agreed to make available from the proceeds of such financing funds to cover the initial working capital requirements for the Mohegan Sun Casino. The Authority and TCA have estimated that the total costs for development and construction of the Mohegan Sun Casino will be $275 million. Under the Development Agreement, if there are any cost overruns related to the construction of the Mohegan Sun Casino, TCA has agreed to assist the Authority in borrowing additional funds necessary to finance such overruns, up to a maximum of $325 million. DESIGN PHASE--ARCHITECT SELECTION; PLANS AND SPECIFICATIONS. The Development Agreement provides that the construction of the Mohegan Sun Casino is divided into two phases: a "Design Phase" and a "Construction Phase." The Design Phase consists of the engagement of the Architect, the preparation of design, construction, and furnishings budgets, preliminary program evaluation, design development and the approval of final detailed plans and specifications (the "Plans and Specifications"). Within 30 days following the Effective Date TCA, with the approval of the Business Board, will select one or more Architects to design the Mohegan Sun Casino and the Management Board, or its designees, must approve the form of the contract with any Architect selected for the project, who will then be employed and directly compensated by the Authority. The Authority has agreed to assign to TCA its responsibilities under any architectural and/or engineering agreements to allow TCA to directly supervise and administer directly the duties of the Architect and/or engineer thereunder. Adjustments to budgets in excess of five percent require the approval of the Business Board. The Development Agreement provides that the design and construction of the Mohegan Sun Casino must comply with all federal and Connecticut statutes and regulations that otherwise would apply if the Mohegan Sun Casino was located outside the jurisdictional boundaries of the Tribe. -73- CONSTRUCTION PHASE--CONTRACTOR SELECTION AND PREFERENCE; TCA OVERSIGHT. The Construction Phase consists of the selection of one or more contractors and subcontractors and the commencement and completion of construction. Following TCA's review of proposals from prospective contractors, the Business Board is authorized to negotiate and award contracts to one or more qualified applicants of its choosing. All contractors will be engaged and paid directly by the Authority. In addition, the Development Agreement requires subcontractors to be selected in accordance with certain provisions of the Management Agreement, which requires, among other things, that employment preference be given to members of the Tribe, their spouses and children, and business entities controlled by members of the Tribe, who or which, in TCA's opinion, possess sufficient skills and competence. TCA will be responsible for the administration and supervision of all contracts and agreements with contractors and will act as the Authority's representative, with full power and authority to act on behalf of the Authority, in connection with any such contracts that are approved by the Business Board. Specifically, TCA will be responsible for control and charge of all persons performing work on the site of the Mohegan Sun Casino, inspecting the progress of construction, determining completion dates and reviewing contractor payment requests submitted to the Authority. The Authority, subject to the direction and approval of the Business Board, will make progress payments to the contractors. All contractors will be required to warrant that their construction is free of defects and constructed in a workmanlike manner for a period of at least one year from the date of completion and TCA will have the authority to reject any work that does not comply with the applicable contracts. EMPLOYMENT PREFERENCE. The Development Agreement requires that, with respect to all job categories relating to development and construction of the Mohegan Sun Casino, recruiting, training and employment preference be given to members of the Tribe, their spouses and their children who, in TCA's opinion, possess sufficient skills and competence. Thereafter, secondary preference must be given to qualified members of other federally-recognized Indian tribes. TCA has agreed to use its best efforts to assist members of the Tribe and their spouses and children in obtaining necessary skills to qualify for available positions. FURNISHINGS. Furnishings for the Mohegan Sun Casino will be purchased by the Authority from vendors selected by the Business Board or leased on terms arranged by TCA and approved by the Business Board. TCA has agreed to use good business practices and, where appropriate, competitive bidding with respect to the procurement of Furnishings. TERMINATION AND DEFAULT; DISPUTES. Each party has the right to terminate the Development Agreement in the event that a default or failure to perform any material duty or obligation by the other party thereunder remains uncured for at least 20 days following notice to such party of such breach or failure to perform. In addition, each party may terminate the Development Agreement pursuant to applicable provisions of the Management Agreement. In the event of a dispute between the parties or the termination of the Development Agreement and/or any related agreement, the Authority and TCA may pursue any remedy available under the Management Agreement. See "--Management Agreement-- Termination and Default." MANAGEMENT AGREEMENT GENERAL. To provide for the management of the Mohegan Sun Casino, the Tribe and TCA have entered into the Amended and Restated Gaming Facility Management Agreement (the "Management Agreement"), pursuant to which the Tribe has retained and engaged TCA on an exclusive, independent contractor basis, to develop, operate, manage and maintain the Mohegan Sun Casino. The Tribe has assigned its rights and obligations in this agreement to the Authority. The Authority and TCA have consented to this assignment. The term of the Management Agreement is seven years, subject to a one time option for a buyout by the Authority effective on the last day of the 60th month following the first full month of operations (the "Buyout Option"). In order to exercise the Buyout Option, the Authority must (i) fully pay and satisfy certain outstanding indebtedness, including all indebtedness under the Senior Notes and the Subordinated Notes, (ii) give notice of -74- its intent to exercise the option not more than 90 and not less than 30 days prior to the last day of the 60th month after opening of the Mohegan Sun Casino, (iii) enter into discussion with TCA to determine the option price on commercially reasonable terms, (iv) execute and deliver to TCA a full release of all of TCA's obligations under, and claims, whether asserted or unasserted, liquidated or contingent, arising in connection with, the Management Agreement and (v) pay all amounts otherwise due TCA pursuant to the Management Agreement. Under the Management Agreement, the Authority has granted to TCA the exclusive right and obligation to develop, manage, operate and maintain the Mohegan Sun Casino and all other related facilities that are owned by the Authority. The Management Agreement is not assignable by either party without the prior consent of the other party. Pursuant to the terms of the Management Agreement, the Authority and TCA have agreed that neither party may establish or operate any other gaming facility within the states of Connecticut or Rhode Island without first obtaining the consent of the other party, which consent may not be unreasonably withheld. In addition, TCA has agreed to use its best efforts to promote and manage the Casino and the Authority has agreed that, except as required by law, it will not adopt any amendments to its gaming ordinances that would adversely affect TCA's right to operate and maintain the Mohegan Sun Casino. The Management Agreement provides that neither the Authority nor any of its agents, affiliates or representatives will impose any taxes, fees, assessments or other charges on payments of any debt service to TCA or any lender, on the Mohegan Sun Casino or the revenues therefrom or on the management fee payable to TCA thereunder and, if any such tax is imposed, TCA has the right to obtain compensation from the Authority in equal amount to the amount of the tax. BUSINESS BOARD. Under the Management Agreement, certain decision-making authority and oversight duties are delegated to a committee comprised of an equal number of representatives of the Authority and of TCA (the "Business Board"). Actions by the Business Board require the unanimous approval of its members or their respective designees. The Authority and TCA have agreed that, in the event that the Business Board is unable to reach a mutual decision or compromise, any disputes will be submitted to summary arbitration before a single arbitrator who shall render a decision within 48 hours of submission of the dispute. MANAGEMENT DUTIES AND RELATED OBLIGATIONS OF TCA. The Management Agreement provides that TCA will be responsible for the day-to-day management, operation and maintenance of the Mohegan Sun Casino, including the establishment of operating days and hours. The Management Agreement authorizes TCA to select a general manager ("General Manager") to fulfill its responsibilities thereunder. Any General Manager selected by TCA is subject to approval by the Authority, by resolution of the Management Board or its designee, and may be removed at the Authority's request, by resolution of the Management Board and with the consent of TCA, which consent may not be unreasonably withheld. As manager of the Mohegan Sun Casino, TCA has agreed to operate the facility in compliance with all Tribal legal requirements and other applicable laws and that TCA and all of TCA's executive officers shall be licensed by the Tribe pursuant to the Tribe's Gaming Ordinance. Under the Management Agreement, the Tribe may not unreasonably withhold, withdraw, qualify or condition such licenses. The enabling resolution which approved the Management Agreement and was approved by the Tribal Council, provides that the Management Agreement itself is the law of the Tribe and is enforceable according to its terms. The Tribal Constitution includes a provision which forbids any action by the Tribal Council or any officer of the Tribe which impairs contractual obligations. The Management Agreement provides that TCA shall have the authority, through the General Manager, to enter into contracts for the operation of the Mohegan Sun Casino on behalf of the Authority. Any contracts that require annual expenditures in excess of $25,000 or that are entered into with affiliates of TCA must be approved by the Business Board. With respect to contracts for the supply of goods and services, TCA is required to give preference to members of the Tribe, their spouses and children, and business entities controlled by Tribe members. In addition, TCA has agreed to assist the Authority in obtaining funding necessary for the operation of the Mohegan Sun Casino and will be responsible for the marketing, advertisement and promotion thereof. -75- Pursuant to the Management Agreement, TCA will be responsible for the security and surveillance at the Mohegan Sun Casino. The parties have agreed that the Authority will have 24-hour access to the entire Mohegan Sun Casino, including all security and surveillance facilities and records. In addition, TCA will be responsible for maintaining, on behalf of the Authority, adequate insurance coverage for the Mohegan Sun Casino, including "all risk," general commercial liability, workers' compensation, employer liability and such other policies of insurance as the Business Board may reasonably request from time to time. All such policies will name TCA as an additional insured party and/or loss payee to the extent provided in the Management Agreement. TCA will have the right to sell alcoholic beverages and tobacco products at the Mohegan Sun Casino in accordance with the Mohegan Compact and Tribal legal requirements. The Tribe does not presently have enabling legislation necessary to permit retail sale of alcoholic beverages but the parties expect that such legalization will be approved and that TCA will be permitted to include service of alcoholic beverages within the Mohegan Sun Casino. Furthermore, the Tribe has agreed that such enabling legislation will provide for the sale of alcoholic beverages to the maximum extent permitted under the Mohegan Compact. TCA will be responsible for bringing, defending or settling any legal claim brought against TCA or the Authority in connection with the operation of the Mohegan Sun Casino. However, the Business Board will have the right to approve the retention of legal counsel and, in the event such proceeding poses substantial risk to the operation of the Mohegan Sun Casino, such proceedings will be supervised by the Business Board with notice to and consultation with the Management Board. MOHEGAN SUN CASINO EMPLOYEES; EMPLOYMENT PREFERENCE. Pursuant to the Management Agreement, TCA will have the exclusive responsibility and authority to select, retain, train and discharge all employees hired to perform services at the Mohegan Sun Casino; however, all employees will be employees of the Authority and not TCA. The Authority will have the right to select inspectors, who will be responsible for verifying the daily gross revenues of the Mohegan Sun Casino and who will report directly to the Authority. Subject to the approval of the Management Board, TCA will also have the right to engage its own employees and the employees of its affiliates to provide services for the Mohegan Sun Casino; however, neither TCA nor any of its officers, employees or partners will be entitled to receive wages or other monetary compensation for such services under the Management Agreement. In order to maximize the benefits enjoyed by the Tribe, members of the Tribe will be given preference in recruiting, employment and training with respect to all job categories in connection with the operation of the Mohegan Sun Casino, including management positions. Pursuant to the terms of the Management Agreement, however, no member or employee of the government of the Authority may be employed without a waiver by the Authority and such federal agencies as may be required by law. TCA has agreed to conduct applicable background investigations with respect to each applicant for employment at the Mohegan Sun Casino. TCA will have the sole responsibility for determining whether a prospective employee possesses necessary skills for any position and the level of compensation to be paid to such individual. In addition, TCA has agreed to establish standardized personnel policies and procedures, including a job classification system with salary levels and scales, which will be subject to approval by the Management Board and include a grievance procedure to promote fair and uniform standards for members of the Tribe employed at the Mohegan Sun Casino. TCA has agreed that any discharge, demotion or discipline of employees will be conducted in accordance with such policies and procedures. OPERATING AND CAPITAL BUDGETS; REPLACEMENT RESERVE FUND. Prior to the first date that the Mohegan Sun Casino is substantially complete and open to the public (the "Commencement Date") and 60 days prior the commencement of each fiscal year thereafter, TCA must submit to the Management Board, for its approval, a detailed proposed operating budget for the facility. Under the Management Agreement, TCA is required to meet with the Management Board to discuss the proposed budget and the Management Board is obligated to review -76- the budget on a line-by-line basis. The Management Board may not unreasonably withhold or delay its approval of a budget proposed by TCA and the Management Agreement establishes specific procedures and time limits for the Management Board to object to any budget submitted for its approval. In the event that TCA and the Management Board are unable to agree on one or more budget items, the Management Agreement provides for arbitration of the disputed item(s), in the case of the initial budget, and a carry over of the prior fiscal year's allocation (with adjustments for inflation), in the case of subsequent annual budgets. Upon notice to the Management Board, TCA will have the right to revise the budget and/or reallocate budgeted items from time to time to reflect any unpredicted significant changes, variables or events, or to include significant, additional, unanticipated items of expense. Any increase in planned expenditures of more than 5% of the amount budgeted for any profit center of the Mohegan Sun Casino will require approval of the Business Board, and the Authority's representative(s) to the Business Board may require written approval of the Authority for any budget modification that varies from the terms of the Management Agreement. In addition to an annual operating budget, TCA is required to submit, not less than 45 days prior to the commencement of each fiscal year, a recommended capital budget for furnishings, equipment and ordinary capital replacement items required to operate the Mohegan Sun Casino in accordance with sound business practices. The approval and dispute resolution provisions applicable to capital budgets are the same as those for operating budgets. TCA will be responsible for the design and installation of all capital replacement items, and the Authority has agreed to expend such amounts as are necessary to maintain the Mohegan Sun Casino in compliance with all legal requirements and to correct any emergency conditions. In addition, the Authority has agreed to authorize such funds as are necessary to comply with the capital renovation and improvement programs recommended by the Business Board to maintain first class standards at the Mohegan Sun Casino and maintain its competitiveness. Pursuant to the terms of the Management Agreement, TCA will be required to establish a replacement reserve fund (the "Reserve Fund"), which may be used to pay any approved budgeted capital expenditures. Any portion of a Reserve Fund which remains unused at the end of any fiscal year will be carried forward to the following year. Each of TCA and the Authority will be required to make monthly contributions to the Reserve Fund at the rate of 60% from the Authority and 40% from TCA up to a combined total of $3 million per year from both parties. Deposits by the Authority to the Reserve Fund will be deemed capital expenditures and will not reduce amounts distributable as Net Revenues; however, deposits made by TCA will reduce Net Revenues payable to TCA under the Management Agreement. In addition, proceeds from the sale of capital items no longer needed for the operation of the Mohegan Sun Casino and insurance proceeds received in reimbursement for items previously paid for out of the Reserve Fund will be deposited into the Reserve Fund. In the event that the Reserve Fund is insufficient to cover replacements authorized to be paid out of such fund, TCA may, in its discretion, advance funds necessary to cover such insufficiency and will be entitled to reimbursement therefor. See "--Management Fee; Reimbursement and Disbursement." BANK ACCOUNTS AND ACCOUNTING PROCEDURES; INSPECTION BY AUTHORITY. Under the Management Agreement, the Business Board is authorized to establish such bank accounts, for the benefit of the Authority, as TCA shall deem necessary for the operation of the Mohegan Sun Casino. The accounts are also subject to the terms of the Indenture, which provides for the establishment of a security interest in the accounts, and requires that the accounts be opened in the name of the Trustee designated pursuant to the Indenture. The Management Agreement provides for the establishment of depositary and disbursement accounts and authorizes TCA to pay from the disbursement accounts such funds as are necessary to cover the operating expenses of the Mohegan Sun Casino, debt service payments under the Senior Notes, the Indenture, the Development Agreement and fees payable to TCA under the Management Agreement. TCA may not make any cash disbursements from the depositary accounts, except for disbursements of cash prizes from a cash contingency reserve fund and petty cash fund established in accordance with the terms of the Management Agreement. In addition, TCA will be responsible for the installation of internal systems for the monitoring of all funds, which systems will be subject to approval by the Business Board and review by the Authority. The Authority is entitled to appoint an inspector, who will -77- have the right to inspect and oversee such internal control systems at all times and will have full access to the "hard count" (I.E., coins and tokens) and "soft count" (I.E., non-coin revenues and credits) rooms as well as to the closed-circuit television system required to be installed by TCA to monitor the cash-handling activities at the Mohegan Sun Casino. The Management Agreement requires TCA to maintain, in accordance with generally accepted accounting principles, books and records reflecting the operations of the Mohegan Sun Casino and to prepare monthly, quarterly and annual statements for the Authority. An annual audit of the Mohegan Sun Casino will be conducted by a nationally-recognized independent certified public accounting firm with experience in the casino industry. In addition, the Authority's inspector, or any other authorized agent of the Authority, will have an unlimited right to inspect such books and supporting business records. MANAGEMENT FEE; REIMBURSEMENT AND DISBURSEMENT. Subject to the priorities described below and in accordance with the required Reserve Fund contributions, the Management Agreement authorizes TCA to pay itself a monthly management fee. The annual fee is calculated in three tiers based upon Net Revenues set forth below (in thousands):
I II III REVENUES IN TIER I REVENUES IN TIERS I & ------------------ --------------------- 40% OF NET REVENUES PLUS 35% OF NET II PLUS 30% OF NET ------------------- --------------- ------------------ UP TO REVENUES BETWEEN REVENUES ABOVE ----- ---------------- -------------- Year 1 . . . . . . . . . . . . . $50,546 $50,547-$63,183 $63,183 Year 2 . . . . . . . . . . . . . $73,115 $73,116-$91,394 $91,394 Year 3 . . . . . . . . . . . . . $91,798 $91,799-$114,747 $114,747 Year 4 . . . . . . . . . . . . . $95,693 $95,694-$119,616 $119,616 Year 5 . . . . . . . . . . . . . $104,107 $104,108-$130,134 $130,134 Year 6 (subject to Buyout Option) $114,335 $114,336-$142,919 $142,919 Year 7 (subject to Buyout Option) $130,944 $130,945-$163,680 $163,680
The monthly management fee payments are calculated against 1/12th of the annual projections, and then adjusted annually within 60 days of the close of the fiscal year. This annual adjustment might or might not have a material effect on cash flow. As defined in the Management Agreement, "Net Revenues" of the Mohegan Sun Casino means all revenues of any nature generated directly or indirectly from operations of the facility ("Gross Revenues") less operating expenses and certain specified categories of revenue, such as income from any financing or refinancing, taxes or charges received from patrons on behalf of and remitted to a governmental entity, proceeds from the sale of capital assets, insurance proceeds and interest on the Reserve Fund. Net Revenues also include Net Gaming Revenues, which are equal to the amount of the "net win" from Class III Gaming operations (I.E., the difference between gaming wins and losses) less all gaming-related operational expenses (excluding the management fee). Within 25 days after the end of each calendar month, TCA is required to calculate and report to the Authority, the Gross Revenues, operating expenses and Net Revenues. Class II Gaming conducted at the Mohegan Sun Casino is not subject to the Management Agreement; the Agreement does not provide for TCA to manage any Class II Gaming or to share in any Class II Gaming revenues. As and when received by TCA, all revenues from Mohegan Sun Casino operations are required to be deposited in the bank account established under the Management Agreement and to be disbursed, for and on behalf of the Authority, on a monthly basis to cover operating expenses and required deposits to the Reserve Funds. In addition, TCA will be required to reserve additional funds each month, in excess of any required minimum balances established by the Business Board to cover working capital costs, sufficient to cover operating and other costs that are not paid on a monthly basis, such as insurance premiums. See "--Operating and Capital -78- Budgets; Replacement Reserve Fund" and "--Bank Accounts and Accounting Procedures; Inspection by the Authority." Under the Management Agreement, Net Revenues (less any amount reasonably required to maintain a cash contingency reserve fund for the payment of cash prizes) are required to be disbursed, to the extent due and payable and earned, in the following order of priority: (1) $50,000 shall be paid each month to the Authority as a "Minimum Priority Payment," chargeable against the Authority's distribution of Net Revenues. In the event that Net Revenues for any given month are less than the Minimum Priority Payment, TCA will be required to fund any deficiency and will be entitled to reimbursement therefor in subsequent months. Minimum Priority Payments shall be made for any month during which any gaming is conducted, even if only for part of a month. No Minimum Priority Payment will be required to be made for any month during which gaming at the Mohegan Sun Casino is suspended or terminated for the full month. (2) current principal and other payments, including sinking funds or any required deposit to the Cash Maintenance Account or the Interest and Excess Cash Flow Account (exclusive of interest, which is paid as an operating expense) due on the Senior Notes, the Indenture or the Subordinated Notes; (3) recoupment payment to the Manager for funds advanced in prior periods and reimbursement of amounts advanced by TCA (including any Minimum Priority Payment deficiencies funded by TCA pursuant to Item (1), above; all such funds are charged without interest against the Authority's share of Net Revenues); (4) deposits to the Reserve Fund by the Authority and TCA; and (5) payment of the Management Fee to TCA. All remaining Net Revenues, if any, and cash shall be distributed to the Authority, subject to restrictions on distributions to the Authority in the Indenture. In the event of liquidation all disbursements will be subordinate to repayment of the Senior Notes. The Management Agreement provides that the holders of the Senior Notes are expressly recognized as third party beneficiaries for purposes of enforcing this provision of the Management Agreement. The Management Agreement provides that if any person or entity with a financial interest in, or management responsibility for, the Management Agreement is formally indicted, or if a comparable criminal action is initiated in any United States Federal or State Court, or in any foreign court or other comparable jurisdiction, then such person or entity (i) shall not be permitted to exercise any management or other control over the gaming operation of the Mohegan Sun Casino or over TCA, (ii) shall have his or its financial proceeds from the Management Agreement placed in escrow (which escrowed amounts shall be retained by TCA and not transmitted to any intermediate person or entity) until such indictment or other action is finally resolved and (iii) if convicted of any misdemeanor involving gaming or any felony, shall forfeit all of his or its interest in the Management Agreement and any proceeds placed in escrow pursuant to the foregoing clause (ii). LIENS; TAXES. Under the Management Agreement, the Authority and TCA have represented and warranted to the other that it will not act in any way to cause any party, other than TCA or the holders of the Senior Notes to become a lienholder of the Leased Property or the Mohegan Sun Casino, or to allow any party to obtain any such interest under the Management Agreement without the prior consent of TCA or the Authority, as the case may be, and, if required, the United States. In addition, the Authority and TCA have agreed to keep the Leased Property and the Mohegan Sun Casino free and clear of any liens, whether resulting from the construction of the facilities or otherwise. -79- The parties have agreed that in the event that any government attempts to impose taxes upon any party to the Management Agreement or upon the property or operations of the Mohegan Sun Casino or the Leased Property, the Business Board may elect unanimously to resist such attempt on behalf of such party or entity through appropriate legal proceedings. The costs of such proceedings and any tax or other payment required to be made will be treated as an operating expense under the Management Agreement. The Authority has agreed not to impose any taxes, fees, assessments or other charges (i) on payments of any debt service to TCA or any other lender furnishing financing to the Mohegan Sun Casino, and (ii) on the salaries, benefits or dividends paid to any of TCA's partners, officers, employees or affiliates or any employees of the Mohegan Sun Casino. The Management Agreement provides that the Authority shall have the right, however, to assess license fees that reflect reasonable regulatory costs incurred by the Authority. RELATIONSHIP BETWEEN THE AUTHORITY AND TCA. Under the Management Agreement, TCA expressly covenants that it will not unduly interfere in or attempt to improperly influence the internal governmental affairs of the Authority. Furthermore, TCA has agreed that it will not make any payments or gifts of services, except for gifts of nominal value, to any member of the government or other official of the Authority or their relatives (an "Authority Official"). In addition, TCA may not offer any promotional allowances (E.G., complimentary meals, drinks, accommodations or gaming tokens) to any member of the Authority's government. Similarly, no officer of the Authority or family member of any officer or member of the Authority may be employed at the Mohegan Sun Casino without a written waiver by the Authority and, if required under applicable law, the NIGC or other applicable government agency. Furthermore, no Authority Official may have any direct or indirect interest in the Mohegan Sun Casino greater than the interest of any other member of the Authority, except for minimal equity ownership in TCA, its partners, parents, subsidiaries or affiliates. Pursuant to the Management Agreement, TCA has agreed to guarantee to the Authority payment of 40% of the amount of the outstanding balance of the indebtedness of the Authority for Project Costs. This obligation to guarantee will be met to the extent of any participation by the Manager or any of its affiliates in the Subordinated Notes and the Secured Completion Guarantee. This guarantee is for sole benefit of the Authority and is not for the benefit of any holder of the Senior Notes. DAMAGE, CONDEMNATION OR IMPOSSIBILITY OF THE ENTERPRISE. In the event that the Mohegan Sun Casino is damaged or destroyed, taken by condemnation (or sold under threat thereof), or if gaming at the Mohegan Sun Casino is legally prohibited, the Management Agreement provides that TCA will have certain options with respect to the continuation of gaming operations under the Management Agreement. First, TCA will have the option to retain its obligations under the Management Agreement and commence or recommence the operation of the Mohegan Sun Casino if, at some point during the term of the Management Agreement, commencement or recommencement is legally and commercially feasible. Second, if the Mohegan Sun Casino is damaged, destroyed or condemned, and the Business Board elects to apply insurance or condemnation proceeds to the repair or replacement thereof, TCA may elect within 60 days to reconstruct such facility. In the event that the insurance or condemnation proceeds are insufficient to fund such reconstruction, TCA may, at its option, elect to provide additional funds to finance the reconstruction, subject to the approval of the Authority, the BIA and the NIGC, as appropriate. Such funds will constitute a loan to the Authority, will be secured by the revenues of the Mohegan Sun Casino and will not be subject to the limitations set forth in the Development Agreement. See "--Development Agreement; Construction Budget; Funding Requirements; Cost Overruns." Alternatively, if the Business Board elects not to apply the insurance or condemnation proceeds to the reconstruction of the Mohegan Sun Casino, such proceeds will be applied first to amounts due under the Senior Notes, second, to the Subordinated Notes and other outstanding indebtedness, third, to any undistributed Net Revenues and, fourth, to the Authority and TCA in accordance with their respective interests. -80- TCA will have the option to use the Mohegan Sun Casino for any other business purposes reasonably incidental to a Class III Gaming facility. In the event that the Mohegan Sun Casino is to be used for any purpose other than gaming, TCA and the Business Board will need to obtain all approvals necessary under applicable law. In the event of the failure of the Mohegan Sun Casino to produce a Management Fee for a period of six consecutive months, or the cessation of gaming on the Leased Property, the Management Agreement provides that TCA will have the right to terminate its obligations. Following such termination, TCA will remain entitled to undistributed Net Revenues in accordance with the terms of the terminated Management Agreement. However, in the event that TCA elects not to terminate, it will have the right, with the approval of the Business Board, to take whatever actions are necessary to reduce operating expenses of the Mohegan Sun Casino, during such period. In addition, during any period of cessation of operation of the Mohegan Sun Casino, the term of the Management Agreement will be deemed to have been tolled and the expiration date of the term thereof will be accordingly extended. TERMINATION AND DEFAULT. Each party has the right to terminate the Management Agreement for cause, which includes, without limitation, a default or failure by the other party to perform any material duty or obligation that remains uncured for at least 60 days following notice to such party of such breach or failure to perform. In addition, the Authority may terminate the Management Agreement if TCA has its gaming license withdrawn as a result of the conviction of any director or officer of TCA for a criminal felony or misdemeanor offense directly related to the performance of TCA's duties under such agreement. In the event that the Management Agreement is terminated for cause, regardless of which party is at fault, the parties will be entitled to retain all funds previously disbursed to them under the agreement and the Authority shall retain title to the Mohegan Sun Casino. Following such termination, TCA shall have the right to receive its share of all accrued and unpaid Net Revenues and will continue to have the right to repayment of unpaid principal and interest under the Subordinated Notes owned by it, pursuant to the terms thereof. The Management Agreement may also be terminated in the event that any change in law renders the operation of the Mohegan Sun Casino unlawful. For a description of TCA's rights in the event of such a termination. See "--Damage, Condemnation or Impossibility of the Enterprise." Similarly, TCA has the right to terminate the Management Agreement in the event that any Tribal, federal or state authority fails to approve, or objects to, the performance by TCA of its obligations under such agreement or if TCA's performance would jeopardize any licenses or approvals previously obtained by TCA. WAIVER OF TRIBAL SOVEREIGN IMMUNITY; ARBITRATION. Under the Management Agreement, the Authority has waived sovereign immunity for the purposes of permitting, compelling or enforcing arbitration and to be sued by TCA in any court of competent jurisdiction for the purposes of compelling arbitration or enforcing any arbitration or judicial award arising out of the Management Agreement, the Indenture, the Senior Notes, the Secured Completion Guarantee and any collateral agreements or other obligations (including the Subordinated Notes), the Gaming Ordinance of the Tribe or decisions of the Authority. The parties have agreed that all disputes and claims arising out of the Management Agreement or the Tribe's Gaming Ordinance will be submitted to binding arbitration, which shall be the sole remedy of the parties and that punitive damages may not be awarded to either party by any arbitrator. The Authority's waiver of immunity is limited to enforcement of money damages from undistributed or future Net Revenues of the Mohegan Sun Casino (or, under certain conditions, net revenues of other gaming operations of the Authority); Funds earned and paid over to the Authority as the Authority's share of Net Revenues prior to any judgement or award are not subject to the waiver and would not be available for levy pursuant to any judgement or award. SECURED COMPLETION GUARANTEE GENERAL. Sun International has executed the Secured Completion Guarantee, in favor of the Trustee, whereby Sun International has irrevocably guaranteed the obligations of the Authority to complete construction -81- of the Mohegan Sun Casino up to a maximum obligation of $50 million. Sun International's obligations under the Secured Completion Guarantee, which are described below, are hereinafter referred to collectively as the "Guaranteed Obligations." GUARANTEED OBLIGATIONS. Sun International has guaranteed (i) the obligations of the Authority to complete construction of the Mohegan Sun Casino in accordance with the terms of the Indenture and the Disbursement and Escrow Agreement and to cause the Mohegan Sun Casino to be Completed (as defined below) and (ii) the payment of all "Amounts Required for Completion" (as defined below) payable by the Authority in connection with work or services performed or goods or materials delivered or other Guaranteed Obligations that accrued on or prior to the earlier of the date on which the Mohegan Sun Casino first becomes Completed or the occurrence of a Terminating Event (as defined below) under the Secured Completion Guarantee. Under the Secured Completion Guarantee "Amounts Required for Completion" include, without limitation, (v) all regularly scheduled payments of principal and interest on any indebtedness (other than the Senior Notes), (w) all regularly scheduled payments of interest (but not principal) due on the Senior Notes, (x) all costs and cost overruns of construction and completion of the Mohegan Sun Casino (E.G., costs of labor, materials, equipment and supplies, taxes, utilities, assessments, insurance and maintenance expenses), (y) all operating costs of the Authority, and (z) all other amounts or funds required to cause the Mohegan Sun Casino to be Completed. The Guaranteed Obligations of Sun International specifically include the payment, satisfaction or discharge of all liens (other than those permitted under the Indenture) that may be imposed upon the Mohegan Sun Casino or any related property and the defense and indemnification of the Trustee and the holders of the Senior Notes against all such liens. Sun International's Guaranteed Obligations continue until the earlier of the Mohegan Sun Casino being Completed or the occurrence of a Terminating Event. Under the Secured Completion Guarantee, the Mohegan Sun Casino will be deemed "Completed" when all liens (other than those permitted under the Indenture or which relate to amounts disputed by Sun International) relating to the construction of the Mohegan Sun Casino have been paid, the Trustee has received a certificate from the general contractor and project architect for the Mohegan Sun Casino (or other mutually acceptable independent construction expert) certifying that the Mohegan Sun Casino is complete in all material respects in accordance with the plans therefor and in compliance with all applicable laws, ordinances, and regulations with respect to the physical structure, health and safety, environmental and hazardous materials, fire, equipment, security and physical operating requirements of the Mohegan Sun Casino, and the Mohegan Sun Casino is in a condition to receive guests in the ordinary course of business. A "Terminating Event" under the Secured Completion Guarantee includes (i) any Congressional, Tribal or other governmental action that results in a substantial diminution of the gaming operations proposed to be conducted at the Mohegan Sun Casino, (ii) September 30, 1997 (iii) the date immediately prior to the acceleration of amounts due on the Senior Notes, (iv) the repayment of the Senior Notes in full, (v) the termination or unenforceability, in any material respect, of the Management Agreement or the Lease, or (vi) the termination or repudiation of the Management Agreement by the Authority. The legalization of casino gaming at any other location in New England, including Bridgeport, however, will not be deemed to constitute a Terminating Event. Sun International is obligated to perform under the Secured Completion Guarantee regardless of whether the Authority is individually or jointly and severally liable for the Guaranteed Obligations or whether recovery against the Authority is or may become barred by any statute of limitations, sovereign immunity or for any other reason. However, Sun International is liable for the Guaranteed Obligations only in the event, and to the extent, that funds are not available for the payment thereof under the Disbursement and Escrow Agreement. See "Description of Senior Notes--Disbursement and Escrow Agreement." ENFORCEMENT OF SECURED COMPLETION GUARANTEE; PROCEDURES FOR COMPLETION. If the Authority (i) fails or neglects to complete construction of the Mohegan Sun Casino (including the furnishing and fixturing thereof) in the manner specified in the Indenture and the Disbursement and Escrow Agreement, free of all liens (other than those permitted under the Indenture or which relate to disputed amounts), (ii) fails in any other manner to prosecute with diligence and continuity the construction and completion of the Mohegan Sun Casino, (iii) is -82- unable to satisfy any condition required to receive disbursement under, or violates any covenant in, the Disbursement and Escrow Agreement, such that the Mohegan Sun Casino cannot become Completed with funds held therefor, or (iv) is subject to a termination of its right to receive funds from the Escrow Account, then Sun International will be required, at its sole cost, to perform the Guaranteed Obligations within 30 days following written notice from the Trustee, until the Mohegan Sun Casino is Completed or the occurrence of a Terminating Event. Upon the occurrence of a force majeure event, such as fire, war, strike or any other event outside Sun International's control that makes it physically impossible, unlawful or commercially impracticable to cause the Mohegan Sun Casino to be Completed (a "Force Majeure Event"), Sun International's Guaranteed Obligations will be suspended until such time as the Force Majeure Event is removed. During any such suspension period, Sun International has agreed to use reasonable commercial efforts to effect the removal of the Force Majeure Event to the extent that it may be removed or affected by the actions of Sun International. In addition, in the event that Sun International fails to perform the Guaranteed Obligations, the Trustee may, at its option and in its sole discretion, elect to undertake completion of the construction of the Mohegan Sun Casino or to foreclose, judicially or nonjudicially, on all or any portion of the Note Collateral. In either case, the Trustee may recover from Sun International the costs of enforcing such rights, including reasonable attorneys' fees. Pursuant to the terms of the Secured Completion Guarantee, the Trustee's rights to complete construction of the Mohegan Sun Casino or to recover damages against Sun International are the sole and exclusive remedies of the Trustee against Sun International and are independent and not exclusive of any other rights or remedies available to the Trustee or the holders of the Senior Notes against the Authority. Similarly, any alteration by the Trustee or the holders of the Senior Notes of the Guaranteed Obligations with respect to the Authority (including the modification of the Disbursement and Escrow Agreement or the addition or release of other guarantors of the Guaranteed Obligations) shall not affect the Guaranteed Obligations of Sun International. The Guaranteed Obligations are also secured, in part, by an irrevocable letter of credit in the amount of $15 million. The Trustees may draw upon the letter of credit if (i) Sun International fails to pay any SIHL Guaranteed Amount (as defined in the Disbursement and Escrow Agreement) after such amount becomes due and payable and 30 days after notice to Sun International and (ii) Sun International fails to pay any amount required to cause the Mohegan Sun Casino to become Completed (as certified by a professional architect) after such amount becomes due and 30 days after notice to Sun International. Any amounts drawn upon shall be deposited into the Escrow Account and disbursed pursuant to the Disbursement and Escrow Agreement and the Secured Completion Guarantee. In the event that there is a dispute between the Authority and any contractor, subcontractor, supplier, vendor or any other person providing goods or services in connection with the amount owed to such person, Sun International has agreed to allocate and reserve from Available Funds under the Disbursement and Escrow Agreement an amount that it reasonably believes will be sufficient to settle such dispute. In the event that the settlement of such dispute requires expenditures in excess of the amount reserved therefor plus any unallocated reserves, Sun International has guaranteed the payment in full of such disputed amount. Sun International is required to pay any of such disputed amounts when the dispute is resolved or if necessary to prevent a foreclosure, seizure, closure or work or supply stoppage caused by the disputing party. SUBORDINATION; NOTES TO EVIDENCE AMOUNTS PAID UNDER SECURED COMPLETION GUARANTEE. All existing and future indebtedness of the Authority to Sun International is, or will be, subordinated to the Guaranteed Obligations of Sun International. Any payments to Sun International by the Authority in violation of the Secured Completion Guarantee are required to be held by Sun International in trust for the Trustee and must either be paid over to the Trustee or applied against the Guaranteed Obligations. Any amounts paid or advanced by Sun International under the Secured Completion Guarantee shall be deemed a loan by Sun International to the Authority and will be evidenced by additional subordinated notes, which shall be promptly issued by the Authority in the principal amount of the amount so paid or advanced. Such -83- additional subordinated notes will bear interest at an annual rate of the prime rate announced from time to time by Chemical Bank plus one percent. The Authority will be obligated to repay, with interest, any payments or advances made by Sun International under the Secured Completion Guarantee (whether or not such amounts are actually evidenced by additional subordinated notes) pursuant to the terms and conditions set forth in the Note Purchase Agreement (as defined herein). As such, any amounts paid or advanced by Sun International to the Authority under the Secured Completion Guarantee will be subordinated to the prior payment in full of the obligations under the Senior Notes in accordance with the terms and conditions of the Note Purchase Agreement for the Subordinated Notes. See "--Note Purchase Agreement." BANKRUPTCY. Pursuant to the Secured Completion Guarantee, Sun International has agreed that, so long as any Guaranteed Obligations are owed to the Trustee, it will not, without the consent of the Trustee, commence, either individually or with others, any bankruptcy, insolvency or reorganization proceeding against the Authority. Sun International's Guaranteed Obligations may not be altered or limited by any proceeding, voluntarily or involuntarily, involving the bankruptcy, reorganization, insolvency, receivership, liquidation or arrangement of the Authority or by any defense which the Authority may have by reason thereof. The Authority, however, may not be subject to the federal bankruptcy laws. See "Risk Factors--Difficulties in Enforcing Obligations." COLLATERAL. SIIL secured Sun International's obligations under the Secured Completion Guarantee with a pledge of 1,500,000 Ordinary Shares of Sun International. Based upon the closing price of Sun International Ordinary Shares on the NYSE on May 1, 1996, such shares had a market value of approximately $64.1 million. No assurance can be given, however, as to the amount of proceeds, if any, that the Trustee would realize upon a foreclosure and sale of such shares in order to satisfy the obligations under the Secured Completion Guarantee. The terms of the pledge agreement provide that the Trustee may foreclose upon the pledged shares only after obtaining a final judgment from a court of competent jurisdiction that Sun International has breached its obligations under the Secured Completion Guarantee. Accordingly, there may be substantial delay in realizing any proceeds from the share pledge. The share pledge will be released upon termination of the Secured Completion Guarantee. Sun International has agreed to provide certain registration rights to the Trustee in order to permit the Trustee to sell the pledged shares. On March 1, 1996, Sun International redesignated its two series of Ordinary Shares, Series A and Series B, as one series of Ordinary Shares. NOTE PURCHASE AGREEMENT GENERAL. Pursuant to a Note Purchase Agreement (the "Note Purchase Agreement"), entered into between the Authority and Sun International, the Authority issued and sold to Sun International $40,000,000 aggregate principal amount of Subordinated Notes at an aggregate purchase price equal to 100% of the principal amount thereof, approximately $38.3 million of which is payable in cash and the balance of which is payable by the exchange of amounts owed by the Authority to TCA. The Subordinated Notes are subordinate in right of payment to the Senior Notes. The Authority may issue additional subordinated notes from time to time in principal amounts equal to advances made by Sun International under the Secured Completion Guarantee. The following summary sets forth the material terms and provisions of the Note Purchase Agreement. INTEREST. Except for Subordinated Notes, if any, issued to evidence indebtedness of the Authority to Sun International under the Secured Completion Guarantee, each Subordinated Note bears interest at the rate of 15% per annum of the principal amount then outstanding from the Issuance Date to the date of payment of such principal amount of such Subordinated Note. Each Subordinated Note issued to evidence indebtedness under the Secured Completion Guarantee will bear interest at the rate per annum then most recently announced by Chemical Bank of New York as its prime rate at New York, New York plus 1%, which rate shall be set and revised at intervals of six months. Installments of interest become due and payable semi-annually in arrears on each May 15 and November 15 to the holders of record at the close of business on the preceding April 30 or October 31. Additionally, installments of accrued and unpaid interest will become due and payable with respect to any principal amount of the Subordinated Notes that matures (whether at stated maturity, upon acceleration, upon -84- maturity of repurchase obligation, upon repurchase or otherwise) upon such maturity of such principal amount of the Subordinated Notes. Interest on the Subordinated Notes is computed on the basis of a 360-day year, consisting of twelve 30-day months. Each installment of interest is calculated to accrue from and include the most recent date to which interest has been paid or provided for (or from and including the Issuance Date if no installment of interest has been paid) to, but not including, the date of payment. Interest in respect of the most recently ended semi-annual period shall be deferred unless (i) $87.5 million in aggregate principal amount of Senior Notes have been repurchased or retired (for purposes of such determination, the aggregate principal amount of Senior Notes offered to be repurchased in any Senior Note repurchase offer shall be deemed to have been repurchased, whether or not such amount was properly tendered pursuant to such repurchase offer) and (ii) the Authority's Fixed Charge Coverage Ratio for the four full fiscal quarters last ended is equal to or greater than 2.5 to 1 and no deferred cash flow Participation Interest on the Senior Notes remains unpaid. Deferred interest shall continue to be deferred unless (and then only to the extent) current interest may be paid in cash and the Authority's Coverage Ratio for the four full fiscal quarters last ended (calculated as if such accrued interest payable were the oldest interest accrued and was added to Interest Expense for such period if not already included therein) is equal to or greater than 4.0 to 1. Notwithstanding the foregoing, all accrued and unpaid interest shall be payable in cash on the interest payment dates and shall not be deferred if the Authority has paid in full all obligations under the Senior Notes and the Indenture and the same shall have been discharged. Notwithstanding anything herein to the contrary, installments of accrued or deferred and unpaid interest shall become due and payable (and shall not be further deferred) with respect to any principal amount of Subordinated Notes that matures (whether at stated maturity, upon acceleration, upon maturity of repurchase obligation or otherwise) upon the maturity of such principal amount of Subordinated Notes. The term "Fixed Charge Coverage Ratio" shall have the same meaning as set forth in the Indenture. The Subordinated Notes are payable both as to principal and interest at the office or agency of the Authority maintained for such purpose within the City and State of New York or, at the option of the Authority, payment of interest may be made by check mailed to the holders of the Subordinated Notes at their respective addresses set forth in the register of holders of Subordinated Notes. Until otherwise designated by the Authority, its office or agency in New York is the office of the Trustee maintained for such purpose. The Subordinated Notes were issued in registered form, without coupons, and in denominations of $1,000 and integral multiples thereof. USE OF PROCEEDS. Under the terms of the Note Purchase Agreement, the Authority is obligated to use the proceeds from the sale of the Subordinated Notes to (i) finance a loan to the Tribe for the acquisition of the real property on which the Mohegan Sun Casino will be built, (ii) for any use permitted under the Indenture, and (iii) to pay fees and expenses in connection with the uses described in clauses (i) and (ii). The Authority deposited the proceeds from the sale of the Subordinated Notes (other than any portion of such net proceeds used immediately to acquire the Site) in the Escrow Account established in connection with the sale of the Senior Notes and will disburse such proceeds only in accordance with the terms of the Disbursement and Escrow Agreement. See "Description of Senior Notes--Disbursement and Escrow Agreement". SUBORDINATION. The Subordinated Notes rank subordinate in right of payment to the prior payment of all obligations related to the Senior Notes and PARI PASSU or senior to all other subordinated indebtedness of the Authority. Payments of interest on the Subordinated Notes may be made only if at the time of such payment, no Default or Event of Default exists and is continuing with respect to the Senior Notes. No payment of principal of or premium, if any, on the Subordinated Notes may be made, and no Subordinated Notes may be repurchased, redeemed or otherwise retired, until all obligations in respect of the Senior Notes under the Indenture have been paid in full, except that (i) payments of principal and premium, if any, and interest on Subordinated Notes tendered in connection with a Change of Control offer may be made if the Authority has fulfilled all obligations in respect of a Change of Control offer with respect to the Senior Notes and no other Default or Event of Default has occurred and is continuing under the Indenture, (ii) payments of principal and premium, if any, and interest -85- on the Subordinated Notes to be redeemed in the circumstances described in the second paragraph under "--Optional Redemption of Subordinated Notes by Authority" may be made if no Default or Event of Default has occurred and is continuing under the Indenture and (iii) payments of principal and premium, if any, and interest on Subordinated Notes tendered in connection with a Remaining Excess Cash Purchase Offer if no Default or Event of Default has occurred and is continuing under the Indenture. See "--Remaining Excess Cash Purchase Offer." Upon any payment or distribution of the assets of the Authority to creditors in a total or partial liquidation or dissolution of the Authority, holders of the Senior Notes shall be entitled to receive payment in full of all obligations in respect of the Senior Notes before the holders of the Subordinated Notes shall receive any payment in respect of the Subordinated Notes. If the payment of the Subordinated Notes is accelerated because of an Event of Default under the Note Purchase Agreement, the Authority and the holders of the Subordinated Notes are required to promptly notify holders of the Notes of such acceleration and the Authority may not pay the Subordinated Notes until five days after such notice is received and, thereafter, may pay the Subordinated Notes only if the Note Purchase Agreement otherwise permits the payment at that time. In the event that any distributions are made to the holders of the Subordinated Notes in violation of the Note Purchase Agreement, the holders of the Subordinated Notes shall be obligated to hold such distributions, in trust, for the benefit of the holders of the Senior Notes and pay over such amounts to the holders of the Senior Notes as their interests may appear. MANDATORY REDEMPTION. The Authority is not be required to make a mandatory redemption or sinking fund payments with respect to the Subordinated Notes. OPTIONAL REDEMPTION OF SUBORDINATED NOTES BY AUTHORITY. Under the Note Purchase Agreement, the Authority may make an optional redemption of the Subordinated Notes; however, such redemption may be made only after the Senior Notes have been paid in full. Subject to the foregoing, the Authority may redeem the Subordinated Notes at a price equal to 100% of the principal amount thereof plus all accrued and unpaid interest on the unpaid principal to the date of redemption. Any redemption of the Subordinated Notes, whether in whole or in part, must be made in accordance with procedures set forth in the Note Purchase Agreement. Notwithstanding the foregoing, in the event that any holder or beneficial owner of the Subordinated Notes is found unsuitable, or refuses or is unable to, within 30 days after being asked to do so by the applicable gaming regulatory authority, become licensed or qualified under any applicable gaming laws requiring such holder or beneficial owner of the Subordinated Notes to be so licensed, qualified or suitable in order for the Authority to maintain any gaming license or franchise, then, the Authority shall have, at its option, the right (i) to require such holder or beneficial owner to dispose of such holder's or beneficial owner's Subordinated Notes or (ii) to call for the redemption of the Subordinated Notes of such holder or beneficial owner at a redemption price equal to the lesser of the outstanding principal balance of such Subordinated Notes or the price at which such holder or beneficial owner paid to acquire such Subordinated Notes (in each case together with accrued and unpaid interest to the date of redemption). Redemption of the Subordinated Notes pursuant to the foregoing circumstances, however, may not be made if any Event of Default has occurred and is continuing under the Indenture. OFFER TO REPURCHASE SUBORDINATED NOTES UPON CHANGE OF CONTROL. Upon any Change of Control and subject to certain priority rights of the holders of the Senior Notes, the Authority is required to purchase all of the outstanding Subordinated Notes at a purchase price equal to 101% of the aggregate principal thereof plus accrued and unpaid interest to the purchase date; provided, however, the Authority is not required to repurchase the Subordinated Notes if (i) an event deemed to be a Change of Control ceases to exist prior to the closing of such offer or (ii) if on or before the 120th day after the Change of Control, which Change of Control arises under either clause (iv) or (v) of the definition thereof, the Manager (as defined herein) is replaced (or the Authority is using its best efforts to effect such a replacement) with a Person with experience and reputation comparable to Sun International. Any offer to repurchase the Subordinated Notes may be made by the Authority only after -86- a repurchase offer has been made to the holders of the Senior Notes. A "Change of Control" as defined in the Note Purchase Agreement has the same meaning as under the Indenture. See "Description of Senior Notes--Certain Definitions." CASH MAINTENANCE ACCOUNT; SECURITY INTEREST. The Authority is obligated to make monthly deposits into the Cash Maintenance Account as provided for under the Indenture. See "Description of Senior Notes--Mandatory Cash Maintenance Account." Under the Note Purchase Agreement, the Authority is required to grant and maintain a perfected first priority security interest in favor of the Trustee for the ratable benefit of the holders of the Senior Notes and a perfected, second priority security interest for the ratable benefit of the holders of the Subordinated Notes in all amounts in, or investments constituting amounts in, the Cash Maintenance Account. The second priority security interest of the holders of the Subordinated Notes, however, does not impair or prevent the Authority from transferring amounts in the Cash Maintenance Account to the holders of the Senior Notes in accordance with the terms of the Indenture, free and clear of such second priority security interest. Upon full repayment of the Senior Notes, the perfected, second priority security interest shall automatically become, and the Authority is required to take all acts to assure, a perfected, first priority security interest in favor of the holders of the Subordinated Notes. Furthermore, if an Event of Default has occurred and is continuing under the Note Purchase Agreement and the Senior Notes have been paid in full, then, the holders of the Subordinated Notes will have the right, among other things, to direct any investments in the Cash Maintenance Account and to apply any cash or investments therein to the payment of principal and interest on the Subordinated Notes. REMAINING EXCESS CASH PURCHASE OFFER. To the extent that the aggregate purchase price of Senior Notes tendered pursuant to any Excess Cash Purchase Offer required to be made pursuant to the Indenture is less than the Excess Cash Purchase Amount with respect thereto, the Authority has agreed to make an offer to the holders of the Subordinated Notes to purchase the maximum principal amount of Subordinated Notes that is an integral multiple of $1,000 that may be purchased with the Remaining Excess Cash Flow (as defined in the Note Purchase Agreement) at an offer price in cash equal to the principal amount of the Subordinated Notes to be purchased plus accrued and unpaid interest. In the event that more Subordinated Notes are tendered than are required to be purchased by the Authority, the Authority will purchase Subordinated Notes pro rata from each tendering holder. Any Remaining Excess Cash Flow not used to repurchase Subordinated Notes in accordance with the foregoing may be used by the Authority for general purposes. LIMITATIONS ON INCURRENCE OF INDEBTEDNESS. Under the Note Purchase Agreement, the Authority has agreed that the total outstanding principal balance of indebtedness of the Authority shall not exceed an aggregate of $270 million, plus Subordinated Notes issued thereunder and issued to evidence indebtedness incurred pursuant to the Secured Completion Guarantee. The total indebtedness of the Authority permitted to be outstanding at any one time shall be reduced from time to time. In addition, the Authority has agreed that the principal amount of any indebtedness incurred by the Authority to refinance other outstanding indebtedness will not exceed the principal amount of such refinanced indebtedness and, in the event refinancing indebtedness is issued to refinance the Senior Notes or any portion thereof, such refinancing indebtedness shall have a Weighted Average Life to Maturity not less than that of the Senior Notes. See "Description of Senior Notes--Limitations on Incurrence of Indebtedness." CERTAIN OTHER COVENANTS OF THE AUTHORITY. Under the Note Purchase Agreement, the Authority has made certain other covenants with respect to the repayment of the Subordinated Notes and the conduct of its business during the period which such Subordinated Notes remain outstanding that are substantially similar to the covenants made by the Authority under the Indenture. See "Description of Senior Notes--Certain Covenants." EVENTS OF DEFAULT. Under the Note Purchase Agreement, Events of Default include the following: -87- (i) a default by the Authority for 30 days in payment of any interest due on the Subordinated Notes (such due date shall take into account any interest payments entitled to be deferred by the Authority under the Note Purchase Agreement); (ii) default by the Authority in the payment of the principal of or premium, if any, on any Subordinated Notes when due; (iii) failure by the Authority to observe or perform any other covenant, representation, warranty or agreement under the Note Purchase Agreement or the Subordinated Notes that continues for 90 days after written notice to holders of at least 25% of the principal amount of the Subordinated Notes; and (iv) certain events of bankruptcy and insolvency of the Authority. If an Event of Default (other than certain events with respect to bankruptcy, insolvency and reorganization) shall occur and be continuing, then the holders of 25% of the aggregate principal amount of the Subordinated Notes outstanding may declare by written notice to the Authority the principal amount of the Subordinated Notes to be due and payable immediately; provided, however, that no such declaration may be made unless all obligations under the Senior Notes and the Indenture have been paid in full and discharged. If an Event of Default with respect to certain events of bankruptcy or insolvency occurs and all obligations under the Senior Notes and the Indenture have been paid in full and discharged, then all outstanding Subordinated Notes will become due and payable without any act on the part of any holder of Subordinated Notes. LEGAL DEFEASANCE AND COVENANT DEFEASANCE. The Note Purchase Agreement contains legal defeasance and covenant defeasance provisions that are substantially similar to those under the Indenture. See "Description of Senior Notes--Legal Defeasance and Covenant Defeasance." EQUIPMENT FINANCING The Authority has entered into an agreement with Sodek Gaming, Inc. which provides for up to $40 million of financing for the acquisition by the Authority of certain equipment, including gaming equipment. The agreement provides that amounts borrowed for the acquisition of equipment will bear interest, commencing o the date of delivery of the equipment, at a rate of prime plus two-percent. Amounts borrowed under the financing will be payable over 48 months, commencing 30 days after the Mohegan Sun Casino commences operations. The Construction Budget currently allocates $40 million, the full amount available under the agreement, for the acquisition of equipment. WORKING CAPITAL FINANCING The Authority has signed a commitment letter with a third party lender for $12.5 million of Working Capital Financing. In the event that the Authority requires additional working capital, the Indenture permits up to $25 million in Working Capital Financing, which may be secured by the Note Collateral on a PARI PASSU basis with the Senior Notes. Pursuant to the Secured Completion Guarantee, Sun International is required to arrange or provide financing in the event the Authority is unable to arrange or provide the Working Capital Financing from a third party lender. -88- DESCRIPTION OF SENIOR NOTES GENERAL The Series A Senior Notes were, and the Series B Senior Notes will be, issued pursuant to the Indenture between the Authority, First Fidelity Bank, n/k/a First Union Bank of Connecticut, as trustee (the "Trustee"), and the Tribe for certain limited purposes stated therein. The terms of the Senior Notes include those stated in the Indenture and the Collateral Documents and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), as in effect on the date of the Indenture. The Senior Notes are subject to all such terms, and Holders of the Senior Notes are referred to the Indenture, the Collateral Documents and the Trust Indenture Act for a statement thereof. The following summary of certain provisions of the Indenture and the Collateral Documents does not purport to be complete and is qualified in its entirety by reference to the Indenture and the Collateral Documents, including the definitions therein of certain terms used below. A copy of the form of Indenture and of each of the Collateral Documents is available from the Authority as described under "--Additional Information." The definitions of certain terms used in the following summary are set forth below under "--Certain Definitions." Capitalized terms that are used but not otherwise defined in this section of the Prospectus have the meanings assigned them in the Indenture. RANKING AND SECURITY The Series A Senior Notes are, and the Series B Senior Notes will be, ranked senior in right of payment to all Subordinated Indebtedness of the Authority and will rank PARI PASSU in right of payment with the Working Capital Financing and the Equipment Financing. The Series A Senior Notes are, and the Series B Senior Notes will be, secured by a first lien on the Note Collateral (which also will secure the Working Capital Financing) owned by the Authority whether such Note Collateral is now owned or hereafter acquired and such first liens on Note Collateral will be subject to Permitted Liens. The Note Collateral includes, without limitation, all of the assets, with certain exceptions, comprising the Resort including the leasehold interest of the Authority in the Resort (other than certain assets to the extent such assets are permitted to be financed by Indebtedness permitted to be incurred pursuant to the covenant entitled "Limitations on Incurrence of Indebtedness" and such Indebtedness is permitted to be secured pursuant to the covenant entitled "Liens" pursuant to clauses (i), (v) and (viii) of the definition of "Permitted Liens"). Real property pledged as security may be subject to known and unknown environmental risks. Under the federal Comprehensive Environmental Response Compensation and Liability Act ("CERCLA"), as amended, for example, a secured lender may be held liable, in certain limited circumstances, for the costs of remediating a release of or preventing a threatened release of hazardous substances at a mortgaged property. Under CERCLA, a person "who, without participating in the management of a facility, holds indicia of ownership primarily to protect his security interest" is not a property owner, and thus not a responsible person under CERCLA. Lenders have seldom been held liable under CERCLA. The lenders who have been found liable have generally been found to have been sufficiently involved in the mortgagor's operations so that they have "participated in the management of the borrower." CERCLA does not specify the level of actual participation in management. There is currently no controlling authority on this matter. The Trustee may appoint one or more collateral agents, who may be delegated any one or more of the duties or rights of the Trustee under the Collateral Documents or which are specified in any Collateral Documents. -89- PRINCIPAL, MATURITY AND INTEREST The Series A Senior Notes are, and the Series B Senior Notes will be, secured obligations of the Authority, limited in aggregate principal amount to $175 million and will mature on November 15, 2002. Each Senior Note bears interest at the rate of 13 1/2% per annum of the principal amount then outstanding (the "Fixed Interest") from the Issuance Date to the date of payment of such principal amount of such Senior Note. Installments of Fixed Interest become due and payable semi-annually in arrears on each November 15 and May 15 of each year to the Holders of record at the close of business on the preceding November 1 or May 1. Additionally, installments of accrued and unpaid Fixed Interest become due and payable with respect to any principal amount of the Senior Notes that matures (whether at stated maturity, upon acceleration, upon maturity of repurchase obligation or otherwise) upon such maturity of such principal amount of the Senior Notes. Fixed Interest on the Series A Senior Notes is, and the Series B Senior Notes will be, computed on the basis of a 360-day year, consisting of twelve 30-day months. Each installment of Fixed Interest is or will be calculated to accrue from and including the most recent date to which Fixed Interest has been paid or provided for (or from and include the Issuance Date if no installment of Fixed Interest has been paid) to, but not including, the date of payment. In addition, the Senior Notes bear Cash Flow Participation Interest, calculated as described below, from the Commencement Date to the date of payment of the Senior Notes. Installments of accrued or deferred Cash Flow Participation Interest accrued through the Accrual Period (as defined herein) last ended become due and payable semi-annually on each November 15 and May 15 after the Commencement Date to the Holders of record at the close of business on the preceding November 1 or May 1; PROVIDED THAT no Cash Flow Participation Interest is payable with respect to any period prior to the earlier of the first day the Resort commences operations and October 31, 1996. Additionally, all installments of accrued or deferred Cash Flow Participation Interest become due and payable (and may not be further deferred) with respect to any principal amount of the Senior Notes that matures (whether at stated maturity, upon acceleration, maturity of repurchase obligation or otherwise) upon such maturity of such principal amount of the Senior Notes. The Authority, at its option, may defer payment of all or a portion of any installment of Cash Flow Participation Interest then otherwise due if, and only to the extent that, (a) the payment of such portion of Cash Flow Participation Interest will cause the Authority's Fixed Charge Coverage Ratio for the four consecutive fiscal quarters last completed prior to such interest payment date to be less than 2.0:1 on a pro forma basis after giving effect to the assumed payment of such Cash Flow Participation Interest but before giving effect to any interest on the Subordinated Notes which is then not payable in cash and (b) the principal of the Senior Notes corresponding to such Cash Flow Participation Interest has not then matured and become due and payable (at stated maturity, upon acceleration, upon maturity of repurchase obligation or otherwise). Cash Flow Participation Interest that is deferred shall become due and payable on the earlier of (i) the next succeeding interest payment date on which such Cash Flow Participation Interest is not permitted to be deferred, and (ii) upon the maturity of the corresponding principal of the Senior Notes (whether at stated maturity, upon acceleration, upon maturity of repurchase obligation or otherwise). No interest will accrue on any Cash Flow Participation Interest deferred and which has not yet become due and payable. To the extent permitted by law, interest will accrue on overdue Fixed Interest or Cash Flow Participation Interest at the same rate as the Fixed Interest plus one percent (1%) per annum. Each installment of Cash Flow Participation Interest is calculated to accrue (an "Accrual Period") from, but not including, the most recent date to which Cash Flow Participation Interest has been paid or provided for or through which Cash Flow Participation Interest had been calculated and deferred (or from and including the Commencement Date if no installment of Cash Flow Participation Interest has been paid, provided for or deferred) to, and including, either (a) the last day of the next Semi-annual Period if the corresponding principal of the Senior Notes has not become due and payable or (b) the date of payment if the corresponding principal of the -90- Senior Notes has become due and payable (whether at stated maturity, upon acceleration, upon maturity of repurchase obligation or otherwise). With respect to each Accrual Period, Cash Flow Participation Interest accrues daily on the principal of each Senior Note outstanding during such period as follows (except with respect to the Initial Period): (i) for each day during each month that ends during such Accrual Period and which month ends at least 25 days prior to the date of payment, an amount equal to 1/30 of the Monthly Cash Flow Participation Interest on the Senior Note for such month until all of such Monthly Cash Flow Participation Interest on the Senior Note is accrued (and all of such month's Monthly Cash Flow Participation Interest on the Senior Note shall be accrued by the last day of such month) and (ii) for any day in any remaining period, 1/30 of the prior month's Monthly Cash Flow Participation Interest on the Senior Note; provided, however, that additional Cash Flow Participation Interest ceases accruing on any outstanding principal of the Senior Note until the next succeeding September 30, if on any day, the Cash Flow Participation Interest on such principal amount of the Senior Note accrued since the immediately preceding September 30 (excluding any deferred Cash Flow Participation Interest accrued prior to such September 30) exceeds the product of $250 million times such principal amount of the Senior Note divided by $175,000,000. With respect to any principal amount of the Senior Notes during the Initial Period, the Cash Flow Participation Interest accrues daily in the amount of 1/180 of the Cash Flow Participation Interest for such principal in the next succeeding Semi-annual Period. Any reference in this Prospectus to "accrued and unpaid interest" on the Senior Notes includes the amount of Fixed Interest, unpaid Cash Flow Participation Interest and Liquidated Damages, if any, due and payable thereon. "CASH FLOW PARTICIPATION INTEREST" means, as of any payment date, Cash Flow Participation Interest on the Senior Notes accrued through the Accrual Period last ended (including any Accrual Period that ends on such payment date) and any Cash Flow Participation Interest previously accrued and the payment of which has been permitted to be deferred. "COMMENCEMENT DATE" means the earlier of (i) October 31, 1996 and (ii) the first day that the Resort becomes Operating. "FIXED CHARGE COVERAGE RATIO" means with respect to any Person for any period, the ratio of the Cash Flow of such Person for such period to the Fixed Charges of such Person for such period. "INITIAL PERIOD" means the period, if any, beginning on the Commencement Date and ending on the day prior to the first day that the Resort becomes Operating. "MONTHLY CASH FLOW PARTICIPATION INTEREST" means , with respect to any month and any principal amount of the Senior Notes, the product of 5.0% of the Authority's Cash Flow for such month times a fraction, the numerator of which is the principal amount outstanding on the Senior Notes and the denominator of which is $175,000,000. "SEMI-ANNUAL PERIOD" means each period that begins on April 1 and ends on the next succeeding September 30 or each period that begins on October 1 and ends on the next succeeding March 31. The Senior Notes are payable as to principal, premium, if any, interest (including Cash Flow Participation Interest, if any), and Liquidated Damages at the office or agency of the Authority maintained for such purpose within the City and State of New York or, at the option of the Authority, payment of interest (including Cash Flow Participation Interest, if any), may be made by check mailed to the Holders of the Senior Notes at their respective addresses set forth in the register of Holders of Senior Notes. Until otherwise designated by the Authority, its office or agency in New York is the office of the Trustee maintained for such purpose. The Series A Senior Notes were, and the Series B Senior Notes will be, issued in registered form, without coupons, and in denominations of $1,000 and integral multiples thereof -91- NO SINKING FUND There will be no mandatory sinking fund payments for the Senior Notes. MANDATORY REDEMPTION The Authority is not required to make mandatory redemptions prior to maturity with respect to the Senior Notes. OPTIONAL REDEMPTION Except as described below, the Senior Notes are not redeemable at the Authority's option prior to November 15, 1999. From and after November 15, 1999, the Authority shall have the option to redeem the Senior Notes, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest (including Cash Flow Participation Interest and Liquidated Damages, if any), thereon to the applicable redemption date, if redeemed during the twelve (12)-month period beginning on November 15 of the years indicated below: YEAR % ---- ----- 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . 110.0 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . 105.0 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0 Notwithstanding any other provision of the Indenture, if any Gaming Regulatory Authority requires that a Holder or beneficial owner of the Senior Notes must be licensed, qualified or found suitable under any applicable gaming laws in order to maintain any gaming license or franchise of the Authority under any applicable gaming laws, and the Holder or beneficial owner fails to apply for a license, qualification or finding of suitability within 30 days after being requested to do so by such Gaming Regulatory Authority (or such lesser period that may be required by such Gaming Regulatory Authority) or if such Holder or beneficial owner is not so licensed, qualified or found suitable, the Authority shall have the right, at its option: (1) to require such Holder or beneficial owner to dispose of such Holder's or beneficial owner's Senior Notes within 30 days of receipt of such finding by the applicable Gaming Regulatory Authority (or such earlier date as may be required by the applicable Gaming Regulatory Authority); or (2) to call for redemption of the Senior Notes of such Holder or beneficial owner at a redemption price equal to the lesser of the principal amount thereof or the price at which such Holder or beneficial owner acquired the Senior Notes, together with, in either case, accrued and unpaid interest (including Cash Flow Participation Interest and Liquidated Damages, if any), to the earlier of the date of redemption or, the date of the finding of unsuitability by such Gaming Regulatory Authority, which may be less than 30 days following the notice of redemption if so ordered by such Gaming Regulatory Authority. In connection with any such redemption, and except as may be required by a Gaming Regulatory Authority, the Authority shall comply with the procedures contained in the Indenture for redemptions of the Senior Notes. Under the Indenture, the Authority is not required to pay or reimburse any Holder of the Senior Notes or beneficial owner of Senior Notes who is required to apply for any such license, qualification or finding of suitability for the costs of the licensure or investigation for such qualification or finding of suitability. Such expenses will, therefore, be the obligation of such Holder or beneficial owner. See "Government Regulation." -92- REPURCHASE AT THE OPTION OF HOLDERS CHANGE OF CONTROL Upon the occurrence of a Change of Control, the Authority will make an offer to purchase all or any part (equal to $1,000 or an integral multiple thereof) of the Senior Notes pursuant to the offer described below (the "Change of Control Offer") at a price in cash (the "Change of Control Payment") equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest (including Cash Flow Participation Interest) and Liquidated Damages, if any, to the date of purchase. The Authority shall not be required to make such an offer to purchase (i) if the Change of Control event ceases prior to the closing of such offer or (ii) if on or before the 120th day after the Change of Control, which Change of Control arises under either clause (iv) or (v) of the definition thereof, the Manager is replaced (or the Authority is using its best efforts to effect such a replacement) with a Person with experience and reputation comparable to Sun International. To effect any Change of Control Offer, the Authority will mail a notice to each Holder with the following information: (1) a Change of Control Offer is being made pursuant to Section 4.16 of the Indenture, the length of time the offer will remain open and that all Senior Notes properly tendered pursuant to such Change of Control Offer will be accepted for payment; (2) the Offer Amount, the purchase price and the purchase date, which will be no earlier than 30 days nor later than 60 days from the date such notice is mailed, except as may be otherwise required by applicable law (the "Change of Control Payment Date"); (3) any Senior Note not properly tendered or accepted for payment will remain outstanding and continue to accrue interest (including Cash Flow Participation Interest, if any); (4) unless the Authority defaults in the payment of the Change of Control Payment, all Senior Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue interest after the Change of Control Payment Date; (5) Holders electing to have any Senior Notes purchased pursuant to a Change of Control Offer will be required to surrender the Senior Notes, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Senior Notes completed, to the Authority, a depositary, if appointed by the Authority, or a Paying Agent at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date; (6) Holders will be entitled to withdraw their tendered Senior Notes and their election to require the Authority to purchase the Senior Notes, PROVIDED, HOWEVER, that the Authority, the depositary or the Paying Agent receives, not later than the close of business on the last day of the Offer Period, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Senior Notes tendered for purchase, and a statement that such Holder is withdrawing his tendered Senior Notes and his election to have such Senior Notes purchased; and (7) that Holders whose Senior Notes are being purchased only in part will be issued new Senior Notes equal in principal amount to the unpurchased portion of the Senior Notes surrendered, which unpurchased portion must be equal to $1,000 in principal amount or an integral multiple thereof. The Authority will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws or regulations are applicable in connection with the repurchase of the Senior Notes pursuant to a Repurchase Offer. -93- On the Change of Control Payment Date, the Authority will, to the extent permitted by law: (1) accept for payment all Senior Notes or portions thereof properly tendered pursuant to the Change of Control Offer; (2) deposit with the paying agent an amount equal to the aggregate Change of Control Payment in respect of all Senior Notes or portions thereof so tendered; and (3) deliver, or cause to be delivered, to the Trustee for cancellation the Senior Notes so accepted together with an Officers' Certificate stating that such Notes or portions thereof have been tendered to and purchased by the Authority. The paying agent will promptly mail to each Holder of Senior Notes the Change of Control Payment for such Senior Notes, and the Trustee will promptly authenticate and mail to each holder a new Senior Note equal in principal amount to any unpurchased portion of the Senior Notes surrendered, if any, PROVIDED, HOWEVER, that each such new Senior Note will be in a principal amount of $1,000 or an integral multiple thereof. The Authority will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. The source of funds for any repurchase of Senior Notes upon a Change of Control will be the Authority's cash or cash generated from operations or other sources, including borrowings, sales of assets or Capital Stock. However, there can be no assurance that sufficient funds will be available at the time of any Change of Control to make any required repurchases. Any failure by the Authority to repurchase Senior Notes tendered pursuant to a Change of Control Offer will be deemed an Event of Default. ASSET SALES The Indenture provides that the Authority will not cause, make or suffer to exist an Asset Sale, unless: (1) the Authority receives consideration at the time of such Asset Sale at least equal to the fair market value of the assets sold or otherwise disposed of; and (2) at least 85% of such consideration is in the form of cash; PROVIDED, HOWEVER, that the Authority will not be permitted to make any Asset Sale of Key Project Assets. Within 180 days after the Authority's receipt of the Net Proceeds of any Asset Sale, the Authority may apply the Net Proceeds from such Asset Sale to either: (1) an investment in the Principal Business or in tangible long-term assets used or useful in the Principal Business; or (2) to permanently reduce Indebtedness that is not Subordinated Indebtedness. Pending the final application of any such Net Proceeds, such Net Proceeds shall be pledged to the Trustee as security for the Senior Notes. Any Net Proceeds from the Asset Sale that are not invested as provided in the first sentence of this paragraph will be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $5.0 million, the Authority shall make an offer to all Holders of Senior Notes (an "Asset Sale Offer") to purchase the maximum principal amount of Notes, that is an integral multiple of $1,000, that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof, plus accrued and unpaid interest (including Cash Flow Participation Interest) and Liquidated Damages, if any, to the date fixed for the closing of such offer, in accordance with the procedures set forth in -94- the Indenture. The Authority will commence an Asset Sale Offer with respect to Excess Proceeds within 10 Business Days after the date that Excess Proceeds exceeds $5.0 million by mailing the notice required pursuant to the terms of the Indenture. To the extent that the aggregate amount of Senior Notes properly tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, such remaining Excess Proceeds shall be released to the Authority, subject to the terms of the Cash Collateral Accounts Pledge and Security Agreement, and the Authority may use any such remaining Excess Proceeds for any lawful purpose. If the aggregate principal amount of Senior Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Senior Notes to be purchased in the manner described under the caption "Selection and Notice" below. Upon completion of any such Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero. The Indenture will also require the Authority to grant to the Trustee, on behalf of the Holders of the Senior Notes, a first priority lien on any properties or assets acquired with the Net Proceeds of any such Asset Sale on the terms set forth in the Indenture and the Collateral Documents. EVENT OF LOSS The Indenture provides that within 360 days after any Event of Loss with respect to Note Collateral with a fair market value (or replacement cost, if greater) in excess of $500,000, the Authority may apply the Net Loss Proceeds from such Event of Loss to the rebuilding, repair, replacement or construction of improvements to the Resort, with no concurrent obligation to make any purchase of any Senior Notes, provided that: (1) the Authority delivers to the Trustee within 45 days of such Event of Loss a written opinion from a reputable architect that the Resort with at least the Minimum Facilities can be rebuilt, repaired, replaced, or constructed and Operating within 360 days of such Event of Loss and that, with respect to any Event of Loss that occurs on or prior to September 30, 1997, such rebuilding, repair, replacement or construction of improvements can be rebuilt, repaired, replaced or constructed and Operating on or prior to September 30, 1997; (2) an Officer's Certificate certifying that the Authority has available from Net Loss Proceeds or cash or sufficient funds on hand to complete such rebuilding, repair, replacement or construction; and (3) the Net Loss Proceeds is less than $50 million. Any Net Loss Proceeds from an Event of Loss that are not reinvested or are not permitted to be reinvested as provided above will be deemed "Excess Loss Proceeds." When the aggregate amount of "Excess Loss Proceeds" exceeds $50.0 million, the Authority shall make an offer to all Holders of Senior Notes (an "Event of Loss Offer") to purchase the maximum principal amount of Senior Notes, that is an integral multiple of $1,000, that may be purchased out of the Excess Loss Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof, plus accrued and unpaid interest (including Cash Flow Participation Interest and Liquidated Damages), if any, to the date fixed for the closing of such offer, in accordance with the procedures set forth in the Indenture. To the extent that the aggregate amount of Senior Notes tendered pursuant to an Event of Loss Offer is less than the Excess Loss Proceeds, such remaining Excess Loss Proceeds shall be released to the Authority, subject to the terms of the Cash Collateral Accounts Pledge and Security Agreement, and the Authority may use any such remaining Excess Loss Proceeds so released for any lawful purpose. If the aggregate principal amount of Senior Notes surrendered by Holders thereof exceeds the amount of Excess Loss Proceeds, the Trustee shall select the Senior Notes to be purchased in the manner described under the caption "Selection and Notice" below. Upon completion of any such Event of Loss Offer, the amount of Excess Loss Proceeds shall be reset at zero. Pending any permitted rebuilding, repair or construction or the completion of any Excess Loss Offer, the Authority shall pledge to the Trustee as additional Note Collateral any Net Loss Proceeds or other cash on hand required for such permitted rebuilding, repair or construction pursuant to the terms of the Leasehold Mortgage. Such pledged funds will be released to the Authority to pay for such permitted rebuilding, repair or construction or such Event of Loss Offer pursuant to the terms of the Leasehold Mortgage. The Indenture also requires the Authority to grant to the Trustee, on behalf of the Holders of the Senior Notes, a first priority lien -95- on any properties or assets rebuilt, repaired or constructed with such Net Loss Proceeds on the terms set forth in the Indenture and the Collateral Documents. The Indenture also provides that with respect to any Event of Loss pursuant to clause (D) of the definition of "Event of Loss" that has a fair market value (or replacement cost, if greater) in excess of $2.0 million, the Authority will be required to receive consideration at least: (1) equal to the fair market value (as determined by an Independent Financial Advisor) of the assets subject to an Event of Loss; and (2) 85% of which is in the form of cash or Cash Equivalents; PROVIDED, HOWEVER, that the amount of: (a) any liabilities (as shown on the Authority's most recent balance sheet or in the notes thereto) of the Authority (other than liabilities that are by their terms expressly subordinated to the Senior Notes), that are assumed by the transferee of any such assets and (b) any notes or other obligations received by the Authority from such transferee that are converted by the Authority into cash (to the extent of the cash received) within 10 Business Days following the closing of such sale of the assets subject to such Event of Loss, shall be deemed to be cash only for purposes of satisfying this item 2 and for no other purpose. The Indenture also provides that with respect to any Event of Loss with respect to Note Collateral with a fair market value (or replacement cost, if greater) of $500,000 or less, the Net Loss Proceeds therefrom shall be released to the Authority. EXCESS CASH PURCHASE OFFER The Indenture provides that within 120 days after each fiscal year end of the Authority, beginning with the fiscal year that first ends on September 30, 1997, the Authority shall make an offer to all Holders of Senior Notes (the "Excess Cash Purchase Offer") to purchase the maximum principal amount of Senior Notes that is an integral multiple of $1,000 at an offer price equal to the percentage of such principal amount set forth below, plus accrued and unpaid interest to the date of payment (the "Excess Cash Offer Price") that may be purchased with the sum of (i) 50% of the Excess Cash Flow in respect of the fiscal year then ended (or if the amount of Excess Cash Flow for such period is less than $2.0 million and is greater than zero, then the Excess Cash Flow shall be deemed zero, or if the amount of Excess Cash Flow for such period is less than zero, the amount of such negative amount), (ii) the amount of Deferred Subordinated Interest for such fiscal year and (iii) accrued and unpaid interest (including Cash Flow Participation Interest), if any, to the date fixed for the closing of such Excess Cash Purchase Offer on such principal (collectively the amounts under clauses (i) and (ii), the "Excess Cash Purchase Amount"). YEAR % ---- ----- 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . 113.5 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . 112.0 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . 110.0 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . 105.0 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0 The Excess Cash Purchase Offer is required to remain open for 20 Business Days following its commencement and no longer, except to the extent that a longer period is required by applicable law. Upon the expiration of such period, the Authority will apply the Excess Cash Purchase Amount to the purchase of all Senior -96- Notes tendered at the Excess Cash Offer Price. If less than all the Senior Notes tendering in such Excess Cash Purchase Offer are required to be purchased by the Authority, the Authority will purchase Senior Notes pro rata from each tendering Holder in accordance with the principal amount of indebtedness properly tendered. To the extent that the aggregate principal amount of Senior Notes properly tendered pursuant to any Excess Cash Purchase Offer is less than the Excess Cash Purchase Amount with respect thereto, the Authority is required to make an offer to purchase Subordinated Notes from the holders thereof. See "Subordinated Note Purchase Agreement--Remaining Excess Cash Purchase Offer". SELECTION AND NOTICE If less than all of the Senior Notes are to be purchased in an Asset Sale Offer, Event of Loss Offer or Excess Cash Purchase Offer or redeemed at any time, selection of Senior Notes for purchase or redemption will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Senior Notes are listed, or, if the Senior Notes are not so listed, on a PRO RATA basis, by lot or by such other method as the Trustee considers fair and appropriate (and in such manner as complies with applicable legal requirements), PROVIDED, that no Senior Notes of $1,000 or less shall be purchased or redeemed in part. The Authority shall mail, by first class mail, postage prepaid, at least 30 but not more than 60 days before the purchase or redemption date, a notice of purchase or redemption to each Holder of Senior Notes to be purchased or redeemed at such Holder's registered address. If any Senior Note is to be purchased or redeemed in part only, any notice of purchase or redemption that relates to such Senior Note shall state the portion of the principal amount thereof that has been or is to be purchased or redeemed. A new Senior Note in principal amount equal to the unpurchased or unredeemed portion of any Senior Note purchased or redeemed in part will be issued in the name of the Holder thereof upon cancellation of the original Senior Note. On and after the purchase or redemption date unless the Authority defaults in payment of the purchase or redemption price, interest shall cease to accrue on Senior Notes or portions thereof purchased or called for redemption. CERTAIN COVENANTS USE OF PROCEEDS The Indenture provides that the Authority use the net proceeds from the sale of the Series A Senior Notes and the net proceeds from the sale of the Subordinated Notes (to the extent provided in the Indenture), only for Permitted Proceed Uses. The Authority caused the net proceeds from the sale of the Series A Senior Notes and the net proceeds from the sale of the Subordinated Notes to be deposited into the Escrow Account and such net proceeds will be disbursed only in accordance with the Disbursement and Escrow Agreement. See "Material Agreements--Disbursement and Escrow Agreement." CONSTRUCTION The Indenture provides that the Authority cause construction of the Resort, including the furnishing, fixturing and equipping thereof, to be prosecuted with diligence and continuity in a good and worker-like manner substantially in accordance with the Plans and within the Construction Budget. GAMING LICENSES The Indenture provides that the Authority use its best efforts to obtain and retain in full force and effect at all times all Gaming Licenses necessary for the operation of the Resort, PROVIDED, THAT, if in the course of the exercise of its governmental or regulatory functions the Authority is required to suspend or revoke any consent, -97- permit or license or close or suspend any operation of any part of the Resort as a result of any noncompliance with law, the Authority use its best efforts to promptly and diligently correct such noncompliance or replace any personnel causing such noncompliance so that the Resort will be opened and fully Operating. The Authority shall file with the Trustee and provide Holders of Senior Notes, promptly after receipt by the Authority, any Notice of Violation, Order of Temporary Closure, or Assessment of Civil Fines, from the NIGC pursuant to 25 C.F.R. Part 573 or 575 (or any successor provision) and any Notice of Non- Compliance issued by, or cause of action commenced by, the State of Connecticut under Section 13 of the Compact (or any successor provision). RESTRICTED PAYMENTS The Indenture provides that the Authority shall not directly or indirectly: (i) purchase, redeem, defease, or otherwise acquire or retire for value any Subordinated Indebtedness of the Authority or make any interest payment on the Subordinated Notes; (ii) make any payment or distribution to the Tribe (or any other agency, instrumentality or political subunit thereof) or make any general distribution to the members of the Tribe; (iii) make any Management Fee payment or pay any other management or similar fee to the Manager or its affiliates; (iv) make any payment in respect of repayment or reimbursement of any obligations under the Secured Completion Guarantee; or (v) make any Restricted Investment (all such payments and other actions set forth in clauses (i) through (v) above being collectively referred to as "Restricted Payments"), unless, such Restricted Payment is: (a) a monthly payment of the Minimum Priority Payment to the Tribe in an amount not to exceed $50,000 per month pursuant to the terms of the Gaming Facility Management Agreement in effect on the Issuance Date; (b) a monthly payment of a Management Fee to TCA in respect of the Net Revenues of the prior month pursuant to the terms of the Management Agreement in effect on the Issuance Date, which fee may not be greater than that provided by Section 6.4 of such Management Agreement and any management fee in respect of any commercial activity not covered by the Management Agreement (provided that all such fees shall be after paying all Operating Expenses, the Minimum Priority Payment, any required deposit in the Cash Maintenance Account and the Interest and Excess Cash Flow Account and replacement reserve deposits); (c) a monthly payment to the Tribe in respect of the Net Revenues for the prior month, which payment shall not exceed the amount payable to the Tribe pursuant to Section 6.4 of the Management Agreement in effect on the Issuance Date and any Net Revenues from commercial activities not covered under the Management Agreement (provided that all such payments shall be after (i) payments of amounts required by the Management Agreement to be paid prior to payments to the Tribe (other than the Minimum Priority Payment), and (ii) without limiting the generality of clause (i), payments of Operating Expenses, the Minimum Priority Payment, required deposits in the Cash Maintenance Account, the Interest and Excess Cash Flow Account, and Replacement Reserve Account, Management Fees and required payments on the Subordinated Notes permitted by the Indenture; -98- (d) payment of interest on the Subordinated Notes in accordance with the terms of the Subordinated Notes as in effect on the issuance date of the Indenture; (e) redemption of the Subordinated Notes pursuant to the requirements of any gaming law as provided for in the Note Purchase Agreement in effect on the Issuance Date; (f) an annual purchase, redemption, defeasance or retirement of any Subordinated Indebtedness to be paid no earlier than the day after any required payment to the Holders of the Senior Notes in respect of any Excess Cash Purchase Offer has been made, in an amount equal to the Excess Cash Purchase Amount offered to the Holders of the Senior Notes under the covenant entitled "Excess Cash Purchase Offer" in respect of such year and not accepted by such Holders at a price not to exceed 100% of the principal amount thereof and accrued and unpaid interest; (g) an annual payment to the Tribe to be paid no earlier than the day after any required payment has been made to the Holders of the Senior Notes in respect of any Excess Cash Flow Offer (or, if no such offer is required to be made in respect of any year, no earlier than May 1 of the next succeeding year), in an amount not to exceed the amount of the Excess Cash Purchase Amount for the prior year, PROVIDED such amount was (i) first offered to the Holders of the Senior Notes under the covenant entitled "Excess Cash Purchase Offer," and not accepted by the Holders of the Senior Notes and, to the extent not accepted by the Holders of the Senior Notes, was offered to the holders of the Subordinated Notes under clause (f) of this covenant and not accepted by them, or (ii) not required to be offered to the Holders of the Senior Notes under the covenant entitled "Excess Cash Purchase Offer"; or (h) Restricted Investments in Resort Support Entities after the Resort becomes Operating, not to exceed $2.0 million in the aggregate outstanding at any one time; provided that such amounts correspondingly reduce the distributions under foregoing clauses (a), (b) or (c); PROVIDED, that at the time of, and after giving effect to, any Restricted Payment permitted under clauses (b), (c), (g) or (h), no Payment Default shall have occurred and be continuing or would occur as a consequence thereof or any Blockage Period be in effect for any Payment Blockage Notice; and PROVIDED, FURTHER that at the time of and after giving effect to, any Restricted Payment permitted under clause (d), (e) or (f), no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof. For purposes of determining the amount of Restricted Investments outstanding at any time, all Restricted Investments shall be valued at their fair market value at the time made (in each case as determined in good faith by the Authority's Management Board), and no adjustments shall be made for subsequent changes in fair market value. LIMITATIONS ON INCURRENCE OF INDEBTEDNESS The Indenture provides that the Authority shall not, directly or indirectly, create, incur, issue, assume, guaranty or otherwise become directly or indirectly liable with respect to (collectively, "incur" and correlatively, an "incurrence" of) any Indebtedness (including Acquired Indebtedness); PROVIDED, HOWEVER, that the Authority may incur Indebtedness if: (i) the Fixed Charge Coverage Ratio for the Authority's most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date of such incurrence would have been at least 2.50 to 1 if the date on which such Indebtedness is incurred is on or prior to November 15, 1997, 2.75 to 1 if such date is after November 15, 1997 and on or prior to November 15, 1999 and 3.00 to 1 thereafter, in each case determined on a pro forma basis (including a pro forma application of the net proceeds -99- therefrom), as if the additional Indebtedness had been incurred and application of proceeds had occurred at the beginning of such four-quarter period; (ii) such Indebtedness is expressly subordinated in right of payment to the Senior Notes; and (iii) such Indebtedness does not have a Weighted Average Life to Maturity less than the Weighted Average Life to Maturity of the Senior Notes. The foregoing limitations shall not apply to: (a) the incurrence by the Authority of Indebtedness and letters of credit for working capital purposes (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Authority under the related reimbursement or other similar agreement) in an aggregate principal amount not to exceed at any one time $25.0 million less any amount that is a permanent reduction in principal for purposes of calculating Excess Cash Flow which may be secured by a pari passu lien on the Note Collateral; (b) the incurrence by the Authority of Indebtedness represented by the Senior Notes and the Subordinated Notes or the incurrence of Subordinated Indebtedness to evidence advances under the Secured Completion Guarantee pursuant to the terms thereof; (c) the incurrence by the Authority of Indebtedness represented by Capital Lease Obligations or purchase money obligations; PROVIDED, that: (A) the Authority may not incur Indebtedness with a principal amount in excess of $40.0 million pursuant to this clause (c); (B) the proceeds are used for the purpose of financing all or any part of the purchase or lease of personal property or equipment used in the business of the Authority; (C) the term of any Indebtedness incurred pursuant to this clause (c) at the time of incurrence is not less than four years; and (D) the Weighted Average Life to Maturity of all Indebtedness incurred pursuant to this clause (c) at the time of incurrence is not less than two years; (d) the incurrence by the Authority of Indebtedness the proceeds of which are used to develop, design or construct a hotel or hotels with at least 200 rooms as part of the Resort; provided however, that the aggregate principal amount of such Indebtedness (excluding any portion thereof that is original issue discount) does not exceed $35.0 million; and provided that such Indebtedness is not secured by any Note Collateral; (e) the incurrence by the Authority of Indebtedness (the "Refinancing Indebtedness") issued in exchange for, or the proceeds of which are used to extend, refinance, renew, replace, or refund Indebtedness referred to in the first paragraph of this covenant or in clauses (b), (c), (d) or (e), PROVIDED, HOWEVER, that: (A) the principal amount of such Refinancing Indebtedness shall not exceed the principal amount of Indebtedness so extended, refinanced, renewed, replaced, substituted or refunded (plus the amount of reasonable expenses incurred and any premium paid in connection therewith or the amount of any original issue discount), (B) the Refinancing Indebtedness shall, if applicable, be subordinate in right and priority of payment to the Senior Notes on terms at least as favorable to the Holders of Senior Notes as those -100- contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, substituted or refunded, and (C) the Refinancing Indebtedness shall have a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of the Indebtedness being extended, refinanced, renewed, replaced, substituted or refunded; and (f) Hedging Obligations that are incurred for the purpose of fixing or hedging interest rate risk with respect to any floating rate Indebtedness that is permitted by the terms of the Indenture to be outstanding. The Indenture also provides that if this covenant authorizes the incurrence of any Indebtedness that may be secured by a Pari Passu Lien on the Note Collateral, the Trustee is authorized to enter into an intercreditor agreement with the holder of such pari passu Indebtedness (the "Pari Passu Debtholder") upon the request of the Authority that provides to the effect of at least the following: (a) the Lien of the Trustee on the Note Collateral shall be equal in priority (regardless of the time or method of attachment or perfection) to the Lien in favor of, or for the benefit of, such Pari Passu Debtholder for the sum of (1) a principal amount of Indebtedness not to exceed the principal amount permitted by the Indenture to be secured by a Pari Passu Lien and (2) any other Obligations in respect of such principal amount of pari passu Indebtedness; (b) such intercreditor agreement is solely for the purpose of establishing the relative interests of the Pari Passu Debtholder and the Trustee and the Holders of Senior Notes and is not for the benefit of any other party; (c) the Trustee, so long as the principal amount of the outstanding Senior Notes is greater than the principal amount outstanding on such pari passu Indebtedness, shall have the sole right to take, enforce or exercise any right or remedy, to take or exercise any action or election or to refrain from taking or exercising any action with respect to any of the Note Collateral or the Collateral Documents; and so long as the principal amount of the outstanding Senior Notes is greater than the principal amount outstanding on such pari passu Indebtedness, the Pari Passu Debtholder shall not, and shall not permit any of its representatives to, take, enforce or exercise any right or remedy, to take or exercise any action or election or to refrain from taking or exercising any action with respect to any of the Note Collateral or any of its collateral or security documents with respect to any of the Note Collateral; provided, that the Pari Passu Debtholder may take or exercise any action or election or refrain from taking or exercising any action with respect to any collateral that is not Note Collateral or under any document that does not apply to the Note Collateral; and provided, further, that the Trustee shall have no duty or obligation to any Pari Passu Debtholder in taking or exercising any action or election or in refraining from taking or exercising any action with respect to any of the Note Collateral or the Collateral Documents; (d) each of the Trustee and the Pari Passu Debtholder agree that any money or funds realized with respect to the Note Collateral in connection with the enforcement or exercise of any right or remedy with respect to any Note Collateral following the acceleration of the Senior Notes shall be distributed as follows: First, to the payment of all reasonable expenses in connection with the collection, realization or administration of such funds or the exercise of rights or remedies; Second, to each holder of Indebtedness secured by a Pari Passu Lien on the Note Collateral, a proportion of such remaining money or funds in the same proportion as the total outstanding obligations so secured held by such holder bears to the total outstanding obligations so secured until all such secured obligations have been paid in full; and Third, to the Authority or to whosoever may be lawfully entitled to receive the same as a court of competent jurisdiction may direct; (e) the Trustee agrees that any amounts in the Cash Collateral Accounts in the name of the Trustee shall be held for the ratable benefit of the Holders of the Senior Notes and the Pari Passu Debtholders; and -101- (f) each of the Trustee, the Holders of Senior Notes and the Pari Passu Debtholders shall have the right to alter or amend their respective agreements and documents with the Authority or the Tribe in accordance with their terms and to release any Note Collateral from their respective Liens in accordance with the terms of their respective agreements. LIENS The Indenture provides that the Authority will not directly or indirectly create, incur, assume or suffer to exist any Lien, except Permitted Liens, on any asset owned as of the Issuance Date or thereafter acquired by the Authority or any income or profits therefrom, or assign or convey any right to receive income therefrom. LIQUIDATION OR DISSOLUTION The Indenture provides that the Authority shall not sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more transactions. The Authority shall not consolidate or merge with or into any other Person. TRANSACTIONS WITH AFFILIATES The Indenture provides that the Authority shall not sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make any contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, the Tribe, the Management Company or any Affiliate of the Tribe or of the Management Company (each of the foregoing, an "Affiliate Transaction"), unless: (i) such Affiliate Transaction is on terms that are no less favorable to the Authority than those that would have been obtained in a comparable transaction by the Authority with an unrelated Person and (ii) the Authority delivers to the Trustee: (a) with respect to any Affiliate Transaction involving aggregate payments in excess of $2.0 million, a resolution adopted by a majority of the disinterested members of the Management Board approving such Affiliate Transaction and set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with clause (i) above and (b) with respect to any Affiliate Transaction involving aggregate payments in excess of $5.0 million, a written opinion as to the fairness of such Affiliate Transaction to the Authority from a financial point of view issued by an Independent Financial Advisor with assets in excess of $1.0 billion. The foregoing provisions shall not apply to the following: (i) Restricted Payments permitted by the covenant of the Indenture entitled "Restricted Payments" (ii) the Development and Construction Agreement or the Management Agreement in effect on the Issuance Date or (iii) any management agreement for any commercial operations not covered by the Management Agreement that does not provide for any compensation to the Manager greater than 40% of Net Revenues from such operations and which provides that such fees are subordinated to the payment of the Senior Notes to the same extent as the Management Agreement provides. LINE OF BUSINESS The Indenture provides that for so long as any Senior Notes are outstanding, the Authority shall not engage in any business or activity other than the Principal Business. -102- RESTRICTIONS ON LEASING AND DEDICATION OF LEASED PROPERTY The Indenture provides that the Authority shall not lease, sublease, or grant a license, concession or other agreement to occupy, manage or use any Note Collateral owned or leased by the Authority (each, a "Lease Transaction"), other than the following Lease Transactions; PROVIDED that: (1) no Default or Event of Default has occurred or is continuing immediately after entering into such Lease Transaction (or immediately after any extension or renewal of such Lease Transaction made at the option of the Authority) and (2) no gaming or casino operations may be conducted on any Note Collateral that is the subject of such Lease Transaction other than by the Authority: (a) the Authority may enter into a Lease Transaction with respect to any space on or within the Resort with any Person, PROVIDED that: (i) such Lease Transaction will not interfere with, impair or detract from the operations of the Resort and will, in the opinion of the Authority, enhance the value and operations of the Resort; (ii) such Lease Transaction is at a fair market rent (in light of other similar or comparable prevailing commercial transactions) and contains such other terms such that the Lease Transaction, taken as a whole, is commercially reasonable and fair to the Authority in light of prevailing or comparable transactions in other casinos, hotels, attractions or shopping venues; and (iii) such Lease Transaction complies with all applicable law, including obtaining any consent of the BIA, if required; (b) the Authority and the Tribe may enter into the Lease; (c) the Authority may enter into a management or operating agreement with respect to any Note Collateral, including any hotel (other than any Note Collateral or space used for any casino or gaming operations) with any Person; PROVIDED that: (i) the manager or operator has experience in managing or operating similar operations; (ii) such management or operating agreement is on commercially reasonable and fair terms to the Authority; and (iii) such management or operating agreement is terminable without penalty to the Authority upon no more than 90 days written notice; and (d) the Authority may enter into the Management Agreement and any hotel management agreement with the Manager; PROVIDED THAT the compensation to the Manager does not exceed 40% of the Net Revenues of such operation and that such fees are subordinate to the payment of the Senior Notes to the same extent as provided in the Management Agreement. The Trustee shall enter into a leasehold non-disturbance agreement with respect to any Lease Transaction permitted under clause (a) above, in the event that the Trustee, on behalf of the Holders of Senior Notes, forecloses -103- or takes possession of any Note Collateral. Such an agreement shall provide, among other things, that any action taken with respect to any Note Collateral, including any sale of Note Collateral, will be subject to the terms of the Lease Transaction and will permit the lessee to cure certain defaults under such Lease Transaction. No Lease Transaction may provide that the Authority may subordinate its leasehold or fee interest to any lessee or any financing party of any lessee. CASH MAINTENANCE ACCOUNT The Indenture provides that the Authority shall deposit into the Cash Maintenance Account on a monthly basis, 1/12 of the amounts set forth below for each year indicated plus any amounts deferred from any prior month pursuant to the next paragraph, no later than 25 days after the end of such calendar month: YEAR AMOUNT ---- ------ 1997 $6,000,000 1998 $6,000,000 1999 $6,000,000 2000 $6,000,000 2001 $6,000,000 2002 thereafter, such amount necessary to keep at least $36,000,000 in the Cash Maintenance Account. To the extent that any amount required to be deposited into the Cash Maintenance Account in any month exceeds the Cash Available for Cash Maintenance Account for the prior month, then the deposit of such excess amount may be deferred until the next succeeding month or months in which the Cash Available for Cash Maintenance Account is sufficient. Amounts in the Cash Maintenance Account may be withdrawn by the Trustee and applied for any purpose set forth under the caption "Authorization of Receipt of Funds by the Trustee Under the Collateral Documents." The Authority has established the Cash Maintenance Account with an Eligible Institution, which initially is the Trustee. Any amounts deposited into the Cash Maintenance Account may be invested only in Cash or Cash Equivalents. Provided that no Event of Default has occurred and is continuing, the Authority may, from time to time, direct the investment of the funds in the Cash Maintenance Account in Cash Equivalents. The Cash Maintenance Account and any investments constituting funds thereof shall be in the name of the Trustee for the ratable benefit of the Holders of the Senior Notes. The Authority has granted and shall maintain a perfected, first priority security interest in favor of the Trustee for the ratable benefit of the Holders and a perfected, second priority security interest for the ratable benefit of the holders of the Subordinated Notes in all amounts in, or investments constituting amounts in, the Cash Maintenance Account. If an Event of Default has occurred and is continuing, notwithstanding the second priority security interest in favor of the holders of the Subordinated Notes, the Trustee shall have the authority to direct any investments in the Cash Maintenance Account, liquidate or sell any investments therein, to take possession of any cash or investments therein and to hold such amounts as additional Note Collateral, apply any such cash or investments to the payment of principal and interest on the Senior Notes, maintain, repair or otherwise protect the Note Collateral or the other rights of the Holders of the Senior Notes or to take any other appropriate action or remedy. Upon repayment in full of all obligations under the Senior Notes and the Indenture and the discharge of the Indenture, if any amount of principal or interest on the Subordinated Notes is then outstanding and unpaid, the perfected second priority security interest in favor of the holders of the Subordinated Notes shall become (and the Authority and the Trustee shall take all action necessary to cause it to become) a perfected, first priority security interest for the ratable benefit of the holders of the Subordinated Notes to secure the obligations of the Authority under the Subordinated Notes. If the Subordinated Notes have been discharged and paid in full, then such amounts in the Cash Maintenance Account shall be returned to the Authority or to whomsoever a court of competent jurisdiction may so direct. -104- INTEREST AND EXCESS CASH FLOW ACCOUNT The Indenture provides that the Authority deposit into the Interest and Excess Cash Flow Account on a monthly basis the amount of fixed interest accrued during the prior month on the Senior Notes, 50% of the Excess Cash Flow for the prior month on the Senior Notes and 100% of all Deferred Subordinated Interest for the prior month and the amount of Cash Flow Participation Interest accrued for the prior month. The Authority shall establish the Interest and Excess Cash Flow Account with an Eligible Institution. Any amounts deposited into the Interest and Excess Cash Flow Account may be invested only in Cash or Cash Equivalents. Provided that no Event of Default has occurred and is continuing, the Authority may, from time to time, direct the investment of the funds in the Interest and Excess Cash Flow Account in Cash Equivalents. The Interest and Excess Cash Flow Account and any investments constituting funds thereof shall be in the name of the Trustee for the ratable benefit of the Holders of the Senior Notes and may be withdrawn by the Trustee or upon the request of the Authority to (i) pay interest on the Senior Notes, (ii) make an Excess Cash Purchase Offer, and (iii) with respect to amounts deposited in respect of Excess Cash Flow, make payments or expenditures that reduce Excess Cash Flow. Funds in the Interest and Excess Cash Flow Account which were to be withdrawn to make an Excess Cash Purchase Offer but which are not accepted in such an offer may be used by the Authority as provided under the caption "Restricted Payments." The Authority shall grant and maintain a perfected, first priority security interest in favor of the Trustee for the ratable benefit of the Holders in all amounts in, or investments constituting amounts in, the Interest and Excess Cash Flow Account. If an Event of Default has occurred and is continuing, the Trustee shall have the authority to direct any investments in the Interest and Excess Cash Flow Account, liquidate or sell any investments therein, or to take possession of any cash or investments therein and to hold such amounts as additional Note Collateral, apply any such cash or investments to the payment of principal and interest on the Senior Notes, maintain, repair or otherwise protect the Note Collateral or the other rights of the Holders of the Senior Notes or to take any other appropriate action or remedy. Upon repayment in full of all obligations under the Senior Notes and the Indenture and the discharge of the Indenture, if any amount of principal or interest on the Subordinated Notes is then outstanding and unpaid, the amounts in the Interest and Excess Cash Flow Account shall be disbursed to an escrow agent or trustee selected by the holders of the Subordinated Notes, and reasonably acceptable to the Authority, as collateral to secure the obligations of the Authority under the Subordinated Notes. If the Subordinated Notes have been discharged and paid in full, then such amounts in the Interest and Excess Cash Flow Account shall be returned to the Authority or to whomsoever a court of competent jurisdiction may so direct. MAINTENANCE OF INSURANCE The Indenture provides that, until the Senior Notes have been paid in full, the Authority shall maintain insurance with responsible carriers against such risks and in such amounts as is customarily carried by similar businesses with such deductibles, retentions, self insured amounts and coinsurance provisions as are customarily carried by similar businesses of similar size, including, without limitation, property and casualty, and shall have provided insurance certificates evidencing such insurance to the Trustee prior to the Issuance Date and shall hereafter provide such certificates prior to the anniversary or renewal date of each such policy, which certificate shall expressly state the expiration date for each policy listed. The Authority shall furnish or cause to be furnished certified copies of the policies. Customary insurance coverage shall be deemed to include the following: (i) workers' compensation insurance to the extent required to comply with all applicable state, territorial, or United States laws and regulations, or the laws and regulations of any other applicable jurisdiction; (ii) comprehensive general liability insurance with minimum limits of $10 million; -105- (iii) umbrella or bumbershoot liability insurance providing excess liability coverages over and above the foregoing underlying insurance policies up to a minimum limit of $50 million; and (iv) property insurance protecting the property against loss or damage by fire, lightning, windstorm, tornado, water damage, vandalism, riot, earthquake, civil commotion, malicious mischief, hurricane, and such other risks and hazards as are from time to time covered by an "all-risk" policy or a property policy covering "special" causes of loss (such insurance shall provide coverage of not less than 100% of actual replacement value (as determined at each policy renewal based on the F.W. Dodge Building Index or some other recognized means) of any improvements and with a deductible no greater than $500,000 (other than earthquake insurance, for which the deductible may be up to 10% of such replacement value)). All insurance required under the Indenture (except workers' compensation) shall name the Authority and the Trustee as additional insureds, with losses in excess of $1 million payable jointly to the Authority and the Trustee (unless a Default or Event of Default has occurred and is then continuing, in which case all losses are payable solely to the Trustee), with no recourse against the Trustee for the payment of premiums, deductibles, commissions or club calls, and for at least 30 days notice of cancellation. All such losses in excess of $1 million shall be deposited in the Event of Loss Account to be established pursuant to Section 10.12 of the Indenture and shall be pledged to the Trustee until released in accordance with the terms of the applicable Collateral Document. All such insurance policies shall be issued by carriers having an A.M. Best & Company, Inc. rating of "A" or higher and a financial size category of not less than XII, or if such carrier is not rated by A.M. Best & Company, Inc., having the financial stability and size deemed appropriate by an opinion from a reputable insurance broker. The Authority shall deliver to the Trustee on the Issuance Date and each anniversary thereafter a certificate of an insurance agent stating that the insurance policies obtained by the Authority comply with this covenant and the related applicable provisions of the Collateral Documents. LIMITATION ON STATUS AS INVESTMENT COMPANY The Indenture prohibits the Authority from being required to register as an "investment company" (as that term is defined in the Investment Company Act of 1940, as amended), or from otherwise becoming subject to regulation under the Investment Company Act of 1940. COLLATERAL DOCUMENTS The Indenture provides that the Authority will not amend, waive or modify, or take or refrain from taking any action that has the effect of amending, waiving or modifying, any provision of the Collateral Documents, the Management Agreement or the Note Purchase Agreement to the extent that such amendment, waiver, modification or action could have an adverse effect on the rights of the Trustee or the Holders; PROVIDED, that: (i) the Note Collateral may be released or modified as expressly provided in the Indenture and in the Collateral Documents; (ii) the Construction Budget may be amended as expressly provided in the Disbursement and Escrow Agreement; (iii) the Indenture, the Management Agreement and any of the Collateral Documents may be otherwise amended, waived or modified as set forth under the caption "Amendment, Supplement and Waiver" in the Indenture; (iv) the Note Purchase Agreement may be amended in accordance with its terms, provided such amendments do not: -106- (a) cause or permit any principal, interest or premium on the Subordinated Notes to be paid or to become due and payable at any time earlier than such would become paid or due and payable without such amendment; (b) amend any terms of the subordination of the Subordinated Notes; or (c) amend any provision included therein expressly for the benefit of the Senior Notes; and (v) the Management Agreement may be amended with the consent of the NIGC; PROVIDED THAT such amendment does not adversely affect the economic rights of the Holders of the Senior Notes. FURTHER ASSURANCES The Indenture provides that the Authority will do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register, any and all such further acts, deeds, conveyances, security agreements, mortgages, assignments, estoppel certificates, financing statements and continuations thereof, termination statements, notices of assignment, transfers, certificates, assurances and other instruments as may be required from time to time in order (i) to carry out more effectively the purposes of the Collateral Documents, (ii) to subject to the Liens created by any of the Collateral Documents any of the properties, rights or interests required to be encumbered thereby, (iii) to perfect and maintain the enforceability validity, effectiveness and priority of any of the Collateral Documents and the Liens intended to be created thereby, and (iv) to better assure, convey, grant, assign, transfer, preserve, protect and confirm to the Trustee any of the rights granted or now or hereafter intended by the parties thereto to be granted to the Trustee, the Holders of the Senior Notes or under any other instrument executed in connection therewith or granted to the Authority under the Collateral Documents or under any other instrument executed in connection therewith. REPORTS Under the terms of the Indenture, notwithstanding that the Authority may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Authority will file with the SEC all information, documents and reports specified in Section 13 or 15(d) of the Exchange Act. Under the terms of the Indenture, the Authority has agreed to file with the Trustee and provide Holders of Senior Notes, within 15 days after the Authority files the same with the SEC, copies of its annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rule or regulation prescribe) which the Authority would be required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. Notwithstanding that the Authority may not be required to remain subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act or otherwise report on an annual and quarterly basis on forms provided for such annual and quarterly reporting pursuant to rules and regulations promulgated by the SEC, the Indenture requires the Authority to continue to file with the SEC and provide the Trustee and Holders of Senior Notes with, without cost to each such holder: (i) within 90 days after the end of each fiscal year, annual reports on Form 10-K (or any successor or comparable form) containing the information required to be contained therein (or required in such successor or comparable form); (ii) within 45 days after the end of each of the first three fiscal quarters of each fiscal year, reports on Form 10-Q (or any successor or comparable form); and (iii) promptly from time to time after the occurrence of an event required to be therein reported, such other reports on Form 8-K (or any successor or comparable form) containing the information required to be contained therein (or required in any successor or comparable form); PROVIDED, HOWEVER, that the Authority shall not be so obligated to file such reports with the SEC if the SEC does not permit such filings. -107- The Authority has also agreed to include in such reports the anticipated completion date of the Resort and, in the case of quarterly reports, the Cash Flow Participation Interest paid, the Cash Flow Participation Interest Accrual amount and Cash Flow with respect to the most recently ended fiscal quarter of the Authority, and in the case of annual reports, the audited Cash Flow Participation Interest paid, the Cash Flow Participation Interest Accrual amount and audited Cash Flow for the most recently ended fiscal year and for each of the Semi-annual Periods ending in such fiscal year. The Authority will in all cases, without cost to each recipient, provide copies of such information to the Holders of the Senior Notes and, if they are not permitted to file such reports with the SEC, shall make available such information to prospective purchasers and to securities analysts and broker-dealers upon their request. The Authority has also agreed to file with the Trustee and provide to Holders of Senior Notes, within 15 days after it files them with the NIGC, copies of all reports which the Authority is required to file with the NIGC pursuant to 25 C.F.R. Part 514. Not later than the date of filing any quarterly or annual report, the Authority has agreed to deliver to the Trustee an Officers' Certificate stating that each Restricted Payment made in the prior fiscal quarter was permitted and setting forth the basis upon which the calculations required by the covenant in the Indenture relating to "Restricted Payments" were computed, which calculations may be based upon the Authority's latest available financial statements. SECURITY The Series A Senior Notes are, and the Series B Senior Notes will be, secured by a first lien on the Note Collateral (which also will secure the Working Capital Financing) owned by the Authority, whether now owned or hereafter acquired, subject to Permitted Liens, which include, without limitation, all of the assets comprising the Resort (other than any assets which if pledged, hypothecated or given as collateral security would require the Trustee or a holder or beneficial holder of the Senior Notes to be licensed, qualified or found suitable and other than certain assets to the extent such assets are permitted to be financed by Indebtedness permitted to be incurred pursuant to the covenant in the Indenture entitled "Limitation on Incurrence of Indebtedness" and such Indebtedness is permitted to be secured pursuant to the covenant entitled "Liens" pursuant to clause (ii), (iii), (ix) or (xi) of the definition of "Permitted Liens"). So long as no Event of Default has occurred and be continuing, and subject to certain terms and conditions in the Indenture and the Collateral Documents, the Authority is entitled to use the Note Collateral in a manner consistent with normal business practices. Upon the occurrence and during the continuance of an Event of Default, the Trustee may sell the Note Collateral or any part thereof in accordance with the terms of the Collateral Documents. All funds distributed under the Collateral Documents and received by the Trustee for the benefit of the Holders of the Senior Notes shall be distributed by the Trustee in accordance with the provisions of the Indenture. Under the terms of the Collateral Documents, the Trustee may determine the circumstances and manner in which the Note Collateral shall be disposed of, including, but not limited to, the determination of whether to release all or any portion of the Note Collateral from the Liens created by the Collateral Documents and whether to foreclose on the Note Collateral following an Event of Default. Subject to certain additional provisions set forth in the Indenture, the Note Collateral may be released from the Lien and security interest created by the Indenture and the Collateral Documents at any time or from time to time upon the request of the Authority pursuant to an Officers' Certificate certifying that all terms for release and conditions precedent under the Indenture and under any applicable Collateral Document have been met and specifying -108- (i) the identity of the Note Collateral to be released and (ii) the provision of the Indenture which authorizes such release. The Trustee shall release (at the sole cost and expense of the Authority): (i) Note Collateral that is the subject of an Asset Sale or that is sold, transferred or otherwise disposed of (other than any Asset Sale to the Tribe or any Affiliate of the Tribe); PROVIDED, such transaction is or will be in accordance with provisions of the Indenture or the applicable Collateral Document, including, without limitation, the requirement that the net proceeds from such transaction or Asset Sale are or will be applied in accordance with the Indenture; (ii) Note Collateral that is condemned, seized or taken by the power of eminent domain or otherwise confiscated pursuant to an Event of Loss; PROVIDED that the Net Loss Proceeds, if any, from such Event of Loss are or will be applied in accordance with the covenant described above under "Event of Loss"; (iii) Note Collateral which may be released with the consent of Holders of Senior Notes pursuant to the amendment provisions of the Indenture; (iv) all Note Collateral (except as provided in the discharge and defeasance provisions of the Indenture and, in particular, the funds in the trust fund described in such provisions and any funds in any accounts established under the caption "Cash Funds Pledge") upon discharge or defeasance of the Indenture in accordance with the discharge and defeasance provisions thereof; (v) all Note Collateral upon the payment in full of all obligations of the Authority with respect to the Senior Notes; (vi) any amounts in the Cash Maintenance Account, Interest and Excess Cash Flow Account, Net Receipts Accounts or any other cash or Cash Equivalents held as security for the Senior Notes may be released in accordance with the Indenture, the Cash Collateral Accounts Pledge and Security Agreement or any other relevant Collateral Document; and (vii) Note Collateral under the Leasehold Mortgage may be released in accordance with the terms thereof. The Indenture provides that the Net Proceeds of all Asset Sales and the Net Loss Proceeds of all Events of Loss of assets constituting Note Collateral (other than Permitted Investments), as well as Excess Proceeds, be promptly and without any commingling deposited with the Trustee in a Cash Collateral Account subject to a lien in favor of the Trustee for the benefit of the Holders of the Senior Notes unless and until applied as permitted under the covenant described under "Asset Sales" or "Events of Loss," as the case may be. The Trustee shall release to the Authority any Excess Proceeds or Excess Loss Proceeds, as the case may be, that remain after making an offer to purchase the Senior Notes in compliance with the covenant described under "Asset Sales" or "Events of Loss," as the case may be. Amounts so paid to the Trustee shall be invested or released in accordance with the provisions of the Indenture. DISBURSEMENT AND ESCROW AGREEMENT Pursuant to a Disbursement and Escrow Agreement entered into between the Authority, the Trustee, First Fidelity Bank, n/k/a First Union Bank of Connecticut (the "Escrow Agent"), the Manager, Sun International and Chicago Title Insurance Company (the "Disbursement Agent"), the Authority has placed all of the net proceeds of the Offering together with the net proceeds from the sale of the Subordinated Notes (to the extent provided below) into the Escrow Account, to be held in escrow and invested in cash or Cash Equivalents by the Escrow Agent until needed from time to time to fund the construction of the Resort pursuant to the terms of the Disbursement and Escrow Agreement. All such funds will be held in the Escrow Account until disbursed in accordance with a detailed line-item Construction Budget. To the extent any net proceeds of the sale of Subordinated Notes remain subsequent to the acquisition of the land on which the Resort will be constructed, such net proceeds will be placed in the Escrow Account. Subject to certain exceptions set forth in the Disbursement and Escrow Agreement, the Disbursement Agent will authorize the disbursement of funds from the Escrow Account only upon -109- the satisfaction of the disbursement conditions set forth in the Disbursement and Escrow Agreement. Such conditions generally include that the Manager, on behalf of the Authority, deliver a certificate certifying as to, among other things, the application of the funds to be disbursed, the conformity of construction undertaken to date with the plans and specifications, the expectation that the Resort will be Operating by October 31, 1996, lien releases and title insurance policies assuming that the Resort continues to be subject only to Permitted Liens, if applicable, the accuracy of the Construction Budget, the sufficiency of remaining funds to complete the Resort within each line item allocation, compliance with line item budget allocations taking into account allocations for contingencies and the absence of an Event of Default under the Indenture and the satisfaction of certain other conditions to disbursement set forth in the Disbursement and Escrow Agreement. Such other conditions generally include, among other things, the delivery of certificates by the project manager and the project architects, a review by an independent third party of prior disbursements, an absence of an event of default under the Disbursement and Escrow Agreement and the delivery of certain other documents to the Disbursement Agent. In addition, prior to any disbursements from the Escrow Account subsequent to the initial disbursement, certain additional disbursement conditions will be required to be satisfied by the Authority. Such additional conditions generally include that the Disbursement Agent receive a title commitment or other satisfactory assurances with respect to the condition of title to the Resort and that the Disbursement Agent receive certain information relating to the contractors who have worked on the Resort and lien releases from such contractors, if appropriate. The Disbursement and Escrow Agreement also provides that the Construction Budget may be amended from time to time under certain circumstances set forth therein. The Construction Budget may be amended only upon the satisfaction of certain conditions set forth in the Disbursement and Escrow Agreement. Such conditions generally include that the Authority deliver a certificate certifying as to the reasonable necessity of the amendment; the availability of funding to pay costs represented by any line item increase; the continued reasonableness of the Construction Budget; conformity with plans and specifications; the expectation that the Resort will be Operating by October 31, 1996; the sufficiency of remaining funds to complete the Resort within the line item allocations, including allocations for contingencies; the absence of an Event of Default under the Indenture; and certain other conditions if the unallocated reserve is zero. In addition, prior to any amendment to the Construction Budget, certain additional conditions will be required to be satisfied by the Authority. Such additional conditions generally include that the Authority submit the proposed amendment in writing and identify with particularity the availability of funds to pay for any increased line item and the delivery of certificates to the Disbursement Agent by the project manager and the project architects. In addition, the Disbursement and Escrow Agreement will provide that construction line items may only be reduced upon evidence of the occurrence of certain savings and that unallocated reserves may be reduced by allocation to other line items. In addition, the Disbursement and Escrow Agreement provides that if any funds remain in the Escrow Account on the date the Resort is Operating (which shall have occurred on or before October 31, 1996) and the Resort shall have generated at least $10 million of Cash Flow in one fiscal quarter, the Disbursement Agent shall, upon the direction of the Authority, direct the Escrow Agent, subject to certain exceptions set forth in the Disbursement and Escrow Agreement, to disburse all remaining funds, if any, in the Escrow Account to any account or accounts specified by the Authority. The Disbursement and Escrow Agreement also provides that an event of default shall exist thereunder if any of the following shall occur: -110- (i) an Event of Default occurs and is continuing under the Indenture; (ii) the project manager or project architect is unable to deliver the certificates required to be delivered pursuant to the Disbursement and Escrow Agreement and such failure continues for a period of 30 days; (iii) the independent third party reviewing prior disbursements reports an exception or such independent third party fails to deliver a report within a certain amount of days after each disbursement request and such failure continues for a period of 30 days; (iv) any representation, warranty, certification or statement by the Authority, project manager or project architect in the Disbursement and Escrow Agreement or any certificate required to be delivered therein is untrue in any material respect on the date given or made and such untruthfulness continues for a period of 30 days; (v) if at any time the amount remaining in the Escrow Account plus certain other funds is less than the amount required in the Construction Budget to cause the Resort to be Operating on or before October 31, 1996 and such deficiency continues for a period of 30 days; and (vi) the Authority fails to deliver certain other documents required by the Disbursement and Escrow Agreement and such failure continues for a period of 30 days. Subject to certain exceptions set forth in the Disbursement and Escrow Agreement and an amount up to $10.0 million to preserve the collateral and to fund minimum operating expenses, if an event of default exists thereunder, the Disbursement Agent is not permitted to authorize the disbursement of funds from the Escrow Account. The Authority will be deemed to have expended all remaining proceeds from the Equity Contribution prior to expending any proceeds from the Offering. All funds in the Escrow Account are pledged as security for the repayment of the Senior Notes and under certain circumstances the funds in the Escrow Account will be used to offer to redeem a portion of the Senior Notes. EVENTS OF DEFAULT AND REMEDIES The Indenture provides that each of the following constitutes an Event of Default: (i) the Authority defaults in payment when due and payable, upon maturity, redemption or otherwise, of principal or premium, if any, on the Senior Notes; (ii) the Authority defaults for 30 days or more in the payment when due of interest (including Cash Flow Participation Interest) and Liquidated Damages, if any on the Senior Notes; PROVIDED, that payments of Cash Flow Participation Interest that are permitted to be deferred as provided in the Senior Notes shall not become due for this purpose until such payment is required to be made pursuant to the terms of the Senior Notes; (iii) failure by the Authority to comply, within the applicable cure periods, if any, with the covenants and provisions described under the captions "Offer to Repurchase Upon Change of Control," "Excess Cash Purchase Offer," "Restricted Payments," "Asset Sales," "Events of Loss," "Use of Proceeds," "Limitations on Incurrence of Indebtedness," "Governmental Existence" or "Liquidation or Dissolution"; -111- (iv) the Authority or the Tribe (with respect to its obligations hereunder) fails to observe or perform any other covenant, representation, warranty or other agreement in the Indenture, the Notes or the Collateral Documents for 60 days after written notice to the Authority by the Trustee or to the Authority and the Trustee from Holders of at least 25% in principal amount of the Senior Notes then outstanding; (v) the Lease ceases to be in full force and effect or the Authority defaults in the performance of any covenant set forth in the Lease, the Leasehold Mortgage or any of the other Collateral Documents (which default is not waived or cured); (vi) a default occurs under any mortgage, indenture or instrument under which there is issued or by which there is secured or evidenced any Indebtedness for money borrowed by the Authority or the payment of which is guaranteed by the Authority, whether such Indebtedness or guarantee now exists, or is created after the Issuance Date, which default: (a) is caused by a failure to pay when due principal of or premium, if any, or interest on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness (a "Payment Cross-Default"); or (b) results in the acceleration of such Indebtedness prior to its express maturity or would constitute a default in the payment of such issue of Indebtedness at final maturity of such issue and, in each case, the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness under which a Payment Cross-Default then exists or with respect to which the maturity thereof has been so accelerated or which has not been paid at maturity, aggregates $7.5 million or more; (vii) the entry of final judgments against the Authority aggregating in excess of $7.5 million, which final judgments remain unpaid, undischarged and unstayed for a period of more than 60 days; (viii) breach by the Authority of any representation or warranty set forth in the Lease or the Leasehold Mortgage or any of the Collateral Documents, or the repudiation by the Authority of its obligations under, or any judgment or decree by a court or governmental agency of competent jurisdiction declaring the unenforceability of, the Lease or any of the Collateral Documents for any reason that would materially impair the benefits to the Trustee or the Holders of the Senior Notes thereunder; (ix) certain events of bankruptcy or insolvency with respect to the Authority; (x) revocation, termination, suspension or other cessation of effectiveness of any Gaming License which results in the cessation or suspension of gaming operations for a period of more than 90 consecutive days at the Resort; (xi) cessation of gaming operations for a period of more than 90 consecutive days at the Resort (other than as a result of a casualty loss) after the Resort becomes Operating; or (xii) cessation of gaming operations for a period of more than 180 consecutive days as a result of a casualty loss after the Resort becomes Operating except if the Authority is diligently pursuing reconstruction and opening of the Resort. The Trustee shall mail to the Holders of the Senior Notes notice of any Default or Event of Default known to the Trustee within 90 days after such Default or Event of Default occurs. If any Event of Default (other than by reason of bankruptcy or insolvency) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Senior Notes may declare the principal, premium, if any, interest (including all Cash Flow Participation Interest accrued or deferred), Liquidated Damages and any other monetary obligations on all the Senior Notes to be due and payable immediately. -112- Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Authority, all the principal, premium, if any, interest (including all Cash Flow Participation Interest accrued or deferred) and other monetary obligations on all outstanding Senior Notes will become due and payable without further action or notice. Holders of the Senior Notes may not enforce the Indenture or the Senior Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Senior Notes may direct the Trustee in its exercise of any trust or power, including the exercise of any remedy under the Collateral Documents. The Trustee may withhold from Holders of Senior Notes notice of any continuing Default or Event of Default (except a Default or Event relating to the payment of principal or interest) if it determines that withholding notice is in their interest. In addition, the Trustee shall have no obligation to accelerate the Senior Notes if in the best judgment of the Trustee acceleration is not in the best interest of the Holders of the Senior Notes. In the case of any Event of Default occurring on or after November 15, 1999 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Authority with the intention of avoiding payment of the premium that the Authority would have had to pay if the Authority then had elected to redeem the Senior Notes pursuant to the optional redemption provisions of the Indenture, then, upon acceleration of the Senior Notes, an equivalent premium shall also become and be immediately due and payable to the extent permitted by law. If an Event of Default occurs prior to November 15, 1999, by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Authority with the intention of avoiding the prohibition on redemption of the Senior Notes prior to such date, then upon acceleration of the Senior Notes, an additional premium shall also become and be immediately due and payable in an amount, for each of the years beginning on November 15th of the years set forth below, as set forth below (expressed as a percentage of the principal amount that would otherwise be due but for the provisions of this sentence): YEAR % ---- ----- 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . 113.5 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . 113.5 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . 113.5 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . 112.0 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . 110.0 The Holders of a majority in aggregate principal amount of the Senior Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Senior Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest (including Cash Flow Participation Interest) on, premium, if any, or the principal of the Senior Notes. Specific rights and remedies of the Trustee under the Collateral Documents include the right of the Trustee or the appropriate Person under federal or state law to sell the Note Collateral and to apply the net proceeds to the Indebtedness evidenced by the Senior Notes in accordance with the terms of the Indenture and the Collateral Documents. The Collateral Documents will generally provide for the application of the internal laws of the Tribe and/or the State of Connecticut, while the Indenture and the Senior Notes will provide, with certain exceptions, for the application of the internal laws of the State of New York. There is no certainty regarding whether New York or Mohegan tribal law would be applied by any court with respect to the enforcement of remedies under the Senior Notes, the Indenture, or the Collateral Documents. The right of the Trustee to realize upon and sell the Note Collateral is likely to be significantly impaired by applicable bankruptcy and insolvency laws if a proceeding under such laws were commenced in respect of the Authority or any Guarantor. Such laws may impose limitations or prohibitions on the exercise of rights and remedies under the Collateral Documents for a substantial or indefinite period of time. The Indenture provides that, following an Event of Default that permits the taking of possession of the Resort by the Trustee on the appointment of a receiver pursuant to the Leasehold Mortgage (or after such action is taken), the Trustee shall be authorized to recommend that the Authority retain one or more experienced operators of casinos to manage the casino located at the Resort on behalf of the Holders of the Senior Notes; PROVIDED, HOWEVER, THAT any such operator shall have all necessary legal qualifications (including without limitation all Gaming Licenses and approvals of the NIGC and the Tribe to manage the casino located at the Resort). -113- Due to restrictions upon gaming activities on tribal lands, however, the Trustee may incur delays or possibly frustration in its effort to operate or to sell all or a portion of the Note Collateral. Operators of gaming facilities on tribal lands are required to be licensed and are required by applicable Gaming Regulatory Authorities to file applications, be investigated and be found suitable. Only the Tribe may operate gaming activities. Such requirements for governmental approval may delay or preclude a sale of the Note Collateral to a potential buyer at a foreclosure sale or sales. This may effectively limit the number of potential bidders and may delay such sales, either of which could adversely affect the sale price of the Note Collateral. Moreover, the gaming industry could become subject to different or additional regulations during the term of the Senior Notes, which could further adversely affect the practical rights and remedies that the Trustee would have upon the occurrence of an Event of Default. The Authority is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Authority is required, within five Business Days, upon becoming aware of any Default or Event of Default or any default under any document, instrument or agreement representing Indebtedness of the Authority, to deliver to the Trustee a statement specifying such Default or Event of Default. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND MEMBERS Neither the Tribe nor any officer or office holder, employee, agent, representative, or member of the Authority or the Tribe, as such, shall have any liability for any obligations of the Authority under the Senior Notes, the Indenture or the Collateral Documents, as applicable, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Senior Note waives and releases all such liability, which waivers and releases are part of the consideration for issuance of the Senior Notes. To the extent such waivers and releases purport to waive liabilities under the federal securities laws, however, they are void under the Securities Act. LEGAL DEFEASANCE AND COVENANT DEFEASANCE The obligations of the Authority under the Indenture (other than certain obligations) will terminate and the Note Collateral will be released upon payment in full of all of the Senior Notes. The Authority may, at its option and at any time, elect to have all of its obligations discharged with respect to the outstanding Senior Notes ("Legal Defeasance") and cure all then existing Events of Default except for: (i) the rights of Holders of outstanding Senior Notes to receive payments in respect of the principal of, premium, if any, and interest (including Cash Flow Participation Interest, if any) on such Senior Notes when such payments are due; (ii) the Authority's obligations with respect to the Senior Notes concerning issuing temporary Senior Notes, registration of Senior Notes, mutilated, destroyed, lost or stolen Senior Notes and the maintenance of an office or agency for payment and money for security payments held in trust; (iii) the rights, powers, trusts, duties and immunities of the Trustee, and the Authority's obligations in connection therewith; and (iv) the Legal and Covenant Defeasance provisions of the Indenture. -114- In addition, the Authority may, at its option and at any time, elect to have the obligations of the Authority released with respect to certain covenants that are described in the Indenture ("Covenant Defeasance") and thereafter any omission to comply with such obligations shall not constitute a Default or Event of Default with respect to the Senior Notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, rehabilitation and insolvency events) described under "Events of Default" will no longer constitute an Event of Default with respect to the Senior Notes. In addition, the Note Collateral will be released upon Covenant Defeasance or Legal Defeasance. In order to exercise either Legal Defeasance or Covenant Defeasance: (i) the Authority must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the Senior Notes, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants as evidenced by a certificate delivered to the Trustee, to pay the principal of, premium, if any, and interest (including the maximum amount payable as Cash Flow Participation Interest, if any) due on the outstanding Senior Notes on the stated maturity date or on the applicable redemption date, as the case may be, of such principal, premium, if any, or interest (including Cash Flow Participation Interest, if any) on the outstanding Senior Notes on the stated maturity or on the applicable redemption date, as the case may be and the Authority must specify whether the Senior Notes are being defeased to maturity or to a particular redemption date; (ii) in the case of Legal Defeasance, the Authority shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that, subject to customary assumptions and exclusions: (a) the Authority has received from, or there has been published by, the United States Internal Revenue Service a ruling; or (b) since the Issuance Date of the Indenture, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such opinion of counsel in the United States shall confirm that, subject to customary assumptions and exclusions, the Holders of the outstanding Senior Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (iii) in the case of Covenant Defeasance, the Authority shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that, subject to customary assumptions and exclusions, the Holders of the outstanding Senior Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (iv) no Default or Event of Default shall have occurred and be continuing with respect to certain Events of Default on the date of such deposit; (v) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than the Indenture) to which the Authority is a party or by which the Authority is bound; (vi) the Authority shall have delivered to the Trustee an opinion of counsel to the effect that, after the 91st day following the deposit and as of the date of such opinion and subject to customary assumptions and exclusions following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally under any applicable United States, law; -115- (vii) the Authority shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Authority with the intent of defeating, hindering, delaying or defrauding any creditors of the Authority or others; and (viii) the Authority shall have delivered to the Trustee an Officers' Certificate and an opinion of counsel in the United States (which opinion of counsel may be subject to customary assumptions and exclusions) each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance, have been complied with. AMENDMENT, SUPPLEMENT AND WAIVER Except as provided in the next three succeeding paragraphs, the Indenture, the Senior Notes or the Collateral Documents may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the Senior Notes then outstanding (including consents obtained in connection with a tender offer or exchange offer for Senior Notes), provided that any required governmental approval is obtained, including that of the NIGC and subject to certain provisions in the Indenture, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium, if any, or interest (including Cash Flow Participation Interest, if any) on the Senior Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of the Indenture or the Senior Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Senior Notes (including consents obtained in connection with a tender offer or exchange offer for Senior Notes). Without the consent of each holder of Senior Notes affected, an amendment or waiver may not (with respect to any Senior Notes held by a non-consenting holder of Senior Notes): (i) reduce the principal amount of Senior Notes whose Holders must consent to an amendment, supplement or waiver; (ii) reduce the principal of or change the fixed maturity of any Senior Note or alter or waive the provisions with respect to the redemption of the Senior Notes (provided, however, that the term "redemption" does not apply to any provision with respect to any Repurchase Offer); (iii) reduce the rate of or change the time for payment of interest, (including Cash Flow Participation Interest) and Liquidated Damages, on any Senior Note; (iv) waive a Default or Event of Default in the payment of principal of, premium, if any, or interest (including Cash Flow Participation Interest and Liquidated Damages, if any) on the Senior Notes (except a rescission of acceleration of the Senior Notes by the Holders of at least a majority in aggregate principal amount of the then outstanding Senior Notes and a waiver of the payment default that resulted from such acceleration); (v) make any Senior Note payable in money other than that stated in the Senior Notes; (vi) make any change in the provisions of the Indenture relating to waivers of past monetary Defaults or the rights of Holders of Senior Notes to receive payments of principal of or premium, if any, or interest (including Cash Flow Participation Interest), if any on the Senior Notes; (vii) release all or substantially all of the Note Collateral from the Lien of the Indenture or the Collateral Documents; or -116- (viii) make any change in the provisions with respect to "Waiver of Past Defaults" or "Rights of Holders of Senior Notes to Receive Payment" or the foregoing amendment and waiver provisions. Without the consent of Holders of at least 662.3% of the outstanding principal amount of the Senior Notes, the Authority may not amend, alter or waive the provisions with respect to "Offer to Repurchase Upon Change of Control." Notwithstanding the foregoing, without the consent of any Holder of Senior Notes, and provided that any required governmental approval, including that of the NIGC, is obtained, the Authority and the Trustee together may amend or supplement the Indenture, the Senior Notes, the Management Agreement or the Collateral Documents to: (i) cure any ambiguity, defect or inconsistency; (ii) provide for uncertificated Senior Notes in addition to or in place of certificated Senior Notes; (iii) comply with the covenants of the Authority or the Tribe in the Indenture; (iv) to make any change that would provide any additional rights or benefits to the Holders of the Senior Notes, or that does not adversely affect the legal rights under the Indenture of any such holder; (v) comply with requirements of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act; or (vi) enter into additional or supplemental Collateral Documents. CONCERNING THE TRUSTEE The Indenture contains certain limitations on the rights of the Trustee, should it become a creditor of the Authority, to obtain payment of claims in certain cases, or to realize on certain leased property received in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or resign. The Holders of a majority in principal amount of the then outstanding Senior Notes have the right to direct the time, method and place of conducting any proceeding for exercising any remedy, available to the Trustee, subject to certain exceptions. The Indenture provides that in case an Event of Default shall occur (which shall not be cured), the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent person in the conduct of his own affairs. Subject to such provisions, the Trustee is under no obligation to exercise any of its rights or powers under the Indenture at the request of any holder of Senior Notes, unless such holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. GOVERNING LAW The Indenture and the Senior Notes are subject to certain exceptions, governed by and construed in accordance with the internal laws of the State of New York, without regard to the choice of law rules thereof. The Collateral Documents are governed, subject to certain exceptions, by the laws of the Tribe. -117- ADDITIONAL INFORMATION Any Holder of the Senior Notes may obtain a copy of the Indenture and the Collateral Documents without charge by writing to the Authority at 67 Sandy Desert Road, Uncasville, Connecticut 06382, Attention: Roland Harris and Carlisle Fowler, Business Board Members, and Chief Ralph Sturges. CERTAIN DEFINITIONS Set forth below are certain defined terms used in the Indenture. Reference is made to the Indenture for a full disclosure of all such terms, as well as any other capitalized terms used herein for which no definition is provided. "ACQUIRED INDEBTEDNESS" means, with respect to any specified Person, (i) Indebtedness of any other Person existing at the time such other Person merged with or into such specified Person, including Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into such specified Person and (ii) Indebtedness encumbering any asset acquired by such specified Person. "AFFILIATE" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; PROVIDED, HOWEVER, that for purposes of the covenant entitled "Transactions with Affiliates," beneficial ownership of 10% or more of the voting securities of a Person shall be deemed to be control. "AGENT" means any Registrar, Paying Agent or co-registrar. "ASSET SALE" means the sale, conveyance, transfer or other disposition (whether in a single transaction or a series of related transactions) of property or assets (including by way of a sale and leaseback) of the Authority (each referred to in this definition as a "disposition") other than (i) a disposition of inventory or other goods held for sale or disposition in the ordinary course of business, (ii) any disposition that is a Restricted Payment permitted under the covenant entitled "Restricted Payments" or that is a dividend or distribution permitted under the covenant entitled "Restricted Payments" or any Investment that is not prohibited thereunder or any disposition of cash or Cash Equivalents, (iii) any single disposition, or related series of dispositions, of assets with an aggregate fair market value of less than $500,000, (iv) any Event of Loss and (v) any lease or sublease permitted as described under the covenant entitled "Restrictions on Leasing and Dedication of Leased Property." It is acknowledged that the Authority is prohibited from making an Asset Sale of Key Project Assets. "AUTHORITY" means the Mohegan Tribal Gaming Authority together with any subdivision, agency, subunit or Subsidiary thereof and any successor and assignee thereto. "BOARD OF DIRECTORS" means, as the context requires, the Management Board of the Authority or any authorized committee of the Management Board of the Authority. "BUSINESS DAY" means any day other than a Legal Holiday. "CAPITAL LEASE OBLIGATION" means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized and reflected as a liability on the balance sheet in accordance with GAAP. -118- "CAPITAL STOCK" means with respect to any Person, any and all shares, interests, participations, rights or other equivalents (however designated) in the profits or losses of such Person, including, (i) if such Person is a partnership, partnership interests (whether general or limited) and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, such partnership or (ii) with respect to the Authority, any interest, participation in the profits and losses of the Authority or its business other than fees paid to the Manager under the Management Agreement, amounts paid to the state of Connecticut under the Compact or the memorandum of understanding thereunder, Cash Flow Participation Interest on the Senior Notes, or any fees for goods and services provided to the Authority in the ordinary course of business and which is measured by revenues or income. "CASH AVAILABLE FOR CASH MAINTENANCE ACCOUNT" means, with respect to any period, the Cash Flow of the Authority for such period less (i) Interest Expense of the Authority for such period (ii) principal payments on Indebtedness of the Authority made in respect of such period (other than pursuant to an Excess Cash Purchase Offer) and (iii) Minimum Priority Payments to the Tribe for such period; Cash Available for Cash Maintenance Account shall be calculated without any deduction for deposits into the Cash Maintenance Account or deposits in respect of Excess Cash Flow into the Interest and Excess Cash Flow Account. "CASH COLLATERAL ACCOUNTS PLEDGE AND SECURITY AGREEMENT" means the Cash Collateral Accounts Pledge Agreement among the Trustee, the Authority and the Manager dated as of the Issuance Date. "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 having maturities of not more than six months from the date of acquisition, (iii) certificates of deposit and eurodollar time deposits with maturities of six months or less from the date of acquisition, bankers' acceptances with maturities not exceeding six months and overnight bank deposits, in each case with any commercial bank having capital and surplus in excess of $300 million, (iv) repurchase obligations with a term of not more than seven days 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 Investors Service, Inc. or Standard & Poor's Ratings Group and in each case maturing within one year after the date of acquisition and (vi) investment funds investing solely in securities of the types described in clauses (ii) - (v) above. "CASH FLOW" means, with respect to any Person for any period, the Net Revenue of such Person for such period, plus (a) an amount equal to any extraordinary loss plus any net loss realized in connection with an Asset Sale (to the extent such losses were deducted in computing such Net Revenue), plus (b) provision for taxes based on income or profits of such Person for such period, to the extent such provision for taxes was used in computing such Net Revenue, plus (c) Interest Expense of such Person for such period, plus (d) Depreciation and Amortization Expense of such Person for such period to the extent such depreciation and amortization were deducted in computing such Net Revenue, in each case, as determined in accordance with GAAP. "CASH FLOW PARTICIPATION INTEREST" means as of any payment date, Cash Flow Participation Interest on the Senior Notes accrued through the Accrual Period last ended (including any Accrual Period that ends on such payment date) and any Cash Flow Participation Interest previously accrued and the payment of which has been permitted to be deferred. "CASH MAINTENANCE ACCOUNT" means the cash collateral account required to be established by the covenant entitled "Mandatory Cash Maintenance Account" and the provision entitled "Cash Funds Pledge." "CHANGE OF CONTROL" means the occurrence of any of the following: (i) the Authority ceases to be a wholly-owned unit, instrumentality or subdivision of the government of the Tribe, (ii) the Authority ceases to have the exclusive legal right to operate gaming operations of the Tribe, (iii) the Authority fails to retain in full force and effect at all times all material governmental consents, permits or legal rights necessary for the operation of the Resort and such failure continues for a period of 90 consecutive days, (iv) TCA or any other entity in which Sun International owns, directly or indirectly, at least 50% of the Capital Stock ceases to be the manager of the Resort or fails to hold any material governmental consent or permit required to manage the Resort and such failure continues for a period of 90 consecutive days or (v) Sun International fails to own, directly or indirectly, at least 50% of the Capital Stock of the Manager. -119- "COLLATERAL AGENT" means any person appointed by the Trustee as a collateral agent hereunder. "COLLATERAL DOCUMENTS" means, collectively, the Leasehold Mortgage, Cash Collateral Accounts Pledge and Security Agreement, Disbursement and Escrow Agreement, Secured Completion Guarantee or any other agreements, instruments, financing statements or other documents that evidence, set forth or limit the Lien of the Trustee in the Note Collateral. "COMMENCEMENT DATE" means the earlier of (i) October 31, 1996 and (ii) the first day that the Resort becomes Operating. "COMPACT" means the tribal-state Compact entered into between the Tribe and the State of Connecticut pursuant to the Indian Gaming Regulatory Act of 1988, PL 100-497, 25 U.S.C. 2701 ET SEQ. as the same may, from time to time, be amended, or such other Compact as may be substituted therefor. "COMPLETED" means, with respect to the Resort, the first time that (i) all Liens (other than Permitted Liens or Liens which relate to Disputed Amounts (as defined in the Secured Completion Guarantee) guaranteed by the Guarantor (as defined in the Secured Completion Guarantee) under Section 2.5 of the Secured Completion Guarantee) relating to the construction of the Resort have been paid, (ii) the general contractor and the project architect for the Resort, or an independent construction expert appointed by the Guarantor and acceptable to the Trustee, shall have delivered a certificate to the Trustee certifying that the Resort is complete in all material respects in accordance with the Plans therefor and in compliance with all applicable laws, ordinances and regulations (including gaming laws, ordinances and the Compact requirements) with respect to the physical structure, health and safety, environmental and hazardous materials, fire, equipment, security and physical operating (gaming and other) requirements of the Resort, and (iii) the Resort is in a condition (including installation of furnishings, fixtures and equipment sufficient for the Minimum Facilities and provision of adequate initial operating capital including all operating supplies, sufficient coin for the slot machines, sufficient operating cash for the other games and trained employees (or sufficient funds to hire and train such employees) so that the Resort is fit to receive guests in the ordinary course of business. "CONSTRUCTION BUDGET" means itemized schedules setting forth on a line item basis all of the costs (including financing costs) estimated to be incurred in connection with the financing, design, development, construction, equipping and opening of the Resort, as such schedules are delivered to the Disbursement and Escrow Agents as of the Issuance Date and as amended from time to time in accordance with the Disbursement and Escrow Agreement. "DEFAULT" means any event that is or with the passage of time or the giving of notice or both would be an Event of Default. "DEFERRED SUBORDINATED INTEREST" means any interest on Subordinated Indebtedness that is not currently payable in cash or that is not permitted to be paid in cash under the governing agreements, including any amortization of original issue discount. "DEPRECIATION AND AMORTIZATION EXPENSE" means with respect to any Person for any period, the total amount of depreciation and amortization expense and other noncash charges (excluding any noncash item that represents an accrual, reserve or amortization of a cash expenditure for a future period and excluding non-cash Interest Expense) of such Person for such period as defined in accordance with GAAP. -120- "DEVELOPMENT AND CONSTRUCTION AGREEMENT" means the Amended and Restated Gaming Facility Development and Construction Agreement between the Tribe and the Manager, substantially in the form delivered to the Trustee on the Issuance Date. "DISBURSEMENT AND ESCROW AGREEMENT" means the Disbursement and Escrow Agreement among the Authority, the Trustee, First Fidelity Bank (n/k/a First Union Bank of Connecticut), as Escrow Agent, the Manager, Sun International and Chicago Title Insurance Company, as Disbursement Agent, substantially in the form delivered to the Trustee on the Issuance Date. See "Material Agreements--Disbursement and Escrow Agreement." "DOLLARS" and "$" mean lawful money of the United States of America. "ELIGIBLE INSTITUTION" means (i) the Trustee, (ii) an Affiliate of the Trustee or (iii) a commercial banking institution that is federally chartered or organized under the laws of the State of Connecticut, is not Affiliated with or chartered by the Tribe, has combined capital and surplus in excess of $500 million, conducts banking operations in the State of Connecticut and whose debt is rated "A" (or higher) according to Standard & Poor's Ratings Group or Moody's Investors Service, Inc. "EQUITY INTERESTS" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "ESCROW ACCOUNT" shall have the meaning set forth in the Disbursement and Escrow Agreement. "ESCROW AGENT" shall have the meaning set forth in the Disbursement and Escrow Agreement. "EVENT OF LOSS" means, with respect to any property or asset (tangible or intangible, real or personal), any of the following: (i) any loss, destruction or damage of such property or asset; (ii) any institution of any proceedings for the condemnation or seizure of such property or asset or for the exercise of any right of eminent domain; (iii) any actual condemnation, seizure or taking by exercise of the power of eminent domain or otherwise of such property or asset, or confiscation of such property or asset or the requisition of the use of such property or asset; or (iv) any settlement in lieu of clause (ii) or (iii) above. "EXCESS CASH FLOW" means, with respect to any period, an amount equal to the Cash Flow of the Authority for such period, less (i) all Management Fees accrued for such period (whether or not distributed), (ii) principal payments on Indebtedness of the Authority during such period (other than principal payments (a) pursuant to an Excess Cash Purchase Offer, (b) which are funded from the proceeds of Indebtedness permitted to be incurred under the Indenture or (c) on the Working Capital Financing that do not permanently reduce indebtedness under the Working Capital Financing), (iii) the Authority's share of deposits into the Replacement Reserve Account (but not more than $1.8 million per fiscal year) commencing with the first full fiscal year after the commencement of operations of the Resort, (iv) all other capital expenditures not funded from the Replacement Reserve Account (but not more than $5.0 million per fiscal year), (v) any amounts set aside in the Cash Maintenance Account for such fiscal period, (vi) Interest Expense of the Authority for such period and (vii) taxes, if any, payable to the federal government or the State of Connecticut. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. -121- "EXCHANGE OFFER" means the registration by the Authority under the Securities Act of the Series B Senior Notes pursuant to a registration statement pursuant to which the Authority is obligated to offer the holders of all outstanding Transfer Restricted Securities the opportunity to exchange all such outstanding Transfer Restricted Securities held by such holders for Series B Senior Notes in an aggregate principal amount equal to the aggregate principal amount of the Transfer Restricted Securities tendered in such exchange offer by such holders. "FIXED CHARGE COVERAGE RATIO" means, with respect to any Person for any period, the ratio of the Cash Flow of such Person for such period to the Fixed Charges of such Person for such period. In the event that the Authority incurs, assumes, guarantees or redeems any Indebtedness (other than revolving credit borrowings) subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, guarantee or redemption of Indebtedness as if the same had occurred at the beginning of the applicable four-quarter period. For purposes of making the computation referred to above, acquisitions, dispositions and discontinued operations (as determined in accordance with GAAP) that have been made by the Authority, including all mergers, consolidations and dispositions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be calculated on a pro forma basis assuming that all such acquisitions, dispositions, discontinued operations, mergers, consolidations (and the reduction of any associated fixed charge obligations resulting therefrom) had occurred on the first day of the four-quarter reference period. "FIXED CHARGES" means, with respect to any Person for any period, the sum of (i) the Interest Expense of such Person for such period and (ii) the Interest Expense of such Person that was capitalized during such period, and (iii) to the extent not included above, any Interest Expense on Indebtedness of another Person that is Guaranteed by the referent Person or secured by a lien on assets of the referent Person (whether or not such Guarantee or lien is called upon). "FIXED INTEREST" means, interest at the rate of 13 1/2% per annum of the principal amount of the Senior Notes. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession. "GAMING" means any and all activities defined as Class II or Class III Gaming under IGRA or authorized under the Compact. "GAMING DISPUTES COURT" means the Gaming Disputes Court of the Tribe, as established pursuant to Article XIII, Section 2 of the Tribe's Constitution. "GAMING ENTERPRISE" means any commercial enterprise of the Authority, including, without limitation, any hotel or hotel resort property, any gaming operation, any restaurant or other entertainment or other commercial enterprise. "GAMING FACILITY MANAGEMENT AGREEMENT" means that certain Amended and Restated Gaming Facility Management Agreement between the Tribe and the Manager dated August 30, 1995 which shall be assigned by the Tribe to the Authority on or before the Issuance Date. See "Material Agreements--Management Agreement." "GAMING LICENSE" means every license, franchise or other authorization required to own, lease, operate or otherwise conduct gaming activities of the Tribe or the Authority including without limitation, all such licenses granted under the Tribal Gaming Ordinance, and the regulations promulgated pursuant thereto, and other applicable federal, state, foreign or local laws. -122- "GAMING REGULATORY AUTHORITY" means any agency, authority, board, bureau, commission, department, office or instrumentality of any nature whatsoever of the United States or foreign government, any state, province or any city or other political subdivision, whether now or hereafter existing, or any officer or official thereof, including without limitation, any division of the Authority or any other agency with authority to regulate any gaming operation (or proposed gaming operation) owned, managed or operated by the Tribe or the Authority. "GOVERNMENT SECURITIES" means securities that are (i) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with respect to any such Government Security or a specific payment of principal of or interest on any such Government Security held by such custodian for the account of the holder of such depository receipt; PROVIDED, HOWEVER, that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the Government Security or the specific payment of principal of or interest on the Government Security evidenced by such depository receipt. "GROSS REVENUES" means all revenues of any nature derived directly or indirectly by the Authority, including without limitation, gaming revenues, interest earned on bank accounts, food and beverage sales and other rental or receipts from lessees, sublessees, licensees and concessionaires (but not the gross receipts of such lessees, sublessees, licensees or concessionaires) and revenue recorded for promotional allowances, determined in accordance with GAAP consistently applied. "GUARANTEE" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness. "HEDGING OBLIGATIONS" means, with respect to any Person, the obligations of such Person under (i) currency exchange or interest rate swap agreements, currency exchange or interest rate cap agreements and currency exchange or interest rate collar agreements and (ii) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange or interest rates. "HOLDER" means a Person in whose name a Senior Note is registered. "IGRA" means the Indian Gaming Regulatory Act of 1988, PL100-497, U.S.C. 2701 ET SEQ. as same may, from time to time, be amended. "INDEBTEDNESS" means, with respect to any Person, (i) any indebtedness of such Person, whether or not contingent (a) in respect of borrowed money, including accrued and unpaid Cash Flow Participation Interest, (b) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof), (c) representing the balance deferred and unpaid of the purchase price of any property (including Capital Lease Obligations), except any such balance that constitutes an accrued expense or trade payable, or (d) representing any Hedging Obligations, if and to the extent any of the foregoing indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP, (ii) to the extent not otherwise included, any obligation by such Person to be liable for, or to pay, as obligor, guarantor or otherwise, on the Indebtedness of another Person (other than by endorsement of negotiable instruments for collection in the ordinary course of business) and (iii) to the extent not otherwise included, Indebtedness of another Person secured by a Lien on any asset of such Person (whether or not such Indebtedness is assumed by such Person). -123- "INDEPENDENT FINANCIAL ADVISOR" means an accounting, appraisal or investment banking firm of nationally recognized standing that is, in the judgment of the Management Board, (i) qualified to perform the task for which it has been engaged and (ii) disinterested and independent with respect to the Authority and each Affiliate of the Authority. "INITIAL PERIOD" means the period, if any, beginning on the Commencement Date and ending on the day prior to the first day that the Resort becomes Operating. "INTEREST AND EXCESS CASH FLOW ACCOUNT" means the Interest and Excess Cash Flow Account established under the covenant entitled "Interest and Excess Cash Flow Account" and the provision entitled "Cash Funds Pledge." "INTEREST EXPENSE" means, with respect to any period, the sum of (i) interest expense of such Person for such period, whether paid or accrued, to the extent such expense was deducted in computing Net Revenue (including, without limitation, Cash Flow Participation Interest on the Senior Notes, amortization of original issue discount and deferred financing fees, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of Capital Lease Obligations, and net payments (if any) pursuant to Hedging Obligations, excluding amortization of deferred financing fees), (ii) capitalized interest of such Person for such period, whether paid or accrued, to the extent such expense was deducted in computing Net Revenue and (iii) commissions, discounts and other fees and charges paid or accrued with respect to letters of credit and bankers' acceptance financing. "INVESTMENTS" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of loans (including Guarantees), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities and all other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. "ISSUANCE DATE" means the closing date for the sale and original issuance of the Series A Senior Notes. "KEY PROJECT ASSETS" means (i) the Lease and any real property or interest in real property held in trust for the Tribe by the United States, (ii) any improvements to the leasehold estate under the lease or such real property and (iii) any business records of the Authority or the Tribe. "LEASE" means the Land Lease between the Tribe and the Authority, substantially in the form delivered to the Trustee on the Issuance Date, as the same may be amended in accordance with the terms thereof and of the Indenture. See "Material Agreements--Land Lease." "LEASEHOLD MORTGAGE" means that certain Open-End Construction-Permanent Leasehold Mortgage Deed, Assignment of Leases and Rents and Security Agreement, executed by the Authority to encumber certain property in favor of the Trustee, for the ratable benefit of the Holders of Senior Notes, as the same may be amended in accordance with the terms thereof and of the Indenture. See "Material Agreements--Leasehold Mortgage Deed." "LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which banking institutions in the City of New York or at a place of payment on the Senior Notes are authorized by law, regulation or executive order to remain closed. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue on the interest that was due for the intervening period. "LIEN" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction). -124- "LIQUIDATED DAMAGES" means all liquidated damages then owing pursuant to Section 5 of the Registration Rights Agreement. "MANAGEMENT AGREEMENT" means the Amended and Restated Gaming Facility Management Agreement or any successor management agreement thereto. "MANAGEMENT BOARD" means the Management Board of the Authority or any authorized committee of the Management Board of the Authority, as applicable. "MANAGEMENT COMPANY" or "MANAGER" means TCA or a successor permitted pursuant to the Indenture. "MANAGEMENT FEE" means the Management Fee under the Management Agreement. "MINIMUM FACILITIES" means, with respect to the Resort, at least 2,500 operating slot machines, 150 operating table games, operating restaurants with 1,200 seats, 5,000 usable parking spaces, adequate access to the local highway system and all banking, coin, security and other ancillary equipment and facilities necessary to operate the Resort on a 24 hour per day, seven days a week basis. "MINIMUM PRIORITY PAYMENT" has the meaning set forth in the Gaming Facility Management Agreement. "MONTHLY CASH FLOW PARTICIPATION INTEREST" means, with respect to any month and any principal amount of the Senior Notes, the product of 5% of the Authority's Cash Flow for such month times a fraction, the numerator of which is the principal amount outstanding of the Senior Notes and the denominator of which is $175,000,000. "NET LOSS PROCEEDS" means the aggregate cash proceeds received by the Authority in respect of any Event of Loss, including, without limitation, insurance proceeds, condemnation awards or damages awarded by any judgment, net of the direct costs in recovery of such proceeds (including, without limitation, legal, accounting, appraisal and insurance adjuster fees) and any taxes paid or payable as a result thereof. "NET PROCEEDS" means the aggregate cash proceeds received by the Authority in respect of any Asset Sale, net of the direct costs relating to such Asset Sale (including, without limitation, legal, accounting and investment banking or brokerage fees, and sales commissions), and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions), amounts required to be applied to the repayment of Indebtedness secured by a Lien (other than the Senior Notes) on the asset or assets that are the subject of such Asset Sale and any reserve for adjustment in respect of the sale price of such asset or assets. "NET RECEIPTS ACCOUNT" means the Depository Account established pursuant to the Management Agreement. "NET REVENUE" means the sum of Net Revenue From Gaming Operations plus Net Revenue From Other Operations. "NET REVENUE FROM GAMING OPERATIONS" means Gross Gaming Revenue (Win) (as defined in the Gaming Facility Management Agreement) from Class III Gaming, less all Class III gaming related Operating Expenses (excluding any Management Fee) determined in accordance with GAAP consistently applied. -125- "NET REVENUE FROM OTHER OPERATIONS" means gross revenues of the Authority from all sources other than Gaming, such as food and beverage, entertainment and retail, less all related Operating Expenses, excluding any related Management Fee payable to the Manager and less the retail value of Promotional Allowances (as defined in the Management Agreement) plus gross revenues from Class II gaming operations less any Class II gaming related Operating Expenses determined in accordance with GAAP consistently applied and less the following revenues actually received by the Authority and included in gross revenues: (i) any gratuities or service charges added to a customer's bill; (ii) any credits or refunds made to customers, guests or patrons; (iii) any sums and credits received by the Authority for lost or damaged merchandise; (iv) any sales, excise, gross receipt, admission, entertainment, tourist or other taxes or charges (or assessments equivalent thereto, or payments made in lieu thereof) which are received from patrons and passed on to a governmental or quasi-governmental entity; (v) any proceeds from the sale or other disposition of furnishings and equipment or other capital assets; (vi) any fire and extended coverage insurance proceeds other than for business interruption; (vii) any condemnation awards other than for temporary condemnation; (viii) any proceeds of financing or refinancing; and (ix) any interest on the Replacement Reserve Fund (as defined in the Management Agreement), all determined in accordance with GAAP consistently applied, and 25 U.S.C. Section 2703(9). "NIGC" means the National Indian Gaming Commission. "NOTE COLLATERAL" means (i) the Escrow Account, the Replacement Reserve Account, the Cash Maintenance Account, the Net Receipts Account, the Interest and Excess Cash Flow Account and any and all other accounts at any time identified as Collateral in any Collateral Document, all funds at any time on deposit in any such account, all investments of any such funds and all interest and dividends thereon, and (ii) all other assets, now owned or hereafter acquired, of the Authority defined as Collateral in any Collateral Document or the Indenture, which will initially include the Gross Revenues and other cash referred to in the provision entitled "Cash Funds Pledge," the leasehold interest and all personal property owned by the Authority with certain exceptions, but shall specifically exclude the land held in trust for the Tribe by the United States, and excluding any real property interest therein, including the buildings, improvements and fixtures thereon, other than the leasehold interest pursuant to the Lease. "OBLIGATIONS" means any principal, premium, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "OFFERING" means the Offering of the Senior Notes by the Authority. "OFFICER" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice President of such Person and, in the case of the Authority, shall include members of the Management Board. "OFFICERS' CERTIFICATE" means a certificate signed on behalf of the Authority by two Officers of the Authority, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Authority that meets the requirements of Section 12.05 of the Indenture. "OPERATING" means, with respect to the Resort, the first time that (i) all Gaming Licenses have been granted and have not been revoked or suspended, (ii) all Liens (other than Liens created by the Collateral Documents or Permitted Liens) related to the construction of the Resort have been paid or, if payment is not yet due or if such payment is contested in good faith by the Authority, sufficient funds remain in the Collateral Account to discharge such Liens, (iii) the general contractor and the architect of the Resort shall have delivered a certificate to the Trustee certifying that the Resort is complete in all material respects in accordance with the Plans therefor and all applicable building laws, ordinances and regulations, (iv) the Resort is in a condition (including installation of furnishings, fixtures and equipment) to receive guests in the ordinary course of business, and (v) gaming and other operations in accordance with applicable law are open to the general public and are being conducted at the Resort with respect to at least the Minimum Facilities for such Resort. "OPERATING EXPENSES" means all operating expenses of the Authority with respect to any commercial enterprise, determined in accordance with GAAP consistently applied. Operating Expenses shall include, without limitation: (i) all accrued interest expense (whether or not distributed and whether or not deposited, including deposits into the Interest and Excess Cash Flow Account) with respect to the Senior Notes and the Subordinated Notes; (ii) depreciation and amortization and (iii) any bond premium under the Indenture. -126- "OWNERSHIP INTEREST" means, with respect to any Person, Capital Stock of such Person or any interest which carries the right to elect or appoint any members of the Management Board or the Board of Directors or other executive office of such Person. "PARI PASSU LIEN" means a Lien on the Note Collateral that ranks pari passu with the Lien of the Trustee for the ratable benefit of the Holders pursuant to any arrangement in form and substance satisfactory to the Trustee that provides that the Trustee, (i) has the sole authority to exercise any remedy or right with respect to the Note Collateral, (ii) shall be required to act in respect of any remedy or right with respect to the Note Collateral or under the Collateral Documents only upon the direction of the holders of a majority of the principal amount of the Indebtedness secured by the Note Collateral, and (iii) does not act as trustee, fiduciary or agent, and shall have no duty to act for the benefit of any holder of any Indebtedness so secured (other than the Senior Notes). "PAYMENT DEFAULT" means (i) any failure to pay when due, any principal, premium or interest on the Senior Notes, whether at stated maturity, upon acceleration, upon redemption or in connection with a Repurchase Offer, in each case, without giving effect to any grace period, or (ii) any failure to deposit any required amounts into the Cash Maintenance Account or in the Interest and Excess Cash Flow Account. "PERMITTED INVESTMENTS" means (a) any Investments in Cash Equivalents; and (b) other Investments in any Person that do not exceed in the aggregate $50,000 at any time outstanding. "PERMITTED LIENS" means (i) Liens to secure Indebtedness permitted by the terms of the Indenture under clause (d) of the second paragraph of the covenant entitled "Limitations on Incurrence of Indebtedness" on the hotel assets (excluding any lien on the fee title and the reversionary interest of the United States and the Tribe in the Premises, the Improvements and the Appurtenant Rights as such terms are defined in the Leasehold Mortgage) or revenues financed by such Indebtedness or on after acquired personal property or intangibles used in connection with such hotel; (ii) Liens in favor of the Tribe representing the ground lessor's interest under the Lease; (iii) Liens on property existing at the time of acquisition thereof by the Authority; PROVIDED, that such Liens were in existence prior to the contemplation of such acquisition; (iv) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business; (v) Liens to secure Indebtedness (including capital lease obligations) permitted by the Indenture, covering only the assets acquired with such Indebtedness; (vi) Liens existing on the date of the Indenture; (vii) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded; PROVIDED, HOWEVER that any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor; (viii) Liens securing Indebtedness permitted under Section 4.09(e) of the Indenture; PROVIDED THAT such Liens are no more extensive than the liens securing the Indebtedness so extended, refinanced, renewed, replaced or refunded thereby; (ix) Liens incurred in the ordinary course of business of the Authority with respect to obligations that do not exceed $250,000 at any one time outstanding and that (a) are not incurred in connection with the borrowing of money or the obtaining of advances or credit (other than trade credit in the ordinary course of business) and (b) do not in the aggregate materially detract from the value of the property and materially impair the use thereof in the operation of business by the Authority; and (x) Pari Passu Liens on the Note Collateral to secure indebtedness permitted by clause (a) of the second paragraph of the covenant described under the caption "Limitations on the Incurrence of Indebtedness"; provided, however, it is acknowledged that Permitted Liens will not include any Lien on the land held in trust for the Tribe by the United States or any real property interest therein, including the buildings, improvements and fixtures, other than the leasehold interest pursuant to the Lease, or which will give the Holder thereof a proprietary interest in any gaming activity as prohibited by Section 11(b)(2)(A) of IGRA. -127- "PERMITTED PROCEED USES" means (i) to fund interest (including Cash Flow Participation Interest, if any) payments on the Senior Notes, (ii) repurchases of Senior Notes pursuant to an Asset Sale Offer, a Change of Control Offer, an Excess Cash Purchase Offer or an Event of Loss Offer, (iii) Project Costs relating to the Resort in accordance with the Disbursement and Escrow Agreement, and (iv) the repayment of amounts advanced to or paid on behalf of the Tribe or the Authority for (a) any fees and expenses in connection with obtaining and retaining any Gaming Licenses necessary to conduct gaming operations at the Resort, (b) the equipping of the Resort in accordance with the Disbursement and Escrow Agreement, and (c) administrative and operating expenses of the Authority and/or the Tribe necessary to develop, construct, and begin operations at the Resort, including without limitation, pre-opening expenses and initial working capital or bankroll. "PERSON" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. "PLANS" means all drawings, plans and specifications prepared by or on behalf of the Authority, as the same may be amended or supplemented from time to time, and, if required, submitted to and approved by the appropriate Gaming Regulatory Authorities, which describe and show the Resort and the labor and materials necessary for construction thereof. "PRINCIPAL BUSINESS" means the Class II and Class III casino Gaming (as such terms are defined in IGRA) and resort business and any activity or business incidental, directly related or similar thereto, or any business or activity that is a reasonable extension, development or expansion thereof or ancillary thereto, including any hotel, entertainment, recreation or other activity or business designed to promote, market, support, develop, construct or enhance the casino gaming and resort business operated by the Authority. "PROJECT COSTS" means, (i) all costs of developing, designing, constructing, equipping and furnishing the Resort, including costs related to land acquisition, professional services, pre-opening costs and initial operating capital, (ii) all start-up and operating costs of the Authority until the Resort becomes Completed, and (iii) all financing fees and expenses, interest payments and any scheduled principal prior to the date the Resort becomes Completed, provided that all Project Costs shall be allocated in accordance with GAAP, consistently applied. "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement, dated as of the Issuance Date, by and among the Authority and the other parties named on the signature pages thereof, substantially in the form delivered to the Trustee on the Issuance Date. "REPLACEMENT RESERVE ACCOUNT" means a deposit account established, maintained and controlled by the Trustee and designated by the Authority and TCA as the Reserve Account established pursuant to Section 4.12 of the Gaming Facility Management Agreement. "RESORT" means the multi-amenity gaming and entertainment resort proposed to be constructed in Montville, Connecticut as described in this Prospectus as set forth in the Plans, as the Plans may be amended pursuant to the Indenture and the Collateral Documents, but excluding (i) any obsolete personal property or real property improvement determined by the Authority to be no longer useful or necessary to the operations or support of the Resort (other than Key Project Assets) and (ii) any equipment leased from a third party in the ordinary course of business. "RESORT SUPPORT ENTITY" means any Person who provides goods or services to the Resort or whose operations are ancillary to, in support of, or useful to the operations of the Resort. -128- "RESTRICTED INVESTMENT" means any Investment other than a Permitted Investment. "SEC" means the Securities and Exchange Commission. "SECURED COMPLETION GUARANTEE" means the completion guarantee of Sun International substantially in the form delivered to the Trustee on the Issuance Date. "SECURITIES ACT" means the Securities Act of 1933, as amended. "SEMI-ANNUAL PERIOD" means each period that begins on April 1 and ends on the next succeeding September 30 or each period that begins on October 1 and ends on the next succeeding March 31. "SENIOR NOTES" means, collectively, the Series A Senior Notes and, when issued under the Exchange Offer, the Series B Senior Notes. "SERIES A SENIOR NOTES" means the Authority's Series A Senior Secured Notes due November 15, 2002 to be issued pursuant to the Indenture. "SERIES B SENIOR NOTES" means the Authority's Series B Senior Secured Notes due November 15, 2002 to be issued pursuant to the Indenture or in the Exchange Offer. "SUBORDINATED INDEBTEDNESS" means the Indebtedness evidenced by the Subordinated Notes and any other Indebtedness of the Authority which is expressly by its terms subordinated in right of payment to the Senior Notes. "SUBORDINATED NOTES" means the Subordinated Notes due 2003 issued by the Authority pursuant to the Note Purchase Agreement dated as of the Issuance Date between the Authority and Sun International. "SUBSIDIARY" means (i) any instrumentality or subdivision or subunit of the Authority that has a separate legal existence or status or whose property and assets would not be bound by the terms of the Indenture or the Collateral Documents or (ii) with respect to any Person, any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person or a combination thereof. The Tribe and any other instrumentality of the Tribe that is not also an instrumentality of the Authority shall not be a Subsidiary of the Authority. "SUN INTERNATIONAL" means Sun International Hotels Limited, a Bahamian corporation or any of its affiliates. "TCA" means Trading Cove Associates, a Connecticut general partnership. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date on which the Indenture is qualified under the TIA. "TRANSFER RESTRICTED SECURITIES" means securities that bear or are required to bear the legend set forth in Section 2.06 of the Indenture. -129- "TRIBAL GAMING ORDINANCE" means the ordinance and any amendments thereto, and all related or implementing ordinances, including without limitation, the Gaming Authority Ordinance, enacted on July 15, 1995 which are enacted by the Tribe to authorize and regulate gaming on the Mohegan Reservation pursuant to IGRA. "TRIBE" means the Mohegan Tribe of Indians of Connecticut, a sovereign tribe recognized by the United States of America pursuant to 25 C.F.R. Section 83. "TRUSTEE" means the party named as such above until a successor replaces it in accordance with the applicable provisions of the Indenture and thereafter means the successor serving thereunder. "WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness, at any date, the number of years obtained by dividing (a) the sum of the products obtained by multiplying (x) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (y) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment, by (b) the then outstanding principal amount of such Indebtedness, as the case may be. -130- MATERIAL FEDERAL INCOME TAX CONSEQUENCES The following description is a general summary of the principal federal income tax matters of general application relating to the Exchange Offer. Such description is based upon the current provisions of the Internal Revenue Code of 1986, as amended (the "Code"), applicable Treasury regulations, judicial authority and administrative rulings and practice. The statements of law and legal conclusions contained herein are based on the opinion of Neal, Gerber & Eisenberg, special tax counsel to the Authority. There can be no assurance that the Internal Revenue Service (the "IRS") will not take a contrary view, and no ruling from the IRS has been or will be sought. Legislative, judicial or administrative changes or interpretations may occur that could alter or modify the statements and conclusions set forth herein. Any such changes or interpretations may or may not be retroactive and could affect the tax consequences to the Senior Note holders participating in the Exchange Offer. The following summary is for general information only. The tax treatment of a Senior Note holder may vary depending upon its particular situation. Certain Senior Note holders (including insurance companies, tax-exempt organizations, financial institutions or broker-dealers, foreign corporations and persons who are not citizens or residents of the United States) may be subject to special rules not discussed below. EACH HOLDER OF THE SENIOR NOTES IS URGED TO CONSULT ITS TAX ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES OF SUCH HOLDER'S EXCHANGING SERIES A SENIOR NOTES FOR SERIES B SENIOR NOTES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL, OR FOREIGN TAX LAWS. EXCHANGE OF SERIES B SENIOR NOTES FOR SERIES A SENIOR NOTES The exchange of Series B Senior Notes for Series A Senior Notes pursuant to the Exchange Offer should not be treated as an "exchange" for federal income tax purposes because the Series B Senior Notes should not be considered to differ materially in kind or extent from the Series A Senior Notes. Rather, the Series B Senior Notes received in the Exchange Offer by a holder of Series A Senior Notes should be treated as a continuation of the Series A Senior Notes in the hands of such holder. As a result, there should be no federal income tax consequences to holders electing to exchange Series A Senior Notes for Series B Senior Notes pursuant to the Exchange Offer. If, however, such transactions were treated as an "exchange" for federal income tax purposes, the transaction should constitute a recapitalization for federal income tax purposes. Under the rules applicable to recapitalizations, holders of Series A Senior Notes exchanging such Senior Notes for Series B Senior Notes generally should not recognize any gain or loss upon such exchange. LIQUIDATED DAMAGES The Liquidated Damages described under "The Exchange Offer--Registration Rights Agreement" should be taxable to the holder of Senior Notes as ordinary income in accordance with the such holder's method of accounting for tax purposes. The IRS, however, may take a different position, which could affect the timing and amount of a holder's income. -131- PLAN OF DISTRIBUTION This Prospectus may be used by the Initial Purchasers and/or certain broker-dealers in connection with offers and sales of the Senior Notes in market-making transactions in the over-the-counter market at negotiated prices related to prevailing market prices at the time of sale. The Initial Purchasers and/or such broker-dealers may act as principal or agent in such transactions. The Authority has been advised that it is the position of the staff of the Commission that any broker-dealer that receives Series B Senior Notes for its own account pursuant to the Exchange Offer in exchange for Series A Senior Notes acquired by such broker-dealer as a result of market-making or other trading activities must deliver a prospectus in connection with any resale of such Series B Senior Notes. The Authority agrees that for a period of one year after the Expiration Date, it will ensure that this Prospectus, as it may be amended or supplemented from time to time, meets the requirements of the Securities Act and is available to any broker-dealer for use in connection with any such resale of such Series B Senior Notes (other than a resale of an unsold allotment relating to the original placement of the Series A Senior Notes). The Authority will not receive any proceeds from any sale of Series B Senior Notes by broker-dealers. Series B Senior Notes received by broker-dealers for their own account pursuant to the Exchange Offer may be sold from time to time at prices determined at the time of sale directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or the purchasers of any such Series B Senior Notes. Any broker-dealer that resells Series B Senior Notes that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such Series B Senior Notes may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of Series B Senior Notes and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that by delivering a prospectus, a broker-dealer will be not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. -132- LEGAL MATTERS Certain legal matters regarding the validity of the Series B Senior Notes will be passed upon for the Authority by Rome, McGuigan, Sabanosh & Klebanoff, P.C., Hartford, Connecticut, and by Hobbs, Straus, Dean & Walker, Washington, D.C. Certain tax matters will be passed upon by Neal, Gerber & Eisenberg, Chicago, Illinois, special tax counsel to the Authority. INDEPENDENT ACCOUNTANTS The balance sheet of the Authority included in this Prospectus and Registration Statement has been audited by Arthur Andersen LLP, independent certified public accountants, as indicated in their report with respect thereto. AVAILABLE INFORMATION The Authority is not currently subject to the periodic reporting and other informational requirements of the Exchange Act. The Authority has agreed that, whether or not it is required to do so by the rules and regulations of the Commission, for so long as any of the Senior Notes remain outstanding, it will furnish to the holders of the Senior Notes and file with the Commission (unless the Commission will not accept such a filing) (i) all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if the Authority were required to file such forms, including a "Management's Discussion and Analysis of Results of Operations and Financial Condition" and, with respect to the annual information only, a report thereon by the Authority's certified independent accountants and (ii) all reports that would be required to be filed with the Commission on Form 8-K if the Authority were required to file such reports. In addition, for so long as any of the Senior Notes remain outstanding, the Authority has agreed to make available to any prospective purchaser of the Senior Notes or beneficial owner of the Senior Notes in connection with any sale thereof the information required by Rule 144A(d)(4) under the Securities Act. -133- GLOSSARY AND INDEX OF DEFINED TERMS Accrual Period: The period during which each installment of Cash Flow Participation Interest is calculated to accrue, which is defined under the Indenture as the period from, but not including, the most recent date to which Cash Flow Participation Interest has been paid or provided for or through which Cash Flow Participation Interest had been calculated and deferred (or from and including the earlier of October 31, 1996 or the first day the Mohegan Sun Casino commences operations, if no installment of Cash Flow Participation Interest has been paid, provided for or deferred) to and including, either (i) the last day of the next Semi-annual Period, if the corresponding principal of the Senior Notes has not become due and payable, or (ii) the date of payment, if the corresponding principal of the Senior Notes has become due and payable (whether at stated maturity, upon acceleration, upon maturity of repurchase obligation or otherwise). Amounts Required for Amounts required to cause the Mohegan Sun Completion: Casino to be Completed, including, without limitation, (i) all regularly scheduled payments of principal and interest on any indebtedness (other than the Senior Notes), (ii) all regularly scheduled payments of interest (but not principal) due on the Senior Notes, (iii) all costs and cost overruns of construction (E.G., costs of labor, materials, equipment and supplies, taxes, utilities, assessments, insurance and maintenance expenses), (iv) all operating costs of the Authority, and (v) all other amounts or funds required. BIA: Bureau of Indian Affairs of the Department of the Interior. Business Board: Each of two different advisory and oversight boards established under each of the Development Agreement and the Management Agreement which, in the case of the Management Agreement, consists of two members appointed by the Authority and two members appointed by TCA and, in the case of the Development Agreement, consists of an equal number of representatives of the Authority and TCA. Cash Flow: With respect to a specified period, the Net Revenue for such period, plus (i) an amount equal to any extraordinary loss plus any net loss realized in connection with an Asset Sale (to the extent such losses were deducted in computing such Net Revenue), plus (ii) provision for taxes based on income or profits for such period, to the extent such provision for taxes was used in computing such Net Revenue, plus (iii) Interest Expense for such period, plus (iv) Depreciation and Amortization Expense for such period to the extent such depreciation and amortization were deducted in computing such Net Revenue, in each case, as determined in accordance with GAAP. -134- Cash Flow Participation As of any payment date, Cash Flow Participation Interest: Interest on the Senior Notes accrued through the Accrual Period last ended (including any Accrual Period that ends on such payment date) plus any Cash Flow Participation Interest previously accrued and with respect to which payment has been permitted to be deferred. Cash Maintenance The account established by the Authority Account: pursuant to the Indenture into which the Authority is obligated to deposit up to $6 million per year, up to a maximum deposit at any time of $36 million, which amount may be applied by the Trustee, upon an event of default under the Indenture, to satisfy the Authority's obligations under the Senior Notes. Change of Control: The occurrence of any of the following: (i) the Authority ceases to be a wholly-owned unit, instrumentality or subdivision of the government of the Tribe, (ii) the Authority ceases to have the exclusive legal right to operate gaming operations of the Tribe, (iii) the Authority fails to retain in full force and effect at all times all material governmental consents, permits or legal rights necessary for the operation of the Mohegan Sun Casino and such failure continues for a period of 90 consecutive days, (iv) TCA or any other entity in which Sun International owns, directly or indirectly, at least 50% of the capital stock ceases to be the manager of the Mohegan Sun Casino or fails to hold any material governmental consent or permit required to manage the Mohegan Sun Casino and such failure continues for a period of 90 consecutive days or (v) Sun International fails to own, directly or indirectly, at least 50% of the Capital Stock of TCA. Change of Control Offer: An offer required to be made by the Authority upon a Change of Control to purchase all or any part (equal to $1,000 or an integral multiple thereof) of the Senior Notes at a price in cash equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest (including Cash Flow Participation Interest) and Liquidated Damages, if any, to the date of purchase. The Authority shall not be required to make such an offer to purchase (i) if the Change of Control event ceases prior to the closing of such offer or (ii) if on or before the 120th day after the Change of Control, which Change of Control arises under either clause (iv) or (v) of the definition thereof, TCA is replaced as the manager (or the Authority is using its best efforts to effect such a replacement) with a Person with experience and reputation comparable to Sun International. -135- Completed: With respect to the Mohegan Sun Casino, the first time that (i) all liens (other than Permitted Liens or Liens which relate to Disputed Amounts (as defined in the Secured Completion Guarantee) guaranteed by Sun International under Section 2.5 of the Secured Completion Guarantee) relating to the construction of the Mohegan Sun Casino have been paid, (ii) the general contractor and the project architect for the Mohegan Sun Casino, or an independent construction expert appointed by the Sun International and acceptable to the Trustee, shall have delivered a certificate to the Trustee certifying that the Mohegan Sun Casino is complete in all material respects in accordance with the plans therefor and in compliance with all applicable laws, ordinances and regulations (including gaming laws, ordinances and the Mohegan Compact requirements) with respect to the physical structure, health and safety, environmental and hazardous materials, fire, equipment, security and physical operating (gaming and other) requirements of the Mohegan Sun Casino, and (iii) the Mohegan Sun Casino is in a condition (including installation of furnishings, fixtures and equipment sufficient for the Minimum Facilities and provision of adequate initial operating capital including all operating supplies, sufficient coin for the slot machines, sufficient operating cash for the other games and trained employees (or sufficient funds to hire and train such employees) so that the Mohegan Sun Casino is fit to receive guests in the ordinary course of business. Deferred Subordinated Any interest on Subordinated Indebtedness that Interest: is not currently payable in cash or that is not permitted to be paid in cash under the governing agreements. DEP: Department of Environmental Protection of the State of Connecticut. DOT: Department of Transportation of the State of Connecticut. Equipment Financing: The up to $40 million of vendor or third party financing to be incurred by the Authority with respect to certain equipment, including gaming equipment, for use at the Mohegan Sun Casino, which will be senior secured obligations of the Authority and will rank PARI PASSU in right of payment with any existing and future senior Indebtedness of the Authority. Escrow Account: The account established by the Escrow Agent pursuant to Section 2 of the Disbursement and Escrow Agreement dated as of September 29, 1995 into which all of the net proceeds of the issuance of the Series A Senior Notes were deposited, pending disbursement by the Escrow Agent in accordance with the terms thereof. -136- Event of Loss: With respect to any property or asset (tangible or intangible, real or personal), any of the following: (i) any loss, destruction or damage of such property or asset; (ii) any institution of any proceedings for the condemnation or seizure of such property or asset or for the exercise of any right of eminent domain; (iii) any actual condemnation, seizure or taking by exercise of the power of eminent domain or otherwise of such property or asset, or confiscation of such property or asset or the requisition of the use of such property or asset; or (iv) any settlement in lieu of clause (ii) or (iii) above. Event of Loss Purchase An offer made by the Authority following an Offer: Event of Loss to all holders of Senior Notes to purchase the maximum principal amount of Senior Notes that is an integral multiple of $1,000 and that may be purchased out of Excess Loss Proceeds in excess of $50 million at an offer price in cash in an amount equal to 100% of the principal amount thereof, plus accrued and unpaid interest (including Cash Flow Participation Interest and Liquidated Damages), if any, to the date fixed for the closing of such offer, in accordance with the procedures set forth in the Indenture. Excess Cash Flow: The Cash Flow of the Authority for a specified period, less (i) all management fees to be paid to TCA under the Management Agreement that have accrued for such period (whether or not distributed), (ii) principal payments on Indebtedness of the Authority during such period (other than principal payments (a) pursuant to an Excess Cash Purchase Offer, (b) which are funded from the proceeds of Indebtedness permitted to be incurred under the Indenture or (c) on the Working Capital Financing that do not permanently reduce indebtedness under the Working Capital Financing), (iii) the Authority's share of deposits into the Replacement Reserve Account (but not more than $1.8 million per fiscal year) commencing with the first full fiscal year after the commencement of operations of the Mohegan Sun Casino, (iv) all other capital expenditures not funded from the Replacement Reserve Account (but not more than $5.0 million per fiscal year), (v) any amounts set aside in the Cash Maintenance Account for such fiscal period, (vi) interest expense of the Authority for such period, whether paid, accrued or capitalized, and (vii) taxes, if any, payable to the federal government or the State of Connecticut. Excess Cash Purchase The offer required to be made by the Authority Offer: within 120 days after the last day of each fiscal year of the Authority, beginning with the fiscal year ending September 30, 1997, to purchase outstanding Senior Notes in an amount equal to the sum of (i) 50% of the Excess Cash Flow for such fiscal year, (ii) 100% of the amount of the Deferred Subordinated Interest for such fiscal year and (iii) accrued interest to the purchase date and Liquidated Damages, if any, on such principal at the purchase prices set forth in the Indenture (which are expressed as a percentage of the principal amount). -137- Excess Loss Proceeds: Any net proceeds from an Event of Loss with respect to Note Collateral that has a fair market value (or replacement cost, if greater) in excess of $500,000 that are not within, 360 days after any such Event of Loss, applied by the Authority (or are not permitted to be applied) to the rebuilding, repair, replacement or construction of improvements to the Mohegan Sun Casino. To the extent that the aggregate amount of Senior Notes tendered pursuant to an Event of Loss Offer is less than the Excess Loss Proceeds, such remaining Excess Loss Proceeds shall be released to the Authority, subject to the terms of the Cash Collateral Accounts Pledge and Security Agreement, and the Authority may use any such remaining Excess Loss Proceeds so released for any lawful purpose. Exchange Agent: First Fidelity Bank, n/k/a First Union Bank of Connecticut, as exchange agent in connection with the Exchange Offer. Exchange Offer: The offer by the Authority to exchange $175 million aggregate principal amount of Series B Senior Notes for an equal principal amount of Series A Senior Notes. Expiration Date: The termination date for the Exchange Offer, which shall be 5:00 p.m., New York City time, July 12, 1996 unless extended by the Authority in its sole discretion, being the date prior to which Series A Senior Notes must be validly tendered and not withdrawn in order to be accepted by the Authority for exchange. Fixed Charge Coverage With respect to a specified period, the ratio Ratio: of the Cash Flow for such period to the Fixed Charges for such period. In the event that the Authority incurs, assumes, guarantees or redeems any Indebtedness (other than revolving credit borrowings) subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, guarantee or redemption of Indebtedness as if the same had occurred at the beginning of the applicable four-quarter period. For purposes of making the computation referred to above, acquisitions, dispositions and discontinued operations (as determined in accordance with GAAP) that have been made by the Authority, including all mergers, consolidations and dispositions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be calculated on a pro forma basis assuming that all such acquisitions, dispositions, discontinued operations, mergers, consolidations (and the reduction of any associated fixed charge obligations resulting therefrom) had occurred on the first day of the four-quarter reference period. -138- Fixed Interest: Interest at the rate of 13 1/2% per annum of the principal amount of the Senior Notes then outstanding from the date of issuance of Senior Notes to the date of payment of such principal amount of such Senior Note. Fixed Interest on the Series A Senior Notes is, and the Series B Senior Notes will be, computed on the basis of a 360-day year, consisting of twelve 30-day months. Gaming Regulatory Any agency, authority, board, bureau, Authority: commission, department, office or instrumentality of any nature whatsoever of the United States or foreign government, any state, province or any city or other political subdivision, whether now or hereafter existing, or any officer or official thereof, including without limitation, any division of the Authority or any other agency with authority to regulate any gaming operation (or proposed gaming operation) owned, managed or operated by the Tribe or the Authority. IGRA: The Indian Gaming Regulatory Act of 1988, as amended. Indebtedness: With respect to any Person, (i) any indebtedness of such Person, whether or not contingent (a) in respect of borrowed money, including accrued and unpaid Cash Flow Participation Interest, (b) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof), (c) representing the balance deferred and unpaid of the purchase price of any property (including capital lease obligations), except any such balance that constitutes an accrued expense or trade payable, or (d) representing any hedging obligations, if and to the extent any of the foregoing indebtedness (other than letters of credit and hedging obligations) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP, (ii) to the extent not otherwise included, any obligation by such Person to be liable for, or to pay, as obligor, guarantor or otherwise, on the Indebtedness of another Person (other than by endorsement of negotiable instruments for collection in the ordinary course of business) and (iii) to the extent not otherwise included, Indebtedness of another Person secured by a lien on any asset of such Person (whether or not such Indebtedness is assumed by such Person). Indenture: The Indenture governing the Senior Notes, dated as of September 29, 1995. Initial Purchasers: Bear, Stearns & Co. Inc. and Donaldson, Lufkin & Jenrette Securities Corporation, collectively, as the initial purchasers on September 29, 1995 of the Series A Senior Notes. Interest and Excess Cash The account established by the Authority Flow Account: pursuant to the Indenture into which the Authority is required to deposit, on a monthly basis, an amount equal to the accrued interest on the Senior Notes and the Subordinated Notes and 50% of Excess Cash Flow, which amounts will be used to pay interest on the Senior Notes and fund Excess Cash Purchase Offers. -139- Liquidated Damages: Monetary damages the Authority is obligated to pay to the holders of Senior Notes under certain circumstances if the Authority fails to comply with the registration requirements of the Registration Rights Agreement. Minimum Priority Payment: The $50,000 minimum monthly payment required to be made by TCA to the Authority under the Management Agreement, which payment is chargeable against the Authority's share of Net Revenue and is required to be made to the Authority for any month during which any gaming is conducted at the Mohegan Sun Casino. Net Receipts Account: The depository account established pursuant to the Management Agreement into which TCA is required to deposit, on a daily basis, all cash collected from the operation of the Mohegan Sun Casino. Net Revenues: As used in the Management Agreement, the amount of the gross revenues of the Mohegan Sun Casino less operating expenses and certain specified categories of revenue, such as income from any financing or refinancing, taxes or charges received from patrons on behalf of and remitted to a governmental entity, proceeds from the sale of capital assets, insurance proceeds and interest on the Replacement Reserve Account. Net Revenues also include Net Gaming Revenues, which are equal to the amount of the "net win" from Class III Gaming operations (I.E., the difference between gaming wins and losses) less all gaming-related operational expenses (excluding the management fee). NIGC: The National Indian Gaming Commission, an independent governmental agency within the U.S. Department of Interior exercising primary federal regulatory responsibility over Indian gaming. -140- Note Collateral: All of collateral that, pursuant to the terms of the Indenture, secures the Authority's obligations under the Senior Notes (and may secure the Working Capital Financing), consisting primarily of: (i) the Escrow Account, the Replacement Reserve Account, the Cash Maintenance Account, the Net Receipts Account, the Interest and Excess Cash Flow Account and any and all other accounts at any time identified as Collateral in the Indenture, the Disbursement and Escrow Agreement or any collateral document related thereto, all funds at any time on deposit in any such account, all investments of any such funds and all interest and dividends thereon, and (ii) a first priority leasehold mortgage (the "Leasehold Mortgage") on the 25-year ground lease from the Tribe to the Authority with respect to the Site (the "Lease"), (ii) a first priority security interest in all of the Authority's furniture, trade fixtures and equipment, accounts receivable, general intangibles, inventory and other personal property (other than personal property permitted to be financed and secured, as described elsewhere herein, or personal property that is not permitted by applicable law to secure the Senior Notes), (iii) a first priority security interest in the proceeds of the Series A Senior Notes which remain on deposit in the Escrow Account and (iv) an assignment of material construction contracts pursuant to which the Mohegan Sun Casino is to be constructed. Offering: The offer and sale by the Initial Purchasers on September 29, 1995 of the Series A Senior Notes to institutional accredited investors and qualified institutional buyers. Person: Any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. Replacement Reserve The account established pursuant to the Account: Management Agreement into which the Authority and TCA have agreed to deposit, on a monthly basis, up to an aggregate of $3 million per year, which amount will be used to fund replacement capital expenditures for the Mohegan Sun Casino. Senior Notes: Collectively, the 13 1/2% Series A Senior Secured Notes of the Authority due November 15, 2002 and the 13 1/2% Series B Senior Notes of the Authority due November 15, 2002, which have been registered under the Securities Act of 1933, as amended. Secured Completion The $50 million secured completion guarantee Guarantee: given by Sun International pursuant to that Secured Completion Guarantee dated September 29, 1995 in favor of the Trustee, to fund any cost overruns incurred by the Authority in connection with constructing, equipping and opening the Sun Mohegan Casino, which guarantee is secured by a $15 million irrevocable letter of credit and a pledge of 1,500,000 Ordinary Shares of Sun International. -141- Semi-annual Period: Each period that begins on April 1 and ends on the next succeeding September 30 or each period that begins on October 1 and ends on the next succeeding March 31. Subordinated Notes: The $40 million principal amount of Subordinated Notes due 2003 issued by the Authority to Sun International pursuant to that certain Note Purchase Agreement dated as of September 29, 1995, together with any additional subordinated notes that may be issued by the Authority to Sun International pursuant to the Secured Completion Guarantee. Subordinated Indebtedness: Indebtedness evidenced by the Subordinated Notes and any other Indebtedness of the Authority which is expressly by its terms subordinated in right of payment to the Senior Notes. Terminating Event: Any event that terminates Sun International's Obligations under the Secured Completion Guarantee, including (i) any Congressional, Tribal or other governmental action that results in a substantial diminution of the gaming operations proposed to be conducted at the Mohegan Sun Casino, (ii) September 30, 1997 (iii) the date immediately prior to the acceleration of amounts due on the Senior Notes, (iv) the repayment of the Senior Notes in full, (v) the termination or unenforceability, in any material respect, of the Management Agreement or the Lease, or (vi) the termination or repudiation of the Management Agreement by the Authority. Trustee: First Fidelity Bank, n/k/a First Union Bank of Connecticut, as trustee under the Indenture, and any successor serving thereunder. Working Capital Financing: The approximately $12.5 million of third party financing to be incurred by the Authority, prior to opening the Mohegan Sun Casino, for working capital purposes. In the event the Authority requires additional working capital, the Indenture permits up to $25 million in Working Capital Financing, which will be senior secured obligations of the Authority and will rank PARI PASSU in right of payment with any existing and future senior Indebtedness of the Authority. -142- INDEX OF DEFINED TERMS The following terms are defined on the page of the Prospectus indicated directly opposite such term:
Defined Term Page No. - ------------ -------- Accrual Period . . . . . . . . . . . . . . . . . . . . . . . . . . 89 ACMs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Affiliate Transaction . . . . . . . . . . . . . . . . . . . . . .. 101 Appurtenant Rights . . . . . . . . . . . . . . . . . . . . . . . . 68 Architect . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 72 Asset Sale Offer . . . . . . . . . . . . . . . . . . . . . . . . . 93 ASTs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Atlantis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Authority Official . . . . . . . . . . . . . . . . . . . . . . . . 79 Beneficial Owner(s) . . . . . . . . . . . . . . . . . . . . . . .. 30 the BIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 7 Book-Entry Confirmation . . . . . . . . . . . . . . . . . . . . .. 29 Book-Entry Transfer Facility . . . . . . . . . . . . . . . . . . . 29 Business Board (pursuant to the Development Agreement) . . . . . . 72 Business Board (pursuant to the Management Agreement) . . . . . .. 51 Buyout Option . . . . . . . . . . . . . . . . . . . . . . . . . .. 73 Calculation Date . . . . . . . . . . . . . . . . . . . . . . . . . 121 Carousel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 CERCLA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 Change of Control Payment Date . . . . . . . . . . . . . . . . . . 92 Change of Control Payment . . . . . . . . . . . . . . . . . . . .. 92 Change of Control Offer . . . . . . . . . . . . . . . . . . . . .. 92 Church Parcel . . . . . . . . . . . . . . . . . . . . . . . . . .. 50 CJM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 45 Clean-up Standard Regulations . . . . . . . . . . . . . . . . . .. 48 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 the Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 Commencement Date . . . . . . . . . . . . . . . . . . . . . . .. . 75 the Commission . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Construction Budget . . . . . . . . . . . . . . . . . . . . . . .. 7
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Defined Term Page No. - ------------ -------- Council . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 50 Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . . .. 114 DCD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 44 DEP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 47 Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 32 Development Agreement . . . . . . . . . . . . . . . . . . . . . .. 71 Disbursement Agent . . . . . . . . . . . . . . . . . . . . . . . . 108 DJA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 45 DOT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 7 EDSA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Effectiveness Target Date . . . . . . . . . . . . . . . . . . . .. 26 EIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 49 Elders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 Eligible Institution . . . . . . . . . . . . . . . . . . . . . . . 30 Environmental Assessment . . . . . . . . . . . . . . . . . . . . . 49 Equipment Financing . . . . . . . . . . . . . . . . . . . . . . .. Prospectus outside front cover page Escrow Account . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Event of Loss Offer . . . . . . . . . . . . . . . . . . . . . . .. 94 Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . 17 Excess Cash Offer Price . . . . . . . . . . . . . . . . . . . . .. 95 Excess Cash Purchase Amount . . . . . . . . . . . . . . . . . . .. 95 Excess Cash Purchase Offer . . . . . . . . . . . . . . . . . . . . 14 Excess Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . 93 Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Exchange Offer Registration Statement . . . . . . . . . . . . . .. 26 Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Expiration Date . . . . . . . . . . . . . . . . . . . . . . . . .. Prospectus outside front cover page Fixed Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 89 FONSI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 49 Force Majeure Event . . . . . . . . . . . . . . . . . . . . . . .. 21 Foxwoods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Furnishings . . . . . . . . . . . . . . . . . . . . . . . . . . .. 72
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Defined Term Page No. - ------------ -------- Gaming Disputes Court . . . . . . . . . . . . . . . . . . . . . .. 54 General Manager . . . . . . . . . . . . . . . . . . . . . . . . .. 74 Gross Revenue . . . . . . . . . . . . . . . . . . . . . . . . . .. 77 IGRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . .. Prospectus outside front cover page Initial Purchasers . . . . . . . . . . . . . . . . . . . . . . . . 9 IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 130 Lease Transaction . . . . . . . . . . . . . . . . . . . . . . . .. 102 Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 12 Leased Property . . . . . . . . . . . . . . . . . . . . . . . . .. 64 Leasehold Mortgage . . . . . . . . . . . . . . . . . . . . . . . . 12 Legal Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . 113 LEHR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Letter of Transmittal . . . . . . . . . . . . . . . . . . . . . .. Prospectus outside front cover page Management Agreement . . . . . . . . . . . . . . . . . . . . . . . 7 Management Board . . . . . . . . . . . . . . . . . . . . . . . . . 51 Memorandum . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 Mohegan Sun Casino . . . . . . . . . . . . . . . . . . . . . . . . Prospectus outside front cover page (ii) Mohegan Compact . . . . . . . . . . . . . . . . . . . . . . . . .. 5 Morse Diesel . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 NEPA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 the NIGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Note Purchase Agreement . . . . . . . . . . . . . . . . . . . . .. 83 NOx . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 49 NRC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 22 Pari Passu Debtholder . . . . . . . . . . . . . . . . . . . . . .. 99 Payment Cross-Default . . . . . . . . . . . . . . . . . . . . . .. 111
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Defined Term Page No. - ------------ -------- Personal Property . . . . . . . . . . . . . . . . . . . . . . . .. 68 Phase III Assessment . . . . . . . . . . . . . . . . . . . . . . . 48 Plans and Specifications . . . . . . . . . . . . . . . . . . . . . 72 Refinancing Indebtedness . . . . . . . . . . . . . . . . . . . . .. 99 Registration Default . . . . . . . . . . . . . . . . . . . . . . .. 27 Registration Statement . . . . . . . . . . . . . . . . . . . . . .. 2 Registration Rights Agreement . . . . . . . . . . . . . . . . . . . 9 Reserved Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . 97 Rockwell . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 44 Secretary of the Interior . . . . . . . . . . . . . . . . . . . . . 63 Section 81 . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 59 Secured Completion Guarantee . . . . . . . . . . . . . . . . . . .. Prospectus outside front cover page (ii) Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . .. Prospectus outside front cover page Semi-Annual Period. . . . . . . . . . . . . . . . . . . . . . . . . Prospectus outside front cover page (ii) Senior Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . Prospectus outside front cover page Series A Senior Notes . . . . . . . . . . . . . . . . . . . . . . . Prospectus outside front cover page Series B Senior Notes . . . . . . . . . . . . . . . . . . . . . . . Prospectus outside front cover page Shelf Registration Statement. . . . . . . . . . . . . . . . . . . . 26 SII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 SIIL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 15 SNM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Southern Sun . . . . . . . . . . . . . . . . . . . . . . . . . . .. 38 Space Leases . . . . . . . . . . . . . . . . . . . . . . . . . . .. 68 STC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 STC Permit . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 60 Subordinated Notes . . . . . . . . . . . . . . . . . . . . . . . .. Prospectus outside front cover page (ii)
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Defined Term Page No. - ------------ -------- Sun International . . . . . . . . . . . . . . . . . . . . . . . . . Prospectus outside front cover page (ii) TCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 the Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . Prospectus outside front cover page the Pequot Tribe. . . . . . . . . . . . . . . . . . . . . . . . . . 3 the Tribe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Prospectus outside front cover page the NYSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 the Offering . . . . . . . . . . . . . . . . . . . . . . . . . . .. Prospectus outside front cover page Town. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 Town Agreement . . . . . . . . . . . . . . . . . . . . . . . . . .. 63 Tribal-State Compact . . . . . . . . . . . . . . . . . . . . . . .. 58 Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . 88 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 UNC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 USTs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 48 VOCs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 49 Working Capital Financing . . . . . . . . . . . . . . . . . . . . . Prospectus outside front cover page
-147- INDEX TO FINANCIAL STATEMENTS MOHEGAN TRIBAL GAMING AUTHORITY PAGE ---- Independent Auditors' Report. . . . . . . . . . . . . . . F-2 Balance Sheet . . . . . . . . . . . . . . . . . . . . . . F-3 Notes to Balance Sheet. . . . . . . . . . . . . . . . . . F-4 F-1 [Letterhead of Arthur Andersen LLP] REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS The Tribal Council Mohegan Tribe of Indians of Connecticut: We have audited the accompanying balance sheet of the Mohegan Tribal Gaming Authority (a development stage entity) as of March 31, 1996. This financial statement is the responsibility of the Authority's management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the balance sheet is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in that balance sheet. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall balance sheet presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the balance sheet referred to above presents fairly, in all material respects, the financial position of the Mohegan Tribal Gaming Authority as of March 31, 1996, in conformity with generally accepted accounting principles. /s/ Arthur Andersen LLP Hartford, Connecticut April 25, 1996 F-2 MOHEGAN TRIBAL GAMING AUTHORITY BALANCE SHEET AS OF MARCH 31, 1996 (IN THOUSANDS)
ASSETS LIABILITIES RESTRICTED CASH $134,437 ACCOUNTS PAYABLE $ 17,450 -------- CONSTRUCTION RETAINAGE 3,306 ACCRUED INTEREST 15,039 CURRENT PORTION OF LONG-TERM DEBT 21 CAPITALIZED PROPERTY COSTS: Deferred lease cost 29,260 Leasehold interest under construction 73,661 SENIOR NOTES 175,000 Equipment 1,105 -------- 104,026 -------- OTHER LONG-TERM DEBT 321 OTHER ASSETS: SUBORDINATED NOTES 40,000 Pre-opening costs 3,437 Deferred financing costs 8,537 Organizational costs 700 -------- COMMITMENTS AND CONTINGENCIES 12,674 (Note 5) -------- -------- Total Assets $251,137 Total Liabilities $251,137 ======== ========
The accompanying notes are an integral part of this balance sheet. F-3 MOHEGAN TRIBAL GAMING AUTHORITY NOTES TO BALANCE SHEET MARCH 31, 1996 1. GENERAL INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: THE AUTHORITY - The Mohegan Tribal Gaming Authority (the "Authority"), established on July 15, 1995, is an instrumentality of the Mohegan Tribe of Indians of Connecticut (the "Tribe"). The Authority intends to develop a gaming and entertainment facility (the "Mohegan Casino"). The Authority's year-end will be September 30. The Tribe and the Authority have entered into a land lease ("Lease") pursuant to which the Tribe is leasing to the Authority certain land located in southeastern Connecticut on which the Mohegan Casino is being constructed (the "Site"). The Site is a portion of a parcel of land that has been acquired and held in trust for the Tribe by the United States of America, with the Tribe retaining perpetual rights to the use of the Site. See Note 3. The Tribe established the Authority with the exclusive power to conduct and regulate gaming activities for the Tribe. Under the Indian Gaming Regulatory Act of 1988, as amended ("IGRA"), federally recognized Indian tribes are permitted to conduct full-scale casino gaming operations on tribal-land, subject to, among other things, the negotiation of a tribal state compact with the affected state. The Tribe and the State of Connecticut have entered into such a compact (the "Compact") that has been approved by the Secretary of the Interior. The Authority has engaged Trading Cove Associates ("TCA") to manage the development, construction and operation of the Mohegan Casino. TCA is 50% owned by a subsidiary of Sun International Hotels Limited ("Sun International"). The remaining partners of TCA are hotel and real estate developers and operators located primarily in the northeastern United States. The Authority is financing the development of the Mohegan Casino with the proceeds of the sale of senior notes, subordinated notes and equipment financing, as described in Note 2. The total cost of development and construction of the Mohegan Casino and working capital is estimated to be $312.5 million, of which $300 million has been obtained as of the balance sheet date. If additional financing is not obtained, the Authority will draw funds under the Secured Completion Guarantee (the "Guarantee") provided by Sun International. The Guarantee provides that, subject to certain qualifications, Sun International will provide up to $50 million to fund any cost overruns incurred in connection with the construction, development, equipping and opening of the Mohegan Casino. The Guarantee terminates on September 30, 1997, or if certain other criteria are met as agreed upon by the Authority and F-4 Sun International. Any draws on the Guarantee will be evidenced by additional subordinated notes issued by the Authority to Sun International. These additional subordinated notes will bear interest at the prime rate plus 1% and be payable under the same terms as the subordinated notes discussed in Note 2. DEVELOPMENT STAGE ENTERPRISE - The Authority is classified as a Development Stage enterprise as defined by Statement of Financial Accounting Standards No. 7. CASH - Included in cash is approximately $130 million held in escrow as required by the Senior Notes (see Note 2). Disbursements from the escrow account can only occur upon submission of a disbursement request (as defined) to the Escrow Agent, and such funds disbursed can only be used for payment of costs and expenses as contemplated in the original or amended budgets as referred to in the Disbursement and Escrow Agreement. CAPITALIZED PROPERTY COSTS - Capitalized property costs consist of deferred lease costs related to the payment made by the Authority on behalf of the Tribe for the acquisition of the Site (see Note 3), leasehold interest costs which represent costs incurred through the balance sheet date for the construction of the Mohegan Casino (see Note 3) and equipment (primarily furniture and computers) that are being used in connection with the pre-opening activities of the Authority. Upon the commencement of operations, these costs will be depreciated or amortized, as applicable, on a straight-line basis over the following estimated useful lives: Deferred lease cost 50 years Leasehold interest cost 40 years Equipment 5-7 years DEFERRED LEASE COSTS - Deferred lease costs consist of the following (000's): Acquisition cost of the site $23,385 Acquisition cost of additional parcels (note 2) 5,875 The Site and the additional parcels were acquired from third parties unrelated to the Tribe or the Authority. The Authority will not be reimbursed by the Tribe for these payments. OTHER ASSETS - Other assets consist of pre-opening, deferred financing and organization costs. Pre-opening costs are mainly payroll and related benefits and general office overhead incurred through the balance sheet date. Deferred financing costs have been incurred in connection with obtaining the senior notes and the subordinated F-5 notes. Organization costs represent primarily legal costs incurred in the organization of the Authority. Beginning on the opening date of the Mohegan Casino, these costs will be amortized on a straight-line basis over the following estimated useful lives: Pre-opening costs 12 months Deferred financing costs 7 years Organization costs 5 years 2. DEBT: The Authority has issued $175 million in Senior Notes due 2002 (the "Senior Notes") with fixed interest payable at a rate of 13-1/2% per annum and Cash Flow Participation Interest (as defined) in an aggregate amount of 5.0% of the Authority's Cash Flow (as defined) up to a limit, during any two consecutive semi-annual periods, ending September 30, of $250 million of the Authority's Cash Flow. Fixed interest is payable semi-annually commencing May 15, 1996. No Cash Flow Participation Interest shall be payable with respect to any period prior to the earlier of the first day the Mohegan Casino commences operations or October 31, 1996. The aggregate amount of Cash Flow Participation Interest payable will be reduced pro rata for reductions in outstanding principal amount of Senior Notes. The payment of Cash Flow Participation Interest may be deferred if the Authority's Fixed Charge Coverage Ratio (as defined) is less than 2 to 1. The Senior Notes are redeemable at set prices as set forth in the Senior Notes after November 15, 1999 at the option of the Authority. Upon the occurrence of certain events (as specified in the Indenture for the Senior Notes) each holder of Senior Notes can require the Authority to repurchase the Notes at prices specified in the Senior Notes. Beginning with fiscal year ending September 30, 1997, the Authority will be required, under certain circumstances, to offer to purchase, at set prices, certain amounts of Senior Notes then outstanding. The Authority has obtained $40 million of subordinated financing from Sun International in the form of two notes. These notes bear interest at 15% per year, paid semi-annually and are due in 2003; however, these notes cannot be paid until the Senior Notes have been paid in full. The Authority has also obtained a commitment for gaming equipment financing of up to $40 million from Sodek Gaming, Inc. The terms of this agreement provides for an interest rate of 2% over prime, commencing from the date of delivery of the equipment. Principal payments will be over 48 months commencing 30 days after full use of the Mohegan Casino has commenced. The above described debt is secured by substantially all the assets of the Authority. The Tribe has acquired an additional parcel of land adjacent to the Site ("Additional Parcel") that will be used to expand the access road to the Mohegan Casino. The lease between the Tribe and the Authority, with respect to The Site, has been amended to include F-6 the Additional Parcel. The annual rent under the Lease remains at $1.00 (see Note 3), but the Authority has made the initial downpayment of $250,000 and assumed the promissory note ($350,000) with respect to the Additional Parcel. The terms of the promissory note provide for monthly payments of principal and interest (8%) of $4,246 commencing on January 1, 1996, with a final payment due on December 1, 2005. This promissory note is secured by a mortgage on the Additional Parcel. Repayments of debt for the next five years and thereafter follows: Year Ending September 30, Amount --------------- -------- (000's) 1996 $ 21 1997 25 1998 23 1999 21 2000 18 Thereafter 215,234 -------- $215,342 ======== The ability of the Authority to meet its debt service requirements will be entirely dependent upon the completion and future successful performance of the Mohegan Casino, which is subject to financial, economic, political, competitive, and other factors, many of which are beyond the Authority's control. 3. LEASE AGREEMENT: As discussed in Note 1, the Authority has entered into the Lease with the Tribe with respect to the Site. The initial term of the Lease is 25 years, with an option to extend the term for an additional 25 years provided that the Authority is not in default under the Lease. The Lease also provides that all improvements constructed on the Site will become the property of the Tribe and subject to the Lease. The Lease is a net Lease requiring that the Authority be responsible for all costs of operating, constructing, maintaining, repairing, replacing and insuring the leased property, plus paying the Tribe an annual rent of $1.00. In addition to the rent, the Authority has used the proceeds from the issuance of the Subordinated Notes, described in Note 2, to acquire the Site on behalf of the Tribe. Due to these payments and other terms of the Lease described above, expenditures made by the Authority in connection with the acquisition of the Site and the Additional Parcel have been recorded as deferred lease costs and related improvements have been reflected as leasehold interests for financial reporting purposes. The deferred lease costs will be amortized on a straight-line basis over the term of the Lease, plus the option period (a total of 50 years). The leasehold interest will be amortized on a straight-line basis over the estimated life of the buildings (40 years). F-7 4. INCOME TAXES: The Tribe is an "Indian Tribal Government" within the meaning of sections 7701(a)(40) and 7871 of the Internal Revenue Code of 1986, as amended. As such, the Authority has tax-exempt status with respect to federal and state income and certain excise taxes. 5. COMMITMENTS AND CONTINGENCIES: The Tribe, by itself and acting through the Authority, and TCA have entered into an Amended and Restated Gaming Facility Development and Construction Agreement ("the Construction Agreement") providing for the design, construction, furnishing and site development of the Mohegan Casino by TCA. The total cost of the Mohegan Casino, as outlined in the Construction Agreement, is not to exceed $325 million. The Tribe has assigned its rights and obligations in the Agreement to the Authority. The Tribe has entered into a seven-year Amended and Restated Gaming Facility Management Agreement ("the Management Agreement") with TCA to provide for the management of the Mohegan Casino. Under the terms of the Management Agreement, the Tribe has granted TCA the exclusive right and obligation to develop, manage, operate and maintain the Mohegan Casino and all other related facilities that are owned by the Tribe or any of its instrumentalities. The Management Agreement authorizes TCA to pay itself a monthly management fee from the Mohegan Casino's net revenues. The management fee under the Management Agreement is expressed as a percentage of net revenues, which ranges from 30% to 40%, depending on the level of the net revenues generated by the Mohegan Casino. The Tribe has assigned its rights in and delegated its obligations under the Agreement to the Authority. The Tribe's Compact with the State of Connecticut stipulates that a portion of the revenues earned on slot machines will be paid to the State of Connecticut. For each twelve-month period commencing July 1, 1995 the minimum contribution of the Tribe to the State of Connecticut shall be the lesser of (a) 30% of gross revenues from slot machines, or (b) the greater of (i) 25% of gross revenues from slot machines or (ii) $80,000,000. These payments will not be required if the State of Connecticut legalizes any other gaming operations with slot machines to be operated in the State of Connecticut (other than on certain Indian lands). No payments have been made or are due as of the balance sheet date. When such payments become payable, they will be reflected as operating expenses of the Authority. The Tribe has entered into an agreement with the Town of Montville, Connecticut (the "Town") pursuant to which the Tribe has agreed to pay to the Town (i) an annual payment of $500,000 to compensate the Town for the financial impact of removing the Site from the Town's tax rolls and jurisdiction and (ii) a one-time fee of $3 million to make improvements to the Town's water system, which improvements are necessitated by the development and operation of the Mohegan Casino. The one time payment is due and the annual payments commence one year after the commencement of slot machine gaming activities. F-8 It is anticipated that these payments will be made by the Authority on behalf of the Tribe. When that occurs, the one-time fee of $3,000,000 for the improvement of the Town's water system will be capitalized as part of leasehold interest (see Note 3), while the annual payments of $500,000 will be treated as operating expenses of the Authority since they are effectively in lieu of property taxes that would be the responsibility of the Authority under the Lease. It is not anticipated that the Tribe will reimburse the Authority for these payments. F-9 [ALTERNATIVE PROSPECTUS PAGE] MOHEGAN TRIBAL GAMING AUTHORITY 13 1/2% SERIES B SENIOR SECURED NOTES DUE 2002 WITH CASH FLOW PARTICIPATION INTEREST This Prospectus may be used by certain broker-dealers (collectively, the "broker-dealers") in connection with offers and sales of 13 1/2% Series B Senior Secured Notes Due 2002 With Cash Flow Participation Interest (the "Series B Senior Notes") that were received by such broker-dealers for their own accounts pursuant to an exchange offer in exchange for 13 1/2% Series A Senior Secured Notes due 2002 With Cash Flow Participation Interest that were acquired by such broker-dealers as a result of market-making or other trading activities. The Mohegan Tribal Gaming Authority will not receive any proceeds from the sale of Series B Senior Notes. ------------------------ SEE "RISK FACTORS" BEGINNING ON PAGE 17 HEREIN FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF SERIES B SENIOR NOTES. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ---------------------- The date of this Prospectus is June __, 1996. [ALTERNATIVE PROSPECTUS PAGE] PLAN OF DISTRIBUTION This Prospectus may be used by certain broker-dealers (collectively, the "broker-dealers") in connection with offers and sales of 13 1/2% Series B Senior Secured Notes Due 2002 With Cash Flow Participation Interest (the "Series B Senior Notes") that were received by such broker-dealers for their own accounts in exchange for 13 1/2% Series A Senior Secured Notes due 2002 With Cash Flow Participation Interest that were acquired by such broker-dealers as a result of market-making or other trading activities (the "Exchange Offer"). The Mohegan Tribal Gaming Authority will not receive any proceeds from the sale of Series B Senior Notes. Series B Senior Notes received by a broker-dealer for its own account pursuant to the Exchange Offer may be sold by such broker-dealer from time to time at prices determined at the time of sale directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or the purchasers of any such Series B Senior Notes. Any broker-dealer that resells Series B Senior Notes that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such Series B Senior Notes may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of Series B Senior Notes and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. By delivering a prospectus, a broker-dealer will be not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. [ALTERNATIVE PROSPECTUS PAGE] - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- No dealer, salesman or other person has been authorized to give any information or to make any representation in connection with the Series B Senior Notes other than those contained in this Prospectus, and, if given or made, such information or representation must not be relied upon as having been authorized by the Authority. This Prospectus does not constitute an offer to sell or the solicitation of any offer to buy any security other than those to which it relates, nor does it constitute an offer to sell, or the solicitation of any offer to buy, to any person in any jurisdiction in which such offer or solicitation is not authorized, or in which the person making such offer or solicitation is not qualified to do so, or to any person to whom it is unlawful to make such offer or solicitation. Neither the delivery of this Prospectus nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Authority since the date hereof or that the information contained herein is correct as of any time subsequent to the date hereof. ------------ TABLE OF CONTENTS Page ---- Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 The Manager. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Business and Property. . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Mohegan Tribe of Indians of Connecticut. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Government Regulation. . . . . . . . . . . . . . . . . . . . . . . . . . 55 Material Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Description of Senior Notes. . . . . . . . . . . . . . . . . . . . . . . 87 Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . 129 Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 Independent Accountants. . . . . . . . . . . . . . . . . . . . . . . . . 130 Available Information. . . . . . . . . . . . . . . . . . . . . . . . . . 130 Glossary and Index of Defined Terms. . . . . . . . . . . . . . . . . . . 131 Index to Financial Statements. . . . . . . . . . . . . . . . . . . . . . F-1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- MOHEGAN TRIBAL GAMING AUTHORITY 13 1/2% SERIES B SENIOR SECURED NOTES DUE 2002 WITH CASH FLOW PARTICIPATION INTEREST ------------------- PROSPECTUS ------------------- June __, 1996 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION Set forth below is an estimate (except the Commission registration fee) of the fees and expenses payable by the registrant in connection with the issuance and distribution of the Series B Senior Notes. Securities and Exchange Commission registration fee. . . . . . . . . . . . . . . . . . . . . . . . . .$ 60,345 Legal fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,000 Accountants' fees . . . . . . . . . . . . . . . . . . . . . . . . . 69,353 Trustee's fees. . . . . . . . . . . . . . . . . . . . . . . . . . . 7,500 Blue sky qualification fees and expenses. . . . . . . . . . . . . . 6,000 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,802 Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . .$220,000 Item 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS All current and former officers, employees and members of the Authority are entitled to be indemnified by the Authority pursuant to Section 7 of Mohegan Tribal Ordinance No. 95-7/15-1, the ordinance that established the Authority, "against reasonable expenses actually and necessarily incurred by that person in connection with the defense of any action, suit or proceeding in which that person is made a party by reason of being, or having been, such officer, employee or member of the Authority." Indemnification is not available in the event of an adjudication of liability for negligence or misconduct in the performance of duty or for actions beyond the scope of employment. The Authority also may reimburse such persons for the reasonable costs of settlements of actions, suits or proceedings (so long as such settlements do not involve findings of neglect, misconduct or ultra vires acts) deemed by the Management Board to be in the best interests of the Authority. Item 15. RECENT SALES OF UNREGISTERED SECURITIES On September 29, 1995, the Authority issued and sold $175,000,000 aggregate principal amount of Series A Senior Notes on the terms set forth elsewhere in this Registration Statement. The Series A Senior Notes were sold to Bear, Stearns & Co. Inc. and Donaldson, Lufkin & Jenrette Securities Corporation, as initial purchasers (collectively, the "Initial Purchasers"), for resale to qualified institutional buyers in reliance on Rule 144A under the Securities Act and to a limited number of institutional accredited investors within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act. The aggregate offering price for the sale of the Series A Senior Notes to the Initial Purchasers was $175,000,000, and the Authority paid an aggregate of $5,250,000 to the Initial Purchasers in discounts and commissions. II-1 Concurrently with the sale of the Series A Senior Notes, the Authority sold to Sun International $40 million principal amount of subordinated notes due 2003 (the "Subordinated Notes"). The Subordinated Notes were sold at an aggregate purchase price equal to the principal amount thereof and the Authority did not pay any broker fees or commissions in connection therewith. The Authority has committed to issue additional subordinated notes to Sun International in principal amount equal to the amount of funds provided by Sun International, if any, pursuant to the Secured Completion Guarantee, but not to exceed an aggregate of $50 million. The Series A Senior Notes and the Subordinated Notes are the only securities sold by the Authority within the past three years that were not registered under the Securities Act. Item 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) EXHIBITS. See attached Exhibit Index. (b) FINANCIAL STATEMENT SCHEDULES. See attached Index to Financial Statement Schedules. Item 17. UNDERTAKINGS (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) To reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unissued at the termination of the Exchange Offer. II-2 (b) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described under Item 14 above, or otherwise, the registrant has been advised that in, the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted against the registrant by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-3 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE MOHEGAN TRIBAL GAMING AUTHORITY HAVE DULY CAUSED THIS AMENDMENT NO. 3 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE TOWN OF MONTVILLE, STATE OF CONNECTICUT, ON JUNE 3, 1996. MOHEGAN TRIBAL GAMING AUTHORITY By: /s/ Roland Harris ------------------------------------------ Roland Harris Chairman, Management Board, Duly Authorized PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS AMENDMENT NO. 3 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED ON JUNE 3, 1996 BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED. Signature Title /s/ Mark Brown - ----------------------------------- Member, Management Board Mark Brown /s/ Jayne Fawcett - ----------------------------------- Vice Chair and Member, Management Jayne Fawcett Board /s/ Carlisle Fowler - ----------------------------------- Treasurer and Member, Management Carlisle Fowler Board /s/ Courtland Fowler - ----------------------------------- Member, Management Board Courtland Fowler /s/ Roland Harris - ----------------------------------- Chairman and Member, Management Roland Harris Board (Principal Executive Officer) /s/ Glenn R. LaVigne - ----------------------------------- Member, Management Board Glenn R. LaVigne /s/ Loretta Roberge - ----------------------------------- Corresponding Secretary and Loretta Roberge Member, Management Board II-4 Signature Title /s/ Maynard Strickland - ----------------------------------- Member, Management Board Maynard Strickland /s/ Shirley Walsh - ----------------------------------- Recording Secretary and Shirley Walsh Member, Management Board /s/ George Papanier - ----------------------------------- Senior Vice President, Chief George Papanier Financial Officer (Principal Financial and Accounting Officer) II-5 EXHIBIT INDEX EXHIBIT SEQ. NO. DESCRIPTION PAGE NO. 3.1 Constitution of the Mohegan Tribe of Indians of Connecticut (the "Tribe") ratified by Tribal vote on April 12, 1996 *3.2 Ordinance No. 95-7/15-1 of the Tribe for Gaming on Tribal Lands, enacted on July 20, 1995 4.1 Indenture dated as of September 29, 1995 among the Mohegan Tribal Gaming Authority of the Tribe (the "Authority"), the Tribe and First Fidelity Bank, as trustee *4.2 Purchase Agreement dated September 21, 1995 among Bear, Stearns & Co. Inc. and Donaldson, Lufkin & Jenrette Securities Corporation (collectively, the "Initial Purchasers"), the Authority and the Tribe *4.3 Registration Rights Agreement dated as of September 29, 1995 among the Authority and the initial Purchasers *5.1 Opinion of Hobbs, Straus, Dean & Walker, counsel to the Authority, regarding the validity of the Series B Senior Notes *5.2 Opinion of Rome McGuigan, Sabanosh & Klebanoff, P.C., counsel to the Authority, regarding the validity of the Series B Senior Notes *8.1 Opinion of special tax counsel to the Authority regarding certain tax matters *10.1 The Mohegan Tribe--State of Connecticut Gaming Mohegan Compact between the Tribe and the State of Connecticut (the "Compact") *10.2 Agreement dated April 25, 1994 between the Tribe and the State of Connecticut resolving certain land claims (the "Resolution Agreement") *10.3 Memorandum of Understanding dated April 25, 1994 between the Tribe and the State of Connecticut regarding implementation of the Compact and the Resolution Agreement *10.4 Agreement between the Tribe and the Town of Montville, Connecticut 10.5 Land Lease dated September 29, 1995 between the Tribe and the Authority; Amendment of Land Lease dated September 29, 1995 10.6 Open-End Construction--Permanent Leasehold Mortgage Deed, Assignment of Leases and Rents and Security Agreement dated as of September 29, 1995 between the Tribe and First Fidelity Bank, as trustee *10.7 Amended and Restated Gaming Facility Development and Construction Agreement dated September 1, 1995 between the Tribe and Trading Cove Associates ("TCA") *10.8 Amended and Restated Gaming Facility Management Agreement dated August 30, 1995 between the Tribe and TCA *10.9 Secured Completion Guarantee dated as of September 29, 1995 by Sun International Hotels Limited ("Sun") in favor of First Fidelity Bank, as trustee *10.10 Note Purchase Agreement dated as of September 29, 1995 between the Authority and Sun - ----------------- *Previously filed. E-1 EXHIBIT SEQ. NO. DESCRIPTION PAGE NO. 10.11 Cash Collateral Accounts Pledge and Security Agreement dated as of September 29, 1995 among First Fidelity Bank, as trustee, TCA, Sun, the Authority and the Tribe *10.12 Disbursement and Escrow Agreement dated as of September 29, 1995 among First Fidelity Bank, as escrow agent, Chicago Title Insurance Company, as disbursement agent, First Fidelity Bank, as trustee, TCA, Sun and the Authority *10.13 Pledge Agreement dated September 29, 1995 between Sun International Investments Limited and First Fidelity Bank 24.1 Consent of Independent Public Accountants of the Authority *24.2 Consent of counsel to the Authority (included in Exhibits 5.1 and 5.2) *24.3 Consent of special tax counsel to the Authority (included in Exhibit 8.1) 25.1 Statement of Eligibility of Trustee on Form T-1 *27.1 Article 5 Financial Data Schedule *99 Form of Letter of Transmittal - ----------------- *Previously filed. E-2 EX-3.1 2 EXHIBIT 3.1 CONSTITUTION OF THE MOHEGAN TRIBE OF INDIANS OF CONNECTICUT PREAMBLE We, The Mohegan Tribe of Indians of Connecticut, answerable to our ancestors, in order to secure to ourselves and our descendants the management of our own affairs as a sovereign American Indian Nation, to ensure the maintenance of our basic human rights, to exercise our sovereign rights as a federally recognized Indian tribe, including the right of self-determination and self- governance, and to promote the general welfare of The Mohegan People, do hereby establish, adopt and proclaim this Constitution. ARTICLE I - NAME The name of this organization shall be The Mohegan Tribe of Indians of Connecticut (hereinafter "The Mohegan Tribe" or "The Tribe") and the members thereof shall be known as The Mohegan Nation. ARTICLE II - POWERS The powers of The Mohegan Tribe shall include all of the inherent sovereign rights and powers of an independent, indigenous sovereign nation. ARTICLE III - JURISDICTION SECTION 1. The jurisdiction of The Mohegan Tribe shall extend to all lands presently owned or leased by The Tribe, all trust lands of The Tribe, all lands hereinafter acquired by the Tribe, and all lands over which The Tribe has regulatory authority. SECTION 2. The Tribe's jurisdiction shall extend to: (a) all persons who are currently enrolled as members of The Tribe; (b) all persons who make application to become enrolled as members of The Tribe prior to June 30, 1996, as provided in this Constitution and The Tribal Enrollment Ordinance, who are subsequently accepted as members of The Tribe; and (c) all other persons who may lawfully be subject to The Tribe's jurisdiction. ARTICLE IV - GOVERNING BODIES SECTION 1. The Mohegan Tribe shall be governed by The Mohegan People, and represented by a Tribal Council, consisting of nine tribal members, and a Council of Elders, consisting of seven tribal members, unless and until said number of members is increased through the enactment of a joint ordinance; approved by a majority of the Tribal Council and a majority of the Council of Elders. SECTION 2. Except as provided for in Article VIII, members of the Tribal Council and Council of Elders shall serve for five-year terms. SECTION 3. Meetings of the Tribal Council shall be held and conducted as follows: (a) The Tribal Council shall hold regular meetings which shall be called by the Chair or upon written request of a majority of the members of the Tribal Council then in office. (b) Five (5) members of the Tribal Council then in office shall constitute a quorum for the transaction of any tribal business, and a majority of a quorum may make decisions except for those requiring a higher vote under this Constitution. (c) In conducting its business, the Tribal Council shall be governed by such rules as it may, in its discretion, adopt. SECTION 4. The Officers of the Tribal Council shall be elected in the following manner: At the first regular meeting following each election, the Tribal Council shall elect from among the membership of the Tribal Council a Chair, a Vice-Chair, a Recording Secretary, a Corresponding Secretary, and a Treasurer. Those members who are elected to these positions shall have those additional powers and duties as are hereinafter enumerated. SECTION 5. Meetings of the Council of Elders shall be held and conducted as follows: (a) The Council of Elders shall hold regular meetings which shall be called by the Chair or upon written request of a majority of the members of the Elders then in office. (b) Five (5) members of the Elders then in office shall constitute a quorum for the transaction of any tribal business, and a majority of a quorum may make decisions except for those requiring a higher vote under this Constitution. (c) In conducting its business, the Elders shall be governed by such rules as it may, in its discretion, adopt. 2 SECTION 6. The Officers of the Council of Elders shall be elected in the following manner: At the first regular meeting following each election, the Elders shall elect from among the membership of the Council of Elders, a Chair, a Vice-Chair, a Secretary, and a Treasurer. Those Elders who are elected to these positions shall have those additional powers and duties as are hereinafter enumerated. SECTION 7. The members of the Tribal Council and the members of the Council of Elders shall receive a compensation for their services. SECTION 8. The members of the Tribal Council and the members of the Council of Elders shall also be bonded, when legally required and/or deemed advisable, and the cost of such bonds shall be borne by The Tribe. The amount of the bonds shall be determined by the Tribal Council immediately upon adoption of this Constitution. ARTICLE V - MEMBERSHIP SECTION 1. The membership of The Mohegan Tribe/Mohegan Nation shall consist of the following persons: (a) All living persons whose name or ancestor's name appears on the tribal roll, as of federal recognition by the United States of America on May 15, 1994. (b) All persons who become enrolled with the Tribe, pursuant to compliance with The Tribal Membership/Enrollment Ordinance, by June 30, 1996. (c) All descendants of persons who are currently enrolled with The Tribe, and all descendants of persons who become enrolled with The Tribe pursuant to Article V, Section 1(b). SECTION 2. The persons identified in this Article V, section 1, shall not be deprived of membership without their consent. Such a person may, however, be stripped of all rights and privileges attained by him or her as a result of his or her membership with The Mohegan Tribe, as provided for in The Tribal Enrollment Ordinance. SECTION 3. No person shall be entitled to become a member of The Mohegan Tribe if his or her name is listed on the official roll of any other tribe of American Indians. Additionally, any person whose name is listed on the official roll of any other tribe of American Indians after he or she becomes a member of The Mohegan Tribe of Indians may be stripped of all rights and privileges attained by him or her as a result of his or her membership with 3 The Mohegan Tribe, as provided for in The Tribal Enrollment Ordinance. SECTION 4. Any person found to have committed fraud in attaining membership status with The Mohegan Tribe, including but not limited to the submission of falsified documents, shall have his or her "membership" deemed void and of no force and effect, as of the date that said status was previously conferred. ARTICLE VI - ELECTIONS SECTION 1. In order to qualify for and seek election to a position on the Tribal Council, a person: (a) Must be at least 21 years of age prior to the date of the election; (b) Must be a registered voting member of The Tribe in good standing; (c) Must not have been convicted of any violation of The Tribal Election Ordinance; and (d) Must not have been convicted of either a felony or a misdemeanor involving moral integrity, such as forgery or bribery. (e) Subsection (d) of Article VI, Section 1 may be waived by a majority vote of the Council of Elders. SECTION 2. In order to qualify for seek election to a position on the Council of Elders, a person: (a) Must be at least 55 years of age prior to the date of the election; (b) Must be a registered voting member of The Tribe in good standing; (c) Must not have been convicted of any violation of The Tribal Election Ordinance; and (d) Must not have been convicted of either a felony or misdemeanor involving moral integrity, such as forgery or bribery. (e) Subsection (d) of Article VI, Section 2 may be waived by a majority vote of the Council of Elders. SECTION 3. The current members of the Tribal Council and Council of Elders shall serve until five years have expired from the dates they became seated, respectively. Regular elections for the Tribal Council and Council of Elders shall be held on the last 4 Sunday in August, and the newly elected members of each body shall take office on the first Monday in October following the respective elections. ARTICLE VII - VOTING SECTION 1. Any member of The Mohegan Tribe who attains the age of eighteen (18) shall be entitled to become a registered voter, pursuant to the procedures set forth in The Tribal Election Ordinance, and shall be entitled to vote in the next tribal election. SECTION 2. In each tribal election, every registered voting member shall be entitled to cast one vote for each elective position available. SECTION 3. All elections shall be by secret ballot and absentee ballots shall be allowed for registered voters. No votes in a tribal election, however, may be cast by proxy. ARTICLE VIII - VACANCIES AND REMOVAL FROM OFFICE SECTION 1. If a vacancy occurs among the members of either the Tribal Council or the Council of Elders, and less than three months remain of the term of the vacating member, the Tribal Council shall appoint a successor to such position, who shall serve until the next regular tribal election when a subsequent successor is duly elected and seated. SECTION 2. If a vacancy occurs among the members of either the Tribal Council or the Council of Elders, and more than three months remain of the term of the vacating member, the Tribal Council shall cause to be held within sixty days a special tribal election for the purpose of filling the vacancy. SECTION 3. Where any member of the Tribal Council or the Council of Elders, during the term for which he or she is elected or appointed: (a) violates the provisions of this Constitution; (b) is convicted of a felony or misdemeanor involving moral integrity, such as forgery or bribery; or (c) is absent from three consecutive regular meetings of the Tribal Council or the Council of Elders, unless such absence has been excused for good cause; he or she shall be subject to removal from office by action of the Tribal Council or the Council of Elders, provided that such removal 5 shall be effective only after reasonable notice of the charges, an opportunity for the subject member to be heard, and upon approval by a majority of the members of the Council of Elders. SECTION 4. Any member of the Tribal Council or Council of Elders who is elected for a five-year term shall be removed from office if, at least three months prior to the expiration of his or her term, a recall election is held and a majority of the voters vote for removal of said person. The Tribal Council and/or the Council of Elders shall hold a recall election within sixty (60) days of its receipt of a recall petition bearing the signatures of at least forty percent (40%) of the registered voters in The Tribe, accompanied by a cover letter bearing the notarized signatures of at least three sponsors who are members of The Tribe and who are registered to vote in tribal elections. Said petition shall also be filed in accordance with any other procedures established by the Tribal Council and Council of Elders. SECTION 5. The following rules shall govern the removal and/or vacancy of the Officers of the Tribal Council: (a) If a vacancy occurs in the office of Chair, Vice-Chair, Recording Secretary, Corresponding Secretary or Treasurer, such vacancy may be filled by the Tribal Council through a subsequent election of one of its members to the office. (b) The Tribal Council may remove the Chair, Vice-Chair, Recording Secretary, Corresponding Secretary and/or Treasurer from office for cause, by a two-thirds (2/3) vote of the members of the Tribal Council then in office; the Tribal Council may not, however, terminate or affect an officer's status as a member of the Tribal Council through such action. The Tribal Council shall prescribe in the Tribal Election Ordinance the specific methods by which removal from such offices may be carried out. SECTION 6. The following rules shall govern the removal and/or vacancy of the Officers of the Council of Elders: (a) If a vacancy occurs in the office of Chair, Vice-Chair, Secretary or Treasurer, such vacancy may be filled by the Council of Elders through a subsequent election of one of its members to the office. (b) The Council of Elders may remove the Chair, Vice-Chair, Secretary and/or Treasurer from office for cause by a two-thirds (2/3) vote of the members of the Council of Elders then in office; the Council of Elders may not, however, terminate or affect an officer's status as member of the Council of Elders through such action. The Council of Elders shall prescribe in The Tribal Election Ordinance the specific methods by which removal from such offices nay be carried out. 6 ARTICLE IX - POWERS AND DUTIES OF THE TRIBAL COUNCIL SECTION 1. All legislative and executive powers of The Mohegan Tribe not granted to the Council of Elders shall be vested in the Tribal Council and shall be exercised in accordance with this Constitution and laws of the United States applicable to Indian tribes, provided, that legislative and executive actions taken prior to the effective date of this Constitution shall remain in effect unless and until changed by the subsequent action of the Trial Council or until any such action expires of its own terms. SECTION 2. The powers of the Tribal Council shall include all executive and legislative powers reasonable and necessary to achieve the tribal goals recited in the Preamble hereof, and shall further specifically include, but not be limited to, the following powers: (a) To negotiate with and to approve or disapprove contracts or agreements with tribal, foreign, federal, state, or local governments, with private persons or with corporate bodies; (b) To approve or disapprove any sale, disposition, lease or encumbrance of tribal lands, interests in land, tribal funds or other tribal assets or resources with or without advertisement for any period not in excess of the period provided for by federal law; (c) To establish procedures for the conduct of all tribal government and business operations except where elsewhere precluded in this Constitution; (d) To advise the Secretary of the Interior with regard to all appropriation estimates of the Department of the Interior which are submitted for the benefit of The Mohegan Tribe of Indians of Connecticut prior to the submission of such estimates to the Office of Management and Budget or to Congress; (e) To employ and pay legal counsel for The Mohegan Tribe, subject to the approval of the Secretary of the Interior to the extent that such approval is required by federal law; (f) No appropriate available tribal funds for the benefit of the Tribe; (g) To approve or disapprove operating budgets submitted by the Tribal Chair; (h) To review the budget submitted annually by the Council of Elders and, in the event that said budget is approved by a majority of the members of the Tribal Council, to allocate the funds called for by said budget; 7 (i) To approve or disapprove allocations or disbursements of tribal funds (or grant or contract funds under the administrative control of The Tribe) not specifically appropriated or authorized in a budget approved by the Tribal Council; (j) To establish and enforce rules, consistent with applicable federal statutes and the applicable regulations of the Secretary of the Interior, for the management of tribal lands, including but not limited to, the making and revocation of assignments, and the disposition of timber, oil, and mineral resources; (k) To create, or to provide by ordinance for the creation of organizations, including public and private corporations, for any lawful purpose, which may be nonprofit or profit-making, and to regulate the activities of such organizations by ordinance; (l) To promote and protect the health, peace, morals, education, and general welfare of The Tribe and its members; (m) To borrow money from any source whatsoever without limit as to amount, and on such terms and conditions and for such consideration and periods of time as the Tribal Council shall determine; to use all funds thus obtained to promote the welfare and betterment of The Tribe and its members; to finance tribal enterprises; or to lend money thus borrowed; (n) to establish and enforce all ordinances governing tribal members, including, but not limited to, ordinances regarding tribal elections, ordinances establishing the civil and criminal jurisdiction of The Mohegan Tribal Court System, ordinances delineating the civil and criminal laws of The Mohegan Tribe, and ordinances providing for the maintenance of law, order, and the administration of justice within The Mohegan Indian Reservation; (o) To establish a tribal court system, defining the powers and duties of that court system; (p) To regulate wholesale, retail, commercial or industrial activities on tribal lands; (q) To establish a basic departmental structure for the executive branch of the tribal government; and to establish governmental sub-divisions and agencies and delegate appropriate powers to such subdivisions and agencies; (r) To establish policies relating to tribal economic affairs and enterprises in accordance with this Constitution; (s) To levy and collect taxes and raise revenue to meet with needs of The Tribe or to support tribal government operations; 8 (t) To pass any ordinances and resolutions necessary or incidental to the exercise of any of the foregoing powers and duties; to waive the sovereign immunity of The Tribe subject to such limitations and restrictions on the extent and enforcement thereof as the Tribal Council may determine; and to adopt and to do such acts of a governmental and/or public nature as are not prohibited by applicable laws or by this Constitution. SECTION 3. The powers and duties of the Chair of the Tribal Council shall include, but not be limited to, the following: (a) To serve as the chief executive officer of The Tribe and as head of the executive branch of the tribal government; (b) To carry out the policies established by the Tribal Council through its passage of any ordinances and resolutions necessary or incidental to the exercise of any of the powers and duties enumerated in Article IX above, and to be accountable to the Council to see that said policies are faithfully executed; (c) To negotiate, execute and carry out contracts or agreements with tribal, foreign, federal, state, and local governments, private persons, or corporate bodies, provided, that such contracts and agreements shall not be valid unless and until approved by the Tribal Council; (d) To manage, administer and direct the operation of tribal programs, activities, and services and to report to the Tribal Council the status of each program at least annually; (e) To direct the preparation of budgets, budget estimates and financial reports for submission to or at the direction of the Tribal Council; (f) To assure the proper receipt, deposit, disbursement, and accounting of all funds (or funds under control of The Tribe) consistent with this Constitution and such policies as may be established by the Tribal Council; (g) To provide for the protection and maintenance of the property, equipment, and official records of The Tribe; (h) To provide for enforcement of the rules, regulations, and ordinances enacted by the Tribal Council; (i) To preside over the meetings of the Tribal Council; and (j) To exercise such additional powers as are necessary or incidental to the performance of the powers and duties enumerated above. 9 SECTION 4. In the absence of the Chair, it shall be the Vice-Chair's duty and responsibility to preside over the Tribal Council meetings. The Vice-Chair of the Tribal Council shall assist the Chair when called upon to do so and shall maintain a current list of members of The Mohegan Tribe. SECTION 5. The Recording Secretary shall ensure that a full and complete record of all transactions of the Tribal Council and Tribal meetings are kept, and shall submit promptly to the Chair all copies of the minutes, resolutions adopted, and ordinances passed at all meetings of the Tribal Council. SECTION 6. The Corresponding Secretary shall be responsible for all correspondence issued by the Tribal Council, and shall be responsible for communicating all appropriate information from the Tribal Council to other members of The Mohegan Tribe and/or to the Tribal Administration. SECTION 7. The Treasurer shall cause to be audited all tribal funds and accounts at least once per year, and at such other times as requested by the Tribal Council or by any other lawful authority, and shall be the custodian of the liquid assets of The Mohegan Tribe. Additionally: (a) Unless otherwise provided, the Treasurer and Chair shall sign and approve all disbursements of tribal funds or grant or contract funds under the administrative control of The Tribe. (b) The Treasurer shall be included in the membership of any committee established by the Tribal Council, at least insofar as budgetary and financial matters are concerned. SECTION 8. The Tribal Council may authorize the formation of committees to carry out its duties, as it deems necessary and proper. A committee of the Tribal Council shall be defined as a body of one or more persons appointed or elected by the Tribal Council to consider or investigate or take action in regards to those matters assigned to it by the Tribal Council. Tribal Council committees are subordinate to the Tribal Council, who shall delegate authority to each committee at its discretion, and who shall define the duties, membership and quorum for each committee. ARTICLE X - POWERS & DUTIES OF THE COUNCIL OF ELDERS SECTION 1. All judicial review powers of The Mohegan Tribe not exercised by the Gaming Disputes Court shall be vested in the Council of Elders, and in such subordinate commissions and/or courts as the Tribal Council may from time to time ordain and establish. The Council of Elders shall exercise its judicial review powers in accordance with this Constitution and the laws of the United States applicable to Indian tribes, provided that 10 judicial actions taken prior to the effective date of this Constitution shall remain in effect unless and until changed by the subsequent action of the Council of Elders or until any such action expires of its own terms. SECTION 2. The powers of the Council of Elders shall include all judicial review powers reasonable and necessary to achieve the tribal goals recited in the Preamble hereof, and shall further specifically include, but not be limited to, the following powers: (a) To rule over cases and controversies arising under this Constitution and arising under all laws of The Mohegan Tribe, but not to issue advisory opinions or decisions in cases which are moot; (b) To appoint from within their body member(s) to serve in the capacity of "Justice of the Peace"; (c) To provide traditional Mohegan names to tribal members; (d) To appoint and define all religious and ceremonial positions, including but not limited to the Medicine Person, Chief or Sachem, Pipe Carrier, Tribal Historian, Sagamores, Nonners, Fire Keepers, etc.; the persons so appointed to said positions shall act under the supervision of, and subject to the removal by, the Council of Elders, and shall fulfill their respective duties in accordance with traditional Mohegan customs and traditions; (e) To advise the Tribal Council in all matters related to tribal culture; (f) To allocate within its budget the amounts deemed necessary for the advice and assistance of legal counsel, and to exercise its discretion in determining when to seek the advice and assistance of said counsel; (g) To appropriate available tribal funds for the benefit of the Tribe, up to the amount allocated by the Tribal Council in the annual budget of the Council of Elders; (h) To establish and enforce rules of tribal custom, consistent with applicable federal statutes and the applicable regulations of the Secretary of the Interior, for the management of tribal society, including but not limited to, the conduct of tribal ceremonies and rituals; (i) to promote and protect the health, peace, morals, and general welfare of The Tribe and its members, and to establish traditional policies regarding education of tribal members; 11 (j) To establish and enforce ordinances governing tribal membership and enrollment; (k) to recommend and submit for a vote, as it deems necessary and wise, amendments to this Constitution, as prescribed in Article XVI and XVII; and (l) To entertain recommendations from other tribal members regarding amendments to this Constitution, and to submit said recommendations to a tribal vote, as prescribed in Article XVI and Article XVII. SECTION 3. The powers and duties of the Chair of the Council of Elders shall include, but not be limited to, the following powers: (a) To carry out the policies established by the Council of Elders through its passage of any ordinances and resolutions necessary or incidental to the exercise of any of the powers and duties enumerated in Article X above, and to be accountable to the Council of Elders to see that said policies are faithfully executed; (b) To manage, administer and direct the operation of tribal cultural programs, activities, and services and to report to the Tribal Council the status of each program at least annually; (c) To direct the preparation of budgets, budget estimates and financial reports for submission to or at the direction of the Tribal Council; (d) To assure the proper receipt, deposit, disbursement, and accounting of all funds (or funds under control of The Tribe) consistent with this Constitution and such policies as may be established by the Council of Elders; (e) To provide for the protection and maintenance of the property, equipment, and official records of the Council of Elders; (f) to provide for enforcement of the rules, regulations, and ordinances enacted by the Council of Elders; (g) To preside over the meetings of the Council of Elders, and (h) To exercise such additional powers as are necessary or incidental to the performance of the powers and duties enumerated above. SECTION 4. In the absence of the Chair, it shall be the Vice-Chair's duty and responsibility to preside over the meetings 12 of the Council of Elders. The Vice-Chair of the Council of Elders shall also assist the Chair when called upon to do so. SECTION 5. The Council of Elders may authorize the formation of committees to carry out its duties, as it deems necessary and proper. A committee of the Council of Elders shall be defined as a body of one or more persons appointed or elected by the Elders to consider or investigate or take action in regards to those matters assigned to it by the Elders. Committees of the Council of Elders are subordinate to the Council of Elders, who shall delegate authority to each committee at its discretion, and who shall define the duties, membership and quorum for each committee. ARTICLE XI - INDIVIDUAL RIGHTS OF TRIBAL MEMBERS SECTION 1. The Mohegan Tribe, in exercising its powers of self-government, shall make no law inconsistent with The Indian Civil Rights Act of 1968 (25 U.S.C. Sections 1301-1303; 82 Stat. 77), which requires that the Tribe not: (a) Make or enforce any law prohibiting the free exercise of religion, or abridging the freedom of speech, or of the press, or the right of the people peaceably to assemble and to petition for a redress of grievances; (b) Violate the right of the people to be secure in their persons, houses, papers, and effects against unreasonable searches and seizures, nor issue warrants, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched and the person or thing to be seized; (c) Subject any person for the same offense to be twice put in jeopardy; (d) Compel any person in any criminal case to be a witness against himself; (e) Take any private property for a public use without just compensation; (f) Deny to any person in a criminal proceeding the right to a speedy and public trial, to be informed of the nature and cause of the accusation, to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor; and, at his own expense, to have the assistance of counsel for his defense; (g) Require excessive bail, impose excessive fines, inflict cruel and unusual punishments, and in no event impose for conviction of any one offense any penalty or punishment greater 13 than imprisonment for a term of one (1) year or a fine of $5,000.00, or both; (h) Deny to any person within its jurisdiction the equal protection of its laws or deprive any person of liberty or property without the process of law; (i) Pass any bill of attainder or ex post facto law; (j) Deny to any person accused of any offense punishable by imprisonment, the right, upon request, to a trial by jury of not less than six persons; or (k) Prohibit any person from testing the legality of his detention, by order of The Mohegan Tribal Court, by petitioning for a writ of habeas corpus in a court of the United States. SECTION 2. In the event that the Indian Civil Rights Act of 1968 is amended in the future, the Tribal Council may, through legislative action, provide that said amendment shall be deemed a part of this Constitution without the need to adopt formal amendments to this Constitution. ARTICLE XII - RIGHT TO PETITION SECTION 1. The members of The Tribe reserve to themselves the power to propose ordinances and resolutions and to enact or reject the same at the polls independent of the Tribal Council upon petition of thirty-five (35) of the registered voters within seven (7) days of such action. SECTION 2. Forty percent (40%) of the registered voters shall (a) have the right by petition to initiate and propose amendments to this Constitution and to propose ordinances and resolutions; and (b) have the right by petition to force the conduct of a referendum on any subject of concern to the members of The Tribe, excepting the question of recall of the elected tribal officials which shall be governed by the provisions of Article VIII. SECTION 3. Upon receipt of a petition for an initiative or referendum election, the Tribal Council shall, after ascertaining that forty percent (40%) of the registered voters have signed the petition, cause to be held an election on the question within sixty days of receipt of said petition. SECTION 4. Any measure referred to the tribal members by initiative or by referendum shall take effect and be in force when approved by a majority of the votes cast in such election. 14 SECTION 5. Referendum or initiative petitions filed under this Article shall be accompanied by a cover letter bearing the notarized signatures of at least three sponsors who are members of The Tribe and who are registered to vote in tribal elections, and filed in accordance with any other procedures established by the Tribal Council. ARTICLE XIII - TRIBAL GAMING AUTHORITY AMENDMENT SECTION 1. Creation of Gaming Authority. All governmental and proprietary powers of The Mohegan Tribe over the development, construction, operation, promotion, financing, regulation and licensing of gaming, and any associated hotel, associated resort or associated entertainment facilities, on tribal lands (collectively, "Gaming") shall be exercised by the Tribal Gaming Authority, provided that such powers shall be within the scope of authority delegated by the Tribal Council to the Tribal Gaming Authority under the ordinance establishing the Tribal Gaming Authority. Leases and other encumbrances grated by the Tribal Gaming Authority for Gaming development and financing shall be deemed to be for governmental purposes and may be for periods not to exceed 50 years. The Tribal Council shall, by ordinance, establish the Tribal Gaming Authority, which shall oversee, regulate, prudently hold and manage all of the Gaming assets of The Mohegan Tribe. The Tribal Gaming Authority shall have the power to grant a limited waiver of sovereign immunity as to Gaming matters, to contracts relating to Gaming, to the revenues of the Tribal Gaming Authority, to the assets within the control of the Tribal Gaming Authority, and as otherwise authorized by the Tribal Council, but shall have no such right as to other tribal revenues, assets or powers. Nothing contained in this Section shall limit the power of the Tribal Council to waive the sovereign immunity of The Mohegan Tribes to Gaming or other matters, or with respect to other tribal revenues or assets. The Tribal Gaming Authority shall have the power to enter into contractual relationships which bind The Mohegan Tribe, provided that such contracts shall be within the scope of authority delegated by the Tribal Council to the Tribal Gaming Authority. Contracts of the Tribal Gaming Authority shall be the law of The Mohegan Tribe and shall be specifically enforceable in accordance with their terms. To the extent that tribal law does not otherwise govern a dispute, the Gaming Disputes Court may apply relevant provisions of Connecticut law. The Tribal Gaming Authority shall have the authority to submit disputes to arbitration. The Tribal Gaming Authority shall have the authority to stipulate for judgment before the Gaming Disputes court created by Section 2 of this Article. Any stipulation for judgment made by the Tribal Gaming Authority shall be binding on The Mohegan Tribe, the Tribal Gaming Authority and upon the Gaming Disputes Court, provided that such stipulation is within the scope of authority delegated by the Tribal Council to the Tribal Gaming Authority. The Gaming Disputes Court shall grant the relief so stipulated upon 15 a finding that all conditions for granting such relief expressly set forth in such stipulation have been met. SECTION 2. Creation of Gaming Disputes Court. The Tribal Council shall establish by ordinance, the Gaming Disputes Court, which shall be composed of a Trial Branch and an Appellate Branch. Exclusive jurisdiction for the Tribe over disputes arising out of or in connection with the Gaming, the actions of the Tribal Gaming Authority, or contracts entered into by The Mohegan Tribe or the Tribal Gaming Authority in connection with Gaming, including without limitation, disputes arising between any person or entity and the Tribal Gaming Authority, including customers, employees, or any gaming manager operating under a gaming management agreement with the Tribal Gaming Authority, or any person or entity which may be in privity with such persons or entities as to Gaming matters shall be vested in the Gaming Disputes Court. Notwithstanding the provisions of Article X of this Constitution, the Gaming Disputes Court shall also have exclusive jurisdiction to determine all controversies arising under this Constitution which in any way relate to Gaming. 2.1 Procedures. The Gaming Disputes Court shall have the power to enact reasonable rules of procedure. The Gaming Disputes Court may, in its discretion, receive evidence and adjudicate controversy de novo. All proceedings of the Gaming Disputes Court shall be conducted in the state of Connecticut, and shall be open to the public, absent a finding that justice otherwise requires. 2.2 Remedies. Nothing in this Article XIII shall preclude or modify the effect of any arbitration mechanism or other dispute resolution mechanism in any agreement otherwise within the jurisdiction of the Gaming Disputes Court. The Gaming Disputes Court shall have full jurisdiction and authority to compel arbitration, to enforce any arbitration order or other dispute resolution mechanism provision and to mandate any remedy which the Gaming Disputes Court finds justice may require. All findings and orders of the Gaming Disputes Court shall be in writing. In the event that either party to a contract which provides for arbitration seeks an order from the Gaming Disputes Court to compel such arbitration, the Gaming Disputes Court shall not review the merits of the dispute, but shall order the parties to arbitrate; all questions of the enforceability of the agreement to arbitrate, or an obligation to arbitrate the dispute in question, being for the arbitrators to decide. 2.3 Appointment of Judges. The Tribal Council shall appoint the Judges of the Gaming Disputes Court. The Tribal Council shall, within thirty days of the adoption of this Article XIII, appoint a minimum number of four Judges for the Gaming Disputes Court. At any time said number of judges falls below four, the Tribal Council shall within thirty days, appoint such additional judges as necessary to restore the minimum number to four judges. If the 16 Tribal Council fails to restore the minimum pool of four within said thirty days, the remaining Judges shall appoint the judges necessary to restore the number to four judges. All judges shall be selected from a publicly available list of eligible retired federal judges or Connecticut Attorney Trial Referees duly appointed by the Chief Justice of the Connecticut Supreme Court pursuant to Connecticut General Statute Section 52-434(a)(4), as amended from time to time, who remain licensed and qualified to practice law in the State of Connecticut, each of whom: (a) Has never been convicted of a felony or any gaming offense; (b) Is not a member of the Tribal Council, or a relative of any such member by blood, marriage, or operation of law; (c) Is of sound mind, trustworthy, and of good moral character; (d) Is able to determine in what cases he or she will be disqualified and is willing to disqualify himself or herself; (e) Is capable of carrying out the duties of the office, including staff administration and supervision; and (f) Is willing to commit, upon public oath of affirmation, to uphold this Constitution and to fairly and partially adjudicate all matters before the Gaming Disputes Court. 2.4 Appeals. Appeals from any decision of the Trial Branch shall be heard by three Judges in the Appellate Branch, Decisions of the Appellate Branch shall be final. There shall be no further right of appeal within the Tribal Court. 2.5 Compensation. Judges of the Gaming Disputes Court shall be compensated by the Tribal Council in amounts appropriate to the duties and responsibilities of the office, which compensation shall not be diminished during a judge's continuation in office. The Gaming Disputes Court shall have the power to take appropriate action to enforce this subsection. 2.6 Recall and Discipline. After appointment, Judges of the Gaming Disputes Court shall be subject to discipline and removal for cause pursuant to the Rules of the Court. SECTION 3. Amendments. Amendments of the ordinances establishing the Tribal Gaming Authority and the Gaming Disputes Court shall require the vote of two-thirds of the members of the Tribal Council, ratified by a two-thirds majority of all votes cast, with at least 40% registered voters voting, in a special tribal meeting called for that purpose by the Tribal Chair. Prior to the enactment of any such amendment by the Tribal Council, any 17 non-tribal party shall have the opportunity to seek a ruling of the Appellate Division of the Gaming Disputes Court that the proposed amendment would constitute an impermissible impairment of contract. Notwithstanding the provisions of Articles XVI and XVII, amendments to this Article XIII shall require a two-thirds majority of all votes cast, with at least 40% registered voters voting, in a special election called for that purpose by the Tribal Chair. Prior to the adoption of any such constitutional amendment, any non-tribal party shall have the opportunity to seek a ruling of the Appellate Division of the Gaming Disputes Court that the proposed amendment would constitute an impermissible impairment of contract. Notwithstanding any other provision of this Constitution, amendments to subsection 2.3 of Article XIII and to Article XIV shall require the affirmative vote of 75% of all registered voters of The Mohegan Tribe. This Section 3 shall have no force or effect during any period in which no indenture or other contract binding on The Tribe or the Tribal Gaming Authority is outstanding or in effect which recites that it is entered into in reliance on this Section 3. SECTION 4. Indian Civil Rights Act. Nothing in this Article XIII or any other provisions of this Constitution, or any other provision of Tribal Law shall foreclose or limit any right any person may otherwise have to bring an action in a court of competent jurisdiction to protect a right or seek a remedy otherwise available pursuant to the Indian Civil Rights Act, 25 U.S.C. Section 1301 et seq. ARTICLE XIV - NON-IMPAIRMENT OF CONTRACTS The Tribe shall enact no law impairing the obligations of contracts entered into in furtherance of development, construction, operation, and promotion of Gaming on tribal lands. Neither the Tribal Council nor any committee, agency, board or other official body, and no officer or official of The Tribe shall, by exercise of the police power or otherwise, act to modify, amend, or in any manner impair the obligations of contracts entered into by the Tribal Council or the Tribal Gaming Authority or other parties in furtherance of the financing, development, construction, operation, or promotion of Gaming on tribal lands without the written consent of the non-tribal parties to such contract. Any such action or attempted action shall be void ab initio. (Const. Amd., 7-15-95). ARTICLE XV - REPEAL AND SAVINGS CLAUSE In the event that any sentence, paragraph, section, or article of this Constitution is subsequently held invalid by a court of 18 competent jurisdiction, the remainder of this Constitution shall remain valid and in full force and effect. ARTICLE XVI - ADOPTION Except as provided for in Article XIII and Article XIV, this Constitution shall take effect if and when adopted by a majority of all votes cast, where at least thirty percent (30%) of the registered voters of The Tribe have voted, in a special election called for that purpose by the Tribal Chair. ARTICLE XVII - AMENDMENT Except as provided for in Article XIII and Article XIV, this Constitution may be amended in the same manner as that set forth in Article XVI, provided that the Chair of the Tribal Council shall call an election to amend the Constitution as requested by the Council of Elders. Ratified by Tribal Vote April 12, 1996 19 EX-4.1 3 EXHIBIT 4.1 Execution Copy - ---------------------------------------------------------------------- - ---------------------------------------------------------------------- MOHEGAN TRIBAL GAMING AUTHORITY ISSUER $175,000,000 Series A and Series B Senior Secured Notes due 2002 _____________________________ INDENTURE Dated as of September 29, 1995 _________________ Mohegan Tribal Gaming Authority of the Mohegan Tribe of Indians of Connecticut Mohegan Tribe of Indians of Connecticut First Fidelity Bank Trustee - -C- COPYRIGHT 1995 BY THE MOHEGAN TRIBAL GAMING AUTHORITY, TRADING COVE ASSOCIATES AND SUN INTERNATIONAL HOTELS LIMITED. REPRODUCTION OF THE MATERIAL HEREIN OR SUBSTANTIAL QUOTATION OF ITS PROVISIONS WITHOUT PERMISSION VIOLATES THE COPYRIGHT LAWS OF THE UNITED STATES AND WILL BE SUBJECT TO LEGAL PROSECUTION. WARNING: UNLICENSED PHOTOCOPYING VIOLATES U.S. COPYRIGHT LAWS. - ---------------------------------------------------------------------- - ---------------------------------------------------------------------- CROSS-REFERENCE TABLE* TRUST INDENTURE ACT SECTION INDENTURE SECTION 310 (a)(1). . . . . . . . . . . . . . . . . . . . 7.10 (a)(2). . . . . . . . . . . . . . . . . . . . 7.10 (a)(3). . . . . . . . . . . . . . . . . . . . N.A. (a)(4). . . . . . . . . . . . . . . . . . . . N.A. (a)(5). . . . . . . . . . . . . . . . . . . . 7.10 (b) . . . . . . . . . . . . . . . . . . . . . 7.10 (c) . . . . . . . . . . . . . . . . . . . . . N.A. 311 (a) . . . . . . . . . . . . . . . . . . . . . 7.11 (b) . . . . . . . . . . . . . . . . . . . . . 7.11 (c) . . . . . . . . . . . . . . . . . . . . . N.A. 312 (a) . . . . . . . . . . . . . . . . . . . . . 2.05 (b) . . . . . . . . . . . . . . . . . . . . . 11.03 (c) . . . . . . . . . . . . . . . . . . . . . 11.03 313 (a) . . . . . . . . . . . . . . . . . . . . . 7.06 (b)(1). . . . . . . . . . . . . . . . . . . . 10.03 (b)(2). . . . . . . . . . . . . . . . . . . . 7.07 (c) . . . . . . . . . . . . . . . . . . . . . 7.06 . . . . . . . . . . . . . . . . . . . . . . . 11.02 (d) . . . . . . . . . . . . . . . . . . . . . 7.06 314 (a) . . . . . . . . . . . . . . . . . . . . . 4.03 . . . . . . . . . . . . . . . . . . . . . . . 11.02 (b) . . . . . . . . . . . . . . . . . . . . . 10.02 (c)(1). . . . . . . . . . . . . . . . . . . . 11.04 (c)(2). . . . . . . . . . . . . . . . . . . . 11.04 (c)(3). . . . . . . . . . . . . . . . . . . . N.A. (d) . . . . . . . . . . . . . . . . . . . . . 10.03 . . . . . . . . . . . . . . . . . . . . . . . 10.04 . . . . . . . . . . . . . . . . . . . . . . . 10.05 (e) . . . . . . . . . . . . . . . . . . . . . 11.05 (f) . . . . . . . . . . . . . . . . . . . . . N.A. 315 (a) . . . . . . . . . . . . . . . . . . . . . 7.01 (b) . . . . . . . . . . . . . . . . . . . . . 7.05 . . . . . . . . . . . . . . . . . . . . . . . 11.02 (c) . . . . . . . . . . . . . . . . . . . . . 7.01 (d) . . . . . . . . . . . . . . . . . . . . . 7.01 (e) . . . . . . . . . . . . . . . . . . . . . 6.11 316 (a)(last sentence). . . . . . . . . . . . . . 2.09 (a)(1)(A) . . . . . . . . . . . . . . . . . . 6.05 (a)(1)(B) . . . . . . . . . . . . . . . . . . 6.04 (a)(2). . . . . . . . . . . . . . . . . . . . N.A. (b) . . . . . . . . . . . . . . . . . . . . . 6.07 (c) . . . . . . . . . . . . . . . . . . . . . 2.12 317 (a)(1). . . . . . . . . . . . . . . . . . . . 6.08 (a)(2). . . . . . . . . . . . . . . . . . . . 6.09 i (b) . . . . . . . . . . . . . . . . . . . . . 2.04 318 (a) . . . . . . . . . . . . . . . . . . . . . 11.01 (b) . . . . . . . . . . . . . . . . . . . . . N.A. (c) . . . . . . . . . . . . . . . . . . . . . 11.01 N.A. means not applicable. *This Cross-Reference Table is not part of the Indenture. ii TABLE OF CONTENTS PAGE ---- ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE . . . . . 1 Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . 1 Section 1.02. Other Definitions . . . . . . . . . . . . . . . .17 Section 1.03. Incorporation by Reference of Trust Indenture Act . . . . . . . . . . . . . . . . . .17 Section 1.04. Rules of Construction . . . . . . . . . . . . . .18 ARTICLE 2 THE NOTES . . . . . . . . . . . . .18 Section 2.01. Form and Dating . . . . . . . . . . . . . . . . .18 Section 2.02. Execution and Authentication. . . . . . . . . . .19 Section 2.03. Registrar and Paying Agent. . . . . . . . . . . .20 Section 2.04. Paying Agent to Hold Money in Trust . . . . . . .20 Section 2.05. Holder Lists. . . . . . . . . . . . . . . . . . .21 Section 2.06. Transfer and Exchange . . . . . . . . . . . . . .21 Section 2.07. Replacement Notes . . . . . . . . . . . . . . . .27 Section 2.08. Outstanding Notes . . . . . . . . . . . . . . . .28 Section 2.09. Treasury Notes. . . . . . . . . . . . . . . . . .28 Section 2.10. Temporary Notes . . . . . . . . . . . . . . . . .28 Section 2.11. Cancellation. . . . . . . . . . . . . . . . . . .29 Section 2.12. Defaulted Interest. . . . . . . . . . . . . . . .29 Section 2.13. Record Date . . . . . . . . . . . . . . . . . . .29 ARTICLE 3 OFFERS TO PURCHASE OR REDEMPTION. . . . . . . .29 Section 3.01. Notices to Trustee. . . . . . . . . . . . . . . .29 Section 3.02. Selection of Notes to Be Purchased or Redeemed. .30 Section 3.03. Notice of Redemption. . . . . . . . . . . . . . .31 Section 3.04. Effect of Notice of Redemption. . . . . . . . . .31 Section 3.05. Deposit of Purchase or Redemption Price . . . . .31 Section 3.06. Notes Purchased or Redeemed in Part . . . . . . .32 Section 3.07. Optional Redemption . . . . . . . . . . . . . . .32 Section 3.08. Redemption Pursuant to Gaming Law . . . . . . . .32 Section 3.09. Mandatory Redemption. . . . . . . . . . . . . . .33 Section 3.10. Repurchase Offers . . . . . . . . . . . . . . . .33 ARTICLE 4 COVENANTS . . . . . . . . . . . . .35 Section 4.01. Payment of Notes. . . . . . . . . . . . . . . . .35 Section 4.02. Maintenance of Office or Agency . . . . . . . . .35 Section 4.03. Reports . . . . . . . . . . . . . . . . . . . . .36 Section 4.04. Compliance Certificate. . . . . . . . . . . . . .37 Section 4.05. Taxes . . . . . . . . . . . . . . . . . . . . . .37 Section 4.06. Stay, Extension and Usury Laws. . . . . . . . . .38 Section 4.07. Restricted Payments . . . . . . . . . . . . . . .38 i Section 4.08. Mandatory Cash Maintenance Account. . . . . . . .40 Section 4.09. Limitations on Incurrence of Indebtedness . . . .41 Section 4.10. Asset Sales . . . . . . . . . . . . . . . . . . .42 Section 4.11. Event of Loss . . . . . . . . . . . . . . . . . .43 Section 4.12. Transactions with Affiliates. . . . . . . . . . .44 Section 4.13. Liens . . . . . . . . . . . . . . . . . . . . . .45 Section 4.14. Line of Business. . . . . . . . . . . . . . . . .45 Section 4.15. Governmental Existence. . . . . . . . . . . . . .45 Section 4.16. Offer to Repurchase Upon Change of Control. . . .45 Section 4.17. Registration Rights . . . . . . . . . . . . . . .45 Section 4.18. Use of Proceeds . . . . . . . . . . . . . . . . .46 Section 4.19. Disbursement and Escrow Agreement . . . . . . . .46 Section 4.20. Gaming Licenses.. . . . . . . . . . . . . . . . .47 Section 4.21. Construction. . . . . . . . . . . . . . . . . . .47 Section 4.22. Maintenance of Insurance. . . . . . . . . . . . .47 Section 4.23. Limitation on Status as Investment Company. . . .48 Section 4.24. Collateral Documents. . . . . . . . . . . . . . .48 Section 4.25. Further Assurances. . . . . . . . . . . . . . . .49 Section 4.26. Interest and Excess Cash Flow Account . . . . . .49 Section 4.27. Restrictions on Leasing and Dedication of Property . . . . . . . . . . . . . . . . . . .49 Section 4.28. Excess Cash Purchase Offer. . . . . . . . . . . .50 Section 4.29. Ownership Interests in the Authority. . . . . . .51 Section 4.30. Limitation of Creation of Subsidiaries. . . . . .51 ARTICLE 5 SUCCESSORS . . . . . . . . . . . . .52 Section 5.01. Liquidation or Dissolution. . . . . . . . . . . .52 ARTICLE 6 DEFAULTS AND REMEDIES . . . . . . . . . .52 Section 6.01. Events of Default . . . . . . . . . . . . . . . .52 Section 6.02. Acceleration. . . . . . . . . . . . . . . . . . .54 Section 6.03. Other Remedies. . . . . . . . . . . . . . . . . .55 Section 6.04. Waiver of Past Defaults . . . . . . . . . . . . .55 Section 6.05. Control by Majority . . . . . . . . . . . . . . .55 Section 6.06. Limitation on Suits . . . . . . . . . . . . . . .56 Section 6.07. Rights of Holders of Notes to Receive Payment . .56 Section 6.08. Collection Suit by Trustee. . . . . . . . . . . .56 Section 6.09. Trustee May File Proofs of Claim. . . . . . . . .56 Section 6.10. Priorities. . . . . . . . . . . . . . . . . . . .57 Section 6.11. Undertaking for Costs . . . . . . . . . . . . . .57 Section 6.12. Management of Casinos . . . . . . . . . . . . . .58 ARTICLE 7 TRUSTEE. . . . . . . . . . . . . .58 Section 7.01. Duties of Trustee . . . . . . . . . . . . . . . .58 Section 7.02. Rights of Trustee . . . . . . . . . . . . . . . .59 Section 7.03. Individual Rights of Trustee. . . . . . . . . . .60 Section 7.04. Trustee's Disclaimer. . . . . . . . . . . . . . .60 Section 7.05. Notices of Defaults . . . . . . . . . . . . . . .60 ii Section 7.06. Reports by Trustee to Holders of the Notes. . . .60 Section 7.07. Compensation and Indemnity. . . . . . . . . . . .61 Section 7.08. Replacement of Trustee. . . . . . . . . . . . . .62 Section 7.09. Successor Trustee by Merger, etc. . . . . . . . .63 Section 7.10. Eligibility; Disqualification . . . . . . . . . .63 Section 7.11. Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . .64 iii ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE . . . . . 64 Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance. . . . . . . . . . . . . .64 Section 8.02. Legal Defeasance and Discharge. . . . . . . . . .64 Section 8.03. Covenant Defeasance . . . . . . . . . . . . . . .65 Section 8.04. Conditions to Legal or Covenant Defeasance. . . .65 Section 8.05. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions . .67 Section 8.06. Repayment to Authority. . . . . . . . . . . . . .67 Section 8.07. Reinstatement . . . . . . . . . . . . . . . . . .68 Section 8.08. Note Collateral . . . . . . . . . . . . . . . . .68 ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER. . . . . . . .68 Section 9.01. Without Consent of Holders of Notes . . . . . . .68 Section 9.02. With Consent of Holders of Notes. . . . . . . . .69 Section 9.03. Compliance with Trust Indenture Act . . . . . . .70 Section 9.04. Revocation and Effect of Consents . . . . . . . .71 Section 9.05. Notation on or Exchange of Notes. . . . . . . . .71 Section 9.06. Trustee to Sign Amendments, etc . . . . . . . . .71 ARTICLE 10 COLLATERAL AND SECURITY. . . . . . . . . .71 Section 10.01. Security . . . . . . . . . . . . . . . . . . . .71 Section 10.02. Recording and Opinions . . . . . . . . . . . . .72 Section 10.03. Release of Note Collateral . . . . . . . . . . .73 Section 10.04. Protection of the Trust Estate . . . . . . . . .74 Section 10.05. Certificates of the Authority. . . . . . . . . .75 Section 10.06. Certificates of the Trustee. . . . . . . . . . .75 Section 10.07. Authorization of Actions to Be Taken by the Trustee Under the Collateral Documents. .75 Section 10.08. Authorization of Receipt of Funds by the Trustee Under the Collateral Documents . . .76 Section 10.09. Termination of Security Interest . . . . . . . .76 Section 10.10. Cooperation of Trustee . . . . . . . . . . . . .76 Section 10.11. Collateral Agent . . . . . . . . . . . . . . . .77 Section 10.12. Cash Funds Pledge. . . . . . . . . . . . . . . .77 ARTICLE 11 COVENANTS OF THE TRIBE . . . . . . . . . .78 Section 11.01. Covenants of the Tribe . . . . . . . . . . . . .78 ARTICLE 12 MISCELLANEOUS . . . . . . . . . . . .80 Section 12.01. Trust Indenture Act Controls . . . . . . . . . .80 Section 12.02. Notices. . . . . . . . . . . . . . . . . . . . .81 Section 12.03. Communication by Holders of Notes with Other Holders of Notes . . . . . . . . . . . . .82 Section 12.04. Certificate and Opinion as to Conditions Precedent. . . . . . . . . . . . . . . . . . . .83 Section 12.05. Statements Required in Certificate or Opinion. .83 iv Section 12.06. Rules by Trustee and Agents. . . . . . . . . . .83 Section 12.07. Dispute Resolution and Consent to Suit . . . . .83 Section 12.08. No Personal Liability of Directors, Officers, Employees and Stockholders . . . . . .85 Section 12.09. Governing Law. . . . . . . . . . . . . . . . . .86 Section 12.10. No Adverse Interpretation of Other Agreements. .86 Section 12.11. Successors . . . . . . . . . . . . . . . . . . .86 Section 12.12. Severability . . . . . . . . . . . . . . . . . .86 Section 12.13. Counterpart Originals. . . . . . . . . . . . . .86 Section 12.14. Table of Contents, Headings, Etc . . . . . . . .86 v EXHIBITS Exhibit A-1 Form of Senior Secured Note (Series A) A-2 Form of Senior Secured Note (Series B) Exhibit B Certificate to be delivered upon exchange or registration of transfer of Notes vi INDENTURE dated as of September 29, 1995 among the Mohegan Tribal Gaming Authority of the Mohegan Tribe of Indians of Connecticut (the "Authority"), First Fidelity Bank, as trustee (the "Trustee"), and the Mohegan Tribe of Indians of Connecticut (the "Tribe") for the limited purposes stated in Articles 11 and 12 hereof and Section 4.29. This Indenture is entered into on reliance of the provisions of Article XIII, Section 3 of the Tribe's Constitution as in effect on the date of this Indenture. The Authority, the Trustee and the Tribe (to the limited extent specified herein) agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the Series A and Series B Senior Secured Notes due 2002 (the "Notes"): ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. DEFINITIONS. "ACCRUAL PERIOD" shall have the meaning specified in paragraph 1 of the Notes. "ACQUIRED INDEBTEDNESS" means, with respect to any specified Person, (i) Indebtedness of any other Person existing at the time such other Person merged with or into such specified Person, including Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into such specified Person and (ii) Indebtedness encumbering any asset acquired by such specified Person. "AFFILIATE" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise, PROVIDED, HOWEVER, that for purposes of Section 4.12 only, beneficial ownership of 10% or more of the voting securities of a Person shall be deemed to be control. "AGENT" means any Registrar, Paying Agent or co-registrar. "ASSET SALE" means the sale, conveyance, transfer or other disposition (whether in a single transaction or a series of related transactions) of property or assets (including by way of a sale and leaseback) of the Authority (each referred to in this definition as a "disposition") other than (a) a disposition of inventory or other goods held for sale or disposition in the ordinary course of business, (b) any disposition that is a Restricted Payment permitted under Section 4.07 hereof or any Investment that is not prohibited thereunder or any disposition of cash or Cash Equivalents, (c) any single disposition, or related series of dispositions, of assets with an aggregate fair market value of less than $500,000, (d) any Event of Loss and (e) any lease or sublease permitted as described 1 under Section 4.27 hereof. It is acknowledged that the Authority is prohibited from making an Asset Sale of Key Project Assets. "AUTHORITY" means the Mohegan Tribal Gaming Authority together with any subdivision, agency, subunit or Subsidiary thereof and any successor and assignee thereto. "BANKRUPTCY LAW" means Title 11, U.S. Code or any similar federal, state or tribal law or ordinance for the relief of debtors. "BOARD OF DIRECTORS" means, as the context requires, the Management Board of the Authority or any authorized committee of the Management Board of the Authority. "BUSINESS DAY" means any day other than a Legal Holiday. "CAPITAL LEASE OBLIGATION" means, at the time and determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized and reflected as a liability on the balance sheet in accordance with GAAP. "CAPITAL STOCK" means with respect to any Person, any and all shares, interests, participations, rights or other equivalents (however designated) in the profits or losses of such Person, including, (i) if such Person is a partnership, partnership interests (whether general or limited) and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, such partnership or (ii) with respect to the Authority, any interest or participation in the profits or losses of the Authority or its business other than fees paid to the Manager under the Management Agreement, amounts paid to the State of Connecticut under the Compact or the memorandum of understanding thereunder, Cash Flow Participation Interest on the Notes, or any fees for goods and services provided to the Authority in the ordinary course of business and which is measured by revenues or income. "CASH AVAILABLE FOR CASH MAINTENANCE ACCOUNT" means, with respect to any period, the Cash Flow of the Authority for such period less (i) Interest Expense of the Authority for such period, (ii) principal payments on Indebtedness of the Authority made in respect of such period (other than pursuant to an Excess Cash Purchase Offer) and (iii) Minimum Priority Payments to the Tribe for such period; Cash Available for Cash Maintenance Account shall be calculated without any deduction for deposits into the Cash Maintenance Account or deposits in respect of Excess Cash Flow into the Interest and Excess Cash Flow Account. "CASH COLLATERAL ACCOUNTS PLEDGE AND SECURITY AGREEMENT" means the Cash Collateral Accounts Pledge Agreement among the Trustee, the Authority and the Manager dated as of the Issuance Date. "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 having maturities of not more than six months from the date of acquisition, (iii) certificates of deposit and eurodollar time deposits with maturities of six months or less from the date of acquisition, bankers' acceptances with maturities not 2 exceeding six months and overnight bank deposits, in each case with any commercial bank having capital and surplus in excess of $300 million, (iv) repurchase obligations with a term of not more than seven days 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 Investors Service, Inc. or Standard & Poor's Ratings Group and in each case maturing within one year after the date of acquisition and (vi) investment funds investing solely in securities of the types described in clauses (ii) - (v) above. "CASH FLOW" means, with respect to any Person for any period, the Net Revenue of such Person for such period, plus (a) an amount equal to any extraordinary loss plus any net loss realized in connection with an Asset Sale (to the extent such losses were deducted in computing such Net Revenue), plus (b) provision for taxes based on income or profits of such Person for such period, to the extent such provision for taxes was used in computing such Net Revenue, plus (c) Interest Expense of such Person for such period, plus (d) Depreciation and Amortization Expense of such Person for such period to the extent such depreciation and amortization were deducted in computing such Net Revenue, in each case, as determined in accordance with GAAP. "CASH FLOW PARTICIPATION INTEREST" shall have the meaning specified in paragraph 1 of the Notes. "CASH FLOW PARTICIPATION INTEREST ACCRUAL" means, at any time, the total amount of Cash Flow Participation Interest on the Notes accrued and unpaid through and as of such time. "CASH MAINTENANCE ACCOUNT" means the cash collateral account required to be established by Sections 4.08 and 10.12. "CHANGE OF CONTROL" means the occurrence of any of the following: (i) the Authority ceases to be a wholly-owned unit, instrumentality or subdivision of the government of the Tribe, (ii) the Authority ceases to have the exclusive legal right to operate gaming operations of the Tribe, (iii) the Authority fails to retain in full force and effect at all times all material governmental consents, permits or legal rights necessary for the operation of the Resort and such failure continues for a period of 90 consecutive days, (iv) TCA or any other entity in which Sun International owns, directly or indirectly, at least 50% of the Capital Stock ceases to be the Manager of the Resort or fails to hold any material governmental consent or permit required to manage the Resort and such failure continues for a period of 90 consecutive days or (v) Sun International fails to own, directly or indirectly, at least 50% of the Capital Stock of the Manager. "COLLATERAL AGENT" means any person appointed by the Trustee as a collateral agent hereunder. "COLLATERAL DOCUMENTS" means, collectively, the Leasehold Mortgage, Cash Collateral Accounts Pledge and Security Agreement, Disbursement and Escrow Agreement, Secured Completion Guarantee or any other agreements, instruments, financing statements or other documents that evidence, set forth or limit the Lien of the Trustee in the Note Collateral. 3 "COMMENCEMENT DATE" shall have the meaning specified in paragraph 1 of the Notes. "COMPACT" means the tribal-state Compact entered into between the Tribe and the State of Connecticut pursuant to the Indian Gaming Regulatory Act of 1988, PL 100-497, 25 U.S.C. 2701 ET SEQ. as the same may, from time to time, be amended, or such other Compact as may be substituted therefor. "COMPLETED" means, with respect to the Resort, the first time that (i) all Liens (other than Permitted Liens or Liens which relate to Disputed Amounts (as defined in the Secured Completion Guarantee) guaranteed by the Guarantor (as defined in the Secured Completion Guarantee) under Section 2.5 of the Secured Completion Guarantee) relating to the construction of the Resort have been paid, (ii) the general contractor and the project architect for the Resort, or an independent construction expert appointed by the Guarantor and acceptable to the Trustee, shall have delivered a certificate to the Trustee certifying that the Resort is complete in all material respects in accordance with the Plans therefor and in compliance with all applicable laws, ordinances and regulations (including gaming laws, ordinances and the Compact requirements) with respect to the physical structure, health and safety, environmental and hazardous materials, fire, equipment, security and physical operating (gaming and other) requirements of the Resort, and (iii) the Resort is in a condition (including installation of furnishings, fixtures and equipment sufficient for the Minimum Facilities and provision of adequate initial operating capital) including all operating supplies, sufficient coin for the slot machines, sufficient operating cash for the other games and trained employees (or sufficient funds to hire and train such employees) so that the Resort is fit to receive guests in the ordinary course of business. "CONSTRUCTION BUDGET" means itemized schedules setting forth on a line item basis all of the costs (including financing costs) estimated to be incurred in connection with the financing, design, development, construction, equipping and opening of the Project, as such schedules are delivered to the Disbursement Agent and Escrow Agent as of the Issuance Date and as amended from time to time in accordance with the Disbursement and Escrow Agreement. "CONTINUING PAYMENT DEFAULT NOTICE" means a written statement (a "Payment Default Notice") signed by the Authority or by the Trustee or by Holders of at least 25% in principal amount of the then outstanding Notes and received by the Trustee, to the effect that a Payment Default has occurred and is continuing; such Payment Default Notice shall cease to be a Continuing Payment Default Notice when the Trustee subsequently receives either (i) a written statement, signed by the Person or Persons that signed such Payment Default Notice or by Holders of at least 25% in principal amount of the then outstanding Notes or by the Trustee, to the effect that such Payment Default has been cured by payment in cash of the full amount due or (ii) a certified copy of a final and nonappealable order of the Gaming Disputes Court or other court of competent jurisdiction, finding and declaring that such Payment Default either did not occur or has been cured by payment in cash of the full amount due and that such Payment Default Notice has expired. "CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the address of the Trustee specified in Section 12.02 hereof or such other address as to which the Trustee may give notice to the Tribe or the Authority. 4 "DEFAULT" means any event that is or with the passage of time or the giving of notice or both would be an Event of Default. "DEFERRED SUBORDINATED INTEREST" means any interest on Subordinated Indebtedness that is not currently payable in cash or that is not permitted to be paid in cash under the governing agreements, including any amortization of original issue discount. "DEFINITIVE NOTES" means Notes that are in the form of the Notes attached hereto as Exhibit A-1, that do not include the information called for by footnotes 1 and 2 thereof. "DEPOSITORY" means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as the Depository with respect to the Notes, until a successor shall have been appointed and become such pursuant to the applicable provision of this Indenture, and, thereafter, "Depository" shall mean or include such successor. "DEPRECIATION AND AMORTIZATION EXPENSE" means with respect to any Person for any period, the total amount of depreciation and amortization expense and other noncash charges (excluding any noncash item that represents an accrual, reserve or amortization of a cash expenditure for a future period and excluding non cash Interest Expense) of such Person for such period as defined in accordance with GAAP. "DEVELOPMENT AND CONSTRUCTION AGREEMENT" means the Gaming Facility Construction and Development Agreement between the Tribe and the Manager, substantially in the form delivered to the Trustee on the Issuance Date. "DISBURSEMENT AND ESCROW AGREEMENT" means the Disbursement and Escrow Agreement among the Authority, the Trustee, First Fidelity Bank, as Escrow Agent, the Manager, Sun International, and Chicago Title Insurance Company, Disbursement Agent, substantially in the form delivered to the Trustee on the Issuance Date. "DOLLARS" and "$" mean lawful money of the United States of America. "ELIGIBLE INSTITUTION" means (a) the Trustee, (b) an affiliate of the Trustee or (c) a commercial banking institution that is federally chartered or organized under the laws of the State of Connecticut, is not affiliated with or chartered by the Tribe, has combined capital and surplus in excess of $500 million, conducts banking operations in the State of Connecticut, and whose debt is rated "A" (or higher) according to Standard & Poor's Ratings Group or Moody's Investors Service, Inc. "EQUITY INTERESTS" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "ESCROW ACCOUNT" shall have the meaning set forth in the Disbursement and Escrow Agreement. "ESCROW AGENT" shall have the meaning set forth in the Disbursement and Escrow Agreement. 5 "EVENT OF LOSS" means, with respect to any property or asset (tangible or intangible, real or personal), any of the following: (A) any loss, destruction or damage of such property or asset; (B) any institution of any proceedings for the condemnation or seizure of such property or asset or for the exercise of any right of eminent domain; (C) any actual condemnation, seizure or taking by exercise of the power of eminent domain or otherwise of such property or asset, or confiscation of such property or asset or the requisition of the use of such property or asset; or (D) any settlement in lieu of clause (B) or (C) above. "EXCESS CASH FLOW" means, with respect to any period, an amount equal to the Cash Flow of the Authority for such period, less (i) all Management Fees accrued for such period (whether or not distributed), (ii) principal payments on Indebtedness of the Authority during such period (other than principal payments (a) pursuant to an Excess Cash Purchase Offer or (b) which are funded from the proceeds of Indebtedness permitted to be incurred under the Indenture or (c) on the Working Capital Financing that do not permanently reduce Indebtedness under the Working Capital Financing), (iii) the Authority's share of deposits into the Replacement Reserve Account (but not more than $1.8 million per fiscal year) commencing with the first full fiscal year after the commencement of operations of the Resort, (iv) all other capital expenditures not funded from the Replacement Reserve Account or from the proceeds of Indebtedness permitted to be incurred under the Indenture (but not more than $5.0 million per fiscal year), (v) any amounts set aside in the Cash Maintenance Account for such fiscal period, (vi) Interest Expense of the Authority for such period and (vii) taxes, if any, payable to the federal government or the State of Connecticut. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "EXCHANGE OFFER" means the registration by the Authority under the Securities Act of the Series B Notes pursuant to a registration statement pursuant to which the Authority is obligated to offer the Holders of all outstanding Transfer Restricted Securities the opportunity to exchange all such outstanding Transfer Restricted Securities held by such Holders for Series B Notes in an aggregate principal amount equal to the aggregate principal amount of the Transfer Restricted Securities tendered in such exchange offer by such Holders. "FIXED CHARGE COVERAGE RATIO" means, with respect to any Person for any period, the ratio of the Cash Flow of such Person for such period to the Fixed Charges of such Person for such period. In the event that the Authority incurs, assumes, guarantees or redeems any Indebtedness (other than revolving credit borrowings) subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, guarantee or redemption of Indebtedness as if the same had occurred at the beginning of the applicable four- quarter period. For purposes of making the computation referred to above, acquisitions, dispositions and discontinued operations (as determined in accordance with GAAP) that have been made by the Authority, including all mergers, consolidations and dispositions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be calculated on a pro forma basis assuming that all such acquisitions, dispositions, discontinued operations, mergers, 6 consolidations (and the reduction of any associated fixed charge obligations resulting therefrom) had occurred on the first day of the four-quarter reference period. "FIXED CHARGES" means, with respect to any Person for any period, the sum of (a) the Interest Expense of such Person for such period, (b) the Interest Expense of such Person that was capitalized during such period, and (c) to the extent not included above, any Interest Expense on Indebtedness of another Person that is Guaranteed by the referent Person or secured by a lien on assets of the referent Person (whether or not such Guarantee or lien is called upon). "FIXED INTEREST" shall have the meaning specified in paragraph 1 of the Notes. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession. "GAMING" means any and all activities defined as Class II or Class III Gaming under the IGRA or authorized under the Compact. "GAMING DISPUTES COURT" means the Gaming Disputes Court of the Tribe, as established pursuant to Article XIII, Section 2 of the Tribe's Constitution. "GAMING ENTERPRISE" means any commercial enterprise of the Authority, including, without limitation, any hotel or hotel resort property, any gaming operation, any restaurant or other entertainment or other commercial enterprise. "GAMING FACILITY MANAGEMENT AGREEMENT" means that certain Amended and Restated Gaming Facility Management Agreement between the Tribe and the Manager dated August ___, 1995, which shall be assigned by the Tribe to the Authority on or before the Issuance Date. "GAMING LICENSE" means every license, franchise or other authorization required to own, lease, operate or otherwise conduct gaming activities of the Tribe or the Authority including without limitation, all such licenses granted under the Tribal Gaming Ordinance, and the regulations promulgated pursuant thereto, and other applicable federal, state, foreign or local laws. "GAMING REGULATORY AUTHORITY" means any agency, authority, board, bureau, commission, department, office or instrumentality of any nature whatsoever of the United States or foreign government, any state, province or any city or other political subdivision, whether now or hereafter existing, or any officer or official thereof, including without limitation, any division of the Authority or any other agency with authority to regulate any gaming operation (or proposed gaming operation) owned, managed or operated by the Tribe or the Authority. "GLOBAL NOTE" means a Note that contains the paragraph referred to in footnote 1 and the additional schedule referred to in footnote 2 to the form of the Note attached hereto as Exhibit A-1. 7 "GOVERNMENT SECURITIES" means securities that are (a) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged or (b) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act of 1933, as amended), as custodian with respect to any such Government Security or a specific payment of principal of or interest on any such Government Security held by such custodian for the account of the holder of such depository receipt; PROVIDED, that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the Government Security or the specific payment of principal of or interest on the Government Security evidenced by such depository receipt. "GROSS REVENUES" means all revenues of any nature derived directly or indirectly by the Authority, including without limitation, gaming revenues, interest earned on bank accounts, food and beverage sales and other rental or receipts from lessees, sublessees, licensees and concessionaires (but not the gross receipts of such lessees, sublessees, licensees or concessionaires) and revenue recorded for promotional allowances, determined in accordance with GAAP consistently applied. "GUARANTEE" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness. "HEDGING OBLIGATIONS" means, with respect to any Person, the obligations of such Person under (i) currency exchange or interest rate swap agreements, currency exchange or interest rate cap agreements and currency exchange or interest rate collar agreements and (ii) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange or interest rates. "HOLDER" or "NOTEHOLDER" means a Person in whose name a Note is registered. "IGRA" means the Indian Gaming Regulatory Act of 1988, PL100-497, 25 U.S.C. 2701 ET SEQ. as the same may, from time to time, be amended. "INDEBTEDNESS" means, with respect to any Person, (a) any indebtedness of such Person, whether or not contingent (i) in respect of borrowed money, including accrued and unpaid Cash Flow Participation Interest, (ii) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof), (iii) representing the balance deferred and unpaid of the purchase price of any property (including Capital Lease Obligations), except any such balance that constitutes an accrued expense or trade payable, or (iv) representing any Hedging Obligations, if and to the extent any of the foregoing indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of such Person prepared in accordance with GAAP, (b) to the extent not otherwise included, any obligation by such Person to be liable for, or to pay, as obligor, guarantor or otherwise, on the Indebtedness 8 of another Person (other than by endorsement of negotiable instruments for collection in the ordinary course of business) and (c) to the extent not otherwise included, Indebtedness of another Person secured by a Lien on any asset of the referent Person (whether or not such Indebtedness is assumed by such referent Person). "INDENTURE" means this Indenture, as amended or supplemented from time to time. "INDEPENDENT FINANCIAL ADVISOR" means an accounting, appraisal or investment banking firm of nationally recognized standing that is, in the judgment of the Management Board, (i) qualified to perform the task for which it has been engaged and (ii) disinterested and independent with respect to the Authority and each Affiliate of the Authority. "INITIAL PERIOD" shall have the meaning specified in the paragraph 1 of the Notes. "INTEREST AND EXCESS CASH FLOW ACCOUNT" means the Interest and Excess Cash Flow Account established under Sections 4.26 and 10.12 hereof. "INTEREST EXPENSE" means, with respect to any period, the sum of (a) interest expense of such Person for such period, whether paid or accrued, to the extent such expense was deducted in computing Net Revenue (including, without limitation, Cash Flow Participation Interest on the Notes, amortization of original issue discount and deferred financing fees, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of Capital Lease Obligations, and net payments (if any) pursuant to Hedging Obligations, excluding amortization of deferred financing fees), (b) capitalized interest of such Person for such period, whether paid or accrued, to the extent such expense was deducted in computing Net Revenue and (c) commissions, discounts and other fees and charges paid or accrued with respect to letters of credit and bankers' acceptance financing. "INVESTMENTS" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of loans (including Guarantees), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities and all other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. "ISSUANCE DATE" means the closing date for the sale and original issuance of the Notes. "KEY PROJECT ASSETS" means (i) the Lease and any real property or interest in real property held in trust for the Tribe by the United States, (ii) any improvements to the leasehold estate under the Lease or such real property and (iii) any business records of the Authority or the Tribe. "LEASE" means the Land Lease between the Tribe and the Authority, substantially in the form delivered to the Trustee on the Issuance Date, as the same may be amended in accordance with terms hereof and thereof. 9 "LEASEHOLD MORTGAGE" means that certain Open-End Construction - Permanent Leasehold Mortgage Deed, Assignment of Leases and Rents and Security Agreement, executed by the Authority to encumber certain property in favor of the Trustee, for the ratable benefit of the Holders of Notes, as the same may be amended in accordance with terms hereof and thereof. "LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which banking institutions in the City of New York or at a place of payment on the Notes are authorized by law, regulation or executive order to remain closed. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday and no interest shall accrue on the interest that was due for the intervening period. "LIEN" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction). "LIQUIDATED DAMAGES" means all liquidated damages then owing pursuant to Section 5 of the Registration Rights Agreement. "MANAGEMENT AGREEMENT" means the Amended and Restated Gaming Facility Management Agreement or any successor management agreement thereto. "MANAGEMENT BOARD" means the Management Board of the Authority or any authorized committee of the Management Board of the Authority, as applicable. "MANAGEMENT COMPANY" or "MANAGER" means TCA or a successor permitted pursuant to this Indenture. "MANAGEMENT FEE" means the management fee under the Management Agreement. "MAXIMUM CASH FLOW PARTICIPATION INTEREST" shall have the meaning specified in paragraph 1 of the Notes. "MINIMUM FACILITIES" means, with respect to the Resort, at least 2,500 operating slot machines, 150 operating table games, operating restaurants with 1,200 seats, 5,000 usable parking spaces, and all banking, coin, security and other ancillary equipment and facilities necessary to operate the Project on a 24 hour per day, seven days a week basis. "MINIMUM PRIORITY PAYMENT" has the meaning set forth in the Management Agreement in effect on the Issuance Date. "NET LOSS PROCEEDS" means the aggregate cash proceeds received by the Authority in respect of any Event of Loss, including, without limitation, insurance proceeds, condemnation awards or damages awarded by any judgment, net of the direct costs in 10 recovery of such proceeds (including, without limitation, legal, accounting, appraisal and insurance adjuster fees) and any taxes paid or payable as a result thereof. "NET PROCEEDS" means the aggregate cash proceeds received by the Authority in respect of any Asset Sale, net of the direct costs relating to such Asset Sale (including, without limitation, legal, accounting and investment banking or brokerage fees, and sales commissions), and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions), amounts required to be applied to the repayment of Indebtedness secured by a Lien (other than the Notes) on the asset or assets that are the subject of such Asset Sale and any reserve for adjustment in respect of the sale price of such asset or assets. "NET RECEIPTS ACCOUNT" means the Depository Account established pursuant to the Management Agreement. "NET REVENUE" means the sum of Net Revenue From Gaming Operations plus Net Revenue From Other Operations. "NET REVENUE FROM GAMING OPERATIONS" means Gross Gaming Revenue (Win) (as defined in the Gaming Facility Management Agreement) from Class III gaming, less all Class III gaming related Operating Expenses (excluding any Management Fee) determined in accordance with GAAP consistently applied. "NET REVENUE FROM OTHER OPERATIONS" means Gross Revenues of the Authority from all sources other than gaming, such as food and beverage, entertainment and retail, less all related Operating Expenses, excluding any related management fee payable to the Manager and less the retail value of Promotional Allowances (as defined in the Management Agreement), plus gross revenues from Class II gaming operations less any Class II gaming related Operating Expenses determined in accordance with GAAP consistently applied and less the following revenues actually received by the Authority and included in Gross Revenues: (i) any gratuities or service charges added to a customer's bill; (ii) any credits or refunds made to customers, guests or patrons; (iii) any sums and credits received by the Authority for lost or damaged merchandise; (iv) any sales, excise, gross receipt, admission, entertainment, tourist or other taxes or charges (or assessments equivalent thereto, or payments made in lieu thereof) which are received from patrons and passed on to a governmental or quasi-governmental entity; (v) any proceeds from the sale or other disposition of furnishings and equipment or other capital assets; (vi) any fire and extended coverage insurance proceeds other than for business interruption; (vii) any condemnation awards other than for temporary condemnation; (viii) any proceeds of financing or refinancing; and (ix) any interest on the Replacement Reserve Fund (as defined in the Management Agreement), all determined in accordance with GAAP consistently applied, and 25 U.S.C. Section 2703(9). "NIGC" means the National Indian Gaming Commission. "NOTES" means, collectively, the Series A Notes and, when issued under the Exchange Offer, the Series B Notes. "NOTE COLLATERAL" means (i) the Escrow Account, the Replacement Reserve Account, the Cash Maintenance Account, the Net Receipts Account, the Interest and 11 Excess Cash Flow Account and any and all other accounts at any time identified as Collateral in any Collateral Document, all funds at any time on deposit in any such account, all investments of any such funds and all interest and dividends thereon, and (ii) all other assets, now owned or hereafter acquired, of the Authority defined as Collateral in any Collateral Document or this Indenture, which will initially include the Gross Revenues and other cash referred to in Section 10.12, the leasehold interest and all personal property owned by the Authority with certain exceptions, but shall specifically exclude the land held in trust for the Tribe by the United States, and excluding any real property interest therein, including the buildings, improvements and fixtures thereon, other than the leasehold interest pursuant to the Lease. "NOTE CUSTODIAN" means First Fidelity Bank, as custodian with respect to the Notes in global form, or any successor entity thereto. "OBLIGATIONS" means any principal, premium, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "OFFERING" means the Offering of the Notes by the Authority. "OFFICER" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice President of such Person and, in the case of the Authority, shall include members of the Management Board. "OFFICERS' CERTIFICATE" means a certificate signed on behalf of the Authority by two Officers of the Authority, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Authority that meets the requirements of Section 12.05 hereof. "OPERATING" means, with respect to the Resort, the first time that (i) all Gaming Licenses have been granted and have not been revoked or suspended, (ii) all Liens (other than Liens created by the Collateral Documents or Permitted Liens) related to the construction of the Resort have been paid or, if payment is not yet due or if such payment is contested in good faith by the Authority, sufficient funds remain in the Collateral Account to discharge such Liens, (iii) the general contractor and the architect of the Resort shall have delivered a certificate to the Trustee certifying that the Resort is complete in all material respects in accordance with the Plans therefor and all applicable building laws, ordinances and regulations, (iv) the Resort is in a condition (including installation of furnishings, fixtures and equipment) to receive guests in the ordinary course of business, and (v) gaming and other operations in accordance with applicable law are open to the general public and are being conducted at the Resort with respect to at least the Minimum Facilities for such Resort. "OPERATING EXPENSES" means all operating expenses of the Authority with respect to any commercial enterprise, determined in accordance with GAAP consistently applied. Operating Expenses shall include, without limitation: (i) all accrued interest expense (whether or not distributed and whether or not deposited, including deposits into the Interest and Excess Cash Flow Account) with respect to the Notes and the Subordinated 12 Notes; (ii) depreciation and amortization and (iii) any bond premium under this Indenture. "OPINION OF COUNSEL" means an opinion from legal counsel, that meets the requirements of Section 12.05 hereof. The counsel may be an employee of or counsel to the Authority or the Trustee. "OWNERSHIP INTEREST" means, with respect to any Person, Capital Stock of such Person or any interest which carries the right to elect or appoint any members of the Management Board or the Board of Directors or other executive office of such Person. "PARI PASSU LIEN" means a Lien on the Note Collateral that ranks PARI PASSU with the Lien of the Trustee for the ratable benefit of the Holders pursuant to any arrangement in form and substance satisfactory to the Trustee that provides that the Trustee, (i) has the sole authority to exercise any remedy or right with respect to the Note Collateral, (ii) shall be required to act in respect of any remedy or right with respect to the Note Collateral or under the Collateral Documents only upon the direction of the holders of a majority of the principal amount of the Indebtedness secured by the Note Collateral, and (iii) does not act as trustee, fiduciary or agent, and shall have no duty to act for the benefit, of any holder of any Indebtedness so secured (other than the Senior Notes). "PAYMENT DEFAULT" means (i) any failure to pay when due, any principal, premium or interest on the Notes, whether at stated maturity, upon acceleration, upon redemption or in connection with a Repurchase Offer, in each case, without giving effect to any grace period, or (ii) any failure to deposit any required amounts into the Cash Maintenance Account or in the Interest and Excess Cash Flow Account. "PERMITTED INVESTMENTS" means (a) any Investments in Cash Equivalents; and (b) other Investments in any Person that do not exceed in the aggregate $50,000 at any time outstanding. "PERMITTED LIENS" means (i) Liens to secure Indebtedness permitted by the terms of the Indenture under clause (d) of Section 4.09 on the hotel assets or revenues financed by such Indebtedness or on after acquired personal property or intangibles used in connection with such hotel; (ii) Liens in favor of the Tribe representing the ground lessor's interest under the Lease; (iii) Liens on property existing at the time of acquisition thereof by the Authority, PROVIDED that such Liens were in existence prior to the contemplation of such acquisition; (iv) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business; (v) Liens to secure Indebtedness (including capital lease obligations) permitted by clause (c) of the second paragraph of Section 4.09 hereof, covering only the assets acquired with such Indebtedness; (vi) Liens existing on the date of the Indenture; (vii) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded, PROVIDED that any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor; (viii) Liens securing Indebtedness permitted under Section 4.09(e) provided that such Liens are no more extensive than the Liens securing the Indebtedness so extended, refinanced, renewed, replaced or refunded thereby; (ix) Liens incurred in the ordinary course of business of the Authority with respect to obligations 13 that do not exceed $250,000 at any one time outstanding and that (a) are not incurred in connection with the borrowing of money or the obtaining of advances or credit (other than trade credit in the ordinary course of business) and (b) do not in the aggregate materially detract from the value of the property and materially impair the use thereof in the operation of business by the Authority; and (x) Pari Passu Liens on the Note Collateral to secure Indebtedness permitted by clause (a) to Section 4.09. provided, however, it is acknowledged that Permitted Liens will not include any Lien on the land held in trust for the Tribe by the United States or any real property interest therein, including the buildings, improvements and fixtures, other than the leasehold interest pursuant to the Lease, or which will give the holder thereof a proprietary interest in any gaming activity as prohibited by Section 11(b)(2)(A) of IGRA. "PERMITTED PROCEED USES" means (i) the funding of interest (including Cash Flow Participation Interest, if any) payments on the Notes, (ii) repurchases of Notes pursuant to an Asset Sale Offer, a Change of Control Offer, an Excess Cash Purchase Offer or an Event of Loss Offer, (iii) Project Costs relating to the Resort in accordance with the Disbursement and Escrow Agreement, and (iv) the repayment of amounts advanced to or paid on behalf of the Tribe or the Authority for (A) any fees and expenses in connection with obtaining and retaining any Gaming Licenses necessary to conduct gaming operations at the Resort, (B) the equipping of the Resort in accordance with the Disbursement and Escrow Agreement, and (C) administrative and operating expenses of the Authority and/or the Tribe necessary to develop, construct, and begin operations at the Resort, including without limitation, pre-opening expenses and initial working capital or bankroll. "PERSON" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. "PLANS" means all drawings, plans and specifications prepared by or on behalf of the Authority, as the same may be amended or supplemented from time to time, and, if required, submitted to and approved by the appropriate Gaming Regulatory Authorities, which describe and show the Resort and the labor and materials necessary for construction thereof. "PRINCIPAL BUSINESS" means the Class II and Class III casino gaming (as such terms are defined in IGRA) and resort business and any activity or business incidental, directly related or similar thereto, or any business or activity that is a reasonable extension, development or expansion thereof or ancillary thereto, including any hotel, entertainment, recreation or other activity or business designed to promote, market, support, develop, construct or enhance the casino gaming and resort business operated by the Authority. "PRIOR SEMIANNUAL PERIOD" shall have the meaning specified in paragraph 1 of the Notes. "PROJECT" means the Resort. "PROJECT COSTS" means, (i) all costs of developing, designing, constructing, equipping and furnishing the Resort, including costs related to land acquisition, professional services, pre-opening costs and initial operating capital, (ii) all start-up and 14 operating costs of the Authority until the Resort becomes Completed, and (iii) all financing fees and expenses, interest payments and any scheduled principal prior to the date the Resort becomes Completed; provided that all Project Costs shall be allocated in accordance with GAAP, consistently applied. "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement, dated as of the Issuance Date, by and among the Authority and the other parties named on the signature pages thereof, substantially in the form delivered to the Trustee on the Issuance Date. "REPLACEMENT RESERVE ACCOUNT" means a deposit account established, maintained and controlled by the Trustee and designated by the Authority and TCA as the Reserve Account established pursuant to Section 4.12 of the Gaming Facility Management Agreement. "RESORT" means the multi-amenity gaming and entertainment resort proposed to be constructed in Montville, Connecticut as described in the Authority's Offering Memorandum dated September ___, 1995, as set forth in the Plans, as the Plans may be amended pursuant to this Indenture and the Collateral Documents, but excluding (i) any obsolete personal property or real property improvement determined by the Authority to be no longer useful or necessary to the operations or support of the Resort (other than Key Project Assets) and (ii) any equipment leased from a third party in the ordinary course of business. "RESORT SUPPORT ENTITY" means any Person who provides goods or services to the Resort or whose operations are ancillary to, in support of, or useful to the operations of the Resort. "RESPONSIBLE OFFICER," when used with respect to the Trustee, means any officer within the Corporate Trust Administration of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "RESTRICTED INVESTMENT" means any Investment other than a Permitted Investment. "SEC" means the Securities and Exchange Commission. "SECURED COMPLETION GUARANTEE" means the completion guarantee of Sun International substantially in the form delivered to the Trustee on the Issuance Date. "SECURITIES ACT" means the Securities Act of 1933, as amended. "SEMIANNUAL PERIOD" shall have the meaning specified in paragraph 1 of the Notes. "SERIES A NOTES" means the Authority's Series A Senior Secured Notes due November 15, 2002 to be issued pursuant to this Indenture. 15 "SERIES B NOTES" means the Authority's Series B Senior Secured Notes due November 15, 2002 to be issued pursuant to this Indenture in the Exchange Offer. "SUBORDINATED INDEBTEDNESS" means the Indebtedness evidenced by the Subordinated Notes and any other Indebtedness of the Authority which is expressly by its terms subordinated in right of payment to the Notes. "SUBORDINATED NOTES" means the Subordinated Notes due 2003 issued by the Authority pursuant to the Note Purchase Agreement dated as of the Issuance Date between the Authority and Sun International. "SUBSIDIARY" means (i) any instrumentality or subdivision or subunit of the Authority that has a separate legal existence or status or whose property and assets would not be bound by the terms of this Indenture or the Collateral Documents or (ii) with respect to any Person, any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person or a combination thereof. The Tribe and any other instrumentality of the Tribe that is not also an instrumentality of the Authority shall not be a Subsidiary of the Authority. "SUN INTERNATIONAL" means Sun International Hotels Limited, a Bahamian corporation or any of its affiliates. "TCA" means Trading Cove Associates, a Connecticut general partnership. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date on which this Indenture is qualified under the TIA. "TRANSFER RESTRICTED SECURITIES" means securities that bear or are required to bear the legend set forth in Section 2.06 hereof. "TRIBAL GAMING ORDINANCE" means the ordinance and any amendments thereto, and all related or implementing ordinances, including without limitation, the Gaming Authority Ordinance enacted on July 15, 1995, which are enacted by the Tribe to authorize and regulate gaming pursuant to IGRA. "TRIBE" means the Mohegan Tribe of Indians of Connecticut, a sovereign tribe recognized by the United State of America pursuant to 25 C.F.R. Section 83. "TRUSTEE" means the party named as such above until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder. "WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness at any date, the number of years obtained by dividing (a) the sum of the products obtained by multiplying (x) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (y) the number of years (calculated to the nearest one-twelfth) that 16 will elapse between such date and the making of such payment, by (b) the then outstanding principal amount of such Indebtedness, as the case may be. SECTION 1.02. OTHER DEFINITIONS. Defined in Term Section - ---- ------------ "Affiliate Transaction" . . . . . . . . . . . . . . . . . . . .4.12 "Asset Sale Offer". . . . . . . . . . . . . . . . . . . . . . .4.10 "Blockage Period" . . . . . . . . . . . . . . . . . . . . . . .4.07 "Cash Collateral Account" . . . . . . . . . . . . . . . . . . 10.12 "Change of Control Offer" . . . . . . . . . . . . . . . . . . .4.16 "Change of Control Payment" . . . . . . . . . . . . . . . . . .4.16 "Covenant Defeasance" . . . . . . . . . . . . . . . . . . . . .8.03 "Event of Default". . . . . . . . . . . . . . . . . . . . . . .6.01 "Event of Loss Offer" . . . . . . . . . . . . . . . . . . . . .4.11 "Excess Loss Proceeds". . . . . . . . . . . . . . . . . . . . .4.11 "Excess Proceeds" . . . . . . . . . . . . . . . . . . . . . . .4.10 "Excess Cash Purchase Amount" . . . . . . . . . . . . . . . . .4.28 "Excess Cash Purchase Offer". . . . . . . . . . . . . . . . . .4.28 "Incur" . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.09 "Lease Transaction" . . . . . . . . . . . . . . . . . . . . . .4.27 "Legal Defeasance". . . . . . . . . . . . . . . . . . . . . . .8.02 "Offer Amount". . . . . . . . . . . . . . . . . . . . . . . . .3.10 "Offer Period". . . . . . . . . . . . . . . . . . . . . . . . .3.10 "Paying Agent". . . . . . . . . . . . . . . . . . . . . . . . .2.03 "Payment Blockage Notice" . . . . . . . . . . . . . . . . . . .4.07 "Payment Cross Default" . . . . . . . . . . . . . . . . . . . .6.01 "Purchase Date" . . . . . . . . . . . . . . . . . . . . . . . .3.10 "Refinancing Indebtedness". . . . . . . . . . . . . . . . . . .4.09 "Registrar" . . . . . . . . . . . . . . . . . . . . . . . . . .2.03 "Repurchase Offer". . . . . . . . . . . . . . . . . . . . . . .3.10 "Restricted Payments" . . . . . . . . . . . . . . . . . . . . .4.07 SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "INDENTURE SECURITIES" means the Notes; "INDENTURE SECURITY HOLDER" means a Holder of a Note; "INDENTURE TO BE QUALIFIED" means this Indenture; "INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee; 17 "OBLIGOR" on the Notes means the Authority, and any successor obligor upon the Notes as the case may be. All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them. SECTION 1.04. RULES OF CONSTRUCTION. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP and any accounting term with respect to any Person shall be determined on a consolidated or combined basis of such Person and all of its Subsidiaries, in accordance with GAAP; (3) "or" is not exclusive; (4) words in the singular include the plural, and in the plural include the singular; (5) provisions apply to successive events and transactions; (6) references to sections of or rules under the Securities Act or the Exchange Act shall be deemed to include substitute, replacement of successor sections or rules adopted by the SEC from time to time; (7) the term "redeem" and the correlative terms "redemption" and "redeemed" shall not include any Repurchase Offer; and (8) unless otherwise expressly provided, the term "interest" shall include all Fixed Interest, Cash Flow Participation Interest or Liquidated Damages, if any. ARTICLE 2 THE NOTES SECTION 2.01. FORM AND DATING. The Series A Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A-1 hereto which is incorporated in and made a part of this Indenture. Subject to Section 2.07 hereof, the Series A Notes shall be in an aggregate principal amount of $175,000,000; PROVIDED, that in the event Series B Notes are issued hereunder pursuant to the Exchange Offer, the principal amount of Series A Notes shall be reduced by the principal amount of Series B Notes so issued. The Series B Notes, when and if issued, and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A-2 hereto which is incorporated in and made a part of this Indenture. Subject to Section 2.07 hereof, the Series B Notes shall be in a 18 principal amount of $175,000,000 LESS the principal amount of Series A Notes that are not exchanged for Series B Notes in the Exchange Offer. The Notes may have notations, legends or endorsements required by law, stock exchange rule, agreements to which the Authority is subject or usage. Each Note shall be dated the date of its authentication. The Notes shall be in denominations of $1,000 and integral multiples thereof. The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Authority and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. The Tribe expressly agrees to the terms and conditions of Section 4.29 and Articles 11 and 12 and to be bound thereby. The Series A Notes will initially be issued in global form, substantially in the form of Exhibit A-1 (including footnotes 1 and 2, thereto), except for those Series A Notes that will be issued in definitive form in the name of various institutional accredited investors. The Series B Notes also will initially be issued in global form, substantially in the form of Exhibit A-2 (including footnotes 1 and 2, thereto), except for those Series B Notes that will be issued in definitive form in the name of various institutional accredited investors. Such Global Notes shall be registered in the name of the Depositary for such Global Notes or the nominee of such Depositary and shall be delivered by the Trustee to such Depositary or pursuant to such Depositary's instructions. So long as the Depositary or its nominee is the registered owner of such Global Notes it will be deemed the sole owner and holder of such Global Notes for all purposes hereunder and under such Global Notes. Neither the Authority nor the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made by the Depositary on account of beneficial interests in such Global Notes. Such Global Notes shall represent such of the outstanding Notes as shall be specified therein and each shall provide that it shall represent the aggregate amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions and repurchases. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the principal amount of outstanding Notes represented thereby shall be made by the Trustee or the Notes Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof. Subject to the terms and conditions of this Indenture, payment of the principal of and any interest on any Note, as the case may be, in global or definitive form shall be made to the Holder thereof. SECTION 2.02. EXECUTION AND AUTHENTICATION. Two Officers of the Authority shall sign the Notes for the Authority by manual or facsimile signature. The Authority's seal shall be reproduced on the Notes and may be in facsimile form. If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note shall nevertheless be valid. 19 A Note shall not be valid until authenticated by the manual signature of the Trustee. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture. The Trustee shall, upon a written order of the Authority signed by two Officers of the Authority, authenticate Notes for original issue up to the aggregate principal amount stated in Section 2.01 of this Indenture. The aggregate principal amount of Notes outstanding at any time may not exceed such amount except as provided in Section 2.07 hereof. The Trustee may appoint an authenticating agent acceptable to the Authority to authenticate Notes. Unless limited by the terms of such appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with the Authority or an Affiliate of the Authority. SECTION 2.03. REGISTRAR AND PAYING AGENT. The Authority shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange ("REGISTRAR") and an office or agency where Notes may be presented for payment ("PAYING AGENT"). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Authority may appoint one or more co-registrars and one or more additional paying agents. The term "Registrar" includes any co-registrar and the term "Paying Agent" includes any additional paying agent. The Authority may change any Paying Agent or Registrar without notice to any Holder. The Authority shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Authority fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Authority may act as Paying Agent or Registrar. The Authority initially appoints the Depository Trust Company ("DTC") to act as Depository with respect to the Global Notes. The Authority initially appoints the Trustee to act as the Registrar and Paying Agent and for service of notices and demands in connection with the Notes. SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST. The Authority shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium or Liquidated Damages, if any, or interest (including Cash Flow Participation Interest, if any) on the Notes, and will notify the Trustee of any Default by the Authority in making any such payment. While any such Default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Authority at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Authority or an Affiliate) shall have no further liability for the money. If the Authority acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent 20 provided, however, that such trust fund shall be invested in Permitted Investments until used. Upon any bankruptcy or reorganization proceedings relating to the Authority, the Trustee shall serve as Paying Agent for the Notes. SECTION 2.05. HOLDER LISTS. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee is not the Registrar, the Authority shall furnish to the Trustee at least seven Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes and the Authority shall otherwise comply with TIA Section 312(a). SECTION 2.06. TRANSFER AND EXCHANGE. (a) TRANSFER AND EXCHANGE OF DEFINITIVE NOTES. When Definitive Notes are presented by a Holder to the Registrar with a request: (x) to register the transfer of the Definitive Notes; or (y) to exchange such Definitive Notes for an equal principal amount of Definitive Notes of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested if its requirements for such transactions are met; PROVIDED, HOWEVER, that the Definitive Notes presented or surrendered for register of transfer or exchange: (i) shall be duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by his attorney, duly authorized in writing; and (ii) in the case of a Definitive Note that is a Transfer Restricted Security, such request shall be accompanied by the following additional information and documents, as applicable: (A) if such Transfer Restricted Security is being delivered to the Registrar by a Holder for registration in the name of such Holder, without transfer, a certification to that effect from such Holder (in substantially the form of Exhibit B hereto); or (B) if such Transfer Restricted Security is being transferred to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act) in accordance with Rule 144A under the Securities Act or pursuant to an exemption from registration in accordance with Rule 144 or Rule 904 under the Securities Act or pursuant to an effective registration statement under the Securities Act, a certification to that effect from such Holder (in substantially the form of Exhibit B hereto); or 21 (C) if such Transfer Restricted Security is being transferred in reliance on another exemption from the registration requirements of the Securities Act, a certification to that effect from such Holder (in substantially the form of Exhibit B hereto) and an Opinion of Counsel from such Holder or the transferee reasonably acceptable to the Authority and to the Registrar to the effect that such transfer is in compliance with the Securities Act. (b) TRANSFER OF A DEFINITIVE NOTE FOR A BENEFICIAL INTEREST IN A GLOBAL NOTE. A Definitive Note may not be exchanged for a beneficial interest in a Global Note except upon satisfaction of the requirements set forth below. Upon receipt by the Trustee of a Definitive Note, duly endorsed or accompanied by appropriate instruments of transfer, in form satisfactory to the Trustee, together with: (i) if such Definitive Note is a Transfer Restricted Security, a certification from the Holder thereof (in substantially the form delivered to the Trustee on the Issuance Date) to the effect that such Definitive Note is being transferred by such Holder to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act) in accordance with Rule 144A under the Securities Act; and (ii) whether or not such Definitive Note is a Transfer Restricted Security, written instructions from the Holder thereof directing the Trustee to make, or to direct the Note Custodian to make, an endorsement on the Global Note to reflect an increase in the aggregate principal amount of the Notes represented by the Global Note, in which case the Trustee shall cancel such Definitive Note in accordance with Section 2.11 hereof and cause, or direct the Note Custodian to cause, in accordance with the standing instructions and procedures existing between the Depository and the Note Custodian, the aggregate principal amount of Notes represented by the Global Note to be increased accordingly. If no Global Notes are then outstanding, the Authority shall issue and, upon receipt of an authentication order in accordance with Section 2.02 hereof, the Trustee shall authenticate a new Global Note in the appropriate principal amount. (c) TRANSFER AND EXCHANGE OF GLOBAL NOTES. The transfer and exchange of Global Notes or beneficial interests therein shall be effected through the Depository, in accordance with this Indenture and the procedures of the Depository therefor, which shall include restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. (d) TRANSFER OF A BENEFICIAL INTEREST IN A GLOBAL NOTE FOR A DEFINITIVE NOTE. (i) Any Person having a beneficial interest in a Global Note may upon request exchange such beneficial interest for a Definitive Note. Upon receipt by the Trustee of written instructions or such other form of instructions as is customary for the Depository, from the Depository or its nominee on behalf of any Person having a beneficial interest in a Global Note, and, in the case of a Transfer Restricted Security, the 22 following additional information and documents (all of which may be submitted by facsimile): (A) if such beneficial interest is being transferred to the Person designated by the Depository as being the beneficial owner, a certification to that effect from such Person (in substantially the form of Exhibit B hereto); or (B) if such beneficial interest is being transferred to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act) in accordance with Rule 144A under the Securities Act or pursuant to an exemption from registration in accordance with Rule 144 or Rule 904 under the Securities Act or pursuant to an effective registration statement under the Securities Act, a certification to that effect from the transferor (in substantially the form of Exhibit B hereto); or (C) if such beneficial interest is being transferred in reliance on another exemption from the registration requirements of the Securities Act, a certification to that effect from the transferor (in substantially the form of Exhibit B hereto) and an Opinion of Counsel from the transferee or transferor reasonably acceptable to the Authority and to the Registrar to the effect that such transfer is in compliance with the Securities Act, in which case the Trustee or the Note Custodian, at the direction of the Trustee, shall, in accordance with the standing instructions and procedures existing between the Depository and the Note Custodian, cause the aggregate principal amount of Global Notes to be reduced accordingly and, following such reduction, the Authority shall execute and, upon receipt of an authentication order in accordance with Section 2.02 hereof, the Trustee shall authenticate and deliver to the transferee a Definitive Note in the appropriate principal amount. (ii) Definitive Notes issued in exchange for a beneficial interest in a Global Note pursuant to this Section 2.06(d) shall be registered in such names and in such authorized denominations as the Depository, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. (e) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL NOTES. Notwithstanding any other provision of this Indenture (other than the provisions set forth in subsection (f) of this Section 2.06), a Global Note may not be transferred as a whole except by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository. (f) AUTHENTICATION OF DEFINITIVE NOTES IN ABSENCE OF DEPOSITORY. If at any time: 23 (i) the Depository for the Notes notifies the Authority that the Depository is unwilling or unable to continue as Depository for the Global Notes and a successor Depository for the Global Notes is not appointed by the Authority within 90 days after delivery of such notice; or (ii) the Authority, at its sole discretion, notifies the Trustee in writing that it elects to cause the issuance of Definitive Notes under this Indenture, then the Authority shall execute, and the Trustee shall, upon receipt of an authentication order in accordance with Section 2.02 hereof, authenticate and deliver, Definitive Notes in an aggregate principal amount equal to the principal amount of the Global Notes in exchange for such Global Notes. (g) LEGENDS. (i) Except as permitted by the following paragraphs (ii) and (iii), each Note certificate evidencing Global Notes and Definitive Notes (and all Notes issued in exchange therefor or substitution thereof) shall bear legends in substantially the following form: "THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE NOTE EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION PROVIDED BY RULE 144A UNDER THE SECURITIES ACT. THE HOLDER OF THE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE TRIBE AND THE AUTHORITY THAT (A) SUCH NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE AUTHORITY SO REQUESTS), (2) TO THE AUTHORITY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE NOTE EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (1) ABOVE." 24 (ii) Upon any sale or transfer of a Transfer Restricted Security (including any Transfer Restricted Security represented by a Global Note) pursuant to Rule 144 under the Securities Act or pursuant to an effective registration statement under the Securities Act: (A) in the case of any Transfer Restricted Security that is a Definitive Note, the Registrar shall permit the Holder thereof to exchange such Transfer Restricted Security for a Definitive Note that does not bear the legend set forth in (i) above and rescind any restriction on the transfer of such Transfer Restricted Security; and (B) in the case of any Transfer Restricted Security represented by a Global Note, such Transfer Restricted Security shall not be required to bear the legend set forth in (i) above, but shall continue to be subject to the provisions of Section 2.06(c) hereof; PROVIDED, HOWEVER, that with respect to any request for an exchange of a Transfer Restricted Security that is represented by a Global Note for a Definitive Note that does not bear the legend set forth in (i) above, which request is made in reliance upon Rule 144, the Holder thereof shall certify in writing to the Registrar that such request is being made pursuant to Rule 144 (such certification to be substantially in the form of Exhibit B hereto). (iii) Notwithstanding the foregoing, upon consummation of the Exchange Offer, the Authority shall issue and, upon receipt of an authentication order in accordance with Section 2.02 hereof, the Trustee shall authenticate Series B Notes in exchange for Series A Notes accepted for exchange in the Exchange Offer, which Series B Notes shall not bear the legend set forth in (i) above, and the Registrar shall rescind any restriction on the transfer of such Notes, in each case unless the Holder of such Series A Notes is either (A) a broker-dealer, (B) a Person participating in the distribution of the Series A Notes or (C) a Person who is an affiliate (as defined in Rule 144A) of the Holding Company. (h) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL NOTES. At such time as all beneficial interests in Global Notes have been exchanged for Definitive Notes, redeemed, repurchased or cancelled, all Global Notes shall be returned to or retained and cancelled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for Definitive Notes, redeemed, repurchased or cancelled, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note, by the Trustee or the Notes Custodian, at the direction of the Trustee, to reflect such reduction. (i) GENERAL PROVISIONS RELATING TO TRANSFERS AND EXCHANGES. (i) To permit registrations of transfers and exchanges, the Authority shall execute and the Trustee shall authenticate Definitive Notes and Global Notes at the Registrar's request. 25 (ii) No service charge shall be made to a Holder for any registration of transfer or exchange, but the Authority may require apyment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 3.07, 4.10, 4.16 and 9.05 hereto). (iii) The Registrar shall not be required to register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. (iv) All Definitive Notes and Global Notes issued upon any registration of transfer or exchange of Definitive Notes or Global Notes shall be the valid obligations of the Authority, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Definitive Notes or Global Notes surrendered upon such registration of transfer or exchange. (v) The Authority shall not be required: (A) to issue, to register the transfer of or to exchange Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection; or (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part; or (C) to register the transfer of or to exchange a Note between a record date and the next succeeding interest payment date. (vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Authority may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes, and neither the Trustee, any Agent nor the Authority shall be affected by notice to the contrary. (vii) The Trustee shall authenticate Definitive Notes and Global Notes in accordance with the provisions of Section 2.02 hereof. (J) EXCHANGE OF SERIES A NOTES FOR SERIES B NOTES. The Series A Notes may be exchanged for Series B Notes pursuant to the terms of the Exchange Offer. The Trustee and Registrar shall make the exchange as follows: (i) the Authority shall present the Trustee with an Officers' Certificate certifying the following: 26 (A) upon issuance of the Series B Notes, the transactions contemplated by the Exchange Offer have been consummated; and (B) the principal amount of Series A Notes properly tendered in the Exchange Offer which are represented by a Global Note and the principal amount of Series A Notes properly tendered in the Exchange Offer which are represented by Definitive Notes (together with such Definitive Notes), the name of each Holder of such Definitive Notes, the principal amount properly tendered in the Exchange Offer by each such Holder and the name and address to which Definitive Notes for Series B Notes shall be registered and sent for each such Holder. (ii) The Trustee, upon receipt of such Officers' Certificate and a written order signed by two Officers of the Authority shall authenticate (A) a Global Note for Series B Notes in principal amount equal to the principal amount of Series A Notes represented by a Global Note indicated in such Officers' Certificate as having been properly tendered and (B) Definitive Notes representing Series B Notes registered in the names of, and in the principal amounts indicated in such Officers' Certificate. (iii) The Trustee shall deliver such Global Note for Series B Notes to the Notes Custodian who shall deliver to the Trustee the Global Note for the Series A Notes for cancellation pursuant to Section 2.11, or if the principal amount of the Global Note for the Series B Notes is less than the principal amount of the Global Note for the Series A Notes, the Trustee shall direct the Notes Custodian to make an endorsement on such Global Note for Series A Notes indicating a reduction in the principal amount represented thereby. (iv) The Trustee shall deliver such Definitive Notes for Series B Notes to the Holders thereof as indicated in such Officers' Certificate. SECTION 2.07. REPLACEMENT NOTES. If any mutilated Note is surrendered to the Trustee, or the Authority and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Note, the Authority shall issue and the Trustee, upon the written order of the Authority signed by two Officers of the Authority, shall authenticate a replacement Note if the Trustee's requirements are met. If required by the Trustee or the Authority, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Authority to protect the Authority, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Authority may charge for its expenses in replacing a Note. Every replacement Note is an additional obligation of the Authority and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder. 27 SECTION 2.08. OUTSTANDING NOTES. The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those cancelled by it, those delivered to it for cancellation, and those described in this Section 2.08 as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because the Authority or an Affiliate of the Authority holds the Note. If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser. If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest (including Cash Flow Participation Interest, if any) on it ceases to accrue. If the Paying Agent (other than the Authority or an Affiliate thereof) holds, on a redemption date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest (including Cash Flow Participation Interest, if any). SECTION 2.09. TREASURY NOTES. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Authority, the Tribe or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Authority or the Tribe, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that a Trustee knows are so owned shall be so disregarded. Notwithstanding the foregoing, Notes that are to be acquired by the Authority or an Affiliate of the Authority pursuant to an exchange offer, tender offer or other agreement shall not be deemed to be owned by the Authority or an Affiliate of the Authority until legal title to such Notes passes to the Authority or Affiliate of the Authority as the case may be. SECTION 2.10. TEMPORARY NOTES. Until definitive Notes are ready for delivery, the Authority may prepare and the Trustee shall authenticate temporary Notes upon a written order of the Authority signed by two Officers of the Authority. Temporary Notes shall be substantially in the form of definitive Notes but may have variations that the Authority considers appropriate for temporary Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable delay, the Authority shall prepare and the Trustee shall authenticate definitive Notes in exchange for temporary Notes. Until such exchange, Holders of temporary Notes shall be entitled to all of the benefits of this Indenture. 28 SECTION 2.11. CANCELLATION. The Authority at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall destroy cancelled Notes (subject to the record retention requirement of the Exchange Act), unless the Authority directs cancelled Notes to be returned to it. The Authority may not issue new Notes to replace Notes that it has redeemed or paid or that have been delivered to the Trustee for cancellation. All cancelled Notes held by the Trustee shall be destroyed and certification of their destruction delivered to the Authority, unless by a written order, signed by two Officers of the Authority, the Authority shall direct that cancelled Notes be returned to it. SECTION 2.12. DEFAULTED INTEREST. If the Authority defaults in a payment of interest (including Cash Flow Participation Interest, if any) on the Notes, the Authority shall pay the defaulted interest (including Cash Flow Participation Interest, if any), in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 4.01 hereof. The Authority shall notify the Trustee in writing of the amount of such defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Authority shall fix or cause to be fixed each such special record date and payment date, PROVIDED that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest. At least 15 days before the special record date, the Authority (or, upon the written request of the Authority, the Trustee in the name and at the expense of the Authority) shall mail or cause to be mailed to Holders a notice that states the special record date, the related payment date and the amount of such interest (including Cash Flow Participation Interest, if any) to be paid. SECTION 2.13. RECORD DATE. The record date for purposes of determining the identity of Holders entitled to vote or consent to any action by vote or consent authorized or permitted under this Indenture shall be determined as provided in TIA Section 316(c). ARTICLE 3 OFFERS TO PURCHASE OR REDEMPTION SECTION 3.01. NOTICES TO TRUSTEE. If the Authority elects to redeem Notes pursuant to the optional redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee, at least 35 days but not more than 60 days before a redemption date, an Officers' Certificate setting forth (i) the Section of this Indenture pursuant to which the redemption shall occur, (ii) the redemption date, (iii) the principal amount of Notes to be redeemed and (iv) the redemption price. 29 If the Authority is required to make an offer to purchase Notes pursuant to the provisions of Section 4.10, 4.11, 4.16 or 4.28, it shall furnish to the Trustee, at least 35 days before the scheduled purchase date, an Officers' Certificate setting forth (i) the Section of this Indenture pursuant to which the offer to purchase shall occur, (ii) the offer's terms, (iii) the purchase price, (iv) the principal amount of the Notes to be purchased, and (v) further setting forth a statement to the effect that (a) the Authority has made an Asset Sale and there are Excess Proceeds aggregating more than $5.0 million and the amount of such Excess Proceeds, (b) the Authority has suffered an Event of Loss and there are Excess Loss Proceeds aggregating more than $5.0 million and the amount of such amount of the Excess Loss Proceeds, (c) a Change of Control has occurred or (d) the amount that is equal to 50% of the Excess Cash Flow plus 100% of the Deferred Subordinated Interest for the fiscal year then ended, if applicable. SECTION 3.02. SELECTION OF NOTES TO BE PURCHASED OR REDEEMED. If less than all of the Notes are to be purchased in an Asset Sale Offer, Event of Loss Offer or Excess Cash Purchase Offer or redeemed at any time, the Trustee shall select the Notes to be purchased or redeemed among the Holders of the Notes in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed or, if the Notes are not so listed, on a PRO RATA basis, by lot or in accordance with any other method the Trustee considers fair and appropriate. In the event of partial purchase or partial redemption in the manner provided above, the particular Notes to be purchased or redeemed shall be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the purchase or redemption date by the Trustee from the outstanding Notes not previously purchased or called for redemption. In the event that less than all of the Notes properly tendered in an Asset Sale Offer, Event of Loss Offer or Excess Cash Purchase Offer are to be purchased, the particular Notes to be purchased shall be selected promptly upon the expiration of such Asset Sale Offer, Event of Loss Offer, or Excess Cash Purchase Offer. The Trustee shall promptly notify the Authority in writing of the Notes selected for purchase or redemption and, in the case of any Note selected for partial purchase or redemption, the principal amount thereof to be purchased or redeemed. Notes and portions of Notes selected shall be in amounts of $1,000 or whole multiples of $1,000; except that if all of the Notes of a Holder are to be purchased or redeemed, the entire outstanding amount of Notes held by such Holder, even if not a multiple of $1,000, shall be purchased or redeemed. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes purchased or called for redemption also apply to portions of Notes purchased or called for redemption. In the event the Authority is required to make an Excess Cash Purchase Offer, an Asset Sale Offer, a Change of Control Offer, or an Event of Loss Offer pursuant to Section 4.10, 4.11, 4.16 or 4.28 hereof, respectively, and the amount of money in the Cash Maintenance Account or the Collateral Account or the amount of Excess Cash Flow, Excess Proceeds or Excess Loss Proceeds, as the case may be, to be applied to such purchase would result in the purchase of a principal amount of Notes which is not evenly divisible by $1,000, the Trustee shall promptly refund to the Authority the portion of such money in the Cash Maintenance Account or the amount of Excess Cash Flow, Excess Proceeds or Excess Loss Proceeds, as the case may be, that is not necessary to purchase the immediately lesser principal amount of Notes that is so divisible. 30 SECTION 3.03. NOTICE OF REDEMPTION. At least 30 days but not more than 60 days before a redemption date, the Authority shall mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address. The notice shall identify the Notes to be redeemed and shall state: (a) the redemption date; (b) the redemption price; (c) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion shall be issued upon cancellation of the original Note; (d) the name and address of the Paying Agent; (e) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price; (f) that, unless the Authority defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the redemption date; (g) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and (h) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes. At the Authority's request, the Trustee shall give the notice of redemption in the Authority's name and at its expense; PROVIDED, HOWEVER, that the Authority shall have delivered to the Trustee, at least 45 days prior to the redemption date, an Officers' Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph. SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price. A notice of redemption may not be conditional. SECTION 3.05. DEPOSIT OF PURCHASE OR REDEMPTION PRICE. On or prior to any purchase date with respect to an offer to purchase the Notes required hereunder or redemption date, the Authority shall deposit with the Trustee or with the Paying Agent money sufficient to pay the purchase or redemption price of, and accrued and unpaid interest, if any, on all Notes to be purchased or redeemed on that 31 date. The Trustee or the Paying Agent shall promptly return to the Authority any money deposited with the Trustee or the Paying Agent by the Authority in excess of the amounts necessary to pay the purchase or redemption price of, and accrued and unpaid interest, if any, on, all Notes to be purchased or redeemed. If the Authority complies with the provisions of the preceding paragraph, on and after the purchase or redemption date, interest shall cease to accrue on the Notes or the portions of Notes purchased or called for redemption. If a Note is purchased or redeemed on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on such record date. If any Note tendered for purchase or called for redemption shall not be so paid upon surrender for such tender or redemption because of the failure of the Authority to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the purchase or redemption date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof. SECTION 3.06. NOTES PURCHASED OR REDEEMED IN PART. Upon surrender of a Note that is purchased or redeemed in part, the Authority shall issue and, upon the Authority's written request, the Trustee shall authenticate for the Holder at the expense of the Authority a new Note equal in principal amount to the unpurchased or unredeemed portion of the Note surrendered. SECTION 3.07. OPTIONAL REDEMPTION. Except as set forth in Section 3.08 hereof, the Authority shall not have the option to redeem the Notes pursuant to this Section 3.07 prior to November 15, 1999. From and after November 15, 1999, the Authority shall have the option to redeem the Notes, in whole or in part, at the redemption prices (expressed as percentages of principal amount) set forth in the chart immediately below the first paragraph of paragraph 5 of the Notes, plus accrued and unpaid interest, if any, to the applicable redemption date, if redeemed during the twelve-month period beginning on November 15 of the years indicated in such chart. Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Section 3.01 through 3.06 hereof. SECTION 3.08. REDEMPTION PURSUANT TO GAMING LAW. (a) Notwithstanding any other provisions of this Article 3, if any Gaming Regulatory Authority requires that a Holder or beneficial owner of the Notes must be licensed, qualified or found suitable under any applicable gaming laws in order to maintain any gaming license or franchise of the Authority under any applicable gaming laws, and the Holder or beneficial owner fails to apply for a license, qualification or finding of suitability within 30 days after being requested to do so by such Gaming Regulatory Authority (or such lesser period that may be required by such Gaming Regulatory Authority) or if such Holder or beneficial owner is not so licensed, qualified or found suitable, the Authority has the right, at its option, (i) to require such Holder or 32 beneficial owner to dispose of such Holder's or beneficial owner's Notes within 30 days of receipt of such finding by the applicable Gaming Regulatory Authority (or such earlier date as may be required by the applicable Gaming Regulatory Authority) or (ii) to call for redemption of the Notes of such Holder or beneficial owner at a redemption price equal to the lesser of the principal amount thereof or the price at which such Holder or beneficial owner acquired the Notes, together with, in either case, accrued and unpaid interest, if any, to the earlier of the date of redemption or, the date of the finding of unsuitability by such Gaming Regulatory Authority, which may be less than 30 days following the notice of redemption if so ordered by such Gaming Regulatory Authority. (b) In connection with any redemption pursuant to this Section 3.08, and except as may be required by a Gaming Regulatory Authority, the Authority shall be required to comply with Sections 3.01 through 3.06 hereof. (c) The Authority shall not be required to pay or reimburse any Holder or beneficial owner of Notes who is required to apply for any such license, qualification or finding of suitability for the costs of the licensure or investigation for such qualification or finding of suitability. Such expenses shall be the obligation of such Holder or beneficial owner. SECTION 3.09. MANDATORY REDEMPTION. The Authority shall not be required to make mandatory redemption or sinking fund payments prior to maturity with respect to the Notes. SECTION 3.10. REPURCHASE OFFERS. In the event that, pursuant to Section 4.10, 4.11, 4.16 or 4.28 hereof, the Authority shall be required to commence an offer to all Holders to purchase Notes (a "REPURCHASE OFFER"), it shall follow the procedures specified below. The Repurchase Offer shall remain open for a period of 20 Business Days following its commencement and no longer, except to the extent that a longer period is required by applicable law (the "OFFER PERIOD"). No later than five Business Days after the termination of the Offer Period (the "PURCHASE DATE"), the Authority shall purchase at the Purchase Price (as determined in accordance with Section 4.10, 4.11, 4.16 or 4.28 hereof, as the case may be) the principal amount of Notes required to be purchased pursuant to Section 4.10, 4.11, 4.16 or 4.28 hereof, as the case may be (the "OFFER AMOUNT"), or, if less than the Offer Amount has been properly tendered, all Notes properly tendered in response to the Repurchase Offer. Payment for any Notes so purchased shall be made in the same manner as interest payments are made. If the Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest, if any, shall be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest shall be payable to Holders who tender Notes pursuant to the Repurchase Offer. 33 Upon the commencement of a Repurchase Offer, the Authority shall send, by first class mail, a notice to the Trustee and each of the Holders, with a copy to the Trustee. The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Repurchase Offer. The Repurchase Offer shall be made to all Holders. The notice, which shall govern the terms of the Repurchase Offer, shall state: (a) that the Repurchase Offer is being made pursuant to this Section 3.10 and Section 4.10, 4.11, 4.16 or 4.28 hereof, as the case may be, and the length of time the Repurchase Offer shall remain open; (b) the Offer Amount, the purchase price and the Purchase Date; (c) that any Note not properly tendered or accepted for payment shall continue to accrue interest; (d) that, unless the Authority defaults in making such payment, any Note accepted for payment pursuant to the Repurchase Offer shall cease to accrue interest after the Purchase Date; (e) that Holders electing to have a Note purchased pursuant to any Repurchase Offer shall be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, to the Authority, a depositary, if appointed by the Authority, or a Paying Agent at the address specified in the notice at least three days before the Purchase Date; (f) that Holders shall be entitled to withdraw their tendered Notes and their election if the Authority, the depositary or the Paying Agent, as the case may be, receives, not later than the expiration of the Offer Period, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his tendered Notes and his election to have such Note purchased; and (g) that, if the aggregate principal amount of Notes surrendered by Holders exceeds the Offer Amount, the Notes shall be selected for purchase pursuant to the terms of Section 3.02 hereof, and that Holders whose Notes were purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered. On or before the Purchase Date, the Authority shall, to the extent lawful, accept for payment, pursuant to the terms of Section 3.02 hereof, the Offer Amount of Notes or portions thereof properly tendered pursuant to the Repurchase Offer, or if less than the Offer Amount has been properly tendered, all Notes properly tendered, and shall deliver to the Trustee an Officers' Certificate stating that such Notes or portions thereof were accepted for payment by the Authority in accordance with the terms of this Section 3.10. The Authority, the Depository or the Paying Agent, as the case may be, shall promptly (but in any case not later than five days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes properly tendered by such Holder and accepted by the Authority for purchase, and the Authority shall promptly issue a new Note, and the Trustee, upon written request from the 34 Authority shall authenticate and mail or deliver such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered. Any Note not so accepted shall be promptly mailed or delivered by the Authority to the Holder thereof. The Authority shall publicly announce the results of the Repurchase Offer on the Purchase Date. Other than as specifically provided in this Section 3.10, any purchase pursuant to this Section 3.10 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof to the extent applicable. ARTICLE 4 COVENANTS SECTION 4.01. PAYMENT OF NOTES. The Authority shall pay or cause to be paid the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes. Principal, premium, if any, and interest shall be considered paid on the date due if the Paying Agent, if other than the Authority, holds as of 10:00 a.m. Eastern Time on the due date money deposited by the Authority in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due. The Authority shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to 1% per annum in excess of the then applicable interest rate on the Notes to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace period) at the same rate to the extent lawful. SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY. The Authority shall maintain in the Borough of Manhattan, the City of New York, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co - -registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Authority in respect of the Notes and this Indenture may be served. The Authority shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Authority shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee. The Authority may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; PROVIDED, HOWEVER, that no such designation or rescission shall in any manner relieve the Authority of its obligation to maintain an office or agency in the Borough of Manhattan, the City of New York for such purposes. The Authority shall give prompt written notice to the Trustee of any such 35 designation or rescission and of any change in the location of any such other office or agency. The Authority hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Authority in accordance with Section 2.03. SECTION 4.03. REPORTS. Notwithstanding that the Authority may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Authority will file with the SEC all information, documents and reports specified in Section 13 or 15(d) of the Exchange Act. The Authority shall file with the Trustee and provide Holders of Notes, within 15 days after it files them with the SEC, copies of its annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rule or regulation prescribe) which the Authority would be required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. Notwithstanding that the Authority may not be required to remain subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act or otherwise report on an annual and quarterly basis on forms provided for such annual and quarterly reporting pursuant to rules and regulations promulgated by the SEC, the Authority shall be required to continue to file with the SEC and provide the Trustee and Holders with, without cost to each holder, (a) within 90 days after the end of each fiscal year, annual reports on Form 10-K (or any successor or comparable form) containing the information required to be contained therein (or required in such successor or comparable form); (b) within 45 days after the end of each of the first three fiscal quarters of each fiscal year, reports on Form 10-Q (or any successor or comparable form); and (c) promptly from time to time after the occurrence of an event required to be therein reported, such other reports on Form 8-K (or any successor or comparable form) containing the information required to be contained therein (or required in any successor or comparable form); PROVIDED, HOWEVER, that the Authority shall not be so obligated to file such reports with the SEC if the SEC does not permit such filings. The Authority shall also include in such reports the anticipated completion date of the Resort and, in the case of quarterly reports, the Cash Flow Participation Interest paid, the Cash Flow Participation Interest Accrual amount and Cash Flow with respect to the most recently ended fiscal quarter of the Authority, and in the case of annual reports, the audited Cash Flow Participation Interest paid, the Cash Flow Participation Interest Accrual amount and audited Cash Flow for the most recently ended fiscal year and for each of the Semiannual Periods ending in such fiscal year. The Authority will in all cases, without cost to each recipient, provide copies of such information to the Holders of the Notes and, if they are not permitted to file such reports with the SEC, shall make available such information to prospective purchasers and to securities analysts and broker-dealers upon their request. The Authority shall file with the Trustee and provide Holders of Notes, within 15 days after it files them with the NIGC, copies of all reports which the Authority is required to file with the NIGC pursuant to 25 C.F.R. Part 514 (or any successor provision). 36 SECTION 4.04. COMPLIANCE CERTIFICATE. (a) The Authority shall deliver to the Trustee, within 90 days after the end of each fiscal year, an Officers' Certificate stating that a review of the activities of the Authority during the preceding fiscal year has been made under the supervision of the signing Officers of the Authority with a view to determining whether the Authority and each obligor on the Notes and this Indenture is in compliance with this Indenture and each Collateral Document and further stating, (i) as to each such Officer signing such certificate, that to the best of his or her knowledge the Authority and each such obligor is in compliance with each and every covenant contained in this Indenture and each Collateral Document and is not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture or any Collateral Document (or, if a Default or Event of Default shall exist, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Authority or such obligor, as the case may be, is taking or proposes to take with respect thereto) and that to the best of his or her knowledge no event has occurred that remains in existence by reason of which payments on account of the principal of or interest (including Cash Flow Participation Interest, if any) on the Notes is prohibited or if such event exists, a description of the event and what action the Authority or such obligor, as the case may be, is taking or proposes to take with respect thereto and (ii) the amount of Excess Cash Flow for such fiscal year and whether the Authority is required to make an Excess Cash Purchase Offer pursuant to Section 4.28 hereof. (b) So long as not contrary to the then current recommendations of the American Institute of Certified Public Accountants, the year-end financial statements delivered pursuant to Section 4.03(a) above shall be accompanied by a written statement of the Authority's independent public accountants (who shall be a firm of established national reputation) that in making the examination necessary for certification of such financial statements, nothing has come to their attention that would lead them to believe that the Authority is in violation of any provisions of Article Four or Article Five hereof or, if any such violation exists, specifying the nature and period of existence thereof, it being understood that such accountants shall not be liable directly or indirectly to any Person for any failure to obtain knowledge of any such violation. (c) The Authority shall, so long as any of the Notes are outstanding, deliver to the Tribe and the Trustee, within five Business Days upon any Officer becoming aware of any Default or Event of Default or any event of default under any document, instrument or agreement representing Indebtedness of the Authority, an Officers' Certificate specifying such Default or Event of Default and what action the Authority is taking or proposes to take with respect thereto. (d) Immediately upon the Resort becoming Operating, the Authority shall deliver promptly to the Trustee an Officers' Certificate which shall state that (i) the Resort is Operating and (ii) the date on which the Resort became Operating. SECTION 4.05. TAXES. The Authority shall pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate 37 proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders of the Notes. SECTION 4.06. STAY, EXTENSION AND USURY LAWS. The Authority covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Authority (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted. SECTION 4.07. RESTRICTED PAYMENTS. The Authority shall not directly or indirectly: (i) purchase, redeem, defease, or otherwise acquire or retire for value any Subordinated Indebtedness of the Authority or make any interest payment on the Subordinated Notes; (ii) make any payment or distribution to the Tribe or any other agency, instrumentality or political subunit of the Tribe or make any general distribution to the members of the Tribe; (iii) make any Management Fee payment or pay any other management or similar fee to the Manager or its affiliates; (iv) make any payment in respect of repayment or reimbursement of any obligations under the Secured Completion Guarantee; or (v) make any Restricted Investment (all such payments and other actions set forth in clauses (i) through (v) above being collectively referred to as "Restricted Payments"), unless such Restricted Payment is: (a) a monthly payment of the Minimum Priority Payment to the Tribe in an amount not to exceed $50,000 per month pursuant to the terms of the Gaming Facility Management Agreement in effect on the Issuance Date; (b) a monthly payment of a Management Fee to the Manager in respect of the Net Revenues of the prior month pursuant to the terms of the Management Agreement in effect on the Issuance Date, which Management Fee may not be payable in an amount greater than that provided in Section 6.4 of such Management Agreement and any management fee in respect of any commercial activity not covered under the Management Agreement (provided, that all such management fees shall be after paying all Operating Expenses, the Minimum Priority Payment, any required deposit in the Cash Maintenance Account and the Interest and Excess Cash Flow Account and replacement reserve deposits); (c) a monthly payment to the Tribe in respect of the Net Revenues for the prior month, which payment shall not exceed the amount payable to the Tribe pursuant to Section 6.4 of the Management Agreement in effect on the Issuance Date and any Net Revenues from commercial activities not covered under the Management Agreement; (provided, that all such payments shall be after (i) paying all other amounts required under the Management Agreement to be paid prior to the payment of any amounts to the Tribe (other than the Minimum Priority Payment), and (ii), without limiting the 38 generality of clause (i), paying all Operating Expenses, the Minimum Priority Payment, any required deposit in the Cash Maintenance Account and the Interest and Excess Cash Flow Account, replacement reserve deposits, Management Fees and required payments on Subordinated Notes permitted by this Indenture); (d) the payment of interest on the Subordinated Notes in accordance with the terms of the Subordinated Notes as in effect on the Issuance Date; (e) the redemption of the Subordinated Notes pursuant to the requirements of any gaming law as provided for in the Note Purchase Agreement for the Subordinated Notes in effect on the Issuance Date; (f) an annual purchase, redemption, defeasance or retirement of any Subordinated Indebtedness to be paid no earlier than the day after any required payment has been made to the Holders of the Notes in respect of any Excess Cash Purchase Offer in an amount not to exceed the amount of the Excess Cash Purchase Amount offered to the Noteholders under Section 4.28 in respect of such year and not accepted by such Holders, at a price not to exceed 100% of the principal amount thereof and accrued and unpaid interest; (g) an annual payment to the Tribe to be paid no earlier than the day after any required payment has been made to the Holders of the Notes in respect of any Excess Cash Purchase Offer (or, if no such offer is required to be made in respect of any year, no earlier than May 1 of the next succeeding year), in an amount not to exceed the amount of the Excess Cash Purchase Amount for the prior year, PROVIDED such amount was (i) first offered to the Holders of the Notes under Section 4.28 and not accepted by the Holders of the Notes and to the extent not accepted by the Holders of the Notes, and, to the extent not accepted by the Holders of the Notes, was offered to the holders of the Subordinated Notes under clause (f) of this Section 4.07 and not accepted by them, or (ii) not required to be offered to the Holders of the Notes under Section 4.28; or (h) Restricted Investments in Resort Support Entities after the Resort becomes Operating, not to exceed $2.0 million in the aggregate outstanding at any one time and provided that such amounts correspondingly reduce the distributions under clause (a), (b) or (c); PROVIDED, that at the time of, and after giving effect to, any Restricted Payment permitted under clauses (b), (c), (g) or (h), no Payment Default shall have occurred and be continuing or would occur as a consequence thereof or any Blockage Period be in effect for any Payment Blockage Notice; and PROVIDED, FURTHER that at the time of and after giving effect to, any Restricted Payment permitted under clause (d), (e) or (f), no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof. Upon the occurrence of any Event of Default (other than a Payment Default), subject to the next paragraph, the Trustee or the holders of at least 25% in aggregate principal amount of the Notes may deliver a notice (a "Payment Blockage Notice") to the Authority pursuant to Section 12.02, which notice shall state that such notice is a Payment Blockage Notice under Section 4.07 of the Indenture, the date of such notice, and the Event or Events of Default giving rise to such notice. Upon delivery of such Payment Blockage Notice, no Restricted Payment (other than the payment of the 39 Minimum Priority Payment) may be made during the 180 consecutive day period after delivery of such notice (the "Blockage Period") unless (x) such notice is rescinded by the holders of at least a majority in aggregate principal amount of the Notes or (y) such Event or Events of Default giving rise to such Payment Blockage Notice have been cured or waived and no other Event of Default has occurred and is continuing. Payment Blockage Notices may not be issued so that any Blockage Period extends for more than 180 days in any 360 day period with respect to the same event or occurrence giving rise to any Event or Events of Default. Restricted Payments not paid as a result of any Blockage Period shall accrue, and such Restricted Payments may be paid at any time thereafter if permitted by the terms of this Indenture and when no Payment Default shall have occurred and be continuing and no Blockage Period is in effect. For purposes of determining the amount of Restricted Investments outstanding at any time, all Restricted Investments shall be valued at their fair market value at the time made (in each case as determined in good faith by the Authority's Board of Directors), and no adjustments shall be made for subsequent changes in fair market value. Not later than the date of filing any quarterly or annual report, the Authority shall deliver to the Trustee an Officers' Certificate stating that each Restricted Payment made in the prior fiscal quarter was permitted and setting forth the basis upon which the calculations required by this Section 4.07 were computed, which calculations may be based upon the Authority's latest available financial statements. SECTION 4.08. CASH MAINTENANCE ACCOUNT. Subject to the provisions of the next paragraph, commencing with respect to January 1997, the Authority shall deposit into the Cash Maintenance Account established pursuant to Section 10.12 on a monthly basis, 1/12 of the amounts set forth below for each year indicated plus any amounts deferred from any prior month pursuant to the next paragraph no later than 25 days after the end of such calendar month: Year Amount ---- ------- 1997 $6,000,000 1998 $6,000,000 1999 $6,000,000 2000 $6,000,000 2001 $6,000,000 2002 thereafter, such amount necessary to keep at least $36,000,000 in the Cash Maintenance Account. To the extent that any amount required to be deposited into the Cash Maintenance Account in any month exceeds the Cash Available for Cash Maintenance Account for the prior month, then the deposit of such excess amount may be deferred until the next succeeding month or months in which the Cash Available for Cash Maintenance Account is sufficient. Amounts in the Cash Maintenance Account may be withdrawn by the Trustee and applied for any purpose set forth in Section 10.08. 40 SECTION 4.09. LIMITATIONS ON INCURRENCE OF INDEBTEDNESS. The Authority shall not, directly or indirectly, create, incur, issue, assume, guaranty or otherwise become directly or indirectly liable with respect to (collectively, "incur" and correlatively, an "incurrence" of) any Indebtedness (including Acquired Indebtedness); PROVIDED, HOWEVER, that the Authority may incur Indebtedness if (i) the Fixed Charge Coverage Ratio for the Authority's most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date of such incurrence would have been at least 2.50 to 1 if the date on which such Indebtedness is incurred is on or prior to November 15, 1997, 2.75 to 1 if such date is after November 15, 1997 and on or prior to November 15, 1999 and 3.00 to 1 thereafter, in each case determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred and application of proceeds had occurred at the beginning of such four-quarter period, (ii) such Indebtedness is expressly subordinated in right of payment to the Notes and (iii) such Indebtedness does not have a Weighted Average Life to Maturity less than the Weighted Average Life to Maturity of the Notes. The foregoing limitations shall not apply to: (a) the incurrence by the Authority of Indebtedness and letters of credit for working capital purposes (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Authority under the related reimbursement or other similar agreement) in an aggregate principal amount not to exceed at any one time $25 million less any amount that is a permanent reduction in principal for purposes of calculating Excess Cash Flow which may be secured by a pari passu lien on the Note Collateral; (b) the incurrence by the Authority of Indebtedness represented by the Notes and the Subordinated Notes or the incurrence of Subordinated Indebtedness to evidence advances under the Secured Completion Guarantee pursuant to the terms thereof; (c) the incurrence by the Authority of Indebtedness represented by Capital Lease Obligations or purchase money obligations, provided that (i) the Authority may not incur Indebtedness with a principal amount in excess of $40 million pursuant to this clause (c) outstanding in the aggregate at any time, (ii) the proceeds are used for the purpose of financing all or any part of the purchase or lease of personal property or equipment used in the business of the Authority, (iii) the term of any Indebtedness incurred pursuant to this clause at the time of incurrence is not less than 4 years, and (iv) the Weighted Average Life to Maturity of all Indebtedness incurred pursuant to this clause at the time of incurrence is not less than 2 years; (d) the incurrence by the Authority of Indebtedness the proceeds of which are used to develop, design or construct a hotel or hotels with at least 200 rooms as part of the Resort, provided, however, that the aggregate principal amount of such Indebtedness (excluding any portion thereof that is original issue discount) does not exceed $35.0 million; and provided that such Indebtedness is not secured by any Note Collateral; 41 (e) the incurrence by the Authority of Indebtedness (the "Refinancing Indebtedness") issued in exchange for, or the proceeds of which are used to extend, refinance, renew, replace, or refund Indebtedness referred to in the first paragraph of this Section 4.09 or in clauses (b), (c) or (d) or this clause (e), PROVIDED, HOWEVER, that (1) the principal amount of such Refinancing Indebtedness shall not exceed the principal amount of Indebtedness so extended, refinanced, renewed, replaced, substituted or refunded (plus the amount of reasonable expenses incurred and any premium paid in connection therewith or the amount of any original issue discount), (2) the Refinancing Indebtedness shall, if applicable, be subordinate in right and priority of payment to the Notes on terms at least as favorable to the holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, substituted or refunded, and (3) the Refinancing Indebtedness shall have a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of the Indebtedness being extended, refinanced, renewed, replaced, substituted or refunded; and (f) Hedging Obligations that are incurred for the purpose of fixing or hedging interest rate risk with respect to any floating rate Indebtedness that is permitted by the terms of this Indenture to be outstanding. If this Section 4.09 authorizes the incurrence of any Indebtedness that may be secured by a Pari Passu Lien on the Note Collateral, the Trustee is hereby authorized to enter into an intercreditor agreement with the holder of such pari passu Indebtedness (the "Pari Passu Debtholder") upon the request of the Authority that provides to the effect of at least the following: (a) the Lien of the Trustee on the Note Collateral shall be equal in priority (regardless of the time or method of attachment or perfection) to the Lien in favor of, or for the benefit of, such Pari Passu Debtholder for the sum of (1) a principal amount of Indebtedness not to exceed the principal amount permitted by the Indenture to be secured by a Pari Passu Lien and (2) any other Obligations in respect of such principal amount of pari passu Indebtedness; (b) such intercreditor agreement is solely for the purpose of establishing the relative interests of the Pari Passu Debtholder and the Trustee and the Noteholders and is not for the benefit of any other party; (c) the Trustee, so long as the principal amount of the outstanding Notes is greater than the principal amount outstanding on such pari passu Indebtedness, shall have the sole right to take, enforce or exercise any right or remedy, to take or exercise any action or election or to refrain from taking or exercising any action with respect to any of the Note Collateral or the Collateral Documents; and so long as the principal amount of the outstanding Notes is greater than the principal amount outstanding on such pari passu Indebtedness, the Pari Passu Debtholder shall not, and shall not permit any of its representatives to, take, enforce or exercise any right or remedy, to take or exercise any action or election or to refrain from taking or exercising any action with respect to any of the Note Collateral or any of its collateral or security documents with respect to any of the Note Collateral; provided, that the Pari Passu Debtholder may take or exercise any action or 42 election or refrain from taking or exercising any action with respect to any collateral that is not Note Collateral or under any document that does not apply to the Note Collateral; and provided, further, that the Trustee shall have no duty or obligation to any Pari Passu Debtholder in taking or exercising any action or election or in refraining from taking or exercising any action with respect to any of the Note Collateral or the Collateral Documents; (d) each of the Trustee and the Pari Passu Debtholder agree that any money or funds realized with respect to the Note Collateral in connection with the enforcement or exercise of any right or remedy with respect to any Note Collateral following the acceleration of the Notes shall be distributed as follows: First, to the payment of all reasonable expenses in connection with the collection, realization or administration of such funds or the exercise of rights or remedies; Second, to each holder of Indebtedness secured by a Pari Passu Lien on the Note Collateral, a proportion of such remaining money or funds in the same proportion as the total outstanding obligations so secured held by such holder bears to the total outstanding obligations so secured until all such secured obligations have been paid in full; and Third, to the Authority or to whosoever may be lawfully entitled to receive the same as a court of competent jurisdiction may direct; (e) the Trustee agrees that any amounts in the Cash Collateral Accounts in the name of the Trustee shall be held for the ratable benefit of the Holders of the Notes and the Pari Passu Debtholders; and (f) each of the Trustee, the Noteholders and the Pari Passu Debtholders shall have the right to alter or amend their respective agreements and documents with the Authority or the Tribe in accordance with their terms and to release any Note Collateral from their respective Liens in accordance with the terms of their respective agreements. SECTION 4.10. ASSET SALES. The Authority shall not cause, make or suffer to exist an Asset Sale, unless (i) the Authority receives consideration at the time of such Asset Sale at least equal to the fair market value of the assets sold or otherwise disposed of and (ii) at least 85% of such consideration consists of cash; PROVIDED that the Authority shall not make or cause or permit to be made any Asset Sale of Key Project Assets. Within 180 days after the Authority's receipt of the Net Proceeds of any Asset Sale, the Authority may apply the Net Proceeds from such Asset Sale to an investment in the Principal Business or in tangible long-term assets used or useful in the Principal Business or to permanently reduce Indebtedness that is not Subordinated Indebtedness. Any Net Proceeds from the Asset Sale will be pledged to the Holders of the Notes as collateral on the Notes until applied or released as herein provided. When the aggregate amount of Net Proceeds from the Asset Sale that are not invested as provided in the preceding sentence ("Excess Proceeds") exceeds $5.0 million, the Authority shall make an offer to all Holders of Notes (an "Asset Sale Offer") to purchase the maximum principal amount of Notes, that is an integral multiple of $1,000, that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any to the date fixed for 43 the closing of such offer, in accordance with the procedures set forth in Article 3 hereto. The Authority shall commence an Asset Sale Offer with respect to Excess Proceeds within 10 Business Days after the date that Excess Proceeds exceeds $5.0 million by mailing the notice required in Section 3.10 hereof to the Holders. To the extent that the aggregate amount of Notes properly tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, such remaining Excess Proceeds shall be released to the Authority, subject to the terms of the Cash Collateral Accounts Pledge and Security Agreement, and the Authority may use any such remaining Excess Proceeds so released for any lawful purpose. If the aggregate principal amount of Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to be purchased in the manner described in Section 3.02 hereof. Upon completion of any such Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero. The Net Proceeds of all Asset Sales of assets constituting Note Collateral (other than Permitted Investments), as well as Excess Proceeds, shall be promptly and without commingling deposited with the Trustee in a Cash Collateral Account established pursuant to Section 10.12 until applied as permitted pursuant to this paragraph. The Authority shall grant to the Trustee, on behalf of the Holders, a first priority Lien on any properties or assets acquired with the Net Proceeds of any such Asset Sale on the terms set forth in this Indenture and the Collateral Documents. SECTION 4.11. EVENT OF LOSS. (a) Within 360 days after any Event of Loss with respect to Note Collateral with a fair market value (or replacement cost, if greater) in excess of $500,000, the Authority may apply the Net Loss Proceeds from such Event of Loss to the rebuilding, repair, replacement or construction of improvements to the Project, with no concurrent obligation to make any purchase of any Notes, PROVIDED that (i) the Authority delivers to the Trustee within 45 days of such Event of Loss a written opinion from a reputable architect that the Project with at least the Minimum Facilities can be rebuilt, repaired, replaced or constructed and Operating within 360 days of such Event of Loss and that, with respect to any Event of Loss that occurs on or prior to September 30, 1997, such rebuilding, repair, replacement or construction of improvements can be rebuilt, repaired, replaced or constructed and Operating on or prior to September 30, 1997, (ii) an Officers' Certificate certifying that the Authority has available from Net Loss Proceeds or cash on hand sufficient funds to complete such rebuilding, repair, replacement or construction, and (iii) the Net Loss Proceeds is less than $50 million. Any Net Loss Proceeds from an Event of Loss that are not reinvested or are not permitted to be reinvested as provided in the first sentence of this paragraph will be deemed "Excess Loss Proceeds." Where the aggregate amount of "Excess Loss Proceeds" exceeds $50 million, the Authority shall make an offer to all Holders of Notes (an "Event of Loss Offer") to purchase the maximum principal amount of Notes, that is an integral multiple of $1,000, that may be purchased out of the Excess Loss Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date fixed for the closing of such offer, in accordance with the procedures set forth in this Indenture. To the extent that the aggregate amount of Notes properly tendered pursuant to an Event of Loss Offer is less than the Excess Loss Proceeds, such remaining Excess Loss Proceeds shall be released to the Authority, subject to the terms of the Cash Collateral Accounts Pledge and Security Agreement, and the Authority may use any such remaining Excess Loss Proceeds so released for any lawful purpose. Upon completion of any such Event of Loss Offer, the amount of 44 Excess Loss Proceeds shall be reset at zero. Pending any permitted rebuilding, repair or construction or the completion of any Excess Loss Offer, the Authority shall pledge to the Trustee as additional Note Collateral any Net Loss Proceeds or other cash on hand required for such permitted rebuilding, repair or construction pursuant to the terms of the Leasehold Mortgage. Such pledged funds will be released to the Authority to pay for such permitted rebuilding repair or construction or such Event of Loss Offer pursuant to the terms of the Leasehold Mortgage. The Net Loss Proceeds of all Events of Loss with respect to assets constituting Note Collateral (other than Permitted Investments), as well as Excess Loss Proceeds, shall be promptly and without commingling deposited with the Trustee in a Cash Collateral Account established pursuant to Section 10.12 until applied as permitted pursuant to this paragraph. The Authority shall grant to the Trustee, on behalf of the Holders of the Notes, a first priority lien on any properties or assets rebuilt, repaired or constructed with such Net Loss Proceeds on the terms set forth in this Indenture and the Collateral Documents. (b) With respect to any Event of Loss pursuant to clause (D) of the definition of "Event of Loss" that has a fair market value (or replacement cost, if greater) in excess of $2.0 million, the Authority will be required to receive consideration at least (i) equal to the fair market value (as determined by an Independent Financial Advisor) of the assets subject to an Event of Loss and (ii) 85% of which is in the form of cash or Cash Equivalents; PROVIDED, HOWEVER, that the amount of (A) any liabilities (as shown on the Authority's most recent balance sheet or in the notes thereto) of the Authority (other than liabilities that are by their terms expressly subordinated to the Notes), that are assumed by the transferee of any such assets and (B) any notes or other obligations received by the Authority from such transferee that are converted by the Authority into cash (to the extent of the cash received) within 10 Business Days following the closing of such sale of the assets subject to such Event of Loss, shall be deemed to be cash only for purposes of satisfying clause (ii) of this Section 4.11 and for no other purpose. (c) With respect to any Event of Loss with respect to Note Collateral with a fair market value (or replacement cost, if greater) of $500,000 or less, the Net Loss Proceeds therefrom shall be released to the Authority. SECTION 4.12. TRANSACTIONS WITH AFFILIATES. The Authority shall not sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make any contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, the Tribe, the Management Company or any Affiliate of the Tribe or of the Management Company (each of the foregoing, an "Affiliate Transaction"), unless (a) such Affiliate Transaction is on terms that are no less favorable to the Authority than those that would have been obtained in a comparable transaction by the Authority with an unrelated Person and (b) the Authority delivers to the Trustee (i) with respect to any Affiliate Transaction involving aggregate payments in excess of $2.0 million, a resolution adopted by a majority of the disinterested members of the Management Board approving such Affiliate Transaction and set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with clause (a) above and (ii) with respect to any Affiliate Transaction involving aggregate payments in excess of $5.0 million, a written opinion as to the fairness to the Authority from a financial point of view issued by an Independent Financial Advisor with assets in excess of $1 billion. The foregoing provisions shall not 45 apply to the following: (x) Restricted Payments permitted by Section 4.07 hereof; (y) the Development and Construction Agreement or the Management Agreement in effect on the Issuance Date or (z) any management agreement for any commercial operations not covered by the Management Agreement that does not provide for any compensation to the Manager greater than 40% of Net Revenues from such operations and which provides that such fees are subordinated to the payment of the Notes to the same extent as the Management Agreement provides. SECTION 4.13. LIENS. The Authority shall not directly or indirectly create, incur, assume or suffer to exist any Lien, except Permitted Liens, on any asset owned as of the Issuance Date or thereafter acquired by the Authority, or any income or profits therefrom, or assign or convey any right to receive income therefrom. SECTION 4.14. LINE OF BUSINESS. For so long as any Notes are outstanding, the Authority shall not engage in any business or activity other than the Principal Business. SECTION 4.15. GOVERNMENTAL EXISTENCE. Subject to Article 5 and Article 11 hereof, as the case may be, the Authority shall do or cause to be done all things necessary to preserve and keep in full force and effect (i) its existence in accordance with the respective organizational, statutory, constitutional or legal documents (as the same may be amended from time to time) of the Authority or the Tribe, and (ii) the rights (charter and statutory), licenses and franchises of the Authority. SECTION 4.16. OFFER TO REPURCHASE UPON CHANGE OF CONTROL. Upon the occurrence of a Change of Control, the Authority shall make an offer to each Holder to purchase all or any part (equal to $1,000 or an integral multiple thereof) of the Notes pursuant to the offer described below (the "Change of Control Offer") at a price in cash (the "Change of Control Payment") equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase, PROVIDED, that the Authority shall not be required to make such an offer to purchase (i) if such event deemed to be a Change of Control ceases to exist prior to the closing of such offer to purchase, or (ii) if, on or before the 120th day after the Change of Control, if such Change of Control arises under either clause (iv) or (v) of the definition thereof, the Manager is replaced, or the Authority is using its best efforts to effect such a replacement, with a Person with experience and reputation in the gaming industry which is comparable to that of Sun International. Such Change of Control Offer shall be made in accordance with the procedures set forth in Article 3 hereof. The Authority shall commence such Change of Control Offer by mailing the notice set forth in Section 3.10 hereof to Holders. The Authority shall comply with the requirements of Rule 14e-1 under the Exchange Act, and any other securities laws and regulations thereunder to the extent such laws or regulations are applicable in connection with the repurchase of the Notes pursuant to any Repurchase Offer. 46 SECTION 4.17. REGISTRATION RIGHTS. Pursuant to the Registration Rights Agreement, the Authority will file a registration statement (the "Exchange Offer Registration Statement") with respect to an offer to exchange the Series A Notes for a new issue of Series B Notes of the Authority (the "New Notes") registered under the Securities Act, with terms identical to those of the Notes (the "Exchange Offer"). If (i) the Exchange Offer is not permitted by applicable law or (ii) any holder of Notes notifies the Authority that (A) it is prohibited by law or SEC policy from participating in the Exchange Offer, (B) that it may not resell the New Notes acquired by it in the Exchange Offer to the public without delivering a prospectus and the prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales or (C) that it is a broker-dealer and holds Notes acquired directly from the Authority or an affiliate of the Authority, the Authority will be required to provide a shelf registration statement (the "Shelf Registration Statement") to cover resales of the Notes by the holders thereof. If (i) the Authority fails to file within 30 days, or cause to become effective within 120 days after filing, the Exchange Offer Registration Statement, or (ii) the Authority is obligated to provide a Shelf Registration Statement and such Shelf Registration Statement is not filed within 30 days, or declared effective within 120 days after filing, or (iii) the Authority fails to consummate the Exchange Offer within 30 days of the date on which the Exchange Offer Registration Statement was required to be declared effective by the Commission or (iv) the Shelf Registration Statement or the Exchange Offer Registration Statement is declared effective but shall thereafter cease to be effective or usable in connection with resales of the Notes for the periods specified in the Registration Rights Agreement (each such event referred to in clauses (i) through (iv) above a "Registration Default"), then the Authority shall pay to each holder of Notes, with respect to the first 90-day period following such Registration Default, liquidated damages ("Liquidated Damages") in an amount equal to $.05 per week per $1,000 in principal amount of Notes held by such holder. The amount of such Liquidated Damages will increase by an additional $.05 per week per $1,000 in principal amount of Notes held by such holders for each subsequent 90-day period until such Registration Default has been cured, up to a maximum of $.50 per week. SECTION 4.18. USE OF PROCEEDS. The Authority shall use the net proceeds from the sale of the Notes and the net proceeds from the sale of the Subordinated Notes (to the extent provided in Section 4.19), only for Permitted Proceed Uses. The Authority shall cause the net proceeds from the sale of the Notes and the net proceeds from the sale of the Subordinated Notes to be deposited into the Escrow Account and disbursed only in accordance with the Disbursement and Escrow Agreement. SECTION 4.19. DISBURSEMENT AND ESCROW AGREEMENT. The Authority shall place all of the net proceeds of the Offering together with the net proceeds from the sale of the Subordinated Notes (to the extent provided below) into the Escrow Account to be held in escrow and invested in cash or Cash Equivalents by the Escrow Agent until needed from time to time to fund the construction of the Resort pursuant to the terms of the Disbursement and Escrow Agreement. On or prior to the 47 Issuance Date, the Authority shall have entered into the Disbursement and Escrow Agreement. The Trustee, for the ratable benefit of the Holders, shall have an exclusive, and perfected security interest in the Escrow Account. To the extent any net proceeds of the sale of Subordinated Notes remain subsequent to the acquisition of the land on which the Resort will be constructed, such net proceeds will also be placed into the Escrow Account. The Escrow Agent will make disbursements out of the Escrow Account in accordance with a detailed line-item Construction Budget. The Disbursement and Escrow Agreement will provide for restrictions on changing the Construction Budget. The Authority shall cause the Construction Budget and the terms of the Disbursement and Escrow Agreement to be approved by the general contractor for the Resort and shall cause such general contractor to agree to comply with its terms. SECTION 4.20. GAMING LICENSES. The Authority covenants to use its best efforts to obtain and retain in full force and effect at all times all Gaming Licenses necessary for the operation of the Resort provided, that, if in the course of the exercise of its governmental or regulatory functions the Authority is required to suspend or revoke any consent, permit or license or close or suspend any operation of any part of the Resort as a result of any noncompliance with law, the Authority will use its best efforts to promptly and diligently correct such noncompliance or replace any personnel causing such noncompliance so that the Resort will be opened and fully operating. The Authority shall file with the Trustee and provide Holders of Notes, promptly after receipt by the Authority, any Notice of Violation, Order of Temporary Closure, or Assessment of Civil Fines, from the NIGC pursuant to 25 C.F.R. Part 573 or 575 (or any successor provision) and any Notice of Non-Compliance issued by, or cause of action commenced by, the State of Connecticut under Section 13 of the Compact (or any successor provision). SECTION 4.21. CONSTRUCTION. The Authority shall cause construction of the Resort, including the furnishing, fixturing and equipping thereof, to be prosecuted with diligence and continuity in a good and workmanlike manner substantially in accordance with the Plans and within the Construction Budget. SECTION 4.22. MAINTENANCE OF INSURANCE. Until the Notes have been paid in full, the Authority shall maintain insurance with responsible carriers against such risks and in such amounts as is customarily carried by similar businesses with such deductibles, retentions, self insured amounts and coinsurance provisions as are customarily carried by similar businesses of similar size, including, without limitation, property and casualty, and shall have provided insurance certificates evidencing such insurance to the Trustee prior to the Issuance Date and shall hereafter provide such certificates prior to the anniversary or renewal date of each such policy, which certificate shall expressly state the expiration date for each policy listed. The Authority shall furnish or cause to be furnished certified copies of the policies. 48 Customary insurance coverage shall be deemed to include the following: (i) workers' compensation insurance to the extent required to comply with all applicable state, territorial, or United States laws and regulations, or the laws and regulations of any other applicable jurisdiction, (ii) comprehensive general liability insurance with minimum limits of $10 million, (iii) Umbrella or Bumbershoot liability insurance providing excess liability coverages over and above the foregoing underlying insurances up to a minimum limit of $50 million, and (iv) property insurance protecting the property against loss or damage by fire, lightning, windstorm, tornado, water damage, vandalism, riot, earthquake, civil commotion, malicious mischief, hurricane, and such other risks and 32 hazards as are from time to time covered by an "all-risk" policy or a property policy covering "special" causes of loss (such insurance shall provide coverage in not less than 100% of actual replacement value (as determined at each policy renewal based on the F.W. Dodge Building Index or some other recognized means) of any improvements and with a deductible no greater than $500,000 (other than earthquake insurance, for which the deductible may be up to 10% of such replacement value)). All insurance required under this Indenture (except worker's compensation) shall name the Authority and the Trustee as additional insureds, with losses in excess of $1 million payable jointly to the Authority and the Trustee (unless a Default or Event of Default has occurred and is then continuing, in which case all losses are payable solely to the Trustee), with no recourse against the Trustee for the payment of premiums, deductibles, commissions or club calls, and for at least 30 days notice of cancellation. All such losses in excess of $1 million shall be deposited in the Event of Loss Account to be established pursuant to Section 10.12 hereof and shall be pledged to the Trustee until released in accordance with the terms of the applicable Collateral Document. All such insurance policies shall be issued by carriers having an A.M. Best & Company, Inc. rating of A or higher and a financial size category of not less than XII, or if such carrier is not rated by A.M. Best & Company, Inc., having the financial stability and size deemed appropriate by an opinion from a reputable insurance broker. The Authority shall deliver to the Trustee on the Issuance Date and each anniversary hereafter a certificate of an insurance agent stating that the insurance policies obtained by the Authority comply with this Section 4.22 and the related applicable provisions of the Collateral Documents. SECTION 4.23. LIMITATION ON STATUS AS INVESTMENT COMPANY. The Authority shall not become an Investment Company subject to registration as an "investment company" (as that term is defined in the Investment Company Act of 1940, as amended), or from otherwise becoming subject to regulation under the Investment Company Act of 1940. SECTION 4.24. COLLATERAL DOCUMENTS. The Authority will not amend, waive or modify, or take or refrain from taking any action that has the effect of amending, waiving or modifying, any provision of the Collateral Documents, the Management Agreement or the Note Purchase Agreement for the Subordinated Notes to the extent that such amendment, waiver, modification or action could have an adverse effect on the rights of the Trustee or the Holders, PROVIDED, that: (i) the Note Collateral may be released or modified as expressly provided in this Indenture and in the Collateral Documents; (ii) the Construction Budget may be amended as expressly provided in the Disbursement and Escrow Agreement; (iii) this Indenture, the Management Agreement and any of the Collateral Documents may be otherwise 49 amended, waived or modified as set forth under Article 9 hereof; (iv) the Note Purchase Agreement for the Subordinated Notes may be amended in accordance with its terms, provided such amendments do not (A) cause or permit any principal, interest or premium on the Subordinated Notes to be paid or to become due and payable at any time earlier or in an amount greater than such would become paid or due and payable without such amendment, (B) amend any terms of the subordination of the Subordinated Notes, or (C) amend any provision included therein expressly for the benefit of the Notes; and (v) the Management Agreement may be amended with the consent of the NIGC, provided that such amendment does not adversely affect the economic rights of the Holders of the Notes. SECTION 4.25. FURTHER ASSURANCES. The Authority shall do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register, any and all such further acts, deeds, conveyances, security agreements, mortgages, assignments, estoppel certificates, financing statements and continuations thereof, termination statements, notices of assignment, transfers, certificates, assurances and other instruments as may be required from time to time in order (i) to carry out more effectively the purposes of the Collateral Documents, (ii) to subject to the Liens created by any of the Collateral Documents any of the properties, rights or interests required to be encumbered thereby, (iii) to perfect and maintain the enforceability, validity, effectiveness and priority of any of the Collateral Documents and the Liens intended to be created thereby, and (iv) to better assure, convey, grant, assign, transfer, preserve, protect and confirm to the Trustee any of the rights granted or now or hereafter intended by the parties thereto to be granted to the Trustee, the Holders of the Notes or under any other instrument executed in connection therewith or granted to the Authority under the Collateral Documents or under any other instrument executed in connection therewith. SECTION 4.26. INTEREST AND EXCESS CASH FLOW ACCOUNT. The Authority shall deposit into the Interest and Excess Cash Flow Account established pursuant to Section 10.12 on a monthly basis (i), on the first day of each month, the amount of fixed interest accrued during the prior month on the Notes and 100% of all Deferred Subordinated Interest for the prior month, (ii) no later than the 25th day of each month, 50% of the Excess Cash Flow for the prior month and (iii) no later than the 25th day of each month, the amount of Cash Flow Participation Interest accrued for such prior month. In respect of any year, if the cumulative amount deposited under clause (ii) is greater than 50% of the Excess Cash Flow from the beginning of such year to the end of such prior month, the Authority shall be permitted to receive such excess from the Interest and Excess Cash Flow Account upon request to the Trustee. In respect of any semi-annual period, if the amount deposited under clause (iii) is greater than the cumulative accrued Cash Flow Participation Interest from the beginning of such period to the end of the prior month, the Authority may receive such excess from the Interest and Excess Cash Flow Account upon written request to the Trustee. Funds in the Interest and Excess Cash Flow Account may be withdrawn by the Trustee or upon the request of the Authority to (i) pay interest on the Notes, (ii) make an Excess Cash Purchase Offer, and (iii) with respect to amounts deposited in respect of Excess Cash Flow, make payments or expenditures that reduce Excess Cash Flow under the definition thereof. Funds in the Interest and Excess Cash Flow Account which were to be 50 withdrawn to make an Excess Cash Purchase Offer but which are not accepted in such an offer may be applied as provided in Section 4.07. SECTION 4.27. RESTRICTIONS ON LEASING AND DEDICATION OF PROPERTY. The Authority shall not lease, sublease, or grant a license, concession or other agreement to occupy, manage or use any Note Collateral owned or leased by the Authority (each, a "Lease Transaction"), other than the following Lease Transactions, PROVIDED that (1) no Default or Event of Default has occurred or is continuing immediately after entering into such Lease Transaction (or immediately after any extension or renewal of such Lease Transaction made at the option of the Authority) and (2) no gaming or casino operations may be conducted on any Note Collateral that is the subject of such Lease Transaction other than by the Authority: (a) the Authority may enter into a Lease Transaction with respect to any space on or within the Resort with any Person, PROVIDED that (i) such Lease Transaction will not interfere with, impair or detract from the operations of the Resort and will, in the opinion of the Authority, enhance the value and operations of the Resort, (ii) such Lease Transaction is at a fair market rent (in light of other similar or comparable prevailing commercial transactions) and contains such other terms such that the Lease Transaction, taken as a whole, is commercially reasonable and fair to the Authority in light of prevailing or comparable transactions in other casinos, hotels, attractions or shopping venues and (iii) such Lease Transaction complies with all applicable law, including obtaining any consent of the Bureau of Indian Affairs, if required; (b) the Authority and the Tribe may enter into the Lease; (c) the Authority may enter into a management or operating agreement with respect to any Note Collateral (other than any Note Collateral or space used for any casino or gaming operations) with any Person, PROVIDED that (i) the manager or operator has experience in managing or operating similar operations, (ii) such management or operating agreement is on commercially reasonable and fair terms to the Authority and (iii) such management or operating agreement is terminable without penalty to the Authority upon no more than 90 days written notice; and (d) the Authority may enter into the Management Agreement and any hotel management agreement with the Manager provided that the compensation to the Manager does not exceed 40% of the Net Revenues of such operation and that such fees are subordinated to the payment of the Notes to the same extent as the Management Agreement provides. The Trustee shall enter into a leasehold non-disturbance agreement with respect to any Lease Transaction permitted under clause (a) above, in the event that the Trustee, on behalf of the Holders of Notes, forecloses or takes possession of any Note Collateral. Such an agreement shall provide, among other things, that any action taken with respect to any Note Collateral, including any sale of Note Collateral, will be subject to the terms of the Lease Transaction and will permit the lessee to cure certain defaults under such Lease Transaction. No Lease Transaction may provide that the Authority may subordinate its leasehold or fee interest to any lessee or any financing party of any lessee. 51 SECTION 4.28. EXCESS CASH PURCHASE OFFER. Within 120 days after each fiscal year end of the Authority, beginning with the fiscal year that first ends after September 30, 1996, the Authority shall make an offer to all Holders of Notes (the "Excess Cash Purchase Offer") to purchase the maximum principal amount of Notes that is an integral multiple of $1,000 at an offer price in cash equal to the percentage set forth below of the principal amount of the Notes to be purchased plus accrued and unpaid interest, if any, to the date fixed for the closing of such Excess Cash Purchase Offer that may be purchased with the sum of (i) 50% of the Excess Cash Flow in respect of the fiscal year then ended (or if the amount of Excess Cash Flow for such period is less than $2.0 million and is greater than zero, then the Excess Cash Flow shall be deemed zero, or if the amount of Excess Cash Flow for such period is less than zero, the amount of such negative amount), (ii) the amount of Deferred Subordinated Interest for such fiscal year and (iii) accrued and unpaid interest on such principal, if any, to the date fixed for the closing of such Excess Cash Purchase Offer (collectively the amounts under clauses (i) and (ii), the "Excess Cash Purchase Amount"): Year % - ----- -- 1997 1998 1999 2000 2001 2002 If less than all Notes tendering in such Excess Cash Purchase Offer are required to be purchased by the Authority, the Authority will purchase Notes pro rata from each tendering holder in accordance with the principal amount of indebtedness properly tendered. To the extent that the aggregate principal amounts properly tendered pursuant to any Excess Cash Purchase Offer is less than the Excess Cash Purchase Amount with respect thereto, the Authority may apply such difference pursuant to Section 4.07. Any offer to repurchase Notes pursuant to this Section 4.28 shall be made in accordance with the procedures set forth in Section 3.10 hereof. SECTION 4.29. OWNERSHIP INTERESTS IN THE AUTHORITY. Neither the Tribe nor the Authority shall permit any Person other than the Tribe to acquire any Ownership Interest in the Authority. SECTION 4.30. LIMITATION OF CREATION OF SUBSIDIARIES. The Authority will not create any instrumentality, subdivisions or subunits unless the actions and assets of such instrumentalities, subdivisions or subunit are subject to or bound by the terms of this Indenture and the Collateral Documents. The Authority will not form, acquire or own any Subsidiary, except as otherwise provided in the organizational chart of the Authority as delivered by the Authority to the Trustee. 52 ARTICLE 5 SUCCESSORS SECTION 5.01. LIQUIDATION OR DISSOLUTION. The Authority shall not sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more transactions. The Authority shall not consolidate or merge with or into any other Person. ARTICLE 6 DEFAULTS AND REMEDIES SECTION 6.01. EVENTS OF DEFAULT. An "Event of Default" occurs if: (a) the Authority defaults in the payment when due of interest on the Notes and such default continues for a period of 30 days; provided that payments of Cash Flow Participation Interest that are permitted to be deferred as provided in the Notes shall not become due for this purpose until such payment is required to be made pursuant to the terms of the Notes; (b) the Authority defaults in the payment when due of principal of or premium, if any, on the Notes when the same becomes due and payable at maturity, upon redemption (or in connection with an offer to purchase) or otherwise; (c) the Authority fails to comply with any of the provisions of Section 4.07, 4.09, 4.10, 4.11, 4.15, 4.16, 4.18, 4.28 or 5.01 hereof; (d) the Authority or the Tribe (with respect to its obligations hereunder) fails to observe or perform any other covenant, representation, warranty or other agreement in this Indenture, the Notes or the Collateral Documents for 60 days after written notice to the Authority by the Trustee or to the Authority and the Trustee from Holders of at least 25% in principal amount of the Notes then outstanding; (e) the Lease ceases to be in full force and effect or the Authority defaults in the performance of any covenant set forth in the Lease, the Leasehold Mortgage or any of the other Collateral Documents (which default is not waived or cured); (f) a default occurs under any mortgage, indenture or instrument under which there is issued or by which there is secured or evidenced any Indebtedness for money borrowed by the Authority or the payment of which is guaranteed by the Authority, whether such Indebtedness or guarantee now exists, or is created after the Issuance Date, which default (a) is caused by a failure to pay when due principal of or premium, if any, or interest on such Indebtedness prior to the 53 expiration of the grace period provided in such indebtedness (a "Payment Cross-Default") or (b) results in the acceleration of such Indebtedness prior to its express maturity or would constitute a default in the payment of such issue of Indebtedness at final maturity of such issue and, in each case, the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness under which a Payment Cross-Default then exists or with respect to which the maturity thereof has been so accelerated or which has not been paid at maturity, aggregates $7.5 million or more; (g) a final judgment or final judgments for the payment of money are entered by a court or courts of competent jurisdiction against the Authority or any of its assets and such judgment or judgments remain unpaid or undischarged or unstayed for a period of 60 days, PROVIDED that the aggregate of all such undischarged judgments exceeds $7.5 million; (h) the Authority breaches in a material respect any representation or warranty set forth in the Lease or the Leasehold Mortgage or any of the other Collateral Documents, or the Authority repudiates any of its obligations under, or any judgment or decree by a court or government agency of competent jurisdiction declaring the unenforceability of, the Lease or any of the Collateral Documents and such repudiation materially impairs the benefits of the Trustee and the Holders of the Notes thereunder; (i) the Authority pursuant to or within the meaning of Bankruptcy Law: (i) commences a voluntary case, (ii) consents to the entry of an order for relief against it in an involuntary case, (iii) makes a general assignment for the benefit of its creditors, or (iv) generally is not paying its debts as they become due; or (j) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (i) is for relief against the Authority in an involuntary case; or (ii) orders the liquidation of the Authority; and the order or decree remains unstayed and in effect for 60 consecutive days; (k) there is any revocation, termination, suspension or other cessation of effectiveness of any Gaming License which results in the cessation or suspension of gaming operations for a period of more than 90 consecutive days at the Resort; (l) there is a cessation of gaming operations for a period of more than 90 consecutive days at the Resort (other than as a result of a casualty loss) after the Resort becomes Operating; or 54 (m) there is a cessation of gaming operations for a period of more than 180 consecutive days as a result of a casualty loss after the Resort becomes Operating, except if the Authority is diligently pursuing reconstruction and opening of the Resort and such reconstruction and opening can be accomplished with the funds available to the Authority. SECTION 6.02. ACCELERATION. If any Event of Default (other than an Event of Default specified in clause (i) or (j) of Section 6.01 hereof with respect to the Authority), occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare the principal, premium, if any, interest and any other monetary obligations on all of the Notes to be due and payable immediately. Notwithstanding the foregoing, if an Event of Default specified in clause (i) or (j) of Section 6.01 hereof occurs with respect to the Authority, the principal, premium, if any, interest (including all Cash Flow Participation Interest accrued or deferred) and any other monetary obligations on all of the outstanding Notes shall be due and payable immediately without further action or notice. The Holders of a majority in aggregate principal amount of the then outstanding Notes by written notice to the Trustee may on behalf of all of the Holders rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default (except nonpayment of principal, interest or premium that has become due solely because of the acceleration) have been cured or waived. Notwithstanding the foregoing, the Trustee shall have no obligation to accelerate the Notes if in the best judgment of the Trustee acceleration is not in the best interest of the Holders of the Notes. If an Event of Default occurs on or after November 15, 1999 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Authority with the intention of avoiding payment of the premium that the Authority would have had to pay if the Authority then had elected to redeem the Notes pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an equivalent premium shall also become and be immediately due and payable, to the extent permitted by law, anything in this Indenture or in the Notes to the contrary notwithstanding. If an Event of Default occurs prior to November 15, 1999 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Authority with the intention of avoiding the prohibition on redemption of the Notes prior to such date, then, upon acceleration of the Notes, an additional premium shall also become and be immediately due and payable in an amount, as to each of the years beginning on November 15 of the years set forth below, as set forth below (expressed as a percentage of the principal amount that would otherwise be due but for the provisions of this sentence): 55 Year % - ---- -- 1995 1996 1997 1998 1999 SECTION 6.03. OTHER REMEDIES. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal, premium, if any, and interest on the Notes or to enforce the performance of any provision of the Notes, this Indenture or the Collateral Documents. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law. SECTION 6.04. WAIVER OF PAST DEFAULTS. Holders of not less than a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may on behalf of the Holders of all of the Notes waive an existing Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of the principal of, premium, if any, or interest on, the Notes (including in connection with an offer to purchase) (PROVIDED, HOWEVER, that the Holders of a majority in aggregate principal amount of the then outstanding Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration). Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. SECTION 6.05. CONTROL BY MAJORITY. Holders of a majority in principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it, including the exercise of any remedy under the Collateral Documents. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture that the Trustee determines may be unduly prejudicial to the rights of other Holders of Notes or that may involve the Trustee in personal liability. 56 SECTION 6.06. LIMITATION ON SUITS. A Holder of a Note may pursue a remedy with respect to this Indenture or the Notes only if: (a) the Holder of a Note gives to the Trustee written notice of a continuing Event of Default or the Trustee receives such notice from the Authority; (b) the Holders of at least 25% in principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy; (c) such Holder of a Note or Holders of Notes offer and, if requested, provide to the Trustee indemnity satisfactory to the Trustee against any loss, liability or expense; (d) the Trustee does not comply with the request within 60 days after receipt of the request and the offer and, if requested, the provision of indemnity; and (e) during such 60-day period the Holders of a majority in principal amount of the then outstanding Notes do not give the Trustee a direction inconsistent with the request; PROVIDED, HOWEVER, that such provision does not effect the right of a Holder to sue for enforcement of any overdue payment thereon. A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note. SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT. Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal, premium, if any, and interest on the Notes, on or after the respective due dates expressed in the Notes (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. SECTION 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of Default specified in Section 6.01(a) or (b) occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Authority for the whole amount of principal of, premium, if any, and interest remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and 57 advances of the Trustee, its agents and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Authority (or any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. SECTION 6.10. PRIORITIES. If the Trustee collects any money pursuant to this Article, it shall pay out the money in the following order: FIRST: to the Trustee, its agents and attorneys for amounts due under Section 7.07 hereof, including payment of all compensation, expense and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection; SECOND: to Holders of Notes for amounts due and unpaid on the Notes for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, and interest, respectively; and THIRD: (i) with respect to any money collected in respect of the Cash Maintenance Account that was not applied as provided above, to the holders of the Subordinated Notes as their interests may appear and (ii) with respect to any other money, to the Authority or to such party as a court of competent jurisdiction shall direct. The Trustee may fix a record date and payment date for any payment to Holders of Notes pursuant to this Section 6.10. SECTION 6.11. UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due 58 regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount of the then outstanding Notes. SECTION 6.12. MANAGEMENT OF CASINOS. Notwithstanding any provision of this Article 6 to the contrary, following an Event of Default, the Trustee shall be authorized, to recommend that the Authority retain one or more experienced operators of casinos to manage the casino located at the Resort on behalf of the Holders of Notes; PROVIDED, HOWEVER, that any such operator shall have all necessary legal qualifications, including all Gaming Licenses and/or approvals of the NIGC and the Tribe to manage the casino located at the Resort. ARTICLE 7 TRUSTEE SECTION 7.01. DUTIES OF TRUSTEE. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and the Collateral Documents, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. (b) Except during the continuance of an Event of Default: (i) the duties of the Trustee shall be determined solely by the express provisions of this Indenture and the Collateral Documents and the Trustee need perform only those duties that are specifically set forth in this Indenture and the Collateral Documents and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming in all material respects to the requirements of this Indenture and the Collateral Documents. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform in all material respects to the requirements of this Indenture and the Collateral Documents. (c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) this paragraph (c) does not limit the effect of paragraph (b) of this Section; (ii) the Trustee shall not be liable to the Authority, any holder of the Notes or any other Person for any error of judgment made in good faith by a Responsible 59 Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (iii) the Trustee shall not be liable to the Authority, any holder of the Notes or any other Person with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof. (d) Whether or not therein expressly so provided, every provision of this Inden-ture that in any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of this Section. (e) No provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any liability. The Trustee shall be under no obligation to exercise any of its rights and powers under this Indenture before or following the occurrence of any Event of Default at the request of any Holders, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Authority or as provided in this Indenture. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law or as provided in this Indenture. SECTION 7.02. RIGHTS OF TRUSTEE. (a) The Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture. (e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Authority shall be sufficient if signed by an Officer of the Authority. (f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders 60 unless such Holders shall have requested such action in accordance with this Indenture and have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction. (g) Except with respect to Section 4.01 hereof, the Trustee shall have no duty to inquire as to the performance of the Authority's covenants in Article Four hereof. In addition, the Trustee shall not be deemed to have knowledge of any Default or Event of Default except (i) any Event of Default occurring pursuant to Section 6.01(a) or 6.01(b) or (ii) any Default or Event of Default of which the Trustee shall have received written notification or obtained actual knowledge. SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Authority with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof. SECTION 7.04. TRUSTEE'S DISCLAIMER. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture, the Collateral Documents, the Notes, it shall not be accountable for the Authority's use of the proceeds from the Notes or any money paid to the Authority or upon the Authority's direction under any provision of this Indenture or the Collateral Documents, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication. SECTION 7.05. NOTICES OF DEFAULTS. If a Default or Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to the Tribe and the Holders of Notes notices of the Default or Event of Default within 90 days after it occurs. Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest (including Cash Flow Participation Interest, if any) on any Note, the Trustee may withhold the notices if and so long as the Trustee in good faith determines that withholding the notices is in the interests of the Holders of the Notes. SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES. On each May 15 beginning with the May 15 following the date of this Indenture, and for so long as Notes remain outstanding, the Trustee shall mail to the Holders of the Notes a brief report dated as of such reporting date that complies with TIA Section 313(a) (but if no event described in TIA Section 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with 61 TIA Section 313(b)(2). The Trustee shall also transmit by mail all reports as required by TIA Section 313(c). A copy of each report at the time of its mailing to the Holders of Notes shall be mailed to the Authority and filed with the SEC and each stock exchange on which the Notes are listed in accordance with TIA Section 313(d). The Authority shall promptly notify the Trustee when the Notes are listed on any stock exchange. At the expense of the Authority, the Trustee or, if the Trustee is not the Registrar, the Registrar, shall report the names of record holders of the Notes to any Gaming Regulatory Authority when requested to do so by the Authority. At the express direction of the Authority and at the Authority's expense, the Trustee will provide any Gaming Regulatory Authority with: (i) copies of all notices, reports and other written communications which the Trustee gives to Holders; (ii) a list of all of the Holders promptly after the original issuance of the Notes and periodically thereafter if the Authority so directs; (iii) notice of any Default under this Indenture, any acceleration of the Indebtedness evidenced hereby, the institution of any legal actions or proceedings before any court or governmental authority in respect of a Default or Event of Default hereunder; (iv) notice of the removal or resignation of the Trustee within five Business Days of the effectiveness thereof; (v) notice of any transfer or assignment of rights under this Indenture known to the Trustee within five Business Days thereof; and (vi) a copy of any amendment to the Notes or this Indenture within five Business Days of the effectiveness thereof. To the extent requested by the Authority and at the Authority's expense, the Trustee shall cooperate with any Gaming Regulatory Authority in order to provide such Gaming Regulatory Authority with the information and documentation requested and as otherwise required by applicable law. SECTION 7.07. COMPENSATION AND INDEMNITY. The Authority shall pay to the Trustee from time to time reasonable compensation for its acceptance of this Indenture and services hereunder in accordance with a written schedule provided by the Trustee to the Authority. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Authority shall reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel. 62 The Authority shall indemnify the Trustee against any and all losses, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture or the Collateral Documents, including the costs and expenses of enforcing this Indenture or the Collateral Documents against the Authority (including this Section 7.07) and defending itself against any claim (whether asserted by the Authority or any Holder or any other person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its negligence or bad faith. The Trustee shall notify the Authority promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Authority shall not relieve the Authority of its obligations hereunder. The Authority shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Authority shall pay the reasonable fees and expenses of such counsel. The Authority need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. The obligations of the Authority under this Section 7.07 shall survive the satisfaction and discharge of this Indenture. To secure the Authority's payment obligations in this Section, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest (including Cash Flow Participation Interest, if any) on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(i) or (j) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law. The Trustee shall comply with the provisions of TIA Section 313(b)(2) to the extent applicable. SECTION 7.08. REPLACEMENT OF TRUSTEE. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment and taking of office as provided in this Section. The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Authority. The Holders of Notes of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Authority in writing. The Authority may remove the Trustee if: (a) the Trustee fails to comply with Section 7.10 hereof; (b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; (c) a Custodian or public officer takes charge of the Trustee or its property; or 63 (d) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Authority shall promptly appoint a successor Trustee. For up to one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may by written action appoint a successor Trustee to replace the successor Trustee appointed by the Authority. If any Gaming Regulatory Authority requires a Trustee to be approved, licensed or qualified and the Trustee fails or declines to do so, such approval, license or qualification shall be obtained upon the request of, and at the expense of, the Authority unless the Trustee declines to do so, or, if the Trustee's relationship with either the Authority may, in the Authority's discretion, jeopardize any material gaming license or franchise or right or approval granted thereto, the Trustee shall resign, and, in addition, the Trustee may at its option resign if the Trustee in its sole discretion determines not to be so approved, licensed or qualified. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Authority or the Holders of Notes of at least 10% in principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee, after written request by any Holder of a Note who has been a Holder of a Note for at least six months, fails to comply with Section 7.10, such Holder of a Note may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Authority. Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders of the Notes. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, PROVIDED all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Authority's obligations under Section 7.07 hereof shall continue for the benefit of the retiring Trustee. SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC. If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee; PROVIDED such corporation shall be otherwise eligible and qualified under this Article. SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to 64 supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $50 million as set forth in its most recent published annual report of condition. This Indenture shall always have a Trustee who satisfies the requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to TIA Section 310(b). SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The Trustee is subject to TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated therein. The Trustee hereby waives any right to setoff any claim that it may have against the Authority in any capacity (other than as Trustee, Paying Agent or Collateral Agent hereunder or under the Collateral Documents) against any of the assets of the Authority held by the Trustee, including in any of the Cash Collateral Accounts; provided, however, that if the Trustee is or becomes a lender of any other Indebtedness permitted hereunder to be pari passu with the Notes, then such waiver shall not apply to the extent of such Indebtedness. ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE. The Authority may, at the option of its Board of Directors evidenced by a resolution set forth in an Officers' Certificate delivered to the Trustee, at any time, elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article Eight. SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE. (a) When (i) the Authority delivers to the Trustee all outstanding Notes (other than Securities replaced pursuant to Section 2.07) for cancellation or (ii) all outstanding Securities have become due and payable and the Authority irrevocably deposits with the Trustee funds sufficient to pay at maturity all outstanding Notes, including interest thereon (other than Notes replaced pursuant to Section 2.07), and if in either case the Authority pays all other sums payable hereunder by it, then this Indenture shall, subject to Sections 8.01(b) and 8.07 cease to be of further effect. The Trustee shall acknowledge satisfaction and discharge of this Indenture on the Authority's demand accompanied by an Officers' Certificate and an Opinion of Counsel and at the Authority's cost and expense. (b) Upon the Authority's exercise under Section 8.01 hereof of the option applicable to this Section 8.02, the Authority shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to have been discharged from their respective obligations with respect to all outstanding Notes on the date the conditions set forth below are satisfied (hereinafter, "LEGAL DEFEASANCE"). For this purpose, Legal Defeasance means that the Authority shall be deemed to have paid and discharged the 65 entire Indebtedness represented by the outstanding Notes and cured all existing Events of Default, which shall thereafter be deemed to be "outstanding" only for the purposes of Section 8.05 hereof and the other Sections of this Indenture referred to in (a) and (b) below, and to have satisfied all its other obligations under such Notes and this Indenture (and the Trustee, on demand of and at the expense of the Authority, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of outstanding Notes to receive payments in respect of the principal of, premium, if any, and interest on such Notes when such payments are due, (b) the Authority's obligations with respect to such Notes under Article 2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Authority's obligations in connection therewith and (d) this Article Eight. Subject to compliance with this Article Eight, the Authority may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof. SECTION 8.03. COVENANT DEFEASANCE. Upon the Authority's exercise under Section 8.01 hereof of the option applicable to this Section 8.03, the Authority shall, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from their obligations under the covenants contained in Sections 4.03, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.16, 4.17, 4.18, 4.19,4.20, 4.21, 4.22, 4.24, 4.25, 4.26, 4.27, 4.28, 4.29, 4.30 and 5.01, and the Events of Default specified under 6.01(c), 6.01(d), 6.01(e), 6.01(h), 6.01(k), 6.01(l) or 6.01(m) hereof with respect to the outstanding Notes on and after the date the conditions set forth below are satisfied (hereinafter, "COVENANT DEFEASANCE"), and the Notes shall thereafter be deemed not "outstanding" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "outstanding" for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes, the Authority may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant listed in this Section 8.03, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE. The following shall be the conditions to the application of either Section 8.02 or 8.03 hereof to the outstanding Notes: In order to exercise either Legal Defeasance or Covenant Defeasance: (a) the Authority must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, cash in United States dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants as 66 evidenced by a certificate delivered to the Trustee, to pay the principal of, premium, if any, and interest (including the maximum amount payable as Cash Flow Participation Interest, if any) on the outstanding Notes on the stated maturity date or on the applicable redemption date, as the case may be, of such principal of, premium, if any, or interest on the outstanding Notes on the stated Maturity or on the applicable redemption date, as the case may be and the Authority must specify whether the Notes are being defeased to maturity or to a particular redemption date; (b) in the case of an election under Section 8.02 hereof, the Authority shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that, subject to customary assumptions and exclusions, (A) the Authority has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the Issuance Date, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, subject to customary assumptions and exclusions, the Holders of the outstanding Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (c) in the case of an election under Section 8.03 hereof, the Authority shall have delivered to the Trustee an Opinion of Counsel in the United States reasonably acceptable to the Trustee confirming that, subject to customary assumptions and exclusions, the Holders of the outstanding Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (d) no Default or Event of Default shall have occurred and be continuing pursuant to Section 6.01(a), 6.01(b), 6.01(i) or 6.01(j) hereof on the date of such deposit; (e) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture) to which the Authority is a party or by which the Authority is bound; (f) the Authority shall have delivered to the Trustee an opinion of counsel to the effect that after the 91st day following the deposit following the deposit and as of the date of such opinion and subject to customary assumptions and exclusions, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally under any applicable United States law; (g) the Authority shall have delivered to the Trustee an Officers' Certificate stating that the deposit was not made by the Authority with the intent 67 of defeating, hindering, delaying or defrauding any creditors of the Authority or others; and (h) the Authority shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, which Opinion of Counsel may be subject to customary assumptions and exclusions, each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance have been complied with. SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS. Subject to Section 8.06 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Authority acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest (including the maximum amount of Cash Flow Participation Interest payable), but such money need not be segregated from other funds except to the extent required by law. The Authority shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes. Anything in this Article Eight to the contrary notwithstanding, the Trustee shall deliver or pay to the Authority from time to time upon the request of the Authority any money or non-callable Government Securities held by it as provided in Section 8.04 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.04(a) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance. SECTION 8.06. REPAYMENT TO AUTHORITY. Any money deposited with the Trustee or any Paying Agent, or then held by the Authority, in trust for the payment of the principal of, premium, if any, or interest on any Note and remaining unclaimed for two years after such principal, premium, if any, or interest has become due and payable shall be paid to the Authority on its request or (if then held by the Authority) shall be discharged from such trust; and the Holder of such Note shall thereafter, as an unsecured creditor, look only to the Authority for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Authority as trustee thereof, shall thereupon cease; PROVIDED, HOWEVER, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Authority cause to be published 68 once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Authority. SECTION 8.07. REINSTATEMENT. If the Trustee or Paying Agent is unable to apply any United States dollars or non-callable Government Securities in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Authority's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the case may be; PROVIDED, HOWEVER, that, if the Authority make any payment of principal of, premium, if any, or interest (including Cash Flow Participation Interest, if any) on any Note following the reinstatement of its obligations, the Authority shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent. SECTION 8.08. NOTE COLLATERAL. Upon the Authority's exercise under Section 8.01 hereof of the option applicable to either Section 8.02 or 8.03, the Note Collateral, except the funds in the trust fund described in Section 8.04 hereof, shall be released pursuant to Section 10.03 hereof. ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES. Notwithstanding Section 9.02 of this Indenture, the Authority and the Trustee may amend or supplement this Indenture, the Notes, the Management Agreement or the Collateral Documents without the consent of any Holder of a Note or the Tribe, and provided that any required governmental approval, including that of the NIGC, is obtained: (a) to cure any ambiguity, defect or inconsistency; (b) to provide for uncertificated Notes in addition to or in place of certificated Notes; (c) to comply with Article 4 or Article 11 hereof; (d) to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights hereunder of any Holder of a Note; 69 (e) to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA; or (f) to enter into additional or supplemental Collateral Documents. Upon the request of the Authority accompanied by a resolution of the Board of Directors of the Authority authorizing the execution of any such amended or supple-mental Indenture, Notes or Collateral Documents, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee shall join with the Authority in the execution of any amended or supplemental Indenture, Notes or Collateral Documents authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to enter into such amended or supplemental Indenture, Notes or Collateral Documents that affects its own rights, duties or immunities under this Indenture or otherwise. SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES. Except as provided below in this Section 9.02 or elsewhere in this Indenture, the Authority and the Trustee may amend or supplement this Indenture, the Notes or the Collateral Documents with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including consents obtained in connection with a tender offer or exchange offer for the Notes), provided that any required governmental approval is obtained, including that of the NIGC, and, subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium, if any, or interest, if any, on the Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes (including consents obtained in connection with a tender offer or exchange offer for the Notes). Without the consent of at least 66-2/3% in principal amount of the Notes then outstanding (including consents obtained in a tender offer or exchange offer for such Notes), no waiver or amendment to this Indenture may make any change to Section 4.16 hereof. With the consent of a majority in principal amount of the Notes then outstanding, the Authority may amend or waive any provision of the Note Purchase Agreement for the Subordinated Notes not otherwise permitted to be amended hereunder or the Management Agreement. Upon the request of the Authority accompanied by a resolution of the Board of Directors of the Authority authorizing the execution of any such amended or supple-mental Indenture, Notes or Collateral Documents, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee shall join with the Authority in the execution of such amended or supplemental Indenture, Notes or Collateral Documents, unless such amended or supplemental Indenture, Notes or Collateral Documents affects the Trustee's own rights, duties or immunities under this Indenture, the Notes, the Collateral Documents or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental Indenture, Notes or Collateral Documents. 70 It shall not be necessary for the consent of the Holders of Notes under this Section 9.02 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver under this Section becomes effective, the Authority shall mail to the Holders of Notes affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Authority to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental Indenture, Notes or Collateral Documents or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate principal amount of the Notes then outstanding may waive compliance in a particular instance with any provision of this Indenture, the Notes or the Collateral Documents. However, without the consent of each Holder affected, an amendment or waiver may not (with respect to any Notes held by a non-consenting Holder): (a) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver; (b) reduce the principal of or change the fixed maturity of any Note or alter or waive any of the provisions with respect to the optional or mandatory redemption provisions of the Notes (provided, however, that this clause (b) does not apply to any provision with respect to any Repurchase Offer); (c) reduce the rate of or change the time for payment of interest, on any Note; (d) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the then outstanding Notes and a waiver of the payment default that resulted from such acceleration); (e) make any Note payable in money other than that stated in the Notes; (f) make any change in the provisions of this Indenture relating to waivers of past monetary Defaults or the rights of Holders of Notes to receive payments of principal of or premium, if any, or interest on the Notes; (g) release all or substantially all of the Note Collateral from the Lien of this Indenture and the Collateral Documents; or (h) make any change in Section 6.04 or 6.07 hereof or in the foregoing amendment and waiver provisions. SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment or supplement to this Indenture, the Notes and the Collateral Documents shall be set forth in a amended or supplemental Indenture or Collateral Document that complies with the TIA as then in effect, if applicable. 71 SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS. Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder. SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES. The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Authority in exchange for all Notes may issue and the Trustee shall authenticate new Notes that reflect the amendment, supplement or waiver. Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver. SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC. The Trustee shall sign any amended or supplemental indenture, Note or Collateral Document, if necessary, authorized pursuant to this Article Nine if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Authority may not sign an amendment or supplemental Indenture, Note or Collateral Document until the Board of Directors approves it. In executing any amended or supplemental indenture, Note or Collateral Document, if necessary, the Trustee shall be entitled to receive and (subject to Section 7.01) shall be fully protected in relying upon, an Officer's Certificate and an Opinion of Counsel, which Opinion of Counsel may be subject to customary assumptions and exclusions, stating that the execution of such amended or supplemental indenture, Note or Collateral Document is authorized or permitted by this Indenture. ARTICLE 10 COLLATERAL AND SECURITY SECTION 10.01. SECURITY. The due and punctual payment of the principal of, premium, if any, and interest on the Notes when and as the same shall be due and payable, whether on an interest payment date, at maturity, by acceleration, repurchase, redemption or otherwise, and interest on the overdue principal of, premium, if any, and interest on the Notes and performance of all other obligations of the Authority to the Holders of Notes or the Trustee under this Indenture and the Notes, according to the terms hereunder or thereunder, shall be secured by a first lien on the Note Collateral (which will also secure the Working Capital Financing), as provided herein and in the Collateral Documents 72 which the Authority has entered into simultaneously with the execution of this Indenture for the benefit of the Holders of Notes. Each Holder of Notes, by its acceptance thereof, consents and agrees to the terms of the Collateral Documents (including, without limitation, the provisions providing for foreclosure and release of Note Collateral and to the remedies available therefor, whether under tribal law or otherwise) as the same may be in effect or may be amended from time to time in accordance with its terms and authorizes and directs the Trustee to enter into the Collateral Documents and to perform its obligations and exercise its rights thereunder in accordance therewith. The Authority shall deliver to the Trustee copies of all documents executed pursuant to this Indenture and the Collateral Documents and shall do or cause to be done all such acts and things as may be necessary or proper, or as may be required by the provisions of the Collateral Documents to assure and confirm to the Trustee the security interest in the Note Collateral contemplated hereby, by the Collateral Documents or any part thereof, as from time to time constituted, so as to render the same available for the security and benefit of this Indenture and of the Notes secured hereby, according to the intent and purposes herein expressed. The Authority shall take any and all actions reasonably required to cause the Collateral Documents to create and maintain, as security for the obligations of the Authority hereunder, a valid and enforceable perfected first priority Lien in and on all the Note Collateral, in favor of the Trustee for the ratable benefit of the Holders, superior to and prior to the rights of all third Persons and subject to no other Liens than Permitted Liens. SECTION 10.02. RECORDING AND OPINIONS. The Authority will cause the applicable Collateral Documents and any financing statements, all amendments or supplements to each of the foregoing and any other similar security documents as necessary, to be registered, recorded and filed and/or re-recorded, re-filed and renewed in such manner and in such place or places, if any, as may be required by law or reasonably requested by the Trustee in order fully to preserve and protect the Lien securing the obligations under the Notes pursuant to the Collateral Documents. The Authority will use its best efforts to obtain any required approval of the Bureau of Indian Affairs or the NIGC of any of the Collateral Documents, this Indenture or any Note. The Authority and any other obligor shall furnish to the Trustee: (a) promptly after the execution and delivery of this Indenture, and promptly after the execution and delivery of any other instrument of further assurance or amendment, an Opinion of Counsel in the United States either (i) stating that, subject to customary assumptions and exclusions, in the opinion of such counsel, this Indenture, the Deed of Trust and other applicable Collateral Documents and all other instruments of further assurance or amendment have been properly recorded, registered and filed to the extent necessary to make effective the Lien intended to be created by such Collateral Documents and reciting the details of such action or referring to prior Opinions of Counsel in which such details are given, and stating that, subject to customary assumptions and exclusions, as to such Collateral Documents and such other instruments such recording, registering and filing are the only recordings, registerings and filings necessary to give notice thereof and that no re-recordings, re-registerings or re- filings are necessary to maintain such notice, and further stating that all financing statements and continuation statements have been executed and filed that are necessary fully to preserve and protect the rights of the 73 Holders of Notes and the Trustee hereunder and under the Collateral Documents or (ii) stating that, subject to customary assumptions and exclusions, in the opinion of such counsel, no such action is necessary to make any other Lien created under any of the Collateral Documents effective as intended by such Collateral Documents; and (b) within 30 days after January 1, in each year beginning with the year 1996, an Opinion of Counsel, dated as of such date, either (i) stating that, subject to customary assumptions and exclusions, in the opinion of such counsel, such action has been taken with respect to the recording, registering, filing, re-recording, re- registering and re-filing of this Indenture and all supplemental indentures, financing statements, continuation statements or other instruments of further assurance as is necessary to maintain the Lien of this Indenture and the Collateral Documents until the next Opinion of Counsel is required to be rendered pursuant to this paragraph and reciting the details of such action or referring to prior Opinions of Counsel in which such details are given, and stating that all financing statements and continuation statements have been executed and filed that are necessary fully to preserve and protect the rights of the Holders and the Trustee hereunder and under the Collateral Documents or (ii) stating that, subject to customary assumptions and exclusions, in the opinion of such counsel, no such action is necessary to maintain such Lien, until the next Opinion of Counsel is required to be rendered pursuant to this paragraph. (c) The Authority shall furnish to the Trustee the certificates or opinions, as the case may be, required by TIA Section 314(d). Such certificates or opinions will be subject to the terms of TIA Section 314(e). SECTION 10.03. RELEASE OF NOTE COLLATERAL. (a) Subject to subsections (b), (c) and (d) of this Section 10.03, Note Collateral may be released from the Lien and security interest created by this Indenture and the Collateral Documents at any time or from time to time upon the request of the Authority pursuant to an Officers' Certificate certifying that all terms for release and conditions precedent hereunder and under any applicable Collateral Document have been met and specifying (i) the identity of the Note Collateral to be released and (ii) the provision of this Indenture which authorizes such release. The Trustee shall release (at the sole cost and expense of the Authority) (a) Note Collateral that is the subject of an Asset Sale or which is sold, transferred or disposed of (other than any Asset Sale to the Tribe or any Affiliate of the Tribe); PROVIDED, such transaction is or will be in accordance with the provisions of this Indenture or the applicable Collateral Document, including, without limitation, the requirement that the Net Proceeds from such Asset Sale are or will be applied in accordance with Section 4.10 hereof; (b) Note Collateral that is condemned, seized or taken by the power of eminent domain or otherwise confiscated pursuant to an Event of Loss; PROVIDED that the Net Loss Proceeds from such Event of Loss are or will be applied in accordance with Section 4.11 hereof; (c) Note Collateral which may be released with the consent of Holders pursuant to Article 9 hereof; (d) all Note Collateral (except as provided in Article 8 hereof and, in particular, the funds in the trust fund described in Section 8.04 and any funds in any accounts established under Section 10.12 hereof) upon discharge or defeasance of this Indenture in accordance with Article 8 hereof; (e) all Note Collateral upon the payment in full of all obligations of the Authority with respect to the Notes; (f) any amounts in 74 the Cash Maintenance Account, Interest and Excess Cash Flow Account, Net Receipts Account or any other cash or Cash Equivalents held as security for the Notes may be released pursuant to the terms of this Indenture, the Cash Collateral Accounts Pledge and Security Agreement or any other relevant Collateral Document; and (g) collateral under the Leasehold Mortgage may be released in accordance with the terms of the Leasehold Mortgage. Upon receipt of such Officers' Certificate the Trustee shall execute, deliver or acknowledge any necessary or proper instruments of termination, satisfaction or release to evidence the release of any Note Collateral permitted to be released pursuant to this Indenture or the Collateral Documents. (b) No Note Collateral shall be released from the Lien and security interest created by the Collateral Documents pursuant to the provisions of the Collateral Documents unless there shall have been delivered to the Trustee the certificate required by this Section 10.03 (or the applicable certificate called for by the Cash Collateral Accounts Pledge and Security Agreement). (c) The Trustee may release Note Collateral from the Lien and security interest created by this Indenture and the Collateral Documents upon the sale or disposition of Note Collateral pursuant to the Trustee's powers, rights and duties with respect to remedies provided under any of the Collateral Documents. (d) The release of any Note Collateral from the terms of this Indenture and the Collateral Documents shall not be deemed to impair the security under this Indenture in contravention of the provisions hereof if and to the extent the Note Collateral is released pursuant to the terms hereof. To the extent applicable, the Authority shall cause TIA Section 313(b), relating to reports, and TIA Section 314(d), relating to the release of property or securities from the Lien and security interest of the Collateral Documents and relating to the substitution therefor of any property or securities to be subjected to the Lien and security interest of the Collateral Documents to be complied with. Any certificate or opinion required by TIA Section 314(d) may be made by an Officer of the Authority except in cases where TIA Section 314(d) requires that such certificate or opinion be made by an independent Person, which Person shall be an independent engineer, appraiser or other expert selected or approved by the Trustee in the exercise of reasonable care. If, at any time there is no Manager under the Management Agreement, the rights of the Manager to make withdrawals as set forth in this Section 10.03(e) may be made by the Authority for the purposes set forth herein. SECTION 10.04. PROTECTION OF THE TRUST ESTATE. Upon prior written notice to the Authority, the Trustee shall have the power (i) to institute and maintain such suits and proceedings as it may deem expedient, to prevent any impairment of the Note Collateral under any of the Collateral Documents; and (ii) to enforce the obligations of the Authority, under this Indenture or the Collateral Documents, to institute and maintain such suits and proceedings as may be expedient to prevent any impairment of the Note Collateral under the Collateral Documents and in the profits, rents, revenues and other income arising therefrom; including the power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such 75 enactment, rule or order would impair any Note Collateral or be prejudicial to the interests of the Holders of Notes or the Trustee, to the extent permitted thereunder. Upon receipt of notice that the Authority is not in compliance with any of the requirements of the Deed of Trust, the Trustee may, but shall have no obligation to purchase, at the Authority's expense, such insurance coverage necessary to comply with the appropriate section of the mortgage. SECTION 10.05. CERTIFICATES OF THE AUTHORITY. The Authority shall furnish to the Trustee, prior to each proposed release of Note Collateral pursuant to the Collateral Documents (i) all documents required by TIA Section 314(d) and (ii) an Opinion of Counsel in the United States, which may be rendered by internal counsel to the Authority, to the effect that, subject to customary assumptions and exclusions, such accompanying documents constitute all documents required by TIA Section 314(d). The Trustee may, to the extent permitted by Sections 7.01 and 7.02 hereof, accept as conclusive evidence of compliance with the foregoing provisions the appropriate statements contained in such documents and such Opinion of Counsel. SECTION 10.06. CERTIFICATES OF THE TRUSTEE. In the event that the Authority wishes to release Note Collateral in accordance with the Collateral Documents and has delivered the certificates and documents required by the Collateral Documents and Sections 10.03 and 10.05 hereof, the Trustee shall determine whether it has received all documentation required by TIA Section 314 (d) in connection with such release and, based on such determination and the Opinion of Counsel delivered pursuant to Section 10.05, shall deliver a certificate to the Trustee setting forth such determination. SECTION 10.07. AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE TRUSTEE UNDER THE COLLATERAL DOCUMENTS. Subject to the provisions of Section 7.01 and 7.02 hereof, the Trustee may, in its sole discretion and without the consent of the Holders of Notes on behalf of the Holders of Notes, take all actions it deems necessary or appropriate in order to (a) enforce any of the terms of the Collateral Documents and (b) collect and receive any and all amounts payable in respect of the Obligations of the Authority hereunder. The Trustee shall have power to institute and maintain such suits and proceedings as it may deem expedient to prevent any impairment of the Note Collateral by any acts that may be unlawful or in violation of the Collateral Documents or this Indenture, and such suits and proceedings as the Trustee may deem expedient to preserve or protect its interests and the interests of the Holders of Notes in the Note Collateral (including power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair the security interest hereunder or be prejudicial to the interests of the Holders of Notes or of the Trustee). 76 SECTION 10.08. AUTHORIZATION OF RECEIPT OF FUNDS BY THE TRUSTEE UNDER THE COLLATERAL DOCUMENTS. Upon an Event of Default and so long as such Event of Default continues, the Trustee may exercise in respect of the Note Collateral, in addition to the other rights and remedies provided for herein, in the Collateral Documents or otherwise available to it, all of the rights and remedies of a secured party under the Uniform Commercial Code or other applicable law, and the Trustee may also upon obtaining possession of the Note Collateral as set forth herein, without notice to the Authority, except as specified below, sell the Note 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 Authority acknowledges and agrees that any such private sale may result in prices and other terms less favorable to the seller than if such a sale were a public sale. The Authority agrees that, to the extent notice of sale shall be required by law, at least 10 days' notice to the Authority 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. Any cash that is Note Collateral held by the Trustee and all cash proceeds received by the Trustee in respect of any sale of, collection from, or other realization upon all or any part of the Note Collateral shall be applied (unless otherwise provided for in the Note Collateral Documents and after payment of any and all amounts payable to the Trustee pursuant to the Indenture), as the Trustee shall determine or as the Holders of the Notes shall direct pursuant to Section 6.05 hereof, (i) against the Obligations for the ratable benefit of the Holders of the Notes, (ii) to maintain, repair or otherwise protect the Note Collateral or (iii) to take such other action to protect the other rights of the Holders of the Notes or to take any other appropriate action or remedy for the benefit of the Holders of the Notes. Any surplus of such cash or cash proceeds held by the Trustee and remaining after payment in full of all the Obligations of the Authority under this Indenture, the Notes or the Collateral Documents shall be paid over to the Authority or to whomsoever may be lawfully entitled to receive such surplus or as a court of competent jurisdiction may direct. SECTION 10.09. TERMINATION OF SECURITY INTEREST. Upon the payment in full of all Obligations of the Authority under this Indenture, the Notes and the Collateral Documents, or upon Legal Defeasance, the Trustee shall, at the request of the Authority, deliver a certificate to the Collateral Agent stating that such Obligations have been paid in full, and instruct the Collateral Agent to release the Liens pursuant to this Indenture and the Collateral Documents. SECTION 10.10. COOPERATION OF TRUSTEE. In the event the Authority pledges or grants a security interest in additional Note Collateral, the Trustee shall cooperate with the Authority in reasonably and promptly agreeing to the form of, and executing as required, any instruments or documents 77 necessary to make effective the security interest in the Note Collateral to be so substituted or pledged. To the extent practicable, the terms of any security agreement or other instrument or document necessitated by any such substitution or pledge shall be comparable to the provisions of the existing Collateral Documents. Subject to, and in accordance with the requirements of this Article 10 and the terms of the Collateral Documents, in the event that the Authority engages in any transaction pursuant to Section 10.03, the Trustee shall cooperate with the Authority in order to facilitate such transaction in accordance with any reasonable time schedule proposed by the Authority, including by delivering and releasing the Note Collateral in a prompt and reasonable manner. SECTION 10.11. COLLATERAL AGENT. The Trustee may, from time to time, appoint one or more Collateral Agents hereunder. Each of such Collateral Agents may be delegated any one or more of the duties or rights of the Trustee hereunder or under the Collateral Documents or which are specified in any Collateral Documents, including without limitation, the right to hold any Note Collateral in the name of, registered to, or in the physical possession of, such Collateral Agent, for the rateable benefit of the Holders of the Notes. Each such Collateral Agent shall have such rights and duties as may be specified in an agreement between the Trustee and such Collateral Agent. The Trustee and any Collateral Agent shall be authorized hereunder to give any acknowledgment reasonably requested by any party to confirm the rights and obligations of the parties. SECTION 10.12. CASH FUNDS PLEDGE. (a) As security for the payment of the Obligations under the Indenture, the Notes and the Collateral Documents, the Authority hereby pledges to the Trustee and grants to the Trustee for the ratable benefit of the Holders of the Notes a duly perfected first priority security interest in the Net Receipts Account, the Cash Maintenance Account, the Interest and Excess Cash Flow Account, the Replacement Reserve Account, the Event of Loss Account and the Asset Sale Account (collectively, the "Cash Collateral Accounts"), together with all amounts in, and investments of amounts in, each and every such account. The Authority also agrees not to further pledge or grant other security interests in the foregoing Note Collateral to any Person, except as otherwise provided in this Indenture and, except that the Authority may grant a security interest of second priority in the Cash Maintenance Account and funds and investments therein to the holders of the Subordinated Notes. The Authority shall establish the Cash Collateral Accounts in the name of the Trustee pursuant to the terms of the Cash Collateral Accounts Pledge and Security Agreement. The Cash Collateral Accounts shall be maintained with an Eligible Institution, which initially shall be the Trustee, and all funds therein may only be invested in cash or Cash Equivalents. (b) As security for the payment of the principal of, premium (if any) on, and all Fixed Interest and Cash Flow Participation Interest at any time accruing on, the Notes and the payment of all other Obligations secured by any of the Note Collateral pursuant to any of the Collateral Documents, the Authority hereby grants the Trustee, for the ratable benefit of the Holders of the Notes, a continuing first and sole security interest upon all present and future cash, from whatever source derived, whenever received, and whether or not deposited in any Cash Collateral Account or held by the Trustee; 78 provided, that so long as no Default or Event of Default has occurred and is continuing, upon written request of the Authority to the Trustee, the Trustee shall release the Lien under this paragraph (b) with respect to any cash or account as to which a Permitted Lien under clause (i),(v) or (viii) of the definition thereof is permitted. (c) The Authority covenants to deposit or cause to be deposited daily, in accordance with the terms of the Management Agreement, all Gross Revenues of the Resort into the Net Receipts Account, except for Gross Revenues with respect to which the Trustee has released its lien under Section 10.12(b). (d) Cash in any Cash Collateral Account may be withdrawn pursuant to the terms of the Cash Collateral Accounts Pledge and Security Agreement. The Authority further covenants to maintain each Cash Collateral Account in existence so long as any Obligations under the Notes are outstanding. (f) The Authority agrees to do or cause to be done all things, and to make all filings, and to enter into any agreements or instruments reasonably requested by the Eligible Financial Institution at which any Cash Collateral Account is located, to evidence and perfect the first priority security interest in favor of the Trustee for the ratable benefit of the Noteholders granted therein, the rights and interests hereunder of the Trustee, for the ratable benefit of the Holders of the Notes, in such Cash Collateral Account and to otherwise effect the intention and purposes of the parties hereunder with respect to such Cash Collateral Account. (g) The Authority shall establish each Cash Collateral Account in the name of the Trustee and the Trustee shall have sole dominion and control thereon and in all amounts in, and investments of amounts in, such accounts, to the full extent necessary to ensure the validity, effectiveness, perfection, priority and enforceability of the foregoing pledge and security interest in favor of the Trustee. ARTICLE 11 COVENANTS OF THE TRIBE SECTION 11.01. COVENANTS OF THE TRIBE. (a) Except with the consent of a majority in interest of the Holders of the Notes or as required by federal or state law, the Tribe shall not, and shall not permit any of its representatives, political subunits or councils, agencies, instrumentalities, to, directly or indirectly, (i) increase or impose any tax, levy or other monetary payment or reimbursement obligation on the Authority or on any patrons of the Resort or on any activity at the Resort (gaming or otherwise), other than (1) any payments due under any agreement in effect on the Issuance Date and pursuant to the terms of the agreement in effect on the Issuance Date or any such payments that are not materially adverse to the economic interests of the Holders of the Notes, (2) which the Authority has agreed to reimburse each Noteholder for the economic effect thereof, if any, (3) which correspondingly reduces the Restricted Payments otherwise payable to the Tribe under Section 4.07 or (4) which are reasonable, nondiscriminatory charges for utilities or other governmental services supplied by the Tribe and used by the Authority in an amount not 79 to exceed the reasonable cost of such services and a reasonable allowance for administrative costs; (ii) amend the terms of the Lease in any material manner that would be adverse to the economic interests of the Holders of the Notes; (iii) subject to paragraph (b), amend the Tribal Gaming Ordinance in effect on the Issuance Date, restrict or eliminate the exclusive right of the Authority to conduct gaming operations on behalf of the Tribe or permit any other entity to conduct gaming operations on any property owned or controlled by the Tribe, in each case, in a material manner that would be adverse to the economic interests of the Holders of the Notes; or (iv) take any other action, enter into any agreement, amend its constitution or enact any ordinance, law, rule or regulation that would prejudice or have a material adverse effect on any of the rights of the Holders of the Notes under this Indenture or the Collateral Documents. In addition, except as specifically provided in this Indenture, the Tribe shall not, and shall not permit the Authority or any of the Tribe's representatives, political subunits or councils agencies, instrumentalities to, directly or indirectly impose, levy, tax or otherwise make any charge on the Notes, the Indenture, the Collateral Documents, any payments or deposits to be made thereunder, including without limitation upon the payment of any principal, premium or interest (including Cash Flow Participation Interest) unless such levy, tax or charge is reimbursed in full to the Holders. (b) The Tribe covenants that any amendments made to the Tribal Gaming Ordinance will be a legitimate effort to ensure that the Authority and the Resort conduct their gaming operations in a manner that adequately protects the environment, the public health and safety, or the integrity of the Authority or the Resort. The Tribe and the Authority agree that any licensure or investigation of a holder of the Notes, in such holder's capacity as a Noteholder, shall be conducted in good faith and with a reasonable basis therefor. (c) Any action taken by the Tribe to comply with federal or state law that would otherwise violate paragraph (a) shall be taken only after prior written notice to the Trustee, accompanied with an Officers' Certificate and Opinion of Counsel that such action is required by federal or state law. To the extent possible under federal or state law, the Tribe shall give the Trustee at least 30 days' prior written notice of any such action. (d) The Tribe will not permit or incur any consensual liability of the Tribe (or of any other instrumentality or subunit of the Tribe) that is a legal obligation of the Authority, or for which the Authority's assets may be bound, other than a liability that the Authority is permitted or not prohibited from incurring on its own behalf under this Indenture. (e) In the event that the Tribe receives any payment from the Authority at a time when such payment is prohibited by the terms of this Indenture, such payment shall be held by the Tribe in trust for the benefit of, and shall be paid forthwith over and delivered, upon the written request of the Trustee or the Authority, to the Authority. (f) The Tribe will not, pursuant to or within the meaning of Bankruptcy Law, appoint or consent to the appointment of a Custodian of the Authority or for all or substantially all of the property of the Authority. 80 (g) The Tribe agrees that it will not enact any Bankruptcy Law or similar law for the relief of debtors that would impair, limit, restrict, delay or otherwise adversely affect any of the rights and remedies of the Trustee or the Noteholders provided for in the Indenture, the Notes or the Collateral Documents. (h) The Tribe agrees that it will not, and will not permit the Authority or any of the Tribe's representatives, political subunits, agencies, instrumentalities or councils to, exercise any power of eminent domain over the property that is the subject of the Leasehold Mortgage (other than any such exercise that would not materially adversely affect the economic rights and benefits of the Trustee or the Holders thereunder). Except as required by federal or state law, the Tribe will not enact any statute, law, ordinance or rule that would have a material adverse effect on the rights of the Trustee or the Holders under the Indenture, the Notes or the Collateral Documents. (i) Other than pursuant to execution and delivery of the Indenture and the Collateral Documents by the parties thereto, no filing, recording or other act is required under any law, rule or ordinance of the Tribe to perfect and to maintain the perfection of the first priority lien on the Note Collateral created by the Collateral Documents and this Indenture. (j) The Tribe hereby agrees that upon any payment or distribution of assets upon any liquidation, dissolution, winding up, reorganization, assignment for the benefit of creditors, marshalling of assets or any bankruptcy, insolvency or similar proceedings of the Authority or the Resort, the holders of the Notes shall be entitled to receive payment in full with respect to all principal, premium, interest and other amounts owing in respect of the Notes before any payment or any distribution to the Tribe. (k) The Tribe agrees that the Authority shall have sole and exclusive jurisdiction to operate any Gaming enterprise on behalf of the Tribe or any political subunit thereof. (l) The Tribe hereby consents, agrees and acknowledges to the creation of the Liens securing the Obligations under this Indenture, the Notes and the Collateral Documents created under this Indenture or the Collateral Documents. The Tribe agrees that all Gross Revenues of the Resort shall be deposited into the Net Receipts Account as provided in Section 10.12. Any action taken in violation of this Section 11.01 shall be deemed in contravention of Article XIV ("Non-impairment of Contracts") of the Constitution of the Tribe. ARTICLE 12 MISCELLANEOUS SECTION 12.01. TRUST INDENTURE ACT CONTROLS. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA Section 318(c), the imposed duties shall control. 81 SECTION 12.02. NOTICES. Any notice or communication by the Authority or the Trustee to the others is duly given if in writing and delivered in Person or mailed by first class mail (registered or certified, return receipt requested), telex, telecopier or overnight air courier guaranteeing next day delivery, to the others' address: If to the Authority: Mohegan Tribal Gaming Authority Ralph Sturges, Chief and Carlisle Fowler, Business Board Member and Roland Harris Business Board Member Mohegan Tribe of Indians of Connecticut 27 Church Lane Uncasville, CT 06382 Telecopy: (203) 848-9253 With a copy to: Lewis B. Rome, Esq. Rome, McGuigan, Hoberman, Sabanosh & Klebanoff, P.C. One State Street Hartford, Connecticut 06103-3103 Telecopy: (203) 724-3921 If to the Tribe: Ralph Sturges, Chief and Carlisle Fowler, Business Board Member and Roland Harris Business Board Member Mohegan Tribe of Indians of Connecticut 27 Church Lane Uncasville, CT 06382 Telecopy: (203) 848-0545 With a copy to: Lewis B. Rome, Esq. Rome, McGuigan, Hoberman, Sabanosh & Klebanoff, P.C. One State Street Hartford, Connecticut 06103-3103 Telecopy: (203) 724-3921 82 If to the Trustee: First Fidelity Bank 10 State House Square Hartford, Connecticut 06103-3698 Attention: W. Jeffrey Kramer Vice President, Corporate Trust With a copy to: William Shure, Esq. Sachs, Shure, Sklarz & Gallant, P.C. 700 State Street New Haven, Connecticut 06509 Telecopy: (203) 777-3347 The Authority or the Trustee, by notice to the others may designate additional or different addresses for subsequent notices or communications. All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. Any notice or communication to a Holder shall be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Any notice or communication shall also be so mailed to any Person described in TIA Section 313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it. If the Authority mails a notice or communication to Holders, it shall mail a copy to the Trustee and each Agent at the same time. SECTION 12.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES. Holders may communicate pursuant to TIA Section 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Authority, the Trustee, the Registrar and anyone else shall have the protection of TIA Section 312(c). 83 SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any request or application by the Authority to the Trustee to take any action under this Indenture, the Authority shall furnish to the Trustee: (a) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, pro- vided for in this Indenture relating to the proposed action have been satisfied; and (b) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.05 hereof) stating that, subject to customary assumptions and exclusions, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied. SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of TIA Section 314(e) and shall include: (a) a statement that the Person making such certificate or opinion has read such covenant or condition; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been satisfied; and (d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied. SECTION 12.06. RULES BY TRUSTEE AND AGENTS. The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions. SECTION 12.07. DISPUTE RESOLUTION AND CONSENT TO SUIT. The Tribe does not consent to the enforcement, levy or other execution of any judgment for money or other damages against any assets, real or personal, of the Tribe, except that the Tribe and the Authority each do herewith consent to the enforcement and execution of any judgment, whether obtained as a result of judicial, administrative, or arbitrational proceedings, against any assets of the Authority and the assets of the Tribe to the extent of Section 11.01(k). Subject to the foregoing, the Tribe and the Authority each does herewith waive its sovereign immunity from unconsented suit, whether such 84 suit be brought in law or in equity, or in administrative proceedings or proceedings in arbitration, to permit the commencement, maintenance, and enforcement of any action, by any person with standing to maintain an action, to interpret or enforce the terms of this Indenture, the Collateral Documents or the Notes, and to enforce and execute any judgment resulting therefrom against the Authority or the assets of the Authority. Notwithstanding any other provision of law or canon of construction, the Tribe and the Authority each intends this waiver to be interpreted liberally to permit the full litigation of disputes arising under or out of this Indenture, the Collateral Documents or the Notes. Without limiting the generality of the foregoing, the Tribe and the Authority waive their immunity from unconsented suit to permit the maintenance of the following actions: (a) COURTS. The Tribe and the Authority each waive their immunity from unconsented suit to permit any court of competent jurisdiction to (i) enforce and interpret the terms of this Indenture, the Collateral Documents and the Notes, and award and enforce the award of damages owing as a consequence of a breach thereof, whether such award is the product of litigation, administrative proceedings, or arbitration; (ii) determine whether any consent or approval of the Tribe or the Authority has been improperly granted or unreasonably withheld; (iii) enforce any judgment prohibiting the Tribe or the Authority from taking any action, or mandating or obligating the Tribe or the Authority to take any action, including a judgment compelling the Tribe or the Authority to submit to binding arbitration; and (iv) adjudicate any claim under the Indian Civil Rights Act of 1968, 25 U.S.C. Section 1302 (or any successor statute). (b) ARBITRATION. The Tribe and the Authority each waive their immunity from unconsented suit to permit arbitrators, appointed and acting under the commercial arbitration rules of the American Arbitration Association, whenever and to the extent any agreement to submit a matter to arbitration is made by the Tribe or by the Authority, to (i) enforce and interpret the terms of this Indenture, the Collateral Documents and the Notes, and to award and enforce the award of any damages owing as a consequence thereof; (ii) determine whether any consent or approval of the Tribe or the Authority has been unreasonably withheld; and (iii) enforce any judgment prohibiting the Tribe or the Authority from taking any action, or mandating or obligating the Tribe or the Authority to take any action, including a judgment compelling the Tribe or the Authority to submit to binding arbitration. (c) GAMING DISPUTES COURT. Without limiting in any manner the foregoing waivers of immunity or the jurisdiction of any of the courts of the United States or any state thereof, the Tribe and the Authority hereby stipulate and agree that, immediately upon execution and delivery of this Indenture, judgment may and shall be entered by the Gaming Disputes Court: (i) declaring that (a) the Series A Notes are, and the Series B Notes when issued will be, the duly authorized, lawful and valid obligation of the Authority, enforceable in accordance with their terms against the Authority in the Gaming Disputes Court, (b) this Indenture and the Lease are the duly authorized, lawful and valid obligation of the Tribe and the Authority, enforceable in accordance with their terms against the Tribe and the Authority in the Gaming Disputes Court, (c) the Collateral Documents are the duly authorized, lawful and valid obligation of the Authority, enforceable in 85 accordance with their terms against the Authority in the Gaming Disputes Court, (d) the Liens granted pursuant to Section 10.12 and upon the other Note Collateral pursuant to the Collateral Documents are valid and enforceable and, as to the funds in each of the Cash Collateral Accounts and any other Note Collateral located within the territorial jurisdiction of the Gaming Disputes Court, are duly perfected and prior Liens thereon, enforceable in accordance with the terms of the Collateral Documents (including by foreclosure as therein set forth) against the Authority, against any purchaser (including a bona fide purchaser) of such other Note Collateral and against any creditor that acquires a judicial Lien on any of the Note Collateral, and no financing statement or continuation statement is required to be filed, or Collateral Document is required to be registered, recorded or lodged, or other action is required to be taken or event is required to have occurred, in order for such Liens to be and remain so perfected and for as long as any of the Notes may remain outstanding, and (e) there shall be no limitation (either by way of a time bar on the commencement of any action or proceeding or under any equitable principles such as the doctrine of laches) on the time within which any action or proceeding to collect any claim, to foreclose any Lien or otherwise to enforce any claim, interest, Lien, right or remedy arising in favor of the Trustee or any Holder under the Notes, this Indenture, the Lease or the Collateral Documents must be commenced, and (ii) ordering that (a) the Trustee shall be appointed and authorized to act as the receiver of and trustee for all funds in each of the Cash Collateral Accounts and as such receiver and trustee shall have the power and authority to demand, collect, receive, hold and disburse as set forth in Section 10.03(e) hereof, and as supplemented by the Cash Collateral Accounts Pledge and Security Agreement, all funds in each of the Cash Collateral Accounts at any time and in any manner arising and by whomever held and all power and authority reasonably incidental thereto, and (b) on each day, the Authority shall cause to be delivered to the Trustee, for deposit to the Net Receipts Account, all funds required to be deposited therein, and (c) the Trustee shall release, hold or pay out such deposit as provided in Section 10.03(e) hereof, and as supplemented by the Cash Collateral Accounts Pledge and Security Agreement. SECTION 12.08. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS. Neither the Tribe nor any officer or office holder, employee, agent, representative, member of the Authority or the Tribe, as such, shall have any liability for any obligations of the Authority under the Notes, this Indenture or the Collateral Documents, as applicable, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. SECTION 12.09. GOVERNING LAW. 86 THE INTERNAL LAW (EXCLUSIVE OF CONFLICT OF LAWS PRINCIPLES) OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE AND THE NOTES. SECTION 12.10. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Authority or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. SECTION 12.11. SUCCESSORS. All agreements of the Authority and the Tribe in this Indenture and the Notes, as applicable, shall bind their respective successors. All agreements of the Trustee in this Indenture shall bind its successors. SECTION 12.12. SEVERABILITY. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 12.13. COUNTERPART ORIGINALS. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. SECTION 12.14. TABLE OF CONTENTS, HEADINGS, ETC. The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof. [Signatures on following page] 87 SIGNATURES Dated as of September 29, 1995 Mohegan Tribal Gaming Authority By: /s/ Ralph W. Sturges ------------------------------- Name: Ralph W. Sturges Title: Chair of Management Board Attest: /s/ Carlisle Fowler - ------------------------------ Dated as of September 29, 1995 First Fidelity Bank By: /s/ W. Jeffrey Kramer -------------------------------- Name: W. Jeffrey Kramer Title: Vice President Attest: /s/ Thomas J. Brett - ------------------------------ Dated as of September 29, 1995 Mohegan Tribe of Indians of Connecticut (solely with respect to its obligations under Articles 11 and 12 and Section 4.29) By: /s/ Ralph W. Sturges ------------------------------- Name: Ralph W. Sturges Title: Lifetime Chief and Chairman Attest: /s/ Carlisle Fowler - ------------------------------ 88 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EXHIBIT A-I (Face of Note) % SERIES A SENIOR SECURED NOTES due 2002 No. $ ---------- MOHEGAN TRIBAL GAMING AUTHORITY promises to pay to or registered assigns, the principal sum of Dollars on November 15, 2002. Interest Payment Dates: May 15, and November 15 Record Dates: May 1, and November 1 Dated: September , 1995 --- MOHEGAN TRIBAL GAMING AUTHORITY By: ------------------------------ Name: Title: By: ------------------------------ Name: Title: (SEAL) This is one of the Notes referred to in the within-mentioned Indenture: - ----------------------------------- as Trustee By: -------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- A-I-1 (Back of Note) % Series A Senior Secured Notes due 2002 --- [Unless and until it is exchanged in whole or in part for Notes in definitive form, this Note may not be transferred except as a whole by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository. Unless this certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) ("DTC"), to the issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or such other name as may be requested by an authorized representative of DTC (and any payment is made to Cede & Co. or such other entity as may be requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.](1) THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE NOTE EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION PROVIDED BY RULE 144A UNDER THE SECURITIES ACT. THE HOLDER OF THE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE TRIBE AND THE AUTHORITY THAT (A) SUCH NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN OF RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE AUTHORITY SO REQUESTS), (2) TO THE AUTHORITY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE NOTE EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (1) ABOVE. Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. - ------------------------- 1. This paragraph is to be included only if the Note is in global form. A-I-2 1. INTEREST. Mohegan Tribal Gaming Authority (or any successor thereto as provided in the Indenture, the "Authority"), promises to pay interest at the rate of __% per annum of the principal amount of this Note (the "Fixed Interest") from the Issuance Date to the date of payment of such principal amount of this Note and shall pay the Liquidated Damages payable pursuant to Section 5 of the Registration Rights Agreement referred to below. Installments of Fixed Interest and Liquidated Damages shall become due and payable semi-annually in arrears on each May 15 and November 15 to the holder of record at the close of business on the preceding May 1 or November 1. Additionally, installments of accrued and unpaid Fixed Interest shall become due and payable with respect to any principal amount of this Note that matures (whether at stated maturity, upon acceleration, upon maturity of repurchase obligation or otherwise) upon such maturity of such principal amount of this Note. The Authority shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of Fixed Interest and Liquidated Damages (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Fixed Interest on this Note shall be computed on the basis of a 360-day year, consisting of twelve 30- day months. Each installment of Fixed Interest shall be calculated to accrue from and including the most recent date to which Fixed Interest has been paid or provided for (or from and including the Issuance Date if no installment of Fixed Interest has been paid) to, but not including, the date of payment. In addition, this Note shall bear Cash Flow Participation Interest, calculated as described below, from the Commencement Date to the date of payment of this Note. Installments of accrued or deferred Cash Flow Participation Interest on this Note accrued through the Accrual Period last ended shall become due and payable semi-annually on each May 15 and November 15 after the Commencement Date to the holder of record at the close of business on the preceding May 1 or November 1, provided that no Cash Flow Participation Interest shall be payable with respect to any period prior to the earlier of the first day the Resort commences operations and October 31, 1996. Additionally, all installments of accrued or deferred Cash Flow Participation Interest shall become due and payable (and may not be further deferred) with respect to any principal amount of this Note that matures (whether at stated maturity, upon acceleration, maturity of repurchase obligation or otherwise) upon such maturity of such principal amount of this Note. The Authority, at its option, may defer payment of all or a portion of any installment of Cash Flow Participation Interest then otherwise due if, and only to the extent that, (a) the payment of such portion of Cash Flow Participation Interest shall cause the Authority's Fixed Charge Coverage Ratio for the four consecutive fiscal quarters last completed prior to such interest payment date to be less than 2.0:1 on a pro forma basis after giving effect to the assumed payment of such Cash Flow Participation Interest but before giving effect to the payment of any interest on the Subordinated Notes which is then not payable in cash and (b) the principal of this Note corresponding to such Cash Flow Participation Interest has not then matured and become due and payable (at stated maturity, upon acceleration, upon maturity of repurchase obligation or otherwise). Cash Flow Participation Interest that is deferred shall become due and payable on the earlier of (i) the next succeeding interest payment date on which such Cash Flow Participation Interest is not permitted to be deferred, and (ii) upon the maturity of the corresponding principal of this Note (whether at stated maturity, upon acceleration, upon maturity of repurchase obligation or otherwise). No interest shall accrue on any Cash Flow Participation Interest deferred and which has not yet become due and payable. To the extent permitted by law, interest shall accrue on overdue Cash Flow Participation Interest at the same rate as the Fixed Interest plus one percent per annum. Each installment of Cash Flow Participation Interest shall be calculated to accrue (an "Accrual Period") from, but not including, the most recent date to which Cash Flow Participation A-I-3 Interest has been paid or provided for or through which Cash Flow Participation Interest had been calculated and deferred (or from and including the Commencement Date if no installment of Cash Flow Participation Interest has been paid, provided for or deferred) to, and including, either (a) the last day of the next Semi-annual Period if the corresponding principal of this Note has not become due and payable or (b) the date of payment if the corresponding principal of this Note has become due and payable (whether at stated maturity, upon acceleration, upon maturity of repurchase obligation or otherwise). With respect to each Accrual Period, Cash Flow Participation Interest shall accrue daily on the principal of this Note outstanding during such period as follows (except with respect to the Initial Period): (i) for each day during each month that ends during such Accrual Period and which month ends at least 25 days prior to the date of payment, an amount equal to 1/30 of the Monthly Cash Flow Participation Interest on this Note for such month until all of such Monthly Cash Flow Participation Interest has been accrued (and all of such month's Monthly Cash Flow Participation Interest on this Note shall be accrued by the last day of such month) and (ii) for any day in any remaining period, 1/30 of the prior month's Monthly Base Cash Flow Participation Interest on this Note; provided, however, that additional Cash Flow Participation Interest will cease accruing on any outstanding principal of this Note until the next succeeding September 30, if on any day, the Cash Flow Participation Interest on such principal amount of this Note accrued since the immediately preceding September 30 (excluding any deferred Cash Flow Participation Interest accrued prior to such September 30) exceeds the product of $________ million times such principal amount of this Note divided by $175,000,000. With respect to any principal amount of this Note during the Initial Period, Cash Flow Participation Interest shall accrue daily in the amount of 1/180 of the Cash Flow Participation Interest for such principal in the next succeeding Semi-annual Period. Any reference in this Note to "accrued and unpaid interest" includes the amount of unpaid Cash Flow Participation Interest due and payable. "COMMENCEMENT DATE" means the earlier of (i) October 31, 1996 and (ii) the first day that the Resort becomes Operating. "CASH FLOW" shall have the meaning set forth in the Indenture. "CASH FLOW PARTICIPATION INTEREST" means as of any payment date, the Cash Flow Participation Interest on this Note accrued through the Accrual Period last ended (including any Accrual Period that ends on such payment date) and any Cash Flow Participation Interest previously accrued and the payment of which has been permitted to be deferred. "FIXED CHARGE COVERAGE RATIO" shall have the meaning set forth in the Indenture. "INITIAL PERIOD" means the period, if any, beginning on the Commencement Date and ending on the day prior to the first day that the Resort becomes Operating. "MONTHLY CASH FLOW PARTICIPATION INTEREST" means, with respect to any month and any principal amount of this Note, the product of ___% of the Authority's Cash Flow for such month times a fraction, the numerator of which is the principal amount outstanding on this Note and the denominator of which is $175,000,000. "SEMI-ANNUAL PERIOD" means each period that begins on April 1 and ends on the next succeeding September 30, or each period that begins on October 1 and ends on the next succeeding March 31. 2. METHOD OF PAYMENT. The Authority shall pay interest (including Cash Flow Participation Interest, if any) on the Notes (except defaulted interest) and Liquidated Damages to the Persons who are registered Holders of Notes at the close of business on May 1 or November 1 next A-I-4 preceding the Interest Payment Date, even if such Notes are cancelled after such record date and on or before such Interest Payment Date (the "Record Date"), except as provided in Section 2.12 of the Indenture with respect to defaulted interest or as provided with respect to Notes called for redemption after such record and on or before such Interest Payment Date. The Holder hereof must surrender this Note to a Paying Agent to collect principal payments. The Notes shall be payable as to principal, premium, if any, interest (including Cash Flow Participation Interest, if any) and Liquidated Damages at the office or agency of the Authority maintained for such purpose within or without the City and State of New York, or, at the option of the Authority, payment of interest (including Cash Flow Participation Interest, if any) and Liquidated Damages may be made by check mailed to the Holders at their addresses set forth in the register of Holders and provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Authority or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. 3. PAYING AGENT AND REGISTRAR. Initially, First Fidelity Bank (including any successor appointed under the Indenture, the "Trustee"), the Trustee under the Indenture, shall act as Paying Agent and Registrar. The Authority may change any Paying Agent or Registrar without notice to any Holder. The Authority may act in any such capacity. 4. INDENTURE AND COLLATERAL DOCUMENTS. The Authority issued the Notes under an Indenture dated as of September __, 1995 (as it may be amended from time to time, the "Indenture") among the Authority, the Tribe, and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb) as in effect on the Issuance Date. The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. The Notes are obligations of the Authority limited to $175 million in aggregate principal amount. The terms of the Indenture shall govern any inconsistencies between the Indenture and the Notes. The Notes are secured by certain collateral pursuant to the Collateral Documents referred to in the Indenture and which may be released pursuant to the terms thereof. 5. OPTIONAL REDEMPTION. Except as set forth below, the Authority shall not have the option to redeem the Notes prior to November 15, 1999. From and after November 15, 1999, the Authority shall have the option to redeem the Notes, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest (including Cash Flow Participation Interest and Liquidated Damages, if any) thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on November 15 of the years indicated below: YEAR PERCENTAGE - ---- ---------- 1999 . . . . . . . . . . . . . . . . . . . . . . . . 2000 . . . . . . . . . . . . . . . . . . . . . . . . 2001 . . . . . . . . . . . . . . . . . . . . . . . . Notwithstanding any other provisions of Article 3 of the Indenture, if any Gaming Regulatory Authority requires that a Holder or beneficial owner of the Notes be licensed, qualified A-I-5 or found suitable under any applicable gaming laws in order to maintain any gaming license or franchise of the Authority under any applicable gaming laws, and the Holder or beneficial owner fails to apply for a license, qualification or finding of suitability within 30 days after being requested to do so by such Gaming Regulatory Authority (or such lesser period that may be required by such Gaming Regulatory Authority) or if such Holder or beneficial owner is not so licensed, qualified or found suitable, the Authority has the right, at its option, (i) to require such Holder or beneficial owner to dispose of such Holder's or beneficial owner's Notes within 30 days of receipt of such notice of such finding by the applicable Gaming Regulatory Authority (or such earlier date as may be required by the applicable Gaming Regulatory Authority) or (ii) to call for redemption of the Notes of such Holder or beneficial owner at a redemption price equal to the lesser of the principal amount thereof or the price at which such Holder or beneficial owner acquired the Notes, together with, in either case, accrued and unpaid interest (including Cash Flow Participation Interest and Liquidated Damages), if any, to the earlier of the date of redemption or the date of the finding of unsuitability by such Gaming Regulatory Authority, which may be less than 30 days following the notice of redemption if so ordered by such Gaming Regulatory Authority. The Authority shall not be required to pay or reimburse any Holder or beneficial owner of Notes who is required to apply for any such license, qualification or finding of suitability for the costs of the licensure or investigation for such qualification or finding of suitability. Such expenses shall be the obligation of such Holder or beneficial owner. 6. MANDATORY REDEMPTION. The Authority shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes. 7. REPURCHASE AT OPTION OF HOLDER. Under certain circumstances, as provided in the Indenture, the Authority may be required to purchase all or a portion of the Notes. Holders of Notes that are subject to an offer to purchase will receive an offer to purchase from the Authority prior to any related purchase date, and may elect to have such Notes purchased by completing the form entitled "Option of Holders to Elect Purchase" appearing below. 8. NOTICE OF REDEMPTION. Notice of redemption shall be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest (including Cash Flow Participation Interest or Liquidated Damages, if any) ceases to accrue on Notes or portions thereof called for redemption. 9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Authority may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Authority need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, it need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. 10. PERSONS DEEMED OWNERS. Prior to due presentment to the Trustee for registration of the transfer of this Note, the Trustee, any Agent and the Authority may deem and treat the Person in whose name this Note is registered as its absolute owner for the purpose of receiving A-I-6 payment of principal of and interest on this Note and for all other purposes whatsoever, whether or not this Note is overdue, and neither the Trustee, any Agent, nor the Authority shall be affected by notice to the contrary. The registered holder of a Note shall be treated as its owner for all purposes. 11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture, the Notes, the Collateral Documents or the Management Agreement may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes, and any existing default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes. Without the consent of any Holder of a Note, the Indenture, the Notes or the Collateral Documents may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to comply with Article Five or Article 10 of the Indenture, to provide for the assumption of the Authority's obligations to Holders of the Notes in case of a merger or consolidation pursuant to Article Five or Article 10 of the Indenture, to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, or to comply with the requirements of the Commission in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act or to enter into additional or supplemental Collateral Documents. 12. DEFAULTS AND REMEDIES. Events of Default include (as more fully described, and subject to, the terms and conditions of the Indenture as it may be amended from time to time): (i) default in payment of interest (including Cash Flow Participation Interest or Liquidated Damages, if any) when due and payable on any Note for 30 days; (ii) default in payment of principal of or premium, if any on any Note when due; (iii) failure by the Authority to comply with Section 4.07, 4.09, 4.10, 4.11, 4.15, 4.16, 4.18, 4.28 or 5.01 of the Indenture; (iv) failure by the Authority or the Tribe for 60 days after written notice to it to comply with any of its other agreements in the Indenture, the Notes, or the Collateral Documents; (v) any default occurs under the Lease or any Collateral Document or the Lease ceases to be in full force and effect that continues beyond any applicable due period; (vi) payment defaults under and the acceleration prior to express maturity of certain other indebtedness which aggregates $7.5 million or more; (vii) certain final judgments that remain unpaid, undischarged and unstayed if the aggregate of all such undischarged judgements exceeds $7.5 million; (viii) breach of representation or warranty in, or in the repudiation with respect to the Lease or any of the Collateral Documents; (ix) certain events of bankruptcy or insolvency; (x) revocation, termination, suspension or other cessation of effectiveness of any Gaming License which results in the cessation or suspension of gaming operations for a period of more than 90 consecutive days at the Resort; (xi) cessation of gaming operations for a period of more than 90 consecutive days at the Resort (other than as a result of a casualty loss) after the Resort becomes Operating; (xii) cessation of gaming operations for a period of more than 180 consecutive days as a result of a casualty loss except if the Authority is diligently pursuing reconstruction and opening of the Resort and such reconstruction and operating can be accomplished with the funds available to the Authority. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare the principal, premium, if any, interest (including all Cash Flow Participation Interest accrued or deferred and Liquidated Damages) and any other monetary obligations on all of the Notes to be due and payable. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes shall become due and payable without further action or notice. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest (including Cash Flow Participation Interest, if any)) if it A-I-7 determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Notes. The Authority is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Authority is required, within five Business Days upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default. 13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Authority or its Affiliates, and may otherwise deal with the Authority or its Affiliates, as if it were not the Trustee. 14. NO RECOURSE AGAINST OTHERS. Neither the Tribe nor any officer or office holder, employee, agent, representative, member of the Authority or the Tribe, as such, shall have any liability for any obligations of the Authority under this Note, the Indenture or the Collateral Documents, as applicable, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. 15. AUTHENTICATION. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 16. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 17. ADDITIONAL RIGHTS OF HOLDERS. In addition to the rights provided to Holders of Notes under the Indenture, Holders shall have all the rights set forth in the Collateral Documents. 18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Authority has caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. The Authority shall furnish to any Holder upon written request and without charge a copy of the Indenture and/or any of the Collateral Documents. Requests may be made to: Mohegan Tribal Gaming Authority 27 Church Lane Uncasville, Connecticut 06382 Attention: Roland Harris and Carlisle Fowler, Business Board Members, and Chief Ralph Sturges A-I-8 ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to - -------------------------------------------------------------------------------- (Insert assignee's soc. sec. or tax I.D. no.) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint ________________________________________________________ to transfer this Note on the books of the Authority. The agent may substitute another to act for him. - -------------------------------------------------------------------------------- Date: ----------- Your Signature: ----------------------------------- (Sign exactly as your name appears on the face of this Note) Signature Guarantee. A-I-9 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Authority pursuant to Section 4.10, 4.11, 4.16 or 4.28 of the Indenture, check the box below: / / Section 4.10 / / Section 4.11 / / Section 4.16 / / Section 4.28 If you want to elect to have only part of the Note purchased by the Authority pursuant to Section 4.10, Section 4.11, Section 4.16 or Section 4.28 of the Indenture, state the amount you elect to have purchased: $___________ Date: Your Signature: ----------- ------------------------------ (Sign exactly as your name appears on the Note) Tax Identification No.: ------------ Signature Guarantee. A-I-10 EXHIBIT A-II-1 (Face of Note) % SERIES B SENIOR SECURED NOTES due 2002 --- No. $__________ MOHEGAN TRIBAL GAMING AUTHORITY promises to pay to or registered assigns, the principal sum of Dollars on November 15, 2002. Interest Payment Dates: May 15, and November 15 Record Dates: May 1, and November 1 Dated: September __, 1995 MOHEGAN TRIBAL GAMING AUTHORITY By: ---------------------------------- Name: Title: By: ---------------------------------- Name: Title: (SEAL) This is one of the Notes referred to in the within-mentioned Indenture: - -------------------------------------- as Trustee By: ----------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- A-II-1 (Back of Note) % Series B Senior Secured Notes due 2002 --- [Unless and until it is exchanged in whole or in part for Notes in definitive form, this Note may not be transferred except as a whole by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository. Unless this certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) ("DTC"), to the issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or such other name as may be requested by an authorized representative of DTC (and any payment is made to Cede & Co. or such other entity as may be requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.](1) Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. INTEREST. Mohegan Tribal Gaming Authority (or any successor thereto as provided in the Indenture, the "Authority"), promises to pay interest at the rate of ____% per annum of the principal amount of this Note (the "Fixed Interest") from the Issuance Date to the date of payment of such principal amount of this Note. Installments of Fixed Interest shall become due and payable semi-annually in arrears on each May 15 and November 15 to the holder of record at the close of business on the preceding May 1 or November 1. Additionally, installments of accrued and unpaid Fixed Interest shall become due and payable with respect to any principal amount of this Note that matures (whether at stated maturity, upon acceleration, upon maturity of repurchase obligation or otherwise) upon such maturity of such principal amount of this Note. The Authority shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of Fixed Interest (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Fixed Interest on this Note shall be computed on the basis of a 360-day year, consisting of twelve 30-day months. Each installment of Fixed Interest shall be calculated to accrue from and including the most recent date to which Fixed Interest has been paid or provided for (or from and including the Issuance Date if no installment of Fixed Interest has been paid) to, but not including, the date of payment. In addition, this Note shall bear Cash Flow Participation Interest, calculated as described below, from the Commencement Date to the date of payment of this Note. Installments of accrued or deferred Cash Flow Participation Interest on this Note accrued through the Accrual Period last ended shall become due and payable semi-annually on each May 15 and November 15 after the Commencement Date to the holder of record at the close of business on the preceding May 1 or November 1, provided that no Cash Flow Participation Interest shall be payable with respect to any period prior to the earlier of the first day the Resort commences operations and October 31, 1996. Additionally, all installments of accrued or deferred Cash Flow Participation Interest shall become due and payable (and may not be further deferred) with respect to any principal amount of this Note that matures (whether at stated maturity, upon acceleration, maturity of repurchase obligation or otherwise) upon such maturity of such principal amount of this Note. - ------------------------- (1) This paragraph is to be included only if the Note is in global form. A-II-2 The Authority, at its option, may defer payment of all or a portion of any installment of Cash Flow Participation Interest then otherwise due if, and only to the extent that, (a) the payment of such portion of Cash Flow Participation Interest shall cause the Authority's Fixed Charge Coverage Ratio for the four consecutive fiscal quarters last completed prior to such interest payment date to be less than 2.0:1 on a pro forma basis after giving effect to the assumed payment of such Cash Flow Participation Interest but before giving effect to the payment of any interest on the Subordinated Notes which is then not payable in cash and (b) the principal of this Note corresponding to such Cash Flow Participation Interest has not then matured and become due and payable (at stated maturity, upon acceleration, upon maturity of repurchase obligation or otherwise). Cash Flow Participation Interest that is deferred shall become due and payable on the earlier of (i) the next succeeding interest payment date on which such Cash Flow Participation Interest is not permitted to be deferred, and (ii) upon the maturity of the corresponding principal of this Note (whether at stated maturity, upon acceleration, upon maturity of repurchase obligation or otherwise). No interest shall accrue on any Cash Flow Participation Interest deferred and which has not yet become due and payable. To the extent permitted by law, interest shall accrue on overdue Cash Flow Participation Interest at the same rate as the Fixed Interest plus one percent per annum. Each installment of Cash Flow Participation Interest shall be calculated to accrue (an "Accrual Period") from, but not including, the most recent date to which Cash Flow Participation Interest has been paid or provided for or through which Cash Flow Participation Interest had been calculated and deferred (or from and including the Commencement Date if no installment of Cash Flow Participation Interest has been paid, provided for or deferred) to, and including, either (a) the last day of the next Semi-annual Period if the corresponding principal of this Note has not become due and payable or (b) the date of payment if the corresponding principal of this Note has become due and payable (whether at stated maturity, upon acceleration, upon maturity of repurchase obligation or otherwise). With respect to each Accrual Period, Cash Flow Participation Interest shall accrue daily on the principal of this Note outstanding during such period as follows (except with respect to the Initial Period): (i) for each day during each month that ends during such Accrual Period and which month ends at least 25 days prior to the date of payment, an amount equal to 1/30 of the Monthly Cash Flow Participation Interest on this Note for such month until all of such Monthly Cash Flow Participation Interest has been accrued (and all of such month's Monthly Cash Flow Participation Interest on this Note shall be accrued by the last day of such month) and (ii) for any day in any remaining period, 1/30 of the prior month's Monthly Base Cash Flow Participation Interest on this Note; provided, however, that additional Cash Flow Participation Interest will cease accruing on any outstanding principal of this Note until the next succeeding September 30, if on any day, the Cash Flow Participation Interest on such principal amount of this Note accrued since the immediately preceding September 30 (excluding any deferred Cash Flow Participation Interest accrued prior to such September 30) exceeds the product of $________ million times such principal amount of this Note divided by $175,000,000. With respect to any principal amount of this Note during the Initial Period, the Cash Flow Participation Interest shall accrue daily in the amount of 1/180 of the Cash Flow Participation Interest for such principal in the next succeeding Semi-annual Period. Any reference in this Note to "accrued and unpaid interest" includes the amount of unpaid Cash Flow Participation Interest due and payable. "COMMENCEMENT DATE" means the earlier of (i) October 31, 1996 and (ii) the first day that the Resort becomes Operating. "CASH FLOW" shall have the meaning set forth in the Indenture. "CASH FLOW PARTICIPATION INTEREST" means, as of any payment date, Cash Flow Participation Interest on this Note accrued through the Accrual Period last ended (including any A-II-3 Accrual Period that ends on such payment date) and any Cash Flow Participation Interest previously accrued and the payment of which has been permitted to be deferred. "FIXED CHARGE COVERAGE RATIO" shall have the meaning set forth in the Indenture. "INITIAL PERIOD" means the period, if any, beginning on the Commencement Date and ending on the day prior to the first day that the Resort becomes Operating. "MONTHLY CASH FLOW PARTICIPATION INTEREST" means, with respect to any month and any principal amount of this Note, the product of ___% of the Authority's Cash Flow for such month times a fraction, the numerator of which is the principal amount outstanding on this Note and the denominator of which is $175,000,000. "SEMI-ANNUAL PERIOD" means each period that begins on April 1 and ends on the next succeeding September 30, or each period that begins on October 1 and ends on the next succeeding March 31. 2. METHOD OF PAYMENT. The Authority shall pay interest (including Cash Flow Participation Interest, if any) on the Notes (except defaulted interest) and Liquidated Damages to the Persons who are registered Holders of Notes at the close of business on April 30 or September 30 next preceding the Interest Payment Date, even if such Notes are cancelled after such record date and on or before such Interest Payment Date (the "Record Date"), except as provided in Section 2.12 of the Indenture with respect to defaulted interest or as provided with respect to Notes called for redemption after such record and on or before such Interest Payment Date. The Holder hereof must surrender this Note to a Paying Agent to collect principal payments. The Notes shall be payable as to principal, premium, if any, interest (including Cash Flow Participation Interest, if any) and Liquidated Damages at the office or agency of the Authority maintained for such purpose within or without the City and State of New York, or, at the option of the Authority, payment of interest (including Cash Flow Participation Interest, if any) and Liquidated Damages may be made by check mailed to the Holders at their addresses set forth in the register of Holders and provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium and Liquidated Damages on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Authority or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. 3. PAYING AGENT AND REGISTRAR. Initially, First Fidelity Bank (including any successor appointed under the Indenture, the "Trustee"), the Trustee under the Indenture, shall act as Paying Agent and Registrar. The Authority may change any Paying Agent or Registrar without notice to any Holder. The Authority may act in any such capacity. 4. INDENTURE AND COLLATERAL DOCUMENTS. The Authority issued the Notes under an Indenture dated as of September __, 1995 (as it may be amended from time to time, the "Indenture") among the Authority, the Tribe, and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb) as in effect on the Issuance Date. The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. The Notes are obligations of the Authority limited to $175 million in aggregate principal amount. The terms of the Indenture shall govern any inconsistencies between the Indenture and the Notes. The Notes are secured by certain collateral pursuant to the Collateral Documents referred to in the Indenture and which may be released pursuant to the terms thereof. A-II-4 5. OPTIONAL REDEMPTION. Except as set forth below, the Authority shall not have the option to redeem the Notes prior to November 15, 1999. From and after November 15, 1999, the Authority shall have the option to redeem the Notes, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest (including Cash Flow Participation Interest, if any) thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on November 15 of the years indicated below: YEAR PERCENTAGE - ---- ---------- 1999 . . . . . . . . . . . . . . . . . . . . . . 2000 . . . . . . . . . . . . . . . . . . . . . . 2001 . . . . . . . . . . . . . . . . . . . . . . Notwithstanding any other provisions of Article 3 of the Indenture, if any Gaming Regulatory Authority requires that a Holder or beneficial owner of the Notes be licensed, qualified or found suitable under any applicable gaming laws in order to maintain any gaming license or franchise of the Authority under any applicable gaming laws, and the Holder or beneficial owner fails to apply for a license, qualification or finding of suitability within 30 days after being requested to do so by such Gaming Regulatory Authority (or such lesser period that may be required by such Gaming Regulatory Authority) or if such Holder or beneficial owner is not so licensed, qualified or found suitable, the Authority has the right, at its option, (i) to require such Holder or beneficial owner to dispose of such Holder's or beneficial owner's Notes within 30 days of receipt of such notice of such finding by the applicable Gaming Regulatory Authority (or such earlier date as may be required by the applicable Gaming Regulatory Authority) or (ii) to call for redemption of the Notes of such Holder or beneficial owner at a redemption price equal to the lesser of the principal amount thereof or the price at which such Holder or beneficial owner acquired the Notes, together with, in either case, accrued and unpaid interest (including Cash Flow Participation Interest), if any, to the earlier of the date of redemption or the date of the finding of unsuitability by such Gaming Regulatory Authority, which may be less than 30 days following the notice of redemption if so ordered by such Gaming Regulatory Authority. The Authority shall not be required to pay or reimburse any Holder or beneficial owner of Notes who is required to apply for any such license, qualification or finding of suitability for the costs of the licensure or investigation for such qualification or finding of suitability. Such expenses shall be the obligation of such Holder or beneficial owner. 6. MANDATORY REDEMPTION. The Authority shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes. 7. REPURCHASE AT OPTION OF HOLDER. Under certain circumstances, as provided in the Indenture, the Authority may be required to purchase all or a portion of the Notes. Holders of Notes that are subject to an offer to purchase will receive an offer to purchase from the Authority prior to any related purchase date, and may elect to have such Notes purchased by completing the form entitled "Option of Holders to Elect Purchase" appearing below. A-II-5 8. NOTICE OF REDEMPTION. Notice of redemption shall be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest (including Cash Flow Participation Interest, if any) ceases to accrue on Notes or portions thereof called for redemption. 9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Authority may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Authority need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, it need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. 10. PERSONS DEEMED OWNERS. Prior to due presentment to the Trustee for registration of the transfer of this Note, the Trustee, any Agent and the Authority may deem and treat the Person in whose name this Note is registered as its absolute owner for the purpose of receiving payment of principal of and interest (including Cash Flow Participation Interest, if any) on this Note and for all other purposes whatsoever, whether or not this Note is overdue, and neither the Trustee, any Agent, nor the Authority shall be affected by notice to the contrary. The registered holder of a Note shall be treated as its owner for all purposes. 11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture, the Notes, the Collateral Documents or the Management Agreement may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes, and any existing default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes. Without the consent of any Holder of a Note, the Indenture, the Notes or the Collateral Documents may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to comply with Article Five or Article 10 of the Indenture, to provide for the assumption of the Authority's obligations to Holders of the Notes in case of a merger or consolidation pursuant to Article Five or Article 10 of the Indenture, to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, or to comply with the requirements of the Commission in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act or to enter into additional or supplemental Collateral Documents. 12. DEFAULTS AND REMEDIES. Events of Default include (as more fully described, and subject to, the terms and conditions of the Indenture as it may be amended from time to time): (i) default in payment of interest (including Cash Flow Participation Interest, if any) when due and payable on any Note for 30 days; (ii) default in payment of principal of or premium, if any on any Note when due; (iii) failure by the Authority to comply with Section 4.07, 4.09, 4.10, 4.11, 4.15, 4.16, 4.18, 4.28 or 5.01 of the Indenture; (iv) failure by the Authority or the Tribe for 60 days after written notice to it to comply with any of its other agreements in the Indenture, the Notes, or the Collateral Documents; (v) any default occurs under the Lease or any Collateral Document that continues beyond any applicable cure period or the Lease ceases to be in full force and effect; (vi) payment defaults under and the acceleration prior to express maturity of certain other indebtedness which aggregates $7.5 million or more; (vii) certain final judgments that remain unpaid, undischarged and unstayed if the aggregate of all such undischarged judgements exceeds A-II-6 $7.5 million; (viii) breach of representation or warranty in, or the repudiation with respect to, the Lease or any of the Collateral Documents; (ix) certain events of bankruptcy or insolvency; (x) revocation, termination, suspension or other cessation of effectiveness of any Gaming License which results in the cessation or suspension of gaming operations for a period of more than 90 consecutive days at the Resort; (xi) cessation of gaming operations for a period of more than 90 consecutive days at the Resort (other than as a result of a casualty loss) after the Resort becomes Operating; (xii) cessation of gaming operations for a period of more than 180 consecutive days as a result of a casualty loss except if the Authority is diligently pursuing reconstruction and opening of the Resort and such reconstruction and opening can be accomplished with the funds available to the Authority. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare the principal, premium, if any, interest (including all Cash Flow Participation Interest accrued or deferred) and any other monetary obligations on all of the Notes to be due and payable. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes shall become due and payable without further action or notice. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest (including Cash Flow Participation Interest, if any)) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest (including Cash Flow Participation Interest, if any) on, or the principal of, the Notes. The Authority is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Authority is required, within five Business Days upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default. 13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Authority or its Affiliates, and may otherwise deal with the Authority or its Affiliates, as if it were not the Trustee. 14. NO RECOURSE AGAINST OTHERS. Neither the Tribe nor any officer or office holder, employee, agent, representative, member of the Authority or the Tribe, as such, shall have any liability for any obligations of the Authority under this Note, the Indenture or the Collateral Documents, as applicable, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. 15. AUTHENTICATION. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 16. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 17. ADDITIONAL RIGHTS OF HOLDERS. In addition to the rights provided to Holders of Notes under the Indenture, Holders shall have all the rights set forth in the Collateral Documents. A-II-7 18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Authority has caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. The Authority shall furnish to any Holder upon written request and without charge a copy of the Indenture and/or any of the Collateral Documents. Requests may be made to: Mohegan Tribal Gaming Authority 27 Church Lane Uncasville, Connecticut 06382 Attention: Roland Harris and Carlisle Fowler, Business Board Members, and Chief Ralph Sturges A-II-8 ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to - -------------------------------------------------------------------------------- (Insert assignee's soc. sec. or tax I.D. no.) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Print or type assignee's name, address and zip code) and irrevocably appoint ________________________________________________________ to transfer this Note on the books of the Authority. The agent may substitute another to act for him. - -------------------------------------------------------------------------------- Date: ---------- Your Signature: ------------------------------ (Sign exactly as your name appears on the face of this Note) Signature Guarantee. A-II-9 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Authority pursuant to Section 4.10, 4.11, 4.16 or 4.28 of the Indenture, check the box below: / / Section 4.10 / / Section 4.11 / / Section 4.16 / / Section 4.28 If you want to elect to have only part of the Note purchased by the Authority pursuant to Section 4.10, Section 4.11, Section 4.16 or Section 4.28 of the Indenture, state the amount you elect to have purchased: $___________ Date: Your Signature: ---------- ----------------------------------- (Sign exactly as your name appears on the Note) Tax Identification No.: ------------ Signature Guarantee. A-II-10 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EXHIBIT B CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF DEBENTURES Re: __% Senior Secured Notes due 2002 of Mohegan Tribal Gaming Authority. This Certificate relates to $____ principal amount of Notes held in book-entry or *________ definitive form by ____________________ (the "Transferor"). The Transferor*: / / has requested the Trustee by written order to deliver in exchange for its beneficial interest in the Global Note held by the Depository a Note or Notes in definitive, registered form of authorized denominations in an aggregate principal amount equal to its beneficial interest in such Global Note (or the portion thereof indicated above); or / / has requested the Trustee by written order to exchange or register the transfer of a Note or Notes. In connection with such request and in respect of each such Note, the Transferor does hereby certify that Transferor is familiar with the Indenture relating to the above captioned Notes and as provided in Section 2.06 of such Indenture, the transfer of this Note does not require registration under the Securities Act (as defined below) because:* / / Such Note is being acquired for the Transferor's own account, without transfer (in satisfaction of Section 2.06(a)(ii)(A) or Section 2.06(d)(i)(A) of the Indenture). / / Such Note is being transferred to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act of 1933, as amended (the "Securities Act")) in reliance on Rule 144A (in satisfaction of Section 2.06(a)(ii)(B), Section 2.06(b)(A) or Section 2.06(d)(i)(B) of the Indenture) or pursuant to an exemption from registration in accordance with Rule 904 under the Securities Act (in satisfaction of Section 2.06(a)(ii)(B) or Section 2.06(d)(i)(B) of the Indenture.) - ------------------------- * Check applicable box. B-1 EX-10.5 4 EXHIBIT 10.5 EXHIBIT 10.5 LAND LEASE -C-COPYRIGHT 1995 BY THE MOHEGAN TRIBAL GAMING AUTHORITY, TRADING COVE ASSOCIATES AND SUN INTERNATIONAL HOTELS LIMITED. REPRODUCTION OF THE MATERIAL HEREIN OR SUBSTANTIAL QUOTATION OF ITS PROVISIONS WITHOUT PERMISSION VIOLATES THE COPYRIGHT LAWS OF THE UNITED STATES AND WILL BE SUBJECT TO LEGAL PROSECUTION. WARNING: UNLICENSED PHOTOCOPYING VIOLATES U.S. COPYRIGHT LAWS. Execution Copy LAND LEASE THIS LAND LEASE (this "Lease") is entered into this 29th day of September 1995, between the MOHEGAN TRIBE OF INDIANS OF CONNECTICUT, a federally recognized Indian tribe (as lessor or landlord under this Lease being hereinafter referred to as the "Tribe"), and the MOHEGAN TRIBAL GAMING AUTHORITY, an instrumentality of the Tribe (as lessee or tenant under this Lease being hereinafter referred to as the "Authority"). This Lease of land constituting the initial reservation of the Tribe as prescribed by 25 U.S.C. Section 1775c is being entered into by the Tribe pursuant to and in accordance with the provisions of 25 U.S.C. Section 415, 25 C.F.R. Section 162 and the Indian Gaming Regulatory Act, 25 U.S.C. Section 2701 et seq. and also pursuant to the authority contained in Article V, Section 1 and Article XIII, Section 1 of the Tribe's Constitution and Ordinance No. 95 - 7/15 - 1 of the Tribal Council, and by the Authority in reliance on the provisions of Article XIII, Section 3 of the Tribe's Constitution, for the purpose of enabling the Authority to obtain financing by the issuance of certain debt instruments to be secured by a leasehold mortgage on the Premises, as hereinafter defined, thereby permitting the Authority to construct, equip and operate a gaming facility, resort, hotel and other related developments (the "Project"), which will promote the economic development and general welfare of the Tribe. 1. PREMISES. The Tribe, in consideration of the rents reserved and the terms, conditions, covenants and agreements herein contained, hereby leases to the Authority, and the Authority hereby hires from the Tribe, the land located in the Town of Montville, County of New London, and State of Connecticut, described on Exhibit A and depicted on Exhibit B attached to this Lease, together with all rights which apply to and/or benefit the land, whether now or hereafter acquired, including all rights, privileges, tenements, licenses, hereditaments, rights-of-way, easements, utility use, appendages and appurtenances appertaining thereto, all betterments, additions, alterations, substitutions, replacements and revisions thereof and thereto, and all proceeds and products of the foregoing, but subject to all rights-of-way, easements, restrictions and encumbrances of record, and the Improvements (as such term is defined in Section 18 hereof) (collectively, the "Premises"). By entering into this Lease, the Authority accepts the Premises in the condition they are in as of the date of this Lease, as is, without warranty or representation of any kind as to the condition or quality of the Premises. The Authority represents that the Premises, the improvements thereon, subsurface conditions, and the present uses and non-uses thereof, 1 have been examined by the Authority, and the Authority accepts the same, without recourse to the Tribe except as expressly provided in this Lease, in the condition and state in which they or any of them now are, without representation or warranty, express or implied in fact or by law, as to the nature, condition or usability thereof or as to the use or uses to which the Premises or any part thereof may be put (except as set forth in this Lease) or as to the prospective income from, and expenses of operation of, the Premises. The Tribe warrants that the Project constitutes a permitted use of the Premises under the laws of the Tribe. The Premises are leased together with and subject to the following: (a) The non-exclusive right of the Authority to construct, install, maintain, repair, replace, use and operate, in, on, over and across the Premises and any adjoining lands now or hereafter owned by, or in trust for, the Tribe, including any portion of the Premises as to which this Lease is terminated by the Tribe in accordance with Section 2 (d) hereof, such roads as may be required for reasonable access to and from the Premises, subject to the approval of the Secretary, to the extent required by law. The Authority shall construct and maintain at all times during the term of this Lease one or more paved roads providing such access to and from the Premises as may be reasonably required in order for the Authority to operate the Premises for its intended purposes. (b) The non-exclusive right of the Authority to acquire, construct, install, maintain, repair, replace, use and operate, in, on, over and across the Premises and any adjoining lands now or hereafter owned by, or in trust for, the Tribe, including any portion of the Premises as to which this Lease is terminated by the Tribe in accordance with Section 2 (d) hereof, such electric power, water, sanitary and storm sewer, and other utilities lines serving the Premises as may be reasonably required in order for the Authority to operate the Premises for its intended purposes, subject to the approval of the Secretary, to the extent required by law, provided that such utilities lines shall be located, designed and constructed in accordance with plans approved in advance by the Tribe, which approval shall not be unreasonably withheld or delayed. 2. RIGHTS RESERVED TO THE TRIBE. In addition to any other rights of the Tribe, the Tribe reserves the following rights with respect to the Premises: (a) The non-exclusive right to use and operate, in, on, over and across the Premises, the access roads on the Premises, 2 together with the right to construct, install, maintain, repair, replace, use and operate drives, rights-of-way, and/or roadways on the Premises connecting to such access roads to serve any property which may now or hereafter be owned by, or in trust for, the Tribe, including any portion of the Premises as to which this Lease is terminated by the Tribe in accordance with Section 2 (d) hereof, so long as none of the foregoing rights of the Tribe unreasonably interfere with the intended uses of the Premises by the Authority. (b) The non-exclusive right to use and operate, in, on, over and across the Premises, the utilities lines serving the Premises to serve any property which may now or hereafter be owned by, or in trust for, the Tribe, including any portion of the Premises as to which this Lease is terminated by the Tribe in accordance with Section 2 (d) hereof, together with the nonexclusive right to construct, install, maintain, repair, replace, use and operate, in, on, over and across the Premises, such electric power, water, sanitary and storm sewer, and other utilities serving such other property of the Tribe as may be reasonably required in connection with the development of such lands by the Tribe, provided that such utilities shall be located, designed and constructed so as to avoid unreasonable interference with the Authority's use of the Premises for its intended purposes as set forth in this Lease, and provided that the Tribe promptly restores any portion of the Premises disturbed by the construction of such utilities. (c) The right, at any reasonable times during the term of this Lease, and with reasonable notice to the Authority, or, at any time in the event of an emergency, to enter upon the Premises, to inspect the same and any improvements erected and placed thereon, and all activities occurring thereon, so long as such inspection does not unreasonably interfere with the Authority's operations on and uses of the Premises as permitted by this Lease, and, at the Tribe's option, to perform any obligations of the Authority hereunder if the Authority fails to do so after reasonable prior notice to the Authority and all Permitted Mortgagees, as hereinafter defined, in accordance with this Lease. (d) The right, subject to the provisions and limitations of any Permitted Mortgage, to terminate this Lease as to any portion of the Premises, provided that such released portion shall not be used to conduct any gaming operations. Upon any such termination, all other terms and provisions in the Lease shall remain in full force and effect. The Tribe and the Authority shall execute an amendment to this Lease to evidence the portion of the Premises which shall remain subject to this Lease. (e) The right to grant utility and access easements to others over, under and across the Premises, provided that same do 3 not unreasonably interfere with the Authority's use of the Premises for its intended purposes as set forth in this Lease. 3. TERM OF LEASE. The term of this Lease shall be twenty- five (25) years, commencing on the later of August 1, 1995, or the date on which this Lease is approved by the Secretary of the Interior or his authorized representative (the "Secretary"), provided, however, that if such approval is not obtained on or before August 1, 1996, then this Lease shall be void and of no further force or effect, unless otherwise agreed in writing by the Tribe and the Authority. The commencement date of this Lease shall be confirmed by the Authority and the Tribe in an amendment to this Lease substantially in the form of Exhibit C attached hereto. Provided that no Event of Default has occurred and is continuing at the time of exercise of the rights provided in this Section 3, the Authority shall have the option to extend the term of this Lease for one (1) additional twenty-five (25) year period, commencing upon the expiration of the initial term, by giving written notice thereof to the Tribe no more than two (2) years nor less than one (1) year prior to the expiration of the initial term. If the Authority exercises its option to extend, then all of the terms and conditions of this Lease shall remain in effect throughout such extension period, except that the Authority shall have no further option to extend this Lease beyond the end of such extension period. References to the "term of this Lease" or "Lease term" shall mean the initial term and, if the Authority exercises the option to extend in accordance with this Lease, the extension period. 4. RENT. The Mohegan Tribal Gaming Authority is an instrumentality of Tribal government. The construction and operation of the Project by the Mohegan Tribal Gaming Authority, on behalf of the Tribe, constitutes a public purpose of the Tribe. Pursuant to 25 C.F.R. Section 162.5(b)(2), the Tribe has the authority, with the consent of the Secretary, to lease tribal land at a nominal rental for public purposes to agencies of Tribal government, or for purposes of subsidization for the benefit of the Tribe. In consideration of the possession, use and occupancy of the Premises as set forth herein, the Authority and its successors and assigns shall pay, in addition to payments of all taxes and other expenses set forth in Section 15 of this Lease and all other obligations provided for hereunder, annual rent ("Annual Rent") to the Tribe as follows: (a) During any period when the Mohegan Tribal Gaming Authority or another agency or instrumentality of the Tribe is the tenant under this Lease, the Annual Rent shall be $1.00 per year, 4 payable in advance on the first day of the Lease term and on each anniversary thereof. (b) During any period when any party other than the Mohegan Tribal Gaming Authority or another agency or instrumentality of the Tribe is the tenant under this Lease, the Annual Rent shall be equal to eight percent (8%) of the tenant's Gross Revenues from the Premises, payable in arrears on the twenty- fifth (25th) day of each calendar month for the prior calendar month in monthly installments, based on the Gross Revenues for the prior calendar month. For purposes of this paragraph (b), "Gross Revenues" shall mean gross revenues of the tenant from all sources in connection with its operations at the Premises. Within 90 days after the end of each calendar year, an adjustment shall be made, as necessary, so that the total Annual Rent paid by the tenant for the preceding calendar year will be equal to the above percentage of Gross Revenues for such calendar year. 5. USE OF PREMISES. The Authority shall use the Premises solely for the construction and operation of the Project and for no other purpose unless approved in advance by the Tribe in writing; provided, however, that following foreclosure of any Mortgage on the Authority's interest in this Lease, or any transfer of such interest in lieu of foreclosure to the holder of any such Mortgage, the Premises may be used for any lawful purpose, subject to applicable building, zoning and other governmental regulations, EXCEPT THAT IN NO EVENT SHALL ANY NON-INDIAN PERMITTED MORTGAGEE OR TRANSFEREE OF THE LEASEHOLD ESTATE CREATED BY THIS LEASE CONDUCT GAMING OPERATIONS ON THE PREMISES. 6. PERMITTED MORTGAGES ONLY. The Authority shall not mortgage, pledge, or encumber the leasehold estate created by this Lease or any portion thereof or interest therein except through a Permitted Mortgage. For purposes of this Lease, a "Permitted Mortgage" shall be, and a "Permitted Mortgagee" shall be the holder of, (i) that certain Open-End Construction-Permanent Leasehold Mortgage Deed, Assignment of Leases and Rents and Security Agreement of even date herewith between the Authority, as Mortgagor and First Fidelity Bank, as Mortgagee, securing, among other things, the obligations of the Authority under those certain Senior Secured Notes (the "Senior Secured Notes") in the aggregate principal amount of $175,000,000 and under that certain Indenture of even date herewith between the Authority, as issuer, and First Fidelity Bank, as trustee, (the "Indenture"), or (ii) a mortgage: (a) which shall provide, among other things, that in the event of default in any of the mortgagor's obligations thereunder, the Permitted Mortgagee shall provide written notice to the Tribe 5 of such fact and the Tribe shall have the right (but not the obligation) within 60 days after its receipt of such notice (or if such default cannot with diligence be cured within such 60 day period, within a reasonable time thereafter provided that the Tribe proceeds promptly to cure the same and thereafter prosecutes the curing of such default with diligence), to cure such default in the Authority's name and on the Authority's behalf, provided that current payments due the holder during such 60 day period (or such lesser time as may have been required to cure such default) are made to the holder, and shall further provide that so long as said current payments due are paid to the holder as required under the Permitted Mortgage, said holder shall not have the right, unless such default shall not have been cured within such time, to accelerate the note secured by such Permitted Mortgage or to foreclose under the Permitted Mortgage on account of such default; (b) which shall provide, among other things, that after the expiration of such cure period, if the Permitted Mortgagee intends to foreclose under the Permitted Mortgage, the Permitted Mortgagee shall first notify the Tribe of its intention to do so and the Tribe shall have the right, but not the obligation upon notifying the Permitted Mortgagee within sixty (60) days of receipt of said notice from the Permitted Mortgagee, to purchase the note and all of the instruments securing the note for the amount of the outstanding indebtedness (including interest, principal, premiums and make-whole obligations in respect thereof), together with all reasonable costs and expenses due to the Permitted Mortgagee in accordance with such instruments, provided that such purchase must be consummated and payment made in full within ninety (90) days after the Permitted Mortgagee gives notice of its intent to foreclose, or the Tribe shall be deemed to have waived its right to purchase; and (c) which shall provide that such Permitted Mortgage is and shall be subject and subordinate to any and all access and utility easements granted by the Tribe pursuant to Section 2 of this Lease. Any Permitted Mortgagee shall have, without the requirement of consent by the Tribe, the right, but not the obligation, to enforce and preserve such Permitted Mortgagee's rights under any Permitted Mortgage and any other agreement entered into in connection therewith. 7. AMENDMENT OF LEASE. Any material amendments to this Lease shall be subject to the prior written approval of each Permitted Mortgagee, which approval shall not be unreasonably withheld or delayed. For purposes of this Lease, "material" amendments shall mean any amendment which effects changes in rent, the term of the Lease, a termination of Lease and any other 6 amendments likely to adversely affect the value of the Premises and other collateral under a Permitted Mortgage or the rights and remedies of the Permitted Mortgagee or which would increase the obligations of the Permitted Mortgagee if the Permitted Mortgagee were to foreclose its Permitted Mortgage. The Authority and Tribe shall execute such further amendments to this Lease, as may be reasonably required by a Permitted Mortgagee or prospective Mortgagee to carry out the provisions of this Lease. So long as any indebtedness or other obligation secured by said Permitted Mortgage shall remain unsatisfied and not fully discharged, the Tribe shall not without the prior written consent of said Permitted Mortgagee being first had and obtained (a) accept any surrender of the Premises or any portion thereof or termination of this Lease, whether voluntary or involuntary or upon a failure of any condition under this lease, or (b) exercise or accept the exercise of any option or right of the Authority to terminate this Lease or to purchase the Tribe's reversionary interest hereunder. The provisions of this paragraph shall not prevent the Tribe from exercising its rights and remedies provided in this Lease or by law upon the occurrence of an Event of Default, subject to the rights of any Permitted Mortgagee as provided elsewhere in this Lease. 8. CONSENT TO ACQUISITION OF LEASEHOLD INTEREST BY PERMITTED MORTGAGEE; SUBSEQUENT ASSIGNMENT AND SUBLETTING. The Tribe and the Secretary (upon approval of this Lease by the Secretary) hereby consent to the assignment and transfer by the Authority of its interest in this Lease to any Permitted Mortgagee, either through foreclosure of the Permitted Mortgage or by a transfer in lieu of foreclosure, or by exercise of any other right or remedy granted by the applicable Permitted Mortgage, or to any purchaser at a foreclosure or other sale. After an event of default under the applicable Permitted Mortgage, if the Permitted Mortgagee succeeds to the Authority's interest under this Lease through foreclosure or transfer in lieu of foreclosure or otherwise, as provided above, then such Permitted Mortgagee shall have the right to assign this Lease or sublet the Premises from time to time, in whole or in part, without obtaining the consent of the Tribe or the Secretary. Any such assignee shall assume in writing all of the Authority's obligations under this Lease and shall have the rights of, and be substituted for, the Authority. Upon any such assumption by a subsequent assignee, the Permitted Mortgagee shall be automatically released from all liability, if any, hereunder. Following the occurrence of an event of default under any Permitted Mortgage, and prior to any foreclosure, transfer in lieu of foreclosure or other disposition of the Authority's interest in this Lease, the Permitted Mortgagee shall have the right, to the extent provided in the Permitted Mortgage and upon giving written notice thereof to the Tribe, to take possession of and sublease all or any part of the Premises on such terms as the Permitted Mortgagee may deem reasonable for the account of the Authority, and to exercise, in 7 the name of the Authority, any and all other rights or privileges granted to the Authority pursuant to this Lease. In the event the Permitted Mortgagee, in the liquidation of its Permitted Mortgage, should acquire and sell the leasehold interest in this Lease and take a Permitted Mortgage to secure part or all of the sale price, the provisions of this Lease shall apply to such Permitted Mortgage. Nothing herein shall permit the Permitted Mortgagee or any assignee, sublessee, purchaser, or transferee of the Permitted Mortgagee to transfer any interest in this Lease or its leasehold interest in the Premises to any person or entity engaged by the Tribe or the Authority to manage a gaming enterprise under the provisions of the Indian Gaming Regulatory Act, 25 U.S.C. Sections 2701-2721 (1994). 9. PERMITTED MORTGAGEE'S RIGHT TO CURE DEFAULT. Any Permitted Mortgagee shall have the right, but not the obligation, without requirement of consent by the Tribe to: (a) cure any default under this Lease within any applicable cure period, and to timely perform any obligation required hereunder, and any such cure or performance by Permitted Mortgagee shall be effective as if the same had been undertaken and performed by the Authority; and (b) acquire and convey, assign, transfer and exercise any right, remedy or privilege granted to the Authority by this Lease or otherwise by law, subject to the provisions, if any, in said Permitted Mortgage limiting any exercise of any such right, remedy or privilege; and (c) rely upon and enforce any provisions of this Lease to the extent that such provisions are for the benefit of a Permitted Mortgagee. In addition to the rights set forth in Section 9(a) - (c), in the event of default in any of the Authority's obligations hereunder, the Tribe shall provide written notice to the Permitted Mortgagee of such fact and the Permitted Mortgagee shall have the right (but not the obligation) within sixty (60) days after its receipt of such notice (or if such default cannot with diligence be cured within such sixty (60) day period, within a reasonable time thereafter provided that the Permitted Mortgagee proceeds promptly to cure the same and thereafter prosecute the curing of such default with diligence), to cure such default in the Authority's name and on the Authority's behalf, provided that current payments due the Tribe during such sixty (60) day period (or such lesser time as may have been required to cure such default) are made to the Tribe. 8 Notwithstanding anything to the contrary contained in this Lease, so long as any indebtedness or other obligation secured by a Permitted Mortgage shall remain unsatisfied and not fully discharged, upon the occurrence of an Event of Default by the Authority hereunder, the Tribe shall not (i) terminate this Lease nor the Authority's right of possession of the Premises; (ii) exercise any right of reentry provided in this Lease or otherwise by law; (iii) take possession of and/or relet the Premises or any portion thereof or (iv) enforce any other right or remedy which may affect the rights of any Permitted Mortgagee under the applicable Permitted Mortgage unless (A) the default consists of the Authority's failure to pay any sum of money expressly required to be paid by the Authority pursuant to this Lease (a "Monetary Default"), and (B) such Permitted Mortgagee has failed to cure the Authority's Monetary Default pursuant to this Lease; provided, however, that upon expiration of the term of this Lease, including any option period, the Tribe shall have the right to reenter and take possession of the Premises. A Permitted Mortgagee shall not, as a condition to the exercise of its rights hereunder, be required to assume personal liability for the payment and performance of the obligations of the Authority hereunder. Any such payment or performance or other act by a Permitted Mortgagee hereunder shall not be construed as an agreement by such Permitted Mortgagee to assume such personal liability except to the extent such Permitted Mortgagee actually becomes the lessee hereunder; provided, however that in the event the Permitted Mortgagee transfers the leasehold estate to a purchaser of the same any such transferee shall be required to enter into a written agreement assuming such personal liability and upon any such assumption the Permitted Mortgagee shall automatically be released from personal liability hereunder. 10. ASSIGNMENTS AND SUBLETTING. Except as otherwise provided in this Lease and subject to any restrictions of the Authority in a Permitted Mortgage, the Authority shall not assign, pledge, encumber, hypothecate or transfer all or any part of the Authority's interest in this Lease, whether voluntarily or involuntarily, by operation of law or otherwise, and shall not sublease all or any portion of the Premises, without the prior written consent of the Tribe (and, if required by law, the Secretary), which consent shall not be unreasonably withheld or delayed. The Secretary's consent shall not be required for any sublease. The Authority may, without obtaining the consent of the Tribe or the Secretary, sublease all or any portion of the Premises to any entity directly or indirectly owned or controlled by the Tribe. 11. COMPLIANCE WITH LAW. The Authority shall not use or cause or permit to be used any part of the Premises for any conduct 9 or purpose which constitutes a nuisance or waste of the Premises or which violates any applicable law, regulation, code or ordinance, or any order of any court or governmental authority having jurisdiction over the Premises. The Authority shall promptly comply, at its expense, with all laws, regulations, codes, ordinances and governmental requirements relating to or affecting the Premises or the Authority's use or occupancy thereof. All applicable Tribal licensing, permitting, and other approval requirements (including, but not limited to building codes and permits) that must be adhered to by the Authority under tribal law in order for the Authority to utilize the Premises for the purposes set forth in this Lease are identified in Exhibit D hereto. The Tribe shall not impose any additional requirements that would materially and adversely affect the Authority's use of the Premises for the purposes set forth in this Lease. 12. HAZARDOUS SUBSTANCES. The Authority covenants and hereby agrees that the Authority shall not, during the term of this Lease, permit toxic or hazardous substances or wastes, pollutants or contaminants, including, without limitation, asbestos, urea formaldehyde, the group of organic compounds known as polychlorinated biphenyls, petroleum products including gasoline, fuel oil, crude oil and various constituents of such products, any hazardous substance as defined in the Comprehensive Environmental Response, Compensation and Liability Act 42 U.S.C. Sections 9601 et seq., and any other substance similarly defined or identified in any other federal, state or tribal laws, rules or regulations relating to the protection of the environment (collectively, "Hazardous Substances"), to be generated, treated, stored, transferred from, discharged, released or disposed of, or otherwise placed, deposited in or located on, used, transported over, or otherwise entered on or into the Premises, except in accordance with all applicable state, federal, local and tribal laws, regulations, rules, codes and ordinances relating to the protection of the environment ("Environmental Laws"); nor shall the Authority undertake any activity on the Premises that would cause or contribute to the Premises becoming a treatment, storage or disposal facility for Hazardous Substances within the meaning of any applicable Environmental Laws. The foregoing provision shall not be deemed to prohibit the incidental storage or use of Hazardous Substances in the ordinary course of the Authority's business, provided such storage or use is in compliance with all applicable Environmental Laws. 13. EXCULPATION. Neither the Tribe nor the United States, nor their officers, agents or employees shall be liable to the Authority or its successors, assignees or subtenants, including any Permitted Mortgagee, for any loss, damage, or injury of any kind whatsoever to the person or property of the Authority or any 10 sublessee, or any other person, caused by any use or condition of the Premises or by any defect in any structure erected thereon, or arising from any accident, fire or other casualty on the Premises. 14. INDEMNIFICATION OF TRIBE. The Tribe shall not be liable, and the Authority shall defend, indemnify and hold the Tribe, its members, officers, agents and employees, harmless against all liability, claims of liability, obligations, suits, damages, penalties, claims, costs, charges, and expenses, including attorney's fees, that may be imposed upon the Tribe by reason of: (a) Any work or things done in, on or about the Premises and/or the Improvements, as hereinafter defined, or any part thereof; (b) Any use, nonuse, possession, occupation, condition, operation, or maintenance of the Premises and/or the Improvements; (c) Any negligence on the part of the Authority or any of the Authority's agents, contractors, servants, employees, subtenants, licensees, or invitees; (d) Any accident, injury, or damage to any person or property occurring in, on, or about the Premises and/or the Improvements or any part thereof; (e) Any failure by the Authority to perform or comply with any of the covenants, agreements, terms or conditions contained in this Lease on its part to be performed or complied with; and (f) Any tax attributable to the execution, delivery, or recording of this Lease or any modification thereof. The Authority's obligation to defend the Tribe hereunder shall be by counsel reasonably acceptable to the Tribe, and "attorney's fees" shall include both reasonable attorneys' fees and paralegals' fees and expenses. In the event that any action or proceeding is brought against the Tribe, its members, officers, agents or employees by reason of any of the matters set forth in parts (a) through (f) above, then the Authority upon notice from the Tribe, shall protect and defend at the Authority's sole expense such action or proceeding by counsel reasonably satisfactory to the Tribe, and in the event the Authority shall fail to protect and defend the Tribe, its members, officers, agents or employees, then the Tribe may undertake to protect and defend itself, its members, officers, agents or employees and the Authority shall pay to the Tribe, upon demand, all costs and expenses incurred by the Tribe in connection therewith, including, without limitation, all attorneys' fees and expenses. The provisions of this Section 14 are for the 11 sole benefit of the Tribe, and may not be relied on or enforced by any other party. The obligations of the Authority under this Section 14 (i) shall be personal to the Mohegan Tribal Gaming Authority and independent of the demise of the Premises, (ii) shall not run with the land or the leasehold estate hereunder, (iii) need not be assumed by any person or entity who succeeds to the tenant's interest hereunder (including without limitation any Permitted Mortgagee or any purchaser upon foreclosure of any Permitted Mortgage), (iv) shall not, if unpaid, be collectible from any property subject to a Permitted Mortgage, or any proceeds thereof, or from any Permitted Mortgagee or its successors or assigns, and (v) shall not, if unpaid, constitute a default under this Lease or grounds for termination of this Lease. 15. PAYMENT OF TAXES AND OTHER EXPENSES. The rent provided for in Section 4 of this Lease shall be fully "net" to the Tribe. Accordingly, the Authority shall pay, in addition to the payments of Annual Rent, all costs of owning, operating, constructing, maintaining, repairing, replacing and insuring the Premises and any improvements located thereon, all charges for water, sewer and other utilities, services furnished to the Premises, and all fees, taxes, assessments and other charges which may be levied against the Premises or the Authority's interest in the Premises by the Tribe or any other governmental authority having the power to levy such fees, taxes, assessments or other charges, and which are payable for and with respect to the term of the Lease. All applicable Tribal taxes, fees, assessments and other charges payable by the Authority to the Tribe or levied against the Premises that are required for the Authority, to use the Premises for the purposes set forth in this Lease are listed in Exhibit E hereto. The Tribe shall not impose any new or additional taxes, fees, assessments or other charges on the Premises or the Authority, except for reasonable, nondiscriminatory charges for utilities or other governmental services supplied by the Tribe and used by the Authority or the Premises. Nothing contained in this Lease is intended or shall be construed to constitute a waiver by the Tribe or the Authority of any applicable laws that provide tax immunity to trust or restricted Tribal property or to any interest therein or income derived therefrom. 16. AUTHORITY'S REPAIR OBLIGATIONS; INSURANCE. The Authority will, at its Expense, maintain, repair and replace, whether as a result of casualty, or otherwise, the Premises and all Improvements now located or hereafter constructed thereon pursuant to the terms of this Lease in order that the same is in good, safe and habitable condition throughout the term of this Lease, ordinary wear and tear excepted and in any event in a condition satisfactory to the Tribe 12 in its reasonable discretion. The Authority shall maintain or cause the manager of the operations at the Premises to maintain adequate "all-risk" property insurance in an amount equal to the full replacement value of all buildings and other improvements and fixtures located on the Premises against loss throughout the term of this Lease. In addition, the Authority shall maintain or cause the manager of the operations at the Premises to maintain comprehensive general liability insurance against claim for bodily injury, death or property damage occurring in, on or about the Premises with a combined single limit of at least $2,000,000 per occurrence, together with an umbrella policy of liability insurance providing additional coverage of at least $5,000,000 per occurrence. All such policies of insurance shall name the Tribe and any Permitted mortgagee as additional insureds and loss payees, as appropriate, shall provide for 30 days' advance written notice to the Tribe and any such Permitted Mortgagee prior to any modification or cancellation thereof, and shall be in form and substance, and issued by insurance companies, reasonably satisfactory to the Tribe and such Permitted Mortgagee. Subject to the terms of any Permitted Mortgage, which terms shall be approved in writing by the Tribe, any insurance proceeds received as a result of damage or destruction shall be applied first to the cost of restoration of any Improvements located on the Premises, subject to such reasonable controls as may be required by the Tribe, and the remainder, if any, shall be paid to the Authority or to any Permitted Mortgagee, to the extent required by such Permitted Mortgage. The Authority shall provide the Tribe with a duplicate original of each of the Authority's insurance policies and renewals thereof prior to commencement of the Lease term and prior to expiration of any existing policy. 17. ALTERATIONS. No building or other improvement shall be constructed or materially altered by the Authority, and no grading, excavating or other construction activity shall be commenced, on the Premises unless complete and final plans and specifications for such construction or alteration have been submitted to and approved by the Tribe. Any such approval of the Tribe shall not be unreasonably withheld or delayed. Any such construction or alteration shall be commenced and completed promptly and in a good and workmanlike manner using new, top quality materials and in compliance with all applicable permits, authorizations and building, zoning and other laws and ordinances and the requirements of all Permitted Mortgagees. 18. SURRENDER OF POSSESSION; OWNERSHIP OF IMPROVEMENTS. The Authority agrees peaceably to surrender possession and occupancy of the Premises to the Tribe at the termination or expiration of this Lease. Any and all buildings, improvements, and related facilities now existing or hereafter constructed on the Premises, including utilities constructed or installed in or on the Premises by or at 13 the expense of the Authority, and all repairs, remodeling or additions thereof or thereto (collectively, the "Improvements") shall, upon such construction and/or installation, become a part of the Premises leased to the Authority pursuant to the terms of this Lease, and all references in this Lease to "Premises" shall from and after such construction and/or installation include the Improvements. Any and all equipment, furniture, Trade Fixtures and other personal property of the Authority used in connection with the use and operation of the Premises and the Improvements (the "Equipment"), shall be and remain the separate, personal property of the Authority throughout the term of this Lease. The Authority may remove all or any part of the Equipment upon termination or expiration of this Lease, provided that the Authority shall repair and be responsible for any damage done to the Premises by such removal. If any Equipment which the Authority has the right to remove is not removed within 90 calendar days after the date of expiration or termination of this Lease, and provided that the Tribe does not interfere with such timely removal, such property shall automatically become the property of the Tribe and may be used, sold, transferred or otherwise disposed of by the Tribe in any manner, in the Tribe's sole discretion, and at the expense of the Authority. 19. DEFAULT. The occurrence of any of the following events shall constitute an Event of Default by the Authority under this Lease: (a) the Authority fails to pay when due any amount required to be paid by the Authority under this Lease (except Section 14 hereof) and such failure continues for 30 days after written notice thereof from the Tribe to the Authority and any Permitted Mortgagee; or (b) the Authority fails to observe or perform any other covenant or obligation of the Authority under this Lease (except Section 14 hereof) and such failure continues for 60 days (or, if such default cannot reasonably be cured within 60 days, for such longer period reasonably required to cure such default provided that the Authority has within such 60 days promptly commenced curing such default and diligently pursues such cure to completion) after written notice from the Tribe to the Authority and any Permitted Mortgagee; or (c) the Authority pledges, encumbers, hypothecates or conveys its interest in this Lease or any part thereof to anyone in violation of the terms of this Lease. Notwithstanding the foregoing, if the Authority, in connection with a good faith dispute, deposits funds in escrow or obtains a bond that prevents any foreclosure of the leasehold estate, then 14 the Authority shall not be in default hereunder. 20. DISPUTE RESOLUTION AND CONSENT TO SUIT. The Tribe does not consent to the enforcement, levy or other execution of any judgment for money or other damages against any assets, real or personal, of the Tribe, except that the Tribe and the Authority each do herewith consent to the enforcement and execution of any judgment, whether obtained as a result of judicial, administrative, or arbitration proceedings, against any assets of the Authority, in connection with any judicial, administrative or arbitration proceeding commenced for purposes of interpreting or enforcing the obligations of the Tribe or the Authority pursuant to this Lease. Subject to the foregoing, the Tribe and the Authority each does herewith waive its sovereign immunity from unconsented suit whether such suit be brought in law or in equity, or in administrative proceedings or proceedings in arbitration, to permit the commencement, maintenance, and enforcement of any action, by any person with standing to maintain an action, to interpret or enforce the terms of this Lease, and to enforce and execute any judgment resulting therefrom. Notwithstanding any other provision of law or canon of construction, the Tribe and the Authority each intend this waiver to be interpreted liberally to permit the full litigation of disputes arising under or out of this Lease. Without limiting the generality of the foregoing, the Tribe and the Authority waive their immunity from unconsented suit to permit the maintenance of the following actions: (a) Courts. The Tribe and the Authority each waive their immunity from unconsented suit to permit any court of competent jurisdiction to (i) enforce and interpret the terms of this Lease, and award and enforce the award of any damages owing by the Authority as a consequence of a breach thereof, whether such award is the product of litigation, administrative proceedings, or arbitration; (ii) determine whether any consent or approval of the Tribe or the Authority has been improperly granted or unreasonably withheld; (iii) enforce any judgment prohibiting the Tribe or the Authority from taking any action, or mandating or obligating the Tribe or the Authority to take any action, including a judgment compelling the Tribe or the Authority to submit to binding arbitration; and (iv) adjudicate any claim under the Indian Civil Rights Act of 1968, 25 U.S.C. Section 1302 (1994). (b) Arbitration. The Tribe and the Authority each waive their immunity from unconsented suit to permit arbitrators, appointed and acting under the commercial arbitration rules of the American Arbitration Association, whenever and to the extent any agreement to submit a matter to arbitration is made by the Tribe and the Authority, to (i) enforce and interpret the terms of this Lease, and award and enforce the award of any damages owing by the 15 Authority as a consequence of a breach thereof; (ii) determine whether any consent or approval of the Tribe or the Authority has been improperly granted or unreasonably withheld; and (iii) enforce any judgment prohibiting the Tribe or the Authority from taking any action, or mandating or obligating the Tribe or the Authority to take any action, including a judgment compelling the Tribe or the Authority to submit to binding arbitration. Any such arbitration hearings shill be held at a place designated by the arbitrator(s) in New London County, Connecticut. The parties and the arbitrator(s) shall maintain strict confidentiality with respect to any such arbitration. 21. PERFORMANCE DURING DISPUTES. It is mutually agreed that during any kind of controversy, claim, disagreement or dispute, including a dispute as to the validity of this Lease, the Authority shall remain in possession of the Premises as tenant; and the Tribe and the Authority shall continue their performance of the provisions of this Lease. The Authority shall be entitled to injunctive relief from a civil court or other competent authority to maintain possession in the event of a threatened eviction during any dispute, controversy, claim or disagreement arising out of this Lease. 22. TERMINATION. Upon the occurrence of an Event of Default by the Authority as provided in Section 19, the Tribe shall have the right to terminate this Lease with the consent of the Secretary, pursuant to 25 C.F.R. Section 162.14 (as that regulation may be amended), subject to the rights of any transferee permitted hereunder or any Permitted Mortgagee, as provided in this Lease. 23. SECRETARIAL APPROVAL. It is understood and agreed that this Lease, or any amendment thereto, is contingent upon, and shall be valid only after approval by the Secretary as required by law. Execution of this Lease by the Secretary shall be deemed, to the extent necessary, to make this Lease fully effective under federal law. The Secretary hereby waives the requirement to provide a surety bond pursuant to 25 C.F.R. Section 162.5(c). 24. FEDERAL SUPERVISION. The Authority acknowledges and understands that title to the Premises is held by the United States of America in trust for the Tribe. Nothing contained in this Lease shall operate to delay or prevent a termination of Federal trust responsibilities with respect to the land by the issuance of a fee patent or otherwise during the term of this Lease; however, such termination shall not serve to abrogate this Lease. No member of, or delegate to, Congress or Resident Commissioner shall be admitted to any share or part of this Lease or to any benefit that may arise hereunder, but this provision shall not be construed to extend to this contract if made with a corporation or company for its general benefit. During any period when the Premises are in trust or 16 restricted status, all of the Authority's obligations under this Lease, and the obligations of its sureties, are to the United States as well as to the Tribe. 25. SUCCESSORS BOUND. The terms of this Lease shall benefit and be binding upon the successors and assigns of the Tribe and the successors and permitted assigns of the Authority in like manner as upon the original parties, except as otherwise provided in this Lease. The term "Authority," as used in this Lease, means the Mohegan Tribal Gaming Authority and any person or entity succeeding to the interest of the Mohegan Tribal Gaming Authority as tenant under this Lease, in accordance with the provisions of this Lease and applicable law. 26. QUIET ENJOYMENT. The Tribe covenants that at all times during the term of this Lease, so long as no Event of Default has occurred and is continuing hereunder, that the Authority's quiet enjoyment of the Premises or any part thereof shall not be disturbed by any act of the Tribe or anyone acting by, through or under the Tribe. 27. NOTICES. Any notice required by or sent pursuant to any provision of this Lease shall be in writing and shall be deemed given if and when it is personally delivered or sent by certified mail addressed, until some other address is designated in a notice so given, as follows: If to Tribe: Mohegan Tribe of Indians of Connecticut 27 Church Lane Uncasville, CT 06382 Attn: Tribal Chair and Business Board With a copy to: Lewis B. Rome, Esq. Rome, McGuigan, Sabanosh & Klebanoff, P.C. One State Street Hartford, CT 06103 If to Authority: Mohegan Tribal Gaming Authority 27 Church Lane Uncasville, CT 06382 Attn: Tribal Chair and Business Board With a copy to: Trading Cove Associates 914 Hartford Turnpike P. O. Box 60 Waterford, CT 06385 Attn: Len Wolman 17 28. GOVERNING LAW. This Lease, the parties' obligations hereunder, and any disputes hereunder shall be governed by and interpreted and construed in accordance with federal law (to the extent applicable) and the laws of the Tribe, provided that nothing herein shall be deemed to modify the provisions of sections 11 and 15 of this Lease, and, to the extent required to supplement applicable federal law and tribal law, the substantive laws of the State of Connecticut (excepting its choice of law rules). 29. RECORDING. Following approval by the Secretary, this Lease, or a memorandum of this Lease in the form prescribed by Connecticut law, shall be recorded in the appropriate Land Titles and Records Office of the Bureau of Indian Affairs, in the land records of the Town of Montville, Connecticut, and any land records of the Tribe. 30. INVALID PROVISIONS. If any clause, Section, Article, Paragraph, or Subparagraph of this Lease shall be unenforceable or invalid, such material shall be read out of this Lease and shall not affect the validity of any other clause, Section, Article, Paragraph, or Subparagraph, or give rise to any cause of action of either party to this Lease against the other, and the remainder of this Lease shall be valid and enforceable to the fullest extent permitted by law. 31. WAIVER. The waiver by the Tribe of, or the failure of the Tribe to take action with respect to, any breach of any term, covenant, condition, provision, restriction, or reservation herein contained, shall not be deemed to be a waiver of such term, covenant, condition, provision, restriction, or reservation or subsequent breach of same, or of any other term, covenant, condition, provision, restriction, or reservation herein contained. The Tribe may grant a waiver of any term of this Lease, but such must be in writing and signed by the Tribe before being effective. The subsequent acceptance of Annual Rent or any other amount hereunder by the Tribe shall not be deemed to be a waiver of any preceding breach by the Authority of any term, covenant, condition, provision, restriction, or reservation of this Lease, other than the failure of the Authority to pay the particular rent so accepted, regardless of the Tribe's knowledge of such preceding breach at the time of acceptance of such rent. 32. SAVING CLAUSE. If for any reason the term of this Lease, or any renewal thereof, or any substantive provision thereof, shall be found to be unenforceable, illegal or violative of public policy, this Lease shall automatically be amended to conform to the applicable decision, and each party hereto expressly agrees to execute any amendment necessary to effectuate the goals and 18 purposes of this Lease. 33. FORCE MAJEURE. If any dispute shall arise under any provision of this Lease as to whether the Authority shall have commenced promptly or within any limit of time specified in this Lease or proceeded continuously and with all due diligence with any required construction, repair or replacement, there shall be a suspension of performance during the period of any acts of God or by strikes which affect both the building industry generally and the Premises specifically or by orders, directives or regulations of any govern-mental agency or board, making available the materials reasonably required for any such construction, repair or replacement and to any unavoidable delays in adjusting any fire insurance loss. The provisions of this Section 33 shall not, however, apply to a default by the Authority in the payment of any Annual Rent or other charges to be paid by the Authority under the provisions of this Lease. 34. ESTOPPEL CERTIFICATE. The Tribe and the Authority, promptly upon any request therefor from the other, shall execute, cause such signature to be acknowledged by a notary public and deliver to the other or to a third person, if so directed by the other, a statement in writing identifying this Lease and the parties hereto and declaring, as of the date thereof, the following and such other matters as may be reasonably required by the party making such request: (a) Whether or not this Lease is in default, and, to the extent that any default does then exist, the nature of any such default, including any event which may constitute an Event of Default upon the mere passage of time or notice or both; (b) Whether or not this Lease is in full force and effect and that this Lease has not been modified except as provided in an amendment or amendments identified therein, stating further that this Lease as so amended is in full force and effect. (c) Whether the date to which the rent and other charges required to be paid under this Lease have been paid by or on behalf of the Authority; (d) That the Tribe has not conveyed, assigned, transferred or delegated any right or duty of the Tribe hereunder, nor has the Tribe encumbered or otherwise hypothecated the Tribe's reversionary interest in and to the Premises or any rights hereunder except as may be set forth in such statement; and (e) That any such statement may conclusively be relied upon by the Tribe, the Authority and any Permitted Mortgagee or any proposed Mortgagee in making a loan to the Authority or by any 19 title insurance company which issues a title insurance policy or other guaranty or endorsement relating to the existence and status of this Lease. 35. NO MERGER. So long as any Permitted Mortgage is in existence, unless all Permitted Mortgagees shall otherwise expressly consent in writing, the fee title to the Premises and the leasehold estate created by this Lease shall not merge but shall remain separate and distinct, notwithstanding the acquisition of said fee title by the United States of America in trust for the Tribe and said leasehold estate by the Tribe. 36. DEFINITIONS. The following terms, for purposes of this Lease, shall have the meaning as set forth in this Section: "Annual Rent" shall have the meaning as set forth in Section 4 of this Lease. "Authority" shall have the meaning as set forth in Section 25 of this Lease. "Bureau of Indian Affairs (B.I.A.)" shall mean the Bureau of Indian Affairs under the Department of the Interior of the United States of America. "Environmental Laws" shall have the meaning as set forth in Section 12 of this Lease. "Equipment" shall mean all equipment, furniture and Trade Fixtures required or used in the operation of the Premises and the Improvements. "Gaming" shall mean any and all activities defined as Class II or Class III Gaming under the Indian Gaming Regulatory Act, 25 U.S.C. Sections 2701-2721 (1994) or authorized under the Compact. "Gross Revenues" shall have the meaning as set forth in Section 4(b) of this Lease. "Hazardous Substances" shall have the meaning as set forth in Section 12 of this Lease. "Improvements" shall have the meaning as set forth in Section 18 of this Lease. "Indenture" shall have the meaning as set forth in Section 6 of this Lease. "Land Title and Records Office" shall have the meaning as set forth in Section 29 of this Lease. 20 "Lease" or "Land Lease" shall mean this lease entered into this 29th day of September 1995. "Lease Term" or "term of this Lease" shall have the meaning as set forth in Section 3 of this Lease. "Material amendments" shall have the meaning as set forth in Section 7 of this Lease. "Monetary Default" shall have the meaning as set forth in Section 9 of this Lease. "Open-End Construction - Permanent Leasehold Mortgage Deed, Assignment of Leases and Rents and Security Agreement" shall have the meaning as set forth in Section 6 of this Lease. "Permitted Mortgage" shall have the meaning as set forth in Section 6 of this Lease. "Permitted Mortgagees" shall have the meaning as set forth in Section 6 of this Lease. "Premises" shall have the meaning as set forth in Section 1 of this Lease. "Project" shall mean the Gaming Facility, resort, hotel and other related developments on the Premises. "Resident Commissioner" shall have the meaning as set forth in Section 24 of this Lease. "Senior Secured Notes" shall have the meaning as set forth in Section 6 of this Lease. "Trade Fixtures" means articles which are easily removable, and which are placed by and at the sole expense of the Lessee in or attached to the Improvements to prosecute the trade or business of the Lessee for which it occupies the Improvements or for use in connection with such business or to promote convenience and efficiency in conducting such business. "Tribal Council" shall mean the Mohegan Tribal Council created pursuant to the Tribe's Constitution or, a designee agency, committee, corporation or council created pursuant to any resolution or ordinance of the Mohegan Tribal Council. "Tribe" shall mean the Mohegan Tribe of Indians of Connecticut, a federally recognized Indian tribe, its successors and assigns. 21 The remainder of this page is intentionally blank. Signatures appear on following pages. 22 IN WITNESS THEREOF, this Lease has been executed as of the date first above written. WITNESSES: MOHEGAN TRIBE OF INDIANS OF CONNECTICUT /s/ Judith A. Shapiro /s/ Ralph W. Sturges _______________________ By:___________________________ Ralph Sturges /s/ Michael Roy Chairman, Tribal Council _______________________ MOHEGAN TRIBAL GAMING AUTHORITY /s/ Judith A. Shapiro /s/ Ralph W. Sturges _______________________ By:___________________________ Ralph Sturges Chairman, Management Board /s/ Michael Roy _______________________ 23 CITY OF WASHINGTON ) ) ss. September 29, 1995 DISTRICT OF COLUMBIA) On September 29, 1995, Ralph W. Sturges, personally appeared, before me, signer and sealer of the foregoing instrument, who acknowledged that he executed the instrument as the Lifetime Chief and Chairman of the MOHEGAN TRIBE OF INDIANS OF CONNECTICUT, a federally recognized Indian tribe, as his free act and deed and the free act and deed of the Tribe. /s/ Carol C. Williams _____________________________ Notary Public My Commission Expires: June 14, 1998 CITY OF WASHINGTON ) ) ss. September 29, 1995 DISTRICT OF COLUMBIA) On September 29, 1995, Ralph W. Sturges, personally appeared, before me, signer and sealer of the foregoing instrument, who acknowledged that he executed the instrument as the Chairman, Management Board of the MOHEGAN TRIBAL GAMING AUTHORITY, as his free act and deed and the free act and deed of the Authority. /s/ Carol C. Williams _____________________________ Notary Public My Commission Expires: June 14, 1998 24 Attachment to Land Lease SECTION 81 COMPLIANCE In compliance with Section 81 of Title 25 U.S.C.A., the residence and occupation of the parties is as follows: Party in Interest: Mohegan Tribe of Indians or Connecticut Address: 27 Church Lane Uncasville, CT 06382 Occupation: Indian Tribe Party in Interest: Mohegan Tribal Gaming Authority Address: 27 Church Lane Uncasville, CT 06382 Occupation: Tribal Gaming Authority Fixed limited time to run: 25 years, with option to renew for 25 years (see Section 3) The Chairman of the Mohegan Tribe of Indians of Connecticut "Tribe" is authorized to execute the attached document by Resolution No. 95-3 of the Tribal Council of the Tribe, dated August 30, 1995. The Chairman exercises his authority in this instance because the Tribe has determined that execution of the attached document will further the economic development objectives of the Tribe. The Chairman of the Management Board of the Mohegan Tribal Gaming Authority ("Management Board") is authorized to execute the attached document by Resolution No. 95-4 of the Management Board, dated August 30, 1995. The Chairman of the Management Board exercises his authority in this instance because the Management Board has determined that execution of the attached document will further the economic development objectives of the Tribe. The document was executed on or about 12:30 p.m. (time) on September 28, 1995, at New York, New York (place), for the particular purpose set forth above. The undersigned parties agree that the foregoing agreement is in compliance with 25 U.S.C. Sections 81 and 415 and 25 C.F.R Section 162. WITNESS: MOHEGAN TRIBE OF INDIANS OF CONNECTICUT /s/ Judith A. Shapiro /s/ Ralph W. Sturges _____________________ By:___________________________ Ralph Sturges Title: Chairman MOHEGAN TRIBAL GAMING AUTHORITY /s/ Judith A. Shapiro /s/ Ralph W. Sturges _____________________ By:___________________________ Ralph Sturges Title: Chairman, Management Board Approved Pursuant to 25 U.S.C. Sections 81 and 415 and 25 C.F.R. Section 162 United States Department of Interior Bureau of Indian Affairs: /s/ Nancy Jemison Date: September 29, 1995 By:___________________________ Director (Acting) Eastern Area Office Bureau of Indian Affairs for the Secretary of the Interior and the Commissioner of Indian Affairs, acting under delegated authority CITY OF WASHINGTON ) ) ss. DISTRICT OF COLUMBIA) On September 29, 1995, personally appeared, before me, Carol C. Williams a Notary Public in and for said County and State, Nancy Jemison, personally known to me to be the person whose name is subscribed to the above instrument, who acknowledged that she executed the instrument as the Acting Area Director of the Eastern Area Office of the Bureau of Indian Affairs, for the Secretary of the Interior and the Commissioner of Indian Affairs, acting under delegated authority. /s/ Carol C. Williams ___________________________ Notary Public My Commission Expires: June 14, 1998 EXHIBIT A Legal Description of the Property A certain tract or parcel of land, together with the buildings and all other improvements thereon, situated on the southeasterly side of Sandy Desert Road, the southeasterly side of Connecticut Route No. 32, the northeasterly side of Broadview Avenue and the northwesterly side of Fort Shantok Road in the Town of Montville, County of New London and State of Connecticut and being more particularly shown and delineated on a certain map or plan entitled "Harris & Clark, Inc. Land Surveyors - Civil Engineers Griswold, Connecticut Survey Plan Prepared For The Mohegan Tribe Of Indians (U.N.C., Inc. Property) Sandy Desert Road Montville, Connecticut Scale 1" = 200' Date December 1994 Ident. No. 94-1801", which premises are more particularly bounded and described as follows: Beginning at a concrete monument recovered in the southeasterly street line of Sandy Desert Road at a northwesterly corner of the herein-described tract and on the dividing line between the herein- described tract and land now or formerly of Blanche E. Jenoks et al; thence running South 04 degree 34' 54" East for a distance of 298.94 feet to a concrete monument recovered; thence running South 04 degrees 35" 33" East for a distance of 254.69 feet to a concrete monument recovered; thence running North 85 degrees 28' 43" West for a distance of 52.08 feet to a concrete monument recovered, the last three courses being bounded by said Jenoks, et al land; thence running South 06 degrees 35" 16" East for a distance of 181.76 feet to a concrete monument recovered; thence running North 85 degrees 19' 00" West for a distance of 239.12 feet to a concrete monument recovered, the last two courses being bounded by land now or formerly of Elizabeth J. and Russell E. Heebner; thence running South 06 degrees 37' 20" East for a distance of 126.21 feet bounded southwesterly by land now or formerly of James H. Sarayusa to a re- bar recovered; thence running South 03 degrees 10' 57" West for a distance of 99.70 feet, bounded northwesterly by land now or formerly of Paul R. Springer, Jr. and Noreen Springer to a concrete monument recovered; thence running North 86 degrees 44' 47" West for a distance of 212.23 feet, bounded northeasterly by said Springer land to a concrete monument recovered; thence running South 01 degrees 15' 36" West for a distance of 99.98 feet, bounded northwesterly by land now or formerly of Donald McKeith and Arlene McKeith to a concrete monument recovered; thence running South 07 degrees 03' 32" West for a distance of 124.82 feet to a concrete monument recovered; thence running South 07 degrees 34' 18" West for a distance of 138.80 feet to a concrete monument recovered; thence running North 78 degrees 51' 46" West for a distance of 209.41 feet to a concrete monument recovered, the last three courses being bounded by land now or formerly of Walter J. Keane and Debbie L. Keane; thence running South 07 degrees 31' 24" West for a distance of 69.99 feet, bounded northwesterly by Connecticut Route No. 32 to a concrete monument recovered; thence running South 78 degrees 52' 37" East for a distance of 209.39 feet to a concrete monument recovered; thence running South 78 degrees 51' 05" East for a distance of 160 71 feet to a concrete monument recovered at Connecticut Grid Coordinates North 739507.44 East 1178517.72; thence running South 11 degrees 08' 03" West for a distance of 36.00 feet to a point; thence running South 78 degrees 51' 57" East for a distance of 11.00 feet to a point; thence running South 11 degrees 05' 03" West for a distance of 92.35 feet to a point to be set at the face of a retaining wall, the last five courses being bounded by land now or formerly of Frank G. Roderick, Jr., et al; thence running South 79 degrees 25' 36" East for a distance of 191.76 feet along a stone wall, bounded southwesterly in part by land now or formerly of Richard and Shirley McDonald and in part by land now or formerly of Jimmy N. and Kathleen M. Sistare to a concrete monument recovered; thence running South 78 degrees 35' 40" East for a distance of 200.09 feet, bounded southwesterly in part by land now or formerly of Mark M. Deveau and in part by land now or formerly of Agnes and Ernest J. LaPorte to a concrete monument recovered; thence running South 78 degrees 54' 17" East for a distance of 300.86 feet, bounded southwesterly in part by land now or formerly of Joyce Carol Elliott, et al, in part by land now or formerly of Eleanor Joyce Luft and in part by land now or formerly of Christopher A. and Lisa N. Newell to a rebar recovered; thence running South 77 degrees 39' 24" East for a distance of 209 75 feet, bounded southwesterly in part by land now or formerly of Peter G. Rousseau and Helen H. Rousseau and in part by land now or formerly of Robert L. Ellal and Johannah J. Ellal to a concrete monument recovered; thence running South 78 degrees 50' 54" East for a distance of 216 56 feet, bounded southwesterly by land now or formerly of Christopher L. and Phyllis M. McCormick to an iron pin recovered; thence running South 88 degrees 02' 27" East for a distance of 183 74 feet, bounded southwesterly in part by said McCormick land and in part by land now or formerly of Horace W. and Gloria M. Deshefy to a concrete monument recovered; thence running South 01 degrees 34' 54" West for a distance of 202.82 feet to a concrete monument recovered; thence running South 88 degrees 26' 02" East for a distance of 150.00 feet to a point to be set, the last two courses being bounded by said Deshefy land; thence running North 01 degrees 31' 09" East for a distance of 35.00 feet to an iron pipe recovered; thence running South 83 degrees 26' 29" East for a distance of 322.65 feet to a concrete monument recovered; thence running South 08 degrees 21' 36" West for a distance of 200.83 feet to a concrete monument recovered, the last three courses being bounded by land now or formerly of Harry W. Collins; thence running South 81 degrees 53' 04" East for a distance of 415.62 feet, ii bounded southwesterly by Broadview Avenue to a concrete monument recovered; thence running North 01 degrees 42' 10" West for a distance of 58.70 feet to an iron pipe recovered; thence running North 10 degrees 42' 05" West for a distance of 45.00 feet to a point to be set; thence running North 05 degrees 19' 48" West for a distance of 124.70 feet to a concrete monument recovered; thence running South 81 degrees 57" 48" East for a distance of 181.26 feet to a concrete monument recovered; thence running South 81 degrees 57' 48" East for a distance of 192.70 feet to a point to be set; thence running South 48 degrees 42' 13" East for a distance of 158.40 feet along a fence line to a concrete monument recovered; thence running South 47 degrees 09' 18" East for a distance of 565.19 feet to a drill hole recovered in a stone wall, the last seven courses being bounded by land now or formerly of Catherine Bolduc; thence running North 72 degrees 11' 49" East for a distance of 102.09 feet along a stone wall to an angle in said stone wall; thence running North 80 degrees 58' 11" East for a distance of 58 21 feet along a stone wall to the end of said stone wall; thence running North 71 degrees 15' 46" East for a distance of 92.65 feet to a stone wall corner; thence running North 71 degrees 20' 55" East for a distance of 23 94 feet along a stone wall to an angle in said stone wall; thence running North 74 degrees 43' 11" East for a distance of 71.08 feet along a stone wall to a concrete monument recovered; thence running North 76 degrees 14' 02" East for a distance of 28.06 feet along a stone wall to an angle in said stone wall; thence running North 68 degrees 37' 42" East for a distance of 15.60 feet along a stone wall to an angle in said stone wall; thence running North 73 degrees 29' 49" East for a distance of 127.85 feet along a stone wall to a drill hole recovered in said stone wall; thence running North 72 degrees 22' 11" East for a distance of 21.61 feet along a stone wall to an iron pipe recovered; thence running South 16 degrees 57' 33" East for a distance of 31.59 feet along a fence line to a fence post; thence running South 15 degrees 05' 54" East for a distance of 84.04 feet along a fence line to a 6-inch Oak tree with wire; thence running South 13 degrees 10' 31" East for a distance of 54 71 feet along a fence line to a 4-inch Birch tree with wire; thence running South 23 degrees 18' 51" East for a distance of 62.20 feet along a fence line to 4-inch Beech tree with wire; thence running South 202 45' 04" East for a distance of 114.84 feet along a fence line to a wood fence post; thence running South 17 degrees 30' 26" East for a distance of 41.85 feet along a fence line to a stump with wire; thence running South 16 degrees 42' 33" East for a distance of 148.83 feet along a fence line to a 14-inch Oak tree with wire; thence running South 19 degrees 07' 08" East for a distance of 22 59 feet along a fence line to a 15-inch Oak tree with wire; thence running South 12 degrees 45' 40" East for a distance of 36.94 feet along a fence line to a 10-inch dead Oak tree with wire; thence running South 14 degrees 30' 26" East for a distance of 11.00 feet along a fence line to 10-inch dead Oak tree with wire; thence iii running South 04 degrees 25' 15" East for a distance of 28.81 feet along a fence line to a 12-inch dead Oak tree with wire; thence running South 11 degrees 13' 19" East for a distance of 17.10 feet along a fence line to an 8-inch dead Oak tree with wire; thence running South 07 degrees 15' 03" East for a distance of 84.60 feet along a fence line to an 18-inch dead Oak tree with wire; thence running South 03 degrees 14' 32" West for a distance of 56.67 feet along a fence line to a point in the center of a stone wall; thence running North 78 degree 00' 54" West for a distance of 68.44 feet along a stone wall to an angle in said stone wall; thence running North 84 degrees 17' 33" West for a distance of 109.78 feet along a stone wall to an angle in said stone wall; thence running North 87 degrees 48' 33" West for a distance of 53.11 feet along a stone wall to an angle in said stone wall; thence running South 85 degrees 52' 51" West for a distance of 29.79 feet along a stone wall to a drill hole recovered at a stone wall corner; thence running South 09 degrees 09' 03" East for a distance of 238.99 feet along a stone wall to a drill hole set at the end of said stone wall; thence running South 03 degrees 03' 19" East for a distance of 61.53 feet along a fence line to a 26-inch Oak tree with wire; thence running South 23 degrees 09' 48" East for a distance of 47.77 feet along a fence line to a 17-inch Oak tree with wire; thence running South 11 degrees 51' 04" West for a distance of 36.61 feet along a fence line to a 16-inch dead tree with wire; thence running South 46 degrees 39' 16" East for a distance of 32.48 feet to a railroad spike in ledge recovered; thence running South 07 degrees 17' 57" East for a distance of 55.19 feet along a stone wall to an iron pipe recovered in said stone wall the last thirty-three courses being bounded by land now or formerly of Martin Realty, Inc; thence running South 12 degrees 31' 25" East for a distance of 115.48 feet, bounded southwesterly by land now or formerly of Glenn P. Martin, et al to an iron pipe recovered; thence running North 83 degrees 21' 50" East for a distance of 242 09 feet to a drill hole recovered on ledge; thence running South 06 degrees 08' 17" East for a distance of 400.24 feet to a point in the northwesterly street line of Fort Shantok Road, the last two courses being bounded by land now or formerly of Mathew C. Hopkins and Antonette M. Hopkins; thence running North 83 degrees 46' 08" East for a distance of 429.13 feet, bounded southeasterly by Fort Shantok Road to a point to be set in the northwesterly street line of Fort Shantok Road at a southwesterly corner of land now or formerly of Edward G. Bernat and Beatrice L. Bernat; thence running North 14 degrees 53' 14" West for a distance of 65.12 feet to the remains of a metal fence post; thence running North 11 degrees 17' 52" West for a distance of 21.20 feet to the remains of a metal fence post; thence running North 15 degrees 18' 16" West for a distance of 23.09 feet to the remains of a metal fence post; thence running North 15 degrees 15' 33" West for a distance of 89.79 feet along a stone wall to an angle in said stone wall; thence running North 13 degrees 28' 03" West for a distance of 52.97 feet along a iv stone wall to an angle in said stone wall; thence running North 09 degrees 03' 32" West for a distance of 11.42 feet along a stone wall to a drill hole recovered in said stone wall; thence running North 12 degrees 03' 02" West for a distance of 56.33 feet along a stone wall to an iron pipe recovered; thence running North 14 degrees 23' 00" West for a distance of 117.48 feet along a stone wall to the end of said stone wall; thence running North 15 degrees 10' 19" West for a distance of 227.98 feet to a stone pile; thence running North 15 degrees 10' 30" West for a distance of 137.29 feet to a stone pile, the last then courses being bounded by land now or formerly of Edward G. Bernat and Beatrice L. Bernat; thence running North 16 degrees 07' 30" West for a distance of 304.36 feet to a 14-inch dead tree with wire; thence running North 16 degrees 43' 31" West for a distance of 94.09 feet along a fence line to a 5- inch Beech tree with wire; thence running North 17 degrees 46' 50" West for a distance of 86.72 feet along a fence line to a 20-inch Oak tree with wire; thence running North 15 degrees 59' 54" West for a distance of 69.57 feet along a fence line to a 20-inch Oak tree with wire; thence running North 13 degrees 09' 20" West for a distance of 241.49 feet along a fence line to a 22-inch Oak tree with wire; thence running North 08 degrees 51' 10" West for a distance of 99.13 feet along a fence line to a tree with wire; thence running North 13 degrees 11' 22" West for a distance of 44 72 feet along a fence line to a stump with wire; thence running North 06 degrees 55' 31" West for a distance of 44.45 feet long a fence line to an iron pipe recovered in a stone wall; thence running North 73 degrees 35' 41" East for a distance of 71.66 feet along a stone wall to the end of said stone wall; thence running North 73 degrees 57' 46" East for a distance of 48.45 feet to a concrete monument recovered; thence running North 75 degrees 05' 39" East for a distance of 190.94 feet to a concrete monument recovered; thence running North 73 degrees 18' 39" East for a distance of 166.10 feet to an angle point; thence running North 75 degrees 48' 39" East for a distance of 241.15 feet to a point to be set at Connecticut Grid Coordinates North 738813.29, East 1183036.66, the last thirteen courses being bounded by land now or formerly of Southeastern Connecticut Regional Resources Recovery Authority; thence running North 44 degrees 37' 01" West for a distance of 437.22 feet to a point to be set; thence running North 46 degrees 20' 29" West for a distance of 133.75 feet to a point to be set; thence running North 43 degrees 39' 31" East for a distance of 209.89 feet to a point to be set, the last three courses being bounded by other land now or formerly of UNC, Inc; thence running along the arc of a curve to the left with a radius of 3,100.00 feet, a central angle of 04 degrees 34' 39" for a distance of 247.66 feet to a point; thence running North 51 degrees 56' 11" West for a distance of 150.00 feet to a point; thence running along the arc of a curve to the right with a radius of 1,132.75 feet, a central angle of 37 degrees 19' 02" for a distance of 737.77 feet to a point; thence running along the arc of a curve to the right v with a radius of 883.00 feet, a central angle of 38 degrees 49' 37" for a distance of 598.37 feet to a concrete monument recovered, the last four courses being bounded by land now or formerly of Central Vermont Railway, Inc; thence running North 45 degrees 14' 00" West for a distance of 35 feet, more or less, bounded northeasterly by land now or formerly of Central Vermont Railway, Inc. to the tidal high water mark of Trading Cove; thence running in a general westerly direction along the tidal high water mark of Trading Cove for a distance of 3,743 feet, more or less, to a point which is located North 06 degrees 33' 05" East 55 feet, more or less, from a rebar recovered at Connecticut Grid Coordinates North 741768.53, East 1179150.50; thence running South 06 degrees 33' 05" West for a distance of 55 feet, more or less, to a rebar recovered; thence running South 06 degrees 33' 05" West for a distance of 547.50 feet to an iron pipe recovered, the last two courses being bounded northwesterly land now or formerly of Stamatios F. Lahaniatis; thence running South 06 degrees 34' 37" West for a distance of 275.26 feet, bounded northwesterly by land now or formerly of John Lahaniatis and Joan Lahaniatis to an iron pipe recovered; thence running South 07 degree 16' 42" West for a distance of 52.35 feet, bounded northwesterly by the southeasterly terminus of Sandy Desert Road to a concrete monument recovered; thence running South 88 degrees 08' 28" West for a distance of 246.94 feet, bounded northwesterly by Sandy Desert Road to the concrete monument recovered at the point and place of beginning. Together with all rights, easements, hereditaments and appurtenances thereto appertaining and all right, title and interest, if any, in and to strips and gores adjoining said premises and in and to the land lying in the bed of any street or streets adjoining said premises. Reference is hereby made to a certain Quit-Claim Deed from United Nuclear Corporation to UNC Resources, Inc., dated July 1, 1983 and recorded on August 10, 1984 at Volume 160, page 552 of Montville Land Records Reference is further made to a Certificate of Change of Name from UNC Resources, Inc. to UNC Incorporated dated June 16, 1986 and recorded on September 10, 1986 at Volume 177, Page 438 of Montville Land Records. Said premises are conveyed subject to the following encumbrances: 1. Pole line easement in favor of the Hartford Electric Light Company dated October 7, 1958, recorded November 6, 1958 in Volume 66, Page 40 of the Montville Land Records (said easement encumbering Tract Nos. 8 and 3 as shown on plan entitled "Plan Made for Olin Mathieson Chemical Corporation Showing Property in Town of Montville, Conn.) 2. Certificate of Taking in an action instituted by Southeastern vi Connecticut Regional Resources Recovery Authority against UNC Incorporated dated March 4, 1993, recorded March 10, 1993 in Volume 251, Page 713 of the Montville Land Records pursuant to which Southeastern Connecticut Regional Resources Recovery Authority exercised its right of eminent domain to condemn a certain access easement over and across a portion of those premises delineated on a certain map for plan entitled, "Plan made for United Nuclear Corporation Showing Property on Fort Shantok Road Montville, Connecticut Scale 1"=50 Feet Chandler, Palmer & King Norwich, Conn. November 1979" 3. Pole line easement in favor of the Hartford Electric Light Company dated October 27, 1958, recorded November 6, 1958 in Volume 66, Page 38 of the Montville Land Records, which right-of-way encumbers Tract Nos. 10, 1, 2 and 9 and that area between Tract Nos. 10 and 11, all as shown on a plan entitled "Plan Made For Olin Mathieson Chemical Corporation Showing Property in Town of Montville, conn. Scale 1"=200 Ft. Chandler & Palmer, Engr's. Norwich, Conn. July 31, 1957 Additions Sept. 1957 Sub-Division Of Tract 6 Oct 1958 Revision Of"""November 1958 Revised March 1, 1961." 4. Survey by Harris & Clark, Inc. dated December, 1995 shows the following: Lawn encroachment along the northerly line of land now or formerly of Horace W. and Gloria M. Deshefy, which lawn encroachment is approximately 40 feet in width. 5. Riparian rights of other in and to the Trading Cove. 6. Certificate of Taking by Southeastern Connecticut Regional Resources Recovery Authority in an action entitled "Southeastern Connecticut Regional Resources Recovery Authority vs. UNC Incorporation, Town of Montville Water Pollution Control Authority and The Hartford Electric Company" dated February 16, 1993, recorded in Volume 251, Page 167 of the Montville Land Records (thereby exercising its right of eminent domain to condemn certain groundwater easements in conjunction with leachate discharge from the condemnor's ash residue disposal facility located on adjacent real property to the south). 7. Rights to maintain a 30-inch (30") reinforced concrete pipe, endwall and paved ditch and together with permanent sloping rights contained in a Certificate of Condemnation from Albert Elbaum and Evelyn Elbaum to the State of Connecticut dated July 1, 1965, recorded July 3, 1965 in Volume 87, Page 205 of the Montville Land Records, which rights were conveyed by the State of Connecticut to the Town of Montville by deed dated September 9, 1968, recorded in Volume 102, Page 171 of said land records. vii EXHIBIT B TO LAND LEASE [LOCATION MAP OF LEASED PROPERTY] EXHIBIT C TO LAND LEASE AMENDMENT OF LAND LEASE THIS AMENDMENT OF LAND LEASE made and entered into as of this 29 day of September, 1995, by and between the Mohegan Tribe of Indians of Connecticut (the "Tribe"), as Lessor, and the Mohegan Tribal Gaming Authority (the "Authority), as Lessee. W I T N E S S E T H: WHEREAS, on or about _______________, 1995, the Tribe and the Authority entered into a Land Lease (the "Lease"), whereby the Tribe agreed to lease to the Authority certain property located in the Town of Montville, County of New London and State of Connecticut, as more fully described in the Lease (the "Premises") for the purpose of construction, equipping and the operation of the Project, as defined in the Lease; and WHEREAS, the Tribe and the Authority desire to amend the Lease to confirm the commencement date thereof. NOW, THEREFORE, for and in consideration of the sum of One Dollar ($1.00) and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Tribe and the Authority hereby confirm that the commencement date of the Lease is ____________________, 1995. Except as modified hereby, the Lease shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have executed this Amendment of Land Lease on the day and year first above written. Witnessed: MOHEGAN TRIBE OF INDIANS OF CONNECTICUT /s/ Judith A. Shapiro _____________________ By: ________________________ _____________________ Its Duly Authorized MOHEGAN TRIBAL GAMING AUTHORITY /s/ Judith A. Shapiro _____________________ By: __________________________ _____________________ Its Duly Authorized STATE OF CONNECTICUT ) ) ss: __________________, 1995 COUNTY OF ) On ___________________, l995, ____________________________, personally appeared before me, signer and sealer of the foregoing instrument, who acknowledged that he or she executed the instrument as the ___________________________________ of the Mohegan Tribe of Indians of Connecticut, a federally recognized Indian tribe, as his/her free act and deed and the free act and deed of the Tribe. __________________________________ Commissioner of Superior Court Notary Public My Commission Expires:_____________ STATE OF CONNECTICUT ) ) ss: _____________________, 1995 COUNTY OF ) On ___________________, 1995, _____________________________, personally appeared before me, signer and sealer of the foregoing instrument, who acknowledged that he or she executed the instrument as the ____________________________ of the Mohegan tribe of Indians of Connecticut, a federally recognized Indian tribe, as his/her free act and deed And the free act and deed of the Tribe. ____________________________________ Commissioner of Superior Court Notary Public My Commission Expires EXHIBIT D TO LAND LEASE TRIBAL LICENSING, PERMIT AND GOVERNMENTAL APPROVAL REQUIREMENTS 1. Building Permit(s) 2. Health and Safety Inspection(s) 3 . Cafe Permit 4. Gaming License 5. Certificate(s) of Occupancy EXHIBIT E TO LAND LEASE TRIBAL TAXES, ASSESSMENTS, FEES -- NONE -- AMENDMENT OF LAND LEASE THIS AMENDMENT OF LAND LEASE made and entered into as of this 29th day of September, 1995, by and between the Mohegan Tribe of Indians of Connecticut (the "Tribe"), as Lessor, and the Mohegan Tribal Gaming Authority (the "Authority), as Lessee. W I T N E S S E T H: WHEREAS, on or about September 29, 1995, the Tribe and the Authority entered into a Land Lease (the "Lease"), whereby the Tribe agreed to lease to the Authority certain property located in the Town of Montville, County of New London and State of Connecticut, as more fully described in the Lease (the "Premises") for the purpose of construction, equipping and the operation of the Project, as defined in the Lease; and WHEREAS, the Tribe and the Authority desire to amend the Lease to confirm the commencement date thereof. NOW, THEREFORE, for and in consideration of the sum of One Dollar ($1.00) and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Tribe and the Authority hereby confirm that the commencement date of the Lease is September 29, 1995. Except as modified hereby, the Lease shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have executed this Amendment of Land Lease on the day and year first above written. Witnessed: MOHEGAN TRIBE OF INDIANS OF CONNECTICUT /s/ Judith A. Shapiro /s/ Ralph W. Sturges _________________________ By: ________________________ Ralph W. Sturges /s/ Michael L. Roy Its Chairman and Lifetime _________________________ Chief Michael L. Roy Duly Authorized MOHEGAN TRIBAL GAMING AUTHORITY /s/ Judith A. Shapiro /s/ Ralph W. Sturges _________________________ By: __________________________ Ralph W. Sturges /s/ Michael L. Roy Its Chairman of the _________________________ Management Board Michael L. Roy Duly Authorized City of Washington ) ) ss: September 29, 1995 District of Columbia ) On September 29, 1995, Ralph W. Sturges, personally appeared before me, signer and sealer of the foregoing instrument, who acknowledged that he executed the instrument as the Lifetime Chief and Chairman of the Mohegan Tribe of Indians of Connecticut, a federally recognized Indian tribe, as his free act and deed and the free act and deed of the Tribe. /s/ Carol C. Williams ___________________________________ Notary Public My Commission Expires: June 14, 1998 City of Washington ) ) ss: September __, 1995 District of Columbia ) On September 29, 1995, Ralph W. Sturges, personally appeared before me, signer and sealer of the foregoing instrument, who acknowledged that he executed the instrument as the Chairman, Management Board of the Mohegan Tribal Gaming Authority, as his free act and deed and the free act and deed of the Tribe. /s/ Carol C. Williams ___________________________________ Notary Public My Commission Expires: June 14, 1998 EX-10.6 5 EXHIBIT 10.6 OPEN-END CONSTRUCTION - PERMANENT LEASEHOLD MORTGAGE DEED, ASSIGNMENT OF LEASES AND RENTS AND SECURITY AGREEMENT -C-COPYRIGHT 1995 BY THE MOHEGAN TRIBAL GAMING AUTHORITY, TRADING COVE ASSOCIATES AND SUN INTERNATIONAL HOTELS LIMITED. REPRODUCTION OF THE MATERIAL HEREIN OR SUBSTANTIAL QUOTATION OF ITS PROVISIONS WITHOUT PERMISSION VIOLATES THE COPYRIGHT LAWS OF THE UNITED STATES AND WILL BE SUBJECT TO LEGAL PROSECUTION. WARNING: UNLICENSED PHOTOCOPYING VIOLATES U.S. COPYRIGHT LAWS. Execution Copy When recorded, return to: First Fidelity Bank 10 State House Square Hartford, Connecticut 06103-3698 Attn: W. Jeffrey Kramer Vice President, Corporate Trust OPEN-END CONSTRUCTION - PERMANENT LEASEHOLD MORTGAGE DEED, ASSIGNMENT OF LEASES AND RENTS AND SECURITY AGREEMENT TO ALL PEOPLE TO WHOM THESE PRESENTS SHALL COME, GREETING: THIS Mortgage is made as of the 29th day of September, 1995, pursuant to 25 C.F.R. S162.12(c), between the MOHEGAN TRIBAL GAMING AUTHORITY, an instrumentality of The Mohegan Tribe of Indians of Connecticut (hereinafter referred to as "Mortgagor") having a notice address of 27 Church Lane, Uncasville, CT 06382, for the consideration of One ($1.00) Dollar and other good and valuable consideration received to Mortgagor's satisfaction from FIRST FIDELITY BANK, as Trustee for the benefit of the Holders of the Notes as defined in the Indenture, as hereinafter defined, a Connecticut banking corporation, having its principal office at 10 State House Square, Hartford, Connecticut 06103-3698 (the "Mortgagee"). THE CONDITION OF THIS MORTGAGE IS SUCH THAT: WHEREAS, the United States of America in trust for The Mohegan Tribe of Indians of Connecticut (the "Tribe") is the owner of the land in the Town of Montville, County of New London and State of Connecticut, more fully described on Exhibit A attached hereto (the "Premises") and the buildings, structures, improvements and fixtures (excluding Mortgagor's Trade Fixtures) now located or hereafter constructed on the Premises (collectively, the "Improvements"); and WHEREAS, the Tribe, as lessor, and Mortgagor, as lessee, have entered into a Land Lease dated September 29, 1995 (the "Land Lease"), with respect to the Premises and Improvements, which land Lease was approved by the Secretary of the Interior or his authorized representative on September 29, 1995; and WHEREAS, the Premises and Improvements are subject to certain Permitted Encumbrances enumerated on said Exhibit A or otherwise as 1 described in Section 4.13 of the hereinafter described Indenture (hereinafter referred to as "Permitted Encumbrances"); and WHEREAS, Mortgagor now owns or may hereafter acquire certain Personal Property (as hereinafter defined); and WHEREAS, Mortgagor and Mortgagee, as trustee, are parties to an Indenture of Trust dated September 29, 1995 (hereinafter, together with any extensions, renewals, modifications, substitutions and replacements thereof and therefor, referred to as the "Indenture"), a copy of which is on file in the office of Mortgagee at 10 State House Square, Hartford, Connecticut 06103-3698, pursuant to which Mortgagor has issued its Senior Secured Notes due 2002 in the aggregate principal amount of $175,000,000 (hereinafter referred to as the "Notes"), which Notes are in the form(s) attached hereto as Exhibit B, for the purpose of providing financing for the development of the Premises and the construction of the Improvements; and WHEREAS, the holders of the Notes have this day advanced to the Mortgagor the sum of $175,000,000.00 for the construction or repair of the Improvements; and WHEREAS, the holder of the Notes have agreed to make the loan evidenced by the Notes to be paid over to the Mortgagor in installments as the work progresses, the time and amount of each advancement to be at the sole discretion and upon the estimate of the Mortgagee, so that when all of the work shall have been completed to the satisfaction of the Mortgagee, the Mortgagee shall then pay over to the Mortgagor any balance to complete the full loan evidenced by the Notes; and WHEREAS, the parties have entered into Escrow and Disbursement Agreement of even date herewith (together with any amendments thereto, the "Disbursement Agreement"), a copy of which is on file in the office of Mortgagee at 10 State House Square, Hartford, Connecticut 06103-3698; and WHEREAS, the principal amount of the Notes, together with interest thereon at the rates specified in the Notes, is payable in accordance with the terms of the Indenture, with the entire unpaid principal balance and any unpaid, accrued interest thereon maturing and being due and payable in full not later than November 15, 2002 (the "Maturity Date"); and WHEREAS, this Mortgage is entered into in reliance on Article XIII, Section 3 of the Tribe's Constitution; 2 NOW, THEREFORE, to secure the payment of principal and interest and all other premiums, post-petition interest, indemnifications, reimbursements, damages and other monetary obligations under the Notes, the Indenture and the Other Security Documents as such terms are hereinafter defined, all of which terms are hereby incorporated herein and made a part hereof by reference as fully set forth herein, the payment by the Mortgagor to the Mortgagee as herein provided of all sums advanced by the Mortgagee pursuant to any term hereof, with interest thereon as provided herein, and the payment, performance, and observance of all of the covenants and agreements herein contained and contained in the Indenture (collectively, the "Obligations"), Mortgagor hereby gives, grants, bargains, sells, assigns, transfers and mortgages unto Mortgagee, its successors and assigns, and grants the Mortgagee and its successors and assigns a security interest in, all right, title and interest of the Mortgagor in and to the following: (A) The Land Lease; (B) Mortgagor's leasehold interest in the Premises, the Improvements and the Appurtenant Rights (as hereinafter defined) pursuant to the Land Lease; (C) All other right, title, interest and claims of Mortgagor now existing or hereafter arising under the Land Lease; and (D) The Personal Property; (E) TOGETHER WITH: (i) all estate, right, title and interest of Mortgagor of, in and to all judgments and decrees, insurance proceeds, awards of damages and settlements hereafter made resulting from condemnation proceedings or the taking of any of Mortgagor's interest in the property described in Granting Clauses (A), (B), (C) and (D) hereof or any part thereof under any applicable power of eminent domain, or for any damage (whether caused by such taking or otherwise) to Mortgagor's interest in the property described in Granting Clauses (A), (B), (C) and (D) hereof or any part thereof; (ii) all proceeds of any sales or other dispositions of Mortgagor's interest in the property or rights described in Granting Clauses (A), (B), (C) and (D) hereof or any part thereof whether voluntary or involuntary; provided, however, that the foregoing shall not be deemed to permit such sales, transfers, or other dispositions except as specifically permitted herein and in the Indenture; and (iii) whether arising from any voluntary or involuntary disposition of the property described in Granting Clauses (A), (B), (C) and (D), all Proceeds (as hereinafter defined), products, replacements, additions, 3 substitutions, renewals and accessions, remainders, reversions and after-acquired interest in, of and to such property; (F) TOGETHER WITH all of Mortgagor's right, title and interest in any Space Leases or any part thereof that Mortgagor has entered into, taken by assignment, taken subject to, or assumed, or has otherwise become bound by, now or in the future, together with all of the following (including all "Cash Collateral" within the meaning of the Bankruptcy Code) arising from the Space Leases: (a) all Rents (as hereinafter defined) and all rights of Mortgagor to receive and collect the same, (b) all guaranties, letters of credit, security deposits, collateral, cash deposits, and other credit enhancement documents, arrangements and other measures with respect to the Space Leases, (c) the right to enforce against any tenants under the Space Leases and otherwise any and all remedies under the Space Leases, including Mortgagor's right to evict from possession any tenant thereunder or to retain, apply, use, draw upon, pursue, enforce or realize upon any guaranty of any Space Lease, to terminate, modify, or amend the Space Leases; to obtain possession of, use, or occupy, any of the real or personal property subject to the Space Leases, and any claim that Mortgagor may have by reason of a termination, rejection, or disaffirmance of such Space Lease pursuant to any Bankruptcy law; (G) TOGETHER WITH all of Mortgagor's right, title and interest in and to any and all maps, plans, specifications, surveys, studies, tests, reports, data and drawings relating to the development of the Premises and the construction of the Improvements, including without limitation, all marketing plans, feasibility studies, soils tests, design contracts and all contracts and agreements of Mortgagor relating thereto including, without limitation, architectural, structural, mechanical and engineering plans and specifications, studies, data and drawings prepared for or relating to the development of the Premises or the construction, renovation or restoration of any of the Improvements; (H) TOGETHER WITH all of the Mortgagor's right, title, and interest in and to any and all licenses, permits, variances, special permits, franchises, certificates, rulings, approvals, waivers, orders, right and agreements (including options, option rights and contract rights) now or hereafter obtained by Mortgagor from any governmental authority having or claiming jurisdiction over the Premises, the Improvements or any other element of the Premises or providing access thereto, or the operation of any business on, at, or from the Premises, excluding, however, any Gaming Permits; 4 (I) TOGETHER WITH any and all monies and other property arising from or used in connection with Mortgagor's operation of the Premises and the Improvements, including, without limitation, the original proceeds of the Notes and any additional advances under this Mortgage; and all of the Mortgagor's right, title and interest in and to all extensions, improvements, betterments, renewals, substitutes for and replacements of, and all additions, accessions, and appurtenances to, any of the foregoing that Mortgagor may subsequently acquire an interest in or obtain by any means, or construct, assemble or otherwise place on any of the Subject Property, and all conversions of any of the foregoing; it being the intention of Mortgagor that all property in which Mortgagor hereafter acquires an interest and which is required by the Indenture or any Other Security Document or this Mortgage to be subjected to the lien of this Mortgage or intended so to be shall forthwith upon the acquisition of such interest by Mortgagor be subject to the lien of this Mortgage as if such property were now owned by Mortgagor and were specifically described in this Mortgage and granted hereby or pursuant hereto, and the Mortgagee is hereby authorized to receive any and all such property as and for additional security for the obligations secured or intended to be secured hereby; (J) TOGETHER WITH any and all Accounts Receivable, royalties, earnings, income, proceeds, products, Rents, revenues, reversions, remainders, issues, profits, avails, production payments, and other benefits directly or indirectly derived or otherwise arising from any of the foregoing, all of which are hereby assigned to Mortgagee, who, except as otherwise expressly provided in this Mortgage and the Indenture, is authorized to collect and receive the same, to give receipts and acquittances therefor and to apply the same to the Obligations secured hereunder, whether or not then due and payable; and (K) TOGETHER WITH Mortgagor's rights further to assign, encumber or otherwise transfer or dispose of the Mortgagor's interest in the property described in Granting Clauses (A) through (J) inclusive, above, for debt or otherwise, except as otherwise set forth in this Mortgage, the Indenture or the Other Security Documents; (L) EXPRESSLY EXCLUDING, HOWEVER, (i) the fee title and reversionary interest of the United States and the Tribe in the Premises, the Improvements and the Appurtenant Rights, and (ii) any Personal Property to the extent that (a) Mortgagor is permitted to enter into a financing agreement for such Personal Property under the Indenture and (b) such financing agreement prohibits Mortgagee from maintaining a security interest in the Personal Property 5 covered thereby, but only while the debt evidenced by such financing agreement remains unsatisfied. For purposes of this Mortgage, the following terms shall have the meanings set forth below: (1) "Accounts Receivable" means any right to payment for goods sold or leased or for services rendered which is not evidenced by an instrument or chattel paper, whether or not it has been earned by performance. (2) "Appurtenant Rights" means all tenements, hereditaments, rights, remainders, reversions, privileges, benefits, easements (in gross or appurtenant), rights-of-way, gores or strips of land, streets, ways, alleys, passages, sewer rights, and all appurtenances whatsoever, and all claims or demands at law or in equity, in any way belonging, benefitting, relating or appertaining to the Premises, the Improvements, or any part thereof, whether now existing or hereafter arising. (3) "Personal Property" means all right, title and interest of Mortgagor, if any, in and to the following: all goods, equipment, inventory, supplies, building and construction materials (prior to incorporation into the Improvements) and other personal property of every nature whatsoever constituting a part or portion and/or used in the operation of the hotel, casino, restaurants, stores, parking facilities, special events arena, theme park, and all other commercial operations on the Premises, including but not limited to communication systems, visual and electronic surveillance systems and transportation systems, and including all property and materials stored therein and all tools, utensils, food and beverage, liquor, uniforms, linens, housekeeping and maintenance supplies, vehicles, fuel, advertising and promotional materials, blueprints, surveys, plans and other documents relating to the Premises or Improvements, and all furnishings, Trade Fixtures and equipment, including, but not limited to, all gaming equipment and devices which are to be installed and used in connection with the operation of the Project, including without limitation those items of furnishings, Trade Fixtures and equipment which are to be purchased in accordance with the construction budget, and those items of furniture, Trade Fixtures and equipment which are to be purchased or leased by Mortgagor, machinery and any other items of personal property in which Mortgagor now or hereafter owns or acquires an interest or right and which are used or useful in the construction, operation, use and occupancy of the Premises or Improvements; and all gaming and financial equipment, computer equipment, calculators, adding machines, video game and slot machines, and any other electronic equipment of every nature used or located on any part of the Premises or Improvements, and 6 the Intangible Collateral, in each case whether now owned or hereafter acquired by Mortgagor. (4) "Gaming Permits" means any license, franchise, permit or other authorization on the date of the Indenture or thereafter required to own, lease, operate or otherwise conduct casino gaming at the Premises, which cannot be mortgaged, pledged or assigned as security for the Obligations. (This definition is included herein to confirm that no such Gaming Permits shall be included in the lien of this Mortgage.) (5) "Intangible Collateral" means all right, title and interest of Mortgagor, if any, in and to the following: (a) the rights to use all names, logos and designs, and all derivations thereof now or hereafter used by Mortgagor in connection with the Premises or Improvements, together with the goodwill associated therewith, EXPRESSLY EXCLUDING, however, the names "Mohegan", "Mohegan Tribe" or any other name, logo or design used by the Tribe to designate itself, or its tribal heritage, customs or governance, (b) any and all concession agreements, supply or service contracts, licenses, permits (excluding, however, Gaming Permits), governmental approvals (to the extent such licenses, permits and approvals may be pledged under applicable law), signs, goodwill, supplier lists, checking accounts, safe deposit boxes (excluding the contents of such deposit boxes owned by persons other than Mortgagor), cash, instruments, chattel papers, documents, unearned premiums, deposits, refunds, including but not limited to income tax refunds, prepaid expenses, rebates, tax and insurance escrow and impound accounts, if any, actions and rights in action, and all other claims, including without limitation condemnation awards and insurance proceeds, and all other contract rights and general intangibles (excluding, however, all books, records, and customer lists relating to any gaming operations being conducted at the Premises which cannot be mortgaged, pledged or assigned as security for the Obligations) resulting from or used in connection with the operation of the Subject Property and in which Mortgagor now or hereafter has rights; and (d) all of Mortgagor's documents, instruments, contract rights, and general intangibles including, without limitation all permits (excluding, however, Gaming Permits), licenses, franchises and agreements required for the use, occupancy or operation of any Improvements (to the extent such licenses, permits and approvals are not prohibited from being pledged under applicable law); and (e) general intangibles, vacation license resort agreements or other time share license or right to use agreements, including without limitation all rents, issues, profits, income and maintenance fees resulting therefrom, whether any of the foregoing is now owned or hereafter acquired. (6) "Proceeds" means whatever is received upon the sale, exchange, collection or other disposition of collateral or 7 proceeds, and, in any event, shall include but not be limited to (i) any and all proceeds of any insurance (including without limitation property casualty and title insurance), indemnity, warranty or guaranty payable from time to time with respect to any of the Subject Property; (ii) any and all proceeds in the form of accounts, security deposits, tax escrows (if any), down payments (to the extent the same may be pledged under applicable law), collections, contract rights, documents, instruments, chattel paper, liens and security instruments, guaranties or general intangibles relating in whole or in part to the Premises and all rights and remedies of whatever kind or nature which Mortgagor may hold or acquire for the purpose of securing or enforcing any obligation due Mortgagor thereunder; (iii) any and all payments in any form whatsoever made or due and payable from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Mortgagor's interest in the Subject Property by any governmental authority; and (iv) any and all other amounts from time to time paid or payable in connection with any of the Subject Property; provided, however, that the Mortgagor is not authorized to dispose of any of the Subject Property unless such disposition is otherwise permitted by the Indenture or this Mortgage. (7) "Rents" means all rents, income, receipts, issues, profits, revenues and maintenance fees, room, food and beverage revenues, license and concession fees, income, proceeds and other benefits to which Mortgagor may now or hereafter be entitled from the Premises, or Space Leases or any property encumbered hereby or any business or other activity conducted by Mortgagor at the Premises. (8) "Space Lease" means any and all leases, subleases, lettings, licenses, concessions, operating agreements, management agreements, and all other agreements affecting the Premises and/or Improvement that Mortgagor has entered into, taken by assignment, taken subject to, or assumed, or has otherwise become bound by now or in the future, that give any person the right to conduct its business on, or otherwise use, operate or occupy, all or any portion of the Premises and/or Improvement, together with all amendments, extensions, and renewals of the foregoing entered into in compliance with this Mortgage, together with all rental, occupancy, service, maintenance or any other similar agreements pertaining to use or occupation of, or the rendering of services at the Premises and/or Improvement or any part hereof. (9) "Trade Fixtures" means articles, which are easily removable, and which are placed by and at the sole expense of the Mortgagor in or attached to the Improvements to prosecute the trade or business of the Mortgagor for which it occupies the Improvements 8 or for use in connection with such business or to promote convenience and efficiency in conducting such business. (10) "UCC" means the Connecticut Uniform Commercial Code, now in force and as hereafter amended, as the same has been incorporated into and made part of the law of the Tribe as of the date of this Mortgage. All of the foregoing items and property shall be hereinafter collectively referred to as the "Subject Property". TO HAVE AND TO HOLD THE Subject Property, together with all rights, privileges, hereditaments and appurtenances thereunto now or hereafter belonging, or in any way appertaining, and the proceeds and products of all Improvements and Property, unto Mortgagee, its successors and assigns, to their use and behoof forever. NOTHING CONTAINED IN THIS MORTGAGE SHALL BE CONSTRUED TO AUTHORIZE THE MORTGAGEE TO CONDUCT ANY GAMING OPERATIONS ON THE PREMISES. FURTHER, NOTHING CONTAINED IN THIS MORTGAGE SHALL BE CONSTRUED TO GRANT TO MORTGAGEE ANY INTEREST IN ANY MANAGER'S INTEREST IN ANY MANAGEMENT AGREEMENT FOR THE OPERATION OF ALL OR ANY PART OF THE PREMISES OR THE IMPROVEMENTS, OR TO CONDUCT GAMING ON THE PREMISES. Mortgagor and Mortgagee further agree as follows: ARTICLE I GENERAL COVENANTS AND WARRANTIES SECTION 1.1. PERFORMANCE OF MORTGAGOR'S OBLIGATIONS. Mortgagor shall duly, punctually and fully pay, do and perform all Obligations and all other obligations and things on its part to be paid, done or performed under the Indenture, under this Mortgage and under any other instrument which refers to or secures the Indenture. Time is of the essence hereof. SECTION 1.2. REPRESENTATIONS AND WARRANTIES BY MORTGAGOR. Mortgagor represents and warrants to Mortgagee, as follows: (a) Mortgagor is the lawful owner of a leasehold interest in the Premises and Improvements pursuant to the Land Lease, and is the owner of the Personal Property; Mortgagor has good right and lawful authority to grant, bargain, sell, transfer and assign the Subject Property as provided herein; and the Subject Property is free and clear of all mortgages, liens, pledges, security interests, charges and encumbrances, excepting only Permitted Encumbrances. Mortgagor warrants and will defend the Mortgagor's leasehold interest and/or title to, as applicable, the 9 Subject Property against all claims and demands whatsoever, except the Permitted Encumbrances. (b) There is no provision in any indenture, contract or agreement, to which Mortgagor is a party or by which it is bound, or any law, statute, ordinance, governmental rule, regulation or restriction, or any order of any court or administrative agency, to which Mortgagor is subject or by which Mortgagor is bound, which prohibits the execution and delivery by Mortgagor of this Mortgage, the Indenture or any other instruments which refer to or secure the Indenture or evidence the indebtedness secured hereby, including without limitation the Disbursement Agreement (hereinafter collectively referred to as "Other Security Documents" and individually referred to as an "Other Security Document"), or the performance or observance by Mortgagor of any of the terms, covenants or conditions of this Mortgage, the Indenture or any Other Security Document. (c) Execution and delivery of this Mortgage, the Indenture and the Other Security Documents, by and on behalf of Mortgagor, have been duly and validly authorized, and this Mortgage, the Indenture and Other Security Documents have been duly and validly executed and delivered, by and on behalf of Mortgagor, and are valid, binding and enforceable obligations of Mortgagor in accordance with their terms. (d) All applicable building, zoning, occupational safety and health, energy and environmental laws, ordinances and regulations affecting the Subject Property permit the use and occupancy thereof for class II and class III Indian gaming and related purposes and have been complied with, and Mortgagor has obtained the necessary consents, permits and licenses to operate the Improvements for said purposes. (e) Mortgagee may at all times peaceably and quietly enter upon, hold, occupy and enjoy the entire Subject Property in accordance with the terms hereof; (b) neither Mortgagor nor any affiliate of Mortgagor is insolvent and no bankruptcy or insolvency proceedings are pending or contemplated by or, to the best of Mortgagor's knowledge, against Mortgagor or any affiliate of Mortgagor; (c) all costs arising from construction of any Improvements, the performance of any labor and the purchase of all Personal Property and Improvements have been or shall be paid when due; (d) Mortgagor shall at all times conduct and operate the Subject Property in a manner so as not to lose the right to conduct gaming activities at the Premises; (e) no material part of the Subject Property has been damaged, destroyed, condemned or abandoned; and (f) each of the representations and warranties contained in the Notes, the Indenture, this Mortgage and the Other Security Documents is true and correct in all material respects. 10 SECTION 1.3. [Intentionally Omitted] SECTION 1.4. [Intentionally Omitted] SECTION 1.5. FURTHER ASSURANCES; SECURITY AGREEMENT. Mortgagor will procure, do, execute, acknowledge and deliver each and every further act, deed, conveyance, transfer, document and assurance reasonably necessary or proper for the carrying out more effectively of the purpose of this Mortgage and, without limiting the foregoing, for granting, bargaining, selling, transferring and assigning unto Mortgagee all of the right, title and interest which the Mortgagor has by virtue of its tenant's interest under the Land Lease in and/or to the Subject Property, or property intended so to be, whether now owned or hereafter acquired by Mortgagor (hereinafter, "Mortgagor's Interest in the Subject Property"), including without limitations the preparation, execution and filing of any documents, such as financing statements and continuation statement, deemed advisable by Mortgagee for perfecting and maintaining its lien on the Subject Property. This Mortgage shall further constitute and be deemed to be a Security Agreement under the UCC and Mortgagor hereby grants to Mortgagee a present and continuing security interest in any property, Trade Fixtures, equipment, inventory, leases (subject to the absolute assignment thereof hereinafter described), rents, issues, income, profits, Personal Property, accounts, chattel paper, documents, instruments, money and deposit accounts, contract rights, claims, trade names and general intangibles included in, arising from or otherwise related to the Mortgagor's Interest in the Subject Property or any portion thereof, and, subject to the provisions of this Mortgage, in Mortgagor's interest in insurance policies and unearned premiums prepaid thereon, insurance proceeds, and awards, payments or consideration for the taking of Mortgagor's Interest in the Subject Property, or any portion thereof, by condemnation or exercise of the power of eminent domain, or from any sale in lieu or in anticipation thereof, assigned by Mortgagor to Mortgagee hereunder, to the extent that a security interest may be granted therein under the terms of the UCC. SECTION 1.6. CARE AND MAINTENANCE OF SUBJECT PROPERTY. Mortgagor shall not commit or permit waste or deterioration upon or of the Subject Property and shall cause the Subject Property and every part thereof, including but not limited to parking areas, Improvements and all ingress and egress easements, if any, to be continually maintained, preserved and kept in safe and good repair, working order and condition, and will comply with all present and future laws, statutes, ordinances, rules and regulations of any governmental authority having or claiming jurisdiction with reference to the Subject Property and the manner of leasing, using, operating or maintaining the same (hereinafter referred to as "Governmental Requirements"), as now existing or as hereafter 11 amended, and will comply in all materials respects with any requirements of all insurance companies insuring all or any part of the Premises or the Improvements and will comply with all private declarations, easements, covenants and restrictions, if any, affecting the title to the Subject Property, or any thereof (hereinafter referred to as "Private Restrictions"), and will not commit, suffer or permit any violation thereof, and will from time to time make all necessary and proper restorations, rebuildings, repairs, renewals, replacements, additions and betterments to the Subject Property, whether required as the result of casualty or otherwise, and whether or not insurance proceeds or condemnation proceeds exist or are sufficient therefor, in a good and workmanlike manner, so that the value and efficient use thereof shall be fully restored, preserved and maintained, and so that all Governmental Requirements and Private Restrictions shall be complied with. Mortgagor shall give Mortgagee written notice within five Business Days (as that term is defined in the Indenture), if it receives notice of any violation of any Governmental Requirement or Private Restriction, or if any damage or destruction occurs to the Subject Property. Except to the extent permitted by the Indenture, Mortgagor agrees not to make any use of the Subject Property, other than as permitted under the Land Lease; except as contemplated by the Indenture not to demolish, remove, or materially and adversely alter the Improvements, without the prior written consent of Mortgagee, not to be unreasonably withheld; and not to remove from the Premises or Improvements any material part of the Property, unless immediately replaced with like property of at least equal utility and value of the property being replaced when such property was new. All such replacements and additions shall be subject to the lien hereof and the security interest created hereby, which shall be prior to all other liens or security interests thereon and therein, excepting Permitted Encumbrances. Mortgagee or its agents may enter upon the Subject Property at all reasonable times to inspect the same and for the purpose of protecting its security and preserving its rights hereunder, but shall not be liable to any person, party or entity for failure to do so. Except to the extent permitted by the Indenture, Mortgagor covenants and agrees not to commence construction of any new buildings or Improvements upon the Premises, or any additions to existing Improvements, without the prior written consent of Mortgagee, not to be unreasonably withheld, and to promptly complete with due diligence any buildings, Improvements and additions for which Mortgagee's consent is obtained hereunder in good and workmanlike manner, free and clear of all liens, charges and encumbrances, except the lien hereof and Permitted Encumbrances. SECTION 1.7. IMPOSITIONS AND LIENS. Mortgagor shall, before any penalty or interest attaches thereto because of delinquency in payment, pay and discharge, or cause to be paid and discharged, all 12 taxes, assessments, levies and governmental charges imposed upon or against the Subject Property or upon or against the Indenture (not including income taxes of the Mortgagee) or upon or against the Premises or upon or against the Improvements or upon or against the Property (herein collectively referred to as "Impositions") and will thereafter deliver the paid receipts therefor to Mortgagee within 30 days after written request therefor from Mortgagee. Mortgagor shall not suffer to exist and shall promptly pay and discharge any mechanic's, statutory or other lien or encumbrance on the Premises, Improvements and/or Subject Property or any part thereof (hereinafter referred to as "Liens"), except for Permitted Encumbrances. Notwithstanding the foregoing, Mortgagor shall not be in default hereunder in respect to the payment of any Imposition or Lien which Mortgagor shall be required by any provision hereof to pay, so long as Mortgagor shall first notify Mortgagee, in writing, at least 30 days prior to the due date thereof, if any, or otherwise at least 15 days before commencement of any contest thereof, of its intention to contest the amount, applicability and/or validity of said Imposition or Lien and shall thereafter, in good faith, in compliance with all applicable statutes, and with all possible promptness, diligently contest the same, and Mortgagor may postpone or defer payment of a portion of said Imposition or Lien, if, but only if, permitted by statute, and if neither the Subject Property, nor any portion thereof, would, by reason of such postponement or deferment, be in danger of being forfeited or lost. Upon a final adjudication of any such contest, and, in any event, at least 30 days prior to the date on which the interest of Mortgagee in the Subject Property would otherwise forfeit by reason of the nonpayment of any such Imposition or Lien, Mortgagor shall pay the amount thereof then due, including any penalties and interest thereon. Nothing in this Section 1.7 shall be deemed to be an admission by Mortgagor that any part of the Subject Property may be made subject to any taxes, assessments, levies, governmental charges or Liens (other than the lien of this Mortgage). SECTION 1.8. INSURANCE. Mortgagor shall obtain, maintain and keep in full force and effect, or cause the manager of all or any part of the facilities operated upon the Premises to obtain, maintain, and keep in effect, during the term of this Mortgage, with all premiums paid thereon, insurance policies as required by the Indentures and shall provide Mortgagee evidence thereof in accordance with the Indenture. All insurance shall be effected under a valid enforceable policy or policies, shall be issued by insurers of recognized responsibility, which are licensed to do business in State of 13 Connecticut, and which are acceptable to Mortgagee acting reasonably, and shall be reasonably satisfactory to Mortgagee in all other respects. Mortgagor shall not carry separate insurance concurrent in form or contributing in the event of loss with that required to be maintained by Mortgagor, unless it also complies with all provisions of the Indenture applicable to such insurance. All hazard and casualty insurance policies maintained by Mortgagor or the manager pursuant to the foregoing provisions shall (i) provide that any losses payable thereunder shall (pursuant to a standard first mortgage clause in favor of Mortgagee to be attached to each such policy) be payable to Mortgagee, its successors and assigns as their interests may appear, (ii) include effective waivers by the insurer of all claims for insurance premiums against Mortgagee, (iii) provide that any losses shall be payable notwithstanding (a) any act of negligence by Mortgagor or Mortgagee, (b) any foreclosure or other proceedings or notice of sale relating to the Subject Property, (c) any waiver of subrogation rights by the insured, or (d) any change in the title to or ownership of any of the Subject Property, and (iv) be written in amounts sufficient to prevent Mortgagor from becoming a co- insurer under said policies. All liability insurance policies maintained by Mortgagor pursuant to the foregoing contribution from any other insurance carried by Mortgagee in the event of loss. In the event of loss, Mortgagor shall immediately give written notice thereof to Mortgagee and shall, in good faith and with due diligence, promptly file, prosecute and collect upon its insured claims for loss, and shall cause all proceeds thereof to be paid over to Mortgagee. The amount of any settlement of any such claim shall always be subject to the Mortgagee's prior written approval, not to be unreasonably withheld or delayed. If Mortgagor does not promptly and diligently do so, or if any Event of Default (as hereinafter defined) then exists hereunder, Mortgagee is authorized and empowered (but not obligated or required) to make proof of loss, to select, adjust or compromise any claims for loss, damage or destruction under, and to collect and receive all proceeds of, any policies of hazard and casualty insurance maintained pursuant hereto. Mortgagor shall reimburse Mortgagee, on demand, for all costs and expenses, including but not limited to court costs and reasonable attorneys' fees, incurred by Mortgagee in connection therewith. All proceeds of such insurance are hereby absolutely and unconditionally assigned, and shall be paid, to Mortgagee. All Net Loss Proceeds (as defined in the Indenture) received in connection with any such loss shall be held and disbursed in accordance with the Indenture. SECTION 1.9. UTILITIES AND SERVICES. Mortgagor shall pay or cause to be paid promptly, when due, all charges or fees for 14 utilities or services, including but not limited to electricity, water, gas, telephone, sanitary sewer, and trash and garbage removal, supplied to the Subject Property, and, upon request of Mortgagee, shall furnish receipts to Mortgagee showing such payment. SECTION 1.10. [Intentionally Omitted.] SECTION 1.11. CURE OF DEFAULTS BY MORTGAGEE. If Mortgagor shall fail to observe, comply with or perform any of the terms, agreements, covenants and/or conditions herein with respect to the procuring and delivery of insurance, the payment of Impositions or Liens, the keeping of the Subject Property in repair, the protection of the Subject Property or Mortgagor's interest therein, the observing, performing and discharging of the obligations of Mortgagor under the Land Lease and the Space Leases, or any other term, agreement, covenant or condition contained herein, in the Indenture or in any Other Security Document, Mortgagee may, at its option, itself observe, comply with or perform the same, may make such advances to observe, comply with or perform the same as Mortgagee shall deem appropriate, and may pay reasonable fees of attorneys' employed by Mortgagee in connection therewith, and may enter the Subject Property for the purpose of observing, complying with or performing any such term covenant or condition. Mortgagee may expend such sums, including reasonable attorneys' fees (prior to trial, at trial and on appeal), to sustain the lien of this Mortgage or its priority, or to protect or enforce, or to obtain the right to enforce, its rights, powers and remedies hereunder, including the payment of any prior liens, claims and encumbrances, other than Permitted Encumbrances which are not in default, or to protect the Subject Property, as it may deem desirable. Mortgagor agrees to repay all such sums so advanced, paid or expended upon demand, and all sums so advanced, paid or expended, with interest at the default rate set forth in the Indenture, shall be a lien upon the Subject Property, shall be secured hereby and may be collected in the same manner as the principal debt secured hereby, but no such advance or expenditure shall be deemed to relieve Mortgagor from any default hereunder. SECTION 1.12. SALE, TRANSFER OR ENCUMBRANCE. Except to the extent permitted by the Indenture, if Mortgagor shall voluntarily, involuntarily or by operation of law agree to, cause, suffer or permit (a) any sale, transfer, lease or conveyance of any material interest of Mortgagor, legal or equitable, in the Land Lease, the Subject Property or any portion thereof; (b) any change in the ownership of a controlling interest in Mortgagor; or (c) any mortgage, pledge, encumbrance or lien to be outstanding against the Subject Property or any portion thereof, or any security interest to exist therein, except as created by this Mortgage and the other documents which secure the Indenture, and except Permitted 15 Encumbrances, without, in each instance, the prior written consent of Mortgagee which shall not be unreasonably withheld or delayed, Mortgagee may, at its election, declare the entire indebtedness hereby secured to be immediately due and payable, without notice to Mortgagor (which notice Mortgagor hereby expressly waives), and upon such declaration the entire indebtedness hereby secured shall be immediately due and payable. SECTION 1.13. ASSIGNMENT OF LEASES AND RENTS. If the Subject Property is or in the future becomes subleased to third parties as permitted by and in accordance with Section 4.27 of the Indenture, then Mortgagor and Mortgagee agree as follows: (a) This is a present, absolute, effective, irrevocable and completed assignment by Mortgagor to Mortgagee of the Space Leases and Rents and of the right to collect and apply the same, which is not contingent upon Mortgagee being in possession of the Subject Property. Prior to the occurrence of an Event of Default hereunder, Mortgagor may collect all Rents due under any Space Leases. After the occurrence and during the continuance of an Event of Default, Mortgagee shall have the absolute right to collect all Rents. (b) Mortgagor shall, at its costs and expense, perform each obligation to be performed by the landlord under each Space Lease; except as permitted by the Indenture, not borrow against, pledge or further assign any Rents due thereunder; not permit the prepayment of any Rents due for more than 30 days in advance; not permit any tenant to assign or sublet its interest in any Space Lease unless required to do so by the terms thereof and then only if such assignment does not work to relieve the tenant of any liability for performance of its obligations thereunder; not materially and adversely amend or modify the obligations of the parties under any Space Lease without prior written consent of Mortgagee, not to be unreasonably withheld or delayed. (c) If any tenant shall default under a Space Lease, Mortgagor shall, in the ordinary course of business, exercise sound business judgment with respect to such default but may not waive claims or discharge tenants and/or occupants from their obligations under the Space Lease or terminate or accept a surrender of any Space Lease, without the prior written consent of Mortgagee. (d) If Mortgagor fails to perform any obligations of Mortgagor under any Space Lease or if Mortgagee becomes aware of or is notified by any tenant under any Space Lease of a failure on the part of Mortgagor to so perform, Mortgagee may, but shall not be obligated to, without waiving or releasing Mortgagor from any obligation in this Mortgage, remedy such failure, and Mortgagor agrees to repay upon demand all sums incurred by Mortgagee in 16 remedying any such failure together with interest as provided in the Indenture. Any such sums, together with interest, shall be part of the indebtedness secured hereby. (e) Mortgagee shall not be deemed to be a partner of, or a joint venturer with, Mortgagor with respect to the Subject Property or to be a participant of any kind in the management or operation of the Subject Property. Except as to the provisions of the Land Lease, Mortgagee shall not be obligated to perform or discharge, nor does it hereby undertake to perform or discharge, any obligation, duty or liability under any Space Lease, or with respect to the Subject Property or the inspection, maintenance or repair thereof, under or by reason of this Mortgage. Neither this Section 1.13, nor the exercise by Mortgagee of its rights hereunder, shall be deemed to constitute Mortgagee a beneficiary or mortgagee in possession of the Subject Property, unless Mortgagee elects in writing to be so constituted. SECTION 1.14. [Intentionally Omitted.] SECTION 1.15. HAZARDOUS SUBSTANCES. Mortgagor shall not permit toxic or hazardous substances or wastes, pollutants or contaminants, including, without limitation, asbestos, urea formaldehyde, the group of organic compounds known as polychlorinated biphenyls, petroleum products including gasoline, fuel oil, crude oil and various constituents of such products, any hazardous substance as defined in the Comprehensive Environmental Response Act of 1980 (42 U.S.C. S9601, et seq.), and any other federal, state or tribal laws, rules or regulations relating to the protection of the environment (collectively, "Hazardous Substance"), to be generated, treated, stored, transferred from, discharged, released or disposed of, or otherwise placed, deposited in or located on, used, transported over, or otherwise entered on or into the Premises, except in accordance with all applicable state, federal, local and tribal laws, regulations, rules, codes and ordinances relating to the environment ("Environmental Regulations"); nor shall the Mortgagor undertake any activity on the Premises that would cause or contribute to the Premises becoming a treatment, storage or disposal facility for Hazardous Substances within the meaning of any applicable Environmental Regulations. The foregoing provision shall not be deemed to prohibit the incidental storage or use of Hazardous Substances in the ordinary course of the Mortgagor's business, provided such storage or use is in compliance with all applicable Environmental Regulations. SECTION 1.16. INDEMNITY. Mortgagor agrees to indemnify, protect, hold harmless and defend Mortgagee from and against any and all losses, liabilities, suits, actions, obligations, fines, damages, judgments, penalties, claims, causes of action, charges, 17 costs and expenses (including reasonable attorneys' fees, disbursements and court costs prior to trial, at trial and on appeal) which may be imposed on, incurred or paid by, or asserted against Mortgagee by reason or on account of, or in connection with, (i) any willful misconduct of Mortgagor or any Event of Default hereunder, (ii) the construction or alteration of the Subject Property, (iii) any negligence of Mortgagor or any tenant of the Subject Property or any part thereof, or any of their respective agents, contractors, subcontractors, servants, directors, officers, employees, licensees or invitees, or (iv) any accident, injury, death or damage to any person or property occurring in, on or about the Subject Property or any street, drive, sidewalk, curb or passageway adjacent thereto, except to the extent that the same results directly from the gross negligence or willful misconduct of Mortgagee. Any amount payable to Mortgagee under this Section 1.16 shall be due and payable upon demand therefor and receipt by Mortgagor of a statement from Mortgagee setting forth in reasonable detail the amount claimed and the basis therefor. Mortgagor's obligations under this Section 1.16 shall not be affected by the absence or unavailability of insurance covering the same or by the failure or refusal of any insurance carrier to perform any obligation on its part under any such policy of insurance. If any claim, action or proceeding is made or brought against Mortgagee which is subject to the indemnity set forth in this Section 1.16, and provided Mortgagor is given prompt written notice thereof, Mortgagor shall defend the Mortgagee by counsel reasonably acceptable to the Mortgagee, and "attorneys' fees" shall include both reasonable attorneys' fees and paralegals' fees and expenses. In the event that any action or proceeding is brought against the Mortgagee, its officers, agents or employees by reason of any of the matters set forth hereinabove, then the Mortgagor upon notice from the Mortgagee, shall protect and defend at the Mortgagor's sole expense such action or proceeding by counsel reasonably satisfactory to the Mortgagee and in the event the Mortgagor shall fail to protect and defend the Mortgagee, its officers, agents or employees, then the Mortgagee may undertake to protect and defend itself, its officers, agents or employees and the Mortgagor shall pay to the Mortgagee, upon demand, all costs and expenses incurred by the Mortgagee in connection therewith, including without limitation, all such attorneys' fees. SECTION 1.17. LAND LEASE. Mortgagor shall punctually perform all obligations, covenants and agreements to be performed by it under the Land Lease, strictly in accordance with the terms thereof, and shall at all times do all things necessary to compel performance by the Tribe of all of its obligations, covenants and agreements under the Land Lease. Mortgagor shall, at all times, maintain the validity and effectiveness of the Land Lease, and shall neither take nor permit any action which would release the Tribe from its obligations or liabilities under the Land Lease, or 18 would result in the termination, amendment or modification of, or impair the validity of the Land Lease. If Mortgagor defaults under the Land Lease, Mortgagee shall have the right, at its option, to cure such default in accordance with the Land Lease, and all reasonable costs and expenses incurred by Mortgagee in doing so, together with interest thereon at the rate provided in the Indenture, shall become due and payable immediately and shall be added to the indebtedness secured by this Mortgage. Mortgagor appoints Mortgagee as its attorney-in-fact for purposes of taking all actions necessary to cure any such default, in Mortgagee's sole discretion, which power of attorney is coupled with an interest and shall be irrevocable as long as any indebtedness secured by this Mortgage remains outstanding. If, under the Land Lease, Mortgagor shall, at any time before satisfaction of this Mortgage, acquire any additional interest in the Premises or Improvements, then the lien of this Mortgage shall attach, extend to, cover and be a lien upon such title or other interest, provided that in no event shall the fee interest of the United States in trust for the Tribe in the Premises or the Improvements become subject to this Mortgage. SECTION 1.18. BANKRUPTCY EFFECT. Mortgagor acknowledges that pursuant to Section 365 of the Bankruptcy Reform Act of 1978 (as the same may be amended or recodified from time to time, called the "Bankruptcy Reform Act") it is possible that a trustee in bankruptcy of the Tribe or the Tribe as a debtor-in-possession could reject the Land Lease, in which case Mortgagor as tenant would have the election described in Section 365(h) of the Bankruptcy Reform Act (which election, as it may be amended, revised or recodified from time to time, and together with any comparable right under any other state or federal law relating to bankruptcy, reorganization or other relief for debtors, whether now or hereafter in effect, is called the "Election") to treat the Land Lease as terminated by such rejection or, in the alternative, to remain in possession for the balance of the term of the Land Lease and any renewal or extension thereof that is enforceable by the tenant under applicable non-bankruptcy law. (a) Mortgagor agrees not to terminate or permit termination of the Land Lease by exercise of the Election without the prior written consent of Mortgagee. Mortgagor acknowledges that because the Land Lease is a significant part of the Mortgagee's security for the obligations secured under this Mortgage, the Mortgagee does not anticipate that it would consent to termination of the Land Lease and shall not under any circumstances be obliged to give such consent. (b) In order to secure the covenant made in Section 1.1 of this Mortgage and as security for the other obligations secured under this Mortgage, Mortgagor assigns the Election to Mortgagee under this Mortgage. Mortgagor acknowledges and agrees that this 19 assignment of the Election is one of the rights which Mortgagee may use at any time in order to protect and preserve the other rights and interests of Mortgagee under this Mortgage, since exercise of the Election in favor of terminating the Land Lease would constitute waste hereunder. (c) Mortgagor acknowledges and agrees that the Election is in the nature of a remedy and is not a property interest which Mortgagor can separate from the Land Lease. Therefore, Mortgagor agrees that exercise of the Election in favor of preserving the right to possession under the Land Lease shall not be deemed to constitute a taking or sale of Mortgagor's interest in the Subject Property by Mortgagee and shall not entitle Mortgagor to any credit against the obligations secured by this Mortgage. (d) Mortgagor further acknowledges and agrees that if the Election is exercised in favor of Mortgagor remaining in possession, then Mortgagor's resulting right under the Land Lease to possession and use of (and rents and profits from) the Premises and Improvements, as adjusted by the effect of Section 365 of the Bankruptcy Reform Act, shall be part of the Premises and Improvements and shall be subject to the lien created by this Mortgage. However, Mortgagor acknowledges and agrees that the right under the Land Lease to possession and use of the premises and Improvements as so adjusted is not equivalent to the leasehold interest which is the Subject Property at the time of execution of this Mortgage. Therefore, Mortgagor agrees that rejection of the Land Lease under the Bankruptcy Reform Act by a trustee in bankruptcy of the Tribe or by the Tribe as a debtor-in-possession shall constitute a default under this Mortgage and shall entitle Mortgagee to all rights and remedies upon an Event of Default under this Mortgage. ARTICLE II TAKING OF PROPERTY SECTION 2.1. CONDEMNATION OR SALE IN LIEU THEREOF. In case of a taking of or damage to all or any portion of the Subject Property as a result of, or a sale thereof in lieu of or in anticipation of, the exercise of the power of condemnation or eminent domain, or the commencement of any proceedings or negotiations which might result in such a taking, damage or sale, Mortgagor shall promptly give Mortgagee written notice thereof, generally describing the nature of such taking, damage, sale, proceedings or negotiations and the nature and extent of the taking, damage or sale which has resulted or might result therefrom, as the case may be, together with a copy of each and every document relating thereto received by Mortgagor, and Mortgagee shall have the right to participate in such proceedings or negotiations with respect to Mortgagor's leasehold interest 20 therein. Should any of the Subject Property be taken or damaged by exercise of the power of condemnation or eminent domain, or be sold by private sale in lieu or in anticipation thereof, Mortgagor does hereby irrevocably assign, set over and transfer to Mortgagee any award, payment or other consideration for the interest of the Mortgagor by reason of its rights as tenant under the Land Lease or otherwise in the property so taken, damaged or sold and any claim or cause of action therefor. All Net Loss Proceeds (as defined in the Indenture) received in connection with any of the foregoing shall be held and disbursed in accordance with the Indenture. ARTICLE III DEFAULT AND REMEDIES THEREFOR SECTION 3.1. EVENT OF DEFAULT. The occurrence of any of the following shall constitute an "Event of Default" under this Mortgage: (a) the Mortgagor defaults in the payment when due of interest on the Notes and such default continues for a period of 30 days; provided that payments of Cash Flow Participation Interest (as defined in the Notes) that are permitted to be deferred as provided in the Notes shall not become due for this purpose until such payment is required to be made pursuant to the terms of the Notes; (b) the Mortgagor defaults in the payment when due of principal of or premium, if any, on the Notes when the same becomes due and payable at maturity, upon redemption (or in connection with an offer to purchase) or otherwise; (c) the Mortgagor fails to comply with any of the provisions of Section 4.07, 4.09, 4.10, 4.11, 4.15, 4.16, 4.18, 4.28 or 5.01 of the Indenture; (d) the Mortgagor or the Tribe (with respect to its obligations under the Indenture) fails to observe or perform any other covenant, representation, warranty or other agreement in the Indenture, the Notes or the Other Security Documents for 60 days after written notice to the Mortgagor by the Mortgagee or to the Mortgagor and the Mortgagee from Holders of at least 25% in the principal amount of the Notes then outstanding; (e) the Land Lease ceases to be in full force and effect or the Mortgagor defaults in the performance of any covenant set forth in the Lease, the Leasehold Mortgage, or any of the Other Security Documents (which default is not waived or cured); (f) a default occurs under any mortgage, indenture or instrument under which there is issued or by which there is secured 21 or evidenced any Indebtedness for money borrowed by the Mortgagor or the payment of which is guaranteed by the Mortgagor, whether such Indebtedness or guarantee now exists, or is created after the Issuance Date, which default (a) is caused by a failure to pay when due principal of or premium, if any, or interest on such Indebtedness prior to the expiration of the grace period provided in such indebtedness (a "Payment Cross-Default") or (b) results in the acceleration of such Indebtedness prior to its express maturity or would constitute a default in the payment of such issue of Indebtedness at final maturity of such issue and, in each case, the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness under which a Payment Cross- Default then exists or with respect to which the maturity thereof has been so accelerated or which has not been paid at maturity, aggregates $7.5 million or more; (g) final judgment or final judgments for the payment of money are entered by a court or courts of competent jurisdiction against the Mortgagor or any of its assets and such judgment or judgments remain unpaid or undischarged or unstayed for a period of 60 days, provided that the aggregate of all such undischarged judgments exceed $7.5 million; (h) the Mortgagor breaches in a material respect any representation or warranty set forth in the Land Lease or this Mortgage or any of the Other Security Documents, or the Mortgagor repudiates any of its obligations under, or any judgment or decree by a court or government agency of competent jurisdiction declaring the unenforceability of, the Land Lease or any of the Other Security Documents and such repudiation materially impairs the benefits of the Mortgagee and the Holders of the Notes thereunder; (i) the Mortgagor pursuant to or within the meaning of Bankruptcy Law: (i) commences a voluntary case, (ii) consents to the entry of an order for relief against it in an involuntary case, (iii) makes a general assignment for the benefit of its creditors, or (iv) generally is not paying its debts as they become due; or (j) a court of competent jurisdiction enters an order or decree under any bankruptcy law that: 22 (i) is for relief against the Mortgagor in an involuntary case; or (ii) orders the liquidation of the Mortgagor; and the order or decree remains unstayed and in effect for 60 consecutive days; (k) there is any revocation, termination, suspension or other cessation of effectiveness of any Gaming Permit which results in the cessation or suspension of gaming operations for a period of more than 90 consecutive days at the Resort (as defined in the Indenture); (l) there is a cessation of gaming operations for a period of more than 90 consecutive days at the Resort (other than as a result of a casualty loss) after the Resort becomes operating; or (m) there is a cessation of gaming operations for a period of more than 180 consecutive days as a result of a casualty loss after the Resort becomes operating except if the Mortgagor is diligently pursuing reconstruction and opening of the Resort and such reconstruction and opening can be accomplished with the funds available to the Mortgagor. The Indebtedness secured by this Mortgage is subject to acceleration upon the occurrence of an Event of Default. SECTION 3.2 REMEDIES. In the event of the happening of any Event of Default, or in the case the principal of the Notes shall have become due and payable in full, whether by lapse of time or by acceleration, then and in every such case, Mortgagee shall have the right and power, at its option, in addition to any other rights of Mortgagee under the Indenture and the Other Security Documents to pursue any one or more of the following remedies: (a) Remedies Under State Laws. Without limiting any other remedy available under this Mortgage or applicable federal or Tribal law, Mortgagee shall have the right, at its option, to exercise any right or remedy which would be available to Mortgagee under the laws of the State of Connecticut ("State Laws"), if such State Laws were directly applicable to this Mortgage and the Subject Property, including without limitation the right to foreclose this Mortgage by action or in any other manner provided by State Laws (for which purpose Mortgagee is hereby granted all requisite powers under State Laws, including without limitation the power of sale, if and to the full extent now or hereafter permitted by State Laws), the right to have a receiver appointed to operate and manage the Subject Property and collect the Rents, and to 23 perform all other functions and duties of a receiver to the full extent permitted under State Laws, and the right to exercise all rights and remedies of a secured creditor under the UCC. If and to the extent that State Laws pertaining to any remedy or procedure selected by Mortgagee would require action to be taken by a sheriff, clerk of court or other state or local official or authorized person, the Gaming Disputes Court established pursuant to Article XIII, Section 2 of the Tribe's Constitution (the "Tribal Court") shall direct and authorize such action to be taken by an agent or officer of the Tribal Court who shall be selected, appointed and fully empowered by the Tribal Court for such purpose. If and to the extent that application of procedures specified by State Laws in any action to enforce this Mortgage would be impossible or impractical, the Tribal Court shall by order, at Mortgagee's request, direct and establish such alternative and/or supplementary procedures as may be necessary or appropriate to assure practical realization and implementation of the remedies granted to Mortgagee and/or contemplated by this Subsection. (b) Contractual Receiver. Mortgagee may, at its option, but without obligation to do so, without notice to or consent of Mortgagor, either in person or by agent, without regard for the adequacy or value of the Subject Property or of any other security for the indebtedness secured hereby, the commission of waste or the solvency or insolvency of Mortgagor or of any other party bound for the payment and such indebtedness, with or without bringing any action or proceeding, or by a receiver or trustee to be appointed, at Mortgagee's request, by any court of competent jurisdiction, enter upon, inspect, conduct tests with respect to, take possession of, maintain, manage and operate the Subject Property in the name, place and stead of Mortgagor and on Mortgagor's behalf and capacity, subject to the provisions of this Subsection, and to make, execute, enforce, modify, alter, cancel and accept the surrender of any Space Leases (whether or not the same extend beyond the term of this Mortgage), obtain or evict tenants, fix or modify Rents, refund and collect security deposits, and do any other acts in connection with the maintenance, management and operation of the Subject Property to protect the security hereof and to operate the Subject Property which Mortgagee, in its sole discretion, deems proper, and either with or without taking possession of the Subject Property, in its own name or in the name of Mortgagor, sue for or otherwise demand, collect, receive, and give receipts for all cash receipts from the operation of the Subject Property and all Rents, and apply the same (i) upon the costs of collection thereof, including the fees and costs of agents and attorneys employed by Mortgagee; upon the costs of managing, operating and leasing the Subject Property, including taxes, insurance, maintenance, repairs, improvements, the fees of professional managing agents, architects, engineers and appraisers, 24 license and permit fees, leasing fees and commissions, and Mortgagee's out-of-pocket expenses; and (ii) upon any indebtedness secured hereby, in accordance with the Indenture. Mortgagor hereby grants to Mortgagee an irrevocable power of attorney, coupled with an interest, to perform all of the acts and things provided for in this Subsection, as Mortgagor's agent and in Mortgagor's name. The entering upon and taking possession of the Subject Property, the collection of such cash receipts and Rents and the application thereof as aforesaid, and/or the exercise or failure to exercise any remedy hereunder, shall not cure or waive any Event of Default or waive, modify or affect any notice of default under the Indenture, under this Mortgage of under any Other Security Document, invalidate any act done pursuant to such Event of Default or notice of default, or in any way preclude or abridge the right of Mortgagee to foreclose this Mortgage or take other legal or equitable action hereunder. Mortgagee may, without entering into possession or pursuing any other remedy as provided in this subsection or at law or in equity, or in conjunction with such possession or pursuit of other remedy, give notice to any or all tenants under Space Leases authorizing and directing said tenants to pay Rents directly to Mortgagee, or to any receiver appointed pursuant to this Subsection. If a tenant received such a notice, Mortgagor hereby directs such tenant to make payment pursuant thereto, and it shall be conclusively presumed, as between Mortgagor and such tenant, that the tenant is obligated and entitled to make such payment to Mortgagee, or to any receiver appointed pursuant to this Subsection, and that such payment constitutes payment of Rents under the Space Lease in question. Mortgagee shall be accountable only for Rents actually collected hereunder and not for the rental value of the Subject Property. (c) Sale or Disposition. Mortgagee shall have the right, but not the obligation, by giving written notice to Mortgagor of Mortgagee's exercise of its rights under this Subsection (which notice may be given simultaneously with the exercise of such rights), to assume exclusive possession, control, custody and ownership of Mortgagor's Interest in the Subject Property (or the interest of any receiver appointed pursuant to Section 3.2(a) or 3.2(b) above) or any portion thereof, and to sell, assign, sublease or otherwise dispose of the Subject Property, in whole or in part, from time to time, and in a commercially reasonable manner, all as determined by Mortgagee in its reasonable discretion, without further notice to Mortgagor or any other party, free and clear of any interest of Mortgagor, any court-appointed receiver, any secured or unsecured creditor other than Mortgagee, any tenants under Space Leases or any other party in possession or control of any part of the Subject Property, or any other claimant (but subject to the Permitted Encumbrances). The cash proceeds, if any, realized by Mortgagee from any such sale, assignment, sublease or other disposition shall be applied in 25 the order specified in Section 3.5. No such action on the part of Mortgagee shall constitute a satisfaction of the Obligations or a satisfaction or release of this Mortgage with respect to any of the Subject Property, except to the extent expressly provided in Sections 3.5 and 3.10 or otherwise agreed in writing by Mortgagee. (d) Equitable Remedies. Mortgagor may proceed to protect and enforce its rights by a suit or suits in equity or at law for the specific performance of any covenant or agreement contained herein, in the Indenture or in any Other Security Document, or in aid of the execution of any right, power or remedy herein or therein granted, including without limitation the rights, powers and remedies granted Mortgagee pursuant to Section 3.2(d), or for damages, or to collect the indebtedness secured hereby, or for the enforcement of any other appropriate legal, equitable, statutory or contractual remedy. The Tribal Court, upon Mortgagee's request, shall promptly issue such equitable, declaratory, injunctive, supporting, enabling, confirming and other orders and judgments as Mortgagee shall reasonably request to implement, ratify and confirm Mortgagee's exercise of the rights and remedies provided in this Section and to assure Mortgagee of the practical realization of the remedial benefits intended to be extended by this Section. (e) Limitation on Remedies. NOTHING CONTAINED IN THIS MORTGAGE SHALL (1) PERMIT MORTGAGEE OR ANY ASSIGNEE, SUBLESSEE, PURCHASER, OR TRANSFEREE OF THE MORTGAGEE TO TRANSFER MORTGAGOR'S INTEREST IN THE LEASE TO ANY PERSON OR ENTITY ENGAGED BY THE TRIBE OR THE MORTGAGOR TO MANAGE A GAMING ENTERPRISE; OR (2) AUTHORIZE ANY SALE OR OTHER DISPOSITION OF THE FEE TITLE OR REVERSIONARY INTEREST OF THE UNITED STATES AND THE TRIBE IN THE PREMISES, THE IMPROVEMENTS AND THE APPURTENANT RIGHTS. NEITHER TRADING COVE ASSOCIATES, A CONNECTICUT LIMITED PARTNERSHIP, NOR ANY OF ITS ASSIGNS OR SUCCESSORS SHALL BE ALLOWED TO HAVE ANY INTEREST IN THE LEASE. SECTION 3.3 WAIVER OF CONSTITUTIONAL AND STATUTORY RIGHTS. MORTGAGOR UNDERSTANDS AND AGREES THAT FOLLOWING AN EVENT OF DEFAULT, MORTGAGEE MAY TAKE POSSESSION OF THE SUBJECT PROPERTY AND DISPOSE OF THE SAME BY SALE OR OTHERWISE, WITHOUT NOTICE TO MORTGAGOR EXCEPT AS EXPRESSLY PROVIDED IN THIS MORTGAGE, AND IN SOME CIRCUMSTANCES WITHOUT PROVIDING MORTGAGOR WITH AN OPPORTUNITY TO BE HEARD PRIOR TO ANY SUCH DISPOSITION. MORTGAGOR FURTHER UNDERSTANDS THAT UNDER THE CONSTITUTION OF THE UNITED STATES OR UNDER THE INDIAN CIVIL RIGHTS ACT OF 1968, IT MAY HAVE THE RIGHT TO NOTICE AND HEARING BEFORE THE SUBJECT PROPERTY MAY BE SOLD OR DISPOSED OF AND THAT THE REMEDIES DESCRIBED ABOVE PROVIDE ONLY FOR LIMITED NOTICE TO MORTGAGOR, AND MAY NOT REQUIRE ANY HEARING OR OTHER JUDICIAL PROCEEDING. MORTGAGOR HEREBY RELINQUISHES, WAIVES AND GIVES UP ANY CONSTITUTIONAL OR STATUTORY RIGHTS TO NOTICE AND 26 HEARING BEFORE SALE OR OTHER DISPOSITION OF THE SUBJECT PROPERTY AND EXPRESSLY CONSENTS AND AGREES THAT THE SUBJECT PROPERTY MAY BE SOLD OR OTHERWISE DISPOSED IN ACCORDANCE WITH THE TERMS OF THIS MORTGAGE, ALL AS DESCRIBED ABOVE. MORTGAGOR ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL AND BARGAINED-FOR PART OF THE CONSIDERATION FOR THE INDEBTEDNESS EVIDENCED BY THE NOTES, THAT MORTGAGOR IS REPRESENTED BY LEGAL COUNSEL, THAT BEFORE SIGNING THIS DOCUMENT THIS SECTION AND MORTGAGOR'S CONSTITUTIONAL AND STATUTORY RIGHTS WERE FULLY EXPLAINED BY SUCH COUNSEL, AND THAT MORTGAGOR UNDERSTANDS THE NATURE AND EXTENT OF THE RIGHTS WAIVED HEREBY AND THE EFFECT OF SUCH WAIVER. SECTION 3.4 CUMULATIVE NATURE OF RIGHTS, POWERS AND REMEDIES. Each and every right, power or remedy herein specifically given shall be cumulative with and in addition to every other right, power or remedy, express or implied, given or now or hereafter existing at law, in equity, by statute, in the Indenture or in any Other Security Document, and each and every right, power and remedy herein specifically given or otherwise so existing may be exercised concurrently or separately, from time to time, as often and in such order as may be deemed expedient by Mortgagee, and the exercise or the beginning of the exercise of one right, power or remedy shall not be deemed a waiver of the right to exercise at the same time or thereafter any other right, power or remedy. No delay or omission of Mortgagee in the exercise of any such right, power or remedy shall impair any such right, power or remedy or any other right, power or remedy of Mortgagee or be construed to be a waiver of any default or acquiescence therein. Mortgagee shall have all rights, powers and remedies available under the law in effect now and/or at the time such rights, powers and remedies are sought to be enforced, whether or not they are available under the law in effect on the date hereof. SECTION 3.5 APPLICATION OF PROCEEDS. The proceeds and avails of any foreclosure or other sale, lease or disposition of Mortgagor's Interest in the Subject Property, or any part thereof, and the proceeds and avails of any other remedy hereunder, shall be paid and applied as follows, unless otherwise provided herein or required by applicable law: (a) First, to the payment of, or reimbursement to Mortgagee for, all costs, charges and expenses incurred by Mortgagee in acquiring possession, control, custody and ownership of Mortgagor's Interest in the Subject Property, in owning, managing, operating, subleasing, and selling, assigning or otherwise disposing of Mortgagor's Interest in the Subject Property or any portion thereof, including all costs and expenses (including attorneys' fees and legal costs) incurred by Mortgagee in exercising or enforcing any of its rights or remedies pursuant to this Mortgage, the Notes or any of the Other Security Documents, 27 all liabilities and advances incurred or made in connection therewith or otherwise incurred or made hereunder by Mortgagee, as provided herein, and all funds advanced by Mortgagee to pay Impositions, Liens and encumbrances superior to the lien of this Mortgage; (b) Second, to the payment to Mortgagee of the amount then owing and unpaid under the Indenture and this Mortgage for principal, interest, advances and interest thereon, and, in case any such proceeds shall be insufficient to pay the whole amount so due, then to the payment of such items in the order set forth in the Indenture; and (c) Third, any excess to be paid to Mortgagor, its successors or assigns, or to whomsoever may be lawfully entitled to receive the same. SECTION 3.6 RESTORATION OF POSITION. In case Mortgagee shall have proceeded to enforce any right, remedy or power under this Mortgage by foreclosure, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely to Mortgagee, then and in every such case Mortgagor and Mortgagee shall be restored to their former positions and rights hereunder with respect to Mortgagor's Interest in the Subject Property, and all rights, remedies and powers of Mortgagee shall continue in full force and effect as if no such proceedings had been initiated. SECTION 3.7 CLAIMS IN RECEIVERSHIP, INSOLVENCY AND BANKRUPTCY. In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement, readjustment, composition, dissolution, liquidation, termination or other judicial proceedings affecting Mortgagor, its creditors or its property, Mortgagee, to the extent permitted by law, shall be entitled to file such proofs of claim and other documents as may be necessary or advisable in order to have its claims allowed in such proceedings for the entire amount due and payable under the Indenture, this Mortgage and any Other Security Documents, at the date of institution of such proceedings, and for any additional amounts which may become due and payable hereunder and thereunder after such date, including but not limited to Mortgagor's reasonable costs, expenses and attorneys' fees incurred in connection therewith. SECTION 3.8 MARSHALLING; PARCELS. Notwithstanding the existence of any other security interests in Mortgagor's Interest in the Subject Property held by Mortgagee or any other party or the existence of other security for the indebtedness secured hereby, Mortgagee shall have the right to determine the order in which any or all of Mortgagor's Interest in the Subject Property shall be subjected to the remedies provided for herein and in which any of 28 such other security shall be subjected to the remedies provided for in the Other Security Documents. Mortgagee shall also have the right to determine the order in which any or all portions of the indebtedness secured hereby are satisfied from the proceeds realized by the exercise of the remedies provided herein or provided in any Other Security Document. Mortgagor, for itself and on behalf of all persons, parties and entities which may claim under Mortgagor, hereby waives all requirements of law relating to the marshalling of assets, if any, which would be applicable in connection with the enforcement by Mortgagee of its remedies for an Event of Default hereunder or an event of default under any Other Security Document, absent this waiver. In the event of the foreclosure of Mortgagor's Interest in the Subject Property, Mortgagor's Interest in the Subject Property may be sold in one or more parts or as an entirety, as Mortgagee may elect. SECTION 3.9 WAIVERS. No waiver of any provision hereof shall be implied from the conduct of the parties. Any such waiver must be in writing and must be signed by the party against which such waiver is sought to be enforced. The waiver or release by Mortgagee of any breach of the provisions, covenants and conditions set forth herein on the part of the Mortgagor to be kept and performed shall not be a waiver or release of any preceding or subsequent breach of the same or any other provision, covenant or condition contained herein. The subsequent acceptance of any sum in payment of any indebtedness secured hereby or any other payment hereunder by Mortgagor to Mortgagee shall not be construed to be a waiver or release of any preceding breach by Mortgagor of any provision, covenant or condition of this Mortgage, other than the failure of Mortgagor to pay the particular sum so accepted, regardless of Mortgagee's knowledge of such preceding breach at the time of acceptance of such payment. No payment by Mortgagor or receipt by Mortgagee of a lesser amount than the full amount secured hereby shall be deemed to be other than on account of the sums due and payable hereunder, nor shall any endorsement of statement on any check or any letter accompanying any check or payment be deemed an accord and satisfaction, and Mortgagee may accept any check or payment without prejudice to Mortgagee's right to recover the balance of such sums or to pursue any other remedy provided in this Mortgage. The consent by Mortgagee to any matter or event requiring such consent shall not constitute a waiver of the necessity for such consent to any subsequent matter or event. SECTION 3.10 SURVIVAL OF OBLIGATIONS. The Notes, the Indenture, this Mortgage, the Other Security Documents and all unpaid Obligations shall survive and remain in full force and effect, and shall continue to be valid, binding and enforceable in accordance with their terms, notwithstanding the exercise of any one or more of the remedies granted to Mortgagee hereunder, the issuance of any order or judgment by any court of competent 29 jurisdiction, or any foreclosure or other sale, assignment, sublease or other disposition of Mortgagor's Interest in the Subject Property. The Obligations and the documents evidencing and securing the same shall not merge with, or be replaced by, any order, judgment or other right or interest which may accrue to Mortgagee in connection with the exercise of any such remedies, and shall be deemed paid or satisfied only to the extent of any net cash payments or proceeds actually received by Mortgagee and applied in reduction of such Obligations. SECTION 3.11. PURCHASE OF SUBJECT PROPERTY BY MORTGAGEE. In case of any sale of any of the Subject Property pursuant to any judgment or decree of any court or otherwise in connection with the enforcement of any of the terms of this Mortgage, Mortgagee and each holder of any of the Notes and their respective successors or assigns, may become the purchaser, and if Mortgagee or any other trustee, agent or nominee for the holders of the Notes is the purchaser and the holders of the Notes have so agreed, then for the purpose of making settlement for or payment of the purchase price, the Mortgagee or such other trustee, agent or nominee shall be entitled to turn in and use the Obligations, including any claims for interest matured and unpaid thereon, together with any additions to the Obligations and interest thereon, if any, in order that there may be credited as paid on the purchase price, at Mortgagee's option, any sum then due hereunder and/or under the Notes, the Indenture and the Other Security Documents, including principal and interest thereon, and any accrued additions to the Obligations and interest thereon, or any portion thereof. ARTICLE IV RIGHTS OF THE TRIBE Notwithstanding anything contained herein to the contrary: (i) If an Event of Default shall have occurred hereunder, except as provided in the last sentence of this clause (i) the Mortgagee shall not have the right to accelerate the indebtedness, to foreclose this Mortgage, or to sell, assign or otherwise dispose of any of the Subject Property unless the Mortgagor shall have provided notice of such Event of Default to the Tribe under the Land Lease (the "Default Notice") and provided the Tribe with a period of sixty (60) days after the delivery of such Default Notice to cure such Event of Default in the Mortgagor's name and on the Mortgagor's behalf (or if such default cannot with diligence be cured within such sixty day period, for a reasonable time thereafter provided that the Tribe proceeds promptly to cure the same and thereafter prosecutes the curing of such default with diligence). The Mortgagor and the Mortgagee acknowledge and agree that the Tribe shall have no obligation to cure any such Event of Default. The limitation on the Mortgagee's 30 ability to accelerate the Indebtedness, foreclose on this Mortgage, or sell, assign or otherwise dispose of the Subject Property as provided above shall not apply to an Event of Default resulting from the Mortgagor's failure to make monetary payments as required under the Notes, this Mortgage or any of the Other Security Documents (Events of Default other than those arising from Mortgagor's failure to make monetary payments herein called "Nonmonetary Events of Default"); provided, however, that the Mortgagee shall provide the Tribe with notice of such failure of the Mortgagor to make monetary payments and any payment made by the Tribe on the Mortgagor's behalf shall be accepted by the Mortgagee as if it had been made by the Mortgagor; and (ii) Before the Mortgagee may foreclose this Mortgage or sell, assign or otherwise dispose of any of the Subject Property due to an Event of Default, Mortgagee shall be obligated to (1) provide the Tribe with the Default Notice required with respect to each Event of Default and the cure periods required with respect to Nonmonetary Defaults, all as provided in Clause (i) above, and (2) provide the Tribe with notice of the Mortgagee's intention to foreclose this Mortgage or to otherwise sell, assign or dispose of any of the Subject Property (the "Foreclosure Notice") and (3) provide the Tribe with a period of sixty (60) days after the delivery of such Foreclosure Notice within which the Tribe shall have the right (but not the obligation) to purchase the Notes, the Indenture, this Mortgage and all of the Other Security Documents from the Mortgagee for an amount equal to the principal of, premium (if any) on and interest on all outstanding indebtedness and Obligations secured hereby, including all reasonable costs and expenses due to the Mortgagee in accordance with the Notes, the Indenture, this Mortgage and the Other Security Documents; provided, however, that any such purchase shall be consummated and payment made in full within ninety (90) days after Mortgagee gives the Foreclosure Notice, or the Tribe will be deemed to have waived its right to purchase. ARTICLE V MISCELLANEOUS SECTION 5.1. BINDING EFFECT; SURVIVAL; NUMBER; GENDER. Whenever any of the parties hereto is referred to, such reference shall be deemed to include and apply to the successors and assigns of such party, subject to the provisions of Section 1.12 hereof; and all covenants, promises and agreements by or on behalf of Mortgagor in this Mortgage contained shall bind Mortgagor and also its successors and assigns and shall inure to the benefit of Mortgagee, and their successors and assigns, whether elsewhere herein so expressed or not. All representations and warranties contained herein or otherwise heretofore made by Mortgagor to Mortgagee shall survive the execution and delivery hereof. The 31 singular of all terms used herein shall include the plural, the plural shall include the singular, and the use of any gender herein shall include all other genders, where the context so requires or permits. SECTION 5.2. SEVERABILITY. The unenforceability or invalidity of any provision or provisions of this Mortgage as to any persons or circumstances shall not render that provision nor any other provision or provisions herein contained unenforceable or invalid as to any other persons or circumstances, and all provisions hereof, in all other respects, shall remain, valid and enforceable. Mortgagee shall be subrogated for further security to the lien, whether or not released of record, of any and all encumbrances paid out of the proceeds of the Notes or out of any advances made by Mortgagee hereunder. SECTION 5.3. NOTICES. All notices and elections provided for herein shall be in writing and shall be deemed to have been given (unless otherwise required by the specific provisions hereof or by law in respect to any matter) when given in the manner specified in the Indenture. SECTION 5.4. LITIGATION. Mortgagee shall have the power and authority, upon prior notice to Mortgagor, to institute and maintain any suits and proceedings as Mortgagee may deem advisable to (i) prevent any impairment of the Subject Property by any acts which may be unlawful or any violation of the Mortgage, (ii) preserve or protect its interest in the Subject Property, or (iii) restrain the enforcement of or compliance with any legislation or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid, if, in the sole opinion of Mortgagee, the enforcement of or compliance with such enactment, rule or order might impair the security hereunder or be prejudicial to Mortgagee's interest. SECTION 5.5. ACTS OF MORTGAGEE. In the event Mortgagee (a) grants any extension of time or forbearance with respect to the payment of any indebtedness secured by this Mortgage; (b) takes other or additional security for the payment thereof; (c) waives or fails to exercise any right, power or remedy granted herein, in the Indenture or in any Other Security Document; (d) grants any release, with or without consideration, of the whole or any part of the security for the payment of the indebtedness secured hereby or the release of any person, party or entity liable for payment of said indebtedness; and/or (e) amends or modifies in any respect any of the terms and provisions hereof, of the Indenture (including substitution of another Indenture) or of any Other Security Document; then, and in any such event, such act or omission to act shall not release Mortgagor under any covenant of this Mortgage, of the Indenture or of any Other Security Document, nor preclude 32 Mortgagee from exercising any right, power or privilege herein or therein granted or intended to be granted, and shall not in any way impair or affect the lien or priority of this Mortgage. In the event the Mortgagor shall be granted an interest in any additional property, improvements, leases, fixtures or personal property not specifically identified herein or in the Land Lease, but located on or used in connection with the Premises, and the same shall, therefore, become a part of the Subject Property, then this Mortgage shall immediately attach to and constitute a lien against or security interest in such additional items, as appropriate, without further act or deed or either party hereto, provided, however, that in no event shall the fee title of the United States in trust for the Tribe in and/or to the Premises and/or Improvements become subject to this Mortgage. SECTION 5.6. GOVERNING LAW. This Mortgage, the parties' obligations hereunder, and any disputes hereunder shall be governed by and interpreted and construed in accordance with federal law (to the extent applicable) and the law of the Tribe, and, to the extent required to supplement applicable federal law and tribal law, the substantive laws of the State of Connecticut (except its choice of law rules, and except that Mortgagor's rights and remedies set forth herein, and the lien granted hereby, shall in any event be lawful and enforceable in accordance with the terms hereof). This instrument shall be construed in accordance with its intent and with the fair meaning of its provisions, and without regard to any presumption or other rule requiring construction against the party which caused the same to be drafted. SECTION 5.7. COUNTERPARTS. This Mortgage may be executed simultaneously in two or more identical counterparts, each of which, standing, alone, shall be an original, but all of which shall constitute but one agreement. SECTION 5.8. NOTICE. Any notice required by or sent pursuant to any provision of this Mortgage shall be in writing and shall be deemed given if and when it is personally delivered or sent by certified mail addressed, until some other address is designated in a notice so given, as follows: If to Mortgagor: Mohegan Tribal Gaming Authority 27 Church Lane Uncasville, CT 06382 Attention: Tribal Chair and Business Board 33 With a copy to: Trading Cove Associates 914 Hartford Turnpike P.O. Box 60 Waterford, CT 06385 Attention: Len Wolman If to Mortgagee: 10 State House Square Hartford, CT 06103-3698 Attention: W. Jeffrey Kramer Vice-President Corporate Trust SECTION 5.9. OPEN-END MORTGAGE PROVISIONS. This is an "Open-End Mortgage" and the holder hereof shall have all of the rights, powers and protection to which the holder of any Open-End Mortgage is entitled under Connecticut law. Upon request, the Mortgagee may, in its discretion, make future advances to the Mortgagor. Any future advance, and the interest payable thereon, shall be secured by this Mortgage when evidenced by a promissory note stating that the note is secured thereby. At no time shall the principal amount of the debt secured by this Mortgage exceed the aggregate original principal face amounts of the Notes, nor shall the maturity of any future advance secured hereby extend beyond the date the final principal payment is due on the Notes. Additionally, at no time shall the principal amount of the debt secured by this Mortgage, together with all other indebtedness for the construction and development of the Resort, exceed $325,000,000, the maximum amount for recoupment of development costs as provided in the Amended and Restated Gaming Facility Management Agreement, as approved by the National Indian Gaming Commission. SECTION 5.10. SUBORDINATION OF MORTGAGE. The Mortgagee hereby agrees that this Mortgage is and shall be subject and subordinate to any and all access and utility easements granted by the Tribe pursuant to the Land Lease which shall be recorded on the Montville Land Records and any other applicable land records and the Mortgagee agrees to execute any and all additional documents to confirm such subordination as shall be reasonably required of Mortgagee. SECTION 5.11. [Intentionally Omitted] SECTION 5.12. [Intentionally Omitted] SECTION 5.13. CONSENT TO BE SUED. Notwithstanding anything to the contrary contained in this Mortgage, the liability of the Tribe and the officers, office holders, agents, employees representatives and members of the Tribe and the Mortgagor shall be limited to the extent provided in Section 12.08 of the Indenture. 34 Mortgagor hereby waives its sovereign immunity from unconsented suit, whether such suit be brought in law or in equity, or in administrative proceedings or proceedings in arbitration, to permit the commencement, maintenance, and enforcement of any action, by any person with standing to maintain an action, to interpret or enforce the terms of this Mortgage, and to enforce and execute any judgment resulting therefrom against the Mortgagor or the assets of the Mortgagor. Notwithstanding any other provision of law or canon of construction, the Mortgagor intends this waiver to be interpreted liberally to permit the full litigation of disputes arising under or out of this Mortgage. Without limiting the generality of the foregoing, the Mortgagor waives it immunity from unconsented suit to permit any court of competent jurisdiction or mutually agreed upon panel of arbitrators to (i) enforce and interpret the terms of this Mortgage, and award and enforce the award of damages owing as a consequence of a breach hereof, whether such award is the product of litigation, administrative proceedings, or arbitration; (ii) determine whether any consent or approval of the Mortgagor has been improperly granted or unreasonably withheld; (iii) enforce any judgment prohibiting the Mortgagor from taking any action, or mandating or obligating the Mortgagor to take any action, including a judgment compelling the Mortgagor to submit to binding arbitration, if and to the extent provided for in any other agreement between Mortgagor and Mortgagee; and (iv) adjudicate any claim under the Indian Civil Rights Act of 1968, 25 U.S.C. S1302 (1994). Any arbitration carried out under this provision shall proceed in accordance with the rules of the American Arbitration Association. SECTION 5.14. NON-MERGER OF INTERESTS. Mortgagee and Mortgagor agree that in no event shall the fee title of the United States in trust for the Tribe in and/or to the Premises and/or Improvements ever be subject to this Mortgage, this Mortgage being intended to cover only the leasehold interest of the Mortgagor in the Premises and Improvements under the Land Lease. So long as this Mortgage is in effect, unless the Mortgagee shall otherwise expressly consent in writing, the fee title to the Premises and Improvements and the leasehold estate under the Land Lease shall not merge but shall remain separate and distinct, notwithstanding the acquisition of said fee title and said leasehold estate by the Tribe or by the United States in trust for the Tribe. SECTION 5.15. INCORPORATION BY REFERENCE. All terms, covenants, conditions, provisions and requirements of the Indenture are incorporated by reference in this Mortgage. Any capitalized term used in this Mortgage without definition, but defined in the Indenture, shall have the same meaning here as in the Indenture. SECTION 5.16. CONFLICTS. The terms and provisions of this Mortgage shall be subject and subordinate to the terms of the 35 Indenture. To the extent that the Indenture provides Mortgagor with a particular cure or notice period, or establishes any limitations or conditions on Mortgagee's actions, with regard to a particular set of facts, Mortgagor shall be entitled to the same cure periods and notice periods, and Mortgagee shall be subject to the same limitations and conditions, under this Mortgage, in place of the cure period, notice periods, limitations and conditions provided for under this Mortgage; provided, however, that such cure periods, notice periods, limitations and conditions shall not be cumulative as between the Indenture and this Mortgage. In the event of any conflict or inconsistency between the provisions of this Mortgage and those of the Indenture, including, without limitation, any conflicts or inconsistencies in any definitions herein or therein, the provisions or definitions of the Indenture shall govern. SECTION 5.17. OTHER COLLATERAL. This Mortgage is one of a number of security agreements to secure the debt delivered by or on behalf of Mortgagor pursuant to the Indenture and the Other Security Documents and securing, among other things, the Obligations secured hereunder. All potential junior lien claimants are placed on notice that, under any of the Notes, Indenture, this Mortgage or Other Security Documents or otherwise (such as by separate future unrecorded agreement between Mortgagor and Mortgagee), other collateral for the Obligations and other obligations secured hereunder (i.e., collateral other than the Subject Property) may, under certain circumstances, be released without a corresponding reduction in the total principal amount secured by this Mortgage. Such a release would decrease the amount of collateral securing the same indebtedness, thereby increasing the burden on the remaining security created and continued by this Mortgage. No such release shall impair the priority of the lien of this Mortgage. By accepting its interests in the Subject Property, each and every junior lien claimant shall be deemed to have acknowledged the possibility of, and consented to, any such release. Nothing in this paragraph shall impose any obligations upon Mortgagee. SECTION 5.18. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE MORTGAGOR HEREBY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM, WHETHER IN CONTRACT OR IN TORT, AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATED TO THE NOTES, THE INDENTURE, THIS MORTGAGE, OR THE OTHER SECURITY DOCUMENTS. ARTICLE VI CONDITIONAL PARTIAL RELEASE PERMITTED SECTION 6.1. PROCEDURE FOR CONDITIONAL PARTIAL RELEASE. Provided that no Event of Default by the Authority has occurred and 36 is continuing under the Indenture, upon written request of the Authority to the Trustee, the Trustee shall release the lien of this Mortgage as to a portion of the Land Lease and as to a portion of the Mortgagor's leasehold estate in the Premises, so long as such portion of the Land Lease and Mortgagor's leasehold estate in the Premises is not utilized and is not intended to be utilized for the Resort, including any gaming operations, as more fully set forth in the Plans, as such terms are defined in the Indenture, provided that such released portion shall not be used to conduct any gaming operations. The Authority shall deliver to the Trustee an instrument of release, together with a survey of the leasehold estate to the Premises which shall remain subject to this Mortgage and of the released portion of such leasehold estate, and together with an endorsement to the title insurance policy of the Trustee reflecting such change in the leasehold estate. NOW, THEREFORE, if the Notes and any extensions, renewals or alterations thereof shall be fully paid according to their tenor, and if all covenants, conditions, agreements and provisions contained in the Indenture, the Notes, this Mortgage and the Other Security Documents, and any extensions, renewals or modifications thereof are fully kept and performed, then this Mortgage shall become null and void; otherwise to remain in full force and effect. IN WITNESS WHEREOF, the undersigned has caused this instrument to be duly executed as of the day and year first above written. Witnesses: Mortgagor: /s/ Helga Woods MOHEGAN TRIBAL GAMING AUTHORITY - -------------------------- Helga Woods /s/ H. William Shure By: /s/ Ralph Sturges - -------------------------- ------------------------------ H. William Shure Ralph Sturges, Chairman 37 STATE OF NEW YORK ) ) ss: COUNTY OF NEW YORK ) On September 29, 1995, personally appeared before me Ralph Sturges, signer and sealer of the foregoing instrument, who acknowledged that he/she executed the instrument as the Chairman of the MOHEGAN TRIBAL GAMING AUTHORITY, an instrumentality of the Mohegan Tribe of Indians of Connecticut as his/her free act and deed and the free act and deed of the Authority. /s/ Elizabeth T. McNamee -------------------------------------- Notary Public My Commission Expires: August 14, 1997 [Seal] This page intentionally left blank. This page intentionally left blank. This page intentionally left blank. LANDLORD'S CONSENT The undersigned, as landlord pursuant to the Land Lease dated September 29, 1995, between the Mohegan Tribe of Indians of Connecticut and the Mohegan Tribal Gaming Authority, hereby gives its consent to the foregoing. Dated: Witnesses: MOHEGAN TRIBE OF INDIANS OF CONNECTICUT /s/ Helga M. Woods - --------------------------- Helga M. Woods /s/ H. William Shure By: /s/ Ralph Sturges - --------------------------- ------------------------------ H. William Shure Ralph Sturges, LifeTime Chief STATE OF NEW YORK ) ) ss: COUNTY OF NEW YORK ) On September 28, 1995, personally appeared before me Ralph Sturges, signer and sealer of the foregoing instrument, who acknowledged that he/she executed the instrument as the LifeTime Chief and Chair of the MOHEGAN TRIBE OF INDIANS OF CONNECTICUT, as his/her free act and deed and the free act and deed of the Tribe. /s/ Elizabeth T. McNamee - -------------------------------------- Elizabeth T. McNamee Notary Public My Commission Expires: August 14, 1997 [Seal] INDEX TO DEFINED TERMS Accounts Receivable. . . . . . . . . . . . . . . . . . . . . 5 Appurtenant Rights . . . . . . . . . . . . . . . . . . . . . 5 Attorney's Fees. . . . . . . . . . . . . . . . . . . . . . . 16 Bankruptcy Reform Act. . . . . . . . . . . . . . . . . . . 17 Cash Collateral. . . . . . . . . . . . . . . . . . . . . . . 3 Default Notice . . . . . . . . . . . . . . . . . . . . . . . 25 Disbursement Agreement . . . . . . . . . . . . . . . . . . . 2 Election . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Environmental Regulations. . . . . . . . . . . . . . . . . . 15 Event of Default . . . . . . . . . . . . . . . . . . . . . . 18 Foreclosure Notice . . . . . . . . . . . . . . . . . . . . . 26 Gaming Permits . . . . . . . . . . . . . . . . . . . . . . . 6 Governmental Requirements. . . . . . . . . . . . . . . . . . 10 Hazardous Substances . . . . . . . . . . . . . . . . . . . . 15 Impositions. . . . . . . . . . . . . . . . . . . . . . . . . 11 Improvements . . . . . . . . . . . . . . . . . . . . . . . . 1 Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . 2 Intangible Collateral. . . . . . . . . . . . . . . . . . . . 6 Land Lease . . . . . . . . . . . . . . . . . . . . . . . . . 1 Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Maturity Date. . . . . . . . . . . . . . . . . . . . . . . . 2 Mortgagee. . . . . . . . . . . . . . . . . . . . . . . . . 1 Mortgagor. . . . . . . . . . . . . . . . . . . . . . . . . . 1 Mortgagor's Interest in the Subject Property . . . . . . . . 9 Nonmonetary Events of Default. . . . . . . . . . . . . . . . 25 Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Obligations. . . . . . . . . . . . . . . . . . . . . . . . . 2 Open-End Mortgage. . . . . . . . . . . . . . . . . . . . . . 28 Other Security Documents . . . . . . . . . . . . . . . . . . 9 Permitted Encumbrances . . . . . . . . . . . . . . . . . . 1 Personal Property. . . . . . . . . . . . . . . . . . . . . . 5 Premises . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Private Restrictions . . . . . . . . . . . . . . . . . . . . 10 Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Rents. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Space Leases . . . . . . . . . . . . . . . . . . . . . . . . 7 State Laws . . . . . . . . . . . . . . . . . . . . . . . . . 19 Subject Property . . . . . . . . . . . . . . . . . . . . . . 7 Tribal Court . . . . . . . . . . . . . . . . . . . . . . . . 19 Tribe. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 UCC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Attachment to Open - End Construction - Permanent Leasehold Mortgage Deed, Assignment of Leases and Rents and Security Agreement SECTION 81 COMPLIANCE In compliance with Section 81 of Title 25 U.S.C.A., the addresses and occupations of the parties are as follows: Party in Interest: Mohegan Tribe of Indians of Connecticut Address: 27 Church Lane Uncasville, CT 06382 Occupation: Indian Tribe Party in Interest: Mohegan Tribal Gaming Authority Address: 27 Church Lane Uncasville, CT 06382 Occupation: Tribal Gaming Authority Party in Interest: First Fidelity Bank Address: 10 State House Square Hartford, CT 06103-3698 Occupation: Commercial Bank and Trust Company Fixed limited time to run: This mortgage is given as security for notes which become due on November 15, 2002. In event of default on the notes, the mortgage cannot go beyond the term of the Land Lease (i.e., 25 years, with option to renew for 25 years). The Chairman of the Mohegan Tribe of Indians of Connecticut ("Tribe") is authorized to execute the attached document by Resolution No. 95-3 of the Tribal Council of the Tribe, dated August 30, 1995. The Chairman exercises his authority in this instance because the Tribe has determined that execution of the attached document will further the economic development objectives of the Tribe. The Chairman of the Management Board of the Mohegan Tribal Gaming Authority ("Management Board") is authorized to execute the attached document by Resolution No. 95-4 of the Management Board, dated August 30, 1995. The Chairman of the Management Board exercises his authority in this instance because the Management Board has determined that execution of the attached document will further the economic development objectives of the Tribe. The document was executed on or about 12:30 p.m. (time) on September 18, 1995, at New York, NY (place), for the particular purpose set forth above. The undersigned parties agree that the foregoing agreement is in compliance with 25 U.S.C. SS81 and 415 and 25 C.F.R. S162. WITNESS: Mohegan Tribe of Indians of Connecticut /s/ Helga M. Woods By: /s/ Ralph Sturges - -------------------------- ----------------------------- Helga M. Woods Ralph Sturges Title: Chairman /s/ Elizabeth T. McNamara - -------------------------- Elizabeth T. McNamara Mohegan Tribal Gaming Authority /s/ Helga M. Woods By: /s/ Ralph Sturges - -------------------------- ----------------------------- Helga M. Woods Ralph Sturges Title: Chairman, Management Board /s/ Elizabeth T. McNamara - -------------------------- Elizabeth T. McNamara First Fidelity Bank /s/ H. William Shure By: /s/ W. Jeffrey Kramer - -------------------------- ---------------------------- H. William Shure W. Jeffrey Kramer Title: /s/ Helga M. Woods - -------------------------- Helga M. Woods Approved Pursuant to 25 U.S.C. SS 81 and 415 and 25 C.F.R. S162 United States Department of Interior Bureau of Indian Affairs: By: /s/ Nancy Jemison Date: September 29, 1995 --------------------------- Nancy Jemison Director (Acting) Eastern Area Office Bureau of Indian Affairs for the Secretary of the Interior and the Commissioner of Indian Affairs, acting under delegated authority CITY OF WASHINGTON ) ) ss: DISTRICT OF COLUMBIA ) On September 29, 1995, personally appeared before me Carol C. Williams, a Notary Public in and for said County and State, Nancy Jemison, personally known to me to be the person whose name is subscribed to the above instrument, who acknowledged that he or she executed the instrument as the Acting Area Director of the Eastern Area Office of the Bureau of Indian Affairs, for the Secretary of the Interior and the Commissioner of Indian Affairs, acting under delegated authority. /s/ Carol C. Williams -------------------------------- Carol C. Williams Notary Public My Commission Expires: June 4, 1998 EXHIBIT A Legal Description of the Property A certain tract or parcel of land, together with the buildings and all other improvements thereon, situated on the southeasterly side of Sandy Desert Road, the southeasterly side of Connecticut Route No. 32, the northeasterly side of Broadview Avenue and the northwesterly side of Fort Shantok Road in the Town of Montville, County of New London and State of Connecticut and being more particularly shown and delineated on a certain map or plan entitled "Harris & Clark, Inc. Land Surveyors - Civil Engineers Griswold, Connecticut Survey Plan Prepared For The Mohegan Tribe of Indians (U.N.C., Inc. Property) Sandy Desert Road Montville, Connecticut Scale 1 inch = 200 feet Date December 1994 Ident. No. 94-1801", which premises are more particularly bounded and described as follows: Beginning at a concrete monument recovered in the southeasterly street line of Sandy Desert Road at a northwesterly corner of the herein-described tract and on the dividing line between the herein-described tract and land now or formerly of Blanche E. Jenoks, et al; thence running South 04 DEG. 34' 54" East for a distance of 298.94 feet to a concrete monument recovered; then running South 04 DEG. 35" 33" East for a distance of 254.69 feet to a concrete monument recovered; thence running North 85 DEG. 28' 43" West for a distance of 52.08 feet to a concrete monument recovered, the last three courses being bounded by said Jenoks, et al land; then running South 06 DEG. 35" 16" East for a distance of 181.76 feet to a concrete monument recovered; thence running North 85 DEG. 19' 00" West for a distance of 239.12 feet to a concrete monument recovered, the last two courses being bounded by land now or formerly of Elizabeth J. and Russell E. Heebner; thence running South 06 DEG. 37' 20" East for a distance of 126.21 feet bounded southwesterly by land now or formerly of James H. Sarayusa to a re-bar recovered; thence running South 03 DEG. 10' 57" West for a distance of 99.70 feet, bounded northwesterly by land now or formerly of Paul R. Springer, Jr. and Noreen Springer to a concrete monument recovered; thence running North 86 DEG 44' 47" West for a distance of 212.23 feet, bounded northeasterly by said Springer land to a concrete monument recovered; thence running South 01 DEG. 15' 36" West for a distance of 99.98 feet, bounded northwesterly by land now or formerly of Donald McKeith and Arlene McKeith to a concrete monument recovered; thence running South 07 DEG. 03' 32" West for a distance of 124.82 feet to a concrete monument recovered; thence running South 07 DEG. 34' 18" West for a distance of 138.80 feet to a concrete monument recovered; thence running North 78 DEG 51' 46" West for a distance of 209.41 feet to a concrete monument recovered, the last three courses being bounded by land now or formerly of Walter J. Keane and Debbie L. Keane; thence running South 07 DEG. 31' 24" West for a distance of 69.99 feet, bounded northwesterly by Connecticut Route No. 32 to a concrete monument recovered; thence running South 78 DEG. 52' 37" East for a distance of 209.39 feet to a concrete monument recovered; thence running South 78 DEG. 51' 05" East for a distance of 160.71 feet to a concrete monument recovered at Connecticut Grid Coordinates North 739507.44 East 1178517.72; thence running South 11 DEG. 08' 03" West for a distance of 36.00 feet to a point; thence running South 78 DEG. 51' 57" East for a distance of 11.00 feet to a point; thence running South 11 DEG. 08' 03" West for a distance of 92.35 feet to a point to be set at the face of a retaining wall, the last five courses being bounded by land now or formerly of Frank G. Roderick, Jr., et al; thence running South 79 DEG. 25' 36" East for a distance of 191.76 feet along a stone wall, bounded southwesterly in part by land now or formerly of Richard and Shirley McDonald and in part by land now or formerly of Jimmy N. and Kathleen M. Sistare to a concrete monument recovered; thence running South 78 DEG. 35' 40" East for a distance of 200.59 feet, bounded southwesterly in part by land now or formerly of Mark M. Deveau and in part by land now or formerly of Agnes and Ernest J. LaPorte to a concrete monument recovered; thence running South 78 DEG. 54' 17" East for a distance of 300.86 feet, bounded southwesterly in part by land now or formerly of Joyce Carol Elliot, et al, in part by land now or formerly of Eleanor Joyce Luft and in part by land now or formerly of Christopher A. and Lisa M. Newell to a rebar recovered; thence running South 77 DEG. 39' 24" East for a distance of 209.75 feet, bounded southwesterly in part by land now or formerly of Peter G. Rousseau and Helen H. Rousseau and in part by land now or formerly of Robert L. Ellal and Johannah J. Ellal to a concrete monument recovered; thence running South 78 DEG. 50' 54" East for a distance of 216.56 feet, bounded southwesterly by land now or formerly of Christopher L. and Phyllis M. McCormick to an iron pin recovered; thence running South 88 DEG. 02' 27" East for a distance of 183.74 feet, bounded southwesterly in part by said McCormick land and in part by land now or formerly of Horace W. and Gloria M. Deshefy to a concrete monument recovered; thence running South 01 DEG. 34' 54" West for a distance of 202.82 feet to a concrete monument recovered; thence running South 88 DEG. 26' 02" East for a distance of 150.00 feet to a point to be set, the last two courses being bounded by said Deshefy land; thence running North 01 DEG 31' 09" East for a distance of 35.00 feet to an iron pipe recovered; thence running South 83 DEG. 26' 29" East for a distance of 322.65 feet to a concrete monument recovered; thence running South 08 DEG. 21' 36" West for a distance of 200.83 feet to a concrete monument recovered; the last three courses being bounded by land now or formerly of Harry W. Collins; thence running South 81 DEG. 53' 04" East for a distance of 415.62 feet, bounded southwesterly by Broadview Avenue to a concrete monument recovered; thence running North 01 DEG. 42' 10" West for a distance of 58.70 feet to an iron pipe recovered; thence running North 10 DEG. 42' 05" West for a distance of 45.00 feet to a point to be set; thence running North 05 DEG. 19' 48" West for a distance of 124.70 feet to a concrete monument recovered; thence running South 81 DEG. 57" 48" East for a distance of 181.26 feet to a concrete monument recovered; thence running South 81 DEG. 57' 48" East for a distance of 192.70 feet to a point to be set; thence running South 48 DEG. 42' 13" East for a distance of 158.40 feet along a fence line to a concrete monument recovered; thence running South 47 DEG. 09' 18" East for a distance of 565.19 feet to a drill hole recovered in a stone wall, the last seven courses being bounded by land now or formerly of Catherine Bolduc; thence running North 72 DEG. 11' 49" East for a distance of 102.09 feet ii along a stone wall to an angle in said stone wall; thence running North 80 DEG. 58' 11" East for a distance of 58.21 feet along a stone wall to the end of said stone wall; thence running North 71 DEG. 15' 46" East for a distance of 92.65 feet to a stone wall corner; thence running North 71 DEG. 20' 55" East for a distance of 23.94 feet along a stone wall to an angle in said stone wall; thence running North 74 DEG. 43' 11" East for a distance of 71.08 feet along a stone wall to a concrete monument recovered; thence running North 76 DEG. 14' 02" East for a distance of 28.06 feet along a stone wall to an angle in said stone wall; thence running North 68 DEG 37' 42" East for a distance of 15.60 feet along a stone wall to an angle in said stone wall; thence running North 73 DEG. 29' 49" East for a distance of 127.85 feet along a stone wall to a drill hole recovered in said stone wall; thence running North 72 DEG. 22' 11" East for a distance of 21.61 feet along a stone wall to an iron pipe recovered; thence running South 16 DEG. 57' 33" East for a distance of 31.59 feet along a fence line to a fence post; thence running South 15 DEG. 05' 54" East for a distance of 84.04 feet along a fence line to a 6-inch Oak tree with wire; thence running South 13 DEG. 10' 31" East for a distance of 54.71 feet along a fence line to a 4-inch Birch tree with wire; thence running South 23 DEG. 18' 51" East for a distance of 62.20 feet along a fence line to a 4-inch Beech tree with wire; thence running South 20 DEG. 45' 04" East for a distance of 114.84 feet along a fence line to a wood fence post; thence running South 17 DEG. 30' 26" East for a distance of 41.85 feet along a fence line to a stump with wire; thence running South 16 DEG. 42' 33" East for a distance of 148.83 feet along a fence line to a 14-inch Oak tree with wire; thence running South 19 DEG 07' 08" East for a distance of 22.59 feet along a fence line to a 15-inch Oak tree with wire; thence running South 12 DEG. 45' 40" East for a distance of 36.94 feet along a fence line to a 10-inch dead Oak tree with wire; thence running South 14 DEG. 30' 26" East for a distance of 11.00 feet along a fence line to 10-inch dead Oak tree with wire; thence running South 04 DEG. 25' 15" East for a distance of 28.81 feet along a fence line to a 12-inch dead Oak tree with wire; thence running South 11 DEG. 13' 19" East for a distance of 17.10 feet along a fence line to an 8-inch dead Oak tree with wire; thence running South 07 DEG. 15' 03" East for a distance of 84.60 feet along a fence line to an 18-inch dead Oak tree with wire; thence running South 03 DEG. 14' 32" West for a distance of 56.67 feet along a fence line to a point in the center of a stone wall; thence running North 78 DEG. 00' 54" West for a distance of 68.44 feet along a stone wall to an angle in said stone wall; thence running North 84 DEG. 17' 33" West for a distance of 109.78 feet along a stone wall to an angle in said stone wall; thence running North 87 DEG. 48' 33" West for a distance of 53.11 feet along a stone wall to an angle in said stone wall; thence running South 85 DEG. 52' 51" West for a distance of 29.79 feet along a stone wall to a drill hole recovered at a stone wall corner; thence running South 09 DEG. 09' 03" East for a distance of 238.99 feet along a stone wall to a drill hole set at the end of said stone wall; thence running South 03 DEG. 03' 19" East for a distance of 61.53 feet along a fence line to a 26-inch Oak tree with wire; thence running South 23 DEG. 09' 48" East for a distance of 47.77 feet along a fence line to a 17-inch Oak tree with wire; thence running South 11 DEG. 51' 04" West for a distance of 36.61 feet along a fence line to a 16-inch dead tree with wire; thence running South 46 DEG. 39' 16" East for a distance of 32.48 feet to a railroad spike in ledge recovered; thence running South 07 DEG. 17' 57" iii East for a distance of 55.19 feet along a stone wall to an iron pipe recovered in said stone wall the last thirty-three courses being bounded by land now or formerly of Martin Realty, Inc.; thence running South 12 DEG. 31' 25" East for a distance of 115.48 feet, bounded southwesterly by land now or formerly of Glenn P. Martin, et al to an iron pipe recovered; thence running North 83 DEG. 21' 50" East for a distance of 242.09 feet to a drill hole recovered on ledge; thence running South 06 DEG. 08' 17" East for distance of 400.24 feet to a point in the northwesterly street line of Fort Shantok Road, the last two courses being bounded by land now or formerly of Mathew C. Hopkins and Antonette M. Hopkins; thence running North 83 DEG. 46' 08" East for a distance of 429.13 feet, bounded southeasterly by Fort Shantok Road to a point to be set in the northwesterly street line of Fort Shantok Road at a southwesterly corner of land now or formerly of Edward G. Bernat and Beatrice L. Bernat; thence running North 14 DEG. 53' 14" West for a distance of 65.12 feet to the remains of a metal fence post; thence running North 11 DEG. 17' 52" West for a distance of 21.20 feet to the remains of a metal fence post; thence running North 15 DEG. 18' 16" West for a distance of 23.09 feet to the remains of a metal fence post; thence running North 15 DEG. 15' 33" West for a distance of 89.79 feet along a stone wall to an angle in said stone wall; thence running North 13 DEG. 28' 03" West for a distance of 52.97 feet along a stone wall to an angle in said stone wall; thence running North 09 DEG. 03' 32" West for a distance of 11.42 feet along a stone wall to a drill hole recovered in said stone wall; thence running North 12 DEG. 03' 02" West for a distance of 56.33 feet along a stone wall to an iron pipe recovered; thence running North 14 DEG. 23' 00" West for a distance of 117.48 feet along a stone wall to the end of said stone wall; thence running North 15 DEG. 10' 19" West for a distance of 227.98 feet to a stone pile; thence running North 15 DEG. 16' 30" West for a distance of 137.29 feet to a stone pile, the last then courses being bounded by land now or formerly of Edward G. Bernat and Beatrice L. Bernat; thence running North 16 DEG. 07' 30" West for a distance of 304.36 feet to a 14-inch dead tree with wire; thence running North 16 DEG. 43' 31" West for a distance of 94.09 feet along a fence line to a 5-inch Beech tree with wire; thence running North 17 DEG. 46' 50" West for a distance of 86.72 feet along a fence line to a 20-inch Oak tree with wire; thence running North 15 DEG. 59' 54" West for a distance of 69.57 feet along a fence line to a 20-inch Oak tree with wire; thence running North 13 DEG. 09' 20" West for a distance of 241.49 feet along a fence line to a 22-inch Oak tree with wire; thence running North 08 DEG. 51' 10" West for a distance of 99.13 feet along a fence line to a tree with wire; thence running North 13 DEG. 11' 22" West for a distance of 44.72 feet along a fence line to a stump with wire; thence running North 06 DEG. 55' 31" West for a distance of 44.45 feet long a fence line to an iron pipe recovered in a stone wall; thence running North 73 DEG. 35' 41" East for a distance of 71.66 feet along a stone wall to the end of said stone wall; thence running North 73 DEG. 57' 46" East for a distance of 48.45 feet to a concrete monument recovered; thence running North 75 DEG. 05' 39" East for a distance of 190.94 feet to a concrete monument recovered; thence running North 73 DEG. 18' 39" East for a distance of 166.10 feet to an angle point; thence running North 75 DEG. 48' 39" East for a distance of 241.15 feet to a point to be set at Connecticut Grid Coordinates North 738813.29, East 1183036.66, the last thirteen courses being bounded by land iv now or formerly of Southeastern Connecticut Regional Resources Recovery Authority; thence running North 44 DEG. 37' 01" West for a distance of 437.22 feet to a point to be set; thence running North 46 DEG. 20' 29" West for a distance of 133.75 feet to a point to be set; thence running North 43 DEG. 39' 31" East for a distance of 209.89 feet to a point to be set, the last three courses being bounded by other land now or formerly of UNC, Inc.; thence running along the arc of a curve to the left with a radius of 3,100.00 feet, a central angle of 04 DEG. 34' 39" for a distance of 247.66 feet to a point; thence running North 51 DEG. 56' 11" West for a distance of 150.00 feet to a point; thence running along the arc of a curve to the right with a radius of 1,132.75 feet, a central angle of 37 DEG. 19' 02" for a distance of 737.77 feet to a point; thence running along the arc of a curve to the right with a radius of 883.00 feet, a central angle of 38 DEG. 49' 37" for a distance of 598.37 feet to a concrete monument recovered, the last four courses being bounded by land now or formerly of Central Vermont Railway, Inc.; thence running North 45 DEG. 14' 00" West for a distance of 35 feet, more or less, bounded northeasterly by land now or formerly of Central Vermont Railway, Inc. to the tidal high water mark of Trading Cove; thence running in a general westerly direction along the tidal high water mark of Trading Cove for a distance of 3,743 feet, more or less, to a point which is located North 06 DEG. 33' 05" East 55 feet, more or less, from a rebar recovered at Connecticut Grid Coordinates North 741768.53, East 1179180.50; thence running South 06 DEG. 33' 05" West for a distance of 55 feet, more or less, to a rebar recovered; thence running South 06 DEG. 33' 05" West for a distance of 547.80 feet to an iron pipe recovered, the last two courses being bounded northwesterly by land now or formerly of Stamatios F. Lahaniatis; thence running South 06 DEG. 34' 37" West for a distance of 275.26 feet, bounded northwesterly by land now or formerly of John Lahaniatis and Joan Lahaniatis to an iron pipe recovered; thence running South 07 DEG. 16' 42" West for a distance of 52.35 feet, bounded northwesterly by the southeasterly terminus of Sandy Desert Road to a concrete monument recovered; thence running South 88 DEG. 08' 28" West for a distance of 246.94 feet, bounded northwesterly by Sandy Desert Road to the concrete monument recovered at the point and place of beginning. Together with all rights, easements, hereditaments and appurtenances thereto appertaining and all right, title and interest, if any, in and to strips and gores adjoining said premises and in and to the land lying in the bed of any street or streets adjoining said premises. Reference is hereby made to a certain Quit-Claim Deed from United Nuclear Corporation to UNC Resources, Inc, dated July 1, 1983 and recorded on August 10, 1984 at Volume 160, page 552 of Montville Land Records. Reference is further made to a Certificate of Change of Name from UNC Resources, Inc. to UNC Incorporated dated June 16, 1986 and recorded on September 10, 1986 at Volume 177, Page 438 of Montville Land Records. Said premises are conveyed subject to the following encumbrances: v 1. Pole line easement in favor of the Hartford Electric Light Company dated October 7, 1958, recorded November 6, 1958 in Volume 66, Page 40 of the Montville Land Records (said easement encumbering Tract Nos. 8 and 3 as shown on plan entitled "Plan Made for Olin Mathieson Chemical Corporation Showing Property in Town of Montville, Conn.) 2. Certificate of Taking in an action instituted by Southeastern Connecticut Regional Resources Recovery Authority against UNC Incorporated dated March 4, 1993, recorded March 10, 1993 in Volume 251, Page 713 of the Montville Land Records pursuant to which Southeastern Connecticut Regional Resources Recovery Authority exercised its right of eminent domain to condemn a certain access easement over and across a portion of those premises delineated on a certain map for plan entitled, "Plan made for United Nuclear Corporation Showing Property on Fort Shantok Road Montville, Connecticut Scale 1"=50 Feet Chandler, Palmer & King Norwich, Conn. November 1979." 3. Pole line easement in favor of the Hartford Electric Light Company dated October 27, 1958, recorded November 6, 1958 in Volume 66, Page 38 of the Montville Land Records, which right-of-way encumbers Tract Nos. 10, 1, 2 and 9 and that area between Tract Nos. 10 and 11, all as show on a plan entitled "Plan Made For Olin Mathieson Chemical Corporation Showing Property in Town of Montville, conn. Scale: 1"=200 Ft. Chandler & Palmer, Engr's. Norwich, Conn. July 31, 1957 Additions Sept. 1957 Sub-Division Of Tract 6 Oct 1958 Revision Of"""November 1958 Revised March 1, 1961." 4. Survey by Harris & Clark, Inc. dated December, 1995 shows the following: Lawn encroachment along the northerly line of land now or formerly of Horace W. and Gloria M. Deshefy, which lawn encroachment is approximately 40 feet in width. 5. Riparian rights of other in and to the Trading Cove. 6. Certificate of Taking by Southeastern Connecticut Regional Resources Recovery Authority in an action entitled "Southeastern Connecticut Regional Resources Recovery Authority vs. UNC Incorporation, Town of Montville Water Pollution Control Authority and The Hartford Electric Company" dated February 16, 1993, recorded in Volume 251, Page 167 of the Montville Land Records (thereby exercising its right of eminent domain to condemn certain groundwater easements in conjunction with leachate discharge from the condemnor's ash residue disposal facility located on adjacent real property to the south). vi 7. Rights to maintain a 30-inch (30") reinforced concrete pipe, endwall and paved ditch and together with permanent sloping rights contained in a Certificate of Condemnation from Albert Elbaum and Evelyn Elbaum to the State of Connecticut dated July 1, 1965, recorded in July 3, 1965 in Volume 87, Page 205 of the Montville Land Records, which rights were conveyed by the State of Connecticut to the Town of Montville by deed dated September 9, 1968, recorded in Volume 102, Page 171 of said land records. vii EXHIBIT B TO OPEN-END CONSTRUCTION -- PERMANENT LEASEHOLD MORTGAGE DEED, ASSIGNMENT OF LEASES AND RENTS AND SECURITY AGREEMENT - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ EXHIBIT A-I (Face of Note) --- % SERIES A SENIOR SECURED NOTES due 2002 No. $ -------------- MOHEGAN TRIBAL GAMING AUTHORITY promises to pay to or registered assigns, the principal sum of Dollars on November 15, 2002. Interest Payment Dates: May 15, and November 15 Record Dates: May 1, and November 1 Dated: September ---, 1995 MOHEGAN TRIBAL GAMING AUTHORITY By: ------------------------------------ Name: Title: By: ------------------------------------ Name: Title: (SEAL) This is one of the Notes referred to in the within-mentioned Indenture: - -------------------------------------- as Trustee By: ---------------------------------- - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ A-I-1 (Back of Note) --- % Series A Senior Secured Notes due 2002 [Unless and until it is exchanged in whole or in part for Notes in definitive form, this Note may not be transferred except as a whole by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depositorty or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository. Unless this certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) ("DTC"), to the issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or such other name as may be requested by an authorized representative of DTC (and any payment is made to Cede & Co. or such other entity as may be requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.](1) THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE NOTE EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION PROVIDED BY RULE 144A UNDER THE SECURITIES ACT. THE HOLDER OF THE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE TRIBE AND THE AUTHORITY THAT (A) SUCH NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN OF RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,(b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE AUTHORITY SO REQUESTS), (2) TO THE AUTHORITY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE NOTE EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (1) ABOVE. Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. - ------------------ 1. This paragraph is to be included only if the Note is in global form. A-I-2 1. INTEREST. Mohegan Tribal Gaming Authority (or any successor thereto as provided in the Indenture, the "Authority"), promises to pay interest at the rate of __% per annum of the principal amount of this Note (the "Fixed Interest") from the Issuance Date to the date of payment of such principal amount of this Note and shall pay the Liquidated Damages payable pursuant to Section 5 of the Registration Rights Agreement referred to below. Installments of Fixed Interest and Liquidated Damages shall become due and payable semi-annually in arrears on each May 15 and November 15 to the holder of record at the close of business on the preceding May 1 or November 1. Additionally, installments of accrued and unpaid Fixed Interest shall become due and payable with respect to any principal amount of this Note that matures (whether at stated maturity, upon acceleration, upon maturity of repurchase obligation or otherwise) upon such maturity of such principal amount of this Note. The Authority shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of Fixed Interest and Liquidated Damages (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Fixed Interest on this Note shall be computed on the basis of a 360-day year, consisting of twelve 30-day months. Each installment of Fixed Interest shall be calculated to accrue from and including the most recent date to which Fixed Interest has been paid or provided for (or from and including the Issuance Date if no installment of Fixed Interest has been paid) to, but not including, the date of payment. In addition, the Note shall bear Cash Flow Participation Interest, calculated as described below, from the Commencement Date to the date of payment of this Note. Installments of accrued or deferred Cash Flow Participation Interest on this Note accrued through the Accrual Period last ended shall become due and payable semi-annually on each May 15 and November 15 after the Commencement Date to the holder of record at the close of business on the preceding May 1 or November 1, provided that no Cash Flow Participation Interest shall be payable with respect to any period prior to the earlier of the first day the Resort commences operations and October 31, 1996. Additionally, all installments of accrued or deferred Cash Flow Participation Interest shall become due and payable (and may not be further deferred) with respect to any principal amount of this Note that matures (whether at stated maturity, upon acceleration, maturity of repurchase obligation or otherwise) upon such maturity of such principal amount of this Note. The Authority, at its option, may defer payment of all or a portion of any installment of Cash Flow Participation Interest then otherwise due if, and only to the extent that, (a) the payment of such portion of Cash Flow Participation Interest shall cause the Authority's Fixed Charge Coverage Ratio for the four consecutive fiscal quarters last completed prior to such interest payment date to be less than 2.0:1 on a pro forma basis after giving effect to the assumed payment of such Cash Flow Participation Interest but before giving effect to the payment of any interest on the Subordinated Notes which is then not payable in cash and (b) the principal of this Note corresponding to such Cash Flow Participation Interest has not then matured and become due and payable (at stated maturity, upon acceleration, upon maturity of repurchase obligation or otherwise). Cash Flow Participation Interest that is deferred shall become due and payable on the earlier of (i) the next succeeding interest payment date on which such Cash Flow Participation Interest is not permitted to be deferred, and (ii) upon the maturity of the corresponding principal of this Note (whether at stated maturity, upon acceleration, upon maturity of repurchase obligation or otherwise). No interest shall accrue on any Cash Flow Participation Interest deferred and which has not yet become due and payable. To the extent permitted by law, interest shall accrue on overdue Cash Flow Participation Interest at the same rate as the Fixed Interest plus one percent per annum. Each installment of Cash Flow Participation Interest shall be calculated to accrue (an "Accrual Period") from, but not including, the most recent date to which Cash Flow Participation A-I-3 Interest has been paid or provided for or through which Cash Flow Participation Interest had been calculated and deferred (or from and including the Commencement Date if on installment of Cash Flow Participation Interest has been paid, provided for or deferred) to, and including, either (a) the last day of the next Semi-annual Period if the corresponding principal of this Note has not become due and payable or (b) the date of payment if the corresponding principal of this Note has not become due and payable (whether at stated maturity, upon acceleration, upon maturity of repurchase obligation or otherwise). With respect to each Accrual Period, Cash Flow Participation Interest shall accrue daily on the principal of this Note outstanding during such period as follows (except with respect to the Initial Period): (i) for each day during each month that ends during such Accrual Period and which month ends at least 25 days prior to the date of payment, an amount equal to 1/30 of the Monthly Cash Flow Participation Interest on this Note for such month until all of such Monthly Cash Flow Participation Interest has been accrued (and all of such month's Monthly Cash Flow Participation Interest on this Note shall be accrued by the last day of such month) and (ii) for any day in any remaining period, 1/30 of the prior month's Monthly Base Cash Flow Participation Interest on this Note, provided, however, that additional Cash Flow Participation Interest will cease accruing on any outstanding principal of this Note until the next succeeding September 30, if on any day, the Cash Flow Participation Interest on such principal amount of this Note accrued since the immediately preceding September 30 (excluding any deferred Cash Flow Participation Interest accrued prior to such September 30) exceeds the product of $_______ million times such principal amount of this Note divided by $175,000,000. With respect to any principal amount of this Note during the Initial Period, Cash Flow Participation Interest shall accrue daily in the amount of 1/180 of the Cash Flow Participation Interest for such principal in the next succeeding Semi-annual Period. Any reference in this Note to "accrued and unpaid interest" includes the amount of unpaid Cash Flow Participation Interest due and payable. "COMMENCEMENT DATE" means the earlier of (i) October 31, 1996 and (ii) the first day that the Resort becomes Operating. "CASH FLOW" shall have the meaning set forth in the Indenture. "CASH FLOW PARTICIPATION INTEREST" means as of any payment date, the Cash Flow Participation Interest on this Note accrued through the Accrual Period last ended (including any Accrual Period that ends on such payment date) and any Cash Flow Participation Interest previously accrued and the payment of which has been permitted to be deferred. "FIXED CHARGE COVERAGE RATIO" shall have the meaning set forth in the Indenture. "INITIAL PERIOD" means the period, if any, beginning on the Commencement Date and ending on the day prior to the first day that the Resort becomes Operating. "MONTHLY CASH FLOW PARTICIPATION INTEREST" means, with respect to any month and any principal amount of this Note, the product of __% of the Authority's Cash Flow for such month times a fraction, the numerator of which is the principal amount outstanding on this Note and the denominator of which is $175,000,000. "SEMI-ANNUAL PERIOD" means each period that begins on April 1 and ends on the next succeeding September 30, or each period that begins on October 1 and ends on the next succeeding March 31. 2. METHOD OF PAYMENT. The Authority shall pay interest (including Cash Flow Participation Interest, if any) on the Notes (except defaulted interest) and Liquidated Damages to the Persons who are registered Holders of Notes at the close of business on May 1 or November 1 next A-I-4 preceding the Interest Payment Date, even if such Notes are cancelled after such record date and on or before such Interest Payment Date (the "Record Date"), except as provided in Section 2.12 of the Indenture with respect to defaulted interest or as provided with respect to Notes called for redemption after such record and on or before such Interest Payment Date. The Holder hereof must surrender this Note to a Paying Agent to collect principal payments. The Notes shall be payable as to principal, premium, if any, interest (including Cash Flow Participation Interest, if any) and Liquidated Damages at the office or agency of the Authority maintained for such purpose within or without the City and State of New York, or, at the option of the Authority, payment of interest (including Cash Flow Participation Interest, if any) and Liquidated Damages may be made by check mailed to the Holders at their addresses set forth in the register of Holders and provided that payment by wire transfer of immediately available fund, will be required with respect to principal of and interest, premium on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Authority or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. 3. PAYING AGENT AND REGISTRAR. Initially, First Fidelity Bank (including any successor appointed under the Indenture, the "Trustee"), the Trustee under the Indenture, shall act as Paying Agent and Registrar. The Authority may change any Paying Agent or Registrar without notice to any Holder. The Authority may act in any such capacity. 4. INDENTURE AND COLLATERAL DOCUMENTS. The Authority issued the Notes under an Indenture dated as of September __, 1995 (as it may be amended from time to time, the "Indenture") among the Authority, the Tribe, and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb) as in effect on the Issuance Date. The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. The Notes are obligations of the Authority limited to $175 million in aggregate principal amount. The terms of the Indenture shall govern any inconsistencies between the Indenture and the Notes. The Notes are secured by certain collateral pursuant to the Collateral Documents referred to in the Indenture and which may be released pursuant to the terms thereof. 5. OPTIONAL REDEMPTION. Except as set forth below, the Authority shall not have the option to redeem the Notes prior to November 15, 1999. From and after November 15, 1999, the Authority shall have the option to redeem the Notes, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest (including Cash Flow Participation Interest and Liquidated Damages, if any) thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on November 15 of the years indicated below:
YEAR PERCENTAGE - ---- ---------- 1999........................................... 2000........................................... 2001...........................................
Notwithstanding any other provisions of Article 3 of the Indenture, if any Gaming Regulatory Authority requires that a Holder or beneficial owner of the Notes be licensed, qualified or found suitable under any applicable gaming laws in order to maintain any gaming license or A-1-5 franchise of the Authority under any applicable gaming laws, and the Holder or beneficial owner fails to apply for a license, qualification or finding of suitability within 30 days after being requested to do so by such Gaming Regulatory Authority (or such lesser period that may be required by such Gaming Regulatory Authority) or if such Holder or beneficial owner is not so licensed, qualified or found suitable, the Authority has the right, at its option, (i) to require such Holder or beneficial owner to dispose of such Holder's or beneficial owner's Notes within 30 days of receipt of such notice of such finding by the applicable Gaming Regulatory Authority (or such earlier date as may be required by the applicable Gaming Regulatory Authority) or (ii) to call for redemption of the Notes of such Holder or beneficial owner at a redemption price equal to the lesser of the principal amount thereof or the price at which such Holder or beneficial owner acquired the Notes, together with, in either case, accrued and unpaid interest (including Cash Flow Participation Interest and Liquidated Damages), if any, to the earlier of the date of redemption or the date of the finding of unsuitability by such Gaming Regulatory Authority, which may be less than 30 days following the notice of redemption if so ordered by such Gaming Regulatory Authority. The Authority shall not be required to pay or reimburse any Holder or beneficial owner of Notes who is required to apply for any such license, qualification or finding of suitability for the costs of the licensure or investigation for such qualification or finding of suitability. Such expenses shall be the obligation of such Holder or beneficial owner. 6. MANDATORY REDEMPTION. The Authority shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes. 7. REPURCHASE AT OPTION OF HOLDER. Under certain circumstances, as provided in the Indenture, the Authority may be required to purchase all or a portion of the Notes. Holders of Notes that are subject to an offer to purchase will receive an offer to purchase from the Authority prior to any related purchase date, and may elect to have such Notes purchased by completing the form entitled "Option of Holders to Elect Purchase" appearing below. 8. NOTICE OF REDEMPTION. Notice of redemption shall be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest (including Cash Flow Participation Interest or Liquidated Damages, if any) ceases to accrue on Notes or portions thereof called for redemption. 9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Authority may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Authority need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, it need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. 10. PERSONS DEEMED OWNERS. Prior to due presentment to the Trustee for registration of the transfer of this Note, the Trustee, any Agent and the Authority may deem and treat the Person in whose name this Note is registered as its absolute owner for the purpose of receiving payment of principal of and interest on this Note and for all other purposes whatsoever, whether A-1-6 or not this Note is overdue, and neither the Trustee, any Agent, nor the Authority shall be affected by notice to the contrary. The registered holder of a Note shall be treated as its owner for all purposes. 11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture, the Notes, the Collateral Documents or the Management Agreement may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes, and any existing default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes. Without the consent of any Holder of a Note, the Indenture, the Notes or the Collateral Documents may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to comply with Article Five or Article 10 of the Indenture, to provide for the assumption of the Authority's obligations to Holders of the Notes in case of a merger or consolidation pursuant to Article Five or Article 10 of the Indenture, to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, or to comply with the requirements of the Commission in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act or to enter into additional or supplemental Collateral Documents. 12. DEFAULTS AND REMEDIES. Events of Default include (as more fully described, and subject to, the terms and conditions of the Indenture as it may be amended from time to time): (i) default in payment of interest (including Cash Flow Participation Interest or Liquidated Damages, if any) when due and payable on any Note for 30 days; (ii) default in payment of principal of or premium, if any on any Note when due; (iii) failure by the Authority to comply with Section 4.07, 4.09, 4.10, 4.11, 4.15, 4.16, 4.18, 4.28 or 5.01 of the Indenture; (iv)failure by the Authority or the Tribe for 60 days after written notice to it to comply with any of its other agreements in the Indenture, the Notes, or the Collateral Documents; (v) any default occurs under the Lease or any Collateral Documents or the Lease ceases to be in full force and effect that continues beyond any applicable due period; (vi) payment defaults under and the acceleration prior to express maturity of certain other indebtedness which aggregates $7.5 million or more; (vii) certain final judgments that remain unpaid, undischarged and unstayed if the aggregate of all such undischarged judgements exceeds $7.5 million; (viii) breach of representation or warranty in, or in the repudiation with respect to the Lease or any of the Collateral Documents; (ix) certain events of bankruptcy or insolvency; (x) revocation, termination, suspension or other cessation of effectiveness of any Gaming License which results in the cessation or suspension of gaming operations for a period of more than 90 consecutive days at the Resort; (xi) cessation of gaming operations for a period of more than 90 consecutive days at the Resort (other than as a result of a casualty loss) after the Resort becomes Operating; (xii) cessation of gaming operations for a period of more than 180 consecutive days as a result of a casualty loss except if the Authority is diligently pursuing reconstruction and opening of the Resort and such reconstruction and operating can be accomplished with the funds available to the Authority. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare the principal, premium, if any, interest (including all Cash Flow Participation Interest accrued or deferred and Liquidated Damages) and any other monetary obligations on all of the Notes to be due and payable. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes shall become due and payable without further action or notice. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest (including Cash Flow Participation Interest, if any)) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate A-I-7 principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the Notes. The Authority is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Authority is required, within five Business Days upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default. 13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Authority or its Affiliates, and may otherwise deal with the Authority or its Affiliates, as if it were not the Trustee. 14. NO RECOURSE AGAINST OTHERS. Neither the Tribe nor any officer or office holder, employee, agent, representative, member of the Authority or the Tribe, as such, shall have any liability for any obligations of the Authority under this Note, the Indenture or the Collateral Documents, as applicable, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. 15. AUTHENTICATION. This Note shall not be valid until authentication by the manual signature of the Trustee or an authenticating agent. 16. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 17. ADDITIONAL RIGHTS OF HOLDERS. In addition to the rights provided to Holders of Notes under the Indenture, Holders shall have all the rights set forth in the Collateral Documents. 18. CUSIP NUMBERS. Pursuant to recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Authority has caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers place thereon. The Authority shall furnish to any Holder upon written request and without charge a copy of the Indenture and/or any of the Collateral Documents. Requests may be made to: Mohegan Tribal Gaming Authority 27 Church Lane Uncasville, Connecticut 06382 Attention: Roland Harris and Carlisle Fowler, Business Board Members, and Chief Ralph Sturges A-I-8 Assignment Form To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to ___________________________________________________ _________________________________________________________________________ (Insert assignee's soc. sec. or tax I.D. no.) _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint _________________________________________________ to transfer this Note on the books of the Authority. The agent may substitute another to act for him. _________________________________________________________________________ Date: _____________ Your Signature: ______________________ (Sign exactly as your name appears on the face of this Note) Signature Guarantee. A-I-9 Option of Holder to Elect Purchase If you want to elect to have this Note purchased by the Authority pursuant to Section 4.10, 4.11, 4.16 or 4.28 of the Indenture, check the box below: / / Section 4.10 / / Section 4.11 / / Section 4.16 / / Section 4.28 If you want to elect to have only part of the Note purchased by the Authority pursuant to Section 4.10, Section 4.11, Section 4.16 or Section 4.28 of the Indenture, state the amount you elect to have purchased: $_____________ Date:________________ Your Signature:_______________________________ (Sign exactly as your name appears on the Note) Tax Identification No.:_________ Signature Guarantee. A-I-10 EXHIBIT A-II-1 (Face of Note) ___% SERIES B SENIOR SECURED NOTES due 2002 No. $__________ MOHEGAN TRIBAL GAMING AUTHORITY promises to pay to or registered assigns, the principal sum of Dollars on November 15, 2002. Interest Payment Dates: May 15, and November 15 Record Dates: May 1, and November 1 Dated: September ___, 1995 MOHEGAN TRIBAL GAMING AUTHORITY By:______________________________ Name: Title: By:______________________________ Name: Title: (SEAL) This is one of the Notes referred to in the within-mentioned Indenture: _____________________________________ as Trustee By:__________________________________ - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ A-II-1 (Back of Note) __% Series B Senior Secured Notes due 2002 [Unless and until it is exchanged in whole or in part for Notes in definitive form, this Note may not be transferred except as a whole by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository. Unless this certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) ("DTC"), to the issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or such other name as may be requested by an authorized representateve of DTC (and any payment is made to Cede & Co. or such other entity as may be requested by an authorized representative of DTC). ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.](1) Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. INTEREST. Mohegan Tribal Gaming Authority (or any successor thereto as provided in the Indenture, the "Authority"), promises to pay interest at the rate of __% per annum of the principal amount of this Note (the "Fixed Interest") from the Issuance Date to the date of payment of such principal amount of this Note. Installments of Fixed Interest shall become due and payable semi-annually in arrears on each May 15 and November 15 to the holder of record at the close of business on the preceding May 1 or November 1. Additionally, installments of accrued an unpaid Fixed Interest shall become due and payable with respect to any principal amount of this Note that matures (whether at stated maturity, upon acceleration, upon maturity of repurchase obligation or otherwise) upon such maturity of such principal amount of this Note. The Authority shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, in any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of Fixed Interest (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Fixed Interest on this Note shall be computed on the basis of a 360-day year, consisting of twelve 30-day months. Each installment of Fixed Interest shall be calculated to accrue from and including the most recent date to which Fixed Interest has been paid or provided for (or from and including the Issuance Date if no installment of Fixed Interest has been paid) to, but not including, the date of payment. In addition, this Note shall bear Cash Flow Participation Interest, calculated as described below, from the Commencement Date to the date of payment of this Note. Installments of accrued or deferred Cash Flow Participation Interest on this Note accrued through the Accrual Period last ended shall become due and payable semi-annually on each May 15 and November 15 after the Commencement Date to the holder of record at the close of business on the preceding May 1 or November 1, provided that no Cash Flow Participation Interest shall be payable with respect to any period prior to the earlier of the first day the Resort commences operations and October 31, 1996. Additionally, all installments of accrued or deferred Cash Flow Participation Interest shall become due and payable (and may not be further deferred) with respect to any - ---------- (1) This paragraph is to be included only if the Note is in global form. A-II-2 principal amount of this Note that matures (whether at stated maturity, upon acceleration, maturity of repurchase obligation or otherwise) upon such maturity of such principal amount of this Note. The Authority, at its option, may defer payment of all or a portion of any installment of Cash Flow Participation Interest then otherwise due if, and only to the extent that, (a) the payment of such portion of Cash Flow Participation Interest shall cause the Authority's Fixed Charge Coverage Ratio for the four consecutive fiscal quarters last completed prior to such interest payment date to be less than 2.0:1 on a pro forma basis after giving effect to the assumed payment of such Cash Flow Participation Interest but before giving effect to the payment of any interest on the Subordinated Notes which is then not payable in cash and (b) the principal of this Note corresponding to such Cash Flow Participation Interest has not then matured and become due and payable (at stated maturity, upon acceleration, upon maturity of repurchase obligation or otherwise). Cash Flow Participation Interest that is deferred shall become due and payable on the earlier of (i) the next succeeding interest payment date on which such Cash Flow Participation Interest is not permitted to be deferred, and (ii) upon the maturity of the corresponding principal of this Note (whether at stated maturity, upon acceleration, upon maturity of repurchase obligation or otherwise). No interest shall accrue on any Cash Flow Participation Interest deferred and which has not yet become due and payable. To the extent permitted by law, interest shall accrue on overdue Cash Flow Participation Interest at the same rate as the Fixed Interest plus one percent per annum. Each installment of Cash Flow Participation Interest shall be calculated to accrue (an "Accrual Period") from, but not including, the most recent date to which Cash Flow Participation Interest has been paid or provided for or through which Cash Flow Participation Interest had been calculated and deferred (or from and including the Commencement Date if no installment of Cash Flow Participation Interest has been paid, provided for or deferred) to, and including, either (a) the last day of the next Semi-annual Period if the corresponding principal of this Note has not become due and payable or (b) the date of payment if the corresponding principal of this Note has become due and payable (whether at stated maturity, upon acceleration, upon maturity of repurchase obligation or otherwise). With respect to each Accrual Period, Cash Flow Participation Interest shall accrue daily on the principal of this Note outstanding during such period as follows (except with respect to the Initial Period): (i) for each day during each month that ends during such Accrual Period and which month ends at least 25 days prior to the date of payment, an amount equal to 1/30 of the Monthly Cash Flow Participation Interest on this Note for such month until all of such Monthly Cash Flow Participation Interest has been accrued (and all of such month's Monthly Cash Flow Participation Interest on this Note shall be accrued by the last day of such month) and (ii) for any day in any remaining period, 1/30 of the prior month's Monthly Base Cash Flow Participation Interest on this Note; provided, however, that additional Cash Flow Participation Interest will cease accruing on any outstanding principal of this Note until the next succeeding September 30, if on any day, the Cash Flow Participation Interest on such principal amount of this Note accrued since the immediately preceding September 30 (excluding any deferred Cash Flow Participation Interest accrued prior to such September 30) exceeds the product of $_______ million times such principal amount of this Note divided by $175,000,000. With respect to any principal amount of this Note during the Initial Period, the Cash Flow Participation Interest shall accrue daily in the amount of 1/180 of the Cash Flow Participation Interest for such principal in the next succeeding Semi-annual Period. Any reference in this Note to "accrued and unpaid interest" includes the amount of unpaid Cash Flow Participation Interest due and payable. "COMMENCEMENT DATE" means the earlier of (i) October 31, 1996 and (ii) the first day that the Resort becomes Operating. "CASH FLOW" shall have the meaning set forth in the Indenture. A-II-3 "CASH FLOW PARTICIPATION INTEREST" means, as of any payment date. Cash Flow Participation Interest on this Note accrued through the Accrual Period last ended (including any Accrual Period that ends on such payment date) and any Cash Flow Participation Interest previously accrued and the payment of which has been permitted to be deferred. "FIXED CHARGE COVERAGE RATIO" shall have the meaning set forth in the Indenture. "INITIAL PERIOD" means the period, if any, beginning on the Commencement Date and ending on the day prior to the first day that the Resort becomes Operating. "MONTHLY CASH FLOW PARTICIPATION INTEREST" means, with respect to any month and any principal amount of this Note, the product of __% of the Authority's Cash Flow for such month times a fraction, the numerator of which is the principal amount outstanding on this Note and the denominator of which is $175,000,000. "SEMI-ANNUAL PERIOD" means each period that begins on April 1 and ends on the next succeeding September 30, or each period that begins on October 1 and ends on the next succeeding March 31. 2. METHOD OF PAYMENT. The Authority shall pay interest (including Cash Flow Participation Interest, if any) on the Notes (except defaulted interest) and Liquidated Damages to the Persons who are registered Holders of Notes at the close of business on April 30 or September 30 next preceding the Interest Payment Date, even if such Notes are cancelled after such record date and on or before such Interest Payment Date (the "Record Date"), except as provided in Section 2.12 of the Indenture with respect to defaulted interest or as provided with respect to Notes called for redemption after such record and on or before such Interest Payment Date. The Holder hereof must surrender this Note to a Paying Agent to collect principal payments. The Notes shall be payable as to principal, premium, if any, interest (including Cash Flow Participation Interest, if any) and Liquidated Damages at the office or agency of the Authority maintained for such purpose within or without the City and State of New York, or, at the option of the Authority, payment of interest (including Cash Flow Participation Interest, if any) and Liquidated Damages may be made by check mailed to the Holders at their addresses set forth in the register of Holders and provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium and Liquidated Damages on, all Global Notes and other Notes the Holders of which shall have provided wire transfer instructions to the Authority or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. 3. PAYING AGENT AND REGISTRAR. Initially, First Fidelity Bank (including any successor appointed under the Indenture, the "Trustee"), the Trustee under the Indenture, shall act as Paying Agent and Registrar. The Authority may change any Paying Agent or Registrar without notice to any Holder. The Authority may act in any such capacity. 4. INDENTURE AND COLLATERAL DOCUMENTS. The Authority issued the Notes under an Indenture dated as of September __, 1995 (as it may be amended from time to time, the "Indenture") among the Authority, the Tribe, and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb) as in effect on the Issuance Date. The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. The Notes are obligations of the Authority limited to $175 million in aggregate principal amount. The terms of the Indenture shall govern any inconsistencies between the Indenture and the Notes. The Notes are secured by certain collateral pursuant to the Collateral Documents referred to in the Indenture and which may be released pursuant to the terms thereof. A-II-4 5. OPTIONAL REDEMPTION. Except as set forth below, the Authority shall not have the option to redeem the Notes prior to November 15, 1999. From and after November 15, 1999, the Authority shall have the option to redeem the Notes, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest (including Cash Flow Participation Interest, if any) thereon to the applicable redemption date, if redeemed during the twelve-month period beginning on November 15 of the years indicated below:
YEAR PERCENTAGE - ---- ---------- 1999........................................... 2000........................................... 2001...........................................
Notwithstanding any other provisions of Article 3 of the Indenture, if any Gaming Regulatory Authority requires that a Holder or beneficial owner of the Notes be licensed, qualified or found suitable under any applicable gaming laws in order to maintain any gaming license or franchise of the Authority under any applicable gaming laws, and the Holder or beneficial owner fails to apply for a license, qualification or finding of suitability within 30 days after being requested to do so by such Gaming Regulatory Authority (or such lesser period that may be required by such Gaming Regulatory Authority) or if such Holder or beneficial owner is not so licensed, qualified or found suitable, the Authority has the right, at its option, (i) to require such Holder or beneficial owner to dispose of such Holder's or beneficial owner's Notes within 30 days of receipt of such notice of such finding by the applicable Gaming Regulatory Authority (or such earlier date as may be required by the applicable Gaming Regulatory Authority) or (ii) to call for redemption of the Notes of such Holder or beneficial owner at a redemption price equal to the lesser of the principal amount thereof or the price at which such Holder or beneficial owner acquired the Notes, together with, in either case, accrued and unpaid interest (including Cash Flow Participation Interest), if any, to the earlier of the date of redemption or the date of the finding of unsuitability by such Gaming Regulatory Authority, which may be less than 30 days following the notice of redemption if so ordered by such Gaming Regulatory Authority. The Authority shall not be required to pay or reimburse any Holder or beneficial owner of Notes who is required to apply for any such license, qualification or finding of suitability for the costs of the licensure or investigation for such qualification or finding of suitability. Such expenses shall be the obligation of such Holder or beneficial owner. 6. MANDATORY REDEMPTION. The Authority shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes. 7. REPURCHASE AT OPTION OF HOLDER. Under certain circumstances, as provided in the Indenture, the Authority may be required to purchase all or a portion of the Notes. Holders of Notes that are subject to an offer to purchase will receive an offer to purchase from the Authority prior to any related purchase date, and may elect to have such Notes purchased by completing the form entitled "Option of Holders to Elect Purchase" appearing below. A-II-5 8. NOTICE OF REDEMPTION. Notice of redemption shall be mailed at least 30 days but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest (including Cash Flow Participation Interest, if any) ceases to accrue on Notes or portions thereof called for redemption. 9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Authority may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Authority need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, it need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. 10. PERSONS DEEMED OWNERS. Prior to due presentment to the Trustee for registration of the transfer of this Note, the Trustee, any Agent and the Authority may deem and treat the Person in whose name this Note is registered as its absolute owner for the purpose of receiving payment of principal of and interest (including Cash Flow Participation Interest, if any) on this Note and for all other purposes whatsoever, whether or not this Note is overdue, and neither the Trustee, any Agent, nor the Authority shall be affected by notice to the contrary. The registered holder of a Note shall be treated as its owner for all purposes. 11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture, the Notes, the Collateral Documents or the Management Agreement may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the then outstanding Notes, and any existing default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes. Without the consent of any Holder of a Note, the Indenture, the Notes or the Collateral Documents may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to comply with Article Five or Article 10 of the Indenture, to provide for the assumption of the Authority's obligations to Holders of the Notes in case of a merger or consolidation pursuant to Article Five or Article 10 of the Indenture, to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, or to comply with the requirements of the Commission in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act or to enter into additional or supplemental Collateral Documents. 12. DEFAULTS AND REMEDIES. Events of Default include (as more fully described, and subject to, the terms and conditions of the Indenture as it may be amended from time to time): (i) default in payment of interest (including Cash Flow Participation Interest, if any) when due and payable on any Note for 30 days; (ii) default in payment of principal of or premium, if any on any Note when due; (iii) failure by the Authority to comply with Section 4.07, 4.09, 4.10, 4.11, 4.15, 4.16, 4.18, 4.28 or 5.01 of the Indenture; (iv) failure by the Authority or the Tribe for 60 days after written notice to it to comply with any of its other agreements in the Indenture, the Notes, or the Collateral Documents; (v) any default occurs under the Lease or any Collateral Document that continues beyond any applicable cure period or the Lease ceases to be in full force and effect; (vi) payment defaults under and the acceleration prior to express maturity of certain other indebtedness which aggregates $7.5 million or more; (vii) certain final judgments that remain unpaid, undischarged and unstayed if the aggregate of all such undischarged judgements exceeds A-II-6 $7.5 million; (viii) breach of representation or warranty in, or the repudiation with respect to, the Lease or any of the Collateral Documents; (ix) certain events of bankruptcy or insolvency; (x) revocation, termination, suspension or other cessation of effectiveness of any Gaming License which results in the cessation or suspension of gaming operations for a period of more than 90 consecutive days at the Resort; (xi) cessation of gaming operations for a period of more than 90 consecutive days at the Resort (other than as a result of a casualty loss) after the Resort becomes Operating; (xii) cessation of gaming operations for a period of more than 180 consecutive days as a result of a casualty loss except if the Authority is diligently pursuing reconstruction and opening of the Resort and such reconstruction and opening can be accomplished with the funds available to the Authority. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare the principal, premium, if any, interest (including all Cash Flow Participation Interest accrued or deferred) and any other monetary obligations on all of the Notes to be due and payable. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes shall become due and payable without further action or notice. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest (including Cash Flow Participation Interest, if any)) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest (including Cash Flow Participation Interest, if any) on, or the principal of, the Notes. The Authority is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Authority is required, within five Business Days upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default. 13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Authority or its Affiliates, and may otherwise deal with the Authority or its Affiliates, as if it were not the Trustee. 14. NO RECOURSE AGAINST OTHERS. Neither the Tribe nor any officer of office holder, employee, agent, representative, member of the Authority or the Tribe, as such, shall have any liability for any obligations of the Authority under this Note, the Indenture or the Collateral Documents, as applicable, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. 15. AUTHENTICATION. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 16. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 17. ADDITIONAL RIGHTS OF HOLDERS. In addition to the rights provided to Holders of Notes under the Indenture, Holders shall have all the rights set forth in the Collateral Documents. A-II-7 18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Authority has caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. The Authority shall furnish to any Holder upon written request and without charge a copy of the Indenture and/or any of the Collateral Documents. Requests may be made to: Mohegan Tribal Gaming Authority 27 Church Lane Uneasville, Connecticut 06382 Attention: Roland Harris and Carlisle Fowler, Business Board Members, and Chief Ralph Sturges A-II-8 ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to - --------------------------------------------------------------------------- (INSERT ASSIGNEE'S SOC. SEC. OR TAX I.D. NO.) - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- (PRINT OR TYPE ASIGNEE'S NAME, ADDRESS AMD ZIP CODE) and irrevocably appoint --------------------------------------------------- to transfer this Note on the books of the Authority. The agent may substitute another to act for him. - ----------------------------------------------------------------------------- Date: ---------------------- Your Signature: ---------------------------- (SIGN EXACTLY AS YOUR NAME APPEARS ON THE FACE OF THIS NOTE) Signature Guarantee. A-II-9 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Authority pursuant to Section 4.10, 4.11, 4.16 or 4.28 of the Indenture, check the box below: / / Section 4.10 / / Section 4.11 / / Section 4.16 / / Section 4.28 If you want to elect to have only part of the Note purchased by the Authority pursuant to Section 4.10, Section 4.11, Section 4.16 or Section 4.28 of the Indenture, state the amount you elect to have purchased: $ --------------------- Date: Your Signature: ------------------- ------------------------------- (SIGN EXACTLY AS YOUR NAME APPEARS ON THE NOTE) Tax Identification No.: ----------- Signature Guarantee. A-II-10 EX-10.11 6 EXHIBIT 10.11 - -------------------------------------------------------------------------------- CASH COLLATERAL ACCOUNTS PLEDGE AND SECURITY AGREEMENT DATED AS OF SEPTEMBER 29, 1995 -C-COPYRIGHT 1995 BY THE MOHEGAN TRIBAL GAMING AUTHORITY, TRADING COVE ASSOCIATES AND SUN INTERNATIONAL HOTELS LIMITED. REPRODUCTION OF THE MATERIAL HEREIN OR SUBSTANTIAL QUOTATION OF ITS PROVISIONS WITHOUT PERMISSION VIOLATES THE COPYRIGHT LAWS OF THE UNITED STATES AND WILL BE SUBJECT TO LEGAL PROSECUTION. WARNING: UNLICENSED PHOTOCOPYING VIOLATES U.S. COPYRIGHT LAWS. - -------------------------------------------------------------------------------- TABLE OF CONTENTS Page 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . 1 1.1 DEFINED TERMS. . . . . . . . . . . . . . . . . 1 1.2 INDENTURE DEFINED TERMS . . . . . . . . . . . . 3 1.3 INDEX OF ADDITIONAL DEFINED TERMS . . . . . . . 4 2. PLEDGE AND GRANT OF SECURITY INTEREST - ESTABLISHMENT OF CASH COLLATERAL ACCOUNTS . . . . . . . . . . . . . . . . 4 2.1 . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2.2 . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.3 . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3. WITHDRAWALS OF FUNDS FROM CASH COLLATERAL ACCOUNTS. . . 5 3.1 . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3.2 . . . . . . . . . . . . . . . . . . . . . . . . . . 7 3.3 . . . . . . . . . . . . . . . . . . . . . . . . . . 8 3.4 . . . . . . . . . . . . . . . . . . . . . . . . . . 8 4. INVESTMENT OF FUNDS IN THE CASH COLLATERAL ACCOUNTS . . 9 4.1 . . . . . . . . . . . . . . . . . . . . . . . . . . 9 4.2 . . . . . . . . . . . . . . . . . . . . . . . . . . 9 5. EVENTS OF DEFAULT . .. . . . . . . . . . . . . . . . . 10 5.1 . . . . . . . . . . . . . . . . . . . . . . . . . . 10 5.2 . . . . . . . . . . . . . . . . . . . . . . . . . . 10 5.3 . . . . . . . . . . . . . . . . . . . . . . . . . . 10 6. CERTAIN MATTERS REGARDING THE BANK AND THE TRUSTEE. . . 10 6.1 LIMITATION OF BANK'S LIABILITY . . . . . . . . . 10 6.2 INDEMNITY OF BANK . . . . . . . . . . . . . . . 11 6.3 RIGHT TO CONSULT COUNSEL . . . . . . . . . . . . 11 6.4 AGENCY . . . . . . . . . . . . . . . . . . . . . 11 6.5 WAIVER OF SETOFF RIGHTS. . . . . . . . . . . . . 11 6.6 COOPERATION . . . . . . . . . . . . . . . . . . 11 6.7 COMPENSATION . . . . . . . . . . . . . . . . . . 11 6.8 LIMITATION OF TRUSTEE'S LIABILITY. . . . . . . . 12 6.9 INDEMNITY OF TRUSTEE . . . . . . . . . . . . . . 12 7. TERMINATION . . . . . . . . . . . . . . . . . . . . . . 12 8. SUBSTITUTION OF RESIGNATION . . . . . . . . . . . . . . 12 9. BANK STATEMENTS . . . . . . . . . . . . . . . . . . . . 13 -i- 10. CHOICE OF LAW . . . . . . . . . . . . . . . . . . . . . 13 11. CONSENT TO SUIT. WAIVER OF JURY TRAIL . . . . . . . . 13 12. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 14 12.1 WAIVER . . . . . . . . . . . . . . . . . . . . . 14 12.2 INVALIDITY . . . . . . . . . . . . . . . . . . . 15 12.3 NO AUTHORITY . . . . . . . . . . . . . . . . . . 15 12.4 ASSIGNMENT . . . . . . . . . . . . . . . . . . . 15 12.5 BENEFIT . . . . . . . . . . . . . . . . . . . . 15 12.6 TIME . . . . . . . . . . . . . . . . . . . . . . 15 12.7 ENTIRE AGREEMENT; AMENDMENTS . . . . . . . . . . 15 12.8 NOTICES . . . . . . . . . . . . . . . . . . . . 15 12.9 COUNTERPARTS . . . . . . . . . . . . . . . . . . 16 12.10 CAPTIONS . . . . . . . . . . . . . . . . . . . . 17 13. REMEDIES . . . . . . . . . . . . . . . . . . . . 17 13.1 ADDITIONAL REMEDIES . . . . . . . . . . . . . . 17 13.2 FUTURE ADVANCES . . . . . . . . . . . . . . . . 18 LIST OF SCHEDULES AND EXHIBITS SCHEDULE I FORM OF REVOCATION NOTICE . . . . . . . . . . . . . . . I SCHEDULE II FORM OF TRUSTEE'S NOTICE . . . . . . . . . . . . . . . III EXHIBIT A FORM OF DISBURSEMENT REQUEST AND CERTIFICATION (A). . . IV EXHIBIT B FORM OF DISBURSEMENT REQUEST AND CERTIFICATION (B). . . V EXHIBIT C FORM OF DISBURSEMENT REQUEST AND CERTIFICATION (C). . . IX EXHIBIT D FORM OF DISBURSEMENT REQUEST AND CERTIFICATION (D). . . XI EXHIBIT E FORM OF DISBURSEMENT REQUEST AND CERTIFICATION (E). . XIII EXHIBIT F FORM OF DISBURSEMENT REQUEST AND CERTIFICATION (F). . . XIV EXHIBIT G FORM OF DISBURSEMENT REQUEST AND CERTIFICATION (G). . . XVI EXHIBIT H FORM OF LETTER UNDER SECTION 4.2(D)(II)(A) -ii- CASH COLLATERAL ACCOUNTS PLEDGE AND SECURITY AGREEMENT CASH COLLATERAL ACCOUNTS PLEDGE AND SECURITY AGREEMENT (as amended from time to time, the "AGREEMENT") dated as of September 29, 1995, by and among First Fidelity Bank, a Connecticut banking corporation, as depository bank for the Cash Collateral Accounts (the "BANK"), First Fidelity Bank, a Connecticut banking corporation, as trustee under the Indenture (as defined below) (the "TRUSTEE"), Trading Cove Associates, a Connecticut partnership (the "MANAGER"), Sun International Hotels Limited, a Bahamian corporation ("SIHL"), the Mohegan Tribal Gaming Authority of the Mohegan Tribe of Indians of Connecticut (the "AUTHORITY"), and the Mohegan Tribe of Indians of Connecticut (the "TRIBE"). RECITALS A. SENIOR SECURED NOTES. The Authority has issued $175,000,000 in aggregate principal amount of its ___% Senior Secured Notes due 2002 (as the same may be amended from time to time, the "SENIOR SECURED NOTES"). The Senior Secured Notes are issued pursuant to the provisions of an indenture (as the same may be amended from time to time, the "INDENTURE") dated as of September 29, 1995 among the Authority, the Trustee and, for the limited purposes set forth therein, the Tribe. In addition, the Authority has issued $40,000,000 in aggregate principal amount of its Subordinated Notes due 2003 and may issue such additional principal amount of such notes as contemplated by the Secured Completion Guarantee (as defined below), (collectively, as the same may be amended from time to time, the "SUBORDINATED NOTES"). The Subordinated Notes are issued pursuant to the provisions of a note purchase agreement (as amended from time to time, and including the form of Subordinated Note attached thereto, the "PURCHASE AGREEMENT") dated as of September 29, 1995 among the Authority and SIHL. B. COLLATERAL AND COLLATERAL ASSIGNMENT. Pursuant to Section 10.12 of the Indenture, the Authority has agreed to pledge and grant to the Trustee, for the ratable benefit of the holders of the Senior Secured Notes, a duly preferred first priority security interest in certain cash required to be deposited in the Cash Collateral Accounts. The purpose of this Agreement is to take any and all actions required to effect and perfect such pledge and security interest and to set forth the conditions upon which, and the manner in which, funds will be disbursed from the Cash Collateral Accounts. 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, unless a different meaning clearly appears from the context, 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: "ASSET SALE ACCOUNT" means the cash collateral account required to be established by Section 4.10 and Section 10.12 of the Indenture, in which there must be deposited all Net Proceeds from Asset Sales pursuant to Section 4.10 of the Indenture. "BANK STATEMENT" means a monthly statement setting forth in reasonable particularity deposits in, withdrawals from and the balance of funds in each of the Cash Collateral Accounts, and the manner in which such funds are invested, and includes any additional statement as the Manager, the Authority or the Trustee may require from time to time regarding the status of Cash Collateral Accounts. "BANK'S OFFICE" means the office of the Bank located at 10 State House Square, Hartford, CT 06103-3698. "BUSINESS DAY" means any day other than a Saturday, Sunday or other day on which federal or state banks are required or permitted by law to close in the State of Connecticut. "CASH CONTINGENCY RESERVE FUND" means the account called for by Section 4.26 of the Gaming Facility Management Agreement as in effect on the date hereof. The Manager shall notify the Bank, the Authority and the Trustee of the name and address of the commercial banking institution at which the Cash Contingency Reserve Fund shall be opened initially and of each change thereof. "CASH MAINTENANCE ACCOUNT" means the cash collateral account required to be established by Section 4.08 and Section 10.12 of the Indenture, in which there must be deposited the amounts specified in Section 4.08 of the Indenture. "CASH COLLATERAL" means (a) all amounts required to be deposited into a Cash Collateral Account, (b) the Cash Collateral Accounts and all funds, cash, Cash Equivalents and other items from time to time acquired by the Bank with funds in the Cash Collateral Accounts, as well as any earnings, proceeds or income therefrom and (c) any claims, present or future, of the Authority against any Person liable upon or for the payment of any thereof. "CASH COLLATERAL ACCOUNT" means each of the Cash Maintenance Account, Depository Account, Interest and Excess Cash Flow Account, Replacement Reserve Account, Event of Loss Account, and Asset Sale Account; and "CASH COLLATERAL ACCOUNTS" means the foregoing accounts collectively. "DEPOSITORY ACCOUNT" means the account called for by Section 4.23 of the Gaming Facility Management Agreement as in effect on the date hereof, in which all Gross Revenues are required to be deposited daily. 2 "DISBURSEMENT ACCOUNT" means the account called for by Section 4.24 of the Gaming Facility Management Agreement as in effect on the date hereof, from which Operating Expenses may be paid to the exclusion of any other Cash Collateral Account. The Manager shall notify the Bank, the Authority and the Trustee of the name and address of the commercial banking institution at which the Disbursement Account shall be opened initially and of each change thereof. "ELIGIBLE INSTITUTION" means (a) the Trustee, (b) an affiliate of the Trustee or (c) a commercial banking institution which is not affiliated with or chartered by the Tribe, which is federally chartered or organized under the laws of the State of Connecticut, has combined capital and surplus of not less than $500 million, and whose debt is rated "A" (or higher) according to Standard & Poor's Ratings Group ("S&P") or Moody's Investors Service, Inc. ("Moody's"). "EVENT OF LOSS ACCOUNT" means the account required to be established by Section 4.11 and Section 10.12 of the Indenture, in which there must be deposited all Net Loss Proceeds, pursuant to Section 4.11 of the Indenture. "INTEREST AND EXCESS CASH FLOW ACCOUNT" means the account required to be established by Section 4.26 and Section 10.12 of the Indenture, in which there must be deposited the amounts specified in Section 4.26 of the Indenture. "MANAGER" means Trading Cove Associates, a Connecticut partnership, or a successor permitted pursuant to the Indenture. "OBLIGATIONS" means all obligations and indebtedness of the Authority under the Senior Secured Notes, and any other obligation now or hereafter arising, of every kind and nature, owed by the Authority under the Indenture, the Senior Secured Notes or the Collateral Documents to the holders of the Senior Secured Notes or the Trustee. "OFFICERS' CERTIFICATE" means a disbursement request and certification signed by two authorized signatories of the Authority or the Manager, as the case may be, in the form of Exhibit A, B, C, D, E, F or G to this Agreement, as applicable. "PAYMENT INSTRUCTIONS" means, with respect to the Trustee, the Tribe, the Authority or the Manager, written instructions given to the Bank by the applicable Person as to the method and place of payment of any funds to be disbursed to such Person pursuant to this Agreement. "PERMITTED PRINCIPAL PAYMENTS" means, payments on the principal of any Indebtedness of the Authority permitted to be incurred under the Indenture (other than the Notes or the Subordinated Notes). "REPLACEMENT RESERVE ACCOUNT" means the account called for by Section 4.12 of the Gaming Facility Management Agreement as in effect on the date hereof. "REVOCATION NOTICE" means a notice given by the Trustee to the Bank, with a copy to the Authority and the Manager, in the form of SCHEDULE I attached hereto. A Revocation Notice shall cease to be "in effect" or "outstanding" for purposes hereof at such time as the Bank shall have received from the Trustee, with a copy to the Authority and the Manager, a notice in the form of SCHEDULE II hereto revoking its standing instructions in the Revocation Notice. 3 "TRUSTEE" means First Fidelity Bank, a Connecticut banking corporation, and any successor trustee under the Indenture. 1.2 INDENTURE DEFINED TERMS. In addition, the following terms shall have the respective meanings assigned to such terms in the Indenture: ASSET SALE ASSET SALE OFFER BLOCKAGE PERIOD CASH EQUIVALENTS CASH FLOW CASH FLOW PARTICIPATION INTEREST CHANGE OF CONTROL OFFER COLLATERAL DOCUMENTS COMMENCEMENT DATE DEFAULT ESCROW AND DISBURSEMENT AGREEMENT EVENT OF LOSS EVENT OF LOSS OFFER EXCESS CASH FLOW EXCESS CASH PURCHASE OFFER EXCESS LOSS PROCEEDS EXCESS PROCEEDS GAMING DISPUTES COURT GAMING FACILITY MANAGEMENT AGREEMENT GROSS REVENUES LEASEHOLD MORTGAGE LIEN MANAGEMENT AGREEMENT MANAGEMENT FEE MINIMUM PRIORITY PAYMENT NET PROCEEDS NET LOSS PROCEEDS NET REVENUE NOTES OFFICER OPERATING EXPENSES PAYMENT BLOCKAGE PAYMENT DEFAULT PERSON RESORT SECURED COMPLETION GUARANTEE SUBORDINATED NOTES 1.3 Index of Additional Defined Terms. In addition, the terms listed 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: 4 Section of Defined Term Definition ------------ ---------- AGREEMENT . . . . . . . . . . . . . . . . . . . INTRODUCTION AUTHORITY . . . . . . . . . . . . . . . . . . . INTRODUCTION BANK. . . . . . . . . . . . . . . . . . . . . . INTRODUCTION EVENT OF DEFAULT. . . . . . . . . . . . . . . . . . . . . 5 INDENTURE . . . . . . . . . . . . . . . . . . A OF RECITALS PURCHASE AGREEMENT. . . . . . . . . . . . . . A OF RECITALS SENIOR SECURED NOTES. . . . . . . . . . . . . A OF RECITALS SIHL. . . . . . . . . . . . . . . . . . . . . . INTRODUCTION SUBORDINATED NOTES. . . . . . . . . . . . . . A OF RECITALS TRIBE . . . . . . . . . . . . . . . . . . . . . INTRODUCTION 2. PLEDGE AND GRANT OF SECURITY INTEREST - ESTABLISHMENT OF CASH COLLATERAL ACCOUNTS. 2.1 The Authority hereby irrevocably grants to the Trustee a first priority perfected security interest in the Cash Collateral, and pledges, assigns and sets over the Cash Collateral to the Trustee, for the ratable benefit of the holders of the Senior Secured Notes, to secure the Obligations. The Tribe hereby represents and warrants that the Authority is the sole owner of the Cash Collateral, with sole power to pledge the Cash Collateral and grant security interests therein, and the Tribe hereby irrevocably consents to such pledge and grant. 2.2 In order to effectuate the foregoing pledge and grant of security interest in favor of the Trustee, the Authority hereby irrevocably directs the Bank to open at the Bank's Office the following bank accounts in the name of the Trustee, and the Bank has opened the following bank accounts in the name of the Trustee: (a) the Depository Account, Account No. ______; (b) the Replacement Reserve Account, Account No. ______; (c) the Interest and Excess Cash Flow Account, Account No. ______; (d) the Cash Maintenance Account, Account No. ______; (e) the Event of Loss Account, Account No. _______; and (f) the Asset Sale Account, Account No. ______. The parties hereto agree that any provision of this Agreement to the contrary notwithstanding, express or implied, the Trustee shall have at all times sole dominion and control over each of the Cash Collateral Accounts and all funds, cash, Cash Equivalents and other items from time to time acquired by the Bank with funds in the Cash Collateral Accounts, as well as any earnings, proceeds or income therefrom. 2.3 The Authority and the Manager agree that all Gross Revenues (except as otherwise permitted by Section 10.12(c) of the Indenture) shall be deposited daily in the Depository Account, that all Net Proceeds shall be deposited in the Asset Sale Account upon receipt, and that all Net 5 Loss Proceeds shall be deposited in the Event of Loss Account upon receipt, and further agree that no Gross Revenues (except as otherwise permitted by Section 10.12(c) of the Indenture), Net Proceeds, Net Loss Proceeds or other funds derived from the operation of the Resort or any other commercial enterprise of the Authority will be deposited in any other bank account, except as contemplated by the Escrow and Disbursement Agreement until the same shall terminate and except that the Authority may maintain (a) the Petty Cash Fund and Cash Prize Reserve Fund contemplated by Section 4.26 of the Management Agreement at the Resort so long as monies held therein shall not exceed the amount permitted by the Management Agreement as in effect on the date hereof and (b) the Cash Contingency Reserve Fund and the Disbursement Account contemplated by Section 4.24 of the Management Agreement in the name of the Authority so long as, in each case, the provisions of Section 3.2.2 are complied with. 3. WITHDRAWALS OF FUNDS FROM CASH COLLATERAL ACCOUNTS. 3.1 The Bank shall not allow any Person to withdraw funds from any of the Cash Collateral Accounts except upon a written direction of the Trustee. The Trustee hereby directs the Bank to effect the following disbursements from the Cash Collateral Accounts specified below in the amounts, at the times and otherwise in accordance with the instructions set forth below, subject to the provisions of Section 13.1: 3.1.1 Prior to the first business day of each calendar month, the Manager, on behalf of the Authority, shall deliver to the Bank, with a copy to the Authority and the Trustee, an Officers' Certificate in the form of EXHIBIT A. To the extent of funds available in the Depository Account, the Bank shall on the first business day of such calendar month, transfer from the Depository Account to the Interest and Excess Cash Flow Account, the amount specified in said Officers' Certificate. 3.1.2 Prior to the 25th day of each calendar month, commencing on the earlier of October 31, 1996 and the first calendar month after commencement of operations, the Manager, on behalf of the Authority, shall deliver to the Bank, with a copy to the Authority and the Trustee, an Officers' Certificate in the form of EXHIBIT B. To the extent of funds available in the Depository Account, the Bank shall, on the 25th day of such month or, if such day is not a business day, on the next succeeding business day, effect the following transfers and payments in the order of priority specified below: (a) first, withdraw from the Depository Account for payment to the Tribe in accordance with the Tribe's Payment Instructions the amount of the Minimum Priority Payment specified in Paragraph 2 of said Officers' Certificate, (b) second, transfer from the Depository Account to the Cash Maintenance Account, the amount, if any, specified in Paragraph 3 of said Officers' Certificate, (c) third, transfer from the Depository Account to the Interest and Excess Cash Flow Account, the amounts, if any, specified in Paragraphs 4 and 5 of said certificate, and (d) fourth, if no Revocation Notice is then in effect with respect to the applicable transfer or payment, and except as otherwise provided in Section 3.1.10, make the balance of the transfers and the payments, if any, specified in Paragraph 6 of said certificate in accordance with the payment instructions therein. 3.1.3 Except as otherwise provided in Section 3.2.4, the Bank shall, from and after the Commencement Date, to the extent of funds available in the Depository Account transfer from the Depository Account to the Disbursement Account such amounts as the Manager, on behalf of the Authority, may request to be so transferred in accordance with the provisions of Section 3.2.2. 3.1.4 The Bank shall upon receipt of an Officers' Certificate from the Manager on behalf of the Authority in the form of EXHIBIT C, to the extent of funds available in the Event of Loss Account, make payments from the Event of Loss Account to the Persons and in the amounts specified 6 by the Manager on behalf of the Authority in said Officers' Certificate, provided that if a Revocation Notice applicable to withdrawals from the Event of Loss Account shall be outstanding or Section 3.1.10 shall apply, no payment may be made from funds on deposit in the Event of Loss Account except to the Trustee. 3.1.5 The Bank shall upon receipt of an Officers' Certificate from the Manager on behalf of the Authority in the form of EXHIBIT D, to the extent of funds available in the Asset Sale Account, make payments from the Asset Sale Account to the Persons and in the amounts specified by the Manager on behalf of the Authority in said Officers' Certificate, provided that if a Revocation Notice applicable to withdrawals from the Asset Sale Account shall be outstanding or Section 3.1.10 shall apply, no payment may be made from funds on deposit in the Asset Sale Account except to the Trustee. 3.1.6 So long as no Revocation Notice applicable to withdrawals from the Replacement Reserve Account shall be outstanding, and except as otherwise provided in Section 3.1.10, the Bank shall upon receipt of an Officers' Certificate from the Manager on behalf of the Authority in the form of EXHIBIT E, to the extent of funds available in the Replacement Reserve Account, make payments from such account to the Persons and in the amounts specified by the Manager on behalf of the Authority in said certificate. 3.1.7 The Bank shall upon receipt of an Officers' Certificate from the Manager on behalf of the Authority in the form of Exhibit F, to the extent of funds available in the Interest and Excess Cash Flow Account, make payments from the Interest and Excess Cash Flow Account to the Persons and in the amounts specified by the Manager on behalf of the Authority in said Officers' Certificate, provided that if a Revocation Notice shall be outstanding with respect to the applicable payment or Section 3.1.10 shall apply, no payment may be made from funds on deposit in the Interest and Excess Cash Flow Account except to the Trustee. 3.1.8 The Bank shall upon receipt of an Officers' Certificate from the Manager on behalf of the Authority or an Officer's Certificate from the Authority in the form of Exhibit G, transfer to the Trustee, in accordance with the Trustee's Payment Instructions, on the day specified in such Officers' Certificate, the amount therein specified from funds on deposit in the Depository Account. 3.1.9 Upon receipt of a written request from the Trustee, the Bank shall transfer to the Trustee in accordance with the Trustee's Payment Instructions the amount specified in such written request from the Cash Collateral Account or Accounts, and on the date or dates, specified therein. No Person other than the Trustee may direct the Bank to withdraw funds from the Cash Maintenance Account and all funds withdrawn therefrom may only be paid over to the Trustee. 3.1.10 Except for the disbursement of the Minimum Priority Payments and transfers of funds from the Depository Account to the Interest and Excess Cash Flow Account and to the Cash Maintenance Account, at the request of the Manager on behalf of the Authority, or of the Trustee, the Bank shall not honor requests from any Person other than the Trustee for transfers of funds from the Depository Account to any other account, or permit withdrawals of funds from any account by any Person other than the Trustee or at its direction, unless the Officers' Certificates required to be delivered pursuant to Sections 3.1.1 and 3.1.2 with respect to the month in which a transfer of funds is requested shall have been received by it. 3.2 The Authority hereby authorizes the Manager to give the Officers' Certificates referred to in Section 3.1 on its behalf in accordance with this Agreement. The Manager agrees timely 7 to deliver the Officers' Certificates called for by Section 3.1. Each of the Manager and the Authority further agrees for the benefit of the Trustee and the holders of the Senior Secured Notes that: 3.2.1 It shall immediately give notice to the Trustee and the Bank of any Default, Payment Default or Event of Default of which it is aware. 3.2.2 It shall not use or allow to be used any funds in the Disbursement Account for any purpose other than the payment of Operating Expenses or Permitted Principal Payments, and shall not request or permit any transfer of funds from the Depository Account to the Disbursement Account more than one time per week and then only in an amount which shall not exceed the aggregate amount of Operating Expenses and Permitted Principal Payments that are reasonably anticipated to be due and payable within the ensuing 7-day period. It shall not use or allow to be used any funds in the Cash Contingency Reserve Fund for any purpose other than the payment of excess winnings to gaming customers of the Resort as contemplated by the Management Agreement as in effect on the date hereof, and shall not request or permit any transfer of funds from the Depository Account to the Cash Contingency Reserve Fund if, after giving effect to such transfer, the funds on deposit therein would exceed $50,000 at any time. No amounts may be withdrawn to pay Permitted Principal Payments on the Indebtedness permitted by Section 4.09(a) of the Indenture so long as a Revocation Notice is in effect with respect to such payments. Each request for withdrawal of funds from the Depository Account for deposit in the Disbursement Account or the Cash Contingency Reserve Fund shall be deemed to be a representation and warranty that such request and withdrawal are permitted under this Section 3.2.2 and under Section 3.2.4. 3.2.3 It shall not request or cause or permit to be requested a disbursement of funds in the Depository Account, Event of Loss Account, Asset Sale Account or Interest and Excess Cash Flow Account, except for a purpose specifically permitted by the provisions of the Indenture applicable to such account; it shall not request or cause or permit to be requested a disbursement of funds in the Cash Maintenance Account; and it shall not request or cause or permit to be requested a disbursement of funds in the Disbursement Account, the Replacement Reserve Account or the Cash Contingency Reserve Fund, except for a purpose specifically permitted by the Management Agreement as in effect on the date hereof. 3.2.4 It shall not have the right to, and shall not, request the Bank to make any withdrawals from: (a) the Asset Sale Account, the Event of Loss Account or the Replacement Reserve Account for payment to any Person other than the Trustee from and after the date that the Senior Secured Notes shall have been accelerated to and including the date such acceleration shall have been rescinded or the Obligations shall have been paid in full, without the prior written consent of the Trustee; (b) the Depository Account for deposit in the Disbursement Account, the Replacement Reserve Account or the Cash Contingency Reserve Fund from and after the date that the Senior Secured Notes shall have been accelerated to and including the date such acceleration shall have been rescinded or the Obligations shall have been paid in full, without the prior written consent of the Trustee; (c) any Cash Collateral Account for payments to the Authority, the Tribe or the Manager upon the occurrence and during the continuance of a Payment Default or while a Blockage Period is in effect (provided that the foregoing provision shall not apply to the making of the Minimum Priority Payments); (d) any Cash Collateral Account for payments of interest on the Subordinated Notes upon the occurrence and during the continuance of a Default or an Event of Default; and (e) any Cash Collateral Account for payments of principal on the Subordinated Notes upon the occurrence and during the continuance of any Event of Default. 8 3.2.5 It shall not take or cause to be taken any action which would result in or would constitute a Default or Event of Default under the Indenture, this Agreement or any other Collateral Document, whether or not such action might otherwise be permitted under any other agreement to which it is a party. 3.3 The Manager, SIHL and the Tribe understand and agree that rights they may have to payments from the Authority whether under the Management Agreement or otherwise are subordinate to the rights of the Trustee and the holders of the Senior Secured Notes in the Cash Collateral, including, without limitation, pursuant to the provisions of this Agreement, until indefeasible payment in full of the Obligations shall have been made, any provision of the Management Agreement, expressly or by implication, to the contrary notwithstanding; PROVIDED that the Trustee and the holders of the Senior Secured Notes shall have no right to recover any amount properly paid to the Tribe, the Manager or the holders of the Subordinated Notes, in each case in compliance with the terms of the Indenture (including Section 4.07 thereof) and of this Agreement (including all exhibits thereto) and, in the case of the Subordinated Notes, in compliance with the provisions of the Purchase Agreement (including Article VIII thereof) as in effect on the date hereof. 3.4 The Trustee agrees that as promptly as practicable upon its obtaining actual knowledge that a Default, Payment Default or Event of Default is no longer continuing or a Blockage Period is no longer in effect, it shall notify the Bank of such event. 4. INVESTMENT OF FUNDS IN THE CASH COLLATERAL ACCOUNTS. 4.1 Pending disbursement in accordance with this Agreement, all funds on deposit in the Cash Collateral Accounts shall be invested in cash; PROVIDED HOWEVER that the Trustee hereby directs the Bank, so long as no Revocation Notice shall be in effect, to invest such funds in Cash Equivalents if so instructed by the Manager on behalf of the Authority; and PROVIDED, FURTHER, that the Bank shall not invest any such funds in any investment unless such investment is described in Section 4.2 of this Agreement and the Bank has taken the actions described in Section 4.2 with respect to such investment. The Bank shall hold all Cash Equivalents under the sole dominion and control of the Bank, as agent for the Trustee for the ratable benefit of holders of the Senior Secured Notes. Further, the Bank shall note in its records that all funds and other assets in the Cash Collateral Accounts have been pledged to the Trustee, and that the Bank is holding such items as agent for the Trustee. Accordingly, such funds shall not be within the bankruptcy "estate" of the Bank. The Authority hereby authorizes the Manager to invest funds in the Cash Collateral Accounts in Cash Equivalents on its behalf in accordance with this Agreement. 4.2 The Authority and the Trustee hereby irrevocably instruct the Bank as follows: (a) To the extent it is within its power, the Bank at all times shall maintain all of the Cash Collateral free and clear of all Liens, safekeeping or other charges, demands and claims of any nature whatsoever now or hereafter existing, in favor of anyone other than the Trustee; (b) With respect to any cash in any Cash Collateral Account, the Bank shall at all times maintain dominion and control over, and possession of, such cash on behalf of the Trustee until such time as the cash is disbursed from such Cash Collateral Account in accordance with the terms of this Agreement; 9 (c) With respect to any certificated securities, as a condition to acquiring any such securities: (i) the Bank shall confirm that the Bank does not have any knowledge of any other claims of any other person or entity in or to the securities; (ii) the Bank shall cause any such securities to be issued in the name of, or endorsed to, the Bank as agent for the Trustee; (iii) the Bank at all times shall maintain dominion and control over, and possession of, said securities on behalf of the Trustee until such time as the securities are sold for cash, at which time all proceeds shall be held in accordance with clause (b) of this Section 4.2; and (iv) the Bank at all times shall designate in its records that it is holding said securities as agent for the Trustee, as trustee under the Indenture. (d) With respect to any uncertificated securities (other than uncertificated securities issued by the federal government or an agency or instrumentality thereof), as a condition to acquiring any such securities: (i) the Bank shall confirm that the Bank does not have any knowledge of any other claims of any other person or entity in or to the securities; (ii) the Bank (A) shall cause the Authority to execute a letter substantially in the form of EXHIBIT H attached hereto addressed to the issuer (or the transfer agent for the issuer, if applicable) pertaining to the securities, the Bank shall deliver said letter to the issuer of the securities (or the transfer agent for the issuer, if applicable), and the Bank shall have received back from the issuer (or the transfer agent for the issuer, if applicable) a copy of said letter signed by the issuer of the securities (or the transfer agent for the issuer, if applicable), or (B) shall have taken such alternative steps as are necessary or appropriate in order to cause the Trustee to enjoy a continuous first priority perfected security interest in the securities; and (iii) the Bank at all times shall designate in its records that it is holding said securities as agent for the Trustee, as trustee under the Indenture. For purposes of determining the steps to be taken under clause (ii)(B) of this Section 4.2(d), the Bank may rely upon an opinion of counsel to the Authority or the Bank (the expense of which shall be paid by the Authority) specifying (A) that the counsel is familiar with the laws applicable to the perfection of security interests in said securities and (B) the steps required to perfect and maintain a first priority security interest in favor of the Trustee in said securities. (e) With respect to any uncertificated securities issued by the federal government or an agency or instrumentality thereof, as a condition to acquiring any such securities: (i) the Bank shall confirm that the Bank does not have any knowledge of any claims of any other person or entity in or to the securities; and (ii) the Bank shall have taken such steps as are necessary and appropriate in order to cause the Trustee to enjoy a continuous perfected first priority security interest in said securities. For purposes of determining the foregoing steps, the Bank may rely upon an opinion of counsel to the Authority or the Bank (the expense of which shall be paid by the Authority) specifying (A) that the counsel is familiar with the laws applicable to the perfection of security interests in said securities and (B) the steps required to perfect and maintain a first priority security interest in favor of the Trustee in said securities. (f) The Bank shall take any other steps from time to time requested by the Trustee to confirm and maintain the priority of the security interests in favor of the Trustee in items of the Cash Collateral that have been delivered to the Bank. (g) The Bank shall immediately disburse all funds held in the Cash Collateral Accounts to the Trustee and transfer title to all other Cash Collateral held by the Bank hereunder to the Trustee upon receipt of written request therefor by the Trustee. 5. EVENTS OF DEFAULT. The occurrence of any of the following specified events shall be an Event of Default hereunder: 10 5.1 The occurrence and continuance of an Event of Default (as defined in the Indenture) under the Indenture. 5.2 Any representation, warranty, certification, statement (collectively, "representations") or covenant or agreement by the Manager, the Authority or the Tribe in this Agreement, or any certificate, request, budget or statement delivered pursuant to this Agreement, fails to be true in any material respect on the date given or made in the case of a representation, or is breached in any material respect, in the case of a covenant. 5.3 Any monies are withdrawn from any of the Cash Collateral Accounts in violation of the provisions of the Indenture, this Agreement, or any other Collateral Document, and the monies so withdrawn are not redeposited in the applicable account within two business days of the date on which such withdrawal occurred; or the Trustee ceases to have a valid and enforceable pledge and a perfected security interest of first priority in the Cash Collateral. 6. CERTAIN MATTERS REGARDING THE BANK AND THE TRUSTEE. 6.1 LIMITATION OF BANK'S LIABILITY. The Bank's responsibility and liability under this Agreement shall be limited as follows: (a) the Bank shall have no responsibility to the Manager, SIHL, the Tribe, the Authority, the Trustee or the holders of the Senior Secured Notes or the Subordinated Notes as a consequence of performance by the Bank hereunder except for any gross negligence or willful misconduct of the Bank or failure to account for funds held on deposit. The Bank shall have no duties or obligations hereunder except as expressly set forth herein, shall be responsible only for the performance of such duties and obligations, shall not be required to take any action otherwise than in accordance with the terms hereof and shall not be in any manner liable or responsible for any loss or damage arising by reason of any act or omission to act by it hereunder or in connection with any of the transactions contemplated hereby, including, but not limited to, any loss that may occur by reason of forgery, false representations, the exercise of its discretion, or any other reason, except for its gross negligence (including but not limited to its failure to account for funds on deposit) or willful misconduct. 6.2 INDEMNITY OF BANK. The Authority indemnifies, holds harmless and defends the Bank and its officers, directors, agents and employees, from and against any and all claims, actions, obligations, liabilities and expenses, including defense costs, investigative fees and costs, legal fees, and claims for damages, arising from the Bank's performance under this Agreement, except to the extent that such liability, expense or claim is attributable to the gross negligence or willful misconduct of the Bank or failure to account for funds on deposit. 6.3 RIGHT TO CONSULT COUNSEL. The Bank and the Trustee may, if either of them deems necessary or appropriate, consult with and be advised by counsel in respect to rights or duties hereunder. Each of the Bank and the Trustee shall be entitled to rely upon the advice of its counsel in any action taken in its capacity as the Bank or the Trustee, as the case may be, hereunder and shall be protected from any liability of any kind for actions taken in reasonable reliance upon such opinion of its counsel. The Authority agrees to pay all such reasonable counsel fees. 6.4 AGENCY. The Bank shall act solely as the Trustee's agent in connection with its duties under this Agreement, notwithstanding any other provision contained in this 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. The Authority acknowledges and agrees that in no event shall the Trustee or the holders of the Senior Secured Notes be liable for, nor shall the 11 Obligations of the Authority be affected or diminished as a consequence of, any action or inaction of the Bank with respect to the Cash Collateral. 6.5 WAIVER OF SETOFF RIGHTS. The Bank hereby acknowledges the Trustee's security interest as set forth above and waives any security interest or other lien in the Cash Collateral and further waives any right to set off the Cash Collateral now or in the future against any indebtedness of the Authority, the Tribe, the Manager, SIHL or any other Person to the Bank. The waivers set forth in this Section 6.5 are of rights which may exist now or hereafter in favor of the Bank in its individual capacity, and not of any such rights which may exist now or hereafter in favor of the Bank in its capacity as agent for the Trustee. Nothing in this Section 6.5 shall be construed as waiving, limiting or diminishing any rights of the Trustee as trustee under the Indenture against the Authority. 6.6 COOPERATION. The Bank is hereby directed to cooperate with the Trustee in the exercise of its rights in the Cash Collateral provided for herein. The Trustee will take all necessary action to preserve and protect the security interest created hereby as a lien and encumbrance upon the Cash Collateral and, upon demand, the other parties hereto 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 Cash Collateral. 6.7 COMPENSATION. For each calendar year during the term of this Agreement (a) prior to the Commencement Date, the Authority shall pay the sum of $_________ to the Bank as compensation for services to be performed by the Bank under this Agreement in said year, and (b) thereafter, the Bank shall disburse from the Depository Account $_________ to the Bank as compensation for services to be performed by the Bank under this Agreement in said year. The Bank shall receive such payments without the requirement of obtaining any further consent or action on the part of any other party to this Agreement with respect to such payment. 6.8 LIMITATION OF TRUSTEE'S LIABILITY. The Trustee's responsibility and liability under this Agreement shall be limited as follows: (a) the Trustee shall have no responsibility to the Manager, SIHL, the Tribe, the Authority, the Bank or the holders of the Senior Secured Notes or Subordinated Notes as a consequence of performance by the Trustee hereunder except for any gross negligence (including but not limited to its failure to account for funds received by it) or willful misconduct of the Trustee and except as otherwise provided in the Indenture and except as otherwise provided in the Indenture. The Trustee shall have no duties or obligations hereunder except as expressly set forth herein and in the Indenture, shall be responsible only for the performance of such duties and obligations, shall not be required to take any action otherwise than in accordance with the terms hereof and of the Indenture and shall not be in any manner liable or responsible for any loss or damage arising by reason of any act or omission to act by it hereunder or in connection with any of the transactions contemplated hereby, including, but not limited to, any loss that may occur by reason of forgery, false representations, the exercise of its discretion, or any other reason, except for its gross negligence (including but not limited to its failure to account for funds received by it) or willful misconduct and except as otherwise provided in the Indenture. 6.9 INDEMNITY OF TRUSTEE. In addition to its indemnification obligations in the Indenture, the Authority indemnifies, holds harmless and defends the Trustee and its officers, directors, agents and employees, from and against any and all claims, actions, obligations, liabilities and expenses, including reasonable defense costs, investigative fees and costs, legal fees, and claims for damages, arising from the Trustee's performance under this Agreement, except to the extent that such liability, expense or claim is attributable to the gross negligence (including but not limited to its failure to account 12 for funds received by it) or willful misconduct of the Trustee and except as otherwise provided in the Indenture. 7. TERMINATION. This Agreement shall terminate upon receipt by the Bank from the Trustee of a notice to the effect that the Senior Secured Notes have been paid in full, unless sooner terminated pursuant to Section 8 hereof; PROVIDED, HOWEVER, that the obligations of the Authority under Section 6.2 and Section 6.9 of this Agreement shall survive the termination of this Agreement. 8. SUBSTITUTION OR RESIGNATION. The Trustee shall have the right, upon the expiration of thirty (30) days following delivery of written notice of substitution to all the other parties hereto to cause the Bank to be relieved of its duties hereunder and to select a substitute bank to serve hereunder, provided that such substitute bank shall be an Eligible Institution. The Bank may resign at any time upon thirty (30) days' written notice to all the other parties hereto. Such resignation shall take effect upon receipt by the Bank of an instrument of acceptance executed by a successor Eligible Institution and consented to by the other parties hereto. Upon selection of such substitute bank, the Authority, the Trustee, the Tribe, the Manager, SIHL and the substitute bank shall enter into an agreement substantially identical to this Agreement and, thereafter, the Bank shall be relieved of its duties and obligations to perform hereunder, except that the Bank shall transfer to the substitute bank upon request therefor all funds and Cash Equivalents maintained by the Bank hereunder and originals of all documents in the Bank's possession relating to such funds or Cash Equivalents or this Agreement. 9. BANK STATEMENTS. The Bank shall deliver the Bank Statements to the Authority and the Manager and, upon its request, to the Trustee; PROVIDED, HOWEVER, that the Bank shall not be required to provide such statements more often than weekly. On or prior to the fifteenth day of each month, the Bank shall deliver to the Trustee a statement setting forth the aggregate dollar amount on deposit in each of the Cash Mandatory Maintenance Account and the Interest and Excess Cash Flow Account on the last day of the preceding month. Upon the request of the Authority or the Trustee, the Manager shall deliver or cause to be delivered to the requesting Person copies of such bank statements pertaining to the Disbursement Account or the Cash Contingency Reserve Fund as the requesting Person may request. 10. CHOICE OF LAW. This Agreement, the parties' obligations hereunder, and any disputes hereunder, shall be governed by and interpreted and construed in accordance with the substantive laws of the State of Connecticut (except its choice of law rules, and except that the Trustee's rights and remedies set forth herein, and the pledge and security interest granted hereby, shall in any event be lawful and enforceable in accordance with the terms hereof under the laws of the Tribe). This Agreement shall be construed in accordance with its intent and with the fair meaning of its provisions, and without regard to any presumption or other rules requiring construction against the party which caused the same to be drafted. 11. CONSENT TO SUIT. WAIVER OF JURY TRIAL. 11.1 The Tribe does not consent to the enforcement, levy or other execution of any judgment for money or other damages against any assets, real or personal, of the Tribe, except that the Tribe and the Authority each do herewith consent to the enforcement and execution of any judgment, whether obtained as a result of judicial, administrative, or arbitrational proceedings, against any assets of the Authority. Subject to the foregoing, the Tribe and the Authority each does herewith waive its sovereign immunity from unconsented suit, whether such suit be brought in law or in equity, or in 13 administrative proceedings or proceedings in arbitration, to permit the commencement, maintenance, and enforcement of any action, by any person with standing to maintain an action, to interpret or enforce the terms of this Agreement, and to enforce and execute any judgment resulting therefrom against the Authority or the assets of the Authority. Notwithstanding any other provision of law or canon of construction, the Tribe and the Authority each intend this waiver to be interpreted liberally to permit the full litigation of disputes arising under or out of this Agreement. Without limiting the generality of the foregoing, the Tribe and the Authority waive their immunity from unconsented suit to permit the maintenance of the following actions: (a) COURTS. The Tribe and the Authority each waive their immunity from unconsented suit to permit any court of competent jurisdiction to (i) enforce and interpret the terms of this Agreement, and award and enforce the award of damages against the Authority owing as a consequence of a breach thereof, whether such award is the product of litigation, administrative proceedings, or arbitration; (ii) determine whether any consent or approval of the Tribe or the Authority has been improperly granted or unreasonably withheld; (iii) enforce any judgment prohibiting the Tribe or the Authority from taking any action, or mandating or obligating the Tribe or the Authority to take any action, including a judgment compelling the Tribe or the Authority to submit to binding arbitration; and (iv) adjudicate any claim under the Indian Civil Rights Act of 1968, 25 U.S.C. Section 1302 (or any successor statute). (b) GAMING DISPUTES COURT. Without limiting in any manner the foregoing waivers of immunity or the jurisdiction of any of the courts of the United States or any state thereof, the Tribe and the Authority hereby stipulate and agree that, immediately upon execution and delivery of this Agreement, judgment may and shall be entered by the Gaming Disputes Court: (i) declaring that (a) the Senior Secured Notes are, or when issued will be, the duly authorized, lawful and valid obligation of the Authority, enforceable in accordance with their terms against the Authority in the Gaming Disputes Court, (b) the Indenture and the Collateral Documents, including this Agreement, are the duly authorized, lawful and valid obligation of the Tribe and the Authority, enforceable in accordance with their terms against the Tribe and the Authority in the Gaming Disputes Court, (c) the Liens granted pursuant to this Agreement are valid and enforceable and, as to the funds and investments in each of the Cash Collateral Accounts are duly perfected and prior Liens thereon, enforceable in accordance with the terms of this Agreement and the Indenture (including by foreclosure as herein or therein set forth) against the Authority, against any purchaser (including a bona fide purchaser) of such Cash Collateral and against any creditor that acquires a judicial Lien on any of the Cash Collateral, and no financing statement or continuation statement is required to be filed, or Collateral Document is required to be registered, recorded or lodged, or other action is required to be taken or event is required to have occurred, in order for such Liens to be and remain so perfected and for as long as any of the Senior Secured Notes may remain outstanding, and (d) there shall be no limitation (either by way of a time bar on the commencement of any action or proceeding or under any equitable principles such as the doctrine of laches) on the time within which any action or proceeding to collect any claim, to foreclose any Lien or otherwise to enforce any claim, interest, Lien, right or remedy arising in favor of the Trustee or any Holder under the Senior Secured Notes, the Indenture, or this Agreement must be commenced, and 14 (ii) ordering that (a) the Trustee shall be appointed and authorized to act as the receiver of and trustee for all funds in each of the Cash Collateral Accounts and as such receiver and trustee shall have the power and authority to demand, collect, receive, hold and disburse all funds in each of the Cash Collateral Accounts at any time and in any manner arising and by whomever held and all power and authority reasonably incidental thereto, and (b) on each day, the Authority shall cause to be delivered to the Trustee, for deposit to the Depository Account, all funds required to be deposited therein, and (c) the Trustee shall release, hold or pay out such deposit as provided in Section 10.03 of the Indenture. (c) Each party hereto agrees that it shall not contest or dispute the legality, validity or enforceability of the provisions of this Section 11.1. 12. MISCELLANEOUS. 12.1 WAIVER. Any party hereto may specifically waive any breach 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 designates the breach waived, nor shall any such waiver constitute a continuing waiver of similar or other breaches. 12.2 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. 12.3 NO AUTHORITY. The Bank shall have no authority to, and shall not make any warranty or representation or incur any obligation on behalf of, or in the name of, the Trustee. 12.4 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, provided that (i) the rights and duties of the Trustee are assignable to a successor trustee appointed in accordance with the terms of the Indenture, (ii) the rights and duties of the Bank are assignable to any entity appointed in accordance with the terms hereof as the successor bank hereunder, and (iii) the rights and duties of the Manager are assignable to a successor manager appointed in accordance with the terms of the Indenture. In any event, this Agreement shall inure to and be binding upon the parties and their successors and permitted assigns. 12.5 BENEFIT. The parties hereto, the holders from time to time of the Senior Secured Notes, and their respective successors and assigns, but no others, shall be bound hereby and entitled to the benefits hereof. 12.6 TIME. Time is of the essence of each provision of this Agreement. 12.7 ENTIRE AGREEMENT; AMENDMENTS. This Agreement, together with the Indenture and the other Collateral Documents, contains the entire agreement among the parties with respect to the subject matter hereof and supersedes any and all prior agreements, understandings and commitments, 15 whether oral or written. This Agreement may be amended only by a writing signed by duly authorized representatives of all parties. 12.8 NOTICES. All notices and other communications required or permitted to be given or made under this Agreement shall be in writing and may be personally delivered, sent by telecopier, sent by reputable courier or sent by United States certified mail 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) on the second business day if sent by overnight reputable courier; (c) upon confirmation of receipt of telecopy, when sent by telecopier; or (d) on the day sent, when sent by United States certified mail, postage and certification fee prepaid, return receipt requested, addressed as follows: To the Bank: First Fidelity Bank 10 State House Square Hartford, CT 06103-3698 Attention: W. Jeffrey Kramer Vice President Corporate Trust Telecopy: To the Trustee: First Fidelity Bank 10 State House Square Hartford, CT 06103-3698 Attention: W. Jeffrey Kramer Vice President Corporate Trust Telecopy: To the Tribe or the Authority: Ralph Sturges, Chief, and Carlisle Fowler, Business Board Member, and Roland Harris, Business Board Member Mohegan Tribe of Indians of Connecticut 27 Church Lane Uncasville, CT 06382 Telecopy: (203) 848-0545 With a copy to: Lewis B. Rome, Esq. Rome, McGuigan, Hoberman, Sabanosh & Klebanoff, P.C. One State Street 16 Hartford, Connecticut 06103-3103 Telecopy: (203) 724-3921 To the Manager or SIHL: Len Wolman Trading Cove Associates 914 Hartford Turnpike P.O. Box 60 Waterford, Connecticut 06385 Telecopy: (203) 437-7752 or at such other address or telecopier number as the specified entity most recently may have designated in writing in accordance with this paragraph to the others. Notwithstanding the foregoing, no notice to the Bank or the Trustee shall be deemed to have been given to it or received by it unless and until actually received by it. The failure by any party hereto to give a copy of any notice given by it hereunder to any Person (other than the recipient thereof), unless such Person is the Bank or the Trustee, shall not affect the validity of such notice. 12.9 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. 12.10 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. 13. REMEDIES. 13.1 ADDITIONAL REMEDIES. In addition to the rights otherwise provided under this Agreement and to any rights and remedies provided in the Indenture, the Senior Secured Notes and the other Collateral Documents, upon an Event of Default and for so long as such Event of Default continues the Trustee may exercise any or all of the following remedies, successively or concurrently and in such order as the Trustee elects: (a) The Trustee may deliver some or all of the notices contemplated by Section 3.1.10 and Section 4.2(g) above. (b) The Trustee may exercise in respect of the Cash 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 Connecticut Uniform Commercial Code (now in force and as hereafter amended) or other applicable law, and the Trustee may also, without notice to the Authority, the Manager, the Tribe or SIHL except as specified below, sell the Cash Collateral or any part thereof in one or more parcels at one or more public or private sales, 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. Each of the Authority and the other parties hereto acknowledges and agrees that any such private sale may result in prices and other terms less favorable 17 to the seller than if such sale were a public sale. Each of the Authority and the other parties hereto agrees that, to the extent notice of sale shall be required by law, at least ten (10) days' notice to the Authority 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. Each purchaser at any such sale shall acquire the property sold free and clear of any claim or right of the Authority, the Bank or any other party to this Agreement. (c) Any cash that is Cash Collateral held by the Trustee and all cash proceeds received by the Trustee in respect of any sale of, collection from, or other realization upon all or any part of the Cash Collateral shall be applied (after payment of any and all amounts payable to the Trustee pursuant to the Indenture) against the Obligations for the ratable benefit of the holders of the Senior Secured Notes. Any surplus of such cash or cash proceeds held by the Trustee and remaining after payment in full of all the Obligations shall be paid over to the Authority or to whomsoever may be lawfully entitled to receive such surplus or as a court of competent jurisdiction may direct. (d) The Authority hereby irrevocably appoints the Trustee as its attorney-in-fact effective upon and during the continuance of an Event of Default with full power of substitution to do any act which the Authority is obligated hereby to do, whether directly or through the Manager on behalf of the Authority, to exercise such rights as the Authority might exercise with respect to the Cash Collateral and to execute and file in the Authority's name any financing statements and amendments thereto required or advisable to protect the Trustee's rights or security interest hereunder. Such appointment and power of attorney shall be irrevocable and coupled with an interest. 13.2 FUTURE ADVANCES. All funds advanced in the reasonable exercise of the Bank's or Trustee's judgment to protect the rights and interests of the Trustee or the holders of the Senior Secured Notes under the Indenture or the Collateral Documents are deemed to be obligatory advances and are to be added to the total indebtedness secured by the Leasehold Mortgage. All sums so advanced shall be secured by the Leasehold Mortgage with the same priority of lien as the security for any other obligations secured thereunder; provided, however, that at no time shall the principal amount of the debt secured by the Leasehold Mortgage, together with all other indebtedness for the construction and development of the Resort, exceed $325,000,000. [Signature Pages To Follow] 18 SIGNATURES Dated as of September 29, 1995 MOHEGAN TRIBAL GAMING AUTHORITY By: /s/ Ralph W. Sturges --------------------------------- Name: Ralph W. Sturges Title: Chairman, Management Board Attest: /s/ Carlisle Fowler - ---------------------- Dated as of September 29, 1995 TRADING COVE ASSOCIATES By: /s/ Len Wolman --------------------------------- Name: Len Wolman Title: President, LMW Investments, Inc. Managing Partner Attest: /s/ Elizabeth J. McNamee - --------------------------- Dated as of September 29, 1995 SUN INTERNATIONAL HOTELS LIMITED By: /s/ Howard B. Kerzner --------------------------------- Name: Howard B. Kerzner Title: Executive Vice President Attest: /s/ Judith A. Shapiro - --------------------------- 19 Dated as of September 29, 1995 FIRST FIDELITY BANK By: /s/ W. Jeffrey Kramer --------------------------------- Name: W. Jeffrey Kramer Title: Vice President Attest: /s/ Thomas J. Brett - ---------------------- Dated as of September 29, 1995 MOHEGAN TRIBE OF INDIANS OF CONNECTICUT (solely with respect to its obligations under Sections 2.1 and 3.3) By: /s/ Ralph W. Sturges --------------------------------- Name: Ralph W. Sturges Title: Lifetime Chief and Chair of Tribal Council Attest: /s/ Carlisle Fowler - ---------------------- 20 SCHEDULE I TO CASH COLLATERAL ACCOUNTS PLEDGE AND SECURITY AGREEMENT FORM OF REVOCATION NOTICE [Letterhead of Trustee] [Date] First Fidelity Bank 10 State House Square Hartford, Connecticut 06103-3698 Attention: W. Jeffrey Kramer Vice President, Corporate Trust Re: Cash Collateral Accounts Pledge and Security Agreement dated September 29, 1995 among the Authority, Tribe, Manager, Bank, SIHL and the undersigned Trustee (the "Agreement") Ladies and Gentlemen: We refer to the Agreement. Capitalized terms used herein shall have the respective meanings given such terms in the Agreement. This letter constitutes a Revocation Notice under the Agreement. Please be advised that to the best of our knowledge: Check Applicable Box or Boxes: / / 1. A Default has occurred and is continuing and you are hereby advised not to honor requests for payment of interest on the Subordinated Notes. / / 2. An Event of Default has occurred and is continuing and you are hereby advised not to honor requests for payments of principal of or interest on the Subordinated Notes. / / 3. A Payment Default has occurred and is continuing and you are hereby advised not to honor requests for payment in favor of the Tribe (other than Minimum Priority Payments), the Authority or the Manager or Permitted Principal Payments on Indebtedness permitted by Section 4.09(a) of the Indenture. / / 4. A Blockage Period is in effect and you are hereby advised not to honor requests for payments in favor of the Tribe (other than Minimum Priority Payments), the Authority or the Manager or Permitted Principal Payments on Indebtedness permitted by Section 4.09(a) of the Indenture. I / / 5. The Senior Secured Notes have been accelerated and no funds may be withdrawn from any of the Cash Collateral Accounts by any Person other than the Trustee or at its specific direction in each instance. / / 6. All funds in any of the Cash Collateral Accounts not currently invested in Cash Equivalents must be invested in cash. The foregoing instructions will be effective until further notice is given by the Trustee to you in the form of Schedule II to the Agreement cancelling the foregoing instructions. Chicago Title Insurance Company By:________________________________ Name:______________________________ Title:_____________________________ cc: Trading Cove Associates Mohegan Tribal Gaming Authority II SCHEDULE II TO CASH COLLATERAL ACCOUNTS PLEDGE AND SECURITY AGREEMENT FORM OF TRUSTEE'S NOTICE [Letterhead of Trustee] [Date] First Fidelity Bank 10 State House Square Hartford, Connecticut 06103-3698 Attention: W. Jeffrey Kramer Vice President, Corporate Trust Re: Cash Collateral Accounts Pledge and Security Agreement dated September 29, 1995 among the Authority, Tribe, Manager, Bank, SIHL and the undersigned Trustee (the "Agreement") Ladies and Gentlemen: We refer to the Agreement. Capitalized terms used herein shall have the respective meanings given such terms in the Agreement. This letter constitutes a Trustee's notice under the Agreement. 1. Please be advised that the instructions given to you in Paragraph [1][2][3][4][5][6](1) of our Revocation Notice dated [insert date] are cancelled effective upon receipt of this notice by you. Chicago Title Insurance Company By:________________________________ Name:______________________________ Title:_____________________________ cc: Trading Cove Associates Mohegan Tribal Gaming Authority - ------------------------- 1. Delete inapplicable item. III EXHIBIT A TO CASH COLLATERAL ACCOUNTS PLEDGE AND SECURITY AGREEMENT FORM OF DISBURSEMENT REQUEST AND CERTIFICATION (A) [Letterhead of Manager] [Date] First Fidelity Bank 10 State House Square Hartford, Connecticut 06103-3698 Attention: W. Jeffrey Kramer Vice President, Corporate Trust Re: Cash Collateral Accounts Pledge and Security Agreement dated September 29, 1995 among the Authority, Tribe, Trustee, Bank, SIHL and the undersigned Manager (the "Agreement") Ladies and Gentlemen: We refer to the Agreement. Capitalized terms used herein shall have the respective meanings given such terms in the Agreement. This letter constitutes an Officers' Certificate under Section 3.1.1 of the Agreement. The undersigned hereby certifies that the aggregate amount required to be deposited in the Interest and Excess Cash Flow Account on [insert date, I.E. first business day of applicable month and year] pursuant to clause (i) of the first sentence of Section 4.26 of the Indenture is equal to $_______. The foregoing certifications are true and correct and each of the Bank and the Trustee is entitled to rely on the foregoing. Trading Cove Associates By:___________________________ Name:_________________________ Title:________________________ By:___________________________ Name:_________________________ Title:________________________ cc: Chicago Title Insurance Company Mohegan Tribal Gaming Authority IV EXHIBIT B TO CASH COLLATERAL ACCOUNTS PLEDGE AND SECURITY AGREEMENT FORM OF DISBURSEMENT REQUEST AND CERTIFICATION (B) [Letterhead of Manager] [Date] First Fidelity Bank 10 State House Square Hartford, Connecticut 06103-3698 Attention: W. Jeffrey Kramer Vice President, Corporate Trust Re: Cash Collateral Accounts Pledge and Security Agreement dated September 29, 1995 among the Authority, Tribe, Trustee, Bank, SIHL and the undersigned Manager (the "Agreement") Ladies and Gentlemen: We refer to the Agreement. Capitalized terms used herein shall have the respective meanings given such terms in the Agreement. This letter constitutes an Officers' Certificate under Section 3.1.2 of the Agreement. 1. The undersigned hereby certifies that attached hereto as ANNEX I is a complete, accurate and reasonably detailed computation of the Cash Flow and the Excess Cash Flow for the calendar month ended [insert last day of month next preceding certificate's date]. 2. The undersigned hereby certifies (a) that the Tribe is entitled to the payment of a Minimum Priority Payment of $50,000 on the day which is the 25th day of the month in which this certificate is delivered or, if such day is not a business day, the next succeeding business day and (b) that this payment is permitted by Section 4.07(a) of the Indenture. Check the Applicable Box / / 3A. The undersigned hereby certifies that the amount required to be deposited in the Cash Maintenance Account on the day which is the 25th day of the month in which this certificate is delivered or, if such day is not a business day, the next succeeding business day, pursuant to Section 4.08 of the Indenture equals $_____________. OR / / 3B. The undersigned hereby certifies that no monies are required to be deposited in the Cash Maintenance Account on the 25th day of the month in which this certificate is delivered pursuant to Section 4.08 of the Indenture. V Check the Applicable Box: / / 4A. The undersigned hereby certifies that the sum of $______, representing 50% of the Excess Cash Flow accrued for the month of [insert month next preceding certificate's date], is required to be deposited in the Interest and Excess Cash Flow Account pursuant to clause (ii) of the first sentence of Section 4.26 of the Indenture, after giving effect to the related provisions of the second sentence of said Section, on the day which is the 25th day of the month in which this certificate is delivered or, if such day is not a business day, the next succeeding business day. OR / / 4B. No deposits are required to be made in the Interest and Excess Cash Flow Account on the 25th day of the month in which this certificate is delivered pursuant to clause (ii) of the first sentence of Section 4.26 of the Indenture, after giving effect to the related provisions of the second sentence of said Section. Check the Applicable Box: / / 5A. The undersigned hereby certifies that the amount of Cash Flow Participation Interest accrued for the month of [insert month next preceding certificate's date] is equal to $_____, and such amount is required to be deposited in the Interest and Excess Cash Flow Account pursuant to clause (iii) of the first sentence of Section 4.26 of the Indenture, after giving effect to the related provisions of the third sentence of said Section, on the day which is the 25th day of the month in which this certificate is delivered or, if such day is not a business day, the next succeeding business day. OR / / 5B. No deposit of Cash Flow Participation Interest is required to be made in the Interest and Excess Cash Flow Account on the 25th day of the month in which time this certificate is delivered pursuant to clause (iii) of the first sentence of Section 4.26 of the Indenture after giving effect to the related provisions of the third sentence of said Section. 6. The undersigned (i) hereby requests the Bank to effect the following transfers and payments on the day which is the 25th day of the month in which this certificate is delivered or, if such day is not a business day, the next succeeding business day if, but only if, the amount specified in Paragraph 2 has been paid and the amounts specified in Boxes 3A and 4A, if any, have been deposited in full in the Cash Maintenance Account and the Interest and Excess Cash Flow Account, respectively, and (ii) as a condition to such transfers and payments, makes the certifications specified below: Check All Applicable Boxes: / / (a) to transfer $_______ from the Depository Account to the Replacement Reserve Account; and, in connection therewith, certifies that this transfer does not violate Section 3.2.4 of the Agreement or any other provision thereof and is otherwise permitted by the Indenture and the Management Agreement (as in effect on the date of the Agreement). / / (b) to transfer $________ from the Depository Account to the Cash Contingency Reserve Fund in accordance with the payment instructions attached hereto, and, in connection therewith, certifies that this transfer does not violate Section 3.2.4 of the Agreement or any VI other provision thereof and is otherwise permitted by the Indenture and the Management Agreement (as in effect on the date of the Agreement). / / (c) to pay the sum of $__________ to the holders of the Subordinated Notes in accordance with the payment instructions attached hereto from funds on deposit in the Depository Account, and, in connection therewith, certifies that such payment is permitted under Section 4.07[(d)] [(e)] of the Indenture and not otherwise prohibited by the Indenture or the Purchase Agreement (including Article VIII thereof and the form of Subordinated Note attached thereto) as in effect on the date of the Agreement, and does not violate Section 3.2.4 of the Agreement or any other provision thereof. / / (d) to pay the sum of $___________ to the Authority in accordance with the Authority's Payment Instructions from funds on deposit in the Depository Account, and, in connection therewith, certifies that such payment is permitted under Section 4.07(h) of the Indenture and not otherwise prohibited by the Indenture, and does not violate Section 3.2.4 of the Agreement or any other provision thereof. / / (e) to pay a Management Fee of $_____________ to the Manager in accordance with the Manager's Payment Instructions from funds on deposit in the Depository Account, and, in connection therewith, certifies that such payment is permitted under Section 4.07(b) of the Indenture and not otherwise prohibited by the Indenture or the Management Agreement as in effect on the date hereof, and does not violate Section 3.2.4 of the Agreement or any other provision thereof. / / (f) to pay the amount of $___________ to the Tribe in accordance with the Tribe's Payment Instructions from funds on deposit in the Depository Account, and, in connection therewith, certifies that such payment is permitted under Section 4.07(c) of the Indenture and not otherwise prohibited by the Indenture, and does not violate Section 3.2.4 of the Agreement or any other provision thereof. / / (g) transfer the amount of $_________ from the Interest and Excess Cash Flow Account to the Depository Account, and, in connection therewith, certifies that such transfer is permitted under Section 4.26 of the Indenture and not otherwise prohibited by the Indenture, and does not violate Section 3.2.4 of the Agreement or any other provision thereof. VII The foregoing representations, warranties and certifications are true and correct and each of the Bank and the Trustee is entitled to rely on the foregoing. Trading Cove Associates By:___________________________ Name:_________________________ Title:________________________ By:___________________________ Name:_________________________ Title:________________________ cc: Chicago Title Insurance Company Mohegan Tribal Gaming Authority VIII EXHIBIT C TO CASH COLLATERAL ACCOUNTS PLEDGE AND SECURITY AGREEMENT FORM OF DISBURSEMENT REQUEST AND CERTIFICATION (C) [Letterhead of Manager] [Date] First Fidelity Bank 10 State House Square Hartford, Connecticut 06103-3698 Attention: W. Jeffrey Kramer Vice President, Corporate Trust Re: Cash Collateral Accounts Pledge and Security Agreement dated September 29, 1995 among the Authority, Tribe, Trustee, Bank, SIHL and the undersigned Manager (the "Agreement") Ladies and Gentlemen: We refer to the Agreement. Capitalized terms used herein shall have the respective meanings given such terms in the Agreement. This letter constitutes an Officers' Certificate under Section 3.1.4 of the Agreement. Check the Applicable Box or Boxes: / / 1. The undersigned certifies that the Authority has satisfied all conditions precedent set forth in the Indenture and the Leasehold Mortgage to the release of Net Loss Proceeds held in the Event of Loss Account and the payments requested below are permitted under Section 3.2.4 of the Agreement. The undersigned requests that the aggregate sum of $__________ be paid to the Persons and in the amounts specified in Annex I hereto from funds on deposit in the Event of Loss Account. The undersigned certifies that all such payments constitute payments permitted by Section 4.11 of the Indenture and by the Leasehold Mortgage and are not otherwise prohibited by the Indenture, the Leasehold Mortgage or the Agreement. / / 2. The undersigned requests that the sum of $___________ be paid to the Trustee in accordance with the Trustee's Payment Instructions on [insert business day preceding the day specified below] from funds on deposit in the Event of Loss Account, such amount being the aggregate amount required to be paid on [insert date] to the holders of Senior Secured Notes who have accepted the Authority's Event of Loss Offer pursuant to Section 4.11 of the Indenture. / / 3. The undersigned certifies that the Authority has satisfied all conditions precedent set forth in Section 4.11 of the Indenture to the release of Excess Loss Proceeds to the Authority and the payment requested below is permitted under Section 3.2.4 of the Agreement. The undersigned requests that the sum of $_______________ be paid to the Authority in accordance with the Authority's Payment IX Instructions from funds on deposit in the Event of Loss Account. The undersigned certifies that such payment is permitted by Section 4.11 of the Indenture and not otherwise prohibited by the Indenture or the Agreement. The foregoing representations, warranties and certifications are true and correct and each of the Bank and the Trustee is entitled to rely on the foregoing. Trading Cove Associates By:___________________________ Name:_________________________ Title:________________________ By:___________________________ Name:_________________________ Title:________________________ cc: Chicago Title Insurance Company Mohegan Tribal Gaming Authority X EXHIBIT D TO CASH COLLATERAL ACCOUNTS PLEDGE AND SECURITY AGREEMENT FORM OF DISBURSEMENT REQUEST AND CERTIFICATION (D) [Letterhead of Manager] [Date] First Fidelity Bank 10 State House Square Hartford, Connecticut 06103-3698 Attention: W. Jeffrey Kramer Vice President, Corporate Trust Re: Cash Collateral Accounts Pledge and Security Agreement dated September 29, 1995 among the Authority, Tribe, Trustee, Bank, SIHL and the undersigned Manager (the "Agreement") Ladies and Gentlemen: We refer to the Agreement. Capitalized terms used herein shall have the respective meanings given such terms in the Agreement. This letter constitutes an Officers' Certificate under Section 3.1.5 of the Agreement. Check the Applicable Box or Boxes: / / 1. The undersigned certifies that the Authority has satisfied all conditions precedent set forth in the Indenture to the release of Net Proceeds held in the Asset Sale Account and the payments requested below are permitted under Section 3.2.4 of the Agreement. The undersigned requests that the aggregate sum of $_________ be paid to the Persons and in the amounts specified in ANNEX I hereto from funds on deposit in the Asset Sale Account. The undersigned certifies that all such payments constitute payments permitted by Section 4.10 of the Indenture and not otherwise prohibited by the Indenture or the Agreement. / / 2. The undersigned requests that the sum of $__________ be paid to the Trustee in accordance with the Trustee's Payment Instructions on [insert business day preceding the day specified below] from funds on deposit in the Asset Sale Account, such amount being the aggregate amount required to be paid on [insert date] to the holders of Senior Secured Notes who have accepted the Authority's Asset Sale Offer pursuant to Section 4.10 of the Indenture. / / 3. The undersigned certifies that the Authority has satisfied all conditions precedent set forth in Section 4.10 of the Indenture to the release of Excess Proceeds to the Authority and the payment requested below is permitted under Section 3.2.4 of the Agreement. The undersigned requests that the sum of $_______________ be paid to the Authority in accordance with the Authority's Payment Instructions from funds on deposit in the Asset Sale Account. The undersigned certifies that such payment is permitted by Section 4.10 of the Indenture and not otherwise prohibited by the Indenture or the Agreement. XI The foregoing representations, warranties and certifications are true and correct and each of the Bank and the Trustee is entitled to rely on the foregoing. Trading Cove Associates By:___________________________ Name:_________________________ Title:________________________ By:___________________________ Name:_________________________ Title:________________________ cc: Chicago Title Insurance Company Mohegan Tribal Gaming Authority XII EXHIBIT E TO CASH COLLATERAL ACCOUNTS PLEDGE AND SECURITY AGREEMENT FORM OF DISBURSEMENT REQUEST AND CERTIFICATION (E) [Letterhead of Manager] [Date] First Fidelity Bank 10 State House Square Hartford, Connecticut 06103-3698 Attention: W. Jeffrey Kramer Vice President, Corporate Trust Re: Cash Collateral Accounts Pledge and Security Agreement dated September 29, 1995 among the Authority, Tribe, Trustee, Bank, SIHL and the undersigned Manager (the "Agreement") Ladies and Gentlemen: We refer to the Agreement. Capitalized terms used herein shall have the respective meanings given such terms in the Agreement. This letter constitutes an Officers' Certificate under Section 3.1.6 of the Agreement. The undersigned hereby (a) requests that the aggregate amount of $__________ be paid to the Persons and in the amounts specified in ANNEX II from funds on deposit in the Replacement Reserve Account and (b) certifies that such payments are permitted to be made under the Agreement (including Section 3.2.4 thereof), the Indenture and the Gaming Facility Management Agreement (as in effect on the date hereof). The foregoing certifications are true and correct and each of the Bank and the Trustee is entitled to rely on the foregoing. Trading Cove Associates By:___________________________ Name:_________________________ Title:________________________ By:___________________________ Name:_________________________ Title:________________________ cc: Chicago Title Insurance Company Mohegan Tribal Gaming Authority XIII EXHIBIT F TO CASH COLLATERAL ACCOUNTS PLEDGE AND SECURITY AGREEMENT FORM OF DISBURSEMENT REQUEST AND CERTIFICATION (F) [Letterhead of Manager] [Date] First Fidelity Bank 10 State House Square Hartford, Connecticut 06103-3698 Attention: W. Jeffrey Kramer Vice President, Corporate Trust Re: Cash Collateral Accounts Pledge and Security Agreement dated September 29, 1995 among the Authority, Tribe, Trustee, Bank, SIHL and the undersigned Manager (the "Agreement") Ladies and Gentlemen: We refer to the Agreement. Capitalized terms used herein shall have the respective meanings given such terms in the Agreement. This letter constitutes an Officers' Certificate under Section 3.1.7 of the Agreement. Check the Applicable Box or Boxes: / / 1. The undersigned requests that the amount of $________ be paid to the Trustee in accordance with the Trustee's Payment Instructions on [insert business day preceding the date specified below in this Paragraph 1.] from funds available in the Interest and Excess Cash Flow Account, such amount representing interest (including Liquidated Damages, if any) due and payable on the Senior Secured Notes on [insert date]. / / 2. The undersigned requests that the amount of $_________ be paid to the Trustee in accordance with the Trustee's Payment Instructions on [insert business day preceding the date specified below in this Paragraph 2.] from funds available in the Interest and Excess Cash Flow Account, such amount being the aggregate amount required to be paid on [insert date] to the holders of Senior Secured Notes who have accepted the Authority's Excess Cash Purchase Offer pursuant to Section 4.28 of the Indenture. / / 3. The undersigned (a) certifies that its request for the payments requested below and the making thereof are not prohibited by Section 3.2.4 of the Agreement, (b) requests that the aggregate amount of $_________ be paid to the Persons and in the amounts specified in ANNEX I hereto from funds available in the Interest and Excess Cash Flow Account, and (c) certifies that the making of such payments is permitted by clause (iii) of the penultimate sentence of Section 4.26 of the Indenture, will be applied to the making of capital expenditures that reduce Excess Cash Flow under the definition thereof, and is not otherwise prohibited by the Indenture or the Agreement. / / 4. The undersigned certifies that (a) its request for the payments requested below and the making thereof are not prohibited by Section 3.2.4 of the Agreement, (b) requests that the amount XIV of $____________ be paid from funds on deposit in the Interest and Excess Cash Flow Account to the holders of the Subordinated Notes who have accepted the Authority's Excess Cash Purchase Offer pursuant to Section 4.07(f) of the Indenture in accordance with the attached payment instructions and (c) certifies that the making of such payment is permitted by Section 4.07(f) of the Indenture and not otherwise prohibited by the Indenture or the Agreement. / / 5. The undersigned certifies that (a) its request for the payment requested below and the making thereof are not prohibited by Section 3.2.4 of the Agreement, (b) requests that the amount of $________ be paid from funds on deposit in the Interest and Excess Cash Flow Account to the Tribe in accordance with the Tribe's Payment Instructions and (c) certifies that the making of such payment is permitted by Section 4.07(g) of the Indenture and not otherwise prohibited by the Indenture or the Agreement. The foregoing certifications are true and correct and each of the Bank and the Trustee is entitled to rely on the foregoing. Trading Cove Associates By:___________________________ Name:_________________________ Title:________________________ By:___________________________ Name:_________________________ Title:________________________ cc: Chicago Title Insurance Company Mohegan Tribal Gaming Authority XV EXHIBIT G TO CASH COLLATERAL ACCOUNTS PLEDGE AND SECURITY AGREEMENT FORM OF DISBURSEMENT REQUEST AND CERTIFICATION (G) [Letterhead of Manager or Authority] [Date] First Fidelity Bank 10 State House Square Hartford, Connecticut 06103-3698 Attention: W. Jeffrey Kramer Vice President, Corporate Trust Re: Cash Collateral Accounts Pledge and Security Agreement dated September 29, 1995 among the Authority, Tribe, Trustee, Bank, SIHL, and [Manager] (the "Agreement") Ladies and Gentlemen: We refer to the Agreement. Capitalized terms used herein shall have the respective meanings given such terms in the Agreement. This letter constitutes an Officers' Certificate under Section 3.1.8 of the Agreement. Check the Applicable Box or Boxes: / / 1. The undersigned requests that the amount of $________ be paid to the Trustee in accordance with the Trustee's Payment Instructions on [insert business day preceding the date specified below in this Paragraph 1.] from funds available in the Depository Account, such amount being the aggregate amount required to be paid on [insert date] to the holders of Senior Secured Notes who have accepted the Authority's Change of Control Offer pursuant to Section 4.16 of the Indenture. / / 2. The undersigned requests that the amount of $_________ be paid to the Trustee in accordance with the Trustee's Payment Instructions on [insert business day preceding the date specified below in this Paragraph 1.] from funds available in the Depository Account, such amount being the aggregate amount required to be paid on [insert date] to the holders of Senior Secured Notes whose Notes are required to be redeemed pursuant to Section 3.08 of the Indenture. XVI The foregoing certifications are true and correct and each of the Bank and the Trustee is entitled to rely on the foregoing. Trading Cove Associates or Mohegan Tribal Gaming Authority By:___________________________ Name:_________________________ Title:________________________ By:___________________________ Name:_________________________ Title:________________________ cc: Chicago Title Insurance Company Mohegan Tribal Gaming Authority XVII EXHIBIT H TO CASH COLLATERAL ACCOUNTS PLEDGE AND SECURITY AGREEMENT [Date] [INSERT NAME AND ADDRESS OF ISSUER OR TRANSFER AGENT, AS APPLICABLE] _______________________________________ _______________________________________ Attention: _____________________ Re: Pledge of Shares of _________________ (the "Issuer") Ladies and Gentlemen: This letter shall provide you with irrevocable instructions concerning __________ shares (the "Shares") of beneficial interest of _______________ [INSERT NAME OF ISSUER] to be held in account no. ____________________ (the "Account") and registered in the name of the undersigned (the "Shareholder"). The undersigned hereby certifies and agrees as follows: 1. The Shareholder has pledged and granted a security interest in the Shares, together with all interest, dividends, gains and other income thereon and reinvestments thereof, together with all right, title and interest of Shareholder in the Account with respect to the foregoing (the "Pledge"), to _______________ [INSERT NAME OF TRUSTEE] (the "Trustee") in its capacity as trustee under that certain Indenture dated September 29, 1995 among the Mohegan Tribal Gaming Authority (the "Authority"), an instrumentality of the Mohegan Tribe of Indians of Connecticut (the "Tribe"), the Tribe and the Trustee pertaining to the Authority's ______% Senior Secured Notes due 2002. In such capacity, the Trustee is referred to herein as the "Pledgee." 2. The Shareholder hereby represents to you that: (a) the Pledgee has designated _____________ [INSERT NAME OF BANK] (the "Bank") to serve as the Pledgee's designee and agent in order to perfect the security interest in favor of the Pledgee; and (b) the Shareholder has not granted any security interest, right or claim in the Shares or the Account to any person other than the Pledgee. 3. Accordingly, the Shareholder hereby irrevocably directs you to make such notations in the records pertaining to the Shares and the Account as are necessary to reflect the Pledge, including the registration of the Shares and the Account in the name of the Authority and the registration of the Pledge of the Shares in the following name: "___________________ [INSERT NAME OF BANK], as agent for _______________ [INSERT NAME OF TRUSTEE], in the latter's capacity as trustee under that certain Indenture dated September 29, 1995 among the Mohegan Tribal Gaming Authority, the Mohegan Tribe of Indians of Connecticut, and [INSERT NAME OF TRUSTEE] pertaining to the Authority's [_____]% Senior Secured Notes due 2002" XVIII 4. The Shareholder hereby further irrevocably directs you to reinvest all dividends or distributions from net investment income and capital gains in additional Shares of the Issuer, subject to the Pledge. In addition, the Shareholder hereby irrevocably instructs you, notwithstanding any contrary instructions from the Shareholder, to follow only instructions received from the Bank, furnished in writing, concerning (a) the payment or reinvestment of dividends or distributions and (b) the redemption, transfer, sale or any other disposition or transaction concerning the Shares or the interest, dividends, gains and other income thereon. 5. The Shareholder also irrevocably authorizes and directs you to send all notices, statements and all other communications concerning the Shares or the Account to the following address or such other address as may be specified in written instructions from the Bank: [Insert name and address of Bank] [Insert Name of Bank], as agent for [Insert Name of Trustee] [Insert address of Bank] Attn:_______________________________ Re: Mohegan Tribal Gaming Authority 6. The Shareholder agrees that neither you, the Issuer or any of their respective partners, trustees, officers, employees or affiliates (collectively, the "Issuer Affiliates") shall be liable for complying in good faith with the instructions contained herein or failing to comply with any contrary or inconsistent instructions that may subsequently be issued by the Shareholder. The Shareholder further agrees to hold harmless and indemnify each of the Issuer Affiliates against any claim or loss arising out of any actions or omissions taken by any person in reliance on or compliance with the instructions and authorizations contained herein. 7. The Shareholder agrees that the instructions contained herein may be revoked by the Shareholder only upon the receipt by you of the Bank's written consent to such revocation or written notification from the Bank that the Pledge has been terminated. Very truly yours, MOHEGAN TRIBAL GAMING AUTHORITY By:_______________________________ Name:_____________________________ Title:____________________________ GUARANTEE OF SIGNATURE Authorized Signature By:_______________________ Address: Title:____________________ Dated:____________________ Dated: XIX The undersigned hereby confirms the following for the benefit of the above-referenced Pledgee and Bank: (i) The undersigned is [CHECK APPROPRIATE BOX] / / The Issuer of the Shares, which has been organized under the laws of a jurisdiction which has adopted Article 8 of the Uniform Commercial Code pertaining to investment securities, and said laws accordingly permit the undersigned to register a pledge of the Shares in favor of the Pledgee by taking the steps referenced in numbered paragraph 3 of the above letter. / / The transfer agent for the Issuer of the Shares, which Issuer has been organized under the laws of a jurisdiction which has adopted Article 8 of the Uniform Commercial Code pertaining to investment securities, and said laws accordingly permit the undersigned to register a pledge of the Shares in favor of the Pledgee by taking the steps referenced in numbered paragraph 3 of the above letter. (ii) The undersigned agrees to comply with the instructions set forth in the above letter. The Pledge has been registered on ______________, 199_ [INSERT DATE]. (iii) Immediately after registration of the Pledge, there were no liens, restrictions or adverse claims (as to which the undersigned has a duty to disclose under the Uniform Commercial Code) to the Shares, other than the Pledge. Date: _____________________, 199 _________________________________ XX EX-24.1 7 EXHIBIT 24.1 ARTHUR ANDERSEN LLP CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the use of our report included in or made a part of this registration statement and to all references to our Firm included in this registration statement. /s/ Arthur Andersen LLP Hartford Connecticut May 31, 1996 EX-25.1 8 EXHIBIT 25.1 SECURITIES AND EXCHANGE COMMISSION STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE Check if an Application to Determine Eligibility of a Trustee pursuant to Section 305(b)(2) ------ FIRST UNION BANK OF CONNECTICUT (Exact name of trustee as specified in its charter) CONNECTICUT STATE BANK (Jurisdiction of incorporation or organization if not a U.S. national bank) 06-0547320 (I.R.S. Employer Identification No.) 10 STATE HOUSE SQUARE, HARTFORD, CONNECTICUT 06103-3698 (Address of trustee's principal executive offices) (zip code) NOT APPLICABLE (Name, address and telephone number of agent for service of process) MOHEGAN TRIBAL GAMING AUTHORITY (Exact name of obligor as specified in its charter) NOT APPLICABLE 06-1436334 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) ROLAND HARRIS, CHAIRMAN, MANAGEMENT BOARD 67 SANDY DESERT ROAD UNCASVILLE, CONNECTICUT 06382 (Address of principal executive offices) (zip code) 131/2% SERIES B SENIOR SECURED NOTES DUE 2002 (Title of indenture securities) Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. Connecticut Commissioner of Banking, 262 Constitution Plaza, Hartford, Connecticut 06115 Board of Governors of the Federal Reserve System, Washington D.C. Federal Deposit Insurance Corporation, Washington, D.C. (b) Whether it is authorized to exercise corporate trust powers. Yes. Item 2. Affiliations with Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. Items 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15 have been omitted pursuant to General Instruction B. Item 16. List of Exhibits. List below all exhibits filed as a part of this statement of eligibility and qualification. 1. A copy of the articles of association of the trustee as now in effect. 2. A copy of the certificate of authority to commence business. 3. Not Applicable. Authorization of the trustee to exercise corporate trust powers is contained in articles of association. 4. A copy of the bylaws of the trustee as now in effect. 5. Not Applicable 6. Consent of trustee required by Section 321(b) of the Trust Indenture Act of 1939. 7. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority. - 2 - SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee, First Union Bank of Connecticut, a Connecticut State-chartered bank, incorporated and existing under the laws of the State of Connecticut, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Hartford and State of Connecticut on the 19th day of March, 1996. FIRST UNION BANK OF CONNECTICUT By: /s/ W. Jeffrey Kramer ------------------------------------------- W. Jeffrey Kramer Its Vice President - 3 - EXHIBIT 1 ARTICLES OF INCORPORATION OF FIRST UNION BANK OF CONNECTICUT AS AMENDED AND RESTATED JANUARY 1, 1996 FIRST: The name of the corporation is FIRST UNION BANK OF CONNECTICUT. SECOND: The nature of the business to be transacted, or the purposes to be promoted or carried out by the corporation are as follows: To transact a general banking business as a state bank and trust company and, in the conduct of such business, to engage in any lawful act or activity for Connecticut and to possess and exercise all the powers and privileges granted by The Banking Law of Connecticut or by any other law of Connecticut, together with any powers incidental thereto, so far as such powers and privileges are necessary or convenient to the conduct, promotion or attainment of the business or purposes of the corporation, including, without limiting the generality of the foregoing, the power to: (a) Receive deposits, including deposits of public funds or money held in a fiduciary capacity; (b) Receive for safekeeping or otherwise all kinds of personal property; (c) Act as trustee, receiver, executor or administrator or as guardian or conservator of the estate, but not of the person, of any person; (d) Act as transfer agent or registrar of stocks and bonds; (e) Act as agent, fiscal agent or trustee for any corporation, for holders of bonds, notes or other securities or for the state or any political subdivision thereof or taxing district therein; (f) Lend money with or without security and issue letters of credit for any lawful purpose; (g) Borrow money and pledge assets therefor; (h) Conduct a safe deposit business as permitted by applicable law; and (i) Invest its assets in investment securities as permitted by applicable law. To transact such business and to exercise all rights, privileges, powers and franchises possessed by any entity with which the corporation or a predecessor of the corporation has merged or consolidated. THIRD: The principal office of the corporation is located in the city of Stamford, State of Connecticut. FOURTH: The total number of shares of capital stock which the corporation shall have authority to issue is six million (6,000,000) common shares, and the par value of each such share is Five Dollars ($5.00), amounting in the aggregate to thirty million dollars ($30,000,000), which shares shall be transferable according to such rules as may be established by the Board of Directors of the corporation. FIFTH: (a) the name, address and business of each incorporator of the corporation are as follows: NAME ADDRESS BUSINESS Union Trust Company Church and Elm Streets Bank and Trust Company New Haven, Connecticut 06505 Union Trust Company 180 Fairfield Avenue Bank and Trust Company Bridgeport, Connecticut 06904 (b) the name, address and occupation of each prospective initial director of the corporation are as follows: NAME ADDRESS OCCUPATION Carl Bennett Greenbriar Lane Chairman and President, Stamford, Connecticut 06903 Caldor, Inc. D. Allan Bromley 35 Tokeneke Drive Henry Ford II Professor and Director of North Haven, Connecticut A. W. Wright 06473 Nuclear Structure Laboratory Yale University Gino P. Giusti 236 West Haviland Lane President and Director, Stamford, Connecticut 06903 Texasgulf Inc. J. Robert Gunther Uncas Circle - Sachems Head Chairman and President Guilford, Connecticut 06437 George Schmitt & Co., Inc. Eric R. Hansen 31 Arrowhead Way Vice President of Darien, Connecticut 06820 Northeast Bancorp, Inc. and President of Union Trust Company Robert W. Harcke 8 Point Road Chairman, Universal Wire Niantic, Connecticut 06357 Products, Inc. - 2 - John M. Henske 104 Beachside Avenue Chairman and Chief Green Farms, Connecticut Executive Officer 06436 Olin Corporation Robert E. Ix Walsh Lane Chairman and Chief Greenwich, Connecticut Executive Officer, 06830 Cadbury Schweppes U.S.A. Inc. O. Haydn Owens, Jr. 410 North Cedar Road Vice President, The Fairfield, Connecticut Southern New England 06430 Telephone Co. Kenneth A. Randall 13 Valley Road President, The Conference New Canaan, Connecticut Board, Inc. 06840 Thomas F. Richardson Marchant Road Chairman and President West Redding, Connecticut Northeast Bancorp, Inc. 06896 and Chairman and Chief Executive Officer, Union Trust Company Audrey M. Sargent 18 Wepawaug Road None Woodbridge, Connecticut 06525 Theodore F. Talmage 11406 Lost Tree Way Retired North Palm Beach, Florida 33403 Henry H. Townshend, Jr. 709 Townsend Avenue Retired New Haven, Connecticut 06512 Paul E. Waggoner Vineyard Point Road Director, The Connecticut Guilford, Connecticut 06437 Agricultural Experiment Station A. Porter Waterman Parsonage Road President, Weepor Greenwich, Connecticut 06830 Corporation Howard R. Weckerley 17 Cove Road Retired River Hills Plantation Clover, South Carolina 29710 SIXTH: (A) INDEMNIFICATION OF DIRECTORS The corporation shall, to the fullest extent permitted by applicable banking, corporate and other law and regulations, indemnify any person who is or was a director of the corporation from and against any and all expenses, liabilities or other losses arising in connection with any action, suit, appeal or other proceeding, by reason of the fact that such person is or was serving as a director of the corporation and may, to the fullest extent permitted by applicable banking, corporate and other law and regulation, advance monies to such persons for expenses incurred in defending any such action, suit, appeal or other proceeding on such terms as the corporation's Board of Directors shall determine. The corporation may purchase insurance for the purpose of indemnifying such persons and/or reimbursing the corporation upon payment of indemnification - 3 - to such persons to the extent that indemnification is authorized by the preceding sentences, except that insurance coverage shall not be available in connection with a formal order by a court or judicial or governmental body assessing civil money penalties against such person or in the event that such coverage would be prohibited by applicable banking, corporate and other law or regulations. (B) INDEMNIFICATION OF OFFICERS, EMPLOYEES AND AGENTS The corporation shall indemnify any person who is or was an officer, employee or agent of the corporation or who is or was a director, general partner, trustee or principal of another entity serving as such at the request of the corporation from and against any and all expenses, liabilities or other losses arising in connection with any action, suit, appeal or other proceeding, by reason of the fact that such person is or was serving as an officer, employee or agent of the corporation or as a director of another entity at the request of the corporation to the extent authorized by the corporate policy of the corporation, as adopted and modified from time to time by the shareholder of the corporation, except to the extent that such indemnification would be prohibited by applicable banking, corporate and other law or regulation. The corporation may advance monies to such persons for expenses incurred in defending any such action, suit, appeal or other proceeding in accordance with the corporate policy of the corporation, as adopted and modified from time to time by the shareholder of the corporation, except to the extent that such advancement would be prohibited by applicable banking, corporate and other law or regulation. The corporation may purchase insurance for the purpose of indemnifying such persons and/or reimbursing the corporation upon payment of indemnification to such person to the extent that indemnification is authorized by the preceding sentence, except that insurance coverage shall not be available in connection with a formal order by a court or judicial or governmental body assessing civil money penalties against such person or in the event that such coverage would be prohibited by applicable banking, corporate and other law or regulation. - 4 - EXHIBIT 2 STATE OF CONNECTICUT DEPARTMENT OF BANKING 260 CONSTITUTION PLAZA - HARTFORD, CT 06103 John P. Burke Commissioner CERTIFICATION I, John P. Burke, Banking Commissioner of the State of Connecticut, do hereby certify that FIRST UNION BANK OF CONNECTICUT, is a state bank and trust company duly organized and existing under the laws of the State of Connecticut, and located in STAMFORD, Connecticut. In Testimony Whereof, I have hereunto set my hand and affixed my seal at Hartford, Connecticut, this 21st day of March, 1996. [S E A L] /s/ John P. Burke ----------------------------- John P. Burke Banking Commissioner TEL: (203) 240-8299 FAX: (203) 240-8178 AN EQUAL OPPORTUNITY EMPLOYER EXHIBIT 4 AMENDED AND RESTATED BYLAWS OF FIRST UNION BANK OF CONNECTICUT (EFF. 1/1/96) (FORMERLY FIRST FIDELITY BANK; FORMERLY UNION TRUST COMPANY) STAMFORD, CONNECTICUT AS ADOPTED OCTOBER 12, 1993 ARTICLE I MEETINGS OF STOCKHOLDERS ANNUAL MEETING 1. The Annual Meeting of the stockholders of the Company shall be held on such date between February 1 and April 1 in each year as the Board of Directors shall designate and at such hour as shall be specified in the notice of such meeting. The Annual Meeting shall be held at the principal office of the Company in the Town of New Haven, or such other place within or without the State of Connecticut as the Board of Directors may designate. SPECIAL MEETINGS 2. A special meeting of the stockholders shall be called when ordered by a majority of the Board of Directors or the Chief Executive Officer or when requested in writing by the holders of record of not less than one-tenth of the capital stock issued and outstanding. NOTICE OF MEETINGS 3. Written notice of each stockholders' meeting stating the time, place and purpose or purposes of the meeting, shall be mailed to each stockholder entitled to vote at such meeting at his address as shown on the books of the Company at least ten (10) days before the date of said meeting. QUORUM 4. At all meetings of the stockholders there shall be present, either in person or by proxy, stockholders representing a majority of the capital stock of the Company issued and outstanding, in order to constitute a quorum for the election of directors or the transaction of other business. In the absence of a quorum, a majority in interest of the stockholders present in person or by proxy may adjourn the meeting from time to time, without further notice, until a quorum shall attend, and thereupon any business may be transacted which might have been transacted at the meeting originally called. VOTING 5. At all meetings of the stockholders, each stockholder shall be entitled to vote, in person or by proxy, one vote for each share of stock standing in his name on the books of the Company on the record date set for such meeting. ARTICLE II DIRECTORS GENERAL POWERS 1. The property, affairs and business of the Company shall be managed and controlled by its Board of Directors, which may exercise all of the corporate powers of the Company except such as are by law, the Articles of Incorporation of the Company or the Bylaws expressly conferred upon or reserved to the stockholders. NUMBER, TERM OF OFFICE AND QUALIFICATIONS 2. The number of directors of the Company shall be not less than nine (9) nor more than twenty-five (25). They shall be elected at the Annual Meeting and shall hold office for one (1) year and until their successors are duly elected and qualified. VACANCIES 3. In case of any vacancy among the directors from any cause, the remaining directors at any regular or special meeting may elect a successor to hold office until the next Annual Meeting of the stockholders and until his successor is duly elected and qualified. ORGANIZATION MEETING OF THE BOARD OF DIRECTORS 4. The Board of Directors at their first meeting after the Annual Meeting of the stockholders shall elect or appoint officers at or above the level of senior vice president to serve during the ensuing year. REGULAR MEETINGS 5. Regular meetings of the Board of Directors shall be held at least quarterly on such days and time as the Board of Directors may from time to time determine. No notice of such regular meetings need be given. - 2 - SPECIAL MEETINGS 6. Special meetings of the Board of Directors shall be called when ordered by the Chief Executive Officer or when requested in writing by any five directors, at such time and place as may be designated in such order or request, and the Secretary of the Company shall give reasonable notice thereof to each director either by mail, telegraph, facsimile, telephone or in person. A waiver of notice in writing signed by any director whether before or after such meeting shall be considered equivalent to proper notice to such director. QUORUM 7. A majority of the number of directors serving at the time shall constitute a quorum at any meeting. COMPENSATION OF DIRECTORS 8. All directors who are not also officers of the Company or any of its affiliates shall be entitled to a reasonable fee for attendance at meetings of the Board and of Committees of the Board, such fee to be fixed from time to time by a resolution of the Board of Directors or of the Executive Committee. TERM OF DIRECTORS 9. No person who shall have attained the age of 70 years as of January first in any year shall be eligible to be elected a Director or to be re-elected a Director. COMMUNICATIONS EQUIPMENT 10. Any or all directors may participate in a meeting of the Board or committee thereof by means of conference telephone or any means of communication by which all persons participating in the meeting are able to hear each other. ACTION WITHOUT MEETING 11. Any action required or permitted to be taken by the Board or committee thereof by law, the Company's Articles of Incorporation, or these Bylaws may be taken without a meeting, if, prior or subsequent to the action, all members of the Board or committee shall individually or collectively consent in writing to the action. Each written consent or consents shall be filed with the minutes of the proceedings of the Board or committee. Action by written consent shall have the same force and effect as a unanimous vote of the directors, for all purposes. Any certificate or other documents which relates to action so taken shall state that the action was - 3 - taken by unanimous written consent of the Board or committee without a meeting. ARTICLE III COMMITTEES EXECUTIVE COMMITTEES 1. There shall be an Executive Committee which, when the Board of Directors is not in session, shall have and may exercise all the powers of the Board that lawfully may be delegated. The Executive Committee shall meet at such times as the members shall agree and whenever called by the Chairman of the committee. The Executive Committee shall consist of such number of directors, not less than. four, as the Board shall from time to time appoint. A quorum for all meetings of the Executive Committee shall be a majority of the members. The Board of Directors may appoint a Chairman of the Executive Committee; in his absence or if no such appointment is made, the President of the Company shall be its Chairman. The Executive Committee shall keep a record of its proceedings which shall be reported to the Board of Directors at its next regular meeting. In the event of the absence of any member at a meeting, any other director may be called to serve in his place with full power to act. OTHER COMMITTEES 2. The Board of Directors shall have the power to appoint, or to authorize the appointment of, such other committees as it may deem advisable, to determine the powers, duties, authority and functions of such committees, to provide for the selection of the members thereof and to determine their term or tenure of service. ARTICLE IV OFFICERS OFFICERS 1. The Board of Directors shall have the power to appoint a Chairman of the Board, one or more Vice Chairmen of the Board, a Chief Executive Officer, a President, one or more Executive Vice Presidents, one or more Senior Vice Presidents, one or more Vice Presidents, a Secretary, a Treasurer, an Auditor, one or more Trust Officers and such other officers as from time to time may be elected or appointed by the Board of Directors. The Board may by resolution authorize the President to appoint other officers with such titles and duties as he - 4 - may designate. All officers shall be subject to removal at any time with or without cause by the affirmative vote of a majority of the whole Board of Directors. If any office shall become vacant, the Board of Directors may fill such vacancy. Any officer may hold more than one office, except as otherwise provided by law. In its discretion, the Board of Directors may leave unfilled any offices except those of President, Secretary and Treasurer. CHIEF EXECUTIVE OFFICER 2. The Board of Directors shall designate who shall be the Chief Executive Officer of the Company and who shall substitute for him during his absence or disability. If all of the persons so designated are absent or disabled, any other senior officer designated by the Executive Committee or by the Board of Directors as such shall be the Chief Executive Officer. The Chief Executive Officer shall have general charge of the business of the Company. POWERS AND DUTIES OF OFFICERS 3. All officers shall perform such duties and possess such powers as shall pertain to their respective offices, as may be imposed by law, as may be set forth in these Bylaws, and as may be, from time to time, prescribed by the Board of Directors or by the Chief Executive Officer. ARTICLE V CAPITAL STOCK 1. Transfer of shares shall be made upon the books of the Company by the holder in person, or by power of attorney, duly executed, witnessed and filed with the Secretary or other proper officer of the Company, upon surrender of the certificate or certificates of such shares. In case of the loss or destruction of a certificate another may be issued in its place upon proof of loss or destruction which shall be satisfactory to the Board of Directors. ARTICLE VI EMERGENCIES 1. In the event of any emergency caused by enemy action,nuclear disaster or accident, storm, fire, flood, explosion or other cause (the continuation of any such event being referred to herein as a "State of Emergency" declared by the President of the United States or the person performing his functions, Governor of the State or any Federal or State banking regulatory agency having jurisdiction over the Company), of - 5 - sufficient severity to prevent the conduct and management of the affairs and business of the Company as contemplated by these Bylaws other than this paragraph 1, then during the existence of such State of Emergency, (a) The requirement of these Bylaws as to notice and place of directors' meetings shall be waived and the Board of Directors shall have the power, in the absence or disability of any officer or upon the refusal of any officer to act, to delegate and prescribe such officer's powers and duties to any other officer, or to any director; any powers granted to the Board of Directors pursuant to this paragraph (a) may be exercised as provided in paragraph (b) below: (b) Any two or more members of the Executive Committee shall constitute a quorum of that Committee during such State of Emergency for the full conduct and management of the affairs and business of the Company in accordance with the provisions of Article m of these Bylaws. In the event that two members of the then incumbent Executive Committee do not present themselves at the Head Office or Acting Head Office, and only for the period during which two such members are not present, an interim committee consisting of all of the remaining directors present at such office and willing to serve shall perform the functions of the Executive Committee for the full conduct and management of the affairs and business of the Company in accordance with the foregoing provisions of this Section; provided, however, that no action may be taken by such interim committee present and voting at a meeting attended by no less than two such members; and (c) The business ordinarily conducted at the Head Office or any branch office of the Company may be relocated elsewhere in suitable quarters, in addition to or in lieu of its normal location, as may be designated by the Board of Directors or by the Executive Committee or by such interim committee as may be conducting the affairs of the Company pursuant to paragraph (b) above. Actions taken pursuant to this Section are subject to conformity with any governmental directives issued during any such State of Emergency. Actions taken pursuant to this Section may be ratified at the next annual meeting of stockholders or at a special meeting called for that purpose; however, failure to ratify shall not render any action duly taken pursuant to this Section illegal or invalid as against third persons who have acquired rights or incurred disabilities in reliance thereon. 2. To the full extent permitted by applicable law, the Company will indemnify any director, officer or employee of the - 6 - Company for any actions taken in good faith by such person during any State of Emergency pursuant to this Article VI or any resolution adopted in accordance herewith. ARTICLE VII CORPORATE SEAL SEAL 1. The seal, an impression of which appears below, is the seal of the Company as adopted by the Board of Directors: [Seal] The Chairman of the Board, the Vice Chairman, the Chief Executive Officer, the President, Senior Executive Vice President, Executive Vice President, Senior Vice President, Vice President, each Assistant Vice President, the Chief Financial Officer, the Secretary, each Assistant Secretary, each Trust Officer, or each Assistant Trust Officer shall have the authority to affix the corporate seal of this Company and to attest to the same. ARTICLE VIII MISCELLANEOUS PROVISIONS FISCAL YEAR 1. The fiscal year of the Company shall be the calendar year. EXECUTION OF INSTRUMENTS 2. All agreements, contracts, indentures, mortgages, deeds, conveyances, transfers, certificates, declarations, receipts, discharges, releases, satisfactions, settlements, petitions, schedules, accounts, affidavits, bonds, undertakings, proxies and other instruments or documents may be signed, executed, acknowledged, verified, delivered or accepted in behalf of the Company by the Chairman of the Board, or Vice Chairman, or Chief Executive Officer, or the President, or Senior Executive Vice President, or Executive Vice President, or Senior Vice President, or Vice President, or Assistant Vice President, or Chief Financial Officer, or the Secretary, or Assistant Secretary, or, if in connection with the exercise of fiduciary powers of the Company, by any of said officers or by any Trust Officer or Assistant Trust Officer, to the extent authorized by the corporate policy of the Company, as adopted and modified from time to time. Any such instruments may also be executed, acknowledged, verified, delivered, or accepted in - 7 - behalf of the Company in such other manner and by such other officers as the Board may from time to time direct. VOTING SHARES OF OTHER CORPORATIONS 3. The Chairman, Vice Chairman, or President are authorized to vote, represent and exercise on behalf of this Company all rights incident to any and all shares of stock of any other corporation standing in the name of the Company. The authority granted herein may be exercised by such officers in person or by proxy or by power of attorney duly executed by said officer. ARTICLE IX AMENDMENTS 1. These Bylaws may be altered, amended, or added to by the stockholders at any annual or special meeting or to the extent permitted by law, by the Board of Directors at any meeting, provided in either case notice thereof has been given. - 8 - EXHIBIT 6 CONSENT OF TRUSTEE Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of 1939 in connection with the 131/2% Series B Senior Secured Notes due 2002 of the Mohegan Tribal Gaming Authority, First Union Bank of Connecticut hereby consents that reports of examinations of Federal, state, territorial or district authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. FIRST UNION BANK OF CONNECTICUT By: /s/ W. Jeffrey Kramer ---------------------------------- W. Jeffrey Kramer Its Vice President Board of Governors of the Federal Reserve System EXHIBIT 7 OMB Number: 7100-0036 --------- Federal Deposit Insurance Corporation OMB Number: 3064-0052 Office of the Comptroller of the Currency OMB Number: 1557-0081 Expires March 31, 1996 FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL - ------------------------------------------------------------------------------- Please refer to page i, /1/ [Logo] Table of Contents, for the required disclosure of estimated burden. - ------------------------------------------------------------------------------- CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR A BANK WITH DOMESTIC AND FOREIGN OFFICES--FFIEC 031 REPORT AT THE CLOSE OF BUSINESS DECEMBER 31, 1995 (951231) -------- (RCRI 9999) This report is required by law: 12 U.S.C. Section 324 (State member banks); 12 U.S.C. Section 1817 (State nonmember banks); and 12 U.S.C. Section 161 (National banks). This report form is to be filed by banks with branches and consolidated subsidiaries in U.S. territories and possessions, Edge or Agreement subsidiaries, foreign branches, consolidated foreign subsidiaries, or International Banking Facilities. - ------------------------------------------------------------------------------- NOTE: The Reports of Condition and Income must be signed by an authorized officer and the Report of Condition must be attested to by not less than two directors (trustees) for State nonmember banks and three directors for State member and National banks. I, Ernest J. Verrico, SVP and Comptroller ---------------------------------------------------- Name and Title of Officer Authorized to Sign Report of the named bank do hereby declare that these Reports of Condition and Income (including the supporting schedules) have been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and are true to the best of my knowledge and belief. /S/ Ernest J. Verrico - ------------------------------------------------------ Signature of Officer Authorized to Sign Report January 29, 1996 - ------------------------------------------------------ Date of Signature - ------------------------------------------------------ The Reports of Condition and Income are to be prepared in accordance with Federal regulatory authority instructions. NOTE: These instructions may in some cases differ from generally accepted accounting principles. We, the undersigned directors (trustees), attest to the correctness of this Report of Condition (including the supporting schedules) and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true and correct. /s/ [Illegible] - ---------------------------------------------- Director (Trustee) /s/ Albert L. Knott - ---------------------------------------------- Director (Trustee) - ---------------------------------------------- Director (Trustee) - ------------------------------------------------------------------------------- FOR BANKS SUBMITTING HARD COPY REPORT FORMS: STATE MEMBER BANKS: Return the original and one copy to the appropriate Federal Reserve District Bank. STATE NONMEMBER BANKS: Return the original only in the SPECIAL RETURN ADDRESS ENVELOPE PROVIDED. If express mail is used in lieu of the special return address envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127 Espey Court, Suite 204, Crofton, MD 21114. NATIONAL BANKS: Return the original only in the SPECIAL RETURN ADDRESS ENVELOPE PROVIDED. If express mail is used in lieu of the special return address envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127 Espey Court, Suite 204, Crofton, MD 21114. - ------------------------------------------------------------------------------- FDIC Certificate Number /0/9/2/3/0/ CALL NO. 194 31 12-31-95 (RCRI 9050) STBK: 09-1563 02447 STCERT: 09-09230 FIRST FIDELITY BANK P.O. BOX 700 STAMFORD, CT 06904 Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency FFIEC 031 Page i /2/ Consolidated Reports of Condition and Income for A Bank With Domestic and Foreign Offices - ------------------------------------------------------------------------------- TABLE OF CONTENTS SIGNATURE PAGE Cover REPORT OF INCOME Schedule RI--Income Statement...........................RI-1, 2, 3 Schedule RI-A--Changes in Equity Capital..................... RI-4 Schedule RI-B--Charge-offs and Recoveries and Changes in Allowance for Loan and Lease Losses...................RI-4, 5 Schedule RI-C--Applicable Income Taxes by Taxing Authority...................................................RI-5 Schedule RI-D--Income from International Operations...........RI-6 Schedule RI-E--Explanations................................RI-7, 8 Disclosure of Estimated Burden The estimated average burden associated with this information collection is 31.6 hours per respondent and is estimated to vary from 15 to 225 hours per response, depending on individual circumstances. Burden estimates include the time for reviewing instructions, gathering and maintaining data in the required form, and completing and maintaining business records in the normal course of a respondent's activities. Comments concerning the accuracy of this burden estimate and suggestions for reducing this burden should be directed to the Office of Information and Regulatory Affairs, Office of Management and Budget, Washington, D.C. 20503, and to one of the following: Secretary Board of Governors of the Federal Reserve System Washington, D.C. 20551 Legislative and Regulatory Analysis Division Office of the Comptroller of the Currency Washington, D.C. 20219 Assistant Executive Secretary Federal Deposit Insurance Corporation Washington, D.C. 20429 REPORT OF CONDITION Schedule RC--Balance Sheet.................................RC-1, 2 Schedule RC-A--Cash and Balances Due From Depository Institutions................................................RC-3 Schedule RC-B--Securities...............................RC-3, 4, 5 Schedule RC-C--Loans and Lease Financing Receivables: Part I. Loans and Leases..............................RC-6, 7 Part II. Loans to Small Businesses and Small Farms (included in the forms for June 30 only).........RC-7a, 7b Schedule RC-D--Trading Assets and Liabilities (to be completed only by selected banks)...........................RC-8 Schedule RC-E--Deposit Liabilities....................RC-9, 10, 11 Schedule RC-F--Other Assets..................................RC-11 Schedule RC-G--Other Liabilities.............................RC-11 Schedule RC-H--Selected Balance Sheet Items for Domestic Offices...................................... RC-12 Schedule RC-I--Selected Assets and Liabilities of IBFs.......RC-13 Schedule RC-K--Quarterly Averages............................RC-13 Schedule RC-L--Off-Balance Sheet Items...............RC-14, 15, 16 Schedule RC-M--Memoranda.................................RC-17, 18 Schedule RC-N--Past Due and Nonaccrual Loans, Leases, and Other Assets.......................................RC-19, 20 Schedule RC-O--Other Data for Deposit Insurance Assessments............................................RC-21, 22 Schedule RC-R--Risk-Based Capital........................RC-23, 24 Optional Narrative Statement Concerning the Amounts Reported in the Reports of Condition and Income............RC-25 Special Report (TO BE COMPLETED BY ALL BANKS) Schedule RC-J--Repricing Opportunities (sent only to and to be completed only by savings banks) For information or assistance, National and State nonmember banks should contact the FDIC's Call Analysis Unit, 550 17th Street, NW, Washington, D.C. 20429, toll free on (800) 688-FDIC(3342), Monday through Friday between 8:00 a.m. and 5:00 p.m., Eastern time. State member banks should contact their Federal Reserve District Bank.
Legal Title of Bank: FIRST FIDELITY BANK Call Date: 12/31/95 ST-BK: 09-1563 FFIEC 031 Address: PO BOX 700 Page RI-1 City, State Zip: STAMFORD, CT 06904 FDIC Certificate No.: |0|9|2|3|0|
Consolidated Report of Income for the period January 1, 1995-December 31, 1995 All Report of Income schedules are to be reported on a calendar year-to-date basis in thousands of dollars. Schedule RI -- Income Statement
I480 ----------------- Dollar Amounts in Thousands RIAD Bil Mil Thou - ------------------------------------------------------------------------------------------------------------- 1. Interest income: a. Interest and fee income on loans: (1) In domestic offices: (a) Loans secured by real estate ............................................... 4011 109,582 1.a.(1)(a) (b) Loans to depository institutions ........................................... 4019 70 1.a.(1)(b) (c) Loans to finance agricultural production and other loans to farmers ........ 4024 22 1.a.(1)(c) (d) Commercial and industrial loans ............................................ 4012 26,648 1.a.(1)(d) (e) Acceptances of other banks ................................................. 4026 86 1.a.(1)(e) (f) Loans to individuals for household, family, and other personal expenditures: (1) Credit cards and related plans ......................................... 4054 1,268 1.a.(1)(f)(1) (2) Other .................................................................. 4055 9,635 1.a.(1)(f)(2) (g) Loans to foreign governments and official institutions ..................... 4056 0 1.a.(1)(g) (h) Obligations (other than securities and leases) of states and political subdivisions in the U.S.: (1) Taxable obligations .................................................... 4503 227 1.a.(1)(h)(1) (2) Tax-exempt obligations ................................................. 4504 393 1.a.(1)(h)(2) (i) All other loans in domestic offices ........................................ 4058 556 1.a.(1)(i) (2) In foreign offices, Edge and Agreement subsidiaries, and IBFs .................. 4059 0 1.a.(2) b. Income from lease financing receivables: (1) Taxable leases ................................................................. 4505 0 1.b.(1) (2) Tax-exempt leases .............................................................. 4307 0 1.b.(2) c. Interest income on balances due from depository institutions:(1) (1) In domestic offices ............................................................ 4105 2 1.c.(1) (2) In foreign offices, Edge and Agreement subsidiaries, and IBFs .................. 4106 0 1.c.(2) d. Interest and dividend income on securities: (1) U.S. Treasury securities and U.S. Goverment agency and corporation obligations . 4027 35,094 1.d.(1) (2) Securities issued by states and political subdivbisions in the U.S.: (a) Taxable securities ......................................................... 4506 0 1.d.(2)(a) (b) Tax-exempt securities ...................................................... 4507 39 1.d.(2)(b) (3) Other domestic debt securities ................................................. 3657 4,493 1.d.(3) (4) Foreign debt securities ........................................................ 3658 21 1.d.(4) (5) Equity securities (including investments in mutual funds) ...................... 3659 0 1.d.(5) e. Interest income from trading assets ................................................ 4069 0 1.e.
- ---------- (1) Includes interest income on time certificates of deposit not held for trading. 3
Legal Title of Bank: FIRST FIDELITY BANK Call Date: 12/31/95 ST-BK: 09-1563 FFIEC 031 Address: PO BOX 700 Page RI-2 City, State Zip: STAMFORD, CT 06904 FDIC Certificate No.: |0|9|2|3|0|
Schedule RI -- Continued
Year-to-date ----------------- Dollar Amounts in Thousands RIAD Bil Mil Thou - --------------------------------------------------------------------------------------------- 1. Interest income (continued) f. Interest income on federal funds sold and securities purchased under agreements to resell in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs ............................ 4020 2,924 1.f. g. Total interest income (sum of items 1.a through 1.f) ............... 4107 191,060 1.g. 2. Interest expense: a. Interest on deposits: (1) Interest on deposits in domestic offices: (a) Transaction accounts (NOW accounts, ATS accounts, and telephone and preauthorized transfer accounts) ............. 4508 3,109 2.a.(1)(a) (b) Nontransaction accounts: (1) Money market deposit accounts (MMDAs) .................. 4509 10,196 2.a.(1)(b)(1) (2) Other savings deposits ................................. 4511 9,137 2.a.(1)(b)(2) (3) Time certificates of deposit of $100,000 or more ....... 4174 5,108 2.a.(1)(b)(3) (4) All other time deposits ................................ 4512 23,998 2.a.(1)(b)(4) (2) Interest on deposits in foreign offices, Edge and Agreement subsidiaries, and IBFs ......................................... 4172 0 2.a.(2) b. Expense of federal funds purchased and securities sold under agreements to repurchase in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs ....................... 4180 24,072 2.b. c. Interest on demand notes issued to the U.S. Treasury, trading liabilities, and other borrowed money .............................. 4185 2,986 2.c. d. Interest on mortgage indebtedness and obligations under capitalized leases ............................................................. 4072 0 2.d. e. Interest on subordinated notes and debentures ...................... 4200 0 2.e. f. Total interest expense (sum of items 2.a through 2.e) .............. 4073 78,606 2.f. 3. Net interest income (item 1.g minus 2.f) .............................. RIAD 4074 112,454 3. 4. Provisions: a. Provision for loan and lease losses ................................ RIAD 4230 18,000 4.a b. Provision for allocated transfer risk .............................. RIAD 4243 0 4.b 5. Noninterest income: a. Income from fiduciary activities ................................... 4070 17,350 5.a. b. Service charges on deposit accounts in domestic offices ............ 4080 12,838 5.b. c. Trading gains (losses) and fees from foreign exchange transactions.. 4075 535 5.c. d. Other foreign transaction gains (losses) ........................... 4076 0 5.d e. Other gains (losses) and fees from trading assets and liabilities... 4077 109 5.e. f. Other noninterest income: (1) Other fee income ............................................... 5407 7,030 5.f.(1) (2) All other noninterest income* .................................. 5408 4,879 5.f.(2) g. Total noninterest income (sum of items 5.a through 5.f) ............ RIAD 4079 42,741 5.g 6. a. Realized gains (losses) on held-to-maturity securities ............. RIAD 3521 0 6.a b. Realized gains (losses) on available-for-sale securities ........... RIAD 3196 (23) 6.b 7. Noninterest expense: a. Salaries and employee benefits ..................................... 4135 35,522 7.a. b. Expenses on premises and fixed assets (net of rental income) (excluding salaries and employee benefits and mortgage interest).... 4217 16,335 7.b. c. Other noninterest expense* ......................................... 4092 29,741 7.c. d. Total noninterest expense (sum of items 7.a through 7.c) ........... RIAD 4093 81,598 7.d 8. Income (loss) before income taxes and extraordinary items and other adjustments (item 3 plus or minus items 4.a, 4.b, 5.g, 6.a, 6.b, and 7.d) RIAD 4301 55,574 8. 9. Applicable income taxes (on item 8) ................................... RIAD 4302 20,181 9. 10.Income (loss) before extraordinary items and other adjustments (item 8 minus 9) .............................................................. RIAD 4300 35,393 10.
- ---------- Describe on Schedule RI-E--Explanations. 4
Legal Title of Bank: FIRST FIDELITY BANK Call Date: 12/31/95 ST-BK: 09-1563 FFIEC 031 Address: PO BOX 700 Page RI-3 City, State Zip: STAMFORD, CT 06904 FDIC Certificate No.: |0|9|2|3|0|
Schedule RI -- Continued
Year-to-date ----------------- Dollar Amounts in Thousands RIAD Bil Mil Thou - --------------------------------------------------------------------------------------------- 11. Extraordinary items and other adjustments: a. Extraordinary items and other adjustments, gross of income taxes*.. 4310 0 11.a. b. Applicable income taxes (on item 11.a)* ........................... 4315 0 11.b. c. Extraordinary items and other adjustments, net of income taxes (item 11.a minus 11.b) ............................................ RIAD 4320 0 11.c 12. Net income (loss) (sum of items 10 and 11.c).......................... RIAD 4340 35,393 12.
---- I481 ------------ Year-to-date ----------------- Memoranda Dollar Amounts in Thousands RIAD Bil Mil Thou - --------------------------------------------------------------------------------------------- 1. Interest expense incurred to carry tax-exempt securities, loans, and leases acquired after August 7, 1986, that is not deductible for federal income tax purposes .......................................... 4513 36 M.1. 2. Income from the sale and servicing of mutual funds and annuities in domestic offices (included in Schedule RI, item 8) ................... 8431 461 M.2. 3. Estimated foreign tax credit included in applicable income taxes, items 9 and 11.b above ............................................... 4309 0 M.3. 4. To be completed only by banks with $1 billion or more in total assets: Taxable equivalent adjustment to "Income (loss) before income taxes and extraordinary items and other adjustments" (item 8 above) ........ 1244 245 M.4. 5. Number of full-time equivalent employees on payroll at end of current Number period (round to nearest whole number) ............................... 4150 971 M.5. 6. Not applicable 7. If the reporting bank has restated its balance sheet as a result of applying push down accounting this calendar year, report the date MM DD YY of the bank's acquisition ............................................ 9106 00/00/00 M.7. 8. Trading revenue (from cash instruments and off-balance sheet derivative instruments) (included in Schedule R1, items 5.c and 5.e): Bil Mil Thou a. Interest rate exposures ........................................... 8757 0 M.8.a. b. Foreign exchange exposures ........................................ 8758 535 M.8.b. c. Equity security and index exposures ............................... 8759 0 M.8.c. d. Commodity and other exposures ..................................... 8760 0 M.8.d. 9. Impact on income of off-balance sheet derivatives held for purposes other than trading: a. Net increase (decrease) to interest income ........................ 8761 0 M.9.a. b. Net (increase) decrease to interest expense ....................... 8762 288 M.9.b. c. Other (noninterest) allocations ................................... 8763 0 M.9.c.
- ------------------- Describe on Schedule RI-E--Explanations. 5
Legal Title of Bank: FIRST FIDELITY BANK Call Date: 12/31/95 ST-BK: 09-1563 FFIEC 031 Address: PO BOX 700 Page RI-4 City, State Zip: STAMFORD, CT 06904 FDIC Certificate No.: |0|9|2|3|0|
SCHEDULE RI-A -- CHANGES IN EQUITY CAPITAL
I483 -------------------------- Dollar Amounts in Thousands RIAD Bil Mil Thou - ----------------------------------------------------------------------------------------------- -------------------------- 1. Total equity capital originally reported in the December 31, 1994, Reports of Condition and Income ................................................................................... 3215 271,145 1. 2. Equity capital adjustments from amended Reports of Income, net* .............................. 3216 0 2. 3. Amended balance end of previous calendar year (sum of items 1 and 2) ......................... 3217 271,145 3. 4. Net income (loss) (must equal Schedule R1, item 12) .......................................... 4340 35,393 4. 5. Sale, conversion, acquisition, or retirement of capital stock, net ........................... 4346 0 5. 6. Changes incident to business combinations, net................................................ 4356 0 6. 7. LESS: Cash dividends declared on preferred stock ............................................. 4470 0 7. 8. LESS: Cash dividends declared on common stock ................................................ 4460 34,830 8. 9. Cumulative effect of changes in accounting principles from prior years* (see instructions for this schedule) ............................................................................... 4411 0 9. 10. Corrections of material accounting errors from prior years* (see instructions for this schedule) .................................................................................... 4412 0 10. 11. Change in net unrealized holding gains (losses) on available-for-sale securities ............. 8433 2,471 11. 12. Foreign currency translation adjustments ..................................................... 4414 0 12. 13. Other transactions with parent holding company* (not included in items 5, 7, or 8 above) ..... 4415 0 13. 14. Total equity capital end of current period (sum of items 3 through 13) (must equal Schedule RC, item (28) ....................................................................... 3210 274,179 14. ---------------------------
- ---------- *Describe on Schedule R1-E -- Explanations. SCHEDULE RI-B -- CHARGE-OFFS AND RECOVERIES AND CHANGES IN ALLOWANCE FOR LOAN AND LEASE LOSSES PART I. CHARGE-OFFS AND RECOVERIES ON LOANS AND LEASES Part I excludes charge-offs and recoveries through the allocated transfer risk reserve.
I486 --------------------------------------------------------- (Column A) (Column B) Charge-offs Recoveries -------------------------- --------------------------- Calendar year-to-date --------------------------------------------------------- Dollar Amounts in Thousands RIAD Bil Mil Thou RIAD Bil Mil Thou - --------------------------------------------------------------- -------------------------- -------------------------- 1. Loans secured by real estate: a. To U.S. addressees (domicile) ............................. 4651 6,809 4661 330 1.a. b. To non-U.S. addressees (domicile).......................... 4652 0 4662 0 1.b. 2. Loans to depository institutions and acceptances of other banks: a. To U.S. banks and other U.S. depository institutions ..... 4653 0 4663 0 2.a. b. To foreign banks ......................................... 4654 0 4664 0 2.b. 3. Loans to finance agricultural production and other loans to farmers ..................................................... 4655 0 4665 0 3. 4. Commercial and industrial loans: a. To U.S. addressees (domicile) ............................. 4645 6,141 4617 2,524 4.a. b. To non-U.S. addressees (domicile).......................... 4646 0 4618 0 4.b. 5. Loans to individuals for household, family, and other personal expenditures: a. Credit cards and related plans ........................... 4656 15 4666 1 5.a. b. Other (includes single payment, installment, and all student loans) ........................................... 4657 1,021 4667 530 5.b. 6. Loans to foreign governments and official institutions ...... 4643 0 4627 0 6. 7. All other loans ............................................. 4644 0 4628 0 7. 8. Lease financing receivables: a. Of U.S. addressees (domicile).............................. 4658 0 4668 0 8.a. b. Of non-U.S. addressees (domicile).......................... 4659 0 4669 0 8.b. 9. Total (sum of items 1 and 8)................................. 4635 13,986 4605 3,385 9.
6
Legal Title of Bank: FIRST FIDELITY BANK Call Date: 12/31/95 ST-BK: 09-1563 FFIEC 031 Address: PO BOX 700 Page RI-5 City, State Zip: STAMFORD, CT 06904 FDIC Certificate No.: |0|9|2|3|0|
PART I. CONTINUED (Column A) (Column B) Charge-offs Recoveries ------------------------ ----------------------- Calendar year-to-date ---------------------------------------------------- Memoranda Dollar Amounts in Thousands RIAD Bil Mil Thou RIAD Bil Mil Thou - --------------------------------------------------------------- ------------------------- ------------------------- 1-3. Not applicable 4. Loans to finance commercial real estate, construction, and land development activities (not secured by real estate) included in Schedule R1-B, part I, items 4 and 7, above ...... 5409 0 5410 0 M.4. 5. Loans secured by real estate in domestic offices (included in Schedule R1-B, part I, item 1, above): a. Construction and land development ......................... 3582 617 3583 0 M.5.a. b. Secured by farmland ....................................... 3584 0 3585 0 M.5.b. c. Secured by 1-4 family residential properties: (1) Revolving, open-end loans secured by 1-4 family residential properties and extended under lines of credit ................................................ 5411 551 5412 80 M.5.c.(1) (2) All other loans secured by 1-4 family residential properties ............................................ 5413 1,078 5414 35 M.5.c.(2) d. Secured by multifamily (5 or more) residential properties .. 3588 0 3589 0 M.5.d.(2) e. Secured by nonfarm nonresidential properties ............... 3590 4,563 3591 215 M.5.e.
PART II. CHANGES IN ALLOWANCE FOR LOAN AND LEASE LOSSES
Dollar Amounts in Thousands RIAD Bil Mil Thou - ------------------------------------------------------------------------- ---------------------------- 1. Balance originally reported in the December 31, 1994, Reports of Condition and Income ................................................. 3124 61,607 1. 2. Recoveries (must equal part I, item 9, column B above)................ 4605 3,385 2. 3. LESS: Charge-offs (must be equal part I, item 9, column A above) ..... 4635 13,986 3. 4. Provision for loan and lease losses (must equal Schedule RI, item 4.a) ............................................................ 4230 18,000 4. 5. Adjustments* (see instructions for this schedule) ................... 4815 0 5. 6. Balance end of current period (sum of items 1 through 5) (must equal Schedule RC, item 4.b) ......................................... 3123 73,006 6.
- ---------- *Describe on Schedule RI-E -- Explanations. SCHEDULE RI-C -- APPLICABLE INCOME TAXES BY TAXING AUTHORITY Schedule RI-C is to be reported with the December Report of Income.
Dollar Amounts in Thousands RIAD Bil Mil Thou - ------------------------------------------------------------------------- ---------------------------- 1. Federal .............................................................. 4780 19,981 1. 2. State and local ...................................................... 4790 200 2. 3. Foreign .............................................................. 4795 0 3. 4. Total (sum of items 1 through 3) (must equal sum of Schedule RI, items 9 and 11.b) .................................................... 4770 20,181 4. 5. Deferred portion of Item 4 ................. RIAD 4772 (6,493) 5. ---------------------------------------------------------
Legal Title of Bank: FIRST FIDELITY BANK Call Date: 12/31/95 ST-BK: 09-1563 FFIEC 031 Address: PO BOX 700 Page RI-6 City, State Zip: STAMFORD, CT 06904 FDIC Certificate No.: |0|9|2|3|0|
SCHEDULE RI-D--INCOME FROM INTERNATIONAL OPERATIONS For all banks with foreign offices, Edge or Agreement subsidiaries, or IBFs where international operations account for more than 10 percent of total revenues, total assets, or net income. PART I. ESTIMATED INCOME FROM INTERNATIONAL OPERATIONS
---- I492 ------------ Year-to-date ----------------------- Dollar Amounts in Thousands RIAD Bil Mil Thou - --------------------------------------------------------------------------------------------------------------------------- 1. Interest income and expense booked at foreign offices, Edge and Agreement subsidiaries, and IBFs: a. Interest income booked. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4837 N/A 1.a. b. Interest expense booked . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4838 N/A 1.b. c. Net interest income booked at foreign offices, Edge and Agreement subsidiaries, and IBFs (item 1.a minus 1.b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4839 N/A 1.c. 2. Adjustments for booking location of international operations: a. Net interest income attributable to international operations booked at domestic offices . . . 4840 N/A 2.a. b. Net interest income attributable to domestic business booked at foreign offices . . . . . . . 4841 N/A 2.b. c. Net booking location adjustment (item 2.a minus 2.b). . . . . . . . . . . . . . . . . . . . . 4842 N/A 2.c. 3. Noninterest income and expense attributable to international operations: a. Noninterest income attributable to international operations . . . . . . . . . . . . . . . . . 4097 N/A 3.a. b. Provision for loan and lease losses attributable to international operations. . . . . . . . . 4235 N/A 3.b. c. Other noninterest expense attributable to international operations. . . . . . . . . . . . . . 4239 N/A 3.c. d. Net noninterest income (expense) attributable to international operations (item 3.a minus 3.b and 3.c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4843 N/A 3.d. 4. Estimated pretax income attributable to international operations before capital allocation adjustment (sum of items 1.c, 2.c, and 3.d). . . . . . . . . . . . . . . . . . . . . . . . . . . 4844 N/A 4. 5. Adjustment to pretax income for internal allocations to international operations to reflect the effects of equity capital on overall bank funding costs. . . . . . . . . . . . . . . . . . . 4845 N/A 5. 6. Estimated pretax income attributable to international operations after capital allocation adjustment (sum of items 4 and 5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4846 N/A 6. 7. Income taxes attributable to income from international operations as estimated in item 6 . . . . 4797 N/A 7. 8. Estimated net income attributable to international operations (item 6 minus 7) . . . . . . . . . 4341 N/A 8. ------------------------
Memoranda
----------------------- Dollar Amounts in Thousands RIAD Bil Mil Thou - --------------------------------------------------------------------------------------------------------------------------- 1. Intracompany interest income included in item 1.a above. . . . . . . . . . . . . . . . . . . . . 4847 N/A M.1. 2. Intracompany interest expense included in item 1.b above . . . . . . . . . . . . . . . . . . . . 4848 N/A M.2. ------------------------
PART II. SUPPLEMENTARY DETAILS ON INCOME FROM INTERNATIONAL OPERATIONS REQUIRED BY THE DEPARTMENTS OF COMMERCE AND TREASURY FOR PURPOSES OF THE U.S. INTERNATIONAL ACCOUNTS AND THE U.S. NATIONAL INCOME AND PRODUCT ACCOUNTS
------------ Year-to-date ----------------------- Dollar Amounts in Thousands RIAD Bil Mil Thou - --------------------------------------------------------------------------------------------------------------------------- 1. Interest income booked at IBFs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4849 N/A 1. 2. Interest expense booked at IBFs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4850 N/A 2. 3. Noninterest income attributable to international operations booked at domestic offices (excluding IBFs): a. Gains (losses) and extraordinary items. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5491 N/A 3.a. b. Fees and other noninterest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5492 N/A 3.b. 4. Provision for loan and lease losses attributable to international operations booked at domestic offices (excluding IBFs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4852 N/A 4. 5. Other noninterest expense attributable to international operations booked at domestic offices (excluding IBFs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4853 N/A 5. -----------------------
8
Legal Title of Bank: FIRST FIDELITY BANK Call Date: 12/31/95 ST-BK: 09-1563 FFIEC 031 Address: PO BOX 700 Page RI-7 City, State Zip: STAMFORD, CT 06904 FDIC Certificate No.: |0|9|2|3|0|
SCHEDULE RI-E--EXPLANATIONS Schedule RI-E is to be completed each quarter on a calendar year-to-date basis. Detail all adjustments in Schedule RI-A and RI-B, all extraordinary items and other adjustments in Schedule RI, and all significant items of other noninterest income and other noninterest expense in Schedule RI. (See instructions for details.)
---- I495 ------------ Year-to-date ----------------------- Dollar Amounts in Thousands RIAD Bil Mil Thou - ---------------------------------------------------------------------------------------------------------------------- 1. All other noninterest income (from Schedule RI, item 5.f.(2)) Report amounts that exceed 10% of Schedule RI, item 5.f.(2): a. Net gains on other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . 5415 0 1.a. b. Net gains on sales of loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5416 1,324 1.b. c. Net gains on sales of premises and fixed assets. . . . . . . . . . . . . . . . . . . . . 5417 0 1.c. Itemize and describe the three largest other amounts that exceed 10% of Schedule RI, item 5.f.(2): --------- d. TEXT 4461 Cash Surrender Value - Corp Owned Life Insurance 4461 1,016 1.d. ---------------------------------------------------------------------------------------- e. TEXT 4462 Check Book Sales 4462 1,673 1.e. ---------------------------------------------------------------------------------------- TEXT 4463 4463 1.f. ---------------------------------------------------------------------------------------- 2. Other noninterest expense (from Schedule RI, item 7.c): a. Amortization expense of intangible assets. . . . . . . . . . . . . . . . . . . . . . . . 4531 3,172 2.a. Report amounts that exceed 10% of Schedule RI, item 7.c: b. Net losses on other real estate owned. . . . . . . . . . . . . . . . . . . . . . . . . . 5418 0 2.b. c. Net losses on sales of loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5419 0 2.c. d. Net losses on sales of premises and fixed assets . . . . . . . . . . . . . . . . . . . . 5420 0 2.d. Itemize and describe the three largest other amounts that exceed 10% of Schedule RI, item 7.c: -------- e. TEXT 4464 FDIC Assessment 4464 3,123 2.e. ---------------------------------------------------------------------------------------- f. TEXT 4467 Intercompany Management Fees 4467 5,263 2.f. ---------------------------------------------------------------------------------------- g. TEXT 4468 4468 2.g. ---------------------------------------------------------------------------------------- 3. Extraordinary items and other adjustments (from Schedule RI, item 11.a) and applicable income tax effect (from Schedule RI, item 11.b) (itemize and describe all extraordinary items and other adjustments): -------- a. (1) TEXT 4469 4469 3.a.(1) ------------------------------------------------------------------------------------ (2) Applicable income tax effect RIAD 4486 3.a.(2) ---------------------- --------- b. (1) TEXT 4487 4487 3.b.(1) ------------------------------------------------------------------------------------ (2) Applicable income tax effect RIAD 4488 3.b.(2) ---------------------- --------- c. (1) TEXT 4489 4489 3.c.(1) ------------------------------------------------------------------------------------ (2) Applicable income tax effect RIAD 4491 3.c.(2) ---------------------- 4. Equity capital adjustments from amended Reports of Income (from Schedule RI-A, item 2) (itemize and describe all adjustments): --------- a. TEXT 4492 4492 4.a. ---------------------------------------------------------------------------------------- b. TEXT 4493 4493 4.b. ---------------------------------------------------------------------------------------- 5. Cumulative effect of changes in accounting principles from prior years (from Schedule RI-A, item 9) (itemize and describe all changes in accounting principles): --------- a. TEXT 4494 4494 5.a. ---------------------------------------------------------------------------------------- b. TEXT 4495 4495 5.b. ---------------------------------------------------------------------------------------- 6. Corrections of material accounting errors from prior years (from Schedule RI-A, item 10) (itemize and describe all corrections): --------- a. TEXT 4496 4496 6.a. ---------------------------------------------------------------------------------------- b. TEXT 4497 4497 6.b. ----------------------------------------------------------------------------------------
9
Legal Title of Bank: FIRST FIDELITY BANK Call Date: 12/31/95 ST-BK: 09-1563 FFIEC 031 Address: PO BOX 700 Page RI-8 City, State Zip: STAMFORD, CT 06904 FDIC Certificate No.: |0|9|2|3|0|
SCHEDULE RI-E--CONTINUED
------------ Year-to-date ----------------------- Dollar Amounts in Thousands RIAD Bil Mil Thou - --------------------------------------------------------------------------------------------------------------------------- 7. Other transactions with parent holding company (from Schedule RI-A, item 13) (itemize and describe all such transactions): --------- a. TEXT 4498 4498 7.a. --------------------------------------------------------------------------------------------- b. TEXT 4499 4499 7.b. --------------------------------------------------------------------------------------------- 8. Adjustments to allowance for loan and lease losses (from Schedule RI-B, part II, item 5) (itemize and describe all such adjustments): --------- a. TEXT 4521 4521 8.a. --------------------------------------------------------------------------------------------- b. TEXT 4522 4522 8.b. --------------------------------------------------------------------------------------------- 9. Other explanations (the space below is provided for the bank to briefly describe, at its I498 I499 option, any other significant items affecting the Report of Income): ------------------------ No comment __ (RIAD 4769) Other explanations (please type or print clearly): (TEXT 4769)
10
Legal Title of Bank: FIRST FIDELITY BANK Call Date: 12/31/95 ST-BK: 09-1563 FFIEC 031 Address: PO BOX 700 Page RC-1 City, State Zip: STAMFORD, CT 06904 FDIC Certificate No.: |0|9|2|3|0|
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL AND STATE-CHARTERED SAVINGS BANKS FOR DECEMBER 31, 1995 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding as of the last business day of the quarter.
SCHEDULE RC--BALANCE SHEET C400 ---- Dollar Amounts in Thousands RCFD Bil Mil Thou - ---------------------------------------------------------------------------------------------------------------------- ASSETS 1. Cash and balances due from depository institutions (from Schedule RC-A): a. Noninterest-bearing balances and currency and coin(1).................................. 0081 214,677 1.a. b. Interest-bearing balances(2)........................................................... 0071 50 1.b. 2. Securities: a. Held-to-maturity securities (from Schedule RC-B, column A)............................. 1754 13,097 2.a. b. Available-for-sale securities (from Schedule RC-B, column D)........................... 1773 660,698 2.b. 3. Federal funds sold and securities purchased under agreements to resell in domestic offices of the bank an of its Edge and Agreement subsidiaries, and in IBFs: a. Federal funds sold..................................................................... 0276 7,000 3.a. b. Securities purchased under agreements to resell........................................ 0277 0 3.b. 4. Loans and lease financing receivables: a. Loans and leases, net of unearned income (from Schedule RC-C) RCFD 2122 1,938,535 4.a b. LESS: Allowance for loan and lease losses.................... RCFD 3123 73,006 4.b. c. LESS: Allocated transfer risk reserve........................ RCFD 3128 0 4.c. d. Loans and leases, net of unearned income, allowance, and reserve (item 4.a minus 4.b and 4.c).................................... 2125 1,865,529 4.d. 5. Trading assets (from Schedule RC-D)....................................................... 3545 0 5. 6. Premises and fixed assets (including capitalized leases).................................. 2145 32,691 6. 7. Other real estate owned (from Schedule RC-M).............................................. 2150 4,555 7. 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M).. 2130 0 8. 9. Customers' liability to this bank on acceptances outstanding.............................. 2155 2,004 9. 10. Intangible assets (from Schedule RC-M).................................................... 2143 38,909 10. 11. Other assets (from Schedule RC-F)......................................................... 2160 95,032 11. 12. Total assets (sum of items 1 through 11)......................... ........................ 2170 2,934,242 12.
- ------------------- 1) Includes cash items in process of collection and unposted debits. 2) Includes time certificates of deposits not held for trading. 11
Legal Title of Bank: FIRST FIDELITY BANK Call Date: 12/31/95 ST-BK: 09-1563 FFIEC 031 Address: PO BOX 700 Page RC-2 City, State Zip: STAMFORD, CT 06904 FDIC Certificate No.: |0|9|2|3|0|
SCHEDULE RC--Continued Dollar Amounts in Thousands Bil Mil Thou - ------------------------------------------------------------------------------------------------------------------------ LIABILITIES 13. Deposits a. In domestic offices (sum of totals of columns A and C from Schedule R-E, part 1)...... RCON 2200 2,101,747 13.a. (1) Noninterest-bearing(1)........................................ RCON 6631 571,988 13.a.(1) (2) Interest-bearing.............................................. RCON 6636 1,529,759 13.a.(2) b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, part II).............................................................................. RCFN 2200 0 13.b. (1) Noninterest-bearing........................................... RCFN 6631 0 13.b.(1) (2) Interest-bearing.............................................. RCFN 6636 0 13.b.(2) 14. Federal funds purchased and securities sold under agreements to repurchase in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: a. Federal funds purchased............................................................... RCFD 0278 2,255 14.a. b. Securities sold under agreements to repurchase........................................ RCFD 0279 518,872 14.b. 15. a. Demand notes issued to the U.S. Treasury.............................................. RCON 2840 0 15.a. b. Trading liabilities (from Schedule RC-D).............................................. RCFD 3548 0 15.b. 16. Other borrowed money: a. With original maturity of one year or less............................................ RCFD 2332 0 16.a. b. With original maturity of more than one year.......................................... RCFD 2333 0 16.b. 17. Mortgage indebtedness and obligations under capitalized leases........................... RCFD 2910 0 17. 18. Bank's liability on acceptances executed and outstanding................................. RCFD 2920 2,004 18. 19. Subordinated notes and debentures........................................................ RCFD 3200 0 19. 20. Other liabilities (from Schedule RC-G)................................................... RCFD 2930 35,185 20. 21. Total liabilities (sum of items 13 through 20)........................................... RCFD 2948 2,660,063 21. 22. Limited-life preferred stock and related surplus......................................... RCFD 3282 0 22. EQUITY CAPITAL 23. Perpetual preferred stock and related surplus............................................ RCFD 3838 0 23. 24. Common stock............................................................................. RCFD 3230 14,424 24. 25. Surplus (exclude all surplus related to preferred stock)................................. RCFD 3839 200,511 25. 26. a. Undivided profits and capital reserves................................................ RCFD 3632 60,566 26.a. b. Net unrealized holding gains (losses) on available-for-sale securities................ RCFD 8434 (1,322) 26.b. 27. Cumulative foreign currency translation adjustments...................................... RCFD 3284 0 27. 28. Total equity capital (sum of items 23 through 27)........................................ RCFD 3210 274,179 28. 29. Total liabilities, limited-life preferred stock, and equity capital (sum of items 21, 22, and 28).................................................................................. RCFD 3300 2,934,242 29. Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the statement below that best describes the most comprehensive level of auditing work performed for the bank by independent external Number auditors as of any date during 1994................................................................... RCFD 6724 N/A M.1.
1 = Independent audit of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the bank 2 = Independent audit of the bank's parent holding company conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the consolidated holding company (but not on the bank separately) 3 = Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority) 4 = Directors' examination of the bank performed by other external auditors (may be required by state chartering authority) 5 = Review of the bank's financial statements by external auditors 6 = Compilation of the bank's financial statements by external auditors 7 = Other audit procedures (excluding tax preparation work) 8 = No external audit work - ------------------- (1) Includes total demand deposits and noninterest-bearing time and savings deposits. 12
Legal Title of Bank: FIRST FIDELITY BANK Call Date: 12/31/95 ST-BK: 09-1563 FFIEC 031 Address: PO BOX 700 Page RC-3 City, State Zip: STAMFORD, CT 06904 FDIC Certificate No.: |0|9|2|3|0|
SCHEDULE RC-A--CASH AND BALANCES DUE FROM DEPOSITORY INSTITUTIONS Exclude assets held for trading.
C405 ------------------ (Column A) (Column B) Consolidated Domestic Bank Offices --------------------- ------------------ Dollar Amounts in Thousands RCFD Bil Mil Thou RCON Bil Mil Thou - ---------------------------------------------------------------------------------------------------- 1. Cash items in process of collection, unposted debits, and currency and coin................................ 0022 136,003 1. a. Cash items in process of collection and unposted debits............................................ 0020 109,367 1.a. b. Currency and coin................................. 0080 26,636 1.b. 2. Balances due from depository institutions in the U.S. ............................................ 0082 24,898 2. a. U.S. branches and agencies of foreign banks (including their IBFs)............................ 0083 0 2.a. b. Other commercial banks in the U.S. and other depository institutions in the U.S. (including their IBFs)....................................... 0085 24,898 2.b. 3. Balances due from banks in foreign countries and foreign central banks................................ 0070 159 3. a. Foreign branches of other U.S. banks.............. 0073 0 3.a. b. Other banks in foreign countries and foreign central banks..................................... 0074 159 3.b. 4. Balances due from Federal Reserve Banks.............. 0090 53,667 0090 53,667 4. 5. Total (sum of items 1 through 4) (total of column A must equal Schedule RC, sum of items 1.a and 1.b).... 0010 214,727 0010 214,727 5. --------------------- ------------------
------------------ Memorandum Dollar Amounts in Thousands RCON Bil Mil Thou - ---------------------------------------------------------------------------------------------------- 1. Noninterest-bearing balances due from commercial banks in the U.S. (included in item 2, column B above)........................................................................ 0050 24,898 M.1. ------------------
SCHEDULE RC-B--SECURITIES Exclude assets held for trading.
C410 --------------------------------------------------------------------------------- Held-to-maturity Available-for-sale --------------------------------------- --------------------------------------- (Column A) (Column B) (Column C) (Column D) Amortized Cost Fair Value Amortized Cost Fair Value(1) ------------------ ------------------ ------------------ ------------------ Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou - ------------------------------------------------------------------------------------------------------------------------- 1. U.S. Treasury securities............ 0211 0 0213 0 1286 166,663 1287 166,714 1. 2. U.S. Government agency and corporation obligations (exclude mortgage-backed securities): a. Issued by U.S. Government agencies(2)...................... 1289 0 1290 0 1291 0 1293 0 2.a. b. Issued by U.S. Government- sponsored agencies(3)............ 1294 3,773 1295 3,773 1297 43,927 1298 43,739 2.b. ---------------------------------------------------------------------------------
- ---------------- (1) Includes equity securities without readily determinable fair values at historical cost in item 6.c, column D. (2) Includes Small Business Administration "Guaranteed Loan Pool Certificates," U.S. Maritime Administration obligations, and Export-Import Bank participation certificates. (3) Includes obligations (other than mortgage-backed securities) issued by the Farm Credit System, the Federal Home Loan Bank System, the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, the Financing Corporation, Resolution Funding Corporation, the Student Loan Marketing Association, and the Tennessee Valley Authority. 13
Legal Title of Bank: FIRST FIDELITY BANK Call Date: 12/31/95 ST-BK: 09-1563 FFIEC 031 Address: PO BOX 700 Page RC-4 City, State Zip: STAMFORD, CT 06904 FDIC Certificate No.: |0|9|2|3|0|
SCHEDULE RC-B--CONTINUED
--------------------------------------------------------------------------------- Held-to-maturity Available-for-sale --------------------------------------- --------------------------------------- (Column A) (Column B) (Column C) (Column D) Amortized Cost Fair Value Amortized Cost Fair Value(1) ------------------ ------------------ ------------------ ------------------ Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou - ------------------------------------------------------------------------------------------------------------------------- 3. Securities issued by states and political subdivisions in the U.S.: a. General obligations............. 1676 255 1677 261 1678 0 1679 0 3.a. b. Revenue obligations............. 1681 266 1686 266 1690 0 1691 0 3.b. c. Industrial development and similar obligations............. 1694 0 1695 0 1696 0 1697 0 3.c. 4. Mortgage-backed securities (MBS): a. Pass-through securities: (1) Guaranteed by GNMA.......... 1698 0 1699 0 1701 0 1702 0 4.a.(1) (2) Issued by FNMA and FHLMC.... 1703 8,554 1705 8,599 1706 0 1707 0 4.a.(2) (3) Other pass-through securities.................. 1709 0 1710 0 1711 0 1713 0 4.a.(3) b. Other mortgage-backed securities (include CMOs, REMICs, and stripped MBS): (1) Issued or guaranteed by FNMA, FHLMC, or GNMA........ 1714 0 1715 0 1716 380,254 1717 379,112 4.b.(1) (2) Collateralized by MBS issued or guaranteed by FHMA FHLMC, or GNMA..................... 1718 0 1719 0 1731 0 1732 0 4.b.(2) (3) All other mortgage-backed securities.................. 1733 2 1734 2 1735 71,878 1736 71,123 4.b.(3) 5. Other debt securities: a. Other domestic debt securities.. 1737 0 1738 0 1739 0 1741 0 5.a. b. Foreign debt securities......... 1742 247 1743 247 1744 0 1746 0 5.b. 6. Equity securities: a. Investments in mutual funds..... 1747 0 1748 0 6.a. b. Other equity securities with readily determinable fair values.......................... 1749 0 1751 0 6.b. c. All other equity securities(1).. 1752 10 1753 10 6.c. 7. Total (sum of items 1 through 6) (total of column A must equal Schedule RC, item 2.a) (total of column D must equal Schedule RC, item 2.b).......................... 1754 13,097 1771 13,148 1772 662,732 1773 660,698 7. ---------------------------------------------------------------------------------
- ----------------- (1) Includes equity securities without readily determinable fair values at historical cost in item 6.c, column D. 14
Legal Title of Bank: FIRST FIDELITY BANK Call Date: 12/31/95 ST-BK: 09-1563 FFIEC 031 Address: PO BOX 700 Page RC-5 City, State Zip: STAMFORD, CT 06904 FDIC Certificate No.: |0|9|2|3|0|
Schedule RC-B--Continued
C412 ------------------ Memorandum Dollar Amounts in Thousands RCFD Bil Mil Thou - ---------------------------------------------------------------------------------------------------- 1. Pledged securities(2)........................................................ 0416 546,728 M.1. 2. Maturity and repricing data for debt securities(2)(3)(4) (excluding those in nonaccrual status): a. Fixed rate debt securities with a remaining maturity of: (1) Three months or less.................................................. 0343 30 M.2.a.(1) (2) Over three months through 12 months................................... 0344 83 M.2.a.(2) (3) Over one year through five years...................................... 0345 4,132 M.2.a.(3) (4) Over five years....................................................... 0346 8,852 M.2.a.(4) (5) Total fixed rate debt securities (sum of Memorandum items 2.a.(1) through 2.a.(4)....................................................... 0347 13,097 M.2.a.(5) b. Floating rate debt securities with a repricing frequency of: (1) Quarterly or more frequently.......................................... 4544 0 M.2.b.(1) (2) Annually or more frequently, but less frequently than quarterly....... 4545 0 M.2.b.(2) (3) Every five years or more frequently, but less frequently than annually.............................................................. 4551 312,326 M.2.b.(3) (4) Less frequently than every five years................................. 4552 348,362 M.2.b.(4) (5) Total floating rate debt securities (sum of Memorandum items 2.b.(1) through 2.b.(4))...................................................... 4553 660,688 M.2.b.(5) c. Total debt securities (sum of Memorandum items 2.a.(5) and 2.b.(5)) (must equal total debt securities from Schedule RC-B, sum of items 1 through 5, columns A and D, minus nonaccrual debt securities included in Schedule RC-N, item 9, column C).......................................... 0393 673,785 M.2.c. 3. Not applicable 4. Held-to-maturity debt securities restructured and in compliance with modified terms (included in Schedule RC-B, items 3 through 5, column A, above)........ 5365 0 M.4. 5. Not applicable 6. Floating rate debt securities with a remaining maturity of one year or less(2)(5) (to be completed by all banks).................................... 5519 0 M.6. 7. Amortized cost of held-to-maturity securities sold or transferred to available-for-sale or trading securities during the calendar year-to-date (report the amortized cost at date of sale or transfer)...................... 1778 0 M.7. 8. High-risk mortgage securities (included in the held-to-maturity and available-for-sale accounts in Schedule RC-B, item 4.b): a. Amortized cost............................................................ 8780 5,002 M.8.a. b. Fair value................................................................ 8781 4,920 M.8.b. 9. Structured notes (included in the held-to-maturity and available-for-sale accounts in Schedule RC-B, items 2, 3, and 5): a. Amortized cost............................................................ 8782 11,419 M.9.a. b. Fair value................................................................ 8783 11,505 M.9.b. ------------------
- ----------------- (2) Includes held-to-maturity securities at amortized cost and available-for-sale securities at fair value. (3) Exclude equity securities, e.g., investments in mutual funds, Federal Reserve stock, common stock, and preferred stock. (4) Memorandum item 2 is not applicable to savings banks that must complete supplemental Schedule RC-J. (5) For commercial banks, the debt securities included in Memorandum item 6 will also have been reported in Memorandum item 2.b above. For savings banks, the debt securities included in Memorandum item 6 will also have been reported in supplemental Schedule RC-J, part I, item 4. Savings banks should note that available-for-sale debt securities are reported at fair value in Memorandum item 6 and at amortized cost in Schedule RC-J. 15
Legal Title of Bank: FIRST FIDELITY BANK Call Date: 12/31/95 ST-BK: 09-1563 FFIEC 031 Address: PO BOX 700 Page RC-6 City, State Zip: STAMFORD, CT 06904 FDIC Certificate No.: |0|9|2|3|0|
Schedule RC-C--Loans and Lease Financing Receivables Part I. Loans and Leases Do not deduct the allowance for loan and lease losses from amounts reported in this schedule. Report total loans and leases, net of unearned income. Exclude assets held for trading.
C415 ------------------------------------------ (Column A) (Column B) Consolidated Domestic Bank Offices --------------------- ------------------ Dollar Amounts in Thousands RCFD Bil Mil Thou RCON Bil Mil Thou - ----------------------------------------------------------------------------------------------------- 1. Loans secured by real estate.......................... 1410 1,408,601 1. a. Construction and land development.................. 1415 13,122 1.a. b. Secured by farmland (including farm residential and other improvements)................................ 1420 121 1.b. c. Secured by 1-4 family residential properties: (1) Revolving, open-end loans secured by 1-4 family residential properties and extended under lines of credit................................ 1797 139,530 1.c.(1) (2) All other loans secured by 1-4 family residential properties: (a) Secured by first liens..................... 5367 754,185 1.c.(2)(a) (b) Secured by junior liens.................... 5368 37,083 1.c.(2)(b) d. Secured by multifamily (5 or more) residential properties......................................... 1460 53,673 1.d. e. Secured by nonfarm nonresidential properties....... 1480 410,887 1.e. 2. Loans to depository institutions: a. To commercial banks in the U.S. ................... 1505 42,450 2.a. (1) To U.S. branches and agencies of foreign banks. 1506 0 2.a.(1) (2) To other commercial banks in the U.S. ......... 1507 42,450 2.a.(2) b. To other depository institutions in the U.S. ...... 1517 748 1517 748 2.b. c. To banks in foreign countries...................... 1510 1,119 2.c. (1) To foreign branches of other U.S. banks........ 1513 0 2.c.(1) (2) To other banks in foreign countries............ 1516 1,119 2.c.(2) 3. Loans to finance agricultural production and other loans to farmers...................................... 1590 209 1590 209 3. 4. Commercial and industrial loans: a. To U.S. addresses (domicile)....................... 1763 358,806 1763 358,806 4.a. b. To non-U.S. addresses (domicile)................... 1764 0 1764 0 4.b. 5. Acceptances of other banks: a. Of U.S. banks...................................... 1756 0 1756 0 5.a. b. Of foreign banks................................... 1757 0 1757 0 5.b. 6. Loans to individuals for household, family, and other personal expenditures (i.e., consumer loans) (includes purchased paper)............................ 1975 111,259 6. a. Credit cards and related plans (includes check credit and other revolving credit plans)........... 2008 8,020 6.a. b. Other (includes single payment, installment, and all student loans)................................. 2011 103,239 6.b. 7. Loans to foreign governments and official institutions (including foreign central banks)..................... 2081 0 2081 0 7. 8. Obligations (other than securities and leases) of states and political subdivisions in the U.S. (includes nonrated industrial development obligations........... 2107 6,731 2107 6,731 8. 9. Other loans........................................... 1563 9,424 9. a. Loans for purchasing or carrying securities (secured and unsecured)............................ 1545 0 9.a. b. All other loans (exclude consumer loans)........... 1564 9,424 9.b. 10. Lease financing receivables (net of unearned income).. 2165 0 10. a. Of U.S. addresses (domicile)....................... 2182 0 10.a. b. Of non-U.S. addresses (domicile)................... 2183 0 10.b. 11. LESS: Any unearned income on loans reflected in items 1-9 above....................................... 2123 812 2123 812 11. 12. Total loans and leases, net of unearned income (sum of items 1 through 10 minus item 11) (total of column A must equal Schedule RC, item 4.a)..................... 2122 1,938,535 2122 1,938,535 12. ------------------------------------------
16
Legal Title of Bank: FIRST FIDELITY BANK Call Date: 12/31/95 ST-BK: 09-1563 FFIEC 031 Address: PO BOX 700 Page RC-7 City, State Zip: STAMFORD, CT 06904 FDIC Certificate No.: |0|9|2|3|0|
SCHEDULE RC-C--CONTINUED PART I. CONTINUED
(COLUMN A) (COLUMN B) CONSOLIDATED DOMESTIC memoranda BANK OFFICES ------------------ ----------------- DOLLAR AMOUNTS IN THOUSANDS RCFD BIL MIL THOU RCON BIL MIL THOU - ----------------------------------------------- ------------------ ------------------ 1. Commercial paper included in Schedule RC-C, part 1, above . . . . . . . . . . . . . . . 1496 0 1496 0 M.1. 2. Loans and leases restructured and in compliance with modified terms (included in Schedule RC-C, part 1, above and not reported as past due or nonaccrual in Schedule RC-N, Memorandum item 1): a. Loans secured by real estate: (1) To U.S. addresses (domicile) . . . . 1687 0 M.2.a.(1) (2) To non-U.S. addresses (domicile) . . 1689 0 M.2.a.(2) b. All other loans and all lease financing receivables (exclude loans to individuals for household, family, and other personal expenditures) . . . . . . . .. . . . . . 8691 0 M.2.b. c. Commercial and industrial loans to and lease financing receivables of non-U.S. addresses (domicile) included in Memorandum item 2.b above. . . . . . . . 8692 0 M.2.c. 3. Maturity and repricing data for loans and leases(1) (excluding those in nonaccrual status): a. Fixed rate loans and leases with a remaining maturity of: (1) Three months or less . . . . . . . . . 0348 42,067 M.3.a.(1) (2) Over three months through 12 months. . 0349 54,198 M.3.a.(2) (3) Over one year through five years . . . 0356 347,159 M.3.a.(3) (4) Over five years . . . . . . . . . . . 0357 544,936 M.3.a.(4) (5) Total fixed rate loans and leases (sum of Memorandum items 3.a.(1) through 3.a.(4)) . . . . . . . . . . . 0358 988,360 M.3.a.(5) b. Floating rate loans with a repricing frequency of: (1) Quarterly or more frequently. . . . . . 4554 472,531 M.3.b.(1) (2) Annually or more frequently, but less frequently than quarterly . . . . . . . 4555 425,223 M.3.b.(2) (3) Every five years or more frequently. but less frequently than annually . . . 4561 17,698 M.3.b.(3) (4) Less frequently than every five years . . . . . . . . . . . . . . . . . 4564 6,774 M.3.b.(4) (5) Total floating rate loans (sum of Memorandum items 3.b.(1) through 3.b.(4)) . . . . . . . . . . . . . . . 4567 922,226 M.3.b.(5) c. Total loans and leases (sum of Memorandum items 3.a.(5) and 3.b.(5)) (must equal the sum of total loans and leases, net, from Schedule RC-C, part I, item 12, plus unearned income from Schedule RC-C, part I, item 11, minus total nonaccrual loans and leases from Schedule RC-N, sum of items 1 through 8, column C) . . . . . . . . . . . 1479 1,910,586 M.3.c. 4. Loans to finance commercial real estate, construction, and land development activities (not secured by real estate) included in Schedule RC-C, part I, items 4 and 9, column A, page RC-6(2) . . . . . . . . . . . 2746 48,919 M.4. 5. Loans and leases held for sale (included in Schedule RC-C, part I, above) . . . . . . . . 5369 0 M.5. 6. Adjustable rate closed-end loans secured by first liens on 1-4 family residential properties (included in Schedule RC-C, RCON Bil Mil Thou part I, item 1.c.(2)(a), column B, page RC-6 . 5370 466,418 M.6. ------------------ -----------------
- --------- (1) Memorandum item 3 is not applicable to savings banks that must complete supplemental Schedule RC-J. (2) Exclude loans secured by real estate that are included in Schedule RC-C, part I, item 1, column A. 17
Legal Title of Bank: FIRST FIDELITY BANK Call Date: 12/31/95 ST-BK: 09-1563 FFIEC 031 Address: PO BOX 700 Page RC-8 City, State Zip: STAMFORD, CT 06904
FDIC CERTIFICATE NO.: |0|9|2|3|0| SCHEDULE RC-D--TRADING ASSETS AND LIABILITIES Schedule RC-D is to be completed only by banks with $1 billion or more in total assets or with $2 billion or more in par/notional amount of off-balance sheet derivative contracts (as reported in Schedule RC-L, items 14.a through 14.e, columns A through D).
C420 --------------------- DOLLAR AMOUNTS IN THOUSANDS BIL MIL THOU - ----------------------------------------------- --------------------- ASSETS 1. U.S. Treasury securities in domestic offices . . . RCON 3531 0 1. 2. U.S. Government agency and corporation obligations in domestic offices (exclude mortgage-backed securities) . . . . . . . . . . . RCON 3532 0 2. 3. Securities issued by states and political subdivisions in the U.S. in domestic offices . . . RCON 3533 0 3. 4. Mortgage-backed securities (MBS) in domestic offices: a. Pass-through securities issued or guaranteed by by FNMA, FHLMC, or GNMA. . . . . . . . . . . . . RCON 3534 0 4.a. b. Other mortgage-backed securities issued or guaranteed by FNMA, FHLMC, or GNMA (include CMOs, REMICs, and stripped MBS) . . . . . . . . RCON 3535 0 4.b. c. All other mortgage-backed securities . . . . . . RCON 3536 0 4.c. 5. Other debt securities in domestic offices . . . . . RCON 3537 0 5. 6. Certificates of deposit in domestic offices . . . . RCON 3538 0 6. 7. Commercial paper in domestic offices . . . . . . . RCON 3539 0 7. 8. Bankers acceptances in domestic offices . . . . . . RCON 3540 0 8. 9. Other trading assets in domestic offices. . . . . . RCON 3541 0 9. 10. Trading assets in foreign offices . . . . . . . . . RCFN 3542 0 10. 11. Revaluation gains on interest rate, foreign exchange rate, and other commodity and equity contracts: a. in domestic offices . . . . . . . . . . . . . . . RCON 3543 0 11.a. b. in foreign offices . . . . . . . . . . . . . . . RCFN 3544 0 11.b. 12. Total trading assets (sum of items 1 through 11) (must equal Schedule RC, item 5) . . . . . . . . RCFD 3545 0 12. --------------------- LIABILITIES Bil Mil Thou --------------------- 13. Liability for short positions . . . . . . . . . . . RCFD 3546 0 13. 14. Revaluation losses on interest rate, foreign exchange rate, and other commodity and equity contracts . . . . . . . . . . . . . . . . . . . . . RCFD 3547 0 14. 15. Total trading liabilities (sum of items 13 and 14) (must equal Schedule RC, item 15.b) . . . . . . RCFD 3548 0 15. ---------------------
Legal Title of Bank: FIRST FIDELITY BANK Call Date: 12/31/95 ST-BK: 09-1563 FFIEC 031 Address: PO BOX 700 Page RC- City, State Zip: STAMFORD, CT 06904 FDIC Certificate No.: |0|9|2|3|0|
Schedule RC-E--Deposit Liabilities Part I. Deposits in Domestic Offices
C425 --------------------------------------------------------------- Nontransaction Transaction Accounts Accounts --------------------------------------------------------------- (Column A) (Column B) (Column C) Total transaction Memo: Total Total accounts (including demand deposits nontransaction total demand (included in accounts deposits) column A) (including MMDAs) --------------------- ------------------ ------------------ Dollar Amounts in Thousands RCON Bil Mil Thou RCON Bil Mil Thou RCON Bil Mil Thou - ------------------------------------------------------------------------------------------------------------------------- Deposits of: 1. Individuals, partnerships, and corporations........... 2201 794,062 2240 528,820 2346 1,246,382 1. 2. U.S. Government....................................... 2202 803 2280 803 2520 0 2. 3. States and political subdivisions in the U.S. ........ 2203 31,944 2290 29,135 2530 15,326 3. 4. Commercial banks in the U.S. ......................... 2206 3,883 2310 3,883 4. a. U.S. branches and agencies of foreign banks........ 2347 0 4.a. b. Other commercial banks in the U.S. ................ 2348 0 4.b. 5. Other depository institutions in the U.S. ............ 2207 1,685 2312 1,685 2349 0 5. 6. Banks in foreign countries............................ 2213 221 2320 221 6. a. Foreign branches of other U.S. banks............... 2367 0 6.a. b. Other banks in foreign countries................... 2373 0 6.b. 7. Foreign governments and official institutions (including foreign central banks)..................... 2216 0 2300 0 2377 0 7. 8. Certified and official checks......................... 2330 7,441 2330 7,441 8. 9. Total (sum of items 1 through 8) (sum of columns A and C must equal Schedule RC, item 13.a)............................................ 2215 840,039 2210 571,988 2385 1,261,708 9. ---------------------------------------------------------------
Memoranda
------------------ Dollar Amounts in Thousands RCON Bil Mil Thou - ---------------------------------------------------------------------------------------------------- 1. Selected components of total deposits (i.e., sum of item 9, columns A and C): a. Total individual Retirement Accounts (IRAs) and Keogh Plan accounts...... 6835 206,910 M.1.a. b. Total brokered deposits.................................................. 2365 0 M.1.b. c. Fully insured brokered deposits (included in Memorandum item 1.b above): (1) Issued in denominations of less than $100,000........................ 2343 0 M.1.c.(1) (2) Issued either in denominations of $100,000 or in denominations greater than $100,000 and participated out by the broker in shares of $100,000 or less.................................................. 2344 0 M.1.c.(2) d. Total deposits denominated in foreign currencies......................... 3776 0 M.1.d. e. Preferred deposits (uninsured deposits of states and political subdivisions in the U.S. reported in item 3 above which are secured or collateralized as required under state law)............................. 5590 32,888 M.1.e. 2. Components of total nontransaction accounts (sum of Memorandum items 2.a through 2.d must equal item 9, column C above): a. Savings deposits: (1) Money market deposit accounts (MMDAs)................................ 6810 300,262 M.2.a.(1) (2) Other savings deposits (excludes MMDAs).............................. 0352 362,083 M.2.a.(2) b. Total time deposits of less than $100,000................................ 6648 497,858 M.2.b. c. Time certificates of deposit of $100,000 or more......................... 6645 101,505 M.2.c. d. Open-account time deposits of $100,000 or more........................... 6646 0 M.2.d. 3. All NOW accounts (included in column A above)............................... 2398 268,051 M.3. ------------------
19
Legal Title of Bank: FIRST FIDELITY BANK Call Date: 12/31/95 ST-BK: 09-1563 FFIEC 031 Address: PO BOX 700 Page RC- City, State Zip: STAMFORD, CT 06904 FDIC Certificate No.: |0|9|2|3|0|
Schedule RC-E--Continued Part I. Continued Memoranda (continued)
- ---------------------------------------------------------------------------------------------------- Deposit Totals for FDIC Insurance Assessments ------------------ Dollar Amounts in Thousands RCON Bil Mil Thou - ---------------------------------------------------------------------------------------------------- 4. Total deposits in domestic offices (sum of item 9, column A and item 9, column C) (must equal Schedule RC, item 13.a)............................... 2200 2,101,747 M.4. a. Total demand deposits (must equal item 9, column B)...................... 2210 571,988 M.4.a. b. Total time and savings deposits(1) (must equal item 9, column A plus item 9, column C minus item 9, column B)................................. 2350 1,529,759 M.4.b. ------------------ - ------------------ (1) For FDIC insurance assessment purposes, "total time and savings deposits" consists of nontransaction accounts and all transaction accounts other than demand deposits. - ----------------------------------------------------------------------------------------------------
------------------ Dollar Amounts in Thousands RCON Bil Mil Thou - ---------------------------------------------------------------------------------------------------- 5. Time deposits of less than $100,000 and open-account time deposits of $100,000 or more (included in Memorandum items 2.b and 2.d above) with a remaining maturity or repricing frequency of:(1) a. Three months or less..................................................... 0359 162,009 M.5.a. b. Over three months through 12 months (but not over 12 months)............. 3644 165,406 M.5.b. 6. Maturity and repricing data for time certificates of deposit of $100,000 or more:(1) a. Fixed rate time certificates of deposit of $100,000 or more with a remaining maturity of: (1) Three months or less................................................. 2761 50,834 M.6.a.(1) (2) Over three months through 12 months.................................. 2762 21,927 M.6.a.(2) (3) Over one year through five years..................................... 2763 26,009 M.6.a.(3) (4) Over five years...................................................... 2765 2,735 M.6.a.(4) (5) Total fixed rate time certificates of deposit of $100,000 or more (sum of Memorandum items 6.a.(1) through 6.a.(4)..................... 2767 101,505 M.6.a.(5) b. Floating rate time certificates of deposit of $100,000 or more with a repricing frequency of: (1) Quarterly or more frequently......................................... 4568 0 M.6.b.(1) (2) Annually or more frequently, but less frequently than quarterly...... 4569 0 M.6.b.(2) (3) Every five years or more frequently, but less frequently than annually............................................................. 4571 0 M.6.b.(3) (4) Less frequently than every five years................................ 4572 0 M.6.b.(4) (5) Total floating rate time certificates of deposit of $100,000 or more (sum of Memorandum items 6.b.(1) through 6.b.(4)).................... 4573 0 M.6.b.(5) c. Total time certificates of deposit of $100,000 or more (sum of Memorandum items 6.a.(5) and 6.b.(5)) (must equal Memorandum item 2.c. above)....... 6645 101,505 M.6.c. ------------------
- ----------------- (1) Memorandum items 5 and 6 are not applicable to savings banks that must complete supplemental Schedule RC-J. 20 Call Date: 12/31/95 ST-BK: 09-1563 FFIEC 031 Page RC-1 Legal Title of Bank: FIRST FIDELITY BANK Address: PO BOX 700 City, State Zip: STAMFORD, CT 06904 FDIC Certificate No.: 0 9 2 3 0 SCHEDULE RC-E--CONTINUED PART II. DEPOSITS IN FOREIGN OFFICES (INCLUDING EDGE AND AGREEMENT SUBSIDIARIES AND IBFS)
-------------------- Dollar Amounts in Thousands RCFN Bil Mil Thou - --------------------------------------------------------------------------------------------------------------------------- Deposits of: 1. Individuals, partnerships, and corporations.................................................... 2621 0 1. 2. U.S. banks (including IBFs and foreign branches of U.S. banks)................................. 2623 0 2. 3. Foreign banks (including U.S. branches and agencies of foreign banks, including their IBFs).... 2625 0 3. 4. Foreign governments and official institutions (including foreign central banks)................ 2650 0 4. 5. Certified and official checks.................................................................. 2330 0 5. 6. All other deposits............................................................................. 2668 0 6. 7. Total (sum of items 1 through 6) (must equal Schedule RC, item 13.b)........................... 2200 0 7. -------------------- SCHEDULE RC-F--OTHER ASSETS ------ C430 ---------------------- Dollar Amounts in Thousands ///////// Bil Mil Thou - -------------------------------------------------------------------------------------------------------------------------- 1. Income earned, not collected on loans.......................................................... RCFD 2164 14,394 1. 2. Net deferred tax assets(1)..................................................................... RCFD 2148 8,890 2. 3. Excess residential mortgage servicing fees receivable.......................................... RCFD 5371 0 3. 4. Other (itemize amounts that exceed 25% of this item)........................................... RCFD 2168 71,748 4. a. TEXT 3549 Prepaid Expense - Qualified Pension RCFD 3549 22,415 4.a. b. TEXT 3550 Corporate Owned Life Insurance RCFD 3550 21,273 4.b. c. TEXT 3551 RCFD 3551 4.c. 5. Total (sum of items 1 through 4) (must equal Schedule RC, item 11)............................ RCFD 2160 95,032 5. ---------------------- Memorandum ---------------------- Dollar Amounts in Thousands ///////// Bil Mil Thou - -------------------------------------------------------------------------------------------------------------------------- 1. Deferred tax assets disallowed for regulatory capital purposes................................ RCFD 5610 0 M.1 SCHEDULE RC-G--OTHER LIABILITIES ------ C435 ---------------------- Dollar Amounts in Thousands ///////// Bil Mil Thou - -------------------------------------------------------------------------------------------------------------------------- 1. a. Interest accrued and unpaid on deposits in domestic offices(2)............................ RCON 3645 7,363 1.a. b. Other expenses accrued and unpaid (includes accrued income taxes payable)................. RCFD 3646 25,531 1.b. 2. Net deferred tax liabilities(1)............................................................... RCFD 3049 0 2. 3. Minority interest in consolidated subsidiaries................................................ RCFD 3000 0 3. 4. Other (itemize amounts that exceed 25% of this item).......................................... RCFD 2938 4,291 4. a. TEXT 3552 RCFD 3552 4.a. b. TEXT 3553 RCFD 3553 4.b. c. TEXT 3554 RCFD 3554 4.c. 5. Total (sum of items 1 through 4) (must equal Schedule RC, item 20)............................ RCFD 2930 35,185 5.
- ------------------- (1) See discussion of deferred income taxes in Glossary entry on "income taxes." (2) For savings banks, include "dividends" accrued and unpaid on deposits. 21 Call Date: 12/31/95 ST-BK: 09-1563 FFIEC 031 Page RC-1 Legal Title of Bank: FIRST FIDELITY BANK Address: PO BOX 700 City, State Zip: STAMFORD, CT 06904 FDIC Certificate No.: 0 9 2 3 0 SCHEDULE RC-H--SELECTED BALANCE SHEET ITEMS FOR DOMESTIC OFFICES
------ C440 -------------------- Domestic Offices -------------------- Dollar Amounts in Thousands RCON Bil Mil Thou - ------------------------------------------------------------------------------------------------------------------------ 1. Customers' liability to this bank on acceptances outstanding.................................. 2155 2,004 1. 2. Bank's liability on acceptances executed and outstanding...................................... 2920 2,004 2. 3. Federal funds sold and securities purchased under agreements to resell........................ 1350 7,000 3. 4. Federal funds purchased and securities sold under agreements to repurchase.................... 2800 521,127 4. 5. Other borrowed money.......................................................................... 3190 0 5. EITHER 6. Net due from own foreign offices, Edge and Agreement subsidiaries, and IBFs................... 2163 0 6. OR 7. Net due to own foreign offices, Edge and Agreement subsidiaries, and IBFs..................... 2941 N/A 7. 8. Total assets (excludes net due to foreign offices, Edge and Agreement subsidiaries and IBFs)......................................................................................... 2192 2,934,242 8. 9. Total liabilities (excludes net due to foreign offices, Edge and Agreement subsidiaries, and IBFs)......................................................................................... 3129 2,660,063 9. Items 10-17 include held-to-maturity and available-for-sale securities in domestic offices. -------------------- RCON Bil Mil Thou - ------------------------------------------------------------------------------------------------------------------------ 10. U.S. Treasury securities...................................................................... 1779 166,714 10. 11. U.S. Government agency and corporation obligations (exclude mortgage-backed securities........ 1785 47,512 11. 12. Securities issued by states and political subdivisions in the U.S. ........................... 1786 521 12. 13. Mortgage-backed securities (MBS): a. Pass-through securities: (1) Issued or guaranteed by FNMA, FHLMC, or GNMA.......................................... 1787 8,554 13.a.(1) (2) Other pass-through securities......................................................... 1869 0 13.a.(2) b. Other mortgage-backed securities (including CMOs, REMICs, and stripped MBS): (1) Issued or guaranteed by FNMA, FHLMC, or GNMA.......................................... 1877 379,112 13.b.(1) (2) All other mortgage-backed securities.................................................. 2253 71,125 13.b.(2) 14. Other domestic debt securities............................................................... 3159 0 14. 15. Foreign debt securities...................................................................... 3160 247 15. 16. Equity securities: a. Investments in mutual funds.............................................................. 3161 0 16.a. b. Other equity securities with readily determinable fair values............................ 3162 0 16.b. c. All other equity securities.............................................................. 3169 10 16.c. 17. Total held-to-maturity and available-fo-sale securities (sum of items 10 through 16)......... 3170 673,795 17. Memorandum (to be completed only by banks with IBFs and other "foreign" offices) -------------------- Dollar Amounts in Thousands RCON Bil Mil Thou - ------------------------------------------------------------------------------------------------------------------------ M. EITHER 1. Net due from the IBF of the domestic offices of the reporting bank............................ 3051 N/A M.1. OR 2. Net due to the IBF of the domestic offices of the reporting bank.............................. 3059 N/A M.2.
22 Call Date: 12/31/95 ST-BK: 09-1563 FFIEC 031 Page RC-1 Legal Title of Bank: FIRST FIDELITY BANK Address: PO BOX 700 City, State Zip: STAMFORD, CT 06904 FDIC Certificate No.: 0 9 2 3 0 SCHEDULE RC-I--SELECTED ASSETS AND LIABILITIES OF IBFs TO BE COMPLETED ONLY BY BANKS WITH IBFs AND OTHER "FOREIGN" OFFICES.
------ C445 -------------------- Dollar Amounts in Thousands RCFW Bil Mil Thou - -------------------------------------------------------------------------------------------------------------------------- 1. Total IBF assets of the consolidated bank (component of Schedule RC, item 12)................. 2133 N/A 1. 2. Total IBF loans and lease financing receivables (component of Schedule RC-C, part I, item 12, column A)............................................................................ 2076 N/A 2. 3. IBF commercial and industrial loans (component of Schedule RC-C, part I, item 4, column A).... 2077 N/A 3. 4. Total IBF liabilities (component of Schedule RC, item 21)..................................... 2898 N/A 4. 5. IBF deposit liabilities due to banks, including other IBFs (component of Schedule RC-E, part II, items 2 and 3)....................................................................... 2379 N/A 5. 6. Other IBF deposit liabilities (component of Schedule RC-E, part II, items 1, 4, 5, and 6)..... 2381 N/A 6. -------------------- SCHEDULE RC-K--QUARTERLY AVERAGES(1) ------ C455 ---------------------- Dollar Amounts in Thousands ///////// Bil Mil Thou - -------------------------------------------------------------------------------------------------------------------------- ASSETS 1. Interest-bearing balances due from depository institutions.................................... RCFD 3381 50 1. 2. U.S. Treasury securities and U.S. Government agency and corporation obligations(2)............ RCFD 3382 610,091 2. 3. Securities issued by states and political subdivisions in the U.S.(2)......................... RCFD 3383 529 3. 4. a. Other debt securities(2)................................................................... RCFD 3647 72,428 4.a. b. Equity securities(3) (includes investments in mutual funds and Federal Reserve stock)...... RCFD 3648 10 4.b. 5. Federal funds sold and securities purchased under agreements to resell in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs........................... RCFD 3365 36,185 5. 6. Loans: a. Loans in domestic offices: (1) Total loans............................................................................ RCON 3360 1,898,517 6.a.(1) (2) Loans secured by real estate........................................................... RCON 3385 1,402,818 6.a.(2) (3) Loans to finance agricultural production and other loans to farmers.................... RCON 3386 149 6.a.(3) (4) Commercial and industrial loans........................................................ RCON 3387 364,020 6.a.(4) (5) Loans to individuals for household, family, and other personal expenditures............ RCON 3388 117,510 6.a.(5) b. Total loans in foreign offices, Edge and Agreement subsidiaries, and IBFs.................. RCFN 3360 0 6.b. 7. Trading assets................................................................................ RCFD 3401 0 7. 8. Lease financing receivables (net of unearned income).......................................... RCFD 3484 0 8. 9. Total assets(4)............................................................................... RCFD 3368 2,895,083 9. LIABILITIES 10. Interest-bearing transaction accounts in domestic offices (NOW accounts, ATS accounts, and telephone and preauthorized transfer accounts) (exclude demand deposits)...................... RCON 3485 245,034 10. 11. Nontransaction accounts in domestic offices: a. Money market deposit accounts (MMDAs)...................................................... RCON 3486 309,800 11.a. b. Other saving deposits...................................................................... RCON 3487 361,955 11.b. c. Time certificates of deposit of $100,000 or more........................................... RCON 3345 102,298 11.c. d. All other time deposits.................................................................... RCON 3469 504,915 11.d. 12. Interest-bearing deposits in foreign offices, Edge and Agreement subsidiaries, and IBFs....... RCFN 3404 0 12. 13. Federal funds purchased and securities sold under agreements to repurchase in domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs................... RCFD 3353 512,893 13. 14. Other borrowed money.......................................................................... RCFD 3355 14,279 14.
- ------------------- (1) For all items, banks have the option of reporting either (1) an average of daily figures for the quarter, or (2) an average of weekly figures (i.e., the Wednesday of each week of the quarter). (2) Quarterly averages for all debt securities should be based on amortized cost. (3) Quarterly averages for all equity securities should be based on historical cost. (4) The quarterly average for total assets should reflect all debt securities (not held for trading) at amortized cost, equity securities with readily determinable fair values at the lower of cost or fair value, and equity securities without readily determinable fair values at historical cost. 23 Call Date: 12/31/95 ST-BK: 09-1563 FFIEC 031 Page RC-1 Legal Title of Bank: FIRST FIDELITY BANK Address: PO BOX 700 City, State Zip: STAMFORD, CT 06904 FDIC Certificate No.: 0 9 2 3 0 SCHEDULE RC-L--OFF-BALANCE SHEET ITEMS Please read carefully the instructions for the preparation of Schedule RC-L. Some of the amounts reported in Schedule RC-L are regarded as volume indicators and not necessarily as measures of risk.
------ C460 -------------------- Dollar Amounts in Thousands RCFD Bil Mil Thou - ------------------------------------------------------------------------------------------------------------------------ 1. Unused commitments: a. Revolving, open-end lines secured by 1-4 family residential properties, e.g., home equity lines..................................................................................... 3814 158,079 1.a. b. Credit card lines......................................................................... 3815 95 1.b. c. Commercial real estate, construction, and land development: (1) Commitments to fund loans secured by real estate...................................... 3816 8,666 1.c.(1) (2) Commitments to fund loans not secured by real estate.................................. 6550 0 1.c.(2) d. Securities underwriting................................................................... 3817 0 1.d. e. Other unused commitments.................................................................. 3818 278,356 1.e. 2. Financial standby letters of credit and foreign office guarantees............................. 3819 26,634 2. a. Amount of financial standby letters of credit conveyed to others RCFD 3820 0 2.a. 3. Performance standby letters of credit and foreign office guarantees........................... 3821 2,050 3. a. Amount of performance standby letters of credit conveyed to others RCFD 3822 0 3.a. 4. Commercial and similar letters of credit...................................................... 3411 1,859 4. 5. Participations in acceptance (as described in the instructions) conveyed to others by the reporting bank................................................................................ 3428 0 5. 6. Participations in acceptances (as described in the instructions) acquired by the reporting (nonaccepting) bank........................................................................... 3429 0 6. 7. Securities borrowed........................................................................... 3432 0 7. 8. Securities lent (including customers' securities lent where the customer is indemnified against loss by the reporting bank)................................................................... 3433 0 8. 9. Mortgages transferred (i.e., sold or swapped) with recourse that have been treated as sold for Call Report purposes: a. FNMA and FHLMC residential mortgage loan pools: (1) Outstanding principal balance of mortgages transferred as of the report date.......... 3650 1,216 9.a.(1) (2) Amount of recourse exposure on these mortgages as of the report date.................. 3651 1,216 9.a.(2) b. Private (nongovernment-issued or -guaranteed) residential mortgage loan pools: (1) Outstanding principal balance of mortgages transferred as of the report date.......... 3652 0 9.b.(1) (2) Amount of recourse exposure on these mortgages as of the report date.................. 3653 0 9.b.(2) c. Farmer Mac agricultural mortgage loan pools: (1) Outstanding principal balance of mortgages transferred as of the report date.......... 3654 0 9.c.(1) (2) Amount of recourse exposure on these mortgages as of the report date.................. 3655 0 9.c.(2) 10. When-issued securities: a. Gross commitments to purchase............................................................. 3434 0 10.a. b. Gross commitments to sell................................................................. 3435 0 10.b. 11. Spot foreign exchange contracts............................................................... 8765 0 11. 12. All other off-balance sheet liabilities (exclude off-balance sheet derivatives) (itemize and describe each component of this item over 25% of Schedule RC, item 28, "Total equity capital") 3430 0 12. a. TEXT 3555 RCFD 3555 12.a. b. TEXT 3556 RCFD 3556 12.b. c. TEXT 3557 RCFD 3557 12.c. d. TEXT 3558 RCFD 3558 12.d. 13. All other off-balance sheet assets (exclude off-balance sheet derivatives) (itemize and describe each component of this item over 25% of Schedule RC, item 28, "Total equity capital") 5591 0 13. a. TEXT 5592 RCFD 5592 13.a. b. TEXT 5593 RCFD 5593 13.b. c. TEXT 5594 RCFD 5594 13.c. d. TEXT 5595 RCFD 5595 13.d.
24 Legal Title of Bank: FIRST FIDELITY BANK Address: PO BOX 700 Call Date: 12/31/95 ST-BK: 09-1563 FFIEC 03 City, State Zip: STAMFORD, CT 06904 Page RC- FDIC Certificate No.: 0 9 2 3 0 Schedule RC-L--Continued
C461 (Column A) (Column B) (Column C) (Column D) Dollar Amounts in Thousands Interest Rate Foreign Exchange Equity Derivative Commodity and Off-balance Sheet Derivatives Contracts Contracts Contracts Other Contracts Position Indicators ----------------- ----------------- ----------------- ----------------- Tril Bil Mil Thou Tril Bil Mil Thou Tril Bil Mil Thou Thou Bil Mil Thou ----------------- ----------------- ----------------- ----------------- 14. Gross amounts (e.g., notional amounts) (for each column, sum of items 14.a through 14.e must equal sum of items 15, 16.a, and 16.b): a. Futures contracts.................. 0 0 0 0 14.a. RCFD 8693 RCFD 8694 RCFD 8695 RCFD 8696 b. Forward contracts.................. 0 0 0 0 14.b. RCFD 8697 RCFD 8698 RCFD 8699 RCFD 8700 c. Exchange-traded option contracts: (1) Written options................ 0 0 0 0 14.c.(1) RCFD 8701 RCFD 8702 RCFD 8703 RCFD 8704 (2) Purchased options............. 0 0 0 0 14.c.(2) RCFD 8705 RCFD 8706 RCFD 8707 RCFD 8708 d. Over-the-counter option contracts: (1) Written options.............. 0 0 0 0 14.d.(1) RCFD 8709 RCFD 8710 RCFD 8711 RCFD 8712 (2)Purchased options............. 0 0 0 0 14.d.(2) RCFD 8713 RCFD 8714 RCFD 8715 RCFD 8716 e. Swaps........................... 119,922 0 0 0 14.e. RCFD 3450 RCFD 3826 RCFD 8719 RCFD 8720 15. Total gross notional amount of derivative contracts held for trading 78,312 0 0 0 15. RCFD A126 RCFD A127 RCFD 8723 RCFD 8724 16. Total gross notional amount of derivative contracts held for purposes other than trading: a. Contracts marked to market........ 0 0 0 0 16.a. RCFD 8725 RCFD 8726 RCFD 8727 RCFD 8728 b. Contracts not marked to market... 41,680 0 0 0 16.b. RCFD 8729 RCFD 8730 RCFD 8731 RCFD 8732
25 Legal Title of Bank: FIRST FIDELITY BANK Address: PO BOX 700 Call Date: 12/31/95 ST-BK: 09-1563 FFIEC 03 City, State Zip: STAMFORD, CT 06904 Page RC- FDIC Certificate No.: 0 9 2 3 0 Schedule RC-L--Continued
(Column A) (Column B) (Column C) (Column D) Dollar Amounts in Thousands Interest Rate Foreign Exchange Equity Derivative Commodity and Off-balance Sheet Derivatives Contracts Contracts Contracts Other Contracts Position Indicators ----------------- ----------------- ----------------- ----------------- RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou ----------------- ----------------- ----------------- ----------------- 17. Gross fair values of derivative contracts: a. Contracts held for trading: (1) Gross positive fair value .................... 8733 978 8734 0 8735 0 8736 0 17.a.(1) (2) Gross negative fair value .................... 8737 877 8738 0 8739 0 8740 0 17.a.(2) b. Contracts held for purposes other than trading that are marked to market: (1) Gross positive fair value..................... 8741 0 8742 0 8743 0 8744 0 17.b.(1) (2) Gross negative fair value .................... 8745 0 8746 0 8747 0 8748 0 17.b.(2) c. Contracts held for purposes other than trading that are not marked to market: (1) Gross positive fair value ................... 8749 1,603 8750 0 8751 0 8752 0 17.c.(1) (2) Gross negative fair value ................... 8753 48 8754 0 8755 0 8756 0 17.c.(2)
Memoranda Dollar Amounts in Thousands RCFD Bil Mil Thou - ---------------------------------------------------------------------------------------------------- ----------------- 1.-2. Not applicable 3. Unused commitments with an original maturity exceeding one year that are reported in Schedule RC-L, items 1.a through 1.e, above (report only the unused portions of commitments that are fee paid or otherwise legally binding) ................................................ 3833 203,674 M.3. a. Participations in commitments with an original maturity exceeding one year conveyed to others ................................... RCFD 3834 0 M.3.a. 4. To be completed only by banks with $1 billion or more in total assets: Standby letters of credit and foreign office guarantees (both financial and performance) issued to non-U.S. addressees (domicile) included in Schedule RC-L, items 2 and 3, above .............. 3377 128 M.4. 5. To be completed for the September report only: Installment loans to individuals for household, family, and other personal expenditures that have been securitized and sold without recourse (with servicing retained), amounts outstanding by type of loan: a. Loans to purchase private passenger automobiles ........................................... 2741 N/A M.5.a. b. Credit cards and related plans ............................................................ 2742 N/A M.5.b. c. All other consumer installment credit (including mobile home loans) ....................... 2743 N/A M.5.c.
26
Legal Title of Bank: FIRST FIDELITY BANK Call Date: 12/31/95 ST-BK: 09-1563 FFIEC 031 Address: PO BOX 700 Page RC- City, State Zip: STAMFORD, CT 06904 FDIC Certificate No.: |0|9|2|3|0|
Schedule RC-M--Memoranda
------ C465 -------------------- Dollar Amounts in Thousands RCFD Bil Mil Thou - -------------------------------------------------------------------------------------------------------------------------- 1. Extensions of credit by the reporting bank to its executive officers, directors, principal shareholders, and their related interests as of the report date: a. Aggregate amount of all extensions of credit to all executive officers, directors, principal shareholders, and their related interests .......................................... 6164 20,251 1.a. b. Number of executive officers, directors, and principal shareholders to whom the amount of all extensions of credit by the reporting bank (including extensions of credit to Number related interests) equals or exceeds the lesser of $500,000 or 5 percent of total capital as defined for this purpose in agency regulations. RCFD 6165 2 1.b. 2. Federal funds sold and securities purchased under agreements to resell with U.S. branches and agencies of foreign banks(1) (included in Schedule RC, items 3.a and 3.b).................... 3405 0 2. 3. Not applicable. 4. Outstanding principal balance of 1-4 family residential mortgage loans serviced for others (include both retained servicing and and purchased servicing): a. Mortgages serviced under a GNMA contract ..................................................... 5500 0 4.a. b. Mortgages serviced under a FHLMC contract: (1) Serviced with recourse to servicer ....................................................... 5501 0 4.b.(1) (2) Serviced without recourse to servicer .................................................... 5502 50,084 4.b.(2) c. Mortgages serviced under a FNMA contract: (1) Serviced under a regular option contract ................................................. 5503 1,216 4.c.(1) (2) Serviced under a special option contract ................................................. 5504 11,972 4.c.(2) d. Mortgages serviced under other servicing contracts ........................................... 5505 17,585 4.d. 5. To be completed only by banks with $1 billion or more in total assets: Customers' liability to this bank on acceptances outstanding (sum of items 5.a and 5.b must equal Schedule RC, item 9): a. U.S. addresses (domicile) .................................................................... 2103 2,004 5.a. b. Non-U.S. addresses (domicile) ................................................................ 2104 0 5.b. 6. Intangible assets: a. Mortgage servicing rights .................................................................... 3164 550 6.a. b. Other identifiable intangible assets: (1) Purchased credit card relationships ...................................................... 5506 0 6.a.(1) (2) All other identifiable intangible assets ................................................. 5507 0 6.b.(2) c. Goodwill ..................................................................................... 3163 38,359 6.c. d. Total (sum of items 6.a through 6.c) (must equal Schedule RC, item 10) ....................... 2143 38,909 6.d. e. Amount of intangible assets (included in item 6.b.(2) above) that have been grandfathered or are otherwise qualifying for regulatory capital purposes ..................................... 6442 0 6.e. 7. Mandatory convertible debt, net of common or perpetual preferred stock dedicated to redeem the debt ........................................................................................ 3295 0 7.
- ------------------------ (1) Do not report federal funds sold and securities purchased under agreements to resell with other commercial banks in the U.S. in this item. 27
Legal Title of Bank: FIRST FIDELITY BANK Call Date: 12/31/95 ST-BK: 09-1563 FFIEC 031 Address: PO BOX 700 Page RC-1 City, State Zip: STAMFORD, CT 06904 FDIC Certificate No.: |0|9|2|3|0|
Schedule RC-M--Continued
------------------- Dollar Amounts in Thousands Bil Mil Thou - --------------------------------------------------------------------------------------------------------------------- 8. a. Other real estate owned: (1) Direct and indirect investments in real estate ventures ........................... RCFD 5372 0 8.a.(1) (2) All other real estate owned: (a) Construction and land development in domestic offices ......................... RCON 5508 75 8.a.(2)(a) (b) Farmland in domestic offices .................................................. RCON 5509 0 8.a.(2)(b) (c) 1-4 family residential properties in domestic offices ......................... RCON 5510 1,497 8.a.(2)(c) (d) Multifamily (5 or more) residential properties in domestic offices ............ RCON 5511 663 8.a.(2)(d) (e) Nonfarm nonresidential properties in domestic offices ......................... RCON 5512 2,320 8.a.(2)(e) (f) In foreign offices ............................................................ RCFN 5513 0 8.a.(2)(f) (3) Total (sum of items 8.a.(1) and 8.a.(2)) (must equal Schedule RC, item 7) ......... RCFD 2150 4,555 8.a.(3) b. Investments in unconsolidated subsidiaries and associated companies: (1) Direct and indirect investments in real estate ventures ........................... RCFD 5374 0 8.b.(1) (2) All other investments in unconsolidated subsidiaries and associated companies ..... RCFD 5375 0 8.b.(2) (3) Total (sum of items 8.b.(1) and 8.b.(2)) (must equal Schedule RC, item 8) ......... RCFD 2130 0 8.b.(3) c. Total assets of unconsolidated subsidiaries and associated companies ................. RCFD 5376 0 8.c. 9. Noncumulative perpetual preferred stock and and related surplus included in Schedule RC, item 23, "Perpetual preferred stock related surplus" ................................ RCFD 3778 0 9. 10. Mutual fund and annuity sales in domestic offices during the quarter (include proprietary, private label, and third party products): a. Money market funds ................................................................... RCON 6441 0 10.a. b. Equity securities funds .............................................................. RCON 8427 597 10.b. c. Debt securities funds ................................................................ RCON 8428 648 10.c. d. Other mutual funds ................................................................... RCON 8429 1,976 10.d. e. Annuities ............................................................................ RCON 8430 462 10.e. f. Sales of proprietary mutual funds and annuities (included in items 10.a through 10.e above) .......................................................................... RCON 8784 0 10.f.
Memorandum Dollar Amounts in Thousands RCFD Bil Mil Thou - -------------------------------------------------------------------------------------------------------------------- 1. Interbank holdings of capital instruments (to be completed for the December report only): a. Reciprocal holdings of banking organizations' capital instruments ..................... 3836 0 M.1.a. b. Nonreciprocal holdings of banking organizations' capital instruments .................. 3837 0 M.1.b.
28
Legal Title of Bank: FIRST FIDELITY BANK Call Date: 12/31/95 ST-BK: 09-1563 FFIEC 031 Address: PO BOX 700 Page RC-1 City, State Zip: STAMFORD, CT 06904 FDIC Certificate No.: |0|9|2|3|0|
Schedule RC-N--Past Due and Nonaccrual Loans, Leases, and Other Assets The FFIEC regards the information reported in all of Memorandum item 1, in items 1 through 10, column A, and in Memorandum items 2 through 4, column A, as confidential.
C470 ----------------------------------------------------------- (Column A) (Column B) (Column C) Past due Past due 90 Nonaccrual 30 through 89 days or more days and still and still accruing accruing ------------------ ------------------ ------------------ Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou - ---------------------------------------------------- ------------------ ------------------ ------------------ 1. Loans secured by real estate: a. To U.S. addressees (domicile) ................ 1245 53,140 1246 10,272 1247 18,898 1.a. b. To non-U.S. addressees (domicile) ............ 1248 0 1249 0 1250 0 1.b. 2. Loans to depository institutions and acceptances of other banks: a. To U.S. banks and other U.S. depository institutions ................................. 5377 0 5378 0 5379 0 2.a. b. To foreign banks ............................. 5380 0 5381 0 5382 0 2.b. 3. Loans to finance agricultural production and other loans to farmers .......................... 1594 0 1597 0 1583 0 3. 4. Commercial and industrial loans: a. To U.S. addressees (domicile) ................ 1251 5,495 1252 11 1253 9,863 4.a. b. To non-U.S. addressees (domicile) ............ 1254 0 1255 0 1256 0 4.b. 5. Loans to individuals for household, family, and other personal expenditures: a. Credit cards and related plans ............... 5383 348 5384 152 5385 0 5.a. b. Other (includes single payment, installment, and all student loans) ....................... 5386 4,894 5387 1,783 5388 0 5.b. 6. Loans to foreign governments and official institutions .................................... 5389 0 5390 0 5391 0 6. 7. All other loans ................................. 5459 0 5460 0 5461 0 7. 8. Lease financing receivables: a. Of U.S. addressees (domicile) ................ 1257 0 1258 0 1259 0 8.a. b. Of non-U.S. addressees (domicile) ............ 1271 0 1272 0 1791 0 8.b. 9. Debt securities and other assets (exclude other real estate owned and other repossessed assets).. 3505 0 3506 0 3507 0 9. - ------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------- Amounts reported in items 1 through 8 above include guaranteed and unguaranteed portions of past due and nonaccrual loans and leases. Report in item 10 below certain guaranteed loans and leases that have already been included in the amounts reported in items 1 through 8. ------------------ ------------------ ------------------ RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou ------------------ ------------------ ------------------ 10. Loans and leases reported in items 1 through 8 above which are wholly or partially guaranteed by the U.S. Government .............. 5612 1,656 5613 1,664 5614 0 10. a. Guaranteed portion of loans and leases included in item 10 above ................... 5615 1,656 5616 1,664 5617 0 10.a.
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Legal Title of Bank: FIRST FIDELITY BANK Call Date: 12/31/95 ST-BK: 09-1563 FFIEC 031 Address: PO BOX 700 Page RC-2 City, State Zip: STAMFORD, CT 06904 FDIC Certificate No.: |0|9|2|3|0|
Schedule RC-N--Continued
C473 ----------------------------------------------------------- (Column A) (Column B) (Column C) Past due Past due 90 Nonaccrual 30 through 89 days or more days and still and still accruing accruing Memoranda ------------------ ------------------ ------------------ Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou - ---------------------------------------------------- ------------------ ------------------ ------------------ 1. Restructured loans and leases included in Schedule RC-N, items 1 through 8, above (and not reported in Schedule RC-C, part 1, Memorandum item 2) ......................................... 1658 0 1659 0 1661 0 M.1. 2. Loans to finance commercial real estate, construction, and land development activities (not secured by real estate) included in Schedule RC-N, items 4 and 7, above ............. 6558 306 6559 0 6560 0 M.2. ------------------ ------------------ ------------------ RCON Bil Mil Thou RCON Bil Mil Thou RCON Bil Mil Thou ------------------ ------------------ ------------------ 3. Loans secured by real estate in domestic offices (included in Schedule RC-N, item 1, above): a. Construction and land development............. 2759 398 2769 0 3492 810 M.3.a. b. Secured by farmland........................... 3493 0 3494 0 3495 121 M.3.b. c. Secured by 1-4 family residential properties: (1) Revolving, open-end loans secured by 1-4 family residential properties and extended under lines of credit............ 5398 4,483 5399 1,692 5400 351 M.3.c.(1) (2) All other loans secured by 1-4 family residential properties.................... 5401 37,332 5402 8,286 5403 647 M.3.c.(2) d. Secured by multifamily (5 or more) residential properties.................................... 3499 1,285 3500 0 3501 30 M.3.d. e. Secured by nonfarm nonresidential properties.. 3502 9,642 3503 294 3504 16,939 M.3.e. (Column A) (Column B) Past due 30 Past due 90 through 89 days days or more ------------------ ------------------ RCFD Bil Mil Thou RCFD Bil Mil Thou ------------------ ------------------ 4. Interest rate, foreign exchange rate, and other commodity and equity contracts: a. Book value of amounts carried as assets....... 3522 0 3528 0 M.4.a. b. Replacement cost of contracts with a positive replacement cost..................... 3529 0 3530 0 M.4.b.
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Legal Title of Bank: FIRST FIDELITY BANK Call Date: 12/31/95 ST-BK: 09-1563 FFIEC 031 Address: PO BOX 700 Page RC- City, State Zip: STAMFORD, CT 06904 FDIC Certificate No.: |0|9|2|3|0|
Schedule RC-O--Other Data for Deposit Insurance Assessments
C475 -------------- Dollar Amounts in Thousands RCON Bil Mil Thou - ----------------------------------------------------------------------------------------------------------------- 1. Unposted debits (see instructions): a. Actual amount of all unposted debits............................ 0030 N/A 1.a. OR b. Separate amount of unposted debits: (1) Actual amount of unposted debits to demand deposits......... 0031 0 1.b.(1) (2) Actual amount of unposted debits to time and savings deposits(1)................................................. 0032 0 1.b.(2) 2. Unposted credits (see instructions): a. Actual amount of all unposted credits........................... 3510 4,586 2.a. OR b. Separate amount of unposted credits: (1) Actual amount of unposted credits to demand deposits........ 3512 N/A 2.b.(1) (2) Actual amount of unposted credits to time and savings deposits(1)................................................. 3514 N/A 2.b.(2) 3. Uninvested trust funds (cash) held in bank's own trust department (not included in total deposits in domestic offices)............... 3520 0 3. 4. Deposits of consolidated subsidiaries in domestic offices and in insured branches in Puerto Rico and U.S. territories and possessions (not included in total deposits): a. Demand deposits of consolidated subsidiaries................... 2211 1,026 4.a. b. Time and savings deposits(1) of consolidated subsidiaries...... 2351 0 4.b. c. Interest accrued and unpaid on deposits of consolidated subsidiaries................................................... 5514 0 4.c. 5. Deposits in insured branches in Puerto Rico and U.S. territories and possessions: a. Demand deposits in insured branches (included in Schedule RC-E, Part II)........................................................ 2229 0 5.a. b. Time and savings deposits(1) in insured branches (included in Schedule RC-E, Part II)...................................... 2383 0 5.b. c. Interest accrued and unpaid on deposits in insured branches (included in Schedule RC-G, item 1.b)........................... 5515 0 5.c. Item 6 is not applicable to state nonmember banks that have not been authorized by the Federal Reserve to act as pass-through correspondents. 6. Reserve balances actually passed through to the Federal Reserve by the reporting bank on behalf of its respondent depository institutions that are also reflected as deposit liabilities of the reporting bank: a. Amount reflected in demand deposits (included in Schedule RC-E, Part I, Memorandum item 4.a).................................... 2314 0 6.a. b. Amount reflected in time and savings deposits(1) (included in Schedule RC-E, Part I, Memorandum item 4.b)..................... 2315 0 6.b. 7. Unamortized premiums and discounts on time and savings deposits:(1) a. Unamortized premiums............................................ 5516 0 7.a. b. Unamortized discounts........................................... 5517 0 7.b. 8. To be completed by banks with "Oakar deposits." Total "Adjusted Attributable Deposits" of all institutions acquired under Section 5(d)(3) of the Federal Deposit Insurance Act (from most recent FDIC Oakar Transaction Worksheet(s)).................. 5518 205,796 8. 9. Deposits in lifeline accounts..................................... 5596 9. 10. Benefit-responsive "Depository Institution Investment Contracts" (included in total deposits in domestic offices)................. 8432 0 10.
- -------------- (1) For FDIC insurance assessment purposes, "time and savings deposits" consists of nontransaction accounts and all transaction accounts other than demand deposits. 31
Legal Title of Bank: FIRST FIDELITY BANK Call Date: 12/31/95 ST-BK: 09-1563 FFIEC 031 Address: PO BOX 700 Page RC- City, State Zip: STAMFORD, CT 06904 FDIC Certificate No.: |0|9|2|3|0|
Schedule RC-O--Continued
Dollar Amounts in Thousands RCON Bil Mil Thou - ----------------------------------------------------------------------------------------------------------------- 11. Adjustments to demand deposits in domestic offices reported in Schedule RC-E for certain reciprocal demand balances: a. Amount by which demand deposits would be reduced if reciprocal demand balances between the reporting bank and savings associations were reported on a net basis rather than a gross basis in Schedule RC-E........................................ 8785 0 11.a. b. Amount by which demand deposits would be increased if reciprocal demand balances between the reporting bank and U.S. branches and agencies of foreign banks were reported on a gross basis rather than a net basis in Schedule RC-E......... A181 0 11.b. c. Amount by which demand deposits would be reduced if cash items in process of collection were included in the calculation of net reciprocal demand balances between the reporting bank and the domestic offices of U.S. banks and savings associations in Schedule RC-E.............................................. A182 0 11.c. Memoranda (to be completed each quarter except as noted) Dollar Amounts in Thousands RCON Bil Mil Thou - ----------------------------------------------------------------------------------------------------------------- 1. Total deposits in domestic offices of the bank (sum of Memorandum items 1.a.(1) and 1.b.(1) must equal Schedule RC, item 13.a): a. Deposit accounts of $100,000 or less: (1) Amount of deposit accounts of $100,000 or less............ 2702 1,542,357 M.1.a.(1) (2) Number of deposit accounts of $100,000 or less Number (to be completed for the June report only).... RCON 3779 ------ M.1.a.(2) N/A b. Deposit accounts of more than $100,000: (1) Amount of deposit accounts of more than $100,000.......... 2710 559,390 M.1.b.(1) (2) Number of deposit accounts of more Number than $100,000................................ RCON 2722 ------ M.1.b.(2) 2,377 2. Estimated amount of uninsured deposits in domestic offices of the bank: a. An estimate of your bank's uninsured deposits can be determined by multiplying the number of deposit accounts of more than $100,000 reported in Memorandum item 1.b.(2) above by $100,000 and subtracting the result from the amount of deposit accounts of more than $100,000 reported in Memorandum item 1.b.(1) above. Indicate in the appropriate box at the right whether your bank has a method or procedure for determining a better YES NO estimate of uninsured deposits than the estimate described --- -- above......................................................... RCON 6861 X M.2.a. RCON Bil Mil Thou - ----------------------------------------------------------------------------------------------------------------- b. If the box marked YES has been checked, report the estimate of uninsured deposits determined by using your bank's method or procedure.................................................. 5597 N/A M.2.b.
- -------------------------------------------------------------------------------- Person to whom questions about the Reports of Condition C477 and Income should be directed: BRIAN K. REILLY VICE PRESIDENT (201) 565-7328 - -------------------------------- ------------------------------------------- Name and Title (TEXT 8901) Area code/phone number/extension (TEXT 8902) 32 Schedule RC-R--Risk-Based Capital This schedule must be completed by all banks as follows: Banks that reported total assets of $1 billion or more in Schedule RC, item 12, for June 30, 1994, must complete items 2 through 9 and Memoranda items 1 and 2. Banks with assets of less than $1 billion must complete items 1 and 2 below or Schedule RC-R in its entirety, depending on their response to item 1 below. 1. Test for determining the extent to which Schedule RC-R must be C480 completed. To be completed only by banks with total assets of less than ---- $1 billion. Indicate in the appropriate box at the right whether the YES NO bank has total capital greater than or equal to eight percent of --- -- adjusted total assets................................................... RCFD 6056 1. For purposes of this test, adjusted total assets equals total assets less cash, U.S. Treasuries, U.S. Government agency obligations, and 80 percent of U.S. Government-sponsored agency obligations plus the allowance for loan and lease losses and selected off-balance sheet items as reported on Schedule RC-L (see instructions). If the box marked YES has been checked, then the bank only has to complete item 2 below. If the box marked NO has been checked, the bank must complete the remainder of this schedule. A NO response to item 1 does not necessarily mean that the bank's actual risk-based capital ratio is less than eight percent or that the bank is not in compliance with the risk-based capital guidelines.
(Column A) (Column B) Subordinated Debt(1) Other and Intermediate Limited- Item 2 is to be completed by all banks. Term Preferred Life Capital Stock Instruments ----------------------------- ----------------------------- Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou 2. Subordinated debt(1) and other limited-life capital instruments (original weighted average maturity of at least five years) with a remaining maturity of: a. One year or less................................. 3780 0 3786 0 2.a. b. Over one year through two years.................. 3781 0 3787 0 2.b. c. Over two years through three years............... 3782 0 3788 0 2.c. d. Over three years through four years.............. 3783 0 3789 0 2.d. e. Over four years through five years............... 3784 0 3790 0 2.e. f. Over five years.................................. 3785 0 3791 0 2.f. 3. Not applicable (Column A) (Column B) Items 4-9 and Memoranda items 1 and 2 are to be Assets Credit Equiv- completed by banks that answered NO to item 1 above and Recorded alent Amount by banks with total assets of $1 billion or more. on the of Off-Balance Balance Sheet Sheet Items (2) ----------------------------- ----------------------------- RCFD Bil Mil Thou RCFD Bil Mil Thou 4. Assets and credit equivalent amounts of off-balance sheet items assigned to the Zero percent risk category: a. Assets recorded on the balance sheet: (1) Securities issued by, other claims on, and claims unconditionally guaranteed by, the U.S. Government and its agencies and other OECD central governments............... 3794 166,663 4.a.(1) (2) All other.................................... 3795 82,041 4.a.(2) b. Credit equivalent amount of off-balance sheet items............................................ 3796 0 4.b.
- -------------- (1) Exclude mandatory convertible debt reported in Schedule RC-M, item 7. (2) Do not report in column B the risk-weighted amount of assets reported in column A. 33 Schedule RC-R--Continued
(Column A) (Column B) Assets Credit Equiv- Recorded alent Amount on the of Off-Balance Balance Sheet Sheet Items (1) ----------------------------- ------------------------------- Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou 5. Assets and credit equivalent amounts of off-balance sheet items assigned to the 20 percent risk category: a. Assets recorded on the balance sheet: (1) Claims conditionally guaranteed by the U.S. Government and its agencies and other OECD central governments.................... 3798 44,534 5.a.(1) (2) Claims collateralized by securities issued by the U.S. Government and its agencies and other OECD central governments; by securities issued by U.S. Government- sponsored agencies; and by cash on deposit.. 3799 3,031 5.a.(2) (3) All other................................... 3800 623,934 5.a.(3) b. Credit equivalent amount of off-balance sheet items..................................... 3801 2,249 5.b. 6. Assets and credit equivalent amounts of off-balance sheet items assigned to the 50 percent risk category: a. Assets recorded on the balance sheet............ 3802 768,448 6.a. b. Credit equivalent amount of off-balance sheet items..................................... 3803 1,216 6.b. 7. Assets and credit equivalent amounts of off-balance sheet items assigned to the 100 percent risk category: a. Assets recorded on the balance sheet............ 3804 1,319,919 7.a. b. Credit equivalent amount of off-balance sheet items..................................... 3805 129,868 7.b. 8. On-balance sheet assets value excluded from the calculation of the risk-based capital ratio(2)..... 3806 (1,322) 8. 9. Total assets recorded on the balance sheet (sum of items 4.a, 5.a, 6.a, 7.a, and 8, column A) (must equal Schedule RC, item 12 plus items 4.b and 4.c)........................................... 3807 3,007,248 9.
Memoranda Dollar Amounts in Thousands RCFD Bil Mil Thou 1. Current credit exposure across all off-balance sheet derivative contracts covered by the risk- based capital standards............................ 8764 594 M.1.
With a remaining maturity of ----------------------------------------------------------------------- (Column B) (Column A) Over one year One year or less through five years ---------------------------------- ---------------------------------- RCFD Tril Bil Mil Thou RCFD Tril Bil Mil Thou 2. Notional principal amounts of off-balance sheet derivative contracts(3): a. Interest rate contracts.................. 3809 1,300 8766 86,100 M.2.a. b. Foreign exchange contracts............... 3812 0 8769 0 M.2.b. c. Gold contracts........................... 8771 0 8772 0 M.2.c. d. Other precious metals contracts.......... 8774 0 8775 0 M.2.d. e. Other commodity contracts................ 8777 0 8778 0 M.2.e. f. Equity derivative contracts.............. A000 0 A001 0 M.2.f. (Column C) Over five years --------------------------------- RCFD Tril Bil Mil Thou 2. Notional principal amounts of off-balance sheet derivative contracts(3): a. Interest rate contracts.................. 8767 32,592 M.2.a. b. Foreign exchange contracts............... 8770 0 M.2.b. c. Gold contracts........................... 8773 0 M.2.c. d. Other precious metals contracts.......... 8776 0 M.2.d. e. Other commodity contracts................ 8779 0 M.2.e. f. Equity derivative contracts.............. A002 0 M.2.f.
- -------------- (1) Do not report in column B the risk-weighted amount of assets reported in column A. (2) Include the difference between the fair value and the amortized cost of available-for-sale securities in item 8 and report the amortized cost of these securities in items 4 through 7 above. Item 8 also includes on-balance sheet asset values (or portions thereof) of off-balance sheet interest rate, foreign exchange rate, and commodity contracts and those contracts (e.g., futures contracts) not subject to risk-based capital. Exclude from item 8 margin accounts and accrued receivables as well as any portion of the allowance for loan and lease losses in excess of the amount that may be included in Tier 2 capital. (3) Exclude foreign exchange contracts with an original maturity of 14 days or less and all futures contracts. 34
Legal Title of Bank: FIRST FIDELITY BANK Call Date: 12/31/95 ST-BK: 09-1563 FFIEC 031 Address: PO BOX 700 Page RC-1 City, State Zip: STAMFORD, CT 06904 FDIC Certificate No.: |0|9|2|3|0|
Optional Narrative Statement Concerning the Amounts Reported in the Reports of Condition and Income at close of business on December 31, 1995 FIRST FIDELITY BANK STAMFORD , Connecticut - ------------------------------- --------------------- --------------------- Legal Title of Bank City State The management of the reporting bank may, if it wishes, submit a brief narrative statement on the amounts reported in the Reports of Condition and Income. This optional statement will be made available to the public, along with the publicly available data in the Reports of Condition and Income, in response to any request for individual bank report data. However, the information reported in column A and in all of memorandum item 1 of Schedule RC-N is regarded as confidential and will not be released to the public. BANKS CHOOSING TO SUBMIT THE NARRATIVE STATEMENT SHOULD ENSURE THAT THE STATEMENT DOES NOT CONTAIN THE NAMES OR OTHER IDENTIFICATIONS OF INDIVIDUAL BANK CUSTOMERS, REFERENCES TO THE AMOUNTS REPORTED IN THE CONFIDENTIAL ITEMS IN SCHEDULE RC-N, OR ANY OTHER INFORMATION THAT THEY ARE NOT WILLING TO HAVE MADE PUBLIC OR THAT WOULD COMPROMISE THE PRIVACY OF THEIR CUSTOMERS. Banks choosing not to make a statement may check the "No comment" box below and should make no entries of any kind in the space provided for the narrative statement; i.e., DO NOT enter in this space such phrases as "No statement," "Not applicable," "N/A," "No comment," and "None." The optional statement must be entered on this sheet. The statement should not exceed 100 words. Further, regardless of the number of words, the statement must not exceed 750 characters, including punctuation, indentation, and standard spacing between words and sentences. If any submission should exceed 750 characters, as defined, it will be truncated at 750 characters with no notice to the submitting bank and the truncated statement will appear as the bank's statement both on agency computerized records and in computer-file releases to the public. All information furnished by the bank in the narrative statement must be accurate and not misleading. Appropriate efforts shall be taken by the submitting bank to ensure the statement's accuracy. The statement must be signed, in the space provided below, by a senior officer of the bank who thereby attests to its accuracy. If, subsequent to the original submission, material changes are submitted for the data reported in the Reports of Condition and Income, the existing narrative statement will be deleted from the files, and from disclosure; the bank, at its option, may replace it with a statement, under signature, appropriate to the amended data. The optional narrative statement will appear in agency records and in release to the public exactly as submitted (or amended as described in the preceding paragaph) by the management of the bank (except for the truncation of statements exceeding the 750-character limit described above). THE STATEMENT WILL NOT BE EDITED OR SCREENED IN ANY WAY BY THE SUPERVISORY AGENCIES FOR ACCURACY OR RELEVANCE. DISCLOSURE OF THE STATEMENT SHALL NOT SIGNIFY THAT ANY FEDERAL SUPERVISORY AGENCY HAS VERIFIED OR CONFIRMED THE ACCURACY OF THE INFORMATION CONTAINED THEREIN. A STATEMENT TO THIS EFFECT WILL APPEAR ON ANY PUBLIC RELEASE OF THE OPTIONAL STATEMENT SUBMITTED BY THE MANAGEMENT OF THE REPORTING BANK. - -------------------------------------------------------------------------------- No comment /X/ (RCON 6979) |c471 |c472 | - BANK MANAGEMENT STATEMENT (please type or print clearly): (TEXT 6980) /s/ Ernest J. Verrico ----------------------------- ------------------- Signature of Executive Date of Signature Officer of Bank 35
Legal Title of Bank: FIRST FIDELITY BANK Call Date: 12/31/95 ST-BK: 09-1563 Address: PO BOX 700 City, State Zip: STAMFORD, CT 06904 FDIC Certificate No.: |0|9|2|3|0| THIS PAGE IS TO BE COMPLETED BY ALL BANKS - ----------------------------------------------------------------------------------------------------------------- NAME AND ADDRESS OF BANK OMB No. For OCC: 1557-0081 OMB No. For FDIC: 3064-0052 OMB No. For Federal Reserve: 7100-0036 Expiration Date: 3/31/96 PLACE LABEL HERE SPECIAL REPORT (Dollar Amounts in Thousands) --------------------------------------------------------------------------- CLOSE OF BUSINESS FDIC Certificate Number DATE 12/31/95 |0|9|2|3|0| C-700 - - -----------------------------------------------------------------------------------------------------------------
LOANS TO EXECUTIVE OFFICERS (Complete as of each Call Report Date) - -------------------------------------------------------------------------------- The following information is required by Public Laws 90-44 and 102-242, but does not constitute a part of the Report of Condition. With each Report of Condition, these Laws require all banks to furnish a report of all loans or other extensions of credit to their executive officers made since the date of the previous Report of Condition. Data regarding individual loans or other extensions of credit are not required. If no such loans or other extensions of credit were made during the period, insert "none" against subitem (a). (Exclude the first $15,000 of indebtedness of each executive officer under bank credit card plan.) See Sections 215.2 and 215.3 of Title 12 of the Code of Federal Regulations (Federal Reserve Board Regulation 0) for the definitions of "executive officer" and "extension of credit," repectively. Exclude loans and other extensions of credit to directors and principal shareholders who are not executive officers. - --------------------------------------------------------------------------------
- - Number of loans made to executive officers since the previous Call Report date. . . . . . . . . RCFD 3561 0 a. - - Total dollar amount of above loans (in thousands of dollars). . . . . . . . . . . . . . . . . . RCFD 3562 0 b. - - Range of interest charged on above loans (example: 9 3/4% = 9.75). . . . . . . . . . . . . . . . . . . . . . RCFD 7701 0.00 % to RCFD 7702 0.00% c. - -------------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------------- SIGNATURE AND TITLE OF OFFICER AUTHORIZED TO SIGN REPORT DATE (Month, Day, Year) /s/ Ernest J. Verrico 1-29-96 - -------------------------------------------------------------------------------------------------------------------------------- NAME AND TITLE OF PERSON TO WHOM INQUIRES MAY BE DIRECTED (TEXT 8903) AREA CODE/PHONE NUMBER/EXTENSION (TEXT 8904) BRIAN K REILLY (201) 565-7238 - -------------------------------------------------------------------------------------------------------------------------------- D I C 8040/53 (6-95)
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